ANNEX C – MASSACHUSETTS LAW ON DISSENTERS’ RIGHTS iii
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE MEETING OF PEOPLES’ STOCKHOLDERS
Q. | Why am I receiving this document? | | | C-1 | |
A. | Independent and Peoples have agreed to the acquisition of Peoples by Independent under the terms of a merger agreement that is described in this document, a copy of which is attached as Annex A. In order to complete the merger, Peoples’ stockholders must vote to approve the merger agreement. Peoples will hold a special meeting of its stockholders to obtain this approval. This document contains important information about the merger, the cash and the shares of Independent common stock to be issued in connection with the merger, the merger agreement and other related matters, and you should read it carefully. The enclosed voting materials for the Peoples special meeting allow you to vote your shares of common stock without attending the special meeting. |
iii Q. | What will happen to Peoples as a result of the merger? |
A. | If the merger is completed, Peoples will be merged with and into Independent and Independent will be the surviving entity. |
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE MEETING OF MNB’S SHAREHOLDERS Q. | What will Peoples’ stockholders receive in the merger? |
A. | Peoples’ stockholders will be entitled to receive in the merger for each share of Peoples common stock they own either (i) 0.5523 of a share of Independent common stock or (ii) $21.00 in cash. |
Peoples’ stockholders
| Q. | Why am I receiving this document? |
| A. | Independent Bank Corp. (“Independent”) and MNB Bancorp (“MNB”) have agreed to the acquisition of MNB by Independent under the terms of a merger agreement that is described in this document, a copy of which is attached asAnnex A. In order to complete the merger, MNB’s shareholders must approve the merger agreement and the merger. MNB will hold a special meeting of its shareholders to obtain this approval. This document contains important information about the merger, the shares of Independent common stock to be issued in connection with the merger, the merger agreement, and other related matters, and you should read it carefully. The enclosed voting materials for the MNB special meeting allow you to vote your shares of MNB common stock without attending the special meeting. |
| Q. | What will happen to MNB and The Milford National Bank and Trust Company as a result of the merger? |
| A. | If the merger is completed, MNB will merge with and into Independent and Independent will be the surviving entity. Immediately following the merger, The Milford National Bank and Trust Company, the wholly owned subsidiary of MNB, will merge with and into Rockland Trust Company, the wholly owned subsidiary of Independent, and Rockland Trust Company will be the surviving entity. |
| Q. | What will MNB’s shareholders receive in the merger? |
| A. | MNB’s shareholders will be entitled to receive in the merger either (i) $275.00 in cash or (ii) 3.55 shares of Independent common stock for each share of MNB common stock they own. MNB’s shareholders will be able to elect to receive cash, Independent common stock, or a combination of cash and Independent common stock for their shares of PeoplesMNB common stock. Regardless of a Peoples stockholder’san MNB shareholder’s choice, however, elections will be limited by the requirement that 60%75% of PeoplesMNB common stock be converted into Independent common stock and 40%25% of PeoplesMNB common stock be exchanged for cash. Therefore, the allocation of cash and Independent common stock that a Peoples stockholderan MNB shareholder will receive will depend on the elections of other Peoples’ stockholders.MNB shareholders. The allocation of the consideration payable to Peoples’ stockholdersMNB’s shareholders will not be known until the exchange agent tallies the results of the cash/stock elections made by Peoples’ stockholders.MNB’s shareholders. If a Peoples stockholderan MNB shareholder does not make an election, the consideration that such stockholderparticular shareholder will receive will depend on the consideration elected by other Peoples’ stockholders.Independent’s common stock is listed on the NASDAQ Global Select Market under the trading symbol “INDB.” Independent will not issue fractional shares of its common stock in the merger, but will instead cash out any fractional shares at a price determined by the volume weighted average closing price of Independent common stock on the NASDAQMNB shareholders.
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Independent’s common stock is listed on the Nasdaq Global Select Market under the trading symbol “INDB.” Independent will not issue fractional shares of its common stock in the merger, but will instead pay cash for any fractional shares at a price determined by the volume weighted average closing price of Independent common stock on the Nasdaq Global Select Market for the five trading days ending on the fifth trading day immediately preceding the closing date of the merger, which is referred to in this proxy statement/prospectus as the “Closing VWAP.” | Q. | Are MNB’s shareholders entitled to dissenters’ rights? |
| A. | Yes. Massachusetts law affords for the five trading days ending on the fifth trading day immediately preceding the closing date of the merger.Each holder of a vested or unvested optiondissenters’ rights to purchase Peoples common stock will receive, upon consummation of the transaction, a cash payment in settlement of the Peoples option equal to the product of (i) the number of shares of Peoples common stock provided for by such option and (ii) the excess, if any, of the per share cash consideration of $21.00 over the exercise price of such option. All unvested shares of restricted Peoples common stock will vest in full immediately prior to the effective time of the merger and will be treated as outstanding Peoples shares for all purposes under the merger agreement, including for purposes of the holders’ right to receive the merger consideration.
Q. | When will the merger be completed? |
A. | We expect the merger will be completed when all of the conditions to completion contained in the merger agreement are satisfied or waived, including obtaining required regulatory approvals and the approval of the merger agreement by Peoples’ stockholders. We currently expect to complete the merger during the first calendar quarter of 2015. However, because fulfillment of some of the conditions to completion of the merger, such as receiving required regulatory approvals, are not entirely within our control, we cannot predict the actual timing. |
Q. | Who is being asked to approve matters in connection with the merger? |
A. | Peoples’ stockholders are being asked to vote to approve the merger agreement and the transactions contemplated by the merger agreement, including the merger, to approve the authorization of the board of directors of Peoples to adjourn or postpone the special meeting if necessary to permit further solicitation of proxies in favor of the Peoples merger agreement proposal or to vote on other matters properly before the special meeting and to approve, on a non-binding advisory basis, certain compensation payable to the named executive officers of Peoples in connection with the merger. |
Under Maryland General Corporation Law (“Maryland Law”), the merger cannot be consummated unless Peoples’ stockholders vote to approve the merger agreement and the merger. By this proxy statement/prospectus, Peoples’ board of directors is soliciting proxies of Peoples’ stockholders to provide this approval at the special meeting of Peoples’ stockholders discussed below.
Q. | Should Peoples’ stockholders send in their stock certificates now? |
A. | No, Peoples’ stockholders should not send in any stock certificates now. If the merger is approved at the special meeting, Independent will send Peoples’ stockholders written instructions on how to exchange their stock certificates for the merger consideration. |
Q. | What are the material U.S. federal income tax consequences of the merger to me? |
A. | The merger is intended to qualify, and the obligation of the parties to complete the merger is conditioned upon the receipt of a legal opinion from their counsel to the effect that the merger will qualify, as a reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended, which is referred to herein as the Code. The tax consequences of the merger to Peoples’ stockholders will depend on whether Peoples’ stockholders receive only cash, only Independent common stock, or a combination of cash and Independent common stock in exchange for their Peoples common stock. Peoples’ stockholders that exchange their shares solely for Independent common stock should not recognize gain or loss except with respect to any cash they receive in lieu of receiving a fractional share of Independent common stock. Peoples’ stockholders that exchange their shares solely for cash should recognize gain or loss on the exchange. Peoples’ stockholders that exchange their shares for a combination of Independent common stock and cash should recognize gain (but not loss) with respect to the cash portion of the consideration they receive. Because the allocations of cash and Independent common stock that are received will depend on the elections of other Peoples’ stockholders, Peoples’ stockholders will not know the actual tax consequences of the merger to them until the allocations are completed. See “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 80. |
Q. | Are there any risks that I should consider in deciding whether to vote for approval of the merger? |
A. | Yes. You should read and carefully consider the risk factors set forth in the section in this document titled “Risk Factors” beginning on page 13. |
Q. | When and where will Peoples’ stockholders meet? |
A. | Peoples will hold its special meeting of stockholders on November 25, 2014 at 5:00 p.m., local time, at the main office of Peoples Federal Savings Bank located at 435 Market Street, Brighton, Massachusetts 02135. |
Q. | What matters are Peoples’ stockholders being asked to approve at the Peoples special meeting pursuant to this proxy statement/prospectus? |
A. | Peoples’ stockholders are being asked to approve the merger agreement and the transactions contemplated by the merger agreement, including the merger. We refer to this proposal as the “Peoples merger agreement proposal.” |
Peoples’ stockholders are also being asked to authorize the board of directors of Peoples to adjourn or postpone the special meeting if necessary to permit further solicitation of proxies in favor of the Peoples merger agreement proposal or to vote on other matters properly before the special meeting and to approve, on a non-binding advisory basis, certain compensation payable to the named executive officers of PeoplesMNB’s shareholders in connection with the merger.
Q. | What does Peoples’ board of directors recommend with respect to the three proposals? |
A. | Peoples’ board of directors has unanimously approved the merger agreement and determined that the merger agreement and the merger are fair to, advisable and in the best interests of Peoples and its stockholders and unanimously recommends that Peoples’ stockholders vote “FOR” the Peoples merger agreement proposal. |
Peoples’ board See “Dissenters’ Rights of directors also unanimously recommends that Peoples’ stockholders vote “FOR” approval of the authorization of the board of directors of Peoples to adjourn or postpone the special meeting if necessary to permit further solicitation of proxies in favor of the Peoples merger agreement proposal or to voteAppraisal” beginning on other matters properly before the special meeting and “FOR” Approval, on a non-binding advisory basis, of certain compensation payable to the named executive officers of Peoples in connection with the merger.
Q. | Who can vote at the Peoples special meeting of stockholders? |
A. | Holders of record of Peoples common stock at the close of business on October 16, 2014, which is the record date for the Peoples special meeting of stockholders, are entitled to vote at the special meeting. |
Q. | How many votes must be represented in person or by proxy at the Peoples special meeting to have a quorum? |
A. | The holders of a majority of the shares of Peoples common stock outstanding and entitled to vote at the special meeting of stockholders, present in person or represented by proxy, will constitute a quorum at the special meeting. |
Q. | What vote by Peoples’ stockholders is required to approve the Peoples special meeting proposals? |
A. | Assuming a quorum is present at the Peoples special meeting of stockholders, approval of the Peoples merger agreement proposal will require the affirmative vote of the holders of a majority of the outstanding shares of Peoples common stock entitled to vote. Abstentions and broker non-votes will have the same effect as shares voted against the Peoples merger agreement proposal. |
Assuming a quorum is present at the Peoples special meeting, approval of the Peoples adjournment proposal will require the affirmative vote of a majority of the votes cast on the Peoples adjournment proposal. Abstentions and broker non-votes will not affect whether the Peoples adjournment proposal is approved.
Assuming a quorum is present at the Peoples stockholder meeting, approval of the non-binding advisory resolution approving certain compensation payable to the named executive officers of Peoples in connection with the merger will require the affirmative vote of a majority of votes cast on the proposal. Abstentions and broker non-votes will not affect whether such resolution is approved.
As of the record date for the special meeting, directors and executive officers of Peoples, together with their affiliates, had sole or shared voting power over approximately 15.2% of the Peoples common stock outstanding and entitled to vote at the special meeting.
Q: | What will happen if the stockholders do not approve the advisory vote on certain compensation payable to Peoples’ named executive officers in connection with the merger at the special meeting? |
A: | Approval of the non-binding advisory resolution approving certain compensation payable to Peoples’ named executive officers in connection with the merger is not a condition to completion of the merger. The vote
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| with respect to such compensation is an advisory vote and will not be binding on Peoples or on Independent. Therefore, if the merger is approved by Peoples’ stockholders and completed, such compensation will still be paid to Peoples’ executive officers if and when due. |
Q. | Are any Peoples’ stockholders already committed to vote in favor of any of the special meeting proposals? |
A. | Under voting agreements with Independent, each of Peoples’ directors and certain Peoples’ executive officers, solely in his or her capacity as a stockholder, has agreed to vote all of his or her Peoples common stock in favor of the Peoples merger agreement proposal and has granted to Independent a proxy to vote his or her shares in favor of the Peoples merger agreement proposal. As of the record date for the Peoples special meeting of stockholders, the Peoples’ stockholders who are parties to the Peoples voting agreements collectively owned (with sole or shared voting power) approximately 15.2% of the Peoples common stock outstanding and entitled to vote at the special meeting. |
Q. | How may the Peoples’ stockholders vote their shares for the special meeting proposals presented in this proxy statement/prospectus? |
A. | Peoples’ stockholders may submit their proxies by:page [●]. |
signing| Q. | When will the enclosed proxy card and mailing it in the enclosed, prepaid and addressed envelope;merger be completed? |
calling toll-free 1-800-652-VOTE(8683) and following the instructions; or
accessing the web page at www.investorvote.com and following the on-screen instructions.
Proxies submitted through the Internet or by telephone must
| A. | The merger will be received by 1:00 a.m., Eastern Standard Time, on November 25, 2014.Q. | Will a broker or bank holding shares in “street name” for a Peoples’ stockholder vote those shares for the stockholder at the Peoples special meeting? |
A. | A broker or bank will not be able to vote your shares at the special meeting without first receiving instructions from you on how to vote. If your shares are held in “street name,” you will receive separate voting instructions with your proxy materials. It is therefore important that you provide timely instruction to your broker or bank to ensure that all of the Peoples common stock you own is voted at the special meeting. |
Q. | Will Peoples’ stockholders be able to vote their shares in person at the Peoples special meeting? |
A. | Yes. Submitting a proxy will not affect the right of any Peoples stockholder to vote in person at the special meeting of stockholders. Peoples will distribute written ballots to any Peoples stockholder who requests, and is entitled, to vote at the special meeting. If a Peoples stockholder holds shares in “street name,” the stockholder must request a proxy from the stockholder’s broker or bank in order to vote those shares in person at the special meeting. |
Q. | What do Peoples’ stockholders need to do now? |
A. | After carefully reading and considering the information contained in this proxy statement/prospectus, Peoples’ stockholders are requested to complete and return their proxies as soon as possible. The proxy card will instruct the persons named on the proxy card to vote the stockholder’s Peoples shares at the special meeting as the stockholder directs. If a stockholder signs and sends in a proxy card and does not indicate how the stockholder wishes to vote, the proxy will be voted “FOR” all three of the special meeting proposals. |
Q. | May a Peoples stockholder change such stockholder’s vote after submitting a proxy? |
A. | Yes. A Peoples stockholder may change a vote at any time before the stockholder’s proxy is voted at the Peoples special meeting. A proxy submitted through the Internet or by telephone may be revoked by executing a later-dated proxy card, by subsequently submitting a proxy through the Internet or by telephone, or by attending the special meeting and voting in person. A stockholder executing a proxy card also may revoke the proxy at any time before it is voted by giving written notice revoking the proxy to Peoples’ Corporate Secretary, by subsequently filing another proxy card bearing a later date or by attending the special meeting and voting in person. Attending the special meeting will not automatically revoke a stockholder’s prior submission of a proxy (by Internet, telephone or in writing). All written notices of revocation or other communications with respect to revocation of proxies should be addressed to: |
Peoples Federal Bancshares, Inc.
435 Market Street
Brighton, Massachusetts 02135
Attention: Myron Fox, Corporate Secretary
Q. | If I am a Peoples stockholder, who can help answer my questions? |
A. | If you have any questions about the merger or the special meeting, or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact Peoples’ proxy solicitor, at the following address or phone number: |
Laurel Hill Advisory Group, LLC
2 Robbins Lane, Suite 201
Jericho, New York 11753
(516) 396-7901
Q. | Where can I find more information about the companies? |
A. | You can find more information about Independent and Peoples from the various sources described under the section of this document titled “Where You Can Find More Information” beginning on page 95. |
SUMMARY
This summary highlights selected information from this document and may not containcompleted when all of the information that is importantconditions to you. You should carefully read this entire document and the other documents to which this document refers to fully understand the merger and the related transactions. See “Where You Can Find More Information” beginning on page 95 of this document. Most items in this summary include a page reference directing you to a more complete description of those items.
Unless the context otherwise requires, throughout this document, “Independent” refers to Independent Bank Corp., “Peoples” refers to Peoples Federal Bancshares, Inc., “Rockland Trust” refers to Rockland Trust Company; and “we,” “us” and “our” refers to Independent and Peoples. Also, we refer to the merger between Independent and Peoples as the “merger,” and the Agreement and Plan of Merger, dated as of August 5, 2014, by and among Independent, Rockland Trust, Peoples and Peoples Federal Savings Bank as the “merger agreement.”
The Companies (see page 84)
Independent
Independent is a state chartered, federally registered bank holding company headquartered in Rockland, Massachusetts that was incorporated under Massachusetts law in 1985. Independent is the sole stockholder of Rockland Trust, a Massachusetts trust company chartered in 1907. Through its subsidiary, Rockland Trust, Independent offers a full range of banking services through a network of 78 bank branches in eastern Massachusetts and its commercial lending centers and investment management offices in eastern Massachusetts and Providence, Rhode Island. Rockland Trust provides investment management and trust services to individuals, institutions, small businesses and charitable institutions throughout eastern Massachusetts and Rhode Island.
At June 30, 2014, Independent had total consolidated assets of approximately $6.3 billion, net loans of approximately $4.8 billion, total deposits of approximately $5.3 billion and total stockholders’ equity of approximately $616 million.
Independent Bank Corp.
288 Union Street
Rockland, Massachusetts 02370
(781) 878-6100
Peoples
Peoples is a Maryland corporation that owns 100% of the common stock of Peoples Federal Savings Bank. Peoples was incorporated in March 2010 to become the holding company of Peoples Federal Savings Bank in connection with Peoples Federal Savings Bank’s mutual to stock conversion in July 2010. Headquartered in Brighton, Massachusetts, Peoples operates its business from eight banking offices located in Brighton, Allston, West Roxbury, Jamaica Plain, Brookline, West Newton, Westwood and Norwood. Peoples is engaged principally in the business of providing a variety of financial services to individuals and small businesses primarily in the form of various deposit products and residential and commercial mortgage lending products.
At June 30, 2014, Peoples had total consolidated assets of $606 million, net loans of $493 million, total deposits of $435 million and total stockholders’ equity of $104 million.
Peoples Federal Bancshares, Inc.
435 Market Street
Brighton, Massachusetts 02135
(617) 254-0707
The Merger and the Merger Agreement (see pages 38 and 64)
The terms and conditions of the merger arecompletion contained in the merger agreement which is attached as Annex A to this proxy statement/prospectus. Please carefully read the merger agreement, as it is the legal document that governs the merger. Under the terms of the merger agreement, Peoples will merge with and into Independent (the “merger”) and Independent will survive the merger. Upon completion of the merger, each share of Peoples common stock will be converted into the right to receive either (i) 0.5523 of a share of Independent common stockare satisfied or (ii) $21.00 in cash.
Special Meeting of Peoples’ Stockholders; Required Vote (see page 33)
Peoples will hold a special meeting of stockholders at the main office of Peoples Federal Savings Bank, located at 435 Market Street, Brighton, Massachusetts 02135 on November 25, 2014 at 5:00 p.m., local time. Peoples’ stockholders will be asked to:
approve the merger agreementwaived, including obtaining required regulatory approvals and/or waivers and the transactions it contemplates, including the merger;
authorize the boardexpiration of directors of Peoples to adjourn or postpone the special meeting if necessary to permit further solicitation of proxies in favor of the Peoples merger agreement proposal or to vote on other matters properly before the special meeting (the “Peoples adjournment proposal”);any statutory waiting periods and
approve, on a non-binding advisory basis, a resolution approving certain compensation payable to the named executive officers of Peoples in connection with the merger.
You can vote at the Peoples special meeting if you owned Peoples common stock at the close of business on October 16, 2014. On that date, there were 6,239,436 shares of Peoples common stock outstanding and entitled to vote, approximately 15.2% of which were owned and entitled to be voted by Peoples directors and executive officers and their affiliates. You can cast one vote for each share of Peoples common stock you owned on that date. In order to approve the merger agreement and the transactions it contemplates, the holders of at least a majority of the outstanding shares of Peoples common stock entitled to vote must vote in favor of the proposal.
What Holders of Peoples Stock Options and Restricted Stock Will Receive in the Merger (see page 64)
All outstanding unvested Peoples stock options and restricted shares of Peoples common stock will become fully vested immediately prior to the effective time of the merger. Peoples options will be cancelled upon consummation of the merger, and each option holder will receive a cash payment upon cancellation of the Peoples option equal to the product of (i) the number of shares of Peoples common stock provided for by such option and (ii) the excess, if any, of the per share cash consideration of $21.00 over the exercise price of such option. All shares of accelerated restricted stock will be treated as outstanding Peoples shares for all purposes under the merger agreement, including for purposes of the holders’ right to receive the merger consideration.
Dividend Policy of Independent; Dividends from Peoples (see page 26)
The holders of Independent common stock receive dividends as and when declared by Independent’s board of directors. Independent declared quarterly cash dividends of $0.24 per share of common stock for the first and second quarters of 2014, cash dividends of $0.22 per share of common stock for each quarter of 2013 and cash dividends of $0.21 per share of common stock for each quarter in 2012. Following the completion of the merger, subject to approval and declaration by Independent’s board of directors, Independent expects to continue paying quarterly cash dividends consistent with past practices.
Prior to completion of the merger, Peoples’ stockholders will continue to receive any regular quarterly dividends declared and paid by Peoples, at a rate not to exceed $0.05 per share of Peoples common stock. A special dividend consistent with past years may not be paid by Peoples without the prior consent of Independent and is not expected to be paid.
Fairness Opinion Presented to the Peoples Board of Directors (see pages 43 and B-1)
Sandler O’Neill + Partners, L.P. (“Sandler O’Neill”) has provided an opinion to Peoples’ board of directors, dated August 5, 2014, to the effect that, as of that date and based upon and subject to the factors and assumptions set forth in the opinion, the merger consideration was fair, from a financial point of view, to the holders of Peoples common stock. The full text of Sandler O’Neill’s opinion is attached to this proxy statement/prospectus as Annex B, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Sandler O’Neill in connection with its opinion. We urge you to read the opinion in its entirety. Sandler O’Neill’s opinion is addressed to Peoples’ board of directors, is directed only to the fairness, from a financial point of view, of the merger consideration to the holders of Peoples common stock and does not constitute a recommendation to any stockholder as to how that stockholder should vote on the merger agreement or the form of consideration that any stockholder should elect in the merger. Pursuant to an engagement letter between Peoples and Sandler O’Neill, Peoples has paid a fee to Sandler O’Neill for rendering its opinion and has agreed to pay Sandler O’Neill a transaction fee, which is payable only upon completion of the merger.
Recommendation of Peoples’ Board of Directors (see pages 33 and 36)
Peoples’ board of directors has unanimously determined that the merger agreement and the merger are advisable and in the best interests of Peoples and its stockholders and accordingly unanimously recommends that Peoples’ stockholders vote “FOR” the proposal to approve the merger agreement and the transactions it contemplates, “FOR” the proposal to approve the authorization of the board of directors of Peoples to adjourn or postpone the special meeting if necessary to permit further solicitation of proxies in favor of the Peoples merger agreement proposal or to vote on other matters properly before the special meeting and “FOR” the proposal to approve, on a non-binding advisory basis, a resolution approving certain compensation payable to the named executive officers of Peoples in connection with the merger.
Peoples’ Reasons for the Merger (see page 42)
In determining whether to approve the merger agreement, Peoples’ board of directors consulted with certain of its senior management and with its legal and financial advisers. In arriving at its determination, Peoples’ board of directors also considered the factors described under “The Merger – Reasons for the Merger.”
Interests of Peoples’ Executive Officers and Directors in the Merger (see page 58)
Some of the directors and executive officers of Peoples have financial interests in the merger that are different from, or in addition to, the interests of Peoples’ other stockholders generally. These interests include rights of executive officers under their existing employment agreements, which are being provided through settlement agreements executed in connection with the merger agreement; rights under consulting and non-competition agreements executed in connection with the merger agreement; rights under Peoples’ equity-based benefit programs and awards, including the acceleration of vesting of stock options; and rights to continued indemnification and insurance coverage by Independent after the merger for acts and omissions occurring before the merger.
The boards of directors of Independent and Peoples were aware of these interests and considered them, among other matters, in approving the merger agreement and related transactions.
Peoples Directors and Certain Peoples Executive Officers Have Agreed to Vote in Favor of the Merger Agreement (see page 34)
On the record date of October 16, 2014, the directors of Peoples and certain Peoples executive officers had sole or shared voting power over 949,196 shares, or approximately 15.2%, of the outstanding shares of Peoples common stock. Each of these directors and officers has agreed with Independent to vote his or her shares of Peoples common stock in favor of the merger agreement and the transactions it contemplates.
Approval by Independent’s Board of Directors and Reasons for the Merger (see page 56)
Independent’s board of directors has unanimously approved and adopted the merger agreement.
In determining whether to approve the merger agreement, Independent’s board of directors consulted with certain of its senior management and with its legal and financial advisers. In arriving at its determination, Independent’s board of directors also considered the factors described under “The Merger – Approval by Independent’s Board of Directors and Reasons for the Merger.”
Non-Solicitation (see page 71)
Peoples has agreed that it will not solicit or knowingly encourage any inquiries or proposals regarding any acquisition proposals by third parties. Peoples may respond to unsolicited proposals in certain circumstances if required by Peoples’ board of directors’ fiduciary duties. Peoples must promptly notify Independent if it receives any acquisition proposals.
Conditions to Complete the Merger (see page 74)
Each of Independent’s and Peoples’ obligations to complete the merger is subject to the satisfaction or waiver to the extent legally permitted of a number of mutual conditions, including:
the approval of the merger agreement and the transactions it contemplates, including the merger by Peoples’ stockholders at the Peoples special meeting described in this proxy statement/prospectus; the receipt of all regulatory approvals and consents (none of which shall contain a burdensome condition, as defined in the merger agreement), and the expiration of all waiting periods required to complete the merger;
the effectiveness of the registration statement with respect to the Independent common stock to be issued in the merger under the Securities Act, and the absence of any stop order or proceedings initiated or threatened by the Securities and Exchange Commission for that purpose; and
the absence of any statute, regulation, rule, decree, injunction or other order in effect by any court or other governmental entity that prohibits completion of the transactions contemplated by the merger agreement.
Each of Independent’s and Peoples’ obligationsMNB’s shareholders. We currently expect to complete the merger during the fourth quarter of 2018. However, because fulfillment of some of the conditions to completion of the merger, such as receiving required regulatory approvals and/or waivers, are not entirely within our control, we cannot predict the actual timing.
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| Q. | Should MNB’s shareholders send in their stock certificates now? |
| A. | No, MNB’s shareholders should not send in any stock certificates now. If the merger is also separately subjectconsummated, Independent will send MNB’s shareholders written instructions on how to the satisfaction or waiver (exceptexchange their stock certificates for the condition set forth inmerger consideration. |
| Q. | What are the first bullet below, which may not be waived in any circumstance) of a number of conditions, including:the receipt by the party of a legal opinion from its counsel with respect to certainmaterial U.S. federal income tax consequences of the merger; and
merger to U.S. holders of MNB common stock? |
the other company’s representations and warranties in the merger agreement being true and correct, in all material respects, and the performance by the other party in all material respects of its obligations under the merger agreement.
Independent’s obligation to complete the merger is further subject to the conditions that the number of outstanding shares of Peoples common stock shall not exceed 6,241,436, except to the extent increased as a result of the exercise of stock options, and the Peoples Federal Savings Bank Charitable Foundation shall have changed its name to “Rockland Trust – Peoples Federal Foundation” and a majority of its board of directors shall consist of individuals acceptable to Independent in its sole discretion.
Termination of the Merger Agreement (see page 75)
Independent and Peoples may mutually agree at any time to terminate the merger agreement without completing the merger, even if Peoples’ stockholders have approved the merger transactions. Also, either Independent or Peoples can terminate the merger agreement in various circumstances, including the following:
if any regulatory approval necessary for consummation of the transactions contemplated by the merger agreement is not obtained;
if the merger is not completed by April 30, 2015;
if the other party breaches the merger agreement in a way that would entitle the party seeking to terminate the merger agreement not to consummate the merger, subject to the right of the breaching party to cure the breach within 30 days following written notice (unless it is not possible due to the nature or timing of the breach for the breaching party to cure the breach); or
if Peoples’ stockholders do not approve the merger agreement and the transactions it contemplates.
Additionally, Independent may terminate the merger agreement if:
Peoples has materially breached its “non-solicitation” obligations described under “The Merger Agreement – No Solicitation of Alternative Transactions” beginning on page 71;
Peoples’ board of directors fails to recommend in this proxy statement/prospectus the approval of the merger agreement;
Peoples’ board of directors recommends, proposes or publicly announces its intention to recommend or propose, to engage in an “Acquisition Transaction” with any party other than Independent or a subsidiary of Independent; or
Peoples breaches its obligation to call, give notice of, convene and hold a meeting of stockholders for the purpose of approving the merger agreement and the transactions it contemplates.
Additionally, Peoples may terminate the merger agreement:
if it enters into a “Superior Proposal” as described under “The Merger Agreement – No Solicitation of Alternative Transactions,” so long as it pays a termination fee of $5.3 million to Independent; or
pursuant to a “walk away” right that is subject to a “top up” option, if (a) the ten day volume-weighted average price of Independent’s common stock as of a measurement date prior to closing is more than 20% below the ten day volume-weighted average price of Independent’s common stock for the trading period ended August 4, 2014, (b) the drop in the ten day volume-weighted average price of Independent’s common stock between August 5, 2014 and the measurement date is more than 20% greater than any drop in the ten day average price of the Nasdaq Bank Stock Index during such measurement period, (c) Peoples elects to terminate the merger agreement by a majority vote of Peoples’ directors, and (d) following notice of such election, Independent does not exercise its “top up” option under the merger agreement to increase the exchange ratio to a number that would compensate Peoples’ stockholders for the extent of the drop in Independent’s common stock below the lowest price per share at which the “walk away” right would not have been triggered. If Independent does exercise its “top up” option, then no termination will occur.
Termination Fee (see page 76)
Peoples has agreed to pay a termination fee of $5.3 million to Independent if the merger agreement is terminated under any of the circumstances described in “The Merger Agreement – Termination Fee” beginning on page 75.
Advisory Vote on Named Executive Officer Compensation in Connection with the Merger (see page 37)
Peoples’ stockholders are being asked to vote on a non-binding advisory resolution approving certain compensation payable to the named executive officers of Peoples in connection with the merger, approval of which requires the affirmative vote of a majority of the votes cast with respect to the proposal. Abstentions and broker non-votes will not affect whether such resolution is approved. Approval of this resolution is not a condition to completion of the merger. The vote with respect to certain compensation payable to the named executive officers of Peoples in connection with the merger is an advisory vote and will not be binding on Peoples or on Independent. Therefore, if the merger is approved by Peoples’ stockholders and completed, such compensation will still be paid to Peoples’ named executive officers if and when due.
Regulatory Approvals Required for the Merger (see page 56)
Completion of the transactions contemplated by the merger agreement is subject to various regulatory approvals, including approval from the Federal Reserve Board, the Federal Deposit Insurance Corporation (“FDIC”), the Board of Bank Incorporation of the Commonwealth of Massachusetts, and the Massachusetts Commissioner of Banks. Independent and Peoples have completed, or will complete, filing all of the required applications and notices with regulatory authorities. Although we do not know of any reason why we would not be able to obtain the necessary regulatory approvals in a timely manner, we cannot be certain when or if we will receive them.
Rights of Independent Stockholders Differ from Those of Peoples’ Stockholders (see page 87)
When the merger is completed, Peoples’ stockholders who receive Independent common stock as consideration in the merger will automatically become Independent’s stockholders. The rights of Independent’s stockholders differ from the rights of Peoples’ stockholders in important ways. Many of these differences relate to provisions in Independent’s articles of organization and bylaws that differ from those of Peoples. See “Comparison of Rights of Stockholders of Peoples and Independent” beginning on page 87 for a summary of the material differences between the respective rights of Peoples and Independent stockholders.
Tax Consequences of the Merger (see page 80)
| A. | The merger is intended to qualify, and the obligations of the parties to complete the merger isare conditioned upon the receipt of a legal opinion from their respective counsel to the effect that the merger will qualify, as a reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended, which is referred to hereinin this proxy statement/prospectus as the Code.“Code.” The federal tax consequences of the merger to Peoples’ stockholdersMNB’s shareholders will depend primarily on whether they exchange their Peoples common stock solely forMNB’s shareholders receive only cash, only Independent common stock, solely for cash, or for a combination of cash and Independent common stock and cash. Peoples’ stockholders whoin exchange for their MNB common stock. MNB’s shareholders that exchange their shares solely for Independent common stock shouldgenerally will not recognize gain or loss except with respect to any cash they receive in lieu of receiving a fractional share of Independent common stock. Peoples’ stockholders whoMNB’s shareholders that exchange their shares solely for cash shouldgenerally will recognize gain or loss on the exchange. Peoples’ stockholders whoMNB’s shareholders that exchange their shares for a combination of Independent common stock and cash shouldgenerally will recognize gain (but not loss) with respect to the cash portion of the consideration they receive. The actual federal income tax consequences to Peoples’ stockholdersBecause the allocations of electing to receive cash and Independent common stock or a combinationthat are received will depend on the elections of cash and stockother MNB shareholders, MNB’s shareholders will not be ascertainable atknow the time Peoples’ stockholders make their election because it will not be known at that time how, oractual tax consequences of the merger to what extent,them until the allocation and proration procedures will apply.allocations are completed. See “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page [●].This tax treatment may not apply to all of Peoples’ stockholders.MNB shareholders. Determining the actual tax consequences of the merger to Peoples’ stockholdersMNB shareholders can be complicated. Peoples’ stockholderscomplicated and will depend on your particular circumstances. MNB shareholders should consult their own tax advisor for a full understanding of the merger’s tax consequences that are particular to each stockholder.shareholder. |
To review the tax consequences of the merger to Peoples’ stockholders in greater detail, please see the section “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 80.
Dissenters’ Rights of Appraisal (see page 36)
Dissenters’ rights are statutory rights
| Q. | Are there any risks that if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their sharesI should consider in cash as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction. Dissenters’ rights are not available in all circumstances, and exceptions to these rights are provided under the Maryland General Corporation Law, as amended (the “MGCL”). Under the provisions of the MGCL, the holders of Peoples common stock are not entitled to dissenters’ rights in the merger. Please see the section “Dissenters’ Rights of Appraisal” on page 36.Comparative Per Share Market Price Information (see page 25)
Independent common stock trades on the NASDAQ Global Select Market under the symbol “INDB” and Peoples common stock trades on the NASDAQ Capital Market under the symbol “PEOP.” The following presents the closing sale prices of Independent common stock and Peoples common stock on August 5, 2014, the last trading day before we announced the merger agreement, and October 15, 2014, the last practicable trading day prior to mailing this document. The table also represents the equivalent value of the stock consideration to be paid in the merger per share of Peoples common stock on those dates, calculated by multiplying the closing price of Independent common stock on those dates by an exchange ratio of 0.5523, which represents the fraction of a share of Independent common stock that Peoples’ stockholders will receive in the merger for each share of Peoples common stock.
| | | | | | | | | | | | | | | | | Date | | Independent
Closing Price | | | Peoples
Closing Price | | | Exchange
Ratio | | | Equivalent Per Share
Value | | August 5, 2014 | | $ | 36.31 | | | $ | 18.16 | | | | 0.5523 | | | $ | 20.05 | | October 15, 2014 | | $ | 36.40 | | | $ | 19.98 | | | | 0.5523 | | | $ | 20.10 | |
The market prices of both Independent common stock and Peoples’ common stock will fluctuate prior to the merger. You should obtain current stock price quotations for Independent common stock and Peoples common stock.
Litigation Relating to the Merger (see page 63)
On October 14, 2014 Richard Morris, an individual who alleges himself to be a Peoples stockholder, filed a purported class action lawsuit in Maryland state court which named Peoples, Peoples Federal Savings Bank, Peoples’ directors, Independent, and Rockland Trust Company as defendants. The lawsuit, which was pending as of the date of this filing, alleges breaches of fiduciary duty in connection with the sale of Peoples to Independent and seeks, among other things, class action certification, court orders prohibiting a Peoples stockholder vote regarding the merger and completion of the merger, and other equitable and monetary relief. Peoples, Peoples Federal Savings Bank, Independent, Rockland Trust Company, and the individual defendants each believe that the case is a typical, meritless “shareholder strike” suit, that the claims made are without merit, and intend to defend the case vigorously. See “The Merger — Litigation Relating to the Merger” beginning on page 63 for more information.
RISK FACTORS
In addition to the other information included in this proxy statement/prospectus, including the matters addressed under “Forward-Looking Information,” Peoples’ stockholders should carefully consider the following risks before deciding whether to vote for approval of the merger agreement. In addition, stockholders of Peoplesmerger?
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| A. | Yes. You should read and carefully consider the risks associated with eachrisk factors set forth in the section in this document titled “Risk Factors” beginning on page [●]. |
| Q. | When and where will MNB’s shareholders meet? |
| A. | MNB will hold its special meeting of shareholders on [●], 2018 at [●], local time, at [●] located at [●]. |
| Q. | What matters are MNB’s shareholders being asked to approve at the businesses of Independent and Peoples because these risks will relateMNB special meeting pursuant to the combined company. Certain of these risks with respect to Independent can be found in Independent’s annual report on Form 10-K for the fiscal year ended December 31, 2013, and quarterly reports on Form 10-Q for each of the quarters ended March 31, 2014 and June 30, 2014, which reports are incorporated by reference into this proxy statement/prospectus. Certain of these risks with respectprospectus? |
| A. | MNB’s shareholders are being asked to Peoples can be found in Peoples’ annual report on Form 10-K for the fiscal year ended September 30, 2013, and quarterly reports on Form 10-Q for each of the quarters ended December 31, 2013, March 31, 2014 and June 30, 2014. You should also consider the other information in this proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” and “Incorporation of Certain Documents by Reference” beginning on page 95.Risks Related to the Merger
Absent an exercise by Peoples of its “walk away” right and a subsequent “top up” election by Independent, the exchange ratio used to determine the stock consideration in the merger will be 0.5523 and will not change due to changes in the market value of Peoples common stock or Independent common stock before the completion of the merger, regardless of how significant such changes might be.
Upon completion of the merger, each share of Peoples common stock will be converted into the right to receive either (i) $21.00 in cash or (2) 0.5523 of a share of Independent common stock. The exchange ratio used to determine the stock consideration will not increase based on fluctuations in market prices regardless of how far the price of Independent common stock falls, except in the event Independent’s stock drops beyond certain levels and Peoples exercises its “walk away” right and Independent subsequently exercises its right to “top up” the stock consideration to void the walk away right. The market values of Independent common stock and Peoples common stock have varied since Independent and Peoples entered intoapprove the merger agreement and will continuethe transactions contemplated by the merger agreement, including the merger. We refer to varythis proposal collectively as the “MNB merger agreement proposal.”
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MNB’s shareholders are also being asked to authorize the board of directors of MNB to adjourn or postpone the special meeting, if necessary, to permit further solicitation of proxies in favor of the MNB merger agreement proposal or to vote on other matters properly before the special meeting. We refer to this proposal as the “MNB adjournment proposal.” | Q. | What does MNB’s board of directors recommend with respect to the two proposals? |
| A. | MNB’s board of directors has unanimously approved the merger agreement and determined that the merger agreement and the merger are fair to, and advisable to, MNB and its shareholders and unanimously recommends that MNB’s shareholders vote “FOR” the MNB merger agreement proposal. |
MNB’s board of directors also unanimously recommends that MNB’s shareholders vote “FOR” approval of the MNB adjournment proposal. | Q. | Who is eligible to vote at the MNB special meeting of shareholders? |
| A. | Only holders of record of MNB common stock at the close of business on [●], 2018, which is the record date for the MNB special meeting of shareholders, are entitled to vote at the special meeting. |
| Q. | How many votes must be represented in person or by proxy at the future dueMNB special meeting to changes in the business, operations or prospectshave a quorum? |
| A. | The holders of Independent and Peoples, market assessmentsa majority of the merger, regulatory considerations, marketshares of MNB common stock outstanding and economic considerations, and other factors both within and beyond the control of Independent and Peoples. Therefore,entitled to vote at the timespecial meeting of shareholders, present in person or represented by proxy, will constitute a quorum at the special meeting. |
| Q. | What vote by MNB’s shareholders is required to approve the MNB special meeting proposals? |
| A. | Approval of the MNB merger agreement proposal will require the affirmative vote of the holders of at leasttwo-thirds of the shares of MNB common stock entitled to vote. Abstentions and brokernon-votes will have the same effect as shares voted against the MNB merger agreement proposal. |
Assuming a quorum is present at the MNB special meeting, approval of the MNB adjournment proposal will require the affirmative vote of a majority of the shares voted on the MNB adjournment proposal. Abstentions and brokernon-votes will not affect whether the MNB adjournment proposal is approved. | Q. | Are any MNB shareholders already committed to vote in favor of any of the special meeting Peoples’ stockholders will not knowproposals? |
| A. | Under voting agreements with Independent, each of MNB’s directors who individually or be ablejointly owns shares of MNB common stock, acting solely in his or her capacity as a shareholder, has agreed to calculate the market valuevote all of their shares of MNB common stock in favor of the IndependentMNB merger agreement proposal. Additionally, the spouse of Kevin P. Meehan, Chairman of the Board of MNB, has agreed to vote her shares in favor of the MNB merger agreement proposal. As of the record date for the MNB special meeting of shareholders, the shareholders who are parties to the MNB voting agreements collectively owned approximately [●]% of the MNB common stock they will receive upon completionentitled to vote at the special meeting. Because the holders of the merger. For example, based on the range of closing prices of Independent common stock during the period from August 5, 2014, the last trading day before public announcement of the merger, through October 15, 2014, the last practicable date before the date of this document, the exchange ratio represented a market value ranging from a low of $19.36 to a high of $20.81 for each share of Peoples common stock.Peoples’ stockholders may receive a form of consideration different from what they elect.
The consideration to be received by Peoples’ stockholders in the merger is subject to the requirement that 60% of the shares of Peoples common stock be exchanged for Independent common stock and 40% be exchanged for cash. The merger agreement contains proration and allocation procedures to achieve this desired result. If you elect all cash and the available cash is oversubscribed, then you will receive a portion of the merger consideration in Independent common stock. If you elect all stock and the available stock is oversubscribed, then you will receive a portion of the merger consideration in cash.
The fairness opinion obtained by Peoples from its financial advisor will not reflect changes in circumstances after the date of the fairness opinion.
Sandler O’Neill, Peoples’ financial advisor in connection with the merger, has delivered to the board of directors of Peoples its opinion dated August 5, 2014. The opinion of Sandler O’Neill states that as of the date of
such opinion, and based upon and subject to the factors and assumptions set forth therein, the merger consideration to be paid to the holdersmore thantwo-thirds of the outstanding shares of PeoplesMNB common stock pursuanthave already committed to the agreement and plan of merger was fair from a financial point of view to such holders. The opinion does not reflect changes that may occur or may have occurred after the date of such opinion, including changes to the operations and prospects of Peoples or Independent, changesvote in general market and economic conditions or regulatory or other factors. Any such changes, or changes in other factors on which the opinion is based, may materially alter or affect the conclusion reached in such opinion.
Peoples will be subject to business uncertainties and contractual restrictions while the merger is pending.
Uncertainty about the effectfavor of the merger, on employees and customers may have an adverse effect on Peoples and consequently on Independent. These uncertainties may impair Peoples’ ability to attract, retain and motivate key personnel until the merger is consummated, and could cause customers and others that deal with Peoples to seek to change existing business relationships with Peoples. Retention of certain employees may be challenging during the pendencyabsent a breach of the merger, as certain employees may experience uncertainty about their future roles with Independent. If key employees depart because of issues relating tovoting agreements, the uncertainty and difficulty of integration or a desire not to remain with Independent, Independent’s business following the merger could be harmed. In addition, the merger agreement restricts Peoples from making certain acquisitions and taking other specified actions until the merger occurs without the consent of Independent. These restrictions may prevent Peoples from pursuing attractive business opportunities that may arise prior to the completion of the merger. Please see the section entitled “The Merger Agreement – Conduct of Business Pending the Merger” of this proxy statement/prospectus for a description of the restrictive covenants to which Peoples is subject.
Independent may fail to realize all of the anticipated benefits of the merger, particularly if the integration of Independent’s and Peoples’ businesses is more difficult than expected.
The success of the merger will depend, in part, on our ability to successfully combine the businesses of Independent and Peoples. Independent may fail to realize some or all of the anticipated benefits of the transaction if the integration process takes longer than expected or is more costly than expected. Furthermore, any number of unanticipated adverse occurrences for either the business of Peoples or Independent may cause us to fail to realize some or all of the expected benefits. The integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger. Each of these issues might adversely affect Independent, Peoples, or both during the transition period, resulting in adverse effects on Independent following the merger. As a result, revenues may be lower than expected or costs may be higher than expected and the overall benefits of the merger may not be as great as anticipated.
The market price of Independent common stock after the merger may be affected by factors different from those affecting Independent common stock or Peoples common stock currently.
The businesses of Independent and Peoples differ in some respects and, accordingly, the results of operations of the combined company and the market price of Independent’s shares of common stock after the merger may be affected by factors different from those currently affecting the results of operations of each of Independent or Peoples. For a discussion of the businesses of Independent and Peoples and of certain factors to consider in connection with those businesses, see the documents incorporated by reference into this proxy statement/prospectus and referred to under “Where You Can Find More Information” and “Incorporation of Certain Documents by Reference” beginning on page 95 and the information regarding Peoples set forth under “The Companies – Peoples” beginning on page 84.
Some of the directors and executive officers of Peoples may have interests and arrangements that may have influenced their decisions to support or recommend that you approve the merger.
The interests of some of the directors and executive officers of Peoples may be different from those of Peoples’ stockholders, and certain directors and officers of Peoples may be participants in arrangements that are different from, or are in addition to, those of Peoples’ stockholders, including the acceleration of awards under equity plans, agreements in settlement of obligations to such directors and officers under pre-existing employment agreements. These interests are described in more detail in the section of this proxy statement/prospectus entitled “The Merger – Interests of Peoples’ Executive Officers and Directors in the Merger” beginning on page 58.
A lawsuit has been filed against Peoples, Peoples Federal Savings Bank, Peoples’ directors, Independent, and Rockland Trust Company alleging breaches of fiduciary duty in connection with the sale of Peoples to Independent. The lawsuit may prevent the merger from being completed or from being completed in a timely manner.
On October 14, 2014 Richard Morris, an individual who alleges himself to be a Peoples stockholder, filed a purported class action lawsuit in Maryland state court which named Peoples, Peoples Federal Savings Bank, Peoples’ directors, Independent, and Rockland Trust Company as defendants. The purported class action lawsuit, which was pending as of the date of this filing, alleges breaches of fiduciary duty in connection with the sale of Peoples to Independent and seeks, among other things, class action certification, court orders prohibiting a Peoples stockholder vote regarding the merger and completion of the merger, and other equitable and monetary relief. Peoples, Peoples Federal Savings Bank, Independent, Rockland Trust Company, and the individual defendants each believe that the case is a typical, meritless “shareholder strike” suit, that the claims made are without merit, and intend to defend the case vigorously. See “The Merger — Litigation Relating to the Merger” beginning on page 63 for more information.
One of the conditions to the closingapproval of the merger is that no judgment, order, injunction or decree issuedassured.
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| Q. | How may MNB’s shareholders vote their shares for the special meeting proposals presented in this proxy statement/prospectus? |
| A. | MNB’s shareholders may submit their proxies by a court or agency of competent jurisdiction or other legal restraint or prohibition preventingsigning and dating the consummation of the merger shall be in effect. If the plaintiff obtains a court order the merger may not occur in a timely manner or be prevented.The merger agreement limits Peoples’ ability to pursue alternatives to the merger.
The merger agreement contains provisions that limit Peoples’ ability to solicit, initiate, encourage or take any actions to facilitate competing third-party proposals to acquire all or substantially all of Peoples. These provisions, which include a $5.3 million termination fee payable under certain circumstances, might discourage a potential competing acquiror that might have an interest in acquiring all or substantially all of Peoples from considering or proposing that acquisition even ifenclosed proxy card and mailing it were prepared to pay consideration with a higher per share market price than that proposed in the merger,enclosed, prepaid and addressed envelope.
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Proxies must be received by [●], 2018. | Q. | Will a broker or might resultbank holding shares in a potential competing acquiror proposing to pay a lower per share price to acquire Peoples than it might otherwise have proposed to pay.“street name” for an MNB shareholder vote those shares for the shareholder at the MNB special meeting? |
Regulatory approvals may not be received, may take longer than expected| A. | No. A broker or impose conditions that are not presently anticipated.Before the merger may be completed, certain approvals or consents must be obtained from the various bank regulatory and other authorities in the United States and the Commonwealth of Massachusetts. These governmental entities, including the Federal Reserve Board, the FDIC, the Board of Bank Incorporation of the Commonwealth of Massachusetts, and the Massachusetts Division of Banks, may impose conditions on the completion of the merger or require changes to the terms of the merger. While Independent and Peoples do not currently expect that any such conditions or changes would be imposed, there can be no assurance that they will not be and such conditionsable to vote your shares at the special meeting without first receiving instructions from you on how to vote. If your shares are held in “street name,” you will receive separate voting instructions, provided by your broker or changes could have the effect of delaying completionbank, with your proxy materials. It is therefore important that you provide timely instructions to your broker or bank to ensure that all of the merger or imposing additional costs on or limitingMNB common stock you own is voted at the revenues of Independent following the merger, any of which might have aspecial meeting.
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material adverse effect on Independent following the merger. Independent is not obligated
| Q. | Will MNB’s shareholders be able to complete the merger if the regulatory approvals received in connection with the completion of the merger include any conditions or restrictions that would constitute a “Burdensome Condition” as defined in the merger agreement.There can be no assurance as to whether the regulatory approvals will be received or the timing of the approvals. For more information, see the section entitled “The Merger – Regulatory Approvals Required to Complete the Merger” of this proxy statement/prospectus beginning on page 56.
Peoples’ stockholders who make elections may be unable to sellvote their shares in person at the market pending the merger.MNB special meeting?
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Peoples’ stockholders may elect to receive cash, stock or mixed consideration in the merger by completing an election form that will be sent under separate cover. Making an election will require that stockholders turn in their Peoples stock certificates. This means that during the time between when the election is made and the date the merger is completed, Peoples’ stockholders will be unable to sell their Peoples common stock. If the merger is unexpectedly delayed, this period could extend for
| A. | Yes. Submitting a significant period of time. Peoples’ stockholders can shorten the period during which they cannot sell their shares by delivering their election shortly before the election deadline. However, elections received after the election deadlineproxy will not be accepted or honored.affect the right of any MNB shareholder to vote in person at the special meeting of shareholders. If an MNB shareholder holds shares in “street name,” the merger is not consummated by April 30, 2015, either Independent or Peoples may choose not to proceed with the merger. Either Independent or Peoples may terminate the merger agreement if the merger has not been completed by April 30, 2015, unless the failure of the merger to be completed has resultedshareholder must request a proxy from the failure of the party seekingshareholder’s broker or bank in order to terminate the merger agreement to perform its obligations.
Thevote those shares of Independent common stock to be received by Peoples’ stockholders as a result of the merger will have different rights from the shares of Peoples common stock.
The rights associated with Peoples common stock are different from the rights associated with Independent common stock. See the section of this proxy statement/prospectus entitled “Comparison of Rights of Stockholders of Peoples and Independent” beginning on page 87 for a discussion of the different rights associated with Independent common stock.
Failure to complete the merger could negatively impact the stock prices and future businesses and financial results of Peoples and Independent.
If the merger is not completed, the ongoing businesses of Peoples and Independent may be adversely affected and Peoples and Independent will be subject to several risks, including the following:
Peoples may be required, under certain circumstances, to pay Independent a termination fee of $5.3 million under the merger agreement;
Peoples and Independent will each be required to pay certain costs relating to the merger, whether or not the merger is completed, such as legal, accounting, financial advisor and printing fees;
under the merger agreement, Peoples is subject to certain restrictions on the conduct of its business prior to completing the merger which may adversely affect its ability to execute certain of its business strategies; and
matters relating to the merger may require substantial commitments of time and resources by Peoples’ and Independent’s management, which could otherwise have been devoted to other opportunities that may have been beneficial to Peoples and Independent as independent companies, as the case may be.
In addition, if the merger is not completed, Peoples and/or Independent may experience negative reactions from the financial markets and from their respective customers and employees. Peoples and/or Independent also could be subject to litigation related to any failure to complete the merger or to enforcement proceedings commenced against Peoples and/or Independent to perform their respective obligations under the merger agreement. If the merger is not completed, Peoples and Independent cannot assure their stockholders that the risks described above will not materialize and will not materially affect the business, financial results and stock prices of Peoples and/or Independent.
Risks Related to Independent’s Business
Changes in interest rates could adversely impact Independent’s financial condition and results of operations.
Independent’s ability to make a profit, like that of most financial institutions, substantially depends upon its net interest income, which is the difference between the interest income earned on interest earning assets, such as loans and investment securities, and the interest expense paid on interest-bearing liabilities, such as deposits and borrowings. However, certain assets and liabilities may react differently to changes in market interest rates. Further, interest rates on some types of assets and liabilities may fluctuate prior to changes in broader market interest rates, while rates on other types of assets may lag behind. Additionally, some assets such as adjustable-rate mortgages have features, such as rate caps and floors, which restrict changes in their interest rates.
Factors such as inflation, recession, unemployment, money supply, global disorder, instability in domestic and foreign financial markets, and other factors beyond Independent’s control, may affect interest rates. Changes in market interest rates will also affect the level of voluntary prepayments on loans and the receipt of payments on mortgage-backed securities, resulting in the receipt of proceeds that may have to be reinvested at a lower rate than the loan or mortgage-backed security being prepaid.
The state of the financial and credit markets, and potential sovereign debt defaults may severely impact the global and domestic economies and may lead to a significantly tighter environment in terms of liquidity and availability of credit. Economic growth may slow down and the national economy may experience additional recession periods. Market disruption, government and central bank policy actions intended to counteract the effects of recession, changes in investor expectations regarding compensation for market risk, credit risk and liquidity risk and changing economic data could continue to have dramatic effects on both the volatility of and the magnitude of the directional movements of interest rates. Although Independent pursues an asset/liability management strategy designed to control its risk from changes in interest rates, changes in market interest rates can have a material adverse effect on the Independent’s profitability.
A further deterioration of the credit rating for U.S. long-term sovereign debt could adversely impact Independent.
On August 5, 2011, Standard and Poor’s downgraded the U.S. long-term sovereign debt from AAA, the highest rating, to AA+, the second highest rating. This downgrade did not directly impact the financial position or outlook for Independent, but a further downgrade as a result of an inability by the federal government to raise the U.S. debt limit or otherwise could result in a re-evaluation of the ‘risk-free’ rate used in many accounting models, other-than-temporary-impairment of securities and/or impairment of goodwill and other intangibles. Given that future deterioration in the United States credit and financial markets is a possibility, no assurance can be made that losses or significant deterioration in the fair value of Independent’s U.S. government issued or guaranteed investments will not occur.
If Independent has higher than anticipated loan losses than it has modeled, its earnings could materially decrease.
Independent’s loan customers may not repay loans according to their terms, and the collateral securing the payment of loans may be insufficient to assure repayment. Independent may therefore experience significant credit losses which could have a material adverse effect on its operating results and capital ratios. Independent
makes various assumptions and judgments about the collectability of its loan portfolio, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans. In determining the amount of the allowance for loan losses, Independent relies on its experience and its evaluation of economic conditions. If its assumptions prove to be incorrect, its current allowance for loan losses may not be sufficient to cover losses inherent in its loan portfolio and an adjustment may be necessary to allow for different economic conditions or adverse developments in its loan portfolio. Consequently, a problem with one or more loans could require Independent to significantly increase the level of its provision for loan losses. In addition, federal and state regulators periodically review Independent’s allowance for loan losses and may require it to increase its provision for loan losses or recognize further loan charge-offs. Material additions to the allowance would materially decrease Independent’s net income.
A significant amount of Independent’s loans are concentrated in Rockland Trust’s geographic footprint and adverse conditions in this area could negatively impact its operations.
Substantially all of the loans Independent originates are secured by properties located in, or are made to businesses which operate in Massachusetts, and to a lesser extent Rhode Island. Because of the current concentration of Independent’s loan origination activities in its geographic footprint, in the event of adverse economic conditions, including, but not limited to, increased unemployment, downward pressure on the value of residential and commercial real estate, political or business developments, that may affect the ability of property owners and businesses to make payments of principal and interest on the underlying loans in Rockland Trust’s geographic footprint. Independent would likely experience higher rates of loss and delinquency on its loans than if its loans were more geographically diversified, which could have an adverse effect on its results of operations or financial condition.
Independent operates in a highly regulated environment and may be adversely impacted by changes in law, regulations, and accounting policies.
Independent is subject to extensive regulation, supervision and examination. Any change in the laws or regulations and failure by Independent to comply with applicable law and regulation, or a change in regulators’ supervisory policies or examination procedures, whether by the Massachusetts Commissioner of Banks, the FDIC, the Federal Reserve Board, other state or federal regulators, the United States Congress, or the Massachusetts legislature could have a material adverse effect on Independent’s business, financial condition, results of operations, and cash flows. Changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters, could also negatively impact Independent’s financial results.
The Dodd-Frank Act has had and will continue to have a significant impact on the regulatory structure of the financial markets and will impose additional costs on Independent.
The Dodd-Frank Act could adversely affect certain of Independent’s business operations and competitive position. The Dodd-Frank Act, among other things, establishes a new Financial Stability Oversight Council to monitor systemic risk posed by financial institutions, restricts proprietary trading and private fund investment activities by banking institutions, creates a new framework for the regulation of derivatives and revises the FDIC’s assessment base for deposit insurance. Provisions in the Dodd-Frank Act may also restrict the flexibility of financial institutions to compensate their employees. In addition, provisions in the Dodd-Frank Act have resulted in changes to existing capital rules, which could have an adverse effect on Independent’s business operations, capital structure, capital ratios or financial performance. The final effects of the Dodd-Frank Act on Independent’s business will depend largely on the implementation of the Dodd-Frank Act by regulatory bodies and the exercise of discretion by these regulatory bodies.
The short-term and long-term impact of the changing regulatory capital requirements and new capital rules is unknown.
In 2013, the FDIC, the OCC and the Federal Reserve Board approved a new rule that will substantially amend the regulatory risk-based capital rules applicable to Independent. The final rule implements the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act. The application of more stringent capital requirements for Independent could, among other things, result in lower returns on equity, require the raising of additional capital, and result in regulatory actions such as a prohibition on the payment of dividends or on the repurchase shares if we were unable to comply with such requirements. The new rule will be effective on January 1, 2015.
Independent has strong competition within its market area which may limit Independent’s growth and profitability.
Independent faces significant competition both in attracting deposits and in the origination of loans. Additional mergers and acquisitions of financial institutions within Independent’s market area may also occur given the current difficult banking environment and add more competitive pressure. If Independent is unable to compete effectively, it may lose market share and income generated from loans, deposits, and other financial products may decline.
The success of Independent is dependent on hiring and retaining certain key personnel.
Independent’s performance is largely dependent on the talents and efforts of highly skilled individuals. Independent relies on key personnel to manage and operate its business, including major revenue generating functions such as loan and deposit generation. The loss of key staff may adversely affect Independent’s ability to maintain and manage these functions effectively, which could negatively affect Independent’s revenues. In addition, loss of key personnel could result in increased recruiting and hiring expenses, which could cause a decrease in Independent’s net income. Independent’s continued ability to compete effectively depends on its ability to attract new employees and to retain and motivate its existing employees.
Independent’s business strategy of growth in part through acquisitions could have an impact on its earnings and results of operations that may negatively impact the value of Independent’s stock.
In recent years, Independent has focused, in part, on growth through acquisitions. From time to time in the ordinary course of business, Independent engages in preliminary discussions with potential acquisition targets. The consummation of any future acquisitions may dilute stockholder value. Although Independent’s business strategy emphasizes organic expansion combined with acquisitions, there can be no assurance that, in the future, Independent will successfully identify suitable acquisition candidates, complete acquisitions, and successfully integrate acquired operations into our existing operations or expand into new markets. There can be no assurance that acquisitions will not have an adverse effect upon Independent’s operating results while the operations of the acquired business are being integrated into the Independent’s operations. In addition, once integrated, acquired operations may not achieve levels of profitability comparable to those achieved by Independent’s existing operations, or otherwise perform as expected. Further, transaction-related expenses may adversely affect Independent’s earnings. These adverse effects on Independent’s earnings and results of operations may have a negative impact on the value of Independent’s stock.
Difficult market conditions have adversely affected the industry in which Independent operates.
In recent years, dramatic declines in the housing market, with falling real estate values and increasing foreclosures, unemployment, and under-employment negatively impacted the credit performance of mortgage loans and resulted in significant write-downs of asset values by financial institutions, including government-sponsored entities as well as major commercial and investment banks. These write-downs, initially of mortgage-backed securities but spreading to credit default swaps and other derivative and cash securities, in turn, caused
many financial institutions to seek additional capital, to merge with larger and stronger institutions and, in some cases, to fail. Reflecting concern about the stability of the financial markets generally and the strength of counterparties, many lenders and institutional investors reduced or ceased providing funding to borrowers, including to other financial institutions. This market turmoil and tightening of credit led to an increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility and widespread reduction of business activity generally. A resumption of economic pressure on consumers and lack of confidence in the financial markets could materially affect Independent’s business, financial condition and results of operations. A worsening of these conditions would likely have adverse effects on Independent and others in the financial services industry. In particular, Independent may face the following risks in connection with these events:
Independent could face increased regulation of its industry. Compliance with such regulation may increase its costs and limit its ability to pursue business opportunities.
Market developments may affect customer confidence levels and may cause increases in loan delinquencies and default rates, which Independent expects could impact its loan charge-offs and provision for loan losses.
Deterioration or defaults made by issuers of the underlying collateral of Independent’s investment securities may cause credit related other-than-temporary impairment charges to Independent’s income statement.
Independent’s ability to borrow from other financial institutions or to access the debt or equity capital markets on favorable terms or at all could be adversely affected by further disruptions in the capital markets or other events, including actions by rating agencies and deteriorating investor expectations.
Competition in the industry could intensify as a result of the increasing consolidation of financial services companies in connection with adverse market conditions.
Independent could be required to pay significantly higher FDIC premiums if market developments significantly deplete the insurance fund of the FDIC and reduce the ratio of reserves to insured deposits.
It may become necessary or advisable for Independent, due to changes in regulatory requirements, change in market conditions, or for other reasons, to hold more capital or to alter the forms of capital it currently maintains.
Independent’s securities portfolio performance in difficult market conditions could have adverse effects on Independent’s results of operations.
Under Generally Accepted Accounting Principles, Independent is required to review Independent’s investment portfolio periodically for the presence of other-than-temporary impairment of its securities, taking into consideration current market conditions, the extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, current analysts’ evaluations, Independent’s ability and intent to hold investments until a recovery of fair value, as well as other factors. Adverse developments with respect to one or more of the foregoing factors may require Independent to deem particular securities to be other-than-temporarily impaired, with the credit related portion of the reduction in the value recognized as a charge to Independent’s earnings. Recent market volatility has made it extremely difficult to value certain of Independent’s securities. Subsequent valuations, in light of factors prevailing at that time, may result in significant changes in the values of these securities in future periods. Any of these factors could require Independent to recognize further impairments in the value of Independent’s securities portfolio, which may have an adverse effect on Independent’s results of operations in future periods.
Impairment of goodwill and/or intangible assets could require charges to earnings, which could result in a negative impact on our results of operations.
Goodwill arises when a business is purchased for an amount greater than the net fair value of its assets. Independent has recognized goodwill as an asset on the balance sheet in connection with several acquisitions. When an intangible asset is determined to have an indefinite useful life, it is not amortized, and instead is evaluated for impairment. Goodwill is subject to impairment tests annually, or more frequently if necessary, and is evaluated using a two-step impairment approach. A significant and sustained decline in Independent’s stock price and market capitalization, a significant decline in Independent’s expected future cash flows, a significant adverse change in the business climate, slower growth rates or other factors could result in impairment of goodwill or other intangible assets. If Independent were to conclude that a future write-down of the goodwill or intangible assets is necessary, then Independent would record the appropriate charge to earnings, which could be materially adverse to the results of operations and financial position.
Deterioration in the Federal Home Loan Bank (“FHLB”) of Boston’s capital might restrict the FHLB of Boston’s ability to meet the funding needs of its members, cause a suspension of its dividend, and cause its stock to be determined to be impaired.
Significant components of Rockland Trust’s liquidity needs are met through its access to funding pursuant to its membership in the FHLB of Boston. The FHLB is a cooperative that provides services to its member banking institutions. The primary reason for joining the FHLB is to obtain funding from the FHLB of Boston. The purchase of stock in the FHLB is a requirement for a member to gain access to funding. Any deterioration in the FHLB’s performance may affect Independent’s access to funding and/or require Independent to deem the required investment in FHLB stock to be impaired.
Reductions in the value of Independent’s deferred tax assets could affect earnings adversely.
A deferred tax asset is created by the tax effect of the differences between an asset’s book value and its tax basis. Independent assesses the deferred tax assets periodically to determine the likelihood of Independent’s ability to realize their benefits. These assessments consider the performance of the associated business and its ability to generate future taxable income. If the information available to Independentperson at the time of assessment indicates there is a greater than 50% chance that Independent will not realize the deferred tax asset benefit, Independent is required to establish a valuation allowance for it and reduce its future tax assets to the amount Independent believes could be realized in future tax returns. Recording such a valuation allowance could have a material adverse effect on the results of operations or financial position. Additionally, the deferred tax asset is measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. Accordingly, a change in enacted tax rates may result in a decrease/increase to Independent’s deferred tax asset.
Independent willspecial meeting.
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| Q. | What do MNB’s shareholders need to keep pace with evolving information technologydo now? |
| A. | After carefully reading and guard against and react to increased cyber security risks and electronic fraud.The potential need to adapt to changes in information technology could adversely impact Independent’s operations and require increased capital spending. The risk of electronic fraudulent activity withinconsidering the financial services industry, especially in the commercial banking sector due to cyber criminals targeting bank accounts and other customer information, could adversely impact Independent’s operations, damage its reputation and require increased capital spending.
Independent’s business depends on maintaining the trust and confidence of customers and other market participants, and the resulting good reputation is critical to its business.
Independent’s ability to originate and maintain accounts is highly dependent upon the perceptions of consumer and commercial borrowers and deposit holders and other external perceptions of Independent’s business practices or financial health. Independent’s reputation is vulnerable to many threats that can be difficult
or impossible to control, and costly or impossible to remediate. Regulatory inquiries, employee misconduct and rumors, among other things, can substantially damage Independent’s reputation, even if they are baseless or satisfactorily addressed. Adverse perceptions regarding Independent’s reputation in the consumer, commercial and funding markets could lead to difficulties in generating and maintaining accounts as well as in financing them and to decreases in the levels of deposits that consumer and commercial customers and potential customers choose to maintain with Independent, any of which could have a material adverse effect on Independent’s business and financial results.
If Independent’s risk management framework does not effectively identify or mitigate Independent’s risks, Independent could suffer unexpected losses and could be materially adversely affected.
Independent’s risk management framework seeks to mitigate risk and appropriately balance risk and return. Independent has established processes and procedures intended to identify, measure, monitor and report the types of risk to which its subject, including credit risk, operations risk, compliance risk, reputation risk, strategic risk, market risk and liquidity risk. Independent seeks to monitor and control its risk exposure through a framework of policies, procedures and reporting requirements. Management of Independent’s risks in some cases depends upon the use of analytical and/or forecasting models. If the models used to mitigate these risks are inadequate, Independent may incur losses. In addition, there may be risks that exist, or that develop in the future, that Independent has not appropriately anticipated, identified or mitigated. If Independent’s risk management framework does not effectively identify or mitigate its risks, Independent could suffer unexpected losses and could be materially adversely affected.
A significant portion of Independent’s loan portfolio is secured by real estate, and events that negatively impact the real estate market could adversely affect Independent’s asset quality and profitability for those loans secured by real property and increase the number of defaults and the level of losses within Independent’s loan portfolio.
The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and could deteriorate in value during the time the credit is extended. A downturn in the real estate market in Independent’s primary market areas could result in an increase in the number of borrowers who default on their loans and a reduction in the value of the collateral securing their loans, which in turn could have an adverse effect on Independent’s profitability and asset quality. If Independent is required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, its earnings and stockholders’ equity could be adversely affected. The declines in real estate prices in Independent’s markets also may result in increases in delinquencies and losses in its loan portfolios. Unexpected decreases in real estate prices coupled with a prolonged economic recovery and elevated levels of unemployment could drive losses beyond that which is provided for in Independent’s allowance for loan losses. In that event, Independent’s earnings could be adversely affected.
Changes in accounting policies or accounting standards could cause Independent to change the manner in which it reports its financial results and condition in adverse ways and could subject Independent to additional costs and expenses.
Independent’s accounting policies are fundamental to understanding its financial results and condition. Some of these policies require the use of estimates and assumptions that may affect the value of Independent’s assets or liabilities and financial results. Independent identified its accounting policies regarding the allowance for loan losses, security valuations and impairments, goodwill and other intangible assets, and income taxes to be critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain. Under each of these policies, it is possible that materially different amounts would be reported under different conditions, using different assumptions, or as new information becomes available.
From time to time, the FASB and the SEC change their guidance governing the form and content of Independent’s external financial statements. In addition, accounting standard setters and those who interpret U.S. GAAP, such as the FASB, SEC, banking regulators and Independent’s independent registered public accounting firm, may change or even reverse their previous interpretations or positions on how these standards should be applied. Such changes are expected to continue, and may accelerate dependent upon the FASB and International Accounting Standards Board commitments to achieving convergence between U.S. GAAP and International Financial Reporting Standards. Changes in U.S. GAAP and changes in current interpretations are beyond Independent’s control, can be hard to predict and could materially impact how Independent reports its financial results and condition. In certain cases, Independent could be required to apply new or revised guidance retroactively or apply existing guidance differently (also retroactively) which may result in Independent restating prior period financial statements for material amounts. Additionally, significant changes to U.S. GAAP may require costly technology changes, additional training and personnel, and other expenses that will negatively impact Independent’s results of operations.
Independent may be unable to adequately manage its liquidity risk, which could affect its ability to meet its obligations as they become due, capitalize on growth opportunities, or pay regular dividends on its common stock.
Liquidity risk is the potential that Independent will be unable to meet its obligations as they come due, capitalize on growth opportunities as they arise, or pay regular dividends on its common stock because of an inability to liquidate assets or obtain adequate funding in a timely basis, at a reasonable cost and within acceptable risk tolerances. Liquidity is required to fund various obligations, including credit commitments to borrowers, mortgage and other loan originations, withdrawals by depositors, repayment of borrowings, dividends to stockholders, operating expenses and capital expenditures. Liquidity is derived primarily from retail deposit growth and retention; principal and interest payments on loans; principal and interest payments on investment securities; sale, maturity and prepayment of investment securities; net cash provided from operations, and access to other funding sources.
Independent is subject to environmental liability risk associated with lending activities which could have a material adverse effect on its financial condition and results of operations.
A significant portion of Independent’s loan portfolio is secured by real property. During the ordinary course of business, Independent may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, Independent may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require Independent to incur substantial expenses and may materially reduce the affected property’s value or limit Independent’s ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase Independent’s exposure to environmental liability. Although Independent has policies and procedures to perform an environmental review prior to originating certain commercial real estate loans, as well as before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on Independent’s financial condition and results of operations.
FORWARD-LOOKING STATEMENTS
This document contains or incorporates by reference a number of forward-looking statements regarding the financial condition, results of operations, earnings outlook, and business prospects of Independent, Peoples, and the potential combined company and may include statements for the period following the completion of the merger. You can find many of these statements by looking for words such as “expects,” “projects,” “anticipates,” “believes,” “intends,” “estimates,” “strategy,” “plan,” “potential,” “possible,” and other similar expressions.
The forward-looking statements involve certain assumptions, risks, and uncertainties. In particular, the ability of either Independent or Peoples to predict results or actual effects of its plans and strategies, or those of the combined company, is inherently uncertain. Accordingly, actual results may differ materially from those expressed in, or implied by, the forward-looking statements. You therefore are cautioned not to place undue reliance on these statements, which speak only as of the date of this document or the date of any document incorporated by reference in this document. Some of the factors that may cause actual results or earnings to differ materially from those contemplated by the forward-looking statements include, but are not limited to, those discussed elsewhere in this proxy statement/prospectus under “Risk Factors” and those discussed in the filings of Independent that are incorporated herein by reference, as well as the following:
those risks and uncertainties Independent and Peoples discuss or identify in their public filings with the SEC;
the risk that the businesses of Independent and Peoples will not be integrated successfully or such integration may be more difficult, time-consuming, or costly than expected;
expected revenue synergies and cost savings from the merger may not be fully realized or realized within the expected time frame;
revenues following the merger may be lower than expected;
competitive pressure among financial services companies may increase significantly;
general economic or business conditions, either nationally, regionally, or in the markets in which Independent and Peoples do business, may be less favorable than expected;
changes in the interest rate environment may reduce interest margins and impact funding sources;
changes in both companies’ businesses during the period between now and the completion of the merger may have adverse impacts on the combined company;
changes in market rates and prices may adversely impact the value of financial products and assets;
deterioration in the credit markets may adversely impact either company or its business;
legislation or regulatory environments, requirements, or changes, including changes in accounting methods, may adversely affect businesses in which either company is engaged;
litigation liabilities, including costs, expenses, settlements and judgments, may adversely affect either company or its businesses;
deposit attrition, operating costs, customer loss and business disruption following the merger, including difficulties in maintaining relationships with employees, may be greater than expected; and
the ability to obtain timely governmental approvals of the merger without the imposition of any conditions that would adversely affect the potential combined company.
These forward-looking statements are subject to assumptions, risks and uncertainties, and actual results may differ materially from those expressed or implied by these forward-looking statements.
All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this document and attributable to Independent or Peoples or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, Independent and Peoples undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL INFORMATION
Comparative Per Share Market Price Information
Independent common stock trades on the NASDAQ Global Select Market under the symbol “INDB” and Peoples common stock trades on the NASDAQ Capital Market under the symbol “PEOP.” The following presents the closing sale prices of Independent common stock and Peoples common stock on August 5, 2014, the last trading day before we announced the merger agreement, and October 15, 2014, the last practicable trading day prior to mailing this document. The table also represents the equivalent value of the stock consideration to be paid in the merger per share of Peoples common stock on those dates, calculated by multiplying the closing price of Independent common stock on those dates by an exchange ratio of 0.5523, which represents the number of shares of Independent common stock that Peoples’ stockholders will receive in the merger for each share of Peoples common stock using such exchange ratio.
| | | | | | | | | | | | | | | | | Date | | Independent
Closing
Price | | | Peoples
Closing
Price | | | Exchange
Ratio | | | Equivalent
Per Share
Value | | August 5, 2014 | | $ | 36.31 | | | $ | 18.16 | | | | 0.5523 | | | $ | 20.05 | | October 15, 2014 | | $ | 36.40 | | | $ | 19.98 | | | | 0.5523 | | | $ | 20.10 | |
The above table shows only historical comparisons. These comparisons may not provide meaningful information to Peoples’ stockholders in determining whether to approve the merger agreement. Peoples’ stockholders are urged to obtain current market quotations for Independent and Peoples common stock and to review carefully the other information contained in this proxy statement/prospectus, MNB’s shareholders are requested to complete and return their proxies as soon as possible. The proxy card will instruct the persons named on the proxy card to vote the shareholder’s shares of MNB common stock at the special meeting as the shareholder directs. If a shareholder signs, dates and sends in a proxy card and does not indicate how the shareholder wishes to vote, the proxy will be voted “FOR” both of the special meeting proposals.
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| Q. | May an MNB shareholder change its vote after submitting a proxy? |
| A. | Yes. An MNB shareholder may change a vote at any time before the shareholder’s proxy is voted at the MNB special meeting. A proxy may be revoked by executing a later-dated proxy card, or incorporated by reference intoattending the special meeting and voting in person. A shareholder executing a proxy card may also revoke the proxy at any time before it is voted by giving written notice revoking the proxy to MNB’s Corporate Secretary, by subsequently filing another proxy card bearing a later date or by attending the special meeting and voting in person. Attending the special meeting will not automatically revoke a shareholder’s prior submission of a proxy. All written notices of revocation or other communications with respect to revocation of proxies should be addressed to: |
MNB Bancorp 300 East Main Street Milford, Massachusetts 01757 (508)634-4100 Attention: Kathrine Baldwin, Corporate Secretary | Q. | If I am an MNB shareholder, who can help answer my questions? |
| A. | If you have any questions about the merger or the special meeting, or if you need additional copies of this proxy statement/prospectus in considering whether to approveor the merger agreement. Seeenclosed proxy card, you should contactDaniel R. Devine, Senior Vice President and Chief Financial Officer, at the following address or phone number: |
MNB Bancorp 300 East Main Street (508)244-5140 | Q. | Where can I find more information about the companies? |
| A. | You can find more information about Independent and MNB from the various sources described under the section entitledof this document titled “Where You Can Find More Information” beginning on page 95[●]. |
SUMMARY This summary highlights selected information from this document and may not contain all of the information that is important to you. You should carefully read this entire document and all other documents to which this document refers to fully understand the merger and the related transactions. See “Where You Can Find More Information” beginning on page [●] of this document. Most items in this summary include a page reference directing you to a more complete description of those items. Unless the context otherwise requires, throughout this document, “Independent” refers to Independent Bank Corp., “MNB” refers to MNB Bancorp, “Rockland Trust” refers to Rockland Trust Company, and “Milford National” refers to The Milford National Bank and Trust Company; and “we,” “us” and “our” refers to Independent and MNB. Also, we refer to the merger between Independent and MNB as the “merger,” and the Agreement and Plan of Merger, dated as of May 29, 2018, by and among Independent, Rockland Trust, MNB, and Milford National as the “merger agreement.” The Companies (see page [●]) Independent Independent is a state chartered bank holding company headquartered in Rockland, Massachusetts that was incorporated under Massachusetts law in 1985. Independent is the sole shareholder of Rockland Trust, a Massachusetts trust company chartered in 1907. Through its subsidiary, Rockland Trust, Independent offers a full range of banking services through a network of approximately 100 retail branches, commercial and residential lending centers, and investment management offices in eastern Massachusetts, including Greater Boston, the South Shore, Cape Cod and Martha’s Vineyard, and Providence, Rhode Island. Rockland Trust provides investment management and trust services to individuals, institutions, small businesses, and charitable institutions throughout eastern Massachusetts and Rhode Island. At March 31, 2018, Independent had total consolidated assets of approximately $8.1 billion, net loans of approximately $6.3 billion, total deposits of approximately $6.8 billion, and total shareholders’ equity of approximately $956.1 million. Independent Bank Corp. 288 Union Street Rockland, Massachusetts 02370 (781)878-6100 MNB MNB was incorporated under Massachusetts law in 1998 to become the holding company of Milford National, a national bank chartered by the Office of the Comptroller of the Currency in 1849. Headquartered in Milford, Massachusetts, MNB operates its business from three banking offices in Worcester County, Massachusetts: two of which are located in Milford, Massachusetts and one of which is located in Mendon, Massachusetts. MNB, through Milford National, provides a variety of financial services to individuals and small businesses primarily in the form of various deposit products, residential and commercial mortgages, and commercial loans and lines of credit. At March 31, 2018, MNB had total consolidated assets of $365.3 million, net loans of $304 million, total deposits of $300.8 million, and total shareholders’ equity of $27.2 million. MNB Bancorp 300 East Main Street Milford, Massachusetts 01757 (508)634-4100 The Merger and the Merger Agreement (see pages [●] and [●]) The terms and conditions of the merger are contained in the merger agreement, which is attached asAnnex A to this proxy statement/prospectus. Please carefully read the merger agreement, as it is the legal document that governs the merger. Under the terms of the merger agreement, MNB will merge with and into Independent and Independent will survive the merger. Special Meeting of MNB’s Shareholders; Required Vote (see page [●]) MNB will hold a special meeting of shareholders at [●], located at [●] on [●], 2018 at [●], local time. MNB’s shareholders will be asked to: approve the merger agreement and the transactions it contemplates, including the merger; and authorize the board of directors of MNB to adjourn or postpone the special meeting, if necessary, to permit further solicitation of proxies in favor of the MNB merger agreement proposal or to vote on other matters properly before the special meeting. You can vote at the MNB special meeting if you owned MNB common stock at the close of business on [●], 2018. On that date, there were [●] shares of MNB common stock entitled to vote, approximately [●]% of which were beneficially owned and entitled to be voted by MNB directors and the spouse of Kevin P. Meehan, Chairman of the Board of MNB. You can cast one vote for each share of MNB common stock you owned on that date. In order to approve the merger agreement and the transactions it contemplates, the holders of at leasttwo-thirds of the shares of MNB common stock entitled to vote must vote in favor of the MNB merger agreement proposal. What Holders of MNB Common Stock Will Receive in the Merger (see page [●]) Upon completion of the merger, each share of MNB common stock will be converted into the right to receive at the election of the holder either (i) $275.00 in cash or (ii) 3.55 shares of Independent common stock. MNB’s shareholders will be able to elect to receive cash, Independent common stock, or a combination of cash and Independent common stock for their shares of MNB common stock. Regardless of an MNB shareholder’s choice, however, elections will be limited by the requirement that 75% of MNB common stock be converted into Independent common stock and 25% of MNB common stock be exchanged for cash. Therefore, the allocation of cash and Independent common stock that an MNB shareholder will receive will depend on the elections of other MNB shareholders. The allocation of the consideration payable to MNB’s shareholders will not be known until the exchange agent tallies the results of the cash/stock elections made by MNB’s shareholders. If an MNB shareholder does not make an election, the consideration that shareholder will receive will depend on the consideration elected by other MNB shareholders. Dividend Policy of Independent; Dividends from MNB (see page [●]) The holders of Independent common stock receive dividends as and when declared by Independent’s board of directors. Independent declared cash dividends of $0.38 per share of common stock in the first and second quarters of 2018, cash dividends of $0.32 per share of common stock for each quarter of 2017, and $0.29 per share of common stock for each quarter of 2016. After completion of the merger, the timing and amount of the payment of dividends will be at the discretion of Independent’s board of directors and will be determined after consideration of various factors, including level of earnings, cash requirements, and financial condition. The holders of MNB common stock receive dividends as and when declared by MNB’s board of directors. MNB did not declare any cash dividends in the first or second quarters of 2018 or for any quarter in 2017 and 2016. The merger agreement prohibits MNB from declaring or paying any dividends on any of its capital stock without the prior written consent of Independent, which may be withheld for any reason by Independent in its sole discretion. Fairness Opinion Rendered to the MNB Board of Directors (see pages [●] andB-1) Sandler O’Neill & Partners, L.P., which we refer to as Sandler, has provided an opinion to MNB’s board of directors, dated May 29, 2018, to the effect that, as of that date and based upon and subject to the factors and assumptions set forth in the opinion, the merger consideration was fair, from a financial point of view, to the holders of MNB common stock. The full text of Sandler’s opinion is attached to this proxy statement/prospectus asAnnex B, which sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken by Sandler in connection with its opinion. We urge you to read the opinion in its entirety. Sandler’s opinion is addressed to MNB’s board of directors, is directed only to the fairness, from a financial point of view, of the merger consideration to the holders of MNB common stock and does not constitute a recommendation to any shareholder as to how that shareholder should vote on the merger agreement. Recommendation of MNB’s Board of Directors (see pages [●] and [●]) MNB’s board of directors has unanimously determined that the merger agreement and the merger are advisable and in the best interests of MNB and its shareholders and, accordingly, unanimously recommends that MNB’s shareholders vote “FOR” the MNB merger agreement proposal and “FOR” the MNB adjournment proposal. MNB’s Reasons for the Merger (see page [●]) In determining whether to approve the merger agreement, MNB’s board of directors consulted with certain of its senior management and with its legal and financial advisers. In arriving at its determination, MNB’s board of directors also considered the factors described under “The Merger – Reasons for the Merger.” Interests of MNB’s Executive Officers and Directors in the Merger (see page [●]) Some of the directors and executive officers of MNB have financial interests in the merger that are different from, or in addition to, the interests of MNB’s other shareholders generally. These interests include rights of executive officers under their existing change in control agreements; rights under a competition,non-solicitation and market consulting agreement with Rockland Trust executed in connection with the merger agreement; and rights to continued indemnification and insurance coverage by Independent after the merger for acts and omissions occurring before the merger. The boards of directors of Independent and MNB were aware of these interests and considered them, among other matters, in approving the merger agreement and related transactions. MNB’s Directors and the Spouse of the Chairman of the Board of MNB Have Agreed to Vote in Favor of the Merger Agreement (see page [●]) On the record date of [●], the directors of MNB and the spouse of Kevin P. Meehan, Chairman of the Board of MNB, individually or jointly owned an aggregate of [●] shares of MNB common stock, or approximately [●]% of the outstanding shares of MNB common stock. Each of these shareholders has agreed with Independent to vote his or her shares of MNB common stock in favor of the merger agreement and the transactions it contemplates. Because the holders of more thantwo-thirds of the outstanding shares of MNB common stock have already committed to vote in favor of the merger, absent a breach of the voting agreements, the approval of the merger is assured. Approval by Independent’s Board of Directors and Reasons for the Merger (see page [●]) Independent’s board of directors has unanimously approved and adopted the merger agreement. In determining whether to approve the merger agreement, Independent’s board of directors consulted with certain of its senior management and with its legal and financial advisers. In arriving at its determination, Independent’s board of directors also considered the factors described under “The Merger – Independent’s Reasons for the Merger.” Non-Solicitation (see page [●]) MNB has agreed that it will not solicit or encourage any inquiries or proposals regarding any acquisition proposals by third parties. MNB may respond to unsolicited proposals in certain circumstances if required by MNB’s board of directors’ fiduciary duties. MNB must promptly notify Independent if it receives any acquisition proposals. Conditions to Complete the Merger (see page [●]) Each of Independent’s and MNB’s obligations to complete the merger is subject to the satisfaction or waiver to the extent legally permitted of a number of mutual conditions, including: the approval of the merger agreement and the transactions it contemplates, including the merger, by MNB’s shareholders at the MNB special meeting described in this proxy statement/prospectus; the receipt of all regulatory approvals, waivers, and consents (none of which shall contain a burdensome condition, as defined in the merger agreement), and the expiration of all statutory waiting periods required to complete the merger; the effectiveness of the registration statement with respect to the Independent common stock to be issued in the merger under the Securities Act of 1933, as amended (the “Securities Act”), and the absence of any stop order or proceedings initiated or threatened by the Securities and Exchange Commission for that purpose; and the absence of any statute, regulation, rule, decree, injunction or other order in effect by any court or other governmental entity that prohibits completion of the transactions contemplated by the merger agreement. Each of Independent’s and MNB’s obligations to complete the merger is also separately subject to the satisfaction or waiver (except for the condition set forth in the first bullet below, which may not be waived in any circumstance) of a number of conditions, including: the receipt by each party of a legal opinion from its counsel with respect to certain U.S. federal income tax consequences of the merger; and the other party’s representations and warranties in the merger agreement being true and correct, in all material respects, and the performance by the other party in all material respects of its obligations under the merger agreement. MNB’s obligation to complete the merger is also subject to the condition that the shares of Independent’s common stock to be issued in the merger be listed on Nasdaq, and that Independent deposits the merger consideration with the exchange agent one business day prior to the closing date. Independent’s obligation to complete the merger is further subject to the conditions that the number of outstanding shares of MNB common stock not exceed 198,845 and the holders of no more than 10% of MNB outstanding common stock will have taken the actions required by Part 13 of Chapter 156D of the Massachusetts General Laws, known as the Massachusetts Business Corporation Act, to qualify their MNB common stock as dissenters’ shares. Termination of the Merger Agreement (see page [●]) Independent and MNB may mutually agree at any time to terminate the merger agreement without completing the merger, even if MNB shareholders have approved the merger. Also, either Independent or MNB can terminate the merger agreement in various circumstances, including the following: if any regulatory approval and/or waiver necessary for consummation of the transactions contemplated by the merger agreement is not obtained; if the merger is not completed by March 31, 2019; if the other party breaches the merger agreement in a way that would entitle the party seeking to terminate the merger agreement not to consummate the merger, subject to the right of the breaching party to cure the breach within 30 days following written notice (unless it is not possible due to the nature or timing of the breach for the breaching party to cure the breach); or if MNB shareholders do not approve the merger agreement and the transactions it contemplates. Additionally, Independent may terminate the merger agreement if: MNB has materially breached its“non-solicitation” obligations described under “The Merger Agreement – No Solicitation of Alternative Transactions” beginning on page [●]; MNB’s board of directors fails to recommend in this proxy statement/prospectus the approval of the merger agreement or changes its initial recommendation to approve the merger agreement; MNB’s board of directors recommends, proposes or publicly announces its intention to recommend or propose, to engage in an “Acquisition Transaction” with any party other than Independent or a subsidiary of Independent; MNB fails to publicly recommend against a tender or exchange offer for more than 20% of the MNB common stock; or MNB breaches its obligation to call, give notice of, convene and hold a meeting of shareholders for the purpose of approving the merger agreement and the transactions it contemplates. Additionally, MNB may terminate the merger agreement: if it enters into a “Superior Proposal” as described under “The Merger Agreement – No Solicitation of Alternative Transactions,” so long as it pays a termination fee of $1,600,000 to Independent; or pursuant to a “walk away” right that is subject to a “top up” option, if (a) theten-day volume weighted average closing price (“VWAP”) of Independent’s common stock as of a measurement date prior to closing is less than $60.09, which would be more than 20% below theten-day VWAP of Independent’s common stock for the trading period ended May 25, 2018 ($75.11), (b) the decrease in the ten day VWAP of Independent’s common stock for the trading period ending on May 29, 2018 compared to the ten day VWAP of Independent common stock ending on the measurement date is more than 20% greater than the decrease in the ten day average price of the Nasdaq Bank Stock Index during the same time periods, (c) MNB elects to terminate the agreement by a majority vote of MNB’s directors, and | (d) following notice to Independent by MNB of this proxy statement/prospectus. Comparative Stock Prices and Dividends
The following table sets forth, for the periods indicated, the high and low closing prices per share of Independent common stock as reported by the NASDAQ Global Select Market and the high and low closing prices per share of Peoples common stock as reported by the NASDAQ Capital Market. The table also provides information as to dividends paid per share of Independent common stock and Peoples common stock. As of September 30, 2014, there were 23,911,678 shares of Independent common stock issued and outstanding and approximately 2,606 stockholders of record and 6,239,436 shares of Peoples common stock issued and outstanding and approximately 499 stockholders of record.
| | | | | | | | | | | | | | | | Independent | | | | | Closing Price | | | Dividend
per
Share | | | | | High | | | Low | | | 2012 | | | | | | | | | | | | | Quarter Ended March 31, | | $ | 29.27 | | | $ | 26.46 | | | $ | 0.21 | | Quarter Ended June 30, | | | 29.35 | | | | 26.07 | | | | 0.21 | | Quarter ended September 30, | | | 31.39 | | | | 28.49 | | | | 0.21 | | Quarter Ended December 31, | | | 31.10 | | | | 27.96 | | | | 0.21 | | | | | | 2013 | | | | | | | | | | | | | Quarter Ended March 31, | | $ | 32.77 | | | $ | 29.68 | | | $ | 0.22 | | Quarter Ended June 30, | | | 34.50 | | | | 30.00 | | | | 0.22 | | Quarter Ended September 30, | | | 38.04 | | | | 34.72 | | | | 0.22 | | Quarter Ended December 31, | | | 39.40 | | | | 34.94 | | | | 0.22 | | | | | | 2014 | | | | | | | | | | | | | Quarter Ended March 31, | | $ | 40.45 | | | $ | 34.66 | | | $ | 0.24 | | Quarter Ended June 30, | | | 40.40 | | | | 34.96 | | | | 0.24 | | Quarter Ended September 30, | | | 39.42 | | | | 35.06 | | | | 0.24 | | Quarter Ended December 31, (through October 15, 2014) | | | 36.91 | | | | 35.49 | | | | TBD | |
| | | | | | | | | | | | | | | | Peoples | | | | | Closing Price | | | Dividend
per
Share | | | | | High | | | Low | | | 2012 | | | | | | | | | | | | | Quarter Ended March 31, | | $ | 16.40 | | | $ | 14.15 | | | $ | 0.00 | | Quarter Ended June 30, | | | 16.70 | | | | 15.75 | | | | 0.00 | | Quarter Ended September 30, | | | 17.51 | | | | 16.22 | | | | 0.03 | | Quarter Ended December 31, | | | 17.48 | | | | 16.16 | | | | 0.28 | (1) | | | | | 2013 | | | | | | | | | | | | | Quarter Ended March 31, | | $ | 19.10 | | | $ | 17.31 | | | $ | 0.03 | | Quarter Ended June 30, | | | 19.09 | | | | 17.76 | | | | 0.04 | | Quarter Ended September 30, | | | 19.04 | | | | 17.34 | | | | 0.04 | | Quarter Ended December 31, | | | 18.00 | | | | 17.10 | | | | 0.29 | (2) | | | | | 2014 | | | | | | | | | | | | | Quarter Ended March 31, | | $ | 18.15 | | | $ | 17.74 | | | $ | 0.04 | | Quarter Ended June 30, | | | 18.64 | | | | 17.89 | | | | 0.05 | | Quarter ended September 30, | | | 20.50 | | | | 18.16 | | | | TBD | | Quarter ended December 31, (through October 15, 2014) | | | 20.30 | | | | 19.98 | | | | TBD | |
(1) | Includes a special dividend of $0.25 per share that was paid on December 20, 2012. |
(2) | Includes a special dividend of $0.25 per share that was paid on December 20, 2013. |
The current annualized rate of distribution on a share of Independent common stock is $0.96 per share. After completion of this offering, subject to approval and declaration by the Independent board of directors, Independent anticipates that it will continue to declare quarterly cash dividends on sharesexercise of its common stock consistent with past practices.
Peoples expects to continue to declare quarterly cash dividends on Peoples common stock until“walk away” right, Independent does not exercise its option under the merger is completed, subjectagreement to terms and conditions of the merger agreement. Prior to completion of the merger, Peoples’ stockholders will continue to receive any regular quarterly dividends declared and paid by Peoples, at a rate not to exceed $0.05 per share of Peoples common stock. A special dividend consistent with past years may not be paid by Peoples without the prior consent of Independent and is not expected to be paid. Holders of Peoples common stock will stop receiving cash dividends with respect to shares of Peoples common stock upon completion of the merger, when the separate corporate existence of Peoples will cease.
Unaudited Comparative Per Share Data
The table that follows presents, for both Independent and Peoples, historical information with respect to earnings, dividends and book value on a per share basis. The table also presents preliminary pro forma information for both companies on a per share basis.
The preliminary pro forma information as of and for the year ended December 31, 2013 assumes that the merger became effective on January 1, 2013 and assumes total merger consideration of approximately $140.8 million, consisting of approximately $57.4 million in cash and 2,131,213 shares of Independent common stock to be paid or issued to holders of Peoples common stock upon completion of the merger. The number of shares of Independent common stock was calculated based on 6,431,327 shares of Peoples common stock outstanding on December 31, 2013. Based on the closing price of Independent of $39.12 on December 31, 2013, the value of the merger consideration to be received in exchange for one share of Peoples common stock not exchanged for $21.00 in cash would have been $21.61.
The preliminary pro forma information as of and for the six months ended June 30, 2014 assumes that the merger became effective on January 1, 2014 and assumes total merger consideration of approximately $135.2 million, consisting of approximately $55.8 million in cash and 2,068,287 shares of Independent common stock to be paid or issued to holders of Peoples common stock upon completion of the merger. The number of shares of Independent common stock was calculated based on 6,241,436 shares of Peoples common stock outstanding on June 30, 2014. Based on the closing price of Independent of $38.38 on June 30, 2014, the value of the merger consideration to be received in exchange for one share of Peoples common stock not exchanged for $21.00 in cash would have been $21.20.
The preliminary pro forma equivalent per share information shown for Peoples in the following table was obtained by multiplying the pro forma per share amounts shown for Independent byincrease the exchange ratio to a number that would compensate MNB shareholders for the extent of 0.5523.the decrease in Independent’s common stock price below the lowest price per share at which the “walk away” right would not have been triggered. If Independent exercises its “top up” option, then no termination will occur.
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Termination Fee (see page [●]) MNB has agreed to pay a termination fee of $1,600,000 to Independent or reimburse Independent for certain expenses up to $550,000 if the merger agreement is terminated under any of the circumstances described in “The Merger Agreement – Termination Fee” beginning on page [●]. Regulatory Approvals Required for the Merger (see page [●]) Completion of the transactions contemplated by the merger agreement is subject to regulatory approvals and/or waivers from the Federal Reserve Board, the Federal Deposit Insurance Corporation (the “FDIC”), and the Massachusetts Division of Banks. Independent and MNB have filed or will file all of the required applications and notices with regulatory authorities. Although we do not know of any reason why we would not be able to obtain the necessary regulatory approvals in a timely manner, we cannot be certain when or if we will receive them. Rights of Independent Shareholders Differ from Those of MNB Shareholders (see page [●]) When the merger is completed, MNB shareholders who receive Independent common stock as consideration in the merger will become Independent shareholders. The rights of Independent shareholders differ from the rights of MNB shareholders in important ways. Many of these differences relate to provisions in Independent’s articles of organization and bylaws that differ from those of MNB. See “Comparison of Rights of Shareholders of MNB and Independent” beginning on page [●] for a summary of the material differences between the respective rights of MNB and Independent shareholders. Material U.S. Federal Income Tax Consequences of the Merger (see page [●]) The merger is intended to qualify, and the obligations of the parties to complete the merger are conditioned upon the receipt of a legal opinion from their respective counsel to the effect that the merger will qualify, as a reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended, which is referred to in this proxy statement/prospectus as the “Code.” The U.S. federal income tax consequences of the merger to MNB’s shareholders will depend primarily on whether they exchange their MNB common stock solely for Independent common stock, solely for cash, or for a combination of Independent common stock and cash. MNB’s shareholders who exchange their shares solely for Independent common stock generally will not recognize gain or loss except with respect to any cash they receive in lieu of receiving a fractional share of Independent common stock. MNB’s shareholders who exchange their shares solely for cash generally will recognize gain or loss on the exchange. MNB’s shareholders who exchange their shares for a combination of Independent common stock and cash generally will recognize gain (but not loss) with respect to the cash portion of the consideration they receive. The actual federal income tax consequences to MNB’s shareholders of electing to receive cash, Independent common stock or a combination of cash and stock will not be ascertainable at the time MNB’s shareholders make their election because it will not be known at that time how, or to what extent, the allocation and proration procedures will apply. This tax treatment may not apply to all of MNB’s shareholders. Determining the actual tax consequences of the merger to MNB shareholders can be complicated and will depend upon their particular circumstances. MNB’s shareholders should consult their own tax advisor for a full understanding of the merger’s tax consequences that are particular to each shareholder. To review the tax consequences of the merger to MNB’s shareholders in greater detail, please see the section “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page [●]. Dissenters’ Rights of Appraisal (see page [●]) Dissenters’ rights are statutory rights that, if applicable under law, enable shareholders to dissent from an extraordinary transaction, such as a merger, and to demand that the surviving corporation pay the fair value for their shares in cash as determined by a court in a judicial proceeding instead of receiving the consideration offered to shareholders in connection with the extraordinary transaction. MNB’s shareholders entitled to vote on the merger have the right to dissent from the merger and, if the merger is consummated and upon their compliance with all requirements of Massachusetts law, to receive a cash payment from Independent equal to the fair value of their shares of MNB common stock, determined in the manner set forth under Massachusetts law, instead of the merger consideration. A copy of the section of the Massachusetts Business Corporation Act pertaining to dissenters’ appraisals rights is attached asAnnex C to this proxy statement/prospectus. You should read the statute carefully and consult with your legal counsel if you intend to exercise these rights. Please see the section “Dissenters’ Rights of Appraisal” on page [●]. Per Share Market Price Information of Independent Common Stock (see page [●]) Independent common stock trades on the Nasdaq Global Select Market under the symbol “INDB.” MNB common stock is not traded publicly. The following presents the closing sale prices of Independent common stock on May 29, 2018, the last trading day before we announced the merger agreement, and [●], 2018, the last practicable trading day prior to mailing this document. MNB common stock is not actively traded. As a result, the closing sale prices of MNB common stock on May 29, 2018, the last trading day before we announced the merger agreement, and on [●], 2018, the last practicable trading day prior to mailing this document, are not available. The table also represents the equivalent value of the stock consideration to be paid to MNB shareholders who elect to receive Independent common stock in the merger for each share of MNB common stock that they own on those dates, calculated by multiplying the closing price of Independent common stock on those dates by an exchange ratio of 3.55, which represents the shares of Independent common stock that MNB shareholders who elect to receive Independent common stock will receive in the merger for each share of MNB common stock that they own. | | | | | | | | | | | | | | | | | Date | | Independent
Closing Price | | | MNB
Closing Price | | | Exchange
Ratio | | | Equivalent Per Share
Value | | May 29, 2018 | | $ | 76.55 | | | | N/A | | | | 3.55 | | | $ | 271.75 | | [●], 2018 | | $ | [●] | | | | N/A | | | | 3.55 | | | $ | [●] | |
The market prices of Independent common stock will fluctuate prior to the merger. You should obtain current stock price quotations for Independent common stock. RISK FACTORS In addition to the other information included in this proxy statement/prospectus, including the matters addressed under “Forward-Looking Information,” MNB’s shareholders should carefully consider the following risks before deciding whether to vote for approval of the merger agreement. In addition, shareholders of MNB should read and consider the risks associated with Independent, which can be found in Independent’s annual report on Form10-K for the year ended December 31, 2017, which report is incorporated by reference into this proxy statement/prospectus. You should also consider the other information in this proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” and “Incorporation of Certain Documents by Reference” beginning on page [●]. Risks Related to the Merger Absent an exercise by MNB of its “walk away” right and a subsequent “top up” election by Independent, the exchange ratio used to determine the stock consideration in the merger will be 3.55 and will not change due to changes in the market value of Independent common stock before the completion of the merger, regardless of how significant such changes might be. Upon completion of the merger, each share of MNB common stock will be converted into the right to receive either (i) $275.00 in cash or (2) 3.55 shares of Independent common stock. The exchange ratio used to determine the stock consideration will not increase based on fluctuations in the market price of Independent common stock regardless of how far the price of Independent common stock falls, except in the event Independent’s stock drops beyond certain levels and MNB exercises its “walk away” right and Independent subsequently exercises its right to “top up” the stock consideration to void the “walk away” right. The market value of Independent common stock has varied since Independent and MNB entered into the merger agreement and will continue to vary in the future due to changes in the business, operations or prospects of Independent, market assessments of the merger, regulatory considerations, market and economic considerations, and other factors both within and beyond the control of Independent. Therefore, at the time of the special meeting, MNB’s shareholders will not know or be able to calculate the market value of the Independent common stock they will receive upon completion of the merger. For example, based on the range of closing prices of Independent common stock during the period from May 29, 2018, the last trading day before public announcement of the merger, through [●], 2018, the last practicable date before the date of this document, the exchange ratio represented a market value ranging from a low of $[●] to a high of $[●] for each share of MNB common stock exchanged for the stock consideration. Because the market price of Independent common stock will fluctuate, MNB shareholders cannot be sure of the trading price of the stock portion of the merger consideration they will receive and the price of Independent might decrease after the merger. Upon completion of the merger, each share of MNB common stock will be converted into the right to receive merger consideration consisting of either (i) $275.00 in cash or (2) 3.55 shares of Independent common stock. MNB does not have the right under the merger agreement to increase the exchange ratio in the merger agreement in the event of any decline in the stock price of Independent prior to the merger. There also will be a period of time between the date when MNB shareholders vote on the merger agreement and the date when the merger is completed. The market price of Independent common stock may vary between the date of this proxy statement/prospectus, the date of the MNB special meeting, and the date of completion of the merger. For example, during the twelve-month period ending on [●], 2018 (the last practicable date before the date of this document), the closing price of Independent common stock varied from a low of $[●] to a high of $[●] and ended that period at $[●]. The market value of Independent common stock fluctuates based upon general market economic conditions, Independent’s business and prospects and other factors. Many of these factors are beyond the control of Independent or MNB and are not necessarily related to a change in the financial performance or condition of Independent or MNB. As the market price for shares of Independent will fluctuate, based on numerous factors, the value of the shares of Independent common stock that an MNB shareholder will receive in the merger will correspondingly fluctuate. It is impossible to predict accurately the market price of Independent common stock after completion of the merger. Accordingly, the price of Independent common stock on the date of the special meeting may not be indicative of the price of Independent common stock immediately prior to completion of the merger and the price of Independent common stock after the merger is completed. Independent’s common stock is listed on the Nasdaq Global Select Market under the symbol “INDB.” We urge you to obtain current market quotations for Independent common stock on a regular basis. MNB’s shareholders may receive a form of consideration different from what they elect. The consideration to be received by MNB’s shareholders in the merger is subject to the requirement that 75% of the shares of MNB common stock be exchanged for Independent common stock and 25% be exchanged for cash. The merger agreement contains proration and allocation procedures to achieve this desired result. If you elect all cash and the available cash is oversubscribed, then you will receive a portion of the merger consideration in Independent common stock. If you elect all stock and the available stock is oversubscribed, then you will receive a portion of the merger consideration in cash. The fairness opinion obtained by MNB from its financial advisor does not reflect potential changes in circumstances that may occur after the date of the fairness opinion. Sandler, MNB’s financial advisor in connection with the merger, has delivered to the board of directors of MNB its opinion dated May 29, 2018. The opinion of Sandler states that as of the date of such opinion, and based upon and subject to the factors and assumptions set forth in the opinion, the merger consideration to be paid to the holders of shares of MNB common stock pursuant to the merger agreement was fair from a financial point of view to such holders. The opinion does not reflect potential changes that may occur or may have occurred after the date of such opinion, including changes to the operations and prospects of MNB or Independent, changes in general market and economic conditions or regulatory or other factors. Any such changes, or changes in other factors, may materially alter or affect the conclusion reached in such opinion. MNB will be subject to business uncertainties and contractual restrictions while the merger is pending. Uncertainty about the effect of the merger on employees and customers may have an adverse effect on MNB and, consequently, on Independent. These uncertainties may impair MNB’s ability to attract, retain and motivate key personnel until the merger is consummated, and could cause customers and others that deal with MNB to seek to change existing business relationships with MNB. Retention of certain employees may be challenging during the pendency of the merger, as certain employees may experience uncertainty about their future roles with Independent. If key employees depart because of issues relating to the uncertainty or difficulty of integration or a desire not to remain with Independent, Independent’s business following the merger could be harmed. In addition, the merger agreement restricts MNB from taking certain actions without the consent of Independent until the merger occurs. These restrictions may prevent MNB from pursuing attractive business opportunities that may arise prior to the completion of the merger. Please see the section entitled “The Merger Agreement –Conduct of Business Pending the Merger” of this proxy statement/prospectus for a description of the restrictive covenants to which MNB is subject. Independent may fail to realize all of the anticipated benefits of the merger, particularly if the integration of Independent’s and MNB’s businesses is more difficult than expected. The success of the merger will depend, in part, on our ability to successfully combine the businesses of Independent and MNB. Independent may fail to realize some or all of the anticipated benefits of the transaction if the integration process takes longer or is more costly than expected. Furthermore, any number of unanticipated adverse occurrences for either the business of MNB or Independent may cause us to fail to realize some or all of the expected benefits. The integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger. Each of these issues might adversely affect Independent, MNB or both during the transition period, resulting in adverse effects on Independent following the merger. As a result, revenues may be lower than expected or costs may be higher than expected and the overall benefits of the merger may not be as great as anticipated. Some of the directors and executive officers of MNB may have interests and arrangements that may have influenced their decisions to support and recommend that you approve the merger. The interests of some of the directors and executive officers of MNB may be different from those of MNB shareholders, and certain directors and executive officers of MNB may be participants in arrangements that are different from, or are in addition to, those of MNB shareholders, including agreements in settlement of obligations to such officers underpre-existing change in control agreements, anon-competition,non-solicitation and market consulting agreement with Rockland Trust, and provisions in the merger agreement relating to indemnification of directors and officers and insurance for directors and officers of MNB for events occurring before the merger. These interests are described in more detail in the section of this proxy statement/prospectus entitled “The Merger – Interests of MNB’s Executive Officers and Directors in the Merger” beginning on page [●]. The merger agreement limits MNB’s ability to pursue alternatives to the merger. The merger agreement contains provisions that limit MNB’s ability to solicit, initiate, encourage or take any actions to facilitate competing third-party proposals to acquire all or substantially all of MNB. These provisions, which include a $1,600,000 termination fee or the reimbursement of up to $550,000 in Independent’s expenses, payable under certain circumstances, might discourage a potential competing acquiror that might have an interest in acquiring all or substantially all of MNB from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the merger, or might result in a potential competing acquiror proposing to pay a lower per share price to acquire MNB than it might otherwise have proposed to pay. Regulatory approvals may not be received, may take longer to receive than expected or may impose burdensome conditions that are not presently anticipated. Before the merger may be completed, certain approvals or consents must be obtained from the various bank regulatory and other authorities of the United States and the Commonwealth of Massachusetts. These governmental entities, including the Federal Reserve Board, the FDIC and the Massachusetts Division of Banks, may impose conditions on the completion of the merger or require changes to the terms of the merger. While Independent and MNB do not currently expect that any such conditions or changes would be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of Independent following the merger, any of which might have a material adverse effect on Independent following the merger. Independent is not obligated to complete the merger if the regulatory approvals received in connection with the completion of the merger include any conditions or restrictions that would constitute a “Burdensome Condition” as defined in the merger agreement. There can be no assurance as to whether the regulatory approvals will be received or the timing of the approvals. For more information, see the section entitled “The Merger – Regulatory Approvals Required to Complete the Merger” of this proxy statement/prospectus beginning on page [●]. If the merger is not consummated by March 31, 2019, either Independent or MNB may choose not to proceed with the merger. Either Independent or MNB may terminate the merger agreement if the merger has not been completed by March 31, 2019, unless the failure of the merger to be completed has resulted from the failure of the party seeking to terminate the merger agreement to perform its obligations. The shares of Independent common stock to be received by MNB shareholders as a result of the merger will have different rights from the shares of MNB common stock. The rights associated with MNB common stock are different from the rights associated with Independent common stock. See the section of this proxy statement/prospectus entitled “Comparison of Rights of Shareholders of MNB and Independent” beginning on page [●] for a discussion of the different rights associated with Independent common stock. Shareholders of MNB will have a reduced ownership and voting interest after the merger and will exercise less influence over management. As a result of the merger, the percentage ownership of every MNB shareholder in the combined company will be smaller than the shareholder’s percentage ownership of MNB prior to the merger. Independent estimates that upon completion of the merger, current MNB shareholders will own approximately 2% of the outstanding shares of Independent common stock, and current Independent shareholders will own approximately 98% of Independent common stock. Failure to complete the merger could negatively impact the future business and financial results of MNB. If the merger is not completed, the ongoing business of MNB may be adversely affected and MNB will be subject to several risks, including the following: MNB may be required, under certain circumstances, to pay Independent a termination fee of $1,600,000 or the reimbursement of up to $550,000 in Independent’s expenses under the merger agreement; MNB will be required to pay certain costs relating to the merger, whether or not the merger is completed, such as legal, accounting, financial advisor and printing fees; under the merger agreement, MNB is subject to certain restrictions on the conduct of its business prior to completion of the merger, which may adversely affect its ability to execute certain of its business strategies; and matters relating to the merger may require substantial commitments of time and resources by MNB’s management, which could otherwise have been devoted to other opportunities that may have been beneficial to MNB as an independent company. In addition, if the merger is not completed, MNB may experience negative reactions from its customers and employees. MNB also could be subject to litigation related to any failure to complete the merger or to enforcement proceedings commenced against MNB to perform its obligations under the merger agreement. If the merger is not completed, MNB cannot assure its shareholders that the risks described above will not materialize and will not materially affect the business and financial results of MNB. Risks Related to Independent’s Business You should read and consider risk factors specific to Independent’s business that will also affect the combined company after the merger is consummated. These risks are described in the sections entitled “Risk Factors” in Independent’s Annual Report on Form10-K for the fiscal year ended December 31, 2017 and in other documents incorporated by reference into this proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information” beginning on page [●] of this proxy statement/prospectus for the location of information incorporated by reference into this proxy statement/prospectus. FORWARD-LOOKING STATEMENTS This document contains or incorporates by reference forward-looking statements regarding the financial condition, results of operations, earnings outlook, and business prospects of Independent, MNB and the potential combined company and may include statements for the period following the completion of the merger. You can find many of these statements by looking for forward-looking terminology such as “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate,” or similar statements or variations of such terms. The forward-looking statements involve certain assumptions, risks, and uncertainties. In particular, the ability of either Independent or MNB to predict results or actual effects of its plans and strategies, or those of the combined company, is inherently uncertain. Accordingly, actual results may differ materially from those expressed in, or implied by, the forward-looking statements. You are therefore cautioned not to place undue reliance on these statements, which speak only as of the date of this document or the date of any document incorporated by reference in this document. Some of the factors that may cause actual results or earnings to differ materially from those contemplated by the forward-looking statements include, but are not limited to, those discussed elsewhere in this proxy statement/prospectus under “Risk Factors”, as well as the following: those risks and uncertainties Independent discusses or identifies in its public filings with the SEC; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the risk that MNB’s shareholders may not adopt the merger agreement; the risk that the necessary regulatory approvals may not be obtained, may be delayed, or may be obtained subject to conditions that are not anticipated; delays in closing the merger or other risks that any of the closing conditions to the merger may not be satisfied in a timely manner or at all; the diversion of management’s time from existing business operations due to time spent related to the merger or integration efforts; the risk that the businesses of Independent and MNB will not be integrated successfully or such integration may be more difficult, time-consuming, or costly than expected; expected revenue and other synergies and cost savings from the merger may not be fully realized or realized within the expected time frame; revenues following the merger may be lower than expected; expenses related to the merger and costs following the merger may be higher than expected; competitive pressure among financial services companies may increase significantly; general economic or business conditions, either nationally, regionally, or in the markets in which Independent and MNB do business, may be affected by unexpected material adverse changes or be less favorable than expected; changes in the interest rate environment may reduce interest margins and impact funding sources; changes in both companies’ businesses during the period between now and the completion of the merger may have adverse impacts on the combined company; changes in market rates and prices may adversely impact the value of financial products and assets; deterioration in the credit markets may adversely impact either company or its business; legislation or regulatory environments, requirements, or changes, including changes in accounting methods, may adversely affect businesses in which either company is engaged; potential litigation in connection with the merger and litigation liabilities, including costs, expenses, settlements and judgments, that may adversely affect either company or its businesses; and deposit attrition, operating costs, customer loss and business disruption following the merger, including difficulties in maintaining relationships with employees, may be greater than expected. All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this document and attributable to Independent or MNB or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, Independent and MNB undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL INFORMATION Per Share Market Price Information of Independent Common Stock Independent common stock trades on the Nasdaq Global Select Market under the symbol “INDB.” MNB common stock is not traded publicly. The following presents the closing sale prices of Independent common stock on May 29, 2018, the last trading day before we announced the merger agreement, and [●], 2018, the last practicable trading day prior to mailing this document. MNB common stock is not actively traded. As a result, the closing sale prices of MNB common stock on May 29, 2018, the last trading day before we announced the merger agreement, and on [●], 2018, the last practicable trading day prior to mailing this document, are not available. The table also represents the equivalent value of the stock consideration to be paid to MNB shareholders who elect to receive Independent common stock in the merger for each share of MNB common stock that they own on those dates, calculated by multiplying the closing price of Independent common stock on those dates by an exchange ratio of 3.55, which represents the shares of Independent common stock that MNB shareholders who elect to receive Independent common stock will receive in the merger for each share of MNB common stock that they own. | | | | | | | | | | | | | | | | | Date | | Independent
Closing Price | | | MNB
Closing Price | | | Exchange
Ratio | | | Equivalent Per Share
Value | | May 29, 2018 | | $ | 76.55 | | | | N/A | | | | 3.55 | | | $ | 271.75 | | [●], 2018 | | $ | [●] | | | | N/A | | | | 3.55 | | | $ | [●] | |
The above table shows only historical comparisons. These comparisons may not provide meaningful information to MNB shareholders in determining whether to approve the merger agreement. MNB shareholders are urged to obtain current market quotations for Independent common stock and to review carefully the other information contained in this proxy statement/prospectus or incorporated by reference into this proxy statement/prospectus in considering whether to approve the merger agreement. See the section entitled “Where You Can Find More Information” beginning on page [●] of this proxy statement/prospectus. Comparative Stock Prices and Dividends Independent common stock is listed on the Nasdaq Global Select Market under the symbol “INDB.” The following table sets forth, for the periods indicated, the high and low closing prices per share of Independent common stock as reported by the Nasdaq Global Select Market. The table also provides information as to dividends declared per share of Independent common stock. MNB common stock is not traded publicly, and MNB did not declare any cash dividends in the first or second quarters of 2018 or for any quarter in 2017 and 2016. MNB has also not declared any cash dividends through July 6th of the third quarter of 2018. As of [●], 2018, there were [●] shares of Independent common stock issued and outstanding and approximately [●] shareholders of record and [●] shares of MNB common stock issued and outstanding and approximately [●] shareholders of record. | | | | | | | | | | | | | | | | Independent | | | | | Closing Price | | | Dividend per
Share | | | | | High | | | Low | | | 2016 | | | | | | | | | | Quarter Ended March 31, | | $ | 47.66 | | | $ | 41.35 | | | $ | 0.29 | | Quarter Ended June 30, | | | 49.81 | | | | 42.60 | | | | 0.29 | | Quarter ended September 30, | | | 54.09 | | | | 44.26 | | | | 0.29 | | Quarter Ended December 31, | | | 70.95 | | | | 52.21 | | | | 0.29 | | | | | | 2017 | | | | | | | | | | Quarter Ended March 31, | | $ | 71.45 | | | $ | 60.35 | | | $ | 0.32 | | Quarter Ended June 30, | | | 67.35 | | | | 60.45 | | | | 0.32 | | Quarter Ended September 30, | | | 74.65 | | | | 66.15 | | | | 0.32 | | Quarter Ended December 31, | | | 76.15 | | | | 67.90 | | | | 0.32 | | | | | | 2018 | | | | | | | | | | Quarter Ended March 31, | | $ | 76.35 | | | $ | 66.90 | | | $ | 0.38 | | Quarter Ended June 30, | | | 82.90 | | | | 70.10 | | | $ | 0.38 | | Quarter Ended September 30, (through July 6) | | | 79.90 | | | | 78.85 | | | | TBD | |
After completion of the merger, the timing and amount of the payment of dividends will be at the discretion of Independent’s board of directors and will be determined after consideration of various factors, including level of earnings, cash requirements, and financial condition. The merger agreement prohibits MNB from declaring or paying any cash dividends during the time period between the signing of the merger agreement and the closing of the merger. Unaudited Comparative Per Share Data The table that follows presents, for both Independent and MNB, historical information with respect to earnings, dividends, and book value on a per share basis. The table also presents preliminary pro forma information for both companies on a per share basis. The preliminary pro forma information as of and for the year ended December 31, 2017 assumes that the merger became effective on January 1, 2017 and assumes total merger consideration of approximately $50.7 million, consisting of approximately $13.7 million in cash and 529,425 shares of Independent common stock to be paid or issued to holders of MNB common stock upon completion of the merger. The number of shares of Independent common stock was calculated based on 198,845 shares of MNB common stock outstanding on December 31, 2017. The preliminary pro forma information as of and for the three months ended March 31, 2018 assumes that the merger became effective on January 1, 2018 and assumes total merger consideration of approximately $51.6 million, consisting of approximately $13.7 million in cash and 529,425 shares of Independent common stock to be paid or issued to holders of MNB common stock upon completion of the merger. The number of shares of Independent common stock was calculated based on 198,845 shares of MNB common stock outstanding on March 31, 2018. The preliminary pro forma equivalent per share information shown for MNB in the following table was obtained by multiplying the pro forma per share amounts shown for Independent by the exchange ratio of 3.55. The actual number of shares to be issued by Independent in the merger will also depend on the number of shares of MNB common stock outstanding immediately prior to the effective date of the merger. The preliminary pro forma financial information includes estimated adjustments to record MNB’s assets and liabilities at their respective fair values based on Independent’s management’s best estimate using the information available at this time. The preliminary pro forma adjustments may be revised as additional information becomes available and as additional analyses are performed. The final allocation of the purchase price will be determined after the merger is completed and after the completion of a final analysis to determine the fair values of MNB’s tangible and identifiable intangible assets and liabilities as of the closing date. The final purchase price adjustments may differ materially from the preliminary pro forma adjustments. Increases or decreases in the fair value of certain balance sheet amounts and other items of MNB as compared to the information presented in this document may change the amount of the purchase price allocated to goodwill and other assets and liabilities and may impact the statement of income due to adjustments in yield and/or amortization of adjusted assets and liabilities. It is anticipated that the merger will provide Independent with financial benefits, such as possible expense efficiencies and revenue enhancements, among other factors, although no assurances can be given that these benefits will actually be achieved. The impact of these benefits has not been reflected in the preliminary pro forma financial information. As required, the preliminary pro forma financial information includes adjustments that give effect to events that are directly attributable to the merger and factually supportable. As a result, any planned adjustments affecting the balance sheet, income statement, or shares of common stock outstanding subsequent to the assumed completion date of the merger will also depend on the number of shares of Peoples common stock outstanding immediately prior to the effective date of the merger. The preliminary pro forma financial information includes estimated adjustments to record Peoples’ assets and liabilities at their respective fair values based on Independent’s management’s best estimate using the information available at this time. The preliminary pro forma adjustments may be revised as additional information becomes available and as additional analyses are performed. The final allocation of the purchase price will be determined after the merger is completed and after the completion of a final analysis to determine the fair values of Peoples’ tangible and identifiable intangible assets and liabilities as of the closing date. The final purchase price adjustments may differ materially from the preliminary pro forma adjustments. Increases or decreases in the fair value of certain balance sheet amounts and other items of Peoples as compared to the information presented in this document may change the amount of the purchase price allocated to goodwill and other assets and liabilities and may impact the statement of income due to adjustments in yield and/or amortization of adjusted assets and liabilities.
It is anticipated that the merger will provide Independent with financial benefits, such as possible expense efficiencies and revenue enhancements, among other factors, although no assurances can be given that these benefits will actually be achieved. The impact of these benefits has not been reflected in the preliminary pro forma financial information. As required, the preliminary pro forma financial information includes adjustments that give effect to events that are directly attributable to the merger and factually supportable. As a result, any planned adjustments affecting the balance sheet, income statement, or shares of common stock outstanding subsequent to the assumed merger completion date have not been included.
The preliminary pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the financial results of the combined companies had the merger actually been completed as of or at the beginning of each period presented nor does it indicate future results for any interim or full-year period. The information in the following table is derived from and should be read in conjunction with the historical consolidated financial statements and the notes thereto for Independent and Peoples contained in this proxy statement/prospectus or incorporated into this document by reference. Summary Financial Information | | | | | | | | | | | | At or For the Year
Ended December 31,
2013 | | | At or For the Six
Months Ended June 30, 2014 | | Book value per share: | | | | | | | | | Independent historical | | $ | 24.85 | | | $ | 25.79 | | Peoples historical | | | 16.35 | | | | 16.62 | | Pro forma combined | | | 26.02 | | | | 26.79 | | Peoples pro forma equivalent | | | 14.37 | | | | 14.80 | | | | | Tangible book value per share: | | | | | | | | | Independent historical | | $ | 17.18 | | | $ | 18.20 | | Peoples historical | | | 16.35 | | | | 16.62 | | Pro forma combined | | | 17.56 | | | | 18.55 | | Peoples pro forma equivalent | | | 9.70 | | | | 10.25 | | | | | Cash dividends declared per share: | | | | | | | | | Independent historical | | $ | 0.88 | | | $ | 0.48 | | Peoples historical | | | 0.40 | (1) | | | 0.09 | | Pro forma combined | | | 0.88 | | | | 0.48 | | Peoples pro forma equivalent | | | 0.49 | | | | 0.27 | | | | | Basic net income per share: | | | | | | | | | Independent historical | | $ | 2.18 | | | $ | 1.18 | | Peoples historical | | | 0.35 | | | | 0.19 | | Pro forma combined | | | 1.83 | | | | 0.87 | | Peoples pro forma equivalent | | | 1.01 | | | | 0.48 | | | | | Diluted net income per share: | | | | | | | | | Independent historical | | $ | 2.18 | | | $ | 1.17 | | Peoples historical | | | 0.35 | | | | 0.18 | | Pro forma combined | | | 1.82 | | | | 0.87 | | Peoples pro forma equivalent | | | 1.01 | | | | 0.48 | |
(1) | Includes a special dividend of $0.25 per share that was paid on December 20, 2013. |
| | | | | | | | | | | | At or for the Year Ended December 31, 2017 | | | At or for the Three Months Ended March 31, 2018 | | Book value per share: | | | | | | | | | Independent historical | | $ | 34.38 | | | $ | 34.75 | | MNB historical | | | 134.11 | | | | 136.98 | | Pro forma combined | | | 35.05 | | | | 35.44 | | MNB pro forma equivalent | | | 124.44 | | | | 125.83 | | | | | Tangible book value per share: | | | | | | | | | Independent historical | | $ | 25.60 | | | $ | 26.02 | | MNB historical | | | 134.11 | | | | 136.98 | | Pro forma combined | | | 25.26 | | | | 25.69 | | MNB pro forma equivalent | | | 89.67 | | | | 91.21 | | | | | Cash dividends declared per share: | | | | | | | | | Independent historical | | $ | 1.28 | | | $ | 0.38 | | MNB historical | | | — | | | | — | | Pro forma combined | | | 1.28 | | | | 0.38 | | MNB pro forma equivalent | | | 4.54 | | | | 1.35 | | | | | Basic net income per share: | | | | | | | | | Independent historical | | $ | 3.19 | | | $ | 1.00 | | MNB historical | | | 6.61 | | | | 3.77 | | Pro forma combined | | | 3.04 | | | | 0.88 | | MNB pro forma equivalent | | | 10.81 | | | | 3.14 | | | | | Diluted net income per share: | | | | | | | | | Independent historical | | $ | 3.19 | | | $ | 1.00 | | MNB historical | | | 6.61 | | | | 3.77 | | Pro forma combined | | | 3.04 | | | | 0.88 | | MNB pro forma equivalent | | | 10.78 | | | | 3.13 | |
Independent Selected Historical Financial and Operating Data The following table provides summary historical consolidated financial condition data for Independent as of the end of and for each of the fiscal years in the five-year period ended December 31, 20132017 and operating and per share data and operating ratios for each of the corresponding fiscal years and as of the end of each of the three months ended March 31, 2018 and March 31, 2017 and for the six months ended June 30, 2014 and June 30, 2013.corresponding fiscal periods. The annual historical consolidated financial condition, operating and per share data, as of the end of and for each of the fiscal years in the five-year period ended December 31, 2013operating ratios have been derived in part from Independent’s audited financial statements and related notes incorporated by reference into this document. The historical consolidated financial condition, operating and per share data, and operating ratios as of the end of each of the three months ended March 31, 2018 and March 31, 2017 and for the six months ended June 30, 2014 and June 30, 2013corresponding fiscal periods have been derived from Independent’s unaudited financial statements and related notes incorporated by reference into this document and are not necessarily indicative of the results that may be expected for the full year or any other interim period.year. The following information is only a summary and you should read it in conjunction with Independent’s financial statements and related notes incorporated by reference into this document. | | | | At or for the Six Months
Ended June 30, | | At or for the Year Ended December 31, | | | At or for the Three Months Ended March 31, | | At or for the Year Ended December 31, | | | | | 2014
(Unaudited) | | 2013
(Unaudited) | | 2013 | | 2012 | | 2011 | | 2010 | | 2009 | | | 2018
(unaudited) | | 2017
(unaudited) | | 2017 | | 2016 | | 2015 | | 2014 | | 2013 | | | | | (Dollars in Thousands, Except Shares and Per Share Data) | | | (Dollars in Thousands, Except Per Share Data) | | FINANCIAL CONDITION DATA: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Securities available for sale | | $ | 340,081 | | | $ | 303,855 | | | $ | 356,862 | | | $ | 329,286 | | | $ | 305,332 | | | $ | 377,457 | | | $ | 508,650 | | | Securities held to maturity | | 373,888 | | | 225,278 | | | 350,652 | | | 178,318 | | | 204,956 | | | 202,732 | | | 93,410 | | | Securities | | | $ | 996,287 | | | $ | 905,249 | | | $ | 946,510 | | | $ | 851,524 | | | $ | 845,112 | | | $ | 724,007 | | | $ | 707,514 | | Loans | | 4,885,500 | | | 4,530,111 | | | 4,718,307 | | | 4,519,011 | | | 3,794,390 | | | 3,555,679 | | | 3,395,515 | | | 6,362,056 | | | 6,064,366 | | | 6,355,553 | | | 5,999,605 | | | 5,547,721 | | | 4,970,733 | | | 4,718,307 | | Allowance for loan losses | | 54,538 | | | 52,976 | | | 53,239 | | | 51,834 | | | 48,260 | | | 46,255 | | | 42,361 | | | (60,862 | ) | | (62,318 | ) | | (60,643 | ) | | (61,566 | ) | | (55,825 | ) | | (55,100 | ) | | (53,239 | ) | Goodwill and core deposit intangibles | | 181,460 | | | 161,089 | | | 182,642 | | | 162,144 | | | 140,722 | | | 141,956 | | | 143,730 | | | 240,268 | | | 230,613 | | | 241,147 | | | 231,374 | | | 212,909 | | | 180,306 | | | 182,642 | | Total assets | | 6,348,318 | | | 5,852,595 | | | 6,099,234 | | | 5,756,985 | | | 4,970,240 | | | 4,695,738 | | | 4,482,021 | | | 8,090,410 | | | 7,738,114 | | | 8,082,029 | | | 7,709,375 | | | 7,209,469 | | | 6,364,318 | | | 6,098,869 | | Total deposits | | 5,298,161 | | | 4,676,463 | | | 4,986,418 | | | 4,546,677 | | | 3,876,829 | | | 3,627,783 | | | 3,375,294 | | | 6,751,511 | | | 6,470,674 | | | 6,729,253 | | | 6,412,253 | | | 5,990,703 | | | 5,210,466 | | | 4,986,418 | | Total borrowings | | 345,737 | | | 557,300 | | | 448,488 | | | 591,055 | | | 537,686 | | | 565,434 | | | 647,397 | | | 298,939 | | | 304,297 | | | 323,698 | | | 335,474 | | | 343,933 | | | 406,061 | | | 448,123 | | Stockholders’ equity | | 616,489 | | | 543,605 | | | 591,540 | | | 529,320 | | | 469,057 | | | 436,472 | | | 412,649 | | | 956,059 | | | 877,840 | | | 943,809 | | | 864,690 | | | 771,463 | | | 640,527 | | | 591,540 | | Nonperforming loans | | 27,416 | | | 36,549 | | | 34,659 | | | 28,766 | | | 28,953 | | | 23,108 | | | 36,183 | | | 47,713 | | | 55,052 | | | 49,638 | | | 57,407 | | | 27,690 | | | 27,512 | | | 34,659 | | Nonperforming assets | | 39,661 | | | 48,105 | | | 43,833 | | | 42,427 | | | 37,149 | | | 31,493 | | | 41,245 | | | 48,071 | | | 58,456 | | | 50,250 | | | 61,580 | | | 29,849 | | | 38,894 | | | 43,833 | | Shares outstanding | | 23,904,072 | | | 22,904,284 | | | 23,805,984 | | | 22,774,009 | | | 21,499,768 | | | 21,220,801 | | | 21,072,196 | | | 27,512,328 | | | 27,046,768 | | | 27,450,190 | | | 27,005,813 | | | 26,236,352 | | | 23,998,738 | | | 23,805,984 | | | OPERATING DATA: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest income | | $ | 107,265 | | | $ | 102,315 | | | $ | 205,914 | | | $ | 196,192 | | | $ | 195,751 | | | $ | 202,724 | | | $ | 202,689 | | | $ | 73,749 | | | $ | 64,407 | | | $ | 277,194 | | | $ | 246,637 | | | $ | 235,545 | | | $ | 216,459 | | | $ | 205,914 | | Interest expense | | 10,606 | | | 11,838 | | | 23,336 | | | 23,393 | | | 28,672 | | | 38,763 | | | 51,995 | | | 5,278 | | | 4,207 | | | 18,334 | | | 18,793 | | | 20,617 | | | 20,417 | | | 23,336 | | Net interest income | | 96,659 | | | 90,477 | | | 182,578 | | | 172,799 | | | 167,079 | | | 163,961 | | | 150,694 | | | 68,471 | | | 60,200 | | | 258,860 | | | 227,844 | | | 214,928 | | | 196,042 | | | 182,578 | | Provision for loan losses | | 6,752 | | | 4,400 | | | 10,200 | | | 18,056 | | | 11,482 | | | 18,655 | | | 17,335 | | | Provision (benefit) for loan losses | | | 500 | | | 600 | | | 2,950 | | | 6,075 | | | 1,500 | | | 10,403 | | | 10,200 | | Noninterest income | | 34,373 | | | 32,416 | | | 68,009 | | | 62,016 | | | 52,700 | | | 46,906 | | | 38,192 | | | 19,863 | | | 18,912 | | | 82,994 | | | 82,428 | | | 75,888 | | | 69,943 | | | 68,009 | | Noninterest expenses | | 84,867 | | | 85,084 | | | 173,649 | | | 159,459 | | | 145,713 | | | 139,745 | | | 141,815 | | | 53,451 | | | 48,773 | | | 204,359 | | | 192,122 | | | 197,138 | | | 171,838 | | | 173,649 | | Net income | | 28,129 | | | 25,010 | | | 50,254 | | | 42,627 | | | 45,436 | | | 40,240 | | | 22,989 | | | 27,555 | | | 20,725 | | | 87,204 | | | 76,648 | | | 64,960 | | | 59,845 | | | 50,254 | | Preferred stock dividend | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 5,698 | | | Net income available to the common stockholder | | 28,129 | | | 25,010 | | | 50,254 | | | 42,627 | | | 45,436 | | | 40,240 | | | 17,291 | | | | PER SHARE DATA: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income-basic | | $ | 1.18 | | | $ | 1.09 | | | $ | 2.18 | | | $ | 1.96 | | | $ | 2.12 | | | $ | 1.90 | | | $ | 0.88 | | | $ | 1.00 | | | $ | 0.77 | | | $ | 3.19 | | | $ | 2.90 | | | $ | 2.51 | | | $ | 2.50 | | | $ | 2.18 | | Net income-diluted | | 1.17 | | | 1.09 | | | 2.18 | | | 1.95 | | | 2.12 | | | 1.90 | | | 0.88 | | | 1.00 | | | 0.76 | | | 3.19 | | | 2.90 | | | 2.50 | | | 2.49 | | | 2.18 | | Cash dividends declared | | 0.48 | | | 0.44 | | | 0.88 | | | 0.84 | | | 0.76 | | | 0.72 | | | 0.72 | | | 0.38 | | | 0.32 | | | 1.28 | | | 1.16 | | | 1.04 | | | 0.96 | | | 0.88 | | Book value | | 25.79 | | | 23.73 | | | 24.85 | | | 23.24 | | | 21.82 | | | 20.57 | | | 19.58 | | | 34.75 | | | 32.44 | | | 34.38 | | | 32.02 | | | 29.40 | | | 26.69 | | | 24.85 | | | OPERATING RATIOS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Return on average assets | | 0.91 | % | | 0.89 | % | | 0.87 | % | | 0.83 | % | | 0.96 | % | | 0.88 | % | | 0.40 | % | | 1.39 | % | | 1.10 | % | | 1.11 | % | | 1.04 | % | | 0.93 | % | | 0.95 | % | | 0.87 | % | Return on average common equity | | 9.34 | % | | 9.33 | % | | 9.09 | % | | 8.66 | % | | 9.93 | % | | 9.46 | % | | 4.29 | % | | 11.73 | % | | 9.59 | % | | 9.55 | % | | 9.43 | % | | 8.79 | % | | 9.66 | % | | 9.09 | % | Net interest margin (on a fully tax equivalent basis) | | 3.48 | % | | 3.58 | % | | 3.51 | % | | 3.75 | % | | 3.90 | % | | 3.95 | % | | 3.89 | % | | 3.77 | % | | 3.51 | % | | 3.60 | % | | 3.40 | % | | 3.42 | % | | 3.45 | % | | 3.51 | % | Equity to assets | | 9.71 | % | | 9.29 | % | | 9.70 | % | | 9.19 | % | | 9.44 | % | | 9.30 | % | | 9.21 | % | | 11.82 | % | | 11.34 | % | | 11.68 | % | | 11.22 | % | | 10.70 | % | | 10.06 | % | | 9.70 | % | Dividend payout ratio | | 38.99 | % | | 20.12 | % | | 30.09 | % | | 52.77 | % | | 35.88 | % | | 37.93 | % | | 82.79 | % | | 31.88 | % | | 74.62 | % | | 39.04 | % | | 38.76 | % | | 40.29 | % | | 37.50 | % | | 30.09 | % | | ASSET QUALITY RATIOS: | | | | | | | | | | | | | | | | Nonperforming loans as a percent of gross loans | | | 0.75 | % | | 0.91 | % | | 0.78 | % | | 0.96 | % | | 0.50 | % | | 0.55 | % | | 0.73 | % | Nonperforming assets as a percent of total assets | | | 0.59 | % | | 0.76 | % | | 0.62 | % | | 0.80 | % | | 0.41 | % | | 0.61 | % | | 0.72 | % | Allowance for loan losses as a percent of total loans | | | 0.96 | % | | 1.03 | % | | 0.95 | % | | 1.03 | % | | 1.01 | % | | 1.11 | % | | 1.13 | % | Allowance for loan losses as a percent of nonperforming loans | | | 127.56 | % | | 113.20 | % | | 122.17 | % | | 107.24 | % | | 201.61 | % | | 200.28 | % | | 153.61 | % | | CAPITAL RATIOS: | | | | | | | | | | | | | | | | Tier 1 leverage capital ratio | | | 10.32 | % | | 9.92 | % | | 10.04 | % | | 9.77 | % | | 9.33 | % | | 8.84 | % | | 8.64 | % | Common equity Tier 1 capital ratio | | | 11.47 | % | | 10.89 | % | | 11.20 | % | | 10.82 | % | | 10.44 | % | | N/A | | | N/A | | Tier 1 risk-based capital ratio | | | 12.57 | % | | 12.05 | % | | 12.31 | % | | 11.99 | % | | 11.71 | % | | 10.88 | % | | 10.78 | % | Total risk-based capital ratio | | | 14.08 | % | | 13.66 | % | | 13.82 | % | | 13.60 | % | | 13.36 | % | | 13.15 | % | | 12.58 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At or for the Six Months
Ended June 30, | | | At or for the Year Ended December 31, | | | | | 2014
(Unaudited) | | | 2013
(Unaudited) | | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | | | | | (Dollars in Thousands, Except Shares and Per Share Data) | | | | | | | | | | ASSET QUALITY RATIOS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nonperforming loans as a percent of gross loans | | | 0.56 | % | | | 0.81 | % | | | 0.73 | % | | | 0.64 | % | | | 0.76 | % | | | 0.65 | % | | | 1.07 | % | Nonperforming assets as a percent of total assets | | | 0.62 | % | | | 0.82 | % | | | 0.72 | % | | | 0.74 | % | | | 0.75 | % | | | 0.67 | % | | | 0.92 | % | Allowance for loan losses as a percent of total loans | | | 1.12 | % | | | 1.17 | % | | | 1.13 | % | | | 1.15 | % | | | 1.27 | % | | | 1.30 | % | | | 1.25 | % | Allowance for loan losses as a percent of nonperforming loans | | | 198.93 | % | | | 144.95 | % | | | 153.61 | % | | | 180.19 | % | | | 166.68 | % | | | 200.17 | % | | | 117.07 | % | | | | | | | | | CAPITAL RATIOS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Tier 1 leverage capital ratio | | | 8.62 | % | | | 8.56 | % | | | 8.64 | % | | | 8.65 | % | | | 8.61 | % | | | 8.19 | % | | | 7.87 | % | Tier 1 risk-based capital ratio | | | 10.65 | % | | | 10.62 | % | | | 10.78 | % | | | 10.36 | % | | | 10.74 | % | | | 10.28 | % | | | 9.83 | % | Total risk-based capital ratio | | | 12.38 | % | | | 12.49 | % | | | 12.58 | % | | | 12.23 | % | | | 12.78 | % | | | 12.37 | % | | | 11.92 | % |
PeoplesMNB Selected Historical Consolidated Financial Data
The following table provides summary historical consolidated financial data (i) for PeoplesMNB as of the end of and for each of the fiscal years in the five-year period ended September 30, 2013December 31, 2017 and as of the end of and for each of the ninethree months ended June 30, 2014March 31, 2018 and June 30, 2013.March 31, 2017. The historical consolidated financial data as of the end of and for each of the fiscal years in the five-year period ended September 30, 2013December 31, 2017 have been derived in part from Peoples’MNB’s audited financial statements and related notes incorporated by reference into this document.notes. The historical consolidated financial data as of the end of and for the ninethree months ended June 30, 2014March 31, 2018 and June 30, 2013March 31, 2017 have been derived from Peoples’MNB’s unaudited financial statements and related notes incorporated by reference into this document and are not necessarily indicative of the results that may be expected for the full year or any other interim period. The capital ratios data provided in the table below are capital ratios for Peoples Federal Savings Bank only. The following information is only a summary and you should read it in conjunction with Peoples’ financial statements and related notes incorporated by reference into this document. | | | | At or for the Nine Months
Ended June 30, | | At or for the Year Ended September 30, | | | At or for the Three Months
Ended March 31, | | At or for the Year Ended December 31,
(audited) | | | | | 2014
(Unaudited) | | 2013
(Unaudited) | | 2013 | | 2012 | | 2011 | | 2010 | | 2009 | | | 2018
(unaudited) | | 2017
(unaudited) | | 2017 | | 2016 | | 2015 | | 2014 | | 2013 | | | | | (Dollars in Thousands, Except Shares and Per Share Data) | | | (Dollars in Thousands, Except Per Share Data) | | FINANCIAL CONDITION DATA: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Securities available for sale | | $ | 9,298 | | �� | $ | 14,424 | | | $ | 14,225 | | | $ | 21,653 | | | $ | 28,452 | | | $ | 23,596 | | | $ | 6,328 | | | Securities held to maturity | | 38,557 | | | 27,825 | | | 32,054 | | | 25,921 | | | 19,713 | | | | — | | | | — | | | Loans | | 497,408 | | | 457,324 | | | 470,086 | | | 454,925 | | | 410,794 | | | 380,867 | | | 365,871 | | | Allowance for loan losses | | 4,023 | | | 4,025 | | | 4,037 | | | 3,891 | | | 3,371 | | | 3,203 | | | 3,204 | | | Securities | | | $ | 35,304 | | | $ | 33,434 | | | $ | 34,026 | | | $ | 30,768 | | | $ | 31,769 | | | $ | 33,245 | | | $ | 33,302 | | Loans (Net) | | | | 308,136 | | | 280,811 | | | 298,973 | | | 274,212 | | | 244,647 | | | 237,326 | | | 223,805 | | Allowance for loan losses(1) | | | | (4,146 | ) | | (3,676 | ) | | (3,996 | ) | | (3,550 | ) | | (3,378 | ) | | (3,731 | ) | | (3,853 | ) | Goodwill and core deposit intangibles | | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Total assets | | 606,201 | | | 574,531 | | | 585,246 | | | 570,827 | | | 554,189 | | | 545,937 | | | 482,828 | | | | 365,311 | | | 333,182 | | | 357,914 | | | 326,221 | | | 294,074 | | | 290,005 | | | 280,453 | | Total deposits | | 434,543 | | | 423,627 | | | 425,093 | | | 416,748 | | | 412,645 | | | 390,839 | | | 366,464 | | | | 300,803 | | | 282,250 | | | 295,859 | | | 265,080 | | | 264,333 | | | 253,862 | | | 250,124 | | Total borrowings | | 59,000 | | | 33,000 | | | 44,000 | | | 33,000 | | | 18,000 | | | 33,000 | | | 58,000 | | | | 33,000 | | | 21,000 | | | 31,000 | | | 31,500 | | | 2,000 | | | 9,500 | | | 5,000 | | Stockholders’ equity | | 103,727 | | | 106,967 | | | 106,352 | | | 110,538 | | | 115,702 | | | 114,360 | | | 50,943 | | | Shareholders’ equity | | | | 27,236 | | | 25,847 | | | 26,668 | | | 25,460 | | | 23,744 | | | 22,611 | | | 21,457 | | Nonperforming loans | | 1,824 | | | 1,945 | | | 2,149 | | | 3,417 | | | 3,250 | | | 2,180 | | | 5,725 | | | | 1,495 | | | 2,088 | | | 3,558 | | | 3,025 | | | 2,282 | | | 7,373 | | | 8,538 | | Nonperforming assets | | 1,824 | | | 1,945 | | | 2,149 | | | 3,417 | | | 3,250 | | | 2,975 | | | 5,725 | | | | 1,495 | | | 2,088 | | | 3,558 | | | 3,025 | | | 2,282 | | | 7,373 | | | 8,538 | | Shares outstanding | | 6,241,436 | | | 6,473,004 | | | 6,465,934 | | | 6,726,904 | | | 7,141,500 | | | 7,141,500 | | | n/a | | | Shares outstanding (Common) | | | | 198,845 | | | 198,845 | | | 198,845 | | | 198,842 | | | 198,825 | | | 198,823 | | | 198,813 | | | OPERATING DATA: | | | | | | | | | | | | | | | | Interest income | | | $ | 3,716 | | | $ | 3,108 | | | $ | 12,845 | | | $ | 11,526 | | | $ | 10,409 | | | $ | 9,942 | | | $ | 9,437 | | Interest expense | | | | 441 | | | 243 | | | 1,087 | | | 779 | | | 697 | | | 724 | | | 784 | | Net interest income | | | | 3,274 | | | 2,865 | | | 11,758 | | | 10,747 | | | 9,712 | | | 9,218 | | | 8,653 | | Provision for loan losses | | | | 74 | | | 125 | | | 476 | | | 425 | | | (201 | ) | | 235 | | | 400 | | Noninterest income | | | | 484 | | | 509 | | | 1,946 | | | 2,055 | | | 1,791 | | | 1,873 | | | 1,906 | | Noninterest expenses | | | | 2,654 | | | 2,637 | | | 10,416 | | | 9,643 | | | 10,025 | | | 9,379 | | | 9,186 | | Net income | | | | 750 | | | 382 | | | 1,314 | | | 1,704 | | | 1,143 | | | 956 | | | 752 | | Preferred stock dividend | | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Net income available to common shareholders | | | | 750 | | | 382 | | | 1,314 | | | 1,704 | | | 1,143 | | | 956 | | | 752 | | | PER SHARE DATA: | | | | | | | | | | | | | | | | Net income-basic | | | $ | 15.09 | | | $ | 7.68 | | | $ | 26.43 | | | $ | 34.28 | | | $ | 23.00 | | | $ | 19.23 | | | $ | 15.13 | | Net income-diluted | | | | 15.09 | | | 7.68 | | | 26.43 | | | 34.28 | | | 23.00 | | | 19.23 | | | 15.13 | | Cash dividends declared | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 179.00 | | Book value | | | | 136.97 | | | 129.99 | | | 134.11 | | | 128.04 | | | 119.42 | | | 113.72 | | | 107.93 | | | OPERATING RATIOS: | | | | | | | | | | | | | | | | Return on average assets | | | | 0.87 | % | | 0.48 | % | | 0.41 | % | | 0.59 | % | | 0.39 | % | | 0.33 | % | | 0.27 | % | Return on average common equity | | | | 10.52 | % | | 3.57 | % | | 4.93 | % | | 6.69 | % | | 4.81 | % | | 4.23 | % | | 3.50 | % | Net interest margin (on a fully tax equivalent basis) | | | | 3.79 | % | | 3.57 | % | | 3.64 | % | | 3.71 | % | | 3.35 | % | | 3.22 | % | | 3.16 | % | Equity to assets | | | | 7.46 | % | | 7.76 | % | | 7.45 | % | | 7.80 | % | | 8.07 | % | | 7.80 | % | | 7.65 | % | Dividend payout ratio | | | | 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | | 23.80 | % | | ASSET QUALITY RATIOS: | | | | | | | | | | | | | | | | Nonperforming loans as a percent of gross loans | | | | 0.49 | % | | 0.74 | % | | 1.19 | % | | 1.10 | % | | 0.93 | % | | 3.11 | % | | 3.81 | % | Nonperforming assets as a percent of total assets | | | | 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | | 3.04 | % | Allowance for loan losses as a percent of total loans | | | | 1.36 | % | | 1.33 | % | | 1.35 | % | | 1.31 | % | | 1.40 | % | | 1.60 | % | | 1.75 | % | Allowance for loan losses as a percent of nonperforming loans | | | | 277.28 | % | | 176.03 | % | | 112.31 | % | | 117.36 | % | | 147.99 | % | | 50.60 | % | | 45.12 | % | | CAPITAL RATIOS: | | | | | | | | | | | | | | | | Tier 1 leverage capital ratio | | | | 8.7 | % | | 8.9 | % | | 9.1 | % | | 9.0 | % | | 9.1 | % | | 8.9 | % | | 8.8 | % | Common equity Tier 1 capital ratio | | | | 11.3 | % | | 11.4 | % | | 11.3 | % | | 11.6 | % | | 11.7 | % | | | — | | | | — | | Tier 1 risk-based capital ratio | | | | 11.1 | % | | 11.4 | % | | 11.5 | % | | 11.7 | % | | 11.9 | % | | 11.9 | % | | 12.3 | % | Total risk-based capital ratio | | | | 12.6 | % | | 12.6 | % | | 12.7 | % | | 13.0 | % | | 13.2 | % | | 13.1 | % | | 13.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At or for the Nine Months
Ended June 30, | | | At or for the Year Ended September 30, | | | | | 2014
(Unaudited) | | | 2013
(Unaudited) | | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | | | | | (Dollars in Thousands, Except Shares and Per Share Data) | | | | | | | | | | OPERATING DATA: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest and dividend income | | $ | 15,058 | | | $ | 14,615 | | | $ | 19,393 | | | $ | 20,329 | | | $ | 20,590 | | | $ | 21,086 | | | $ | 22,614 | | Interest expense | | | 1,873 | | | | 2,120 | | | | 2,745 | | | | 3,319 | | | | 4,190 | | | | 6,234 | | | | 8,687 | | Net interest and dividend income | | | 13,185 | | | | 12,495 | | | | 16,648 | | | | 17,010 | | | | 16,400 | | | | 14,852 | | | | 13,927 | | Provision for loan losses | | | — | | | | 200 | | | | 200 | | | | 540 | | | | 405 | | | | 300 | | | | 127 | | Noninterest income | | | 1,219 | | | | 1,452 | | | | 1,854 | | | | 1,833 | | | | 1,720 | | | | 1,940 | | | | 1,816 | | Noninterest expenses | | | 11,684 | | | | 10,579 | | | | 14,346 | | | | 14,126 | | | | 12,787 | | | | 17,055 | | | | 11,263 | | Net income (loss) | | | 1,607 | | | | 1,824 | | | | 2,285 | | | | 1,657 | | | | 3,071 | | | | (164 | ) | | | 2,672 | | | | | | | | | | PER SHARE DATA: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income-basic | | $ | 0.27 | | | $ | 0.30 | | | $ | 0.37 | | | $ | 0.26 | | | $ | 0.47 | | | $ | n/a | | | $ | n/a | | Net income-diluted | | | 0.27 | | | | 0.30 | | | | 0.37 | | | | 0.26 | | | | 0.47 | | | | n/a | | | | n/a | | Cash dividends declared | | | 0.38 | | | | 0.35 | | | | 0.39 | | | | 0.03 | | | | — | | | | n/a | | | | n/a | | Book value | | | 16.62 | | | | 16.53 | | | | 16.45 | | | | 16.43 | | | | 16.20 | | | | 16.01 | | | | n/a | | | | | | | | | | OPERATING RATIOS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Return (loss) on average assets | | | 0.36 | % | | | 0.42 | % | | | 0.40 | % | | | 0.30 | % | | | 0.57 | % | | | (0.03 | %) | | | 0.59 | % | Return (loss) on average common equity | | | 2.04 | % | | | 2.23 | % | | | 2.11 | % | | | 1.46 | % | | | 2.64 | % | | | (0.23 | %) | | | 5.32 | % | Net interest margin (on a fully tax equivalent basis) | | | 3.16 | % | | | 3.10 | % | | | 3.09 | % | | | 3.32 | % | | | 3.31 | % | | | 3.30 | % | | | 3.31 | % | Equity to assets | | | 17.11 | % | | | 18.62 | % | | | 18.17 | % | | | 19.36 | % | | | 20.88 | % | | | 20.95 | % | | | 10.55 | % | Dividend payout ratio | | | 140.82 | % | | | 114.91 | % | | | 102.19 | % | | | 10.92 | % | | | 0 | % | | | 0 | % | | | 0 | % | | | | | | | | | ASSET QUALITY RATIOS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nonperforming loans as a percent of gross loans | | | 0.37 | % | | | 0.43 | % | | | 0.46 | % | | | 0.75 | % | | | 0.79 | % | | | 0.57 | % | | | 1.56 | % | Nonperforming assets as a percent of total assets | | | 0.30 | % | | | 0.34 | % | | | 0.37 | % | | | 0.60 | % | | | 0.59 | % | | | 0.54 | % | | | 1.19 | % | Allowance for loan losses as a percent of total loans | | | 0.81 | % | | | 0.88 | % | | | 0.86 | % | | | 0.86 | % | | | 0.82 | % | | | 0.84 | % | | | 0.88 | % | Allowance for loan losses as a percent of nonperforming loans | | | 220.56 | % | | | 206.94 | % | | | 187.85 | % | | | 113.87 | % | | | 103.72 | % | | | 146.93 | % | | | 55.97 | % | | | | | | | | | CAPITAL RATIOS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Tier 1 leverage capital ratio | | | 15.10 | % | | | 15.19 | % | | | 15.08 | % | | | 14.71 | % | | | 14.61 | % | | | 14.11 | % | | | 10.48 | % | Tier 1 risk-based capital ratio | | | 23.48 | % | | | 24.16 | % | | | 23.74 | % | | | 23.05 | % | | | 22.86 | % | | | 23.46 | % | | | 15.95 | % | Total risk-based capital ratio | | | 24.51 | % | | | 25.28 | % | | | 24.83 | % | | | 24.12 | % | | | 23.81 | % | | | 24.43 | % | | | 16.93 | % |
Recent Developments for Independent
On October 16, 2014, Independent issued a press release reporting its results of operations for the quarter ended September 30, 2014. For the three months ended September 30, 2014, Independent’s net income was $15.7 million, or $0.66 per diluted share, which represented increases of 6.7% and 8.2%, respectively, as compared to $14.7 million, or $0.61 per diluted share, in the prior quarter.
Net interest income increased to $49.6 million for the third quarter of 2014 as compared to $49.1 million in the linked quarter, reflective of higher earning asset levels. During the third quarter, Independent’s net interest margin decreased from the prior quarter by 6 basis points to 3.42%. The decrease was attributable to an increase in Independent’s average liquidity position, along with ongoing pressure on asset yields.
Independent recorded noninterest income of $17.1 million during the third quarter of 2014, which represented a $241,000, or 1.4%, increase from the linked quarter.
Independent recorded noninterest expense of $42.6 million during the third quarter of 2014 which represented a $373,000, or 0.9%, decrease from the prior quarter.
Independent generated a return on average assets and a return on average common equity of 0.99% and 9.97%, respectively, in the third quarter, as compared to 0.94% and 9.65% in the second quarter of 2014. On an operating basis, the return on average assets and the return on average common equity for the three months ended September 30, 2014 were 1.01% and 10.23%, respectively, as compared to 0.96% and 9.87%, respectively, for the second quarter of 2014.
All asset quality metrics remained strong during the third quarter of 2014, due to Independent’s ongoing credit discipline and prudent resolution of problem loans. For the third quarter, total net charge-offs were $1.4 million, or 0.12%, of average loans on an annualized basis, relatively consistent with the prior quarter results. The provision for loan losses was $1.9 million for the third quarter, as compared to $2.3 million for the quarter ended June 30, 2014. Nonperforming loans decreased during the quarter by $1.3 million to $26.1 million, or 0.53% of total loans, at September 30, 2014, from $27.4 million, or 0.56% of total loans, at June 30, 2014. In addition, nonperforming assets decreased to $38.6 million at the end of the third quarter of 2014, as compared to $39.6 million in the linked quarter. Delinquency as a percentage of loans was 0.73% at September 30, 2014, consistent with prior quarter levels.
The allowance for loan losses was $55.0 million at September 30, 2014, as compared to $54.5 million for the prior quarter. Independent’s allowance for loan losses as a percentage of loans was 1.11% at September 30, 2014 compared to 1.12% at June 30, 2014.
THE SPECIAL MEETING OF PEOPLES’ STOCKHOLDERSMNB SHAREHOLDERS This proxy statement/prospectus is being provided to holders of PeoplesMNB common stock as Peoples’MNB’s proxy statement in connection with the solicitation of proxies by and on behalf of its board of directors to be voted at the special meeting of Peoples’ stockholdersMNB shareholders to be held on November 25, 2014,[●], 2018, and at any adjournment or postponement of the special meeting. This proxy statement/prospectus is also being provided to you as Independent’s prospectus in connection with the offer and sale by Independent of its shares of common stock as a result of the proposed merger. Date, Time and Place of the Special Meeting The special meeting is scheduled to be held as follows: Date: November 25, 2014[●], 2018 Time: 5:00 p.m.[●], Local Time Place: Peoples Federal Savings Bank’s main office 435 Market Street
Brighton, Massachusetts 02135[●]
Purpose of the Special Meeting At the special meeting, Peoples’ stockholdersMNB shareholders will be asked to: approve the merger agreement and the transactions it contemplates, including the merger; and authorize the board of directors of PeoplesMNB to adjourn or postpone the special meeting, if necessary, to permit further solicitation of proxies in favor of the PeoplesMNB merger agreement proposal or to vote on other matters properly before the special meeting; and approve, on a non-binding advisory basis, a resolution approving certain compensation payable to the named executive officers of Peoples in connection with the merger.meeting.
Recommendation of Peoples’MNB’s Board of Directors Peoples’MNB’s board of directors has unanimously determined that the merger agreement and the merger are advisable to MNB and its shareholders and, accordingly, unanimously recommends athat MNB’s shareholders vote “FOR” approval and adoption of the agreement and plan of merger, “FOR” approval of the proposal to authorize the board of directors of Peoples to adjourn or postpone the special meeting if necessary to permit further solicitation of proxies in favor of the PeoplesMNB merger agreement proposal or to vote on other matters properly before the special meeting and “FOR” approval, on a non-binding advisory basis, of a resolution approving certain compensation payable to the named executive officers of Peoples in connection with the merger.MNB adjournment proposal.
Record Date; Shares Entitled to Vote You are entitled to vote if the records of Peoples showedMNB show that you held shares of PeoplesMNB common stock as of the close of business on October 16, 2014.[●], 2018. Beneficial owners of shares held in the name of a broker, bank or other nominee (“street name”) should instruct their recordholderrecord holder how to vote their shares. As of the close of business on the record date, a total of 6,239,436[●] shares of PeoplesMNB common stock were outstanding. Each share of common stock has one vote on each matter presented to stockholders.shareholders. If you are a beneficial owner of shares of PeoplesMNB common stock held in “street name” and you want to vote your shares in person at the meeting, you will have to get a written proxy in your name from the broker, bank or other nominee who holds your shares. Quorum; Vote Required We will have a quorum and will be able to conduct the business of the special meeting if the holders of record of shares of capital stock of Peoples entitling the holders to cast a majority of the votes entitled to be cast by the holders of shares of the capital stock of Peoples entitled to vote are present at the special meeting, either in person or by proxy.
The special meeting will conduct business only if a majority of the outstanding shares of PeoplesMNB common stock entitled to vote is represented in person or by proxy at the special meeting. If you return a valid proxy instructionscard or attend the meeting in person, your shares will be counted for purposes of determining whether there is a quorum, even if you abstain from voting. Brokernon-votes also will be counted for purposes of determining the existence of a quorum. A brokernon-vote occurs when a broker, bank or other nominee holding shares of PeoplesMNB common stock for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner.
Approval of the MNB merger agreement and plan of mergerproposal will require the affirmative vote of at least a majoritytwo-thirds of the outstanding shares of PeoplesMNB common stock entitled to vote at the special meeting.Failure to return a properly executed proxy card or to vote in person will have the same effect as a vote against the agreement and plan of merger.proposal. Brokernon-votes and abstentions from voting will have the same effect as voting against the agreement and plan of merger.proposal. The affirmative vote of thea majority of votes castthe shares voted on the MNB adjournment proposal is required to approve the proposal to authorizeMNB adjournment proposal. Brokernon-votes and abstentions from voting will have no effect on the board of directors of Peoples to adjourn or postpone the special meeting if necessary to permit further solicitation of proxies in favor of the Peoples merger agreement proposal or to vote on other matters properly before the special meeting. The affirmative vote of the majority of votes cast is required to approve, on a non-binding advisory basis, a resolution approving certain compensation payable to the named executive officers of Peoples in connection with the merger.proposal.
PeoplesMNB Voting Agreements
As of the record date of October 16, 2014,[●], 2018, the directors of MNB and executive officersthe spouse of Peoples beneficiallyKevin P. Meehan, Chairman of the Board of MNB, individually or jointly owned 949,196an aggregate of [●] shares of PeoplesMNB common stock. This equals 15.2%approximately [●]% of the outstanding shares of PeoplesMNB common stock. All of MNB’s directors and Mr. Meehan’s spouse entered into voting agreements with Independent pursuant to which they agreed to vote these shares of MNB common stock in favor of the MNB merger agreement proposal. Because the holders of more thantwo-thirds of the outstanding shares of MNB common stock have already committed to vote in favor of the merger, absent a breach of the voting agreements, the approval of the merger is assured. As of the same date, neither Independent nor any its subsidiaries, directors or executive officers owned any shares of PeoplesMNB common stock. All of Peoples’ directors entered into voting agreements with Independent, solely in their capacities as stockholders of Peoples, to vote the 949,196 shares of Peoples common stock owned by them in favor of the proposal to approve the agreement and plan of merger. For more information about the PeoplesMNB voting agreements, see “Voting Agreements.” Voting of Proxies You may vote in person at the special meeting or by proxy. To ensure your representation at the special meeting, PeoplesMNB recommends that you vote by proxy even if you plan to attend the special meeting. You can always change your vote at the special meeting. Peoples’ stockholdersMNB shareholders whose shares are held in “street name” by their broker, bank or other nominee must follow the instructions provided by their broker, bank, or other nominee to vote their shares. Your broker or bank may allow you to deliver your voting instructions via the telephone or the Internet. If your shares are held in “street name” and you wish to vote in person at the special meeting, you will have to obtain a “legal proxy” from your recordholderrecord holder entitling you to vote at the special meeting.
Voting instructions are included on your proxy form. If you properly complete and timely submit your proxy, your shares will be voted as you have directed. If you are the record holder of your shares of PeoplesMNB common stock and submit your proxy without specifying a voting instruction, your shares of PeoplesMNB common stock will be voted “FOR” the proposal to approve and adopt the agreement and plan of merger, “FOR” the proposal to authorize the board of directors of Peoples to adjourn or postpone the special meeting if necessary to permit further solicitation of proxies in favor of the PeoplesMNB merger agreement proposal or to vote on other matters properly before the special meeting, and “FOR” the proposal to approve, on a non-binding advisory basis, a resolution approving certain compensation payable to the named executive officers of Peoples in connection with the merger.MNB adjournment proposal. If you return an incomplete instruction card to your broker, bank or other nominee, that nominee will not vote your shares with respect to any matter.
How to Revoke Your Proxy You may revoke your proxy at any time before it is voted by: filing with the Corporate Secretary of PeoplesMNB a duly executed revocation of proxy; submitting a new executed proxy with a later date; or voting in person at the special meeting.
Attendance at the special meeting will not, in and of itself, constitute a revocation of a proxy. All written notices of revocation and other communication with respect to the revocation of proxies should be addressed to: Peoples Federal Bancshares, Inc.MNB Bancorp
Myron Fox,Attention: Kathrine Baldwin, Corporate Secretary
435 Market300 East Main Street
Brighton,Milford, Massachusetts 0213501757
Voting in Person If you plan to attend the PeoplesMNB special meeting and wish to vote in person, you will be given a ballot at the special meeting. Please note, however, that if your shares are held of record by a broker, bank, or other nominee and you wish to vote at the PeoplesMNB special meeting, you must bring additional documentation from the broker, bank, or other nominee in order to vote your shares. Whether or not you plan to attend the PeoplesMNB special meeting, PeoplesMNB requests that you complete, sign, date, and return the enclosed proxy card as soon as possible in the enclosed postage-paid envelope, or submit a proxy through the Internet or by telephone as described on the enclosed proxy card.envelope. This will not prevent you from voting in person at the PeoplesMNB special meeting but will assure that your vote is counted if you are unable to attend. Abstentions and Broker Non-Votes
If you return valid proxy instructions or attend the meeting in person, we will count your shares for purposes of determining whether there is a quorum, even if you abstain from voting. Broker non-votes, if any, also will be counted for purposes of determining the existence of a quorum. On the proposal to approve the agreement and plan of merger, broker non-votes and abstentions from voting will have the same effect as voting against the agreement and plan of merger. In counting votes on (i) the proposal to approve the authorization of the board of directors of Peoples to adjourn or postpone the special meeting if necessary to permit further solicitation of proxies in favor of the Peoples merger agreement proposal or to vote on other matters properly before the special meeting and (ii) the proposal to approve, on a non-binding advisory basis, a resolution approving certain compensation payable to the named executive officers of Peoples in connection with the merger, abstentions and broker non-votes will have no effect on the outcome of the vote.
Proxy Solicitation PeoplesMNB is soliciting your proxy. PeoplesMNB will pay for this proxy solicitation. In addition to soliciting proxies by mail, Laurel Hill Advisory Group, LLC, a proxy solicitation firm, will assist Peoples in soliciting proxies for the special meeting. Peoples will pay $6,000 for these services. Additionally, directors, officers, and employees of PeoplesMNB and Peoples Federal Savings BankMilford National may solicit proxies personally and by telephone. None of these
persons will receive additional or special compensation for soliciting proxies. PeoplesMNB will, upon request, reimburse brokers, banks and other nominees for their expenses in sending proxy materials to their customers who are beneficial owners and obtaining their voting instructions. Dissenters’ Rights of Appraisal Under applicable MarylandMassachusetts law, the holders of PeoplesMNB common stock are not entitled to dissenters’ rights of appraisal in connection with the merger. Section 13.02(a)(1) of the Massachusetts Business Corporation Act generally provides that shareholders of Massachusetts corporations are entitled to assert appraisal rights in the event of a merger and to receive payment in cash for the fair value of their shares of stock instead of the merger consideration. MNB has concluded that MNB shareholders are entitled to exercise appraisal rights in connection with the proposed merger with Independent. MNB shareholders electing to exercise dissenters’ rights must comply with the provisions of Section 13 of the Massachusetts Business Corporation Act. A copy of the applicable portions of the Massachusetts Business Corporation Act is attached to this proxy statement/prospectus asAnnex C. Failure to follow those provisions exactly could result in a loss of appraisal rights, in which case dissenting shareholders will receive the merger consideration with respect to their shares. MNB shareholders who are entitled to vote on the merger and who would like to assert their appraisal rights are required to do the following pursuant to Section 13 of the Massachusetts Business Corporation Act: Deliver written notice to MNB of their intent to demand payment for their shares of MNB common stock if the proposed merger is effectuated. The notice must be delivered before the shareholder vote to approve the merger agreement takes place. Voting against, abstaining from voting or failing to vote with respect to the merger agreement does not by itself constitute demand for appraisal for purposes of Massachusetts law. The written objection should be filed with MNB Bancorp, Kathrine Baldwin, Corporate Secretary, 300 East Main Street, Milford, Massachusetts 01757. Refrain from voting “FOR” approval of the MNB merger agreement proposal. If a shareholder returns a signed and dated proxy but does not specify a vote “AGAINST” approval of the MNB merger agreement proposal or a direction to “ABSTAIN” from voting on the proposal, the proxy will be voted “FOR” approval of the MNB merger agreement proposal, which will have the effect of waiving their appraisal rights. Comply with other procedures required under Section 13 of the Massachusetts Business Corporation Act. Section 13 of the Massachusetts Business Corporation Act requires that Independent deliver, within 10 days after the effective date of the merger, a written appraisal notice and forms containing certain information to all shareholders who have properly complied with the procedures for demanding appraisal. Shareholders who have received such notice and wish to exercise appraisal rights must make certain certifications to Independent and deposit their share certificates with Independent in order to perfect their appraisal rights. Each shareholder that has properly perfected their appraisal rights will be entitled to a cash payment of the estimated fair value of the shares, plus interest but subject to any applicable withholding taxes, within 30 days of the written appraisal notice and forms’ due date, except for shareholders who acquired their shares on or after May 29, 2018, who are not entitled to payment until they accept the offer from Independent. A shareholder that fails to execute and return the forms, and comply with the terms stated therein, will not be entitled to a payment. If a dissenting shareholder believes that the amount paid or offered to be paid by Independent is less than the fair value of their shares, the dissenting shareholder is required, within 30 days of receipt of the payment or offer of payment, to notify Independent in writing of the shareholder’s own estimate of the fair value of the shares and demand payment of that amount plus interest, less any payment received. If the shareholder’s demand for payment is not settled within 60 days of Independent’s receipt thereof, Independent is required to petition the court to determine the fair value of the shares and accrued interest or, if the petition is not made, to pay the amount demanded plus interest to the dissenting shareholder. The foregoing summary is not intended to be a complete statement of the procedures for exercising appraisal rights under Massachusetts law. Any shareholder who believes they are entitled to appraisal rights and wishes to preserve those rights should carefully review Sections 13.01 through 13.31 of the Massachusetts Business Corporation Act, which are attached asAnnex C to this proxy statement/prospectus, which set forth the procedures to be complied with in perfecting any such rights. Shareholders who wish to dissent from the merger and pursue their appraisal rights should consult with legal counsel to ensure strict compliance with statutory procedures and avoid the loss of any appraisal rights to which they may be entitled. Dissenting shareholders should also consult with a tax advisor regarding the tax consequences of exercising their appraisal rights under Massachusetts law. Stock Certificates You should not send in any certificates representing PeoplesMNB common stock at this time. If the merger is approved, you will receive separate instructions for the exchange of your certificates representing PeoplesMNB common stock. For more information regarding these instructions, please see the section in this document titled “The Merger Agreement – Exchange of PeoplesMNB Stock Certificate for Independent Certificates”Merger Consideration” beginning on page 65[●] of this document. PROPOSAL NO. 1 APPROVAL OF THE AGREEMENT AND PLAN OF MERGER At the PeoplesMNB special meeting, stockholdersshareholders will consider and vote on a proposal to approve the MNB merger agreement and plan of merger.proposal. Details about the merger, including each party’s reasons for the merger, the effect of approval of the agreement and plan of merger and the timing of effectiveness of the merger, are discussed in the section entitled “The Merger” beginning on page 38[●] of this document. Approval of the MNB merger agreement proposal requires the presence of a quorum and the affirmative vote of the holders of at least a majoritytwo-thirds of the outstanding shares of MNB common stock of Peoples entitled to vote at the special meeting. Peoples’MNB’s board of directors unanimously recommends that Peoples’ stockholdersMNB shareholders vote “FOR” approval and adoption of the MNB merger agreement and plan of merger and the merger.proposal.
PROPOSAL NO. 2 AUTHORIZATIONAPPROVAL OF THE BOARD OF DIRECTORS OF PEOPLESMNB TO ADJOURN OR POSTPONE THE SPECIAL MEETING, IF NECESSARY, TO PERMIT FURTHER SOLICITATION OF PROXIES IN FAVOR OF THE PEOPLES MERGER AGREEMENT PROPOSAL OR TO VOTE ON OTHER MATTERS PROPERLY BEFORE THE SPECIAL MEETING
PeoplesMNB is submitting a proposal for consideration at the PeoplesMNB special meeting to authorize the named proxies to authorize the board of directors of PeoplesMNB to adjourn or postpone the special meeting, if necessary, to permit further solicitation of proxies in favor of the PeoplesMNB merger agreement proposal or to vote on other matters properly before the special meeting. Even though a quorum may be present at the PeoplesMNB special meeting, it is possible that PeoplesMNB may not have received sufficient votes to approve the PeoplesMNB merger agreement proposal by the time of the meeting. In that event, the board of directors of PeoplesMNB would need to adjourn the PeoplesMNB special meeting in order to solicit additional proxies. This proposal relates only to authorization of the board of directors of PeoplesMNB to adjourn or postpone the special meeting, if necessary, to permit further solicitation of proxies in favor of the PeoplesMNB merger agreement proposal or to vote on other matters properly before the special meeting. If the PeoplesMNB special meeting is adjourned for less than 30 days, PeoplesMNB is not required to give notice of the time and place of the adjourned meeting if the new time and place is
announced at the special meeting before adjournment, unless the board of directors of PeoplesMNB fixes a new record date for the PeoplesMNB special meeting. The vote required to approve thisApproval of the MNB adjournment proposal isrequires the presence of a quorum and the affirmative vote of a majority of the votes castshares voted on the proposal. Abstentions and brokernon-votes will have no effect on the outcome of voting on this proposal.
Peoples’MNB’s board of directors unanimously recommends that Peoples’ stockholdersMNB shareholders vote “FOR” authorization of the board of directors of Peoples to adjourn or postpone the special meeting if necessary to permit further solicitation of proxies in favor of the Peoples merger agreementMNB adjournment proposal or to vote on other matters properly before the special meeting.
PROPOSAL NO. 3
APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF A RESOLUTION APPROVING CERTAIN COMPENSATION PAYABLE TO THE NAMED EXECUTIVE OFFICERS OF PEOPLES IN CONNECTION WITH THE MERGER
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, and pursuant to Section 14A of the Exchange Act, Peoples is providing its stockholders with an opportunity to cast an advisory vote to approve certain compensation payable to its named executive officers, Maurice H. Sullivan, Jr., Thomas J. Leetch, Jr., James J. Gavin, and Christopher Lake, in connection with the proposed merger payable pursuant to arrangements entered into with Peoples or Independent as disclosed in this proxy statement/prospectus. Peoples is asking its stockholders to adopt the following resolution at the special meeting:
“RESOLVED, that the stockholders of Peoples approve, on an advisory basis, the compensation that may become payable by Peoples to its named executive officers as disclosed pursuant to Item 402(t) of RegulationS-K in “The Merger – Interests of Peoples’ Executive Officers and Directors in the Merger.”
The descriptions of the payments contained in the section entitled “The Merger – Interests of Peoples’ Executive Officers and Directors in the Merger” including in the subsection entitled “Compensation of Peoples’ Named Executive Officers in Connection with the Merger” is intended to comply with Item 402(t) of Regulation S-K, which requires disclosure of information about compensation of each Peoples named executive officer in connection with the merger and that will or may become payable to the named executive officer either by Peoples or by Independent. Peoples is asking its stockholders to approve, on a non-binding advisory basis, such compensation to the extent that it is payable by Peoples.
The vote on this proposal is a vote separate and apart from the vote to approve the merger agreement. You may vote to approve the merger agreement and vote not to approve this proposal on executive compensation in connection with the proposed merger and vice versa. Because the vote is advisory in nature only, it will not be binding on either Peoples or Independent regardless of whether the proposed merger is completed. Accordingly, as the compensation to be paid in connection with the proposed merger is contractual with respect to the named executive officers, regardless of the outcome of this advisory vote, such compensation will be payable, subject only to the conditions applicable thereto, if the proposed merger is completed. The vote required to approve this proposal is the affirmative vote of a majority of the votes cast on the proposal. Abstentions and broker non-votes will have no effect on the outcome of voting on this proposal.
Peoples’ board of directors unanimously recommends that Peoples’ stockholders vote “FOR” approval of the advisory resolution on the compensation that may be received by Peoples’ named executive officers in connection with the proposed merger.
THE MERGER The discussion in this proxy statement/prospectus of the merger and the principal terms of the merger agreement are subject to, and are qualified in their entirety by reference to, the merger agreement, a copy of which is attached to this proxy statement/prospectus asAnnex A and is incorporated into this proxy statement/prospectus by reference. General The merger is structured as a 60%75% stock and 40%25% cash transaction. Under the terms and conditions set forth in the merger agreement, PeoplesMNB will merge with and into Independent, with Independent surviving the merger. At the effective time of the merger, each share of PeoplesMNB common stock outstanding immediately prior to the effective time will, by virtue of the merger and without any action on the part of the stockholder,shareholder, be converted into the right to receive either (i) $21.00$275.00 in cash or (2) 0.5523 of a share(ii) 3.55 shares of Independent common stock. The exchange ratio may be adjusted to reflect the effect of any stock split,split-up, reverse stock split, stock dividend, reorganization, recapitalization, reclassification, or other similar change with respect to the common stock of Independent or PeoplesMNB that occurs before the merger. Independent will not issue any fractional shares of its common stock in the merger, but will instead pay cash (determined on the basis of the volume weighted average closing price of Independent common stock on the NASDAQ Global Select Market for the five trading days ending on the fifth trading day immediately preceding the completion of the merger)Closing VWAP) for any fractional share a Peoples stockholderan MNB shareholder would otherwise receive after aggregating all of his or her shares. Peoples’ stockholdersMNB’s shareholders will be able to elect to receive cash, Independent common stock, or a combination of cash and Independent common stock for their shares of PeoplesMNB common stock. Regardless of a Peoples stockholder’san MNB shareholder’s choice, however, elections will be limited by the requirement that 60%75% of PeoplesMNB common stock be converted into Independent common stock and 40%25% be exchanged for cash. Therefore, the allocation of cash and Independent common stock that a Peoples stockholderan MNB shareholder will receive will depend on the elections of other Peoples’ stockholders.MNB shareholders. The allocation of the consideration payable to Peoples’ stockholdersMNB’s shareholders will not be known until the exchange agent tallies the results of the cash/stock elections made by Peoples’ stockholders.MNB’s shareholders. If a Peoples stockholderan MNB shareholder does not make an election, the type of consideration such stockholderthe shareholder will receive will depend on the consideration elected by other Peoples’ stockholders.
All outstanding unvested Peoples stock options and unvested shares of restricted Peoples common stock will become fully vested immediately prior to the effective time of the merger. Peoples options will be cancelled upon consummation of the merger, and each option holder will receive a cash payment upon such cancellation in an amount equal to the product of (i) the number of shares of Peoples common stock provided for by such option and (ii) the excess, if any, of the per share cash consideration of $21.00 over the exercise price of such option. All shares of accelerated restricted stock will be treated as outstanding Peoples shares for all purposes under the merger agreement, including for purposes of the holders’ right to receive the merger consideration.MNB shareholders.
Based on the number of shares of PeoplesMNB common stock outstanding on August 5, 2014,[●], 2018, of which 75% will be converted to Independent common stock, it is expected that approximately 2,068,287529,425 shares of Independent common stock will be issued to Peoples’ stockholdersMNB’s shareholders in connection with the merger, which would represent approximately 8.0%[●]% of the outstanding Independent common stock (based on the number of shares of Independent common stock outstanding as of August 5, 2014[●], 2018 and the number of shares of Independent common stock to be issued to Peoples’ stockholdersMNB’s shareholders in connection with the merger). Background of the Merger SinceIn 2012, Kevin P. Meehan purchased a majority of the completionshares of its conversion in 2010,MNB common stock and became the PeoplesChairman of the Board of MNB and Peoples Federal Savings Bank’s boardsMilford National. At all times relevant to this proxy statement/prospectus, Mr. Meehan beneficially owned approximately 62.1% of directors have regularly discussedMNB common stock and reviewed Peoples’his spouse, Patricia M. Meehan, beneficially owned approximately 5.5% of MNB common stock. Therefore, Mr. Meehan and Peoples Federal Savings Bank’s business, performance,Mrs. Meehan together own approximately 67.6% of MNB common stock.
Christopher Oddleifson, the Chief Executive Officer of Independent and prospects, and considered Peoples’ and Peoples Federal Savings Bank’s strategic options. From time to time, Peoples through its executive officers have had general discussionsRockland Trust, has been acquainted with other financial institutions regardingKristin T. Carvalho, the possibility at some time in the future of a potential affiliation and have met with representatives from Sandler O’Neill and other investment banking institutions to discuss the overall market, including the market for mergers and acquisitions.
On March 18, 2014, ChairmanPresident and Chief Executive Officer Maurice H. Sullivan, Jr. convened Messrs. Thomas J. Leetch, Jr., William Giudice,of MNB, for several years. During conversations which occurred prior to March 2018, Mr. Oddleifson indicated to Ms. Carvalho that Independent would have an interest in acquiring MNB if MNB was ever willing to consider a business combination.
In early 2018, Mr. Meehan tentatively decided to recommend that the MNB board of directors explore the possibility of MNB being acquired by a larger banking company in exchange for either cash, stock, or a combination of cash and Randolph Berry,stock. Mr. Meehan was influenced primarily by the increase in the valuation of most publicly traded banking companies in the U.S. during the several months leading up to and executive officers Christopher Lakefollowing the enactment of the Tax Cuts and James Gavin,Jobs Act of 2017 on December 22, 2017. He also was influenced by the progressively increasing share of revenue that smaller community banks, such as Milford National, were devoting to act as a working group to meet withregulatory compliance and technology costs. In late February 2018, Mr. Meehan contacted representatives of Sandler O’Neill to discuss the process and procedures for Peoples’ and Peoples Federal Savings Bank’s boards of directors to explore potential strategic alternatives. At that meeting, Chairman Sullivan and Messrs. Leetch, Giudice, Berry, Lake, and Gavin held a teleconference with representatives of Sandler O’Neill and Peoples’ legal counsel to discuss the potential process for Peoples to explore strategic alternatives and the procedures involved in such a process should Peoples’ and Peoples Federal Savings Bank’s board of directors determine to explore strategic alternatives, including a potential merger transaction. During that meeting, representatives of Sandler O’Neill provided the members of the working group with an overview of the current mergers and acquisitions market and Sandler O’Neill’s assessment of potential business combination partners for Peoples. As a part of those discussions, representatives of Sandler O’Neill discussed the operating environment faced by Peoples and similarly situated bank holding companies, the potential strategic alternatives available, and details of the present bank mergers and acquisitions environment. Chairman Sullivan concluded the teleconference with Sandler O’Neill and Messrs. Sullivan, Leetch, Giudice, Berry, Lake and Gavin attended the regular scheduled meeting of Peoples’ and Peoples Federal Savings Bank’s boards of directors which took place that afternoon. At the regular meeting of Peoples’ and Peoples Federal Savings Bank’s boards of directors held during the afternoon on March 18, 2014, Peoples’ and Peoples Federal Savings Bank’s boards of directors ratified Chairman Sullivan’s nomination of himself and Messrs. Leetch, Giudice, Berry, Lake, and James Gavin to act as a working group to investigate the possibility of Peoples’ entering into a strategic transaction with another financial institution. At the March 18, 2014 meeting of the boards of directors, Chairman Sullivan was authorizedMNB engaging Sandler to commence discussions and negotiations to retain Sandler O’Neill as an investment banking firm to provide independent financial advice to Peoples, survey potential partners, and assist Peoples’ and Peoples Federal Savings Bank’s boards of directors in exploring strategic alternatives. Following discussion,advise it was the consensus of the boards of directors that it would be in the best interests of Peoples, Peoples Federal Savings Bank and their stockholders, and other constituencies to solicit indications of interest from potentially interested parties to engage in a business combination with Peoples. The boards of directors authorized Sandler O’Neill when retained to prepare a confidential information memorandum regarding Peoples and to contact three identified potentially interested financial institutions and to seek to obtain signed confidentiality agreements from them. Peoples retained Sandler O’Neill by letter dated May 13, 2014. The boards of directors also authorized and directed Messrs. Sullivan and Leetch to retain the legal services of Bingham McCutchen LLP as legal counsel to Peoples’ board of directors as it explored potential strategic alternatives.
Upon adjourning the meeting of Peoples’ and Peoples Federal Savings Bank’s boards of directors held on March 18, 2014, Chairman Sullivan and Messrs. Leetch, Giudice, Berry, Lake, and Gavin reconvened a teleconference with representatives from Sandler O’Neill and instructed the representatives from Sandler O’Neill to contact Independent and two other financial institutions that were potentially interested in exploring a strategic alliance with Peoples.
During the week of May 19, 2014, Sandler O’Neill contacted Independent and the two other potentially interested financial institutions. On May 23, 2014, Independent and two other financial institutions executed confidentiality agreements with an effective date of May 21, 2014. On May 29, 2014, Sandler O’Neill circulated a confidential information memorandum to the three financial institutions that executed confidentiality agreements. The financial institutions, including Independent, were instructed to submit preliminary indications of interest by June 12, 2014.
On June 12, 2014, Independent sent a preliminary written indication of interest for a merger with Peoples to Sandler O’Neill. In its letter, Independent proposed that 65% of outstanding Peoples shares would be exchanged for Independent shares at a fixed exchange ratio of 0.5260 of an Independent share for each Peoples share and the remaining 35% of outstanding Peoples shares will be exchanged for $20.00 per share in cash. Independent’s June 12, 2014 letter also indicated that Independent was willing to “discuss” appointing a representative from Peoples’ board of directors to the Independent board of directors in connection with the transaction. One of the other financial institutions also submitted a preliminary written indication of interest for a merger with Peoples that provided for an all-stock, fixed exchange ratio transaction valued at $20.00 per share, and indicated its willingness to appoint one Peoples representative to its board of directors. The third financial institution declined to submit an indication of interest. Sandler O’Neill contacted both interested financial institutions that submitted indications of interest and asked each of them to consider improving its respective indication of interest prior to Sandler O’Neill’s presentation of such indications of interest to the boards of directors on June 17, 2014. Independent, through its financial advisor, indicated that it was willing to improve its indication of interest by increasing its exchange ratio to 0.5392 and the cash component to $20.50. The other bidder informed Sandler O’Neill that its indication of interest represented its best proposal.
At regularly scheduled concurrent meetings of Peoples’ board of directors and Peoples Federal Savings Bank’s board of directors held on June 17, 2014, legal counsel presented to the Peoples’ and Peoples Federal Savings Bank’s boards of directors a summary of their fiduciary duties and responsibilities in the context of a business combination transaction. Sandler O’Neill presented to the boards of directors a summary of the process which led to the receipt of the two indications of interest received and the financial and other material terms of the indications of interest. Sandler O’Neill reviewed with the boards of directors comparable precedent transactions and detailed financial information relating to each of the financial institutions submitting the indications of interest. In addition, Sandler O’Neill presented alternative strategies to the boards of directors, including: proceeding with one or both of the interested parties; requesting improvement of the consideration offered; expanding the process to a larger group of potential merger parties; or, terminating the process and continuing to operate as an independent institution. The boards of directors engaged in a lengthy discussion regarding the indications of interest as well as a detailed review of other financial organizations in the marketplace that might possibly be interested in a potential business combination with Peoples.
Following discussion and deliberation, it was the consensus of the boards of directors that it would be in the best interests of Peoples, Peoples Federal Savings Bank and their stockholders and other constituencies to proceed with due diligence with Independent and pursue a combination with Independent if Independent was willing to increase its stock/cash offer to $21 per share. Sandler O’Neill contacted Independent immediately following the meeting and, on June 18, 2014, Independent indicated it was willing to increase its offer in the context of a 60%/40% stock/cash merger if Peoples would agree to a period of exclusivity in which to complete due diligence and negotiate a merger agreement. Independent subsequently submitted a revised written indication of interest, which, in addition to other customary terms and conditions, provided for a transaction with a consideration structure in which 40% of the consideration would be in cash at $21.00 per share and 60% of the consideration would be in stock at a fixed exchange ratio of 0.5523 of a share. Independent’s June 18, 2014 letter also confirmed that Independent was willing to appoint one current Peoples director to Independent’s board of directors in connection with the transaction. Given that Independent’s offer was financially superior to the other bidder’s offer and that the other bidder had indicated that its $20.00 per share indication of interest was its best proposal, the working group of the board of directors of Peoples directed management to grant Independent a30-day period of exclusivity and continue negotiations with Independent.
On June 18, 2014, Independent and Peoples entered into an exclusivity agreement effective until the earlier of July 18, 2014 or the termination date of the exclusivity agreement. During the course of the due diligence investigation, Independent and Peoples extended the term of the exclusivity agreement through July 31, 2014.
On or about June 18, 2014, Peoples granted Independent access to a secure on-line electronic data room which contained due diligence information about Peoples.
On June 19, 2014, Independent held a regular meeting of its board of directors, at which the potential transaction with Peoples was discussed.
Independent conducted an on-site loan due diligence review of Peoples on June 30, 2014, July 1, 2014, and July 2, 2014, during which Independent representatives met with Peoples’ management to review loan files and discuss credit, recent trends, and business prospects.
On July 2, 2014, Peoples and Independent entered into a confidentiality agreement to protect any information which Independent would provide to Peoples in response to due diligence requests. On or about July 5, 2014, Independent granted Peoples access to a secure on-line electronic data room which contained due diligence information about Independent. On July 8, 2014, Peoples and its representatives conducted a one-day on-site loan due diligence review of Independent.
Peoples conducted an on-site due diligence review of Independent on July 11, 2014, during which Peoples’ representatives met with Independent’s management to discuss Independent’s business, results of operations, and business prospects.
On July 17, 2014, Independent held a regular meeting of its board of directors, at which the potential transaction with Peoples was discussed.
From July 3, 2014 until August 4, 2014, Peoples and Independent negotiated the terms of the merger agreement and the ancillary documents and Peoples and Independent continued their due diligence investigations of each other.
During the afternoon of August 5, 2014, Peoples’ and Peoples Federal Savings Bank’s boards of directors held concurrent special meetings to consider the definitive merger agreement and ancillary documents, which was also attended by representatives of Sandler O’Neill and legal counsel. Legal counsel reviewed in detail with the board of directors the proposed definitive merger agreement and all related documents, copies of which were delivered to each director before the meeting. Sandler O’Neill then reviewed in detail with the boards of directors the financial aspects of the proposed transaction and delivered its opinion to Peoples’ board of directors stating that the merger consideration as proposed was fair to Peoples’ stockholders from a financial point of view. The board of directors considered this opinion carefully, as well as Sandler O’Neill’s experience, qualifications, and interest in the proposed transaction, namely that Sandler O’Neill’s compensation was contingent upon the closing of the proposed transaction, as is customary of investment banks. After these presentations, executive management recommended approval of the merger to Peoples’ board of directors. Following discussion, Peoples’ and Peoples Federal Savings Bank’s boards of directors unanimously approved the merger agreement and authorized and directed management to execute and deliver the merger agreement, related bank merger agreement and ancillary documents.
Also during the afternoon of August 5, 2014, Independent’s board of directors held a special meeting to consider the definitive merger agreement and ancillary documents, which was also attended by representatives of Independent’s investment banker, Keefe, Bruyette & Woods, Inc. (“KBW”). Independent’s assistant general counsel reviewed in detail with the board of directors the proposed definitive merger agreement and all related documents, copies of which were delivered to each director before the meeting. Independent’s management then described, in detail, the strategic rationale for and anticipated financial impact of the transaction. KBW then reviewed, in detail, with the board of directors the financial aspects of the proposed transaction and delivered its opinion stating that the merger consideration was fair, from a financial point of view, to Independent. The board of directors considered KBW’s opinion carefully, as well as KBW’s experience, qualifications, and interest in the proposed transaction, namely that KBW’s compensation was contingent upon the closing of the proposed transaction, as is customary of investment banks. Independent’s management then presented a transaction risk assessment to the board of directors. After these presentations, management recommended approval of the transaction. Following extensive discussion, Independent’s board of directors unanimously approved the merger agreement and authorized and directed management to execute and deliver the merger agreement, related bank merger agreement, and ancillary documents.
After the close of the trading markets on August 5, 2014, Peoples and Independent issued a joint press release announcing the approval, adoption, and execution of the merger agreement.
Recommendation of Peoples’ Board of Directors
Peoples’ board of directors has unanimously approved the merger agreement and unanimously recommends that Peoples’ stockholders vote “FOR” the approval of the merger agreement and the merger.
Peoples’ Reasons for the Merger
In approving the merger agreement, Peoples’ board of directors consulted with Sandler O’Neill regarding the financial aspects and the fairness of the consideration to be paid to stockholders of Peoples in the transaction from a financial point of view and with Peoples’ legal counsel as to the board of directors’ fiduciary duties and the terms of the merger agreement. In arriving at its decision to approve the merger agreement, the board of directors also considered a number of factors, including:
The value of the consideration offered by Independent was commensurate with the prices paid in recent comparable transactions and, based on an indicated value of $21.00 per share, represented a 15.3% premium over the closing market price of Peoples’ common stock on August 4, 2014, the last trading day before the date of the merger agreement.
Peoples’ stockholders will have the opportunity to elect to receive Independent common stock in exchange for their shares of Peoples’ common stock subject to the allocation restrictions, enabling them to participate in any growth opportunities of the combined company.
Independent currently pays a quarterly cash dividend of $0.24 per share (or an implied annualized dividend for those electing and receiving stock of $0.53 per share based on the exchange ratio of 0.5523 of an Independent share for each Peoples share), compared to Peoples’ current quarterly cash dividend of $0.05 per share and special year-end dividend of $0.25 per share (or implied annualized dividend of $0.45 per share).
The results that Peoples could expect to obtain by continuing to operate independently and the likely benefits of continued independent operation to Peoples’ stockholders, compared to the value of the merger consideration offered by Independent.
The perceived risks to stockholder value presented by continued independent operations, including risks relating to the inherent uncertainties about future growth, performance, and economic conditions.
Information concerning the business, earnings, operations, financial condition and prospects of Peoples and Independent, both individually and as a combined company, and the likelihood of the transaction receiving the requisite regulatory approvals in a timely manner and without imposition of burdensome conditions.
Independent’s track record of successfully completing acquisition transactions and integrating the operations of the acquired companies.
The opinion rendered by Sandler O’Neill that, as of August 5, 2014, the merger consideration was fair to Peoples’ stockholders from a financial point of view.
The terms of the merger agreement and the structure of the merger, including that the merger is intended to qualify as a transaction of a type that is generally tax-free for U.S. federal income tax purposes.
The effect of the merger on Peoples Federal Savings Bank’s depositors, customers, and the communities served by Peoples Federal Savings Bank, as well as its effect on Peoples Federal Savings Bank’s employees. Peoples deems the merger with Independent to be an opportunity to provide depositors, customers, and the communities served by Peoples Federal Savings Bank with increased
| financial services and increased access to those services through more branch offices. Peoples also considered the opportunities for career advancement in a larger organization that would be available to Peoples employees who continue employment with the combined company after the merger and the severance benefits provided for in the merger agreement for any Peoples’ employees who do not continue employment with the combined company.
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Peoples’ board of directors also considered potential risks associated with the merger in connection with its decision to approve the merger agreement, including that other parties that might be interested in proposing a transaction with Peoples could be discouraged from doing so given the terms of the merger agreement generally prohibiting Peoples from soliciting, engaging in discussions or providing information regarding an alternative transaction, requiring Peoples to pay a termination fee to Independent under certain circumstances, and requiring Peoples’ executive officers and directors to execute agreements requiring them to vote in favor of the merger with Independent, all of which Independent required in order that it agree to enter into the merger agreement.
The foregoing discussion of the information and factors considered by Peoples’ board of directors is not exhaustive, but includes the material factors that Peoples’ and Peoples Federal Savings Bank’s boards of directors considered and discussed in approving and recommending the merger. In view of the wide variety of factors considered and discussed by Peoples’ and Peoples Federal Savings Bank’s boards of directors in connection with their evaluation of the merger and the complexity of these factors, the boards of directors did not quantify, rank or assign any relative or specific weight to the foregoing factors, rather it considered all of the factors as a whole. The boards of directors discussed the foregoing factors, including asking questions of Peoples’ management and legal and financial advisors, and reached general consensus that the merger was in the best interests of Peoples and its stockholders, Peoples Federal Savings Bank and its sole stockholder and the other constituencies of Peoples and Peoples Federal Savings Bank. In considering the foregoing factors, individual directors may have assigned different weights to different factors. The boards of directors did not undertake to make any specific determination as to whether any factor, or particular aspect of any factor, supported or did not support its ultimate decision to approve the merger agreement and the merger. The foregoing explanation of the reasoning of Peoples and Peoples Federal Savings Bank’s boards of directors and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the cautionary statements set forth in “Forward-Looking Statements” on page 23.
Opinion of Peoples’ Financial Adviser
By letter dated May 13, 2014, Peoples retained Sandler O’Neill to act as financial advisor to Peoples’ board of directors in connection with the Company’s consideration of a possible business combination involving Peoples and a second party. Sandler O’Neill issale transaction. Mr. Meehan was generally familiar with Sandler’s reputation as a nationally recognized investment banking firm whose principal business specialty is financial institutions.institutions, and in particular, Mr. Meehan was familiar with Sandler’s recent engagements representing banking companies located in Massachusetts in strategic combinations with larger companies.
Representatives of Sandler met with Mr. Meehan on February 27, 2018 to discuss the possibility of Sandler acting as MNB’s exclusive financial adviser and to review recent consolidation activity in the banking industry nationwide and in Massachusetts in particular. A representative of Sandler reviewed with Mr. Meehan a preliminary list of potential transaction partners and outlined various factors that could be expected to affect how a potential transaction partner would value MNB in an acquisition transaction. In addition, a representative of Sandler summarized the ordinary courserelative advantages and disadvantages of its investmentvarious approaches that MNB may choose to assess the interest of potential transaction partners, ranging from a negotiated transaction to a full auction. Representatives of Sandler explained that in a negotiated transaction, Sandler would solicit on behalf of MNB an indication of interest from a banking business,company perceived to be the party most likely to conclude a transaction on favorable terms, and in a full auction, Sandler O’Neill is regularly engagedwould solicit indications of interest from a broad range of interested prospective buyers. Representatives of Sandler also noted that MNB may wish to consider a limited auction in which MNB would solicit indications from a smaller group of prospective transaction partners. At a meeting of the MNB board of directors on March 2, 2018, Mr. Meehan briefed board members on his discussions with Sandler. Mr. Meehan relayed that industrywide consolidation was continuing in the community bank sector, as industry dynamics, including rising costs associated with compliance, technology, and risk management, increasingly favored larger community banks. Mr. Meehan also relayed Sandler’s observation that the general increase in the valuation of publicly traded banking companies beginning in the fourth quarter of 2017 evidently was the cause of an increase in the valuation of community banks in recent acquisition transactions. Mr. Meehan also briefed the MNB board regarding how a sale process may be structured, and provided the board with Sandler’s list of potential transaction partners. After extensive discussions, the MNB board of directors authorized Mr. Meehan to engage Sandler to act as MNB’s exclusive financial institutionsadviser and, working with representatives of Sandler with the assistance of Ms. Carvalho and other Milford National executives, to seek an indication of interest for MNB’s acquisition from one or more larger banking companies. The MNB board of directors also delegated to Mr. Meehan the authority, in consultation with Sandler and Nutter McClennen & Fish, MNB’s legal counsel, to choose whether to engage in a negotiated transaction or a full or limited auction process, and to negotiate the material terms of an acquisition of MNB. MNB and Sandler entered into an engagement letter as of March 8, 2018. In March 2018, following Sandler’s engagement, representatives of Sandler met in person and by phone on numerous occasions with Mr. Meehan, Ms. Carvalho, and Daniel R. Devine, Senior Vice President and Chief Financial Officer of MNB and Milford National, to become familiar with the business, financial condition, recent operating results, and prospects of MNB and Milford National. By late March, MNB had prepared, with Sandler’s assistance, a confidential information memorandum for Sandler to use to solicit indications of interest in either a negotiated transaction or an auction process on MNB’s behalf, and MNB, with Sandler’s assistance, began identifying a relatively small number of larger banking companies, including Independent, which MNB expected would have significant interest in acquiring MNB. In late March 2018, after considering various alternatives, Mr. Meehan instructed representatives of Sandler to inform Independent that MNB was interested in negotiating exclusively with Independent if it expressed a strong initial interest in acquiring MNB. In choosing to pursue a negotiated transaction with Independent rather than a limited or full auction process, Mr. Meehan considered input from representatives of Sandler and Ms. Carvalho, among other factors, and consulted with Nutter. Based on Ms. Carvalho’s prior discussions with Mr. Oddleifson and Sandler’s familiarity with the recent consolidation in the Massachusetts banking industry, Mr. Meehan had reason to believe that Independent had an interest in expanding its commercial lending in the Worcester County banking market. A representative of Sandler contacted Independent, provided the draft confidential information memorandum, and informed Independent that although MNB was prepared to solicit bids concurrently from multiple parties, MNB’s preference was to negotiate exclusively with Independent if, after its initial due diligence, Independent expressed strong initial interest in acquiring MNB. Within several days, Independent asked to meet preliminarily with Mr. Meehan and Ms. Carvalho. Independent subsequently entered into a confidentiality agreement with MNB in early April 2018, and scheduled a meeting with Mr. Meehan and Ms. Carvalho for April 13, 2018. In advance of that meeting, representatives of Sandler provided Mr. Meehan with an overview of Independent, consisting of publicly available historical financial data, publicly available analyst estimates for Independent, an analysis of the market performance of Independent common stock; a summary of Independent’s previous acquisitions; and a preliminary contribution analysis, showing in a hypothetical combination of MNB and Independent. That preliminary contribution analysis showed that Milford National would contribute 2.1% of the combined company’spre-tax earnings for the twelve months ended December 31, 2017, and 4.0% of its tangible book value if the combination had occurred on December 31, 2017. On April 13, 2018, Mr. Meehan, Ms. Carvalho and a representative of Sandler met with Mr. Oddleifson, Robert D. Cozzone, Independent’s Chief Financial Officer and Rockland Trust’s Executive Vice President of Consumer and Business Banking, and Gerard F. Nadeau, Rockland Trust’s President and Chief Commercial Banking Officer. Mr. Meehan and Ms. Carvalho described the business, financial condition, recent operating results, and prospects of MNB and Milford National, and the Independent and MNB teams discussed the potential synergies that Independent might achieve in an acquisition of MNB. On April 17, 2018, Independent delivered to MNB a preliminary, nonbinding expression of interest, proposing a merger of MNB with and into Independent in which 20% of MNB common stock would be acquired by Independent for $275.00 per share in cash, and Independent would exchange 3.754 shares of Independent common stock for each of the remaining shares of MNB common stock, also sometimes referred to as the exchange ratio. Based upon the closing price of Independent stock on the Nasdaq Global Select Market on April 16, 2018 of $73.25, each share of MNB common stock to be exchanged for Independent common stock in the merger had an implied value of $274.98, and in the aggregate, MNB was valued at $54.3 million, representing 201% of MNB’s tangible book value as of March 31, 2018. On the terms proposed, MNB shareholders would have owned approximately 2.1% of Independent common stock outstanding immediately after the merger. The terms proposed in the expression of interest were subject to a customary due diligence review by Independent and its advisors, including anin-depth review of Milford National’s loan portfolio and outstanding contractual commitments, and the negotiation of a definitive merger agreement and ancillary documents. Independent’s April 17, 2018 expression of interest also specified that Independent was willing to negotiate a definitive merger agreement only if MNB agreed to negotiate exclusively with Independent until May 17, 2018 and if Mr. Meehan agreed in principle to enter into a shareholder agreement to limit the number of shares of Independent common stock that Mr. Meehan could sell post-closing, to restrict Mr. Meehan from acquiring more than 2% of the shares of Independent common stock, and to require Mr. Meehan to follow any recommendation by Independent’s board of directors or management when voting shares of Independent common stock. Independent also stated in its expression of interest that it wished to discuss with Mr. Meehan a potentialnon-competition and consulting agreement that would become effective upon the completion of the merger. Shortly after receiving the expression of interest, representatives of Sandler presented analyses to Mr. Meehan showing the impact on Independent and MNB shareholders if Independent were to increase to 25% and 30%, respectively, the percentage of MNB common stock that would receive cash in a merger with Independent. Representatives of Sandler also presented its assessment of the hypothetical financial ability of various larger banking companies headquartered in southern New England to offer terms that would be financially superior to those in Independent’s expression of interest. Sandler considered two categories of potential acquirers: eight publicly traded banking companies and ten mutual banking companies. For each group, representatives of Sandler assumed a transaction in which MNB would be valued at 201% of its tangible book value as of March 31, 2018. For the publicly traded group, representatives of Sandler assumed that 20% of MNB common stock would receive cash and the remaining MNB common stock would receive buyer common stock, and for the mutual group, representatives of Sandler assumed that MNB shareholders would receive only cash. Taking into account publicly available financial data, including, where available, analyst estimates for 2019 earnings per share for the publicly traded companies, representatives of Sandler estimated the extent to which such a merger would increase (i.e., be accretive to) or decrease (i.e., be dilutive to) the buyer’s earnings per share in 2019 and 2020. Representatives of Sandler also estimated the extent to which the merger would have decreased the buyer’s tangible book value per share if the closing had occurred as of March 31, 2018. In addition, representatives of Sandler provided an analysis of what Independent’s exchange ratio would have been if Independent were to value its common stock as of various recent dates or using a volume weighted average price (sometimes referred to as “VWAP”) over recent periods ranging from 5 to 20 trading days, all of which would have resulted in an exchange ratio greater than 3.754 if MNB common stock were valued at $275.00 per share. After considering Independent’s expression of interest and Sandler’s analyses described above, Mr. Meehan requested a meeting with Independent’s senior management to discuss Independent’s expression of interest. On April 23, 2018, Mr. Meehan and a representative of Nutter met in person with Mr. Oddleifson, Mr. Cozzone, and Edward H. Seksay, Independent’s General Counsel. Mr. Meehan informed the Independent team that he anticipated the MNB board of directors would prefer that a larger percentage of MNB common stock receive cash in the merger and that the exchange ratio should be greater in light of the range of trading prices for Independent common stock during the preceding several weeks. Mr. Meehan also expressed his willingness to enter into a shareholder agreement with Independent on terms generally consistent with those outlined in the expression of interest. With respect to the potentialnon-competition and consulting agreement referenced in the expression of interest, Mr. Meehan informed Independent that he would prefer that instead of Rockland Trust entering into an agreement solely with him, Rockland Trust enter into agreements with Mr. Meehan, Ronald J. Masiello, a director of MNB and Milford National, and Paul Zekos, a former director of MNB and Milford National. Mr. Meehan explained that he and Messrs. Masiello and Zekos had each been a fruitful source of commercial loan referrals to Milford National in recent years. Mr. Meehan proposed that the compensation Independent would otherwise be willing to pay him should be allocated equally among Messrs. Meehan, Masiello, and Zekos. Later on April 23, 2018, Independent provided a revised, nonbinding expression of interest. The revised expression of interest increased to 30% the percentage of MNB common stock that would be acquired for $275.00 per share in cash, and increased to 3.82 the number of shares of Independent common stock that Independent would issue in exchange for each of the remaining shares of MNB common stock. Based upon the closing price of Independent common stock on April 23, 2018 of $72.70, each share of MNB common stock to be exchanged for Independent common stock in the merger had an implied value of $276.90, and in the aggregate, MNB was valued at approximately $55 million, representing 202% of MNB’s tangible book value as of March 31, 2018. The terms proposed in the April 23, 2018 expression of interest remained subject to a customary due diligence review by Independent and its advisors. In light of the revised expression of interest from Independent, MNB and Independent agreed as of April 24, 2018 that MNB would negotiate exclusively with Independent through May 17, 2018, later extending the exclusivity period through May 29, 2018. From April 24, 2018 throughmid-May 2018, Independent and its advisors engaged in a customary due diligence review of the business, financial condition, recent operating results, and prospects of MNB and Milford National, including anin-depth review of Milford National’s loan portfolio and outstanding contractual commitments. On April 26, 2018, Mr. Meehan and a representative from Nutter briefed the boards of directors of MNB and Milford National regarding the process leading to MNB’s decision to pursue a negotiated transaction with Independent and the material terms of Independent’s April 23, 2018 expression of interest. Mr. Meehan and the Nutter representative responded to questions from directors. Among other things, the MNB directors noted the fact that many MNB shareholders had held MNB stock for a long period of time and that MNB stock did not have a liquid secondary trading market. The board also observed that with respect to any share of MNB common stock exchanged for Independent common stock in the merger, no gain would be recognized by a United States holder of MNB common stock upon receipt of shares of Independent common stock. Following the delivery of the April 23, 2018 expression of interest, Independent and each of Messrs. Meehan, Masiello, and Zekos began to negotiate the structure of anon-competition,non-solicitation, and market consulting agreement. Each of Messrs. Meehan, Masiello, and Zekos met with representatives of Independent on May 14, 2018 to discuss the terms of such an agreement. On May 8, 2018, Independent updated representatives of Sandler on certain aspects of its due diligence review and informed Sandler that Independent no longer was prepared to negotiate a definitive agreement with MNB on the economic terms set forth in its April 23, 2018 expression of interest. Independent explained that as a result of its due diligence review, it determined that it would need to revise certain assumptions underlying that expression of interest. After a proposal by Independent and a counterproposal by MNB, Independent and MNB agreed in principle on May 8, 2018 to the economic terms ultimately reflected in the merger agreement – namely, that 25% of MNB common stock would be acquired by Independent for $275.00 per share in cash, and Independent would issue 3.55 shares of Independent common stock in exchange for each of the remaining shares of MNB common stock. Based upon the closing price of Independent stock on May 8, 2018 of $74.70, each share of MNB common stock to be exchanged for Independent common stock in the merger had an implied value of $265.19, and in the aggregate, MNB was valued at approximately $52.8 million, representing 194% of MNB’s tangible book value as of March 31, 2018. From May 8, 2018 through May 28, 2018, Independent and MNB negotiated the terms of the merger agreement, the voting agreement, the bank merger agreement, and ancillary documents. Concurrently, Independent negotiated the shareholder agreement with Mr. Meehan and Mrs. Meehan, and Rockland Trust negotiated thenon-competition,non-solicitation, and market consulting agreement with Messrs. Meehan, Masiello, and Zekos. The parties ultimately structured thenon-competition,non-solicitation, and market consulting agreement whereby Rockland Trust would pay each consultant $12,500 per month in exchange for each of the consultants introducing potential customers to Rockland Trust and agreeing to certainnon-competition andnon-solicitation restrictions. Each of Rockland Trust and the three consultants would have the right to terminate their securitiesservices under certain circumstances. For a further discussion of the terms of this agreement, see “The Merger – Interests of MNB’s Executive Officers and Directors in theMerger –Non-Competition,Non-Solicitation and Market Consulting Agreement with Kevin P. Meehan, Ronald J. Masiello and Paul Zekos,” beginning on page [●] of this proxy statement/prospectus. In addition, Independent, Rockland Trust, MNB, and Milford National negotiated settlement agreements with Ms. Carvalho and Mr. Devine, confirming the amounts to be paid to them in connection with mergerstheir respective change in control agreements. See “The Merger – Interests of MNB’s Executive Officers and acquisitions Directors in the Merger – Settlement Agreement with Kristin T. Carvalho” and other corporate transactions.“– Settlement Agreement with Daniel R. Devine,” beginning on page [●] of this proxy statement/prospectus. On May 29, 2018, the boards of directors of MNB and Milford National met with representatives of Sandler O’Neill was also generally familiar with Peoples, having acted as offering agent for Peoplesand Nutter in connection with its initial public offeringattendance. The directors reviewed in 2010. Sandler O’Neill acted as financial advisor to Peoples in connection withdetail the proposed transaction and participated in certainmaterial terms of the negotiations leadingdraft merger agreement, including the provisions relating to the executionterms of the merger agreement. Atconsideration, the August 5, 2014respective closing conditions of MNB and Independent, MNB’s ability to consider unsolicited “Acquisition Proposals” under certain circumstances (see “The Merger Agreement – No Solicitation” beginning on page [●] of this proxy statement/prospectus for a discussion of what constitutes an Acquisition Proposal under the merger agreement), the circumstances under which either MNB or Independent would have the right to terminate the merger agreement, and the termination fee payable by MNB to Independent under certain circumstances. The Nutter representative informed the directors that Independent had conditioned its willingness to enter into the merger agreement on obtaining voting agreements from both Mr. Meehan and Mrs. Meehan, who in the aggregate own more than thetwo-thirds of the shares of MNB common stock necessary to approve the merger. In addition, during an executive session with Ms. Carvalho not present, the Nutter representative briefed the directors on the terms of the settlement agreements with Ms. Carvalho and Mr. Devine, including the $100,000 transaction bonus payable to Ms. Carvalho upon completion of the merger.
Also at the May 29, 2018 meeting at which Peoples’of the boards of directors of MNB and Milford National, representatives of Sandler reviewed the financial aspects of the proposed merger and rendered to the MNB board of directors consideredSandler’s opinion (which was initially rendered verbally and approved the merger agreement, Sandler O’Neill deliveredconfirmed in a written opinion, dated May 29, 2018) to the board of directors its written opinioneffect that, as of such date the merger consideration was fairand subject to the holders of Peoples common stock from a financial point of view.Sandler O’Neill’s fairness opinion was approved by Sandler O’Neill’s Fairness Opinion Committee.The full text of Sandler O’Neill’s opinion is attached as Annex B to this proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Sandler O’Neillas set forth in rendering its opinion. The descriptionsuch opinion, the merger consideration in the proposed merger was fair, from a financial point of view, to the holders of MNB common stock. See “The Merger –Opinion of MNB’s Financial Advisor,” beginning on page [●] of this proxy statement/prospectus, and the Sandler opinion included asAnnex B to this proxy statement/prospectus. Following those presentations and discussions, and a discussion by the directors of the opinion set forth below is qualified inproposed merger, which considered the factors described under “MNB’s Reasons for the Merger” beginning on page [●] of this proxy statement/prospectus, the boards of directors determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger of MNB with and into Independent, with Independent the surviving entity, were advisable to MNB and its entiretyshareholders and Milford National. The directors of MNB and Milford National then unanimously voted to approve the proposed merger and to authorize the merger agreement and the transactions contemplated by referencethe merger agreement. On May 29, 2018, the boards of directors of Independent and Rockland Trust met to consider the full textproposed transaction. Independent’s management reviewed the business terms and financial expectations for the proposed merger, and presented a detailed risk assessment of the opinion. Holders of Peoples common stock are urgedproposed merger. In addition, Keefe, Bruyette & Woods, Inc., an investment bank engaged by Independent solely to read the entireprovide a fairness opinion carefully in connection with their considerationthe transaction, reviewed the financial aspects of the proposed merger.merger and delivered its opinion that, as of May 29, 2018 and subject to certain limitations, assumptions, and qualifications, the merger consideration was fair to Independent, from a financial point of view. Following those presentations and discussions, and a discussion by the Independent board of directors of the proposed merger, which considered the factors described under “Independent’s Reasons for the Merger,” the board of directors determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger of MNB with and into Independent, with Independent the surviving entity, were advisable and in the best interests of Independent and its shareholders. The board of directors of Independent and Rockland Trust then unanimously voted to approve the proposed merger and to authorize the merger agreement and the transactions it contemplated. Thereafter, the parties executed and delivered the merger agreement and ancillary documents. A joint press release announcing the approval, adoption, and execution of the merger agreement was then issued on May 29, 2018 and Independent filed a Form8-K with the SEC. Recommendation of MNB’s Board of Directors MNB’s board of directors has unanimously approved the merger agreement and unanimously recommends that MNB shareholders vote “FOR” the approval of the MNB merger agreement proposal. MNB’s Reasons for the Merger The boards of directors of MNB and Milford National unanimously determined that the merger agreement and the merger are advisable and in the best interests of MNB and its shareholders and Milford National. Accordingly, the boards of directors of MNB and Milford National adopted and approved the merger agreement, and the MNB board of directors is unanimously recommending that MNB’s shareholders vote “FOR” the MNB merger agreement proposal. In determining to unanimously adopt and approve the merger agreement and the merger, the directors of MNB and Milford National evaluated the merger and the merger agreement in consultation with MNB’s financial advisor and legal counsel, drew on their knowledge of Milford National’s business, operations, properties, assets, financial condition, operating results, and prospects, and also considered the following factors in favor of the decision to enter into the merger agreement: the prospects of continuing to operate as an independent banking institution, including the challenges associated with such continued independent operation, such as continued competition from other financial institutions that could adversely affect Milford National’s ability to meet growth targets; the continuing escalation of regulatory compliance and technology costs; and the possible impact of these challenges on the value of MNB common stock compared to the merger consideration offered by Independent; the continued illiquidity of an investment in MNB common stock if MNB were to continue to operate as an independent company; the weighted average merger consideration of $273.23 per share of MNB common stock, based upon the closing price of Independent stock on the Nasdaq Global Select Market on May 25, 2018 of $76.80, representing 200% of the tangible book value per share of MNB common stock as of March 31, 2018; the stock component of the merger consideration would allow MNB shareholders to participate in the benefit of the anticipated synergies from the transaction following the closing of the merger, while the cash portion of the merger consideration would provide liquidity and certainty of value; Independent’s recent dividend history; the fact that MNB may choose to terminate the merger agreement if both theten-day volume weighted average closing price (“VWAP”) of Independent’s common stock as of a measurement date prior to closing is less than $60.09, which would be more than 20% below theten-day VWAP of Independent’s common stock for the trading period ended May 25, 2018 ($75.11), and Independent common stock underperforms the Nasdaq Bank Stock Index during the same time period by more than 20%; the terms of the merger, including the expected tax treatment of the merger as a “reorganization” for U.S. federal income tax purposes; the process conducted by MNB, with the assistance of its financial advisor and legal counsel and at the direction of MNB’s board of directors acting through its Chairman and majority shareholder, to evaluate Independent’s expressions of interest; the opinion, dated May 29, 2018, of Sandler O’Neill’s opinion speaks onlyto the MNB board of directors as to the fairness, from a financial point of view and as of the date of the opinion, and was necessarily based on financial, economic, market and other conditions as they existed on, and the information made available to Sandler O’Neill as of, that date. Events occurring or information available after that date could materially affect its opinion. Sandler O’Neill has not undertaken to update, revise, reaffirm or withdraw its opinion or otherwise comment upon events occurring after the date of its opinion. The opinion was directed to Peoples’ board of directors and is directed only to the fairnessholders of MNB common stock of the merger consideration to the holders of Peoples common stock from a financial point of view. It does not address the underlying business decision of Peoples to engage in the proposed merger, or any other aspectas more fully described below under “Opinion of MNB’s Financial Advisor” beginning on page [●] of this proxy statement/prospectus; the fact that the merger agreement was the product of arms’ length negotiations between representatives of MNB and is not a recommendation to any holder of Peoples’ common stock as to how such stockholder should vote at the special meeting with respect to the merger, the form of consideration a stockholder should elect in the merger or any other matter.Sandler O’Neill did not express any opinion as to the fairness of the amount or nature of the compensation to be received in the merger by Peoples’ officers, directors or employees, or class of such persons, relative to the per share consideration to be received by Peoples’ stockholders.In connection with rendering its opinion, Sandler O’Neill reviewed and considered, among other things:
the merger agreement;
certain publicly available financial statements and other historical financial information of Peoples that they deemed relevant, including a draft of Peoples’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2014;
certain publicly available financial statements and other historical financial information of Independent that they deemed relevant;
budget information for the fiscal year ending September 30, 2014 prepared by Peoples management and guidance from senior management of Peoples for the years thereafter, management having advised them that no detailed projections for periods subsequent to the fiscal year ending September 30, 2014 were available;
publicly available analyst earnings estimates for Peoples for the fiscal years ending September 30, 2014 and 2015;
publicly available analyst earnings estimates for Independent for the years ending December 31, 2014 and 2015;
the pro forma financial impact of the merger on Independent based on assumptions relating to transaction expenses, purchase accounting adjustments, cost savings and other synergies as determined by the senior managementrepresentatives of Independent, and discussed with Peoples’ senior management;
a comparison of certain financial and other information, including stock trading information, for Peoples and Independent with similar publicly available information for certain other publicly traded thrift institutions and commercial banks, respectively;
the financial terms of certain other recent merger and acquisition transactions in the banking sector; the current market environment generally and the banking environment in particular; and
such other information, financial studies, analyses and investigations and financial, economic and market criteria as they considered relevant.
Sandler O’Neill also discussed with certain membersbelief of the senior managementboards of Peoples the business, financial condition, resultsdirectors of operationsMNB and prospects of Peoples and held similar discussions with the senior management of Independent regarding the business, financial condition, results of operations and prospects of Independent.
In performing its reviews and analyses and in rendering its opinion, Sandler O’Neill relied upon the accuracy and completeness of all of the financial and other information that was available to them from public sources, that was provided to them by Peoples and Independent or their respective representatives or that was
otherwise reviewed by them and they assumed such accuracy and completeness for purposes of rendering its opinion. Sandler O’Neill further relied on the assurances of senior management of each of Peoples and Independent that they are not aware of any facts or circumstances that would make any of such information inaccurate or misleading in any material respect. Sandler O’Neill was not asked to, and did not, undertake an independent verification of any of such information and did not assume any responsibility or liability for the accuracy or completeness thereof. Sandler O’Neill did not make an independent evaluation or appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of Peoples or Independent or any of their respective subsidiaries. Sandler O’Neill did not review any individual credit files of Peoples or Independent or make an independent evaluation of the adequacy of the allowance for loan losses of Peoples or Independent, and assumed, with Peoples’ consent,Milford National that the respective allowances for loan losses for both Peoples and Independent were adequate to cover any such losses.
In preparing its analyses, Sandler O’Neill used publicly available earnings estimates and guidance from senior management of Peoples, which senior management of Peoples confirmed reflected the best judgments of management of the future financial performance of Peoples. With respect to Independent, Sandler O’Neill used publicly available earnings estimates as discussed with the senior management of Independent. Sandler O’Neill also received and used in its analyses certain projections of transaction costs, purchase accounting adjustments and expected cost savings which were prepared by and/or reviewed with senior management of Independent. With respect to these projections, Sandler O’Neill assumed that they had been reasonably prepared on a basis reflecting the best currently available estimates and judgments of such management, and Sandler O’Neill assumed that such performance would be achieved. Sandler O’Neill expressed no opinion as to such estimates or projections or the assumptions on which they were based. Sandler O’Neill also assumed that there had been no material change in the respective assets, financial condition, results of operations, business or prospects of Peoples or Independent since the date of the most recent financial data made available to them as of the date of their opinion.
Sandler O’Neill assumed in all respects material to its analysis that Peoples and Independent will remain as going concerns for all periods relevant to its analyses, that the parties to the merger agreement will comply with all material terms of the merger agreement are reasonable, including that all of the representations and warranties contained in the merger agreement are trueallows MNB to consider unsolicited acquisition proposals under certain circumstances and correct, that each party to terminate the merger agreement will perform all of the covenants requiredin order to be performed by such party under the agreementaccept a superior proposal, and that the conditions precedent intermination fee that would be payable to Independent upon termination of the merger agreement willin order to accept a superior proposal would not be waived, that no delay, limitation, restriction ordeter another serious bidder from making a competing acquisition proposal (for a more detailed discussion of acquisition proposals and superior proposals, see “The Merger Agreement – No Solicitation” beginning on page [●] of this proxy statement/prospectus);
the ability of Independent to pay the cash merger consideration without needing to condition will be imposed that would have an adverse effect on Peoples, Independent or the merger and that on obtaining additional sources of financing; the merger will be consummated in accordance with the termslikelihood of the Agreement without any waiver, modification or amendmentIndependent obtaining regulatory approval of any material term, condition or agreement thereof and in compliance with all applicable laws and other requirements. Finally, with Peoples’ consent, Sandler O’Neill relied upon the advice Peoples received from its legal, accounting and tax advisors as to all legal, accounting and tax matters relating to the merger and the other transactions contemplated by the merger agreement. Sandler O’Neill expressed no opinion as to any such matters.In rendering its opinion, Sandler O’Neill performedagreement within a varietyreasonable and customary timeframe; and
the belief of financial analyses. The summary below is not a complete description of all the analyses underlying Sandler O’Neill’s opinion or the presentation made by Sandler O’Neill to Peoples’ boardboards of directors but isof MNB and Milford National that, while no assurance can be given, the probability of completing the merger appears to be high. The boards of directors of MNB and Milford National considered the following factors as generally weighing against a summary of all material analyses performed and presented by Sandler O’Neill. The summary includes information presented in tabular format.In orderdecision to fully understandenter into the financial analyses, these tables must be read together with merger agreement: the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Also, no company included in Sandler O’Neill’s comparative analyses described below is identical to Peoples or Independent and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factorsfact that, could affect the public trading values or merger transaction values, as the case may be, ofPeoples and Independent and the companies to which they are being compared. In arriving at its opinion, Sandler O’Neill did not attribute any particular weight to any analysis or factor that it considered. Rather, it made qualitative judgments as to the significance and relevance of each analysis and factor. Sandler O’Neill did not form an opinion as to whether any individual analysis or factor (positive or negative) considered in isolation supported or failed to support its opinions; rather, Sandler O’Neill made its determination as to the fairnessbecause 75% of the merger consideration is payable in shares of Independent common stock, MNB shareholders will be adversely affected by any decrease in the trading price of Independent common stock prior to completion of the merger, and may receive less value for their shares upon completion of the merger than the weighted average merger consideration of $273.23 per share of MNB common stock, based upon the closing price of Independent stock on May 25, 2018 of $76.80;
the basis of its experiencerisks and professional judgment after considering the results of all its analyses taken as a whole.In performing its analyses, Sandler O’Neill also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which cannot be predicted and are beyond the control of Peoples, Independent and Sandler O’Neill. The analyses performed by Sandler O’Neill are not necessarily indicative of actual values or future results, both of which may be significantly more or less favorable than suggested by such analyses. Sandler O’Neill prepared its analyses solely for purposes of rendering its opinion and provided such analysescontingencies related to the Peoples’ boardannouncement and pendency of directors at its August 5, 2014, meeting. Estimatesthe merger, including the diversion of management and employee attention, potential employee attrition and the resulting effect on Milford National’s customers and business relationships;
the values of companies do not purportrisks related to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty and actual values may be materially different. Accordingly, Sandler O’Neill’s analyses do not necessarily reflect the value of Peoples’Independent common stock, orincluding the prices at which Peoples’ or Independent’srisk of fluctuations in the market price of Independent common stock, may be sold at any time. The analysesincluding fluctuations between the date of Sandler O’Neill and its opinion were among a number of factors taken into consideration by Peoples’ board of directors in making its determination to approve the merger agreement and the analyses described below should not be viewed as determinativeeffective date of the decisionmerger and between that date and when MNB shareholders have completed the exchange of Peoples’their shares of MNB common stock and are practically able to freely sell all of the shares of Independent common stock received as merger consideration; and the risk that one or more other parties that might otherwise be interested in proposing a transaction with MNB could be discouraged from doing so by the voting agreement between Independent and each of Mr. and Mrs. Meehan, as well as by the terms of the merger agreement that generally prohibit MNB from soliciting, engaging in discussions or providing information regarding an alternative transaction, require MNB to negotiate with Independent in good faith if Independent proposes to make adjustments in the terms and conditions of the merger agreement so that an acquisition proposal ceases to constitute a superior proposal, and require MNB to pay a termination fee to Independent under certain circumstances, although the MNB board of directors or management with respect tobelieves the fairnessamount of the merger.Summarytermination fee of Proposal. Sandler O’Neill reviewed$1,600,000 (which is equal to approximately 2.96% of the financialaggregate merger consideration based upon the closing price of Independent stock on May 25, 2018 of $76.80) is reasonable in the context of termination fees in comparable transactions and in light of the overall terms of the proposed transaction. As describedmerger agreement and would not deter another serious bidder from making a competing “Acquisition Proposal,” as defined in the merger agreement Peoples’ stockholders will receive, subject to proration, in exchange for each share(for a more detailed discussion of Peoples stock either: (i) 0.5523acquisition proposals and superior proposals, see “The Merger Agreement – No Solicitation” beginning on page [●] of a share of Independent common stock or (ii) $21.00 in cash. Using a 5-day average of Independent’s stock price of $36.62, based upon 6,241,436 common shares outstanding and options to purchase 642,735 Peoples shares with a weighted average strike price of $15.74 per share, Sandler O’Neill calculated a per sharethis proxy statement/prospectus).
During its consideration of $20.54 and aggregate consideration of approximately $131.6 million. Based upon financial information for Peoples as or for the twelve months ended June 30, 2014, Sandler O’Neill calculatedmerger agreement, the following transaction ratios: | | | | | Transaction Value / Book Value Per Share:
| | | 124 | % | | | Transaction Value / Tangible Book Value Per Share:
| | | 124 | % | | | Transaction Value / LTM Earnings Per Share:
| | | 57.0 | x | | | Tangible Book Premium to Core Deposits¹:
| | | 7.4 | % | | | Market Premium2:
| | | 12.7 | % |
1 | Excludes CDs greater than $100,000 |
2 | Based upon the closing price of Peoples’ common stock on August 4, 2014 of $18.22. |
The aggregate transaction value was approximately $131.6 million, based upon 6,241,436 shares of Peoples common stock outstanding and including the implied value of options to purchase an aggregate of 642,735 shares outstanding with a weighted average exercise price of $15.74 per share.
Stock Trading History. Sandler O’Neill reviewed the history of the publicly reported trading prices of Peoples’ common stock and Independent’s common stock for the one-year and three-year periods ended August 4, 2014. Sandler O’Neill then compared the relationship between the movements in the price of Peoples’ and Independent’s common stock, respectively, to movements in certain stock indices and the performance of a peer group of publicly traded banking institutions for each of Peoples and Independent selected by Sandler O’Neill and described under“Comparable Company Analysis”below. During the one-year and three-year
periods, Peoples’ common stock underperformed each of the indices to which it was compared. During the one-year and three-year periods, Independent’s common stock underperformed the NASDAQ Bank Index and the S&P 500 Index. During the same periods, Independent’s common stock underperformed its Peer Group Index during the one-year period, but outperformed the Index during the three-year period.
Peoples’ One-Year Stock Performance
| | | | | | | | | | | | Beginning Value
August 4, 2013 | | | Ending Value
August 4, 2014 | | Peoples | | | 100 | % | | | 98.5 | % | Peoples Peer Group | | | 100 | % | | | 98.9 | % | SNL U.S. Thrift | | | 100 | % | | | 103.9 | % | S&P 500 Index | | | 100 | % | | | 113.4 | % |
Peoples’ Three-Year Stock Performance
| | | | | | | | | | | | Beginning Value
August 4, 2011 | | | Ending Value
August 4, 2014 | | Peoples | | | 100 | % | | | 128.2 | % | Peoples Peer Group | | | 100 | % | | | 136.4 | % | SNL U.S. Thrift | | | 100 | % | | | 135.5 | % | S&P 500 Index | | | 100 | % | | | 161.6 | % |
Independent’s One Year Stock Performance
| | | | | | | | | | | | Beginning Value
August 4, 2013 | | | Ending Value
August 4, 2014 | | Independent | | | 100 | % | | | 95.9 | % | Independent Peer Group | | | 100 | % | | | 98.8 | % | NASDAQ Index | | | 100 | % | | | 102.6 | % | S&P 500 Index | | | 100 | % | | | 113.4 | % |
Independent’s Three Year Stock Performance
| | | | | | | | | | | | Beginning Value
August 4, 2011 | | | Ending Value
August 4, 2014 | | Independent | | | 100 | % | | | 142.2 | % | Independent Peer Group | | | 100 | % | | | 138.4 | % | NASDAQ Index | | | 100 | % | | | 152.5 | % | S&P 500 Index | | | 100 | % | | | 161.6 | % |
Review of Analyst Recommendations and Estimates. Sandler O’Neill reviewed publicly available research analyst estimates and recommendations to outline the current analyst views of Independent. The analysis compared published recommendations and earnings per share estimates for the years ending December 31, 2014 and 2015. At August 4, 2014, six research analysts had published recommendations for Independent, composed of four “neutral” or “hold” recommendations and two “outperform” or “buy” recommendations. The table below sets forth the median of the estimates:
| | | | | 2014 earnings per share | | $ | 2.49 | | 2015 earnings per share | | $ | 2.71 | |
Comparable Company Analysis. Sandler O’Neill used publicly available information to compare selected financial information for Peoples with a group of financial institutions selected by Sandler O’Neill. The Peoples peer group consisted of public thrifts headquartered in the New England and Mid-Atlantic regions with assets between $500 million and $1.2 billion and a Non-Performing Assets/Total Assets ratio of less than 3.0% as of the date of the most recent information reported, excluding companies that were merger targets. The Peoples peer group consisted of the following companies:
| | | | | Cape Bancorp, Inc.
| | Malvern Bancorp, Inc.¹ | | | Chicopee Bancorp, Inc.
| | Naugatuck Valley Financial Corp.¹ | | | Fox Chase Bancorp, Inc.
| | Ocean Shore Holding Co. | | | Hampden Bancorp, Inc.¹
| | Oneida Financial Corp. | | | Harleysville Savings Financial Corp.
| | Prudential Bancorp, Inc. |
1 | Financial information based on GAAP or regulatory financial data as of or for the twelve months ended March 31, 2014. |
The analysis compared publicly available financial information for Peoples with the comparable data for the Peoples peer group as of or for the twelve months ended June 30, 2014 (unless otherwise noted above), with pricing data as of August 4, 2014. The table below sets forth the data for Peoples and the median and mean data for the Peoples peer group.
Peoples Comparable Company Analysis
| | | | | | | | | | | | | | | | Peoples | | | Peer
Group
Median | | | Peer
Group
Mean | | Total assets (in millions) | | $ | 606 | | | $ | 748 | | | $ | 771 | | Tangible common equity/Tangible assets | | | 17.11 | % | | | 11.67 | % | | | 13.06 | % | Return on average assets | | | 0.35 | % | | | 0.57 | % | | | (0.07 | %) | Return on average equity | | | 1.96 | % | | | 4.26 | % | | | (0.23 | %) | Net interest margin | | | 3.14 | % | | | 3.11 | % | | | 3.06 | % | Efficiency ratio | | | 81.5 | % | | | 73.9 | % | | | 78.5 | % | Loan loss reserves/Gross loans | | | 0.81 | % | | | 1.03 | % | | | 1.14 | % | Non-performing assets¹/Total assets | | | 0.30 | % | | | 1.55 | % | | | 1.48 | % | Net charge-offs/Average loans | | | 0.01 | % | | | 0.07 | % | | | 0.29 | % | Price/Tangible book value | | | 110 | % | | | 100 | % | | | 104 | % | Price/Earnings per share | | | 53.6 | x | | | 16.8 | x | | | 19.1 | x | Current dividend yield2 | | | 1.1 | % | | | 1.7 | % | | | 1.9 | % | Market value (in millions) | | $ | 114 | | | $ | 95 | | | $ | 101 | |
1 | Nonperforming assets include nonaccrual loans and leases, renegotiated loans and leases and real estate owned. |
2 | For Peoples, excludes special dividend paid in December 2013. |
Sandler O’Neill used publicly available information to perform a similar analysis for Independent and a group of financial institutions as selected by Sandler O’Neill. The Independent peer group consisted of public retail commercial banks in the Northeast and Mid-Atlantic with assets between $4 billion and $9 billion, excluding companies that were merger targets. The Independent peer group consisted of the following companies:
| | | | | Berkshire Hills Bancorp, Inc.
| | NBT Bancorp Inc. | | | Boston Private Financial Holdings
| | S&T Bancorp, Inc. | | | Community Bank System, Inc.
| | Sandy Springs Bancorp, Inc. | | | Customers Bancorp, Inc.
| | Sterling Bancorp | | | First Commonwealth Financial Corp.
| | Tompkins Financial Corporation | | | National Penn Bancshares, Inc.
| | |
The analysis compared publicly available financial information for Independent with the comparable data for the Independent peer group as of or for the twelve months ended June 30, 2014 (unless otherwise noted), with pricing data as of August 4, 2014. The table below sets forth the data for Independent and the median and mean data for the Independent peer group.
Independent Comparable Company Analysis
| | | | | | | | | | | | | | | | Independent | | | Peer
Group
Median | | | Peer
Group
Mean | | Total assets (in millions) | | $ | 6,348 | | | $ | 6,311 | | | $ | 6,356 | | Tangible common equity/Tangible assets | | | 7.05 | % | | | 7.75 | % | | | 8.29 | % | Leverage ratio | | | 8.44 | % | | | 9.48 | % | | | 9.51 | % | Total risk-based capital ratio | | | 12.15 | % | | | 13.67 | % | | | 13.94 | % | Return on average assets | | | 0.88 | % | | | 1.09 | % | | | 0.93 | % | Return on average tangible common equity | | | 9.6 | % | | | 11.5 | % | | | 12.5 | % | Net interest margin | | | 3.44 | % | | | 3.52 | % | | | 3.47 | % | Efficiency ratio | | | 64.4 | % | | | 61.3 | % | | | 61.6 | % | Loan loss reserves/Gross loans | | | 1.11 | % | | | 1.17 | % | | | 1.11 | % | Non-performing assets¹/Total assets | | | 1.34 | % | | | 0.78 | % | | | 0.78 | % | Net charge-offs/Average loans | | | 0.11 | % | | | 0.14 | % | | | 0.15 | % | Price/Tangible book value | | | 199 | % | | | 172 | % | | | 170 | % | Price/Earnings per share | | | 16.0 | x | | | 15.0 | x | | | 15.2 | x | Price/2014 Earnings per share2 | | | 14.5 | x | | | 14.4 | x | | | 15.8 | x | Price/2015 Earnings per share2 | | | 13.4 | x | | | 12.8 | x | | | 12.9 | x | Current dividend yield | | | 2.7 | % | | | 3.2 | % | | | 3.2 | % | Market value (in millions) | | $ | 865 | | | $ | 802 | | | $ | 882 | |
1 | Nonperforming assets include nonaccrual loans and leases, renegotiated loans and leases and real estate owned. |
2 | Based on median analyst estimates. |
Analysis of Selected Merger Transactions. Sandler O’Neill reviewed two groups of comparable merger and acquisition transactions. The first group consisted of 14 transactions announced between January 1, 2012 and August 4, 2014 with transaction values greater than $15 million and the selling institution having total assets of between $200 million and $1.2 billion, a tangible common equity/tangible assets ratio greater than 12%, and a non-performing assets/total assets ratio of less than 6% (the “Highly Capitalized Transactions”). The second
group consisted of 10 transactions announced between January 1, 2011 and August 4, 2014 involving New England and Mid-Atlantic thrift institutions as sellers with announced deal values greater than $15 million and the selling institution having total assets between $200 million and $1.5 billion and a non-performing assets/total assets ratio of less than 6% (the “Regional Thrift Transactions”).
The Highly Capitalized Transactions group was composed of the following transactions:
TowneBank/Franklin Financial Corp.
CB Financial Services/FedFirst Financial Corp.
F.N.B. Corp./OBA Financial Services Inc.
First Citizens Bancshares Inc./Southern Heritage Bancshares
CenterState Banks/First Southern Bancorp Inc.
WSFS Financial Corp./First Wyoming Financial Corp.
Home Bancorp Inc./Britton & Kroontz Capital Corp.
Cascade Bancorp/Home Federal Bancorp
Independent Bank Group Inc./Collin Bank
Sterling Financial Corp./Commerce National Bank
CBFH Inc./VB Texas Inc.
Pacific Premier Bancorp/First Associations Bank
PacWest Bancorp/American Perspective Bank
First Community Bancshares Inc./Peoples Bank of Virginia
The Regional Thrift Transactions group was composed of the following transactions:
National Penn Bancshares Inc./TF Financial Corp.
CB Financial Services Inc./FedFirst Financial Corp.
F.N.B. Corp./OBA Financial Services Inc.
SI Financial Group Inc./Newport Bancorp Inc.
WesBanco Inc./Fidelity Bancorp Inc.
Berkshire Hills Bancorp Inc./Beacon Federal Bancorp Inc.
Independent Bank Corp./Central Bancorp Inc.
ESSA Bancorp Inc./First Star Bancorp Inc.
Beneficial Mutual Bancorp /SE Financial Corp.
Susquehanna Bancshares Inc./Abington Bancorp Inc.
Sandler O’Neill reviewed the following multiples: transaction price to last twelve month earnings per share, transaction price to book value per share, transaction price to tangible book value per share, tangible book premium to core deposits, and 1-month market premium. Sandler O’Neill compared the indicated transaction multiples to the median and mean multiples of the comparable transaction groups.
| | | | | | | | | | | | | | | | Peoples /
Independent | | | Mean
Highly
Capitalized
Transactions | | | Median
Highly
Capitalized
Transactions | | Transaction value/LTM earnings per share | | | 57.0 | x | | | 20.6 | x | | | 20.3 | x | Transaction value/Book value per share¹: | | | 124 | % | | | 119 | % | | | 115 | % | Transaction value/Tangible book value per share: | | | 124 | % | | | 121 | % | | | 116 | % | Core deposit premium¹: | | | 7.4 | % | | | 6.4 | % | | | 6.6 | % | 1-Month market premium: | | | 12.7 | % | | | 32.5 | % | | | 28.2 | % |
1 | Tangible book premium to core deposits calculated as (deal value – tangible equity) / (core deposits) |
| | | | | | | | | | | | | | | | Peoples/
Independent | | | Mean
Regional
Thrift
Transactions | | | Median
Regional
Thrift
Transactions | | Transaction value/LTM earnings per share | | | 57.0 | x | | | 32.5 | x | | | 29.3 | x | Transaction value/Book value per share¹: | | | 124 | % | | | 120 | % | | | 120 | % | Transaction value/Tangible book value per share: | | | 124 | % | | | 123 | % | | | 120 | % | Core deposit premium¹: | | | 7.4 | % | | | 6.7 | % | | | 7.4 | % | 1-Month market premium: | | | 12.7 | % | | | 51.4 | % | | | 37.8 | % |
1 | Tangible book premium to core deposits calculated as (deal value – tangible equity) / (core deposits) |
Net Present Value Analysis. Sandler O’Neill performed an analysis that estimated the net present value per share of Peoples common stock assuming Peoples performed in accordance with earnings estimates reviewed with management of Peoples. The analysis also assumed that Peoples’ regular cash dividend remained at $0.20 per share annually through fiscal 2018 and that Peoples continued to pay an annual special dividend of $0.25 per share annually. No additional share repurchases were assumed. To approximate the terminal value of Peoples common stock at September 30, 2018, Sandler O’Neill applied price to earnings multiples ranging from 14.0x to 24.0x and multiples of tangible book value ranging from 80% to 130%. The terminal values were then discounted to present values using different discount rates ranging from 9.0% to 15.0% chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of Peoples’ common stock. Using a 20-year normalized treasury yield of 4.00%, an equity risk premium of 5.00% and a size premium of 3.87%, Sandler O’Neill calculated a 12.87% discount rate for Peoples. As illustrated in the following tables, the analysis indicates an imputed range of values per share of Peoples common stock of $4.63 to $8.59 when applying multiples of earnings to the applicable amounts indicated in the Peoples projections and $9.44 to $18.01 when applying multiples of tangible book value to the applicable amounts indicated in the Peoples projections.
Earnings Per Share Multiples
| | | | | | | | | | | | | | | | | | | | | | | | | Discount Rate | | 14.0x | | | 16.0x | | | 18.0x | | | 20.0x | | | 22.0x | | | 24.0x | | | 9.0% | | $ | 5.66 | | | $ | 6.25 | | | $ | 6.83 | | | $ | 7.42 | | | $ | 8.01 | | | $ | 8.59 | | | 10.0% | | | 5.47 | | | | 6.03 | | | | 6.60 | | | | 7.16 | | | | 7.73 | | | | 8.29 | | | 11.0% | | | 5.29 | | | | 5.83 | | | | 6.37 | | | | 6.91 | | | | 7.46 | | | | 8.00 | | | 12.0% | | | 5.11 | | | | 5.63 | | | | 6.16 | | | | 6.68 | | | | 7.20 | | | | 7.72 | | | 13.0% | | | 4.94 | | | | 5.45 | | | | 5.95 | | | | 6.45 | | | | 6.96 | | | | 7.46 | | | 14.0% | | | 4.78 | | | | 5.27 | | | | 5.75 | | | | 6.24 | | | | 6.72 | | | | 7.21 | | | 15.0% | | | 4.63 | | | | 5.10 | | | | 5.56 | | | | 6.03 | | | | 6.50 | | | | 6.96 | |
Tangible Book Value Multiples
| | | | | | | | | | | | | | | | | | | | | | | | | Discount Rate | | 80% | | | 90% | | | 100% | | | 110% | | | 120% | | | 130% | | | 9.0% | | $ | 11.70 | | | $ | 12.96 | | | $ | 14.22 | | | $ | 15.49 | | | $ | 16.75 | | | $ | 18.01 | | | 10.0% | | | 11.27 | | | | 12.49 | | | | 13.71 | | | | 14.92 | | | | 16.14 | | | | 17.35 | | | 11.0% | | | 10.87 | | | | 12.04 | | | | 13.21 | | | | 14.38 | | | | 15.55 | | | | 16.72 | | | 12.0% | | | 10.49 | | | | 11.61 | | | | 12.74 | | | | 13.87 | | | | 14.99 | | | | 16.12 | | | 13.0% | | | 10.12 | | | | 11.21 | | | | 12.29 | | | | 13.37 | | | | 14.46 | | | | 15.54 | | | 14.0% | | | 9.77 | | | | 10.82 | | | | 11.86 | | | | 12.90 | | | | 13.95 | | | | 14.99 | | | 15.0% | | | 9.44 | | | | 10.44 | | | | 11.45 | | | | 12.46 | | | | 13.46 | | | | 14.47 | |
Sandler O’Neill also considered and discussed with the PeoplesMNB board of directors how this analysis would be affected by changeswas also aware that certain MNB officers and directors may have financial interests in the underlying assumptions, including variations with respectmerger that are different from, or are in addition to, net income. To illustrate this impact, Sandler O’Neill performed a similar analysis assuming Peoples’ net income varied from 20% above projections to 20% below projections. This analysis resultedthe interests of MNB shareholders. See “– Interests of MNB’s Executive Officers and Directors in the following rangeMerger,” beginning on page [●].
The discussion of per share values for Peoples common stock, using the same price to earnings multiples of 14.0x to 24.0x. Earnings Per Share Multiples
| | | | | | | | | | | | | | | | | | | | | | | | | | | Annual
Budget
Variance | | | 14.0x | | | 16.0x | | | 18.0x | | | 20.0x | | | 22.0x | | | 24.0x | | | | (20.0 | %) | | $ | 4.38 | | | $ | 4.80 | | | $ | 5.22 | | | $ | 5.63 | | | $ | 6.05 | | | $ | 6.47 | | | | (15.0 | %) | | | 4.56 | | | | 5.01 | | | | 5.45 | | | | 5.89 | | | | 6.34 | | | | 6.78 | | | | (10.0 | %) | | | 4.74 | | | | 5.22 | | | | 5.69 | | | | 6.16 | | | | 6.63 | | | | 7.10 | | | | (5.0 | %) | | | 4.93 | | | | 5.42 | | | | 5.92 | | | | 6.42 | | | | 6.91 | | | | 7.41 | | | | 0.0 | % | | | 5.11 | | | | 5.63 | | | | 6.16 | | | | 6.68 | | | | 7.20 | | | | 7.72 | | | | 5.0 | % | | | 5.29 | | | | 5.84 | | | | 6.39 | | | | 6.94 | | | | 7.49 | | | | 8.04 | | | | 10.0 | % | | | 5.48 | | | | 6.05 | | | | 6.63 | | | | 7.20 | | | | 7.78 | | | | 8.35 | | | | 15.0 | % | | | 5.66 | | | | 6.26 | | | | 6.86 | | | | 7.46 | | | | 8.06 | | | | 8.66 | | | | 20.0 | % | | | 5.84 | | | | 6.47 | | | | 7.10 | | | | 7.72 | | | | 8.35 | | | | 8.98 | |
Sandler O’Neill also performed an analysis that estimatedinformation and factors considered by the net present value per share of Independent common stock assuming that Independent performed in accordance with publicly available analyst earnings estimates for the years ending December 31, 2014, and 2015 and thereafter grew at an annual rate of 8%. To approximate the terminal value of Independent common stock at December 31, 2018, Sandler O’Neill applied price to earnings multiples ranging from 12.0x to 20.0x and multiples of tangible book value ranging from 140% to 225%. The terminal values were then discounted to present values using different discount rates ranging from 9.0% to 15.0% chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of Independent’s common stock. As illustrated in the following tables, the analysis indicates an imputed range of values per share of Independent common stock of $25.10 to $50.10 when applying earnings multiples to the applicable amounts indicated in the Independent projections and $23.46 to $45.06 when applying multiples of tangible book value to the applicable amounts indicated in the Independent projections.
Earnings Per Share Multiples
| | | | | | | | | | | | | | | | | | | | | Discount Rate | | 12.0x | | | 14.0x | | | 16.0x | | | 18.0x | | | 20.0x | | | 9.0% | | $ | 31.55 | | | $ | 36.19 | | | $ | 40.83 | | | $ | 45.46 | | | $ | 50.10 | | | 10.0% | | | 30.34 | | | | 34.79 | | | | 39.24 | | | | 43.70 | | | | 48.15 | | | 11.0% | | | 29.19 | | | | 33.46 | | | | 37.74 | | | | 42.01 | | | | 46.29 | | | 12.0% | | | 28.09 | | | | 32.20 | | | | 36.30 | | | | 40.41 | | | | 44.51 | | | 13.0% | | | 27.05 | | | | 30.99 | | | | 34.94 | | | | 38.88 | | | | 42.82 | | | 14.0% | | | 26.05 | | | | 29.84 | | | | 33.64 | | | | 37.43 | | | | 41.22 | | | 15.0% | | | 25.10 | | | | 28.75 | | | | 32.39 | | | | 36.04 | | | | 39.68 | |
Tangible Book Value Multiples
| | | | | | | | | | | | | | | | | | | | | Discount Rate | | 140% | | | 160% | | | 180% | | | 200% | | | 225% | | | 9.0% | | $ | 29.45 | | | $ | 33.12 | | | $ | 36.80 | | | $ | 40.47 | | | $ | 45.06 | | | 10.0% | | | 28.33 | | | | 31.85 | | | | 35.38 | | | | 38.90 | | | | 43.31 | | | 11.0% | | | 27.26 | | | | 30.64 | | | | 34.03 | | | | 37.41 | | | | 41.64 | | | 12.0% | | | 26.24 | | | | 29.49 | | | | 32.74 | | | | 35.99 | | | | 40.05 | | | 13.0% | | | 25.27 | | | | 28.39 | | | | 31.51 | | | | 34.64 | | | | 38.54 | | | 14.0% | | | 24.34 | | | | 27.34 | | | | 30.34 | | | | 33.35 | | | | 37.10 | | | 15.0% | | | 23.46 | | | | 26.34 | | | | 29.23 | | | | 32.12 | | | | 35.72 | |
Sandler O’Neill also considered and discussed with the PeoplesMNB board of directors how this analysis would be affectedis not exhaustive, but includes all material factors considered by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler O’Neill performed a similar analysis assuming Independent’s net income varied
from 20%MNB board of directors. Based on the factors described above, projections to 20% below projections. This analysis resulted in the following range of per share values for Independent common stock, using the same price to earnings multiples of 12.0x to 20.0x and a discount rate of 9.20%, based on a 4.00% 20-year normalized treasury yield, a two-year beta of Independent’s common stock of 1.04, and an equity risk premium of 5.00%.
Earnings Per Share Multiples
| | | | | | | | | | | | | | | | | | | | | | | Annual
Budget
Variance | | | 12.0x | | | 14.0x | | | 16.0x | | | 18.0x | | | 20.0x | | | | (20.0 | %) | | $ | 25.78 | | | $ | 29.64 | | | $ | 33.14 | | | $ | 36.82 | | | $ | 40.50 | | | | (15.0 | %) | | | 27.16 | | | | 31.07 | | | | 34.98 | | | | 38.89 | | | | 42.80 | | | | (10.0 | %) | | | 28.54 | | | | 32.68 | | | | 36.82 | | | | 40.96 | | | | 45.10 | | | | (5.0 | %) | | | 29.92 | | | | 34.29 | | | | 38.66 | | | | 43.03 | | | | 47.40 | | | | 0.0 | % | | | 31.30 | | | | 35.90 | | | | 40.50 | | | | 45.10 | | | | 49.70 | | | | 5.0 | % | | | 32.68 | | | | 37.51 | | | | 42.34 | | | | 47.17 | | | | 52.00 | | | | 10.0 | % | | | 34.06 | | | | 39.12 | | | | 44.18 | | | | 49.24 | | | | 54.30 | | | | 15.0 | % | | | 35.44 | | | | 40.73 | | | | 46.02 | | | | 51.31 | | | | 56.60 | | | | 20.0 | % | | | 36.82 | | | | 42.34 | | | | 47.86 | | | | 53.38 | | | | 58.90 | |
In connection with its analyses, Sandler O’Neill considered and discussed with the PeoplesMNB board of directors how the present value analyses would be affected by changes in the underlying assumptions. Sandler O’Neill noted that the net present value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.
Pro Forma Merger Analysis. Sandler O’Neill analyzed certain potential pro forma effects of the merger, based on the following: (i) the merger closes in the first calendar quarter of 2015; (ii) 60% of the outstanding shares of Peoples common stock are converted into Independent’s common stock at the exchange ratio of 0.5523 and 40% of the outstanding shares of Peoples common stock are converted into cash at $21.00 per share; (iii) all outstanding Peoples options are surrendered for a cash payment in an amount equal to the spread value between the exercise price of the option and the $21.00 per share cash consideration; and (iv) Independent’s stock price is $36.62. Sandler O’Neill also incorporated the following assumptions as provided by Independent’s financial advisor: (a) purchase accounting adjustments of a credit mark on loans equal to 1.0% of gross loans, an interest rate mark on loans equal to negative $2.9 million and an interest rate mark on deposits equal to negative $200,000; (b) a core deposit intangible of 1.75% of Peoples core deposits; amortized straight-line over 10 years; (c) cost savings equal to 45% of Peoples’ projected non-interest expense, which would be fully realized by 2016; (d) pre-tax transaction costs and expenses of approximately $12.0 million; and (e) an opportunity cost of cash of 2.25%. The analysis indicateddetermined that the merger with Independent would be accretiveadvisable to Independent’s earnings per share (excluding transaction expenses in 2015)MNB shareholders and tangible book value per share in eachapproved the merger agreement and related transactions it contemplates. In view of the four years ending December 31, 2018. From the perspectivewide variety and complexity of a Peoples stockholder receiving stock in the merger, the analysis also indicated that the transaction would result in an approximate increase of 22.7% in annual dividends during the year ending December 31, 2015 (assuming that the regular quarterly dividends of each company remained at current rates and Peoples paid an annual special dividend of $.25).
In connection with this analyses, Sandler O’Neillfactors considered and discussed with the Peoples board of directors how the analysis would be affected by changes in the underlying assumptions, including the impact of final purchase accounting adjustments determined at the closing of the transaction, and noted that the actual results achieved by the combined company may vary from projected results and the variations may be material.
Sandler O’Neill’s Relationship. Sandler O’Neill acted as the financial advisor to Peoples’ board of directors in connection with the merger. Sandler O’Neill has received a fee of $150,000 in connection with the delivery of its fairness opinion, which will be credited in full against the transaction fee that becomes due and payable upon the closing of the merger. Sandler O’Neill will receive a transaction fee equal to 0.65% of the aggregate
consideration paid in connection with the merger, contingent on the closing of the merger. Based on the closing price of Independent’s common stock on October 16, 2014, the transaction fee is approximately $839,684, net of the fairness opinion fee credit. Peoples has also agreed to reimburse Sandler O’Neill for its reasonable out-of-pocket expenses incurred in connection with its engagement and to indemnify Sandler O’Neill and its affiliates and their respective partners, directors, officers, employees and agents against certain expenses and liabilities, including liabilities under applicable federal or state law.
In the past, Sandler O’Neill has provided certain other investment banking services for Peoples and has received compensation for such services, most recently in connection with Peoples’ offering of common stock in connection with its conversion from mutual to stock form in July 2010. In addition, as Sandler O’Neill advised the PeoplesMNB board of directors in connection with its retention for this engagement, Sandler O’Neill hasevaluation of the merger, the MNB board of directors did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision and did not undertake to make any specific determination as to whether any particular factor, or any aspect of any factor, was favorable or unfavorable to the past provided certain investment banking servicesultimate determination of the MNB board of directors. Rather, the MNB board of directors made its recommendation based on the totality of information presented to, Independent and has received compensation for such services andthe investigation conducted by, it. In considering the factors discussed above, individual directors may provide, and receive compensation for, such services in the future. In the two years priorhave given different weights to its May 13, 2014 retention by Peoples, Sandler O’Neill received total aggregate fees of approximately $250,000 from Independent for such services. In the ordinary course of its business as a broker-dealer, Sandler O’Neill may also purchase securities from and sell securities to Peoples and Independent and their affiliates. Sandler O’Neill may also actively trade the securities of Peoples and Independent for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities.different individual factors.
2014 Financial Forecasts and Projections Exchanged
Except for a net interest income simulation model that Peoples includes in its annual and quarterly reports on Form 10-K and 10-Q, respectively, Independent and Peoples do not as a matter of course publicly disclose internal management budgets, forecasts or projections as to future financial performance due to the unpredictability of the underlying assumptions and estimates. However, in connection with their respective confirmatory due diligence, Independent requested, and Peoples’ management provided Independent and its financial advisor with, a net interest income simulation model prepared by Peoples’ management as of June 30, 2014 (prior to such model being made publicly available in Peoples’ Form 10-Q for the quarterly period ended June 30, 2014), and Peoples requested, and Independent’s management provided Peoples and its financial advisors with, certain non-public financial forecasts and projections prepared by Independent’s management.
Set forth below is a summary of the material financial forecasts and projections that were provided by Peoples to Independent and by Independent to Peoples.
Peoples’ financial forecasts and projections were included in Peoples’ asset and liability management modeling, which focuses on expected net interest income results (the largest portion of Peoples’ revenue) under various interest rate scenarios for the next 12 and 24 month periods. This modeling does not focus on detailed forecasting of noninterest income or noninterest expense as they are not drivers of Peoples’ net interest margin. Peoples’ net interest income simulation model as of June 30, 2014 was provided to Independent prior to such model being made publicly available in Peoples’ Form 10-Q for the quarterly period ended June 30, 2014. In its due diligence review of Peoples, Independent did not substantially rely on this net interest income simulation as of June 30, 2014, which was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Economic Value of Equity (2) Estimated Increase
(Decrease) | | | Net Interest Income | | Changes in Interest Rates | | Estimated EVE (2) | | | | Estimated Net
Interest Income | | | Estimated Increase
(Decrease) | | | (basis points) (1) | | | Amount | | | Percent | | | | Amount | | | Percent | | | | | (Unaudited) | | | | | (Dollars in thousands) | | +300 bp | | $ | 84,860 | | | $ | (28,328 | ) | | | (25.0 | )% | | $ | 16,417 | | | $ | (1,687 | ) | | | (9.3 | )% | +200 bp | | | 97,505 | | | | (15,683 | ) | | | (13.9 | )% | | | 17,528 | | | | (576 | ) | | | (3.2 | )% | +100 bp | | | 107,296 | | | | (5,892 | ) | | | (5.2 | )% | | | 18,065 | | | | (39 | ) | | | (0.2 | )% | 0 bp | | | 113,188 | | | | — | | | | — | % | | | 18,104 | | | | — | | | | — | % | -100 bp | | | 118,258 | | | | 5,070 | | | | 4.5 | % | | | 17,417 | | | | (687 | ) | | | (3.8 | )% |
(1) | Assumes an instantaneous uniform change in interest rates at all maturities. |
(2) | EVE is the discounted present value of expected cash flows from interest-earning assets, interest-bearing bearing liabilities and off-balance sheet contracts. |
Independent’s financial forecasts and projections included:
2014 operating diluted earnings per share in a range between $2.42 to $2.52;
A 2014 net interest margin in upper end of a 3.40 to 3.50% range;
Total 2014 non-interest income growth of 1 to 2%;
2014 loan growth at the upper end of a 4 to 5% range; and
2014 deposit growth in the 5 to 7% range.
The financial forecasts and projections set forth above represent the projections prepared by Peoples and delivered to Independent and prepared by Independent and delivered to Peoples prior to the announcement of the merger. At the time the financial forecasts and projections were prepared, they represented the best estimates and judgments of the management teams of Peoples and Independent, respectively, that prepared the forecasts and projections in good faith. These financial forecasts and projections cannot be considered to necessarily be predictive of actual future operating results, and no assurance can be given regarding future events. The financial forecasts and projections represent Independent’s and Peoples’ independent forecasts and projections. The financial forecasts and projections were not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information or published guidelines of the SEC regarding forward-looking statements and do not fully comply with generally accepted accounting principles in the United States (“GAAP”).In light of the foregoing, and considering that the Peoples special meeting will be held several months after the financial forecasts and projections were prepared, as well as the uncertainties inherent in any financial forecasts and projections, stockholders of Peoples are cautioned not to rely on these financial forecasts and projections as a predictor of future operating results or otherwise.
The estimates and assumptions underlying the financial forecasts and projections of Peoples and Independent involve assumptions and judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions. These estimates and assumptions may not be realized and are inherently subject to significant business, economic, competitive and regulatory uncertainties, including those risk factors detailed in the sections entitled “Risk Factors” beginning on page 13 and “Forward-Looking Statements” beginning on page 23, all of which are difficult to predict and many of which are beyond the control of Peoples and Independent and will be beyond the control of the combined company after the merger. Estimates or projections of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold. In addition, the financial forecasts and projections prepared by Peoples and Independent represent each company’s own evaluation of its future financial performance on a stand-alone basis, and without reference to transaction-related costs or benefits. Accordingly, actual results could vary materially from those presented in the financial forecasts and projections, and actual value or future results could be significantly more or less favorable than what is suggested by the forecasts and projections. The inclusion of these financial forecasts and projections should not be interpreted as an indication that Peoples or Independent considers this information as necessarily predictive of actual future results, and this information should not be relied on for that purpose. Independent and its management did not participate in preparing, and do not express any view on, the Peoples financial forecasts and projections set forth above, or the assumptions underlying such financial forecasts and projections. Peoples and its management did not participate in preparing, and do not express any view on, the Independent financial forecasts and projections set forth above, or the assumptions underlying such financial forecasts and projections.
The prospective financial information of Peoples and Independent included in this proxy statement/prospectus has been prepared by, and is the responsibility of, the management teams of Peoples and Independent,
respectively. Neither Peoples’ or Independent’s auditors, nor any other independent registered public accounting firm, nor Peoples’ financial advisor have examined, compiled or performed any procedures with respect to these forecasts or projections, nor have they expressed any opinion or any other form of assurance on this information or its achievability.
Neither Independent nor Peoples intends to disclose publicly any update or other revision to these forecasts or projections to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events or changes in general economic or industry conditions, even in the event that any or all of the underlying assumptions are shown to be in error.
Approval of Independent’s Board of Directors and Reasons for the Merger
Independent’s board of directors determined that the merger agreement and the merger are advisable and in the best interests ofto Independent and its stockholdersRockland Trust. Accordingly, Independent’s board of directors adopted and unanimously approved the merger agreement. The Independent board of directors unanimously approved the merger agreement and the merger because it determined that the merger is a natural expansion and strengthening of its Worcester County, Massachusetts franchise that should strengthen Independent’s existing franchise and increase long term stockholderlong-term shareholder value because Peoples Federal Savings BankMilford National is, like Rockland Trust, a bank that is deeply committed to its customers, employees, and the communities that it serves. The merger should helpprovide Rockland Trust with access to new and potential customers in Worcester County, Massachusetts and provide Independent strengthen its positionwith deposit market share in Milford, Massachusetts, Mendon, Massachusetts, a town where Rockland Trust does not currently have a physical presence, and other towns in the attractive Greater Boston, Massachusetts metropolitan area where Peoples is located.surrounding area. The transaction is financially attractive to Independent and its stockholdersshareholders because it allows Independent to add Peoples’Milford National’s loan and deposit base to that of Independent providing additional liquidity to Independent, allowing Independent to achieve economies of scale, all while simultaneously providing Independent with the opportunity to maintain and deepen relationships with Peoples’Milford National’s customers by offering Independent’s deeper set of products. The Independent board of directors believes that the combined company should have the potential to realize a stronger competitive position and improved long-term operating and financial results, including revenue and earning enhancements, efficiencies, and cost-savings opportunities.enhancements. In addition, Independent’s financial advisor, KBW,Keefe, Bruyette & Woods, Inc., reviewed in detail with the board of directors the financial aspects of the proposed transactionmerger and delivered its opinion that as of May 29, 2018 and subject to the proposed transactionlimitations, assumptions, and qualifications set forth therein, the merger consideration was fair to Independent, from a financial point of view. After taking into account these and other factors, the Independent board of directors determined that the merger agreement and the merger were in the best interests ofadvisable to Independent and its stockholdersRockland Trust and that Independent should enter into the merger agreement and complete the merger. Independent’s board of directors evaluated the factors described above, including asking questions of Independent’s management associate general counsel, and Independent’s legal and financial advisers, and reached the unanimous decision that the merger was in the best interests ofadvisable to Independent and its stockholders, its employees, its customers, and the communities served by Independent.Rockland Trust. This discussion of the factors considered by Independent’s board of directors is not exhaustive, but is intended to describe theincludes all material factors considered.considered by the board. Independent’s board of directors considered these factors as a whole, and overall considered them to be favorable to, and to support, its determination. Independent’s board of directors did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. In considering the factors described above, individual members of Independent’s board of directors may have given different weights to different factors. Independent’s board of directors considered these factors as a whole, and overall considered them to be favorable to, and to support, its determination. Opinion of MNB’s Financial Adviser MNB retained Sandler to act as financial advisor to MNB’s board of directors in connection with MNB’s consideration of a possible business combination. Sandler is a nationally recognized investment banking firm whose principal business specialty is financial institutions. In the ordinary course of its investment banking business, Sandler is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions. Sandler acted as financial advisor in connection with the proposed transaction and participated in certain of the negotiations leading to the execution of the merger agreement. At the May 29, 2018 meeting at which MNB’s board of directors considered and discussed the terms of the merger agreement and the merger, Sandler delivered to MNB’s board of directors its oral opinion, which was subsequently confirmed in writing on May 29, 2018, to the effect that, as of such date, the merger consideration provided for in the merger agreement was fair to the holders of MNB common stock from a financial point of view.The full text of Sandler’s opinion is attached asAnnex B to this proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the full text of the opinion. Holders of MNB common stock are urged to read the entire opinion carefully in connection with their consideration of the proposed merger. Sandler’s opinion speaks only as of the date of the opinion.The opinion was directed to MNB’s board of directors in connection with its consideration of the merger agreement and the merger and does not constitute a recommendation to any shareholder of MNB as to how any such shareholder should vote at any meeting of shareholders called to consider and vote upon the approval of the merger agreement and the merger. Sandler’s opinion was directed only as to the fairness, from a financial point of view, of the merger consideration to the holders of MNB common stock and does not address the underlying business decision of MNB to engage in the merger, the form or structure of the merger or any other transactions contemplated in the merger agreement, the relative merits of the merger as compared to any other alternative transactions or business strategies that might exist for MNB or the effect of any other transaction in which MNB might engage.Sandler did not express any opinion as to the fairness of the amount or nature of the compensation to be received in the merger by any officer, director or employee of MNB or Independent, or any class of such persons, if any, relative to the compensation to be received in the merger by any other shareholder, including the merger consideration to be received by the holders of MNB common stock. Sandler’s opinion was approved by its fairness opinion committee. In connection with its opinion, Sandler reviewed and considered, among other things: a draft of the merger agreement, dated May 23, 2018; certain publicly available financial statements and other historical financial information of MNB and Milford National Bank & Trust Company that Sandler deemed relevant; certain publicly available financial statements and other historical financial information of Independent and Rockland Trust Company that Sandler deemed relevant; internal financial projections for MNB for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of MNB; publicly available consensus median analyst earnings per share estimates for Independent for the years ending December 31, 2018 and December 31, 2019, as well as a long-term earnings per share growth | rate for the years thereafter and dividends per share for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of Independent; |
the pro forma financial impact of the merger on Independent based on certain assumptions relating to transaction expenses, purchase accounting adjustments and cost savings, as well as net income projections and a long-term asset growth rate for MNB for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of Independent (collectively, the “Pro Forma Assumptions”); the publicly reported historical price and trading activity for Independent common stock, including a comparison of certain stock trading information for Independent common stock and certain stock indices, as well as similar publicly available information for certain other companies, the securities of which were publicly traded; a comparison of certain financial information for MNB and Independent with similar financial institutions for which information was publicly available; the financial terms of certain recent business combinations in the bank and thrift industry (on a regional and nationwide basis), to the extent publicly available; the current market environment generally and the banking environment in particular; and such other information, financial studies, analyses and investigations and financial, economic and market criteria as Sandler considered relevant. Sandler also discussed with certain members of the senior management of MNB the business, financial condition, results of operations and prospects of MNB and held similar discussions with certain members of the senior management of Independent and its representatives regarding the business, financial condition, results of operations and prospects of Independent. In performing its review, Sandler relied upon the accuracy and completeness of all of the financial and other information that was available to and reviewed by Sandler from public sources, that was provided to Sandler by MNB or Independent or their respective representatives or that was otherwise reviewed by Sandler, and Sandler assumed such accuracy and completeness for purposes of rendering its opinion without any independent verification or investigation. Sandler relied on the assurances of the respective senior managements of MNB and Independent that they are not aware of any facts or circumstances that would make any of such information inaccurate or misleading. Sandler was not asked to and did not undertake an independent verification of any of such information and Sandler did not assume any responsibility or liability for the accuracy or completeness thereof. Sandler did not make an independent evaluation or perform an appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of MNB or Independent or any of their respective subsidiaries, nor was Sandler furnished with any such evaluations or appraisals. Sandler rendered no opinion or evaluation on the collectability of any assets or the future performance of any loans of MNB or Independent. Sandler did not make an independent evaluation of the adequacy of the allowance for loan losses of MNB or Independent, or of the combined entity after the merger, and Sandler did not review any individual credit files relating to MNB or Independent. Sandler assumed, with MNB’s consent, that the respective allowances for loan losses for both MNB and Independent were adequate to cover such losses and would be adequate on a pro forma basis for the combined entity. In preparing its analyses, Sandler used internal financial projections for MNB for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of MNB. In addition, Sandler used publicly available consensus median analyst earnings per share estimates for Independent for the years ending December 31, 2018 and December 31, 2019, as well as a long-term earnings per share growth rate for the years thereafter and dividends per share for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of Independent. Sandler also received and used in its pro forma analyses the Pro Forma Assumptions, as provided by the senior management of Independent. With respect to the foregoing information, the respective senior managements of MNB and Independent confirmed to Sandler that such information reflected (or, in the case of the publicly available consensus median analyst estimates referred to above, were consistent with) the best currently available projections, estimates and judgments of those respective senior managements as to the future financial performance of MNB and Independent, respectively, and the other matters covered thereby, and Sandler assumed that the future financial performance reflected in such information would be achieved. Sandler expressed no opinion as to such information, or the assumptions on which such information was based. Sandler also assumed that there had been no material change in the respective assets, financial condition, results of operations, business or prospects of MNB or Independent since the date of the most recent financial statements made available to Sandler. Sandler assumed in all respects material to its analysis that MNB and Independent would remain as going concerns for all periods relevant to its analysis. Sandler also assumed, with MNB’s consent, that (i) each of the parties to the merger agreement would comply in all material respects with all material terms and conditions of the merger agreement and all related agreements, that all of the representations and warranties contained in such agreements were true and correct in all material respects, that each of the parties to such agreements would perform in all material respects all of the covenants and other obligations required to be performed by such party under such agreements and that the conditions precedent in such agreements were not and would not be waived, (ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on MNB, Independent or the merger or any related transactions, and (iii) the merger and any related transactions would be consummated in accordance with the terms of the merger agreement without any waiver, modification or amendment of any material term, condition or agreement thereof and in compliance with all applicable laws and other requirements. Finally, with MNB’s consent, Sandler relied upon the advice that MNB had received from its legal, accounting and tax advisors as to all legal, accounting and tax matters relating to the merger and the other transactions contemplated by the merger agreement. Sandler expressed no opinion as to any such matters. Sandler’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Sandler as of, the date of its opinion. Events occurring after the date of its opinion could materially affect its opinion. Sandler did not undertake to update, revise, reaffirm or withdraw its opinion or otherwise comment upon events occurring after the date of its opinion. In rendering its opinion, Sandler performed a variety of financial analyses. The summary below is not a complete description of the analyses underlying Sandler’s opinion or the presentation made by Sandler to MNB’s board of directors, but is a summary of all material analyses performed and presented by Sandler. The summary includes information presented in tabular format.In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do notconstitute a complete description of the financial analyses.The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Sandler believes that its analyses must be considered as a whole and that selecting portions of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in Sandler’s comparative analyses described below is identical to MNB or Independent and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may be, of MNB and Independent and the companies to which they are being compared. In arriving at its opinion, Sandler did not attribute any particular weight to any analysis or factor that it considered. Rather, Sandler made qualitative judgments as to the significance and relevance of each analysis and factor. Sandler did not form an opinion as to whether any individual analysis or factor (positive or negative) considered in isolation supported or failed to support its opinion, rather, Sandler made its determination as to the fairness of the merger consideration on the basis of its experience and professional judgment after considering the results of all its analyses taken as a whole. In performing its analyses, Sandler also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which are beyond the control of MNB, Independent and Sandler. The analyses performed by Sandler are not necessarily indicative of actual values or future results, both of which may be significantly more or less favorable than suggested by such analyses. Sandler prepared its analyses solely for purposes of rendering its opinion and provided such analyses to MNB’s board of directors at its May 29, 2018 meeting. Estimates on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty and actual values may be materially different. Accordingly, Sandler’s analyses do not necessarily reflect the value of MNB common stock or the prices at which MNB common stock or Independent common stock may be sold at any time. The analyses of Sandler and its opinion were among a number of factors taken into consideration by MNB’s board of directors in making its determination to approve the merger agreement and should not be viewed as determinative of the merger consideration or the decision of MNB’s board of directors or management with respect to the fairness of the merger. The type and amount of consideration payable in the merger were determined through negotiation between MNB and Independent. Summary of Proposed Merger Consideration and Implied Transaction Metrics.Sandler reviewed the financial terms of the proposed merger. As set forth in the merger agreement, at the effective time, each share of common stock of MNB issued and outstanding immediately prior to the effective time, except for certain shares of MNB common stock as set forth in the merger agreement, shall become and be converted into the right to receive, at the election of the holder thereof, either (i) $275.00 in cash, or (ii) 3.55 shares of Independent common stock;provided, however, that the merger agreement provides, generally, that seventy-five percent of the total number of shares of MNB common stock issued and outstanding prior to the effective time shall be converted into the stock consideration and twenty-five percent of such shares shall be converted into the cash consideration in accordance with the allocation procedures set forth in the merger agreement. Using the per share cash consideration and the implied value of the per share stock consideration of $272.64 based on the closing price of Independent common stock on May 25, 2018 of $76.80, Sandler calculated an aggregate implied transaction value of approximately $54.3 million, or an implied transaction price per share of $273.23. Based upon financial information for MNB as of or for the last twelve months (“LTM”) ended March 31, 2018, financial information as of or for the last three months (“Q1 2018”) ended March 31, 2018 and forward estimated earnings, as provided by senior management of MNB, Sandler calculated the following implied transaction metrics: | | | | | Transaction Price Per Share / MNB Book Value Per Share: | | | 199.5 | % | Transaction Price Per Share / MNB Tangible Book Value Per Share: | | | 199.5 | % | Transaction Price Per Share / MNB LTM Earnings Per Share: | | | 31.2x | | Transaction Price Per Share / MNB Q1 2018 Earnings Annualized: | | | 18.1x | | Transaction Price Per Share / MNB 2018 Estimated Earnings: | | | 19.0x | | Tangible Book Premium / Core Deposits(1): | | | 11.1 | % |
| 1) | Core Deposits defined as total deposits less time deposits greater than $100,000, CDARs and QwikRate CDs |
Stock Trading History.Sandler reviewed the historical stock price performance of Independent common stock for the three-year period ended May 25, 2018. Sandler then compared the relationship between the stock price performance of Independent to stock price movements in the Independent Peer Group (as described below) as well as certain stock indices. Independent Three-Year Stock Price Performance | | | | | | | | | | | | Beginning
May 22, 2015 | | | Ending
May 25, 2018 | | Independent | | | 100 | % | | | 170.1 | % | Independent Peer Group | | | 100 | % | | | 158.3 | % | NASDAQ Bank Index | | | 100 | % | | | 156.1 | % | S&P 500 Index | | | 100 | % | | | 128.0 | % |
Comparable Company Analyses.Sandler used publicly available information to compare selected financial information for MNB with a group of financial institutions selected by Sandler (the “MNB Peer Group”). The MNB Peer Group consisted of publicly-traded banks and thrifts headquartered in the New England region with total assets between $100 million and $700 million, excluding announced merger targets. The MNB Peer Group consisted of the following companies: | | | | Community Bancorp. | | Randolph Bancorp, Inc. | | PB Bancorp, Inc. | | SBT Bancorp, Inc. | | Ledyard Financial Group, Inc. | | Middlebury National Corporation | | Melrose Bancorp, Inc. | | First Suffield Financial, Inc. | | Pilgrim Bancshares, Inc. | | Peoples Trust Company of St. Albans | | Damariscotta Bankshares, Inc. | | |
The analysis compared publicly available financial information for MNB as of or for the period ended March 31, 2018 with the corresponding publicly available data for the MNB Peer Group as of or for the period ended March 31, 2018 (or, if data as of or for the period ended March 31, 2018 was not publicly available, as of or for the period ended December 31, 2017), with pricing data as of May 25, 2018. The table below sets forth the data for MNB and the high, low, median and mean data for the MNB Peer Group. MNB Peer Group Analysis | | | | | | | | | | | | | | | | | | | | | | | | MNB | | | MNB Peer
Group
Median | | | MNB Peer
Group
Mean | | | MNB Peer
Group
Low | | | MNB Peer
Group
High | | Total assets (in millions) | | $ | 365 | | | $ | 359 | | | $ | 398 | | | $ | 193 | | | $ | 666 | | Loans/Deposits | | | 102.4 | % | | | 90.4 | % | | | 90.3 | % | | | 70.3 | % | | | 114.0 | % | Non-performing assets(1)/Total assets | | | 0.90 | % | | | 1.02 | % | | | 0.94 | % | | | 0.10 | % | | | 1.96 | % | Tangible common equity/Tangible assets | | | 7.46 | % | | | 10.81 | % | | | 10.73 | % | | | 6.27 | % | | | 14.72 | % | Leverage Ratio | | | 8.73 | % | | | 9.66 | % | | | 10.55 | % | | | 7.76 | % | | | 15.52 | % | Total RBC Ratio | | | 12.56 | % | | | 16.85 | % | | | 16.86 | % | | | 12.31 | % | | | 19.91 | % | CRE/Total RBC | | | 297.4 | %(2) | | | 119.5 | % | | | 126.5 | % | | | 54.9 | % | | | 226.4 | % | Last Twelve Months Return on average assets | | | 0.52 | % | | | 0.57 | % | | | 0.53 | % | | | (0.47 | )% | | | 1.04 | % | Last Twelve Months Return on average equity | | | 6.19 | %(2) | | | 4.63 | % | | | 5.43 | % | | | (2.87 | )% | | | 11.91 | % | Last Twelve Months Net interest margin | | | 3.79 | %(2) | | | 3.26 | % | | | 3.24 | % | | | 2.43 | % | | | 4.03 | % | Last Twelve Months Efficiency ratio | | | 73.37 | %(2) | | | 74.14 | % | | | 76.21 | % | | | 63.75 | % | | | 104.90 | % | Price/Tangible book value | | | — | | | | 121 | % | | | 126 | % | | | 89 | % | | | 201 | % | Price/Last Twelve Months Earnings per share | | | — | | | | 21.8 | x | | | 21.4 | x | | | 13.3 | x | | | 32.0 | x | Price/Q1 2018 Earnings per share Annualized | | | — | | | | 14.5 | x | | | 16.7 | x | | | 11.4 | x | | | 24.7 | x | Current Dividend Yield | | | — | | | | 2.3 | % | | | 2.2 | % | | | 0.0 | % | | | 3.9 | % | LTM Dividend Ratio | | | — | | | | 45.9 | % | | | 42.0 | % | | | 0.0 | % | | | 83.6 | % | Market value (in millions) | | | — | | | $ | 46 | | | $ | 53 | | | $ | 16 | | | $ | 90 | |
| 1) | Nonperforming assets defined as nonaccrual loans and leases, renegotiated loans and leases, and real estate owned. |
| 2) | Bank-level regulatory data as of March 31, 2018 |
Sandler used publicly available information to perform a similar analysis for Independent and a group of financial institutions selected by Sandler (the “Independent Peer Group”). The Independent Peer Group consisted of publicly-traded banks and thrifts headquartered in CT, ME, MA, NH, NJ, NY, PA, RI, and VT with total assets between $5.0 billion and $12.5 billion with Q1 2018 return on average assets greater than 1.0%, excluding announced merger targets. The Independent Peer Group consisted of the following companies: | | | Community Bank System, Inc. | | Provident Financial Services, Inc. | Northwest Bancshares, Inc. | | NBT Bancorp Inc. | Boston Private Financial Holdings, Inc. | | First Commonwealth Financial Corp. | Brookline Bancorp, Inc. | | S&T Bancorp, Inc. | Tompkins Financial Corporation | | Lakeland Bancorp, Inc. |
The analysis compared publicly available financial information for Independent as of or for the period ended March 31, 2018 with the corresponding publicly available data for the Independent Peer Group as of or for the period ended March 31, 2018 (or, if data as of or for the period ended March 31, 2018 was not publicly available, as of or for the period ended December 31, 2017), with pricing data as of May 25, 2018. The table below sets forth the data for Independent and the high, low, median and mean data for the Independent Peer Group: Independent Peer Group Analysis | | | | | | | | | | | | | | | | | | | | | | | | INDB | | | INDB Peer
Group
Median | | | INDB Peer
Group
Mean | | | INDB Peer
Group
Low | | | INDB Peer
Group
High | | Total assets (in millions) | | $ | 8,090 | | | $ | 7,820 | | | $ | 8,147 | | | $ | 5,478 | | | $ | 10,967 | | Loans/Deposits | | | 94.2 | % | | | 97.1 | % | | | 97.7 | % | | | 71.0 | % | | | 117.8 | % | Non-performing assets(1)/Total assets | | | 0.90 | % | | | 0.55 | % | | | 0.58 | % | | | 0.26 | % | | | 0.93 | % | Tangible common equity/Tangible assets | | | 9.12 | % | | | 8.68 | % | | | 8.60 | % | | | 7.29 | % | | | 9.85 | % | Leverage Ratio | | | 10.32 | % | | | 9.69 | % | | | 9.85 | % | | | 8.53 | % | | | 11.88 | % | Total RBC Ratio | | | 14.08 | % | | | 13.24 | % | | | 13.94 | % | | | 12.47 | % | | | 17.82 | % | CRE/Total RBC Ratio | | | 294.3 | % | | | 243.8 | % | | | 257.4 | % | | | 82.9 | % | | | 420.7 | % | Q1 2018 Return on average assets Annualized | | | 1.39 | % | | | 1.14 | % | | | 1.22 | % | | | 1.06 | % | | | 1.50 | % | Q1 2018 Return on average equity Annualized | | | 11.73 | % | | | 10.44 | % | | | 10.58 | % | | | 8.29 | % | | | 14.24 | % | Q1 2018 Net interest margin | | | 3.75 | % | | | 3.54 | % | | | 3.47 | % | | | 2.95 | % | | | 3.81 | % | Q1 2018 Efficiency ratio | | | 60.51 | % | | | 57.28 | % | | | 58.72 | % | | | 50.21 | % | | | 71.45 | % | Price/Tangible book value | | | 295 | % | | | 239 | % | | | 245 | % | | | 200 | % | | | 357 | % | Price/Last Twelve Months Earnings per share | | | 22.5 | x | | | 19.3 | x | | | 21.5 | x | | | 17.4 | x | | | 32.5 | x | Price/Q1 2018 Earnings per share Annualized | | | 19.2 | x | | | 16.2 | x | | | 16.7 | x | | | 15.1 | x | | | 19.3 | x | Price/Median Analyst 2018E Earnings per share | | | 17.7 | x | | | 15.5 | x | | | 16.2 | x | | | 14.8 | x | | | 19.3 | x | Price/Median Analyst 2019E Earnings per share | | | 16.4 | x | | | 14.6 | x | | | 15.3 | x | | | 13.8 | x | | | 18.8 | x | Current Dividend Yield | | | 2.0 | % | | | 2.3 | % | | | 2.6 | % | | | 2.2 | % | | | 3.9 | % | LTM Dividend Payout Ratio | | | 38.0 | % | | | 40.5 | % | | | 45.4 | % | | | 29.3 | % | | | 81.4 | % | Market value (in millions) | | $ | 2,114 | | | $ | 1,579 | | | $ | 1,662 | | | $ | 957 | | | $ | 3,074 | |
| 1) | Nonperforming assets defined as nonaccrual loans and leases, renegotiated loans and leases, and real estate owned. |
Analysis of Selected Nationwide Merger Transactions.Sandler reviewed a group of nationwide merger and acquisition transactions involving U.S. banks and thrifts (the “Nationwide Transactions”). The Nationwide Transactions group consisted of transactions with disclosed deal values announced between January 1, 2017 and May 25, 2018 for targets with total assets between $200 million and $700 million, nonperforming assets/total assets less than 1.00%, and last twelve months return on average assets less than 1.00%. The Nationwide Transactions group was composed of the following transactions: | | | Acquiror | | Target | | Capitol Federal Financial, Inc. | | Capital City Bancshares, Inc. | | National Commerce Corporation | | Premier Community Bank of Florida | | Civista Bancshares, Inc. | | United Community Bancorp | | Heritage Financial Corporation | | Premier Commercial Bancorp | | Bank of Southern California, N.A. | | Americas United Bank | | Mechanics Bank | | Learner Financial Corporation | | Guaranty Bancshares, Inc. | | Westbound Bank | | Mid Penn Bancorp, Inc. | | First Priority Financial Corp. | | LCNB Corp. | | Columbus First Bancorp, Inc. | | First Foundation Inc. | | PBB Bancorp | | Equity Bancshares, Inc. | | Kansas Bank Corporation | | Amalgamated Bank | | New Resource Bancorp | | SmartFinancial, Inc. | | Tennessee Bancshares, Inc. | | FirstMid-Illinois Bancshares, Inc. | | First BancTrust Corporation | | FCB Financial Holdings, Inc. | | Floridian Community Holdings, Inc. | | Investor group | | Bancorp of Lexington Inc. | | Brookline Bancorp, Inc. | | First Commons Bank, National Association | | Veritex Holdings, Inc. | | Liberty Bancshares, Inc. | | Bank of Marin Bancorp | | Bank of Napa, N.A. | | Select Bancorp, Inc. | | Premara Financial, Inc. | | Bank of McKenney | | CCB Bankshares, Inc. | | FSB LLC | | First Southern Bancshares, Inc. | | SmartFinancial, Inc. | | Capstone Bancshares, Inc. | | Seacoast Banking Corporation of Florida | | NorthStar Banking Corporation | | Mid Penn Bancorp, Inc. | | Scottdale Bank & Trust Company | | Investar Holding Corporation | | Citizens Bancshares, Inc. | | Old Line Bancshares, Inc. | | DCB Bancshares, Inc. | | HCBF Holding Company, Inc. | | Jefferson Bankshares, Inc. |
Using the latest publicly available information prior to the announcement of the relevant transaction, Sandler reviewed the following transaction metrics: transaction price to last-twelve-months earnings per share, transaction price to tangible book value per share, and core deposit premium. Sandler compared the indicated transaction multiples for the merger to the high, low, mean and median multiples of the Nationwide Transactions group. | | | | | | | | | | | | | | | | | | | | | | | | MNB/
INDB | | | Nationwide
Transactions
Group
Median | | | Nationwide
Transactions
Group
Mean | | | Nationwide
Transactions
Group
High | | | Nationwide
Transactions
Group
Low | | Transaction price/ LTM Earnings per share | | | 31.2x/18.1x | 1 | | | 24.5x | | | | 26.1x | | | | 51.9x | | | | 12.9x | | Transaction price/Tangible book value per share: | | | 199 | % | | | 162 | % | | | 165 | % | | | 223 | % | | | 99 | % | Core deposit premium: | | | 11.1 | % | | | 9.6 | % | | | 10.2 | % | | | 21.6 | % | | | (0.1 | )% |
| 1 | Note: represents transaction price / 2018Q1 earnings annualized. |
Analysis of Selected Regional Merger Transactions.Sandler also reviewed a regional group of merger and acquisition transactions involving U.S. banks and thrifts headquartered in the New England region (the “Regional Transactions”). The Regional Transactions group consisted of transactions with disclosed deal values announced between January 1, 2016 and May 25, 2018 for targets headquartered in the New England region with total assets less than $1 billion. The Regional Transactions group was composed of the following transactions: | | | Acquiror | | Target | | HarborOne Bancorp, Inc. (MHC) | | Coastway Bancorp, Inc. | | Bangor Bancorp, MHC | | First Colebrook Bancorp, Inc. | | Brookline Bancorp, Inc. | | First Commons Bank, National Association | | Patriot National Bancorp, Inc. | | Prime Bank | | Atlantic Community Bancshares, Inc. | | BBN Financial Corporation | | Meridian Bancorp, Inc. | | Meetinghouse Bancorp, Inc. | | Independent Bank Corp. | | Island Bancorp, Inc. | | Salem Five Bancorp | | Georgetown Bancorp, Inc. | | Westfield Financial, Inc. | | Chicopee Bancorp, Inc. | | Independent Bank Corp. | | New England Bancorp, Inc. |
Using the latest publicly available information prior to the announcement of the relevant transaction, Sandler reviewed the following transaction metrics: transaction price to last-twelve-months earnings per share, transaction price to tangible book value per share, and core deposit premium to core deposits. Sandler compared the indicated transaction multiples for the merger to the high, low, mean and median multiples of the Regional Transactions group. | | | | | | | | | | | | | | | | | | | | | | | | MNB/
INDB | | | Nationwide
Transactions
Median | | | Nationwide
Transactions
Mean | | | Nationwide
Transactions
High | | | Nationwide
Transactions
Low | | Transaction price/LTM earnings per share: | | | 31.2/18.1x | 1 | | | 35.8x | | | | 36.8x | | | | 60.5x | | | | 19.6x | | Transaction price/Tangible book value per share: | | | 199 | % | | | 150 | % | | | 145 | % | | | 185 | % | | | 109 | % | Core deposit premium: | | | 11.1 | % | | | 7.8 | % | | | 7.9 | % | | | 14.2 | % | | | 1.1 | % |
| 1 | Note: represents transaction price / 2018Q1 earnings annualized. |
Net Present Value Analyses.Sandler performed an analysis that estimated the net present value per share of MNB common stock assuming MNB performed in accordance with internal financial projections for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of MNB. To approximate the terminal value of a share of MNB common stock at December 31, 2022, Sandler applied price to 2022 earnings per share multiples ranging from 13.0x to 23.0x and price to December 31, 2022 tangible book value per share multiples ranging from 100% to 160%. The terminal values were then discounted to present values using different discount rates ranging from 10.0% to 14.0% which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of MNB common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of MNB common stock of $113.17 to $237.24 when applying multiples of earnings per share and $111.83 to $212.01 when applying multiples of tangible book value per share. Earnings Per Share Multiples | | | | | | | | | | | | | | | | | | | | | | | | | Discount Rate | | 13.0x | | | 15.0x | | | 17.0x | | | 19.0x | | | 21.0x | | | 23.0x | | 10.0% | | $ | 134.09 | | | $ | 154.72 | | | $ | 175.35 | | | $ | 195.98 | | | $ | 216.61 | | | $ | 237.24 | | 11.0% | | $ | 128.45 | | | $ | 148.21 | | | $ | 167.97 | | | $ | 187.73 | | | $ | 207.49 | | | $ | 227.26 | | 12.0% | | $ | 123.09 | | | $ | 142.03 | | | $ | 160.97 | | | $ | 179.90 | | | $ | 198.84 | | | $ | 217.78 | | 13.0% | | $ | 118.00 | | | $ | 136.16 | | | $ | 154.31 | | | $ | 172.47 | | | $ | 190.62 | | | $ | 208.77 | | 14.0% | | $ | 113.17 | | | $ | 130.58 | | | $ | 147.99 | | | $ | 165.40 | | | $ | 182.81 | | | $ | 200.22 | |
Tangible Book Value Per Share Multiples | | | | | | | | | | | | | | | | | | | | | | | | | Discount Rate | | 100% | | | 112% | | | 124% | | | 136% | | | 148% | | | 160% | | 10.0% | | $ | 132.50 | | | $ | 148.40 | | | $ | 164.31 | | | $ | 180.21 | | | $ | 196.11 | | | $ | 212.01 | | 11.0% | | $ | 126.93 | | | $ | 142.16 | | | $ | 157.39 | | | $ | 172.62 | | | $ | 187.86 | | | $ | 203.09 | | 12.0% | | $ | 121.64 | | | $ | 136.23 | | | $ | 150.83 | | | $ | 165.42 | | | $ | 180.02 | | | $ | 194.62 | | 13.0% | | $ | 116.61 | | | $ | 130.60 | | | $ | 144.59 | | | $ | 158.58 | | | $ | 172.58 | | | $ | 186.57 | | 14.0% | | $ | 111.83 | | | $ | 125.25 | | | $ | 138.67 | | | $ | 152.09 | | | $ | 165.50 | | | $ | 178.92 | |
Sandler also considered and discussed with the MNB board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler performed a similar analysis assuming MNB’s net income varied from 15% above projections to 15% below projections. This analysis resulted in the following range of per share values for MNB common stock, applying the price to 2022 earnings per share multiples range of 13.0x to 23.0x referred to above and a discount rate of 13.55%. Earnings Per Share Multiples | | | | | | | | | | | | | | | | | | | | | | | | | Annual Budget Variance | | 13.0x | | | 15.0x | | | 17.0x | | | 19.0x | | | 21.0x | | | 23.0x | | (15.0%) | | $ | 98.02 | | | $ | 113.09 | | | $ | 128.17 | | | $ | 143.25 | | | $ | 158.33 | | | $ | 173.41 | | (10.0%) | | $ | 103.78 | | | $ | 119.75 | | | $ | 135.71 | | | $ | 151.68 | | | $ | 167.65 | | | $ | 183.61 | | (5.0%) | | $ | 109.55 | | | $ | 126.40 | | | $ | 143.25 | | | $ | 160.11 | | | $ | 176.96 | | | $ | 193.81 | | 0.0% | | $ | 115.31 | | | $ | 133.05 | | | $ | 150.79 | | | $ | 168.53 | | | $ | 186.27 | | | $ | 204.01 | | 5.0% | | $ | 121.08 | | | $ | 139.71 | | | $ | 158.33 | | | $ | 176.96 | | | $ | 195.59 | | | $ | 214.21 | | 10.0% | | $ | 126.84 | | | $ | 146.36 | | | $ | 165.87 | | | $ | 185.39 | | | $ | 204.90 | | | $ | 224.42 | | 15.0% | | $ | 132.61 | | | $ | 153.01 | | | $ | 173.41 | | | $ | 193.81 | | | $ | 214.21 | | | $ | 234.62 | |
Sandler also performed an analysis that estimated the net present value per share of Independent common stock assuming that Independent performed in accordance with publicly available consensus median analyst earnings per share estimates for Independent for the years ending December 31, 2018 and December 31, 2019, as well as a long-term earnings per share growth rate for the years thereafter and dividends per share for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of Independent. To approximate the terminal value of a share of Independent common stock at December 31, 2022, Sandler applied price to 2022 earnings per share multiples ranging from 14.0x to 19.0x and price to December 31, 2022 tangible book value per share multiples ranging from 225% to 325%. The terminal values were then discounted to present values using different discount rates ranging from 8.5% to 12.5% chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of Independent common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of Independent common stock of $52.34 to $81.14 when applying multiples of earnings per share and $59.56 to $98.28 when applying multiples of tangible book value per share. Earnings Per Share Multiples | | | | | | | | | | | | | | | | | | | | | Discount Rate | | 14.0x | | | 15.3x | | | 16.5x | | | 17.8x | | | 19.0x | | 8.5% | | $ | 61.65 | | | $ | 66.52 | | | $ | 71.40 | | | $ | 76.27 | | | $ | 81.14 | | 9.5% | | $ | 59.14 | | | $ | 63.81 | | | $ | 68.47 | | | $ | 73.14 | | | $ | 77.80 | | 10.5% | | $ | 56.76 | | | $ | 61.23 | | | $ | 65.69 | | | $ | 70.16 | | | $ | 74.63 | | 11.5% | | $ | 54.50 | | | $ | 58.78 | | | $ | 63.06 | | | $ | 67.34 | | | $ | 71.62 | | 12.5% | | $ | 52.34 | | | $ | 56.45 | | | $ | 60.55 | | | $ | 64.65 | | | $ | 68.75 | |
Tangible Book Value Per Share Multiples | | | | | | | | | | | | | | | | | | | | | Discount Rate | | 225% | | | 250% | | | 275% | | | 300% | | | 325% | | 8.5% | | $ | 70.22 | | | $ | 77.24 | | | $ | 84.25 | | | $ | 91.27 | | | $ | 98.28 | | 9.5% | | $ | 67.35 | | | $ | 74.06 | | | $ | 80.78 | | | $ | 87.49 | | | $ | 94.21 | | 10.5% | | $ | 64.62 | | | $ | 71.05 | | | $ | 77.48 | | | $ | 83.91 | | | $ | 90.34 | | 11.5% | | $ | 62.03 | | | $ | 68.19 | | | $ | 74.35 | | | $ | 80.51 | | | $ | 86.67 | | 12.5% | | $ | 59.56 | | | $ | 65.47 | | | $ | 71.37 | | | $ | 77.28 | | | $ | 83.18 | |
Sandler also considered and discussed with the MNB board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler performed a similar analysis assuming Independent’s net income varied from 15% above estimates to 15% below estimates. This analysis resulted in the following range of per share values for Independent common stock, applying the price to 2022 earnings per share multiples range of 14.0x to 19.0x referred to above and a discount rate of 10.03%. Earnings Per Share Multiples | | | | | | | | | | | | | | | | | | | | | Annual Budget Variance | | 14.0x | | | 15.3x | | | 16.5x | | | 17.8x | | | 19.0x | | (15.0%) | | $ | 50.21 | | | $ | 54.09 | | | $ | 57.96 | | | $ | 61.84 | | | $ | 65.71 | | (10.0%) | | $ | 52.77 | | | $ | 56.87 | | | $ | 60.97 | | | $ | 65.08 | | | $ | 69.18 | | (5.0%) | | $ | 55.32 | | | $ | 59.65 | | | $ | 63.98 | | | $ | 68.31 | | | $ | 72.64 | | 0.0% | | $ | 57.87 | | | $ | 62.43 | | | $ | 66.99 | | | $ | 71.55 | | | $ | 76.11 | | 5.0% | | $ | 60.43 | | | $ | 65.21 | | | $ | 70.00 | | | $ | 74.79 | | | $ | 79.57 | | 10.0% | | $ | 62.98 | | | $ | 67.99 | | | $ | 73.01 | | | $ | 78.02 | | | $ | 83.04 | | 15.0% | | $ | 65.53 | | | $ | 70.78 | | | $ | 76.02 | | | $ | 81.26 | | | $ | 86.50 | |
Sandler noted that the net present value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results. Pro Forma Merger Analysis.Sandler analyzed certain potential pro forma effects of the merger, assuming the merger closes at the end of the fourth calendar quarter of 2018. In performing its analysis, Sandler utilized the Pro Forma Assumptions, as provided by the senior management of Independent. The analysis indicated that the merger could be accretive to Independent’s earnings per share (excludingone-time transaction costs and expenses) in the years ended December 31, 2019, December 31, 2020, and December 31, 2021, dilutive to Independent’s estimated tangible book value per share at close and accretive to Independent’s estimated tangible book value per share at December 31, 2021 and thereafter. In connection with this analysis, Sandler considered and discussed with the MNB board of directors how the analysis would be affected by changes in the underlying assumptions, including the impact of final purchase accounting adjustments determined at the closing of the transaction, and noted that the actual results achieved by the combined company may vary from projected results and the variations may be material. Sandler O’Neill’s Relationship.Sandler acted as MNB’s financial advisor in connection with the merger and will receive a fee for its services in an amount equal to 1.0% of the aggregate purchase price, which fee is estimated to be approximately $543,304 based on the market value of Independent’s common stock at the time the merger was announced. Sandler’s fee is contingent upon the closing of the merger. Sandler also received a $200,000 fee upon rendering its fairness opinion to the MNB Board of Directors, which opinion fee will be credited in full towards the transaction fee which will become payable to Sandler on the day of closing of the merger. MNB has also agreed to indemnify Sandler against certain claims and liabilities arising out of its engagement and to reimburse Sandler for certain of itsout-of-pocket expenses incurred in connection with its engagement. Sandler did not provide any other investment banking services to MNB in the two years preceding the date of its opinion. As the MNB Board of Directors is aware, in the two years preceding the date of its opinion, Sandler did provide certain investment banking services to Independent and received fees for such services. Most recently, Sandler rendered a fairness opinion to the board of directors of Independent in connection with Independent’s acquisition of Island Bancorp, Inc., which transaction closed in May 2017. In addition, in the ordinary course of its business as a broker-dealer, Sandler may purchase securities from and sell securities to Independent and its affiliates. Sandler may also actively trade the equity and debt securities of Independent and its affiliates for its own account and for the accounts of its customers. Regulatory Approvals Required to Complete the Merger The merger is subject to the condition that all consents and approvals of any governmental authority required to consummate the merger and the other transactions contemplated by the merger agreement shall have been obtained and remain in full force and effect and all statutory waiting periods in respect thereof shall have expired or been terminated. The merger also is subject to the condition that none of suchthe required regulatory approvals shall impose, as reasonably determined by Independent, a “Burdensome Condition,” which is defined in the merger agreement to mean any prohibition, limitation or other requirement that would prohibit or materially limit the ownership or operation by PeoplesMNB or any of its subsidiaries, or by Independent or any of its subsidiaries, of all or any material portion of the business or assets of PeoplesMNB or any of its subsidiaries or Independent or its subsidiaries, or compel Independent or any of its subsidiaries to dispose of or hold separate all or any material portion of the business or assets of PeoplesMNB or any of its subsidiaries or Independent or any of its subsidiaries. The consents and approvals of governmental authorities that Independent and Peoples believe areMNB have determined to be required to consummate the merger include: the approval of or waiver of the Board of Bank IncorporationGovernors of the CommonwealthFederal Reserve System under the Bank Holding Company Act of Massachusetts to merge Peoples with1956; and into Independent, with Independent surviving the merger; confirmation from the Massachusetts Housing Partnership Fund (the “Housing Partnership Fund”) that Independent has made arrangements satisfactory to the Housing Partnership Fund; and the approval of the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956.Fund.
The consents and approvals of governmental authorities that Independent and Peoples believeMNB have determined are required to consummate the merger of Peoples Federal Savings BankMilford National with Rockland Trust (which are not conditions to consummation of the merger)(the “bank merger”) are as follows: the FDIC’s approval of the merger of Peoples Federal Savings BankMilford National with and into Rockland Trust, with Rockland Trust surviving the merger; and the approval of the Massachusetts CommissionerDivision of Banks to merge Peoples Federal Savings BankMilford National with and into Rockland Trust, with Rockland Trust surviving the merger. The parties have filed allwill file certain applications and notice materials necessary to obtain these regulatory approvals or confirmations.confirmations in accordance with applicable law. The merger cannot be completed until all the required approvals and confirmations have been obtained, are in full force and effect and all statutory waiting periods in respect thereof have expired, and the bank merger between Rockland Trust and Peoples Federal Savings Bank (the “bank merger”) cannot be completed until after both approvals listed above have been obtained. The merger may not be consummated until 30 days after the approval of the Federal Reserve Board (or such shorter period as the Federal Reserve Board may prescribe with the concurrence of the United States Department of Justice, but not less than 15 days), during which time the Department of Justice may challenge the merger on antitrust grounds. The bank merger (the completion of which is not a condition to the merger) may not be consummated until 30 days after the approval of the FDIC (or such shorter period as the FDIC may prescribe with the concurrence of the United States Department of Justice, but not less than 15 days), during which time the Department of Justice may challenge the bank merger on antitrust grounds. The commencement of an antitrust action by the Department of Justice would stay the effectiveness of the Federal Reserve Board or FDIC approval, as the case may be, unless a court specifically orders otherwise. In reviewing the merger and the bank merger, the Department of Justice could analyze the merger’s effect on competition differently than the Federal Reserve Board and the FDIC, and it is possible that the Department of Justice could reach a different conclusion than the applicable banking regulator regarding the merger’s (or the bank merger’s) competitive effects. Independent and PeoplesMNB cannot assure you that all required regulatory approvals, waivers or confirmationsconsents will be obtained, when they will be obtained or whether there will be burdensome conditions in the approvals or any litigation challenging the approvals. Independent and PeoplesMNB also cannot assure you that the United States Department of Justice or the Attorney General of the Commonwealth of Massachusetts will not attempt to challenge the merger on antitrust grounds, or what the outcome will be if such a challenge is made. Independent and PeoplesMNB are not aware of any other government approvals or actions that are required prior to the parties’ consummation of the merger. It is currently contemplated that if any such additional governmental approvals or actions are required, such approvals or actions will be sought. There can be no assurance, however, that any suchof the additional approvals or actions will be obtained. Interests of Peoples’MNB’s Executive Officers and Directors in the Merger Peoples’MNB’s executive officers and directors have interests in the merger that may be different from, or in addition to, the interests of other Peoples’ stockholdersMNB shareholders generally. The PeoplesMNB board of directors was aware of these interests and considered them, among other matters, when it approved the merger agreement.
Equity Plans
All outstanding unvested Peoples stock options and restricted shares of Peoples common stock will become fully vested immediately prior to the effective time of the merger. Peoples options will be cancelled upon consummation of the merger, and each option holder will receive a cash payment upon such cancellation in an amount equal to the product of (i) the number of shares of Peoples common stock provided for by such option and (ii) the excess, if any, of the per share cash consideration of $21.00 over the exercise price of such option. Holders of restricted shares of Peoples common stock that are vested in connectionSettlement Agreement with the merger will be entitled to receive the same forms of consideration as other holders of Peoples common stock.
The following table sets forth, as of September 30, 2014, the total number of options held by the named executive officers of Peoples and all non-employee directors of Peoples as a group, as well as the value of cash payments to be received upon cancellation of such options. In addition, the following table reflects the number of unvested shares of restricted stock held by the named executive officers of Peoples and all non-employee directors of Peoples as a group which will vest as a result of the merger, as well as the value of the merger consideration to be received in exchange for such shares.
| | | | | | | | | | | | | | | | | Name | | Number
of
Options | | | Payment at
Completion of Merger
when Options are
Cancelled (Before
Deduction of
Withholding Taxes) (1) | | | Number of
Currently
Unvested Shares
of Restricted
Stock | | | Value at Completion
of Merger of
Currently Unvested
Shares of Restricted
Stock (Before
Deduction of
Withholding Taxes) (2) | | Maurice H. Sullivan, Jr. | | | 114,000 | | | $ | 588,140 | | | | 47,337 | | | $ | 958,101 | | Thomas J. Leetch, Jr. | | | 114,000 | | | | 588,140 | | | | 40,125 | | | | 812,130 | | James J. Gavin | | | 71,500 | | | | 372,745 | | | | 26,000 | | | | 526,240 | | Christopher Lake | | | 51,300 | | | | 264,059 | | | | 22,625 | | | | 457,930 | | Non-Employee Directors as a Group | | | 192,500 | | | | 1,026,775 | | | | 62,000 | | | | 1,254,880 | | | | | | | | | | | | | | | | | | | TOTAL | | | 543,300 | | | $ | 2,839,859 | | | | 198,087 | | | $ | 4,009,281 | | | | | | | | | | | | | | | | | | |
(1) | Calculated by multiplying the number of options by the intrinsic value, defined as the cash purchase price of $21.00 less the exercise price. |
(2) | Consideration is computed by multiplying the number of units by $20.24 ($8.40 for cash consideration plus $11.84 for stock consideration). |
| | | | | | | Cash Consideration | | $ | 8.40 | | | (calculated as follows: $21.00 multiplied by 40%) | Stock Consideration | | | 11.84 | | | (based on closing price of $35.72 per share of Independent common stock on September 30, 2014 multiplied by 60%, which is then multiplied by the stock exchange ratio of 0.5523 of a share of Independent common stock) | | | | | | | | | | $ | 20.24 | | | | | | | | | | |
Settlement AgreementsKristin T. Carvalho
In connection with the merger agreement, Independent, Rockland Trust, MNB and PeoplesMilford National have entered into a settlement agreementsagreement (that includeincludes customary mutual waiver and release provisions) with Maurice H. Sullivan, Jr., Peoples’ ChairmanKristin T. Carvalho, President and Chief Executive Officer Thomas J. Leetch, Jr., Peoples’ Presidentof MNB and Chief Operating Officer, James J. Gavin, Peoples’ Executive Vice President, and Christopher Lake, Peoples’ Senior Vice President and Chief Financial Officer,Milford National, for the purpose of setting forth, and avoiding any future disagreement with respect to, the payments and benefits that these executive officers areshe is entitled to receive under their herpre-existing agreements change in control agreement with Peoples and Peoples Federal Savings Bank, as applicable. Pursuant to the settlement agreements, the pre-existing agreements will be terminated or amended, as the case may be, at the closing of the merger and, subject to certain exceptions, the executive officers will look solely to the terms of the settlement agreements to determine their rights to receive severance and other payments and benefits.MNB.
Pursuant to theMs. Carvalho’s settlement agreements of Messrs. Sullivanagreement, herpre-existing change in control agreement with MNB, and Leetch, their employment agreements with Peoples and Peoples Federal Savings Bank, as applicable, and their respectiveher services to each,MNB and Milford National, will terminate immediately prior to the effective time of the merger (other than the survival of certain specified provisions) and theyMs. Carvalho will look solely to the terms of the settlement agreementsagreement to determine theirher rights to receive severance and other payments and benefits in connection with the termination of theirher employment. Under theseMs. Carvalho’s settlement agreements,agreement, a lump sum cash paymentspayment in the amount of $727,940, which consists of a payment of $627,940 payable under her change in control agreement and a payment of $100,000 as a transaction bonus for the merger, will be made following the effective time of the merger in the amount of $2,091,467 for Mr. Sullivan and $2,526,467 for Mr. Leetch (i) in consideration for Messrs. Sullivan’s and Leetch’s execution of their respective consulting and non-competition agreements (described below) and (ii)to Ms. Carvalho in full satisfaction of the obligations of PeoplesMNB under herpre-existing change in control agreement with MNB. As a condition to receiving the lump sum cash payment, Ms. Carvalho will execute and Peoples Federal Savings Bank underdeliver a mutual release agreement to Independent, Rockland Trust, MNB and Milford National at the employment agreementsclosing of the merger. The lump sum cash payment will be made to Ms. Carvalho following the seven day revocation period set forth in the mutual release agreement. In addition to the lump sum cash payment described above, Ms. Carvalho will be reimbursed for up to $7,500 in legal fees incurred in connection with the mergernegotiation of the settlement agreement and the termination of their services.mutual release agreement. Mr. Sullivan and Mr. LeetchMs. Carvalho will retain their respective rightsalso be entitled to receive the following benefits:benefits under her settlement agreement: (i) payment of the change in control benefit of their respective salary continuation agreements with Peoples, which benefit is the payment of $84,555 for Mr. Sullivan and $175,000 for Mr. Leetch per year for twenty years, payable in equal monthly installments; (ii) coverage for each executive and their respective spouses for each of their lifetimes under a supplemental retiree health insurance plan; (iii) payment of the merger consideration pursuant to the merger agreement with respect to their Peoples common stock and options to purchaseher MNB common stock; (iv)(ii) payment of any vested benefits they may havethat Ms. Carvalho has accrued under (a) anytax-qualified retirement plansplan maintained or contributed to by PeoplesMNB and/or Milford National, in accordance with the terms and Peoples Federal Savings Bank in which they are participants,conditions of those plans; and (b) the voluntary deferred compensation and supplemental employee stock ownership plan for executives maintained by Peoples and Peoples Federal Savings Bank; (v) the use of the leased automobile that they are presently using through the end of the current lease and a lump sum payment equal to $729.17 multiplied by the difference between 36 months and the number of months remaining on the lease after the effective time of the Agreement; (vi)(iii) the right to elect to purchase in each case, at theirher sole expense continuation coverage under any group health plan maintained by Peoples Federal Savings BankMilford National that is subject to COBRAthe Consolidated Omnibus Budget Reconciliation Act (“COBRA”) in which they participateshe participates immediately prior to the effective time of the merger; (vii)merger. The settlement agreement also provides that Ms. Carvalho will abide by the rightrestrictive covenants set forth in herpre-existing change in control agreement with MNB related to convert, in each case,non-competition andnon-solicitation of employees and customers for a period of twelve months following her termination of employment and to thenon-disclosure of confidential information at their own cost, any group insurance coveragestime following the termination of her employment or until such time that the confidential information comes into the public domain (other than health benefits) maintainedas a result of Ms. Carvalho’s violation of thenon-disclosure of confidential information restrictive covenant) or is lawfully acquired by Independent in which they are participants to an individual policy in accordanceMs. Carvalho.
Settlement Agreement with Daniel R. Devine In connection with the conversion provisionsmerger agreement, Independent, Rockland Trust, MNB and Milford National have entered into a settlement agreement (that includes customary mutual waiver and release provisions) with Daniel R. Devine, Senior Vice President and Chief Financial Officer of such group insurance policy;MNB and (viii)Milford National, for the rightpurpose of setting forth, and avoiding any future disagreement with respect to, the payments and benefits that he is entitled to receive under hispre-existing change in control agreement with MNB and Milford National. Pursuant to Mr. Devine’s settlement agreement, hispre-existing change in control agreement with MNB and Milford National will terminate immediately prior to the effective time of the merger and Mr. Devine will look solely to the terms of the settlement agreement to determine his rights to receive severance and other payments and benefits in connection with the termination of hispre-existing change in control agreement with MNB and Milford National. Under Mr. Devine’s settlement agreement, a lump sum cash payment in the amount of $214,402 will be made to Mr. Devine in full satisfaction of the obligations of MNB and Milford National under hispre-existing change in control agreement with MNB and Milford National following the earliest to occur of the following events after the effective time of the merger: (i) the ninetieth (90th) day after the effective time of the merger, (ii) Mr. Devine’s separation from service (as defined in hispre-existing change in control agreement with MNB and Milford National) due to Milford National’s termination of Mr. Sullivan’s beneficiaryDevine’s employment without cause or his resignation for good reason, (iii) Mr. Devine’s death, or (iv) Mr. Devine’s disability (as defined in hispre-existing change in control agreement with MNB and Milford National). As a condition to receiving the lump sum cash payment, Mr. Leetch’s beneficiary (as designated by eachDevine will execute and deliver a mutual release agreement to Independent, Rockland Trust, MNB and Milford National on the date of them)the earliest to a $450,000 death benefit and a $400,000 death benefit, respectively, upon their death under Peoples Federal Savings Bank’s split dollar plan as in effect asoccur of the above events after the effective time of the merger. The lump sum cash payment will be made to Mr. Sullivan’sDevine following the seven day revocation period set forth in the mutual release agreement. Mr. Devine will also be entitled to receive the following benefits under his settlement agreement also provides foragreement: (i) payment of the change in control benefit of his director retirementmerger consideration pursuant to the merger agreement with Peoples Federal Savings Bank,respect to his MNB common stock; (ii) payment of any vested benefits that Mr. Devine has accrued under anytax-qualified retirement plan maintained or contributed to by MNB and/or Milford National, in accordance with the terms and conditions of those plans; and (iii) the right to purchase at his sole expense continuation coverage under any group health plan maintained by Milford National that is subject to COBRA in which benefit is $80,455 per year for twenty years, payable in equal monthly installments. Pursuanthe participates immediately prior to the settlement agreements of Messrs. Gavin and Lake, effective as of the effective time of the Merger,merger. The settlement agreement also provides that Mr. Devine will abide by the restrictive covenants related tonon-solicitation of employees and customers for a period of twelve months andnon-disclosure of confidential information at any time that are set forth in hispre-existing change in control agreement with MNB.
Non-Competition,Non-Solicitation and Market Consulting Agreement with Kevin P. Meehan, Ronald J. Masiello and Paul Zekos. In connection with the merger agreement, Rockland Trust has entered into anon-competition,non-solicitation, and market consulting agreement with Kevin P. Meehan, Chairman of the Board of MNB and Milford National, Ronald J. Masiello, a director of MNB and Milford National, and Paul Zekos, a former director of MNB and Milford National. Pursuant to thenon-competition,non-solicitation, and market consulting agreement, each of Messrs. Meehan, Masiello and Zekos will use reasonable efforts, as mutually determined by Rockland Trust and each of them, to help Rockland Trust retain Milford National customers and key employees and work with Rockland Trust personnel to promote the business of Rockland Trust. These efforts may include becoming generally familiar with Rockland Trust’s capabilities and services, making introductions and referrals of prospective customers to appropriate Rockland Trust employees, and assisting with customer relationship management on anon-call andas-appropriate basis as reasonably requested by Rockland Trust. Messrs. Meehan, Masiello and Zekos will each be paid $12,500 per month as consideration (i) their employment agreements with Peoples will be terminatedfor the consulting services rendered under thenon-competition,non-solicitation, and market consulting agreement and (ii) Rockland Trust will assumefor their employment agreementscompliance with customary covenants regarding confidentiality (for an indefinite period) and salary continuation agreements with Peoples Federal Savings Bank with certain modifications. Mr. Gavin will be paid a lump sumnon-competition andnon-solicitation of $850,000 on the business day following the effective time of the Merger. Mr. Gavin will serve as Senior Vice Presidentcustomers and employees of Rockland Trust and his responsibilities will include oversight and maintenance of Peoples Federal Savings Bank’s commercial loan portfolio, origination of new loans and such other duties as RocklandMilford Trust may reasonably assign to him. Mr. Gavin’s annual base salary will
be $235,000. He will be eligible(each for annual merit-based increases and for participation in Independent’s performance-based cash incentive plan with a target payout of 20% of his base salary. In addition, Mr. Gavin shall also be eligible for certain cash incentive payments up to $100,000 perone year for achieving certain customer retention goals within thirty days after eachperiod commencing on the effective date of the first five anniversaries from the effective timemerger).
The term of the merger (for a potential aggregate amount of $500,000). Mr. Lake will be paid a lump sum of $680,000 on the business day following the effective time of the Merger. Mr. Lake will serve as Senior Vice Presidentnon-competition,non-solicitation, and Director of Risk Management for Rockland Trust and such other duties as Rockland Trust may reasonably assign to him. Mr. Lake’s annual base salary will be $240,000. He will be eligible for annual merit-based increases and for participation in Independent’s performance-based cash incentive plan with a target payout of 15% of his base salary.
Messrs. Gavin and Lake will be eligible to participate in Independent’s equity incentive program, tax qualified defined contribution plan and other employee benefit programs, in each case, at the same level as similarly situated executives, with credit given for their respective years of service as provided in the merger agreement. They will also retain their rights: (i) to payment of the merger consideration with respect to their Peoples common stock and options to purchase common stock; and (ii) to payment of any vested benefits they may have accrued under (a) any tax-qualified retirement plans maintained or contributed to by Peoples and Peoples Federal Savings Bank in which they are participants, and (b) the voluntary deferred compensation and supplemental employee stock ownership plan for executives maintained by Peoples and Peoples Federal Savings Bank. They will retain the rights of their respective beneficiaries to a $175,000 death benefit each under the Peoples Federal Savings Bank’s split dollar plan in effect as of the merger. Eachmarket consulting agreement has a three year term. Upon the expiration of the agreements, Independent will offer Messrs. Gavin and Lake the opportunity to enter into the form of change of control agreements then offered to similarly-situated executives of Independent.
Consulting and Non-Competition Agreements
As a requirement of the merger agreement and in consideration of the lump-sum payment described in the discussion of the Settlement Agreements above, Messrs. Leetch and Sullivan must enter into consulting and non-competition agreements under which they will provide Independent with certain consulting servicesis for a termperiod of three years followingone year from the effective date of the merger, and be bound by confidentiality, non-competition and non-solicitation covenants, withexcept that (i) Rockland Trust may terminate the non-competition and non-solicitation restrictions survivingagreement for three years followingany reason or no reason at any time after the four month anniversary of the effective date of the merger.
Compensationmerger, (ii) any of Peoples’ Named Executive Officers in Connection withMessrs. Meehan, Masiello or Zekos may terminate the Merger
For illustrative purposes, ifagreement for any reason or no reason at any time after the completionfour month anniversary of the effective date of the merger, wereor (iii) Rockland Trust may terminate any of
Messrs. Meehan, Masiello or Zekos for cause (as described in the agreement). If Rockland Trust terminates the agreement after the four month anniversary of the effective date of the merger, Rockland Trust will have no further obligations under the agreement unless it wants Messrs. Meehan, Masiello and Zekos to have occurred on September 30, 2014,continue to comply with the latest practicable date priornon-competition andnon-solicitation covenants, in which case Rockland Trust will continue to compensate each of Messrs. Meehan, Masiello and Zekos at the rate of $12,500 per month up to the filingtwelve month anniversary of this proxy statement/prospectus, the following table reflectseffective date of the compensation and benefits that wouldmerger. If any of Messrs. Meehan, Masiello or might be paid or provided to eachZekos terminates the agreement after the four month anniversary of Peoples’ named executive officers in connection withthe effective date of the merger or Rockland Trust terminates any of Messrs. Meehan, Masiello or Zekos for cause, Rockland Trust will have no further obligations under the agreement and Messrs. Meehan, Masiello or Zekos, as described above. Please note that the amounts indicated below are estimates based on multiple assumptions thatcase may or may not actually occur, including assumptions described in this proxy statement/ prospectus. Some of these assumptions are based on information currently availablebe, will continue to comply with thenon-competition and as a result,non-solicitation covenants until the actual amounts, if any, to be received by a named executive officer may differ in material respects from the amounts set forth below. Further, calculations are based on (i) an assumed closing date as of September 30, 2014, including with respect to calculating the portion of equity awards subject to acceleration of vesting (assuming continued vestingone year anniversary of the equity and assuming that all Peoples options, unvested shares of restricted stock remain outstanding on such date), (ii) the equity holdingseffective date of the named executive officers as of September 30, 2014 (assuming no vesting of awards or exercises of Peoples options after September 30, 2014), and (iii)merger. The confidentiality covenant will survive the termination of the named executive officers without cause or for good reason immediately following a changenon-competition,non-solicitation, and market consulting agreement, whether in control as of September 30, 2014. Compensation of Peoples’ Named Executive Officers in Connectionaccordance with the Mergerexpiration of its one year term or any earlier termination of the agreement.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Cash
($) | | | Equity
($) | | | Pension/
NQDC
($) | | | Perquisites/
Benefits
($) | | | Tax
Reimbursement
($) | | | Other
($) | | | Total
($) | | Maurice H. Sullivan, Jr. | | | 3,172,390 | (1) | | | 1,546,251 | | | | 1,125,057( | 3) | | | 127,521( | 4) | | | — | | | | — | | | | 5,971,219 | | Thomas J. Leetch, Jr. | | | 4,872,144 | (2) | | | 1,400,270 | | | | — | | | | 127,521( | 5) | | | — | | | | — | | | | 6,399,935 | | James J. Gavin | | | 850,000 | | | | 898,985 | | | | — | | | | — | | | | — | | | | — | | | | 1,748,985 | | Christopher Lake | | | 680,000 | | | | 721,989 | | | | — | | | | — | | | | — | | | | — | | | | 1,401,989 | |
(1) | Amount includes a lump sum payment of $1,990,000 which includes consideration for a noncompete agreement and consulting services to be rendered to Independent. Amount also includes $1,182,390 which is the present value of Mr. Sullivan’s fully vested salary continuation annual payment of $84,555 which he will receive for 20 years. |
(2) | Amount includes a lump sum payment of $2,425,000 which includes consideration for a noncompete agreement and consulting services to be rendered to Independent. Amount also includes $2,447,144 which is the present value of Mr. Leetch’s fully vested salary continuation annual payment of $175,000 which he will receive for 20 years. |
(3) | Amount represents the present value of Mr. Sullivan’s fully vested director fee annual payment of $80,455 which he will receive for 20 years. |
(4) | Amount represents a benefit of $101,467 from the Executive Health Insurance Plan and $26,054 relating to Mr. Sullivan’s use of a company car. |
(5) | Amount represents a benefit of $101,467 from the Executive Health Insurance Plan and $26,054 relating to Mr. Leetch’s use of a company car. |
Indemnification and Insurance The merger agreement provides that following the merger, Independent will indemnify and hold harmless the present and former officers, directors and directorsemployees of PeoplesMNB and its subsidiaries against costs or expenses, judgments, fines, losses, claims, damages or liabilities and amounts paid in settlement incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to the merger, whether asserted or claimed prior to, at or after the effective date of the merger, to the extent suchthe indemnified party would have been indemnified, as a director, officer or officeremployee of PeoplesMNB or any of its subsidiaries under Peoples’MNB’s Articles of IncorporationOrganization and Bylaws.Bylaws and as permitted by applicable law. Independent will also continue to cover those persons under a directors’ and officers’ liability insurance policy for a period of six years following the effective date of the merger arising out of actions or omissions occurring at or prior to the merger, except that Independent is not required to expend an aggregate annual amount of more than 200% per year of the current amount expendedannual premium currently paid by PeoplesMNB for its directors’ and officers’ liability insurance policy. Retention Bonuses Certain employees who are not executive officers of Milford National will be entitled, subject to, at the option of Independent, the employee’s execution of a release provided by Independent, to a retention bonus if they maintain such insurance.their employment with Milford National until that person’s job function has been converted or transitioned and that person does not accept an offer for continued employment with Rockland Trust. Ownership Interests of Directors and Executive Officers The following table states the names and positions of Peoples’MNB’s directors and executive officers,of Milford National, their ages as of SeptemberJune 30, 20142018, and the amount and percentage of PeoplesMNB common stock beneficially owned by each person individually and in total by all of management and directors as a group. The table also states the amount and percentage of MNB common stock beneficially owned by Patricia M. Meehan, who is the spouse of Kevin P. Meehan, Chairman of the Board of MNB, and who has signed the shareholders agreement described below and a voting agreement agreeing to vote her shares in favor of the merger. Other than shares beneficially owned by Kristin T. Carvalho, who is President and Chief Executive Officer of MNB and Milford National as well as a director of MNB, no other executive officer of MNB or Milford National owns any shares of MNB common stock. | | | | | | | | | | | | | | | Name | | Position(s) Held With Peoples (1) | | Age | | | Shares
Beneficially Owned as
of September 30,
2014 (2) | | | Percent of
Common
Stock | | Maurice H. Sullivan, Jr. | | Chairman of the Board, Chief Executive Officer and Director | | | 68 | | | | 191,699 | (3)(13) | | | 3.1 | % | Thomas J. Leetch, Jr. | | President, Chief Operating Officer and Director | | | 64 | | | | 181,403 | (3)(4) | | | 2.9 | % | Vincent Mannering | | Director | | | 61 | | | | 31,950 | (5) | | | * | | Norman Posner | | Director | | | 67 | | | | 44,450 | (6) | | | * | |
| | | | | | | | | | | | | | | Name | | Position(s) Held With Peoples (1) | | Age | | | Shares
Beneficially Owned as
of September 30,
2014 (2) | | | Percent of
Common
Stock | | Maurice H. Sullivan, III | | Director | | | 42 | | | | 37,985 | (7) | | | * | | D. Randolph Berry | | Director | | | 66 | | | | 111,490 | (8) | | | 1.8 | % | Lee Ann E. Coté | | Director | | | 39 | | | | 22,799 | (3)(9) | | | * | | Hugh Gallagher | | Director | | | 83 | | | | 24,150 | | | | * | | Frederick Taw | | Director | | | 63 | | | | 29,150 | | | | * | | Myron Fox | | Director | | | 69 | | | | 48,427 | (10) | | | * | | William Giudice | | Director | | | 59 | | | | 20,150 | (11) | | | * | | John F. Reen, Jr. | | Director | | | 71 | | | | 26,650 | (12) | | | * | | James J. Gavin | | Executive Vice President | | | 49 | | | | 96,444 | (14) | | | 1.5 | % | Christopher Lake | | Senior Vice President and Chief Financial Officer | | | 50 | | | | 82,449 | (15) | | | 1.3 | % | | | | | | | | | | | | | | | | All Directors and Executive Officers as a Group (14 persons) | | | | | | | | | 949,196 | | | | 15.2 | % | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Name | | Position(s) Held With MNB(1) | | Age | | | Shares Beneficially
Owned as of
June 30, 2018(2) | | | Percent of
Common
Stock(3) | | Kevin P. Meehan | | Chairman of the Board | | | 58 | | | | 123,411.5 | | | | 62.1 | % | Thomas C. Sawyer, Sr. | | Director | | | 73 | | | | 850 | | | | * | % | Michael A. Diorio | | Director | | | 72 | | | | 145 | | | | * | % | Kristin T. Carvalho | | Director, President and Chief Executive Officer | | | 53 | | | | 10 | | | | * | % | Ernest H. Horn | | Director | | | 57 | | | | 10 | | | | * | % | Ronald J. Masiello | | Director | | | 63 | | | | 10 | | | | * | % | David Patterson | | Director | | | 51 | | | | 10 | | | | * | % | | | | | | | | | | | | | | | | All Directors as a Group (7 persons) | | | | | | | | | 124,446.5 | | | | 62.6 | % | Patricia M. Meehan(4) | | None | | | N/A | | | | 10,849 | | | | 5.5 | % | | | | | | | | | | | | | | | |
| (1) | The business address of each director and executive officer is 435 Marketc/o MNB Bancorp, 300 East Main Street, Brighton,Milford, Massachusetts 02135.01757. |
| (2) | In accordance with Rule13d-3 under the Securities Exchange Act of 1934, a person is deemed to be the beneficial owner, for purposes of this table, of any shares of Common StockMNB common stock if he or she has shared voting or investment power with respect to such security, or has a right to acquire beneficial ownership at any time within 60 days from the Record Date.June 30, 2018. As used herein, “voting power” is the power to vote or direct the voting of shares, and “investment power” is the power to dispose or direct the disposition of shares. The shares set forth above for directors and executive officersthe named individuals include all shares held directly as well as by spouses and minor children, in trust and other indirect ownership,or jointly with family members, over which shares the named individuals effectively exercise sole or shared voting and investment power. |
| (3) | Does not include 529,000Based on 198,845 shares held by the Peoples Federal Savings Bank Charitable Foundation, which by regulation must vote its shares in the same proportion as all other stockholders on all matters placed to a vote of stockholders. The board of directors of the Foundation includes directors Sullivan, Jr., Leetch and Coté.MNB common stock outstanding. |
| (4) | Includes 38,761 shares held by Mr. Leetch’s 401(k) account, 5,524 shares held by Mr. Leetch’s ESOP account and 1,244 shares held in Mr. Leetch’s IRA account. |
(5) | Includes 7,500 shares held by Mr. Mannering’s IRA; 4,500 shares held by the IRA of Mr. Mannering’s spouse; and 50 shares held jointly with Mr. Mannering’s child. |
(6) | Includes 26,700 shares held by Mr. Posner’s spouse and 300 shares held inMrs. Meehan maintains a trust of which Mr. Posner is trustee. |
(7) | Includes 13,185 shares held in Mr. Sullivan’s 401(k) account, 1,200 shares held by the IRA of Mr. Sullivan’s spouse, 600 shares held by Mr. Sullivan’s IRA account, 200 shares held by Mr. Sullivan’s spouse and 150 shares held by Mr. Sullivan as custodian. |
(8) | Includes 2,519 shares held by Mr. Berry as trustee. |
(9) | Includes 849 shares held by Ms. Coté’s 401(k) account, 300 shares held as custodian for children and 2,500 shares held by Ms. Coté’s parent. |
(10) | Includes 20,000 shares held by Mr. Fox’s spouse and 100 shares held jointly with Mr. Fox’s spouse and child. |
(11) | Includes 1,000 shares held in trust. |
(12) | Includes 5,000 share held by Mr. Reen’s IRA account and 2,500 shares held by the IRA of Mr. Reen’s spouse. |
(13) | Includes 40,500 shares held by Mr. Sullivan’s IRA account, 7,000 shares held by Mr. Sullivan’s spouse, 5,524 shares held by Mr. Sullivan’s ESOP account and 1,000 shares held by Mr. Sullivan’s spouse as custodian. |
(14) | Includes 27,297 shares held in Mr. Gavin’s 401(k) account and 5,447 shares held in Mr. Gavin’s ESOP account. |
(15) | Includes 14,988 shares held by Mr. Lake’s 401(k) account and 4,391 shares held in Mr. Lake’s ESOP account.mailing address at 60 Causeway Street, Millis, Massachusetts 02054-10373. |
Litigation Relating to the MergerShareholders Agreement
On October 14, 2014 Richard Morris, an individual who alleges himself to be a Peoples stockholder, filed a purported class action lawsuit in Maryland state court which named Peoples, Peoples Federal Savings Bank, Peoples’ directors, Independent, and Rockland Trust Company as defendants. The purported class action lawsuit, which was pending as of the date of this filing, alleges breaches of fiduciary duty inIn connection with the salemerger agreement, Independent has entered into a shareholders agreement with Kevin P. Meehan and Patricia M. Meehan. Pursuant to the shareholders agreement, Mr. and Mrs. Meehan have agreed, severally and not jointly:
that for as long as they own, in the aggregate, more than one percent (1%) of PeoplesIndependent’s outstanding common stock, they will (i) cause their shares to be counted as present for purposes of calculating a quorum at any meeting of shareholders of Independent; (ii) vote their shares of Independent common stock in favor of any and seeks, among other things, class action certification and court orders prohibitingall proposals that Independent’s board of directors recommends a Peoples stockholder vote regarding the merger and completionin favor to Independent’s shareholders; (iii) vote their shares of the merger. The complaint alleges that the individual defendants, who are directors of Peoples, breached their fiduciary duties in a number of ways and failed to maximize stockholder value and disclose all information necessary for Peoples stockholders to make a fully informed decision about whether to voteIndependent common stock in favor of the merger. election of all director candidates nominated and recommended by Independent’s board of directors; (iv) vote their shares of Independent common stock against any and all proposals that Independent’s board of directors recommends a vote against to Independent’s shareholders; and | (v) vote their shares of Independent common stock against the election of all director candidates that are not nominated and recommended by Independent’s board of directors; |
not to own, in the aggregate, more than two percent (2%) of Independent’s outstanding common stock without the prior written consent of Independent; and subject to certain exceptions, they will not, in the aggregate, sell, transfer or otherwise dispose of more than 15,000 shares of Independent common stock in a single trading day or more than 45,000 shares of Independent common stock in any five (5) consecutive trading days. The complaint also alleges that Peoples, Peoples Federal Savings Bank, Independent, and Rockland Trust Company aided and abetted the alleged fiduciary breaches. The complaint also alleges that the merger consideration is inadequate to Peoples stockholders, that the directors of Peoples have material conflicts of interest and are acting to better their own personal interests through the merger, that the merger agreement includes unreasonable deal protection provisions, and that this registration statement is materially incomplete and misleading. The complaint seeks, among other things, class action certification, court orders prohibiting a Peoples stockholder vote regarding the merger and completionterm of the merger,shareholders agreement commenced on May 29, 2018 and other equitablewill terminate automatically when Mr. and monetary relief. Peoples, Peoples Federal Savings Bank, Independent, Rockland Trust Company, andMrs. Meehan own, in the individual defendants each believe that the case isaggregate, one percent (1%) or less of Independent’s outstanding common stock for a typical, meritless “shareholder strike” suit, that the claims made are without merit, and intend to defend the case vigorously.period of 90 consecutive days. THE MERGER AGREEMENT The following summary describes certain aspects of the merger, including material provisions of the merger agreement. This summary is not complete and is qualified in its entirety by reference to the merger agreement, a copy of which is attached asAnnex A to this document and is incorporated into this document by reference. You should read the merger agreement in its entirety, as it is the legal document governing the merger. The Merger Each of Peoples’MNB’s board of directors and Independent’s board of directors has unanimously adopted and approved the merger agreement, which provides for the merger of PeoplesMNB with and into Independent. Each share of Independent common stock issued and outstanding atimmediately prior to the effective time of the merger will remain issued and outstanding as one share of common stock of Independent, and each share of PeoplesMNB common stock issued and outstanding atimmediately prior to the effective time of the merger (other than dissenters’ shares, shares held as treasury stock or shares owned directly by Independent in trust accounts, managed accounts and the like) will be converted into the right to receive, eitherat the election of the holder, either: (i) 0.5523 of a share$275.00 in cash or (ii) 3.55 shares of Independent common stock or (ii) $21.00 in cash.stock. See “– Consideration To Be Received in the Merger” below. Effective Time and Completion of the Merger The merger will be completed and will become effective upon the acceptance for filing by the Secretary of the Commonwealth of Massachusetts and the Maryland State Department of Assessments and Taxation of the articles of merger related to the merger. However, the parties may agree to a later time for completion of the merger and specify that later time in the articles of merger in accordance with Massachusetts law and Maryland law. We currently expect that the merger will be completed in the firstfourth quarter of 2015,2018, subject to Peoples’ stockholders’MNB shareholders’ approval of the merger agreement and the transactions it contemplates, the receipt of all necessary regulatory approvals and/or waivers, and the expiration of all regulatory waiting periods. However, completion of the merger could be delayed if there is a delay in obtaining the required stockholdershareholder or regulatory approvals or in satisfying any other conditions to the merger. There can be no assurances as to whether, or when, PeoplesMNB and Independent will obtain the required approvals or complete the merger. Consideration to Be Received in the Merger In the merger, each outstanding share of PeoplesMNB common stock (other than dissenters’ shares, shares held as treasury stock or shares owned directly by Independent in trust accounts, managed accounts and the like) will be converted into the right to receive eitherat the election of the holder of the share of MNB common stock either: (i) 0.5523 of a share$275.00 in cash or (ii) 3.55 shares of Independent common stock or (ii) $21.00 in cash.stock. Independent will not issue any fractional shares of its common stock in the merger, but will instead pay cash (determined byon the basis of the volume-weighted average trading price (“VWAP”)per share of IndependentMNB common stock on the NASDAQ Global Select Market for the five consecutive trading days ending on the fifth trading day immediately precedingprecedent the completion ofclosing date, rounded to the merger)nearest whole cent) for any fractional share a Peoples stockholderan MNB shareholder would otherwise receive after aggregating all of his or her shares. Peoples��� stockholdersMNB’s shareholders will be able to elect to receive cash, Independent common stock or a combination of cash and Independent common stock for their shares of PeoplesMNB common stock. Regardless of a Peoples stockholder’san MNB shareholder’s choice, however, electionselection will be limited by the requirement that 60%75% of PeoplesMNB common stock be converted into Independent common stock and 40%25% be exchanged for cash. Therefore, the allocation of cash and Independent common stock that a Peoples stockholderan MNB shareholder will receive will depend on the elections of other Peoples’ stockholders.MNB shareholders. The allocation of the consideration payable to Peoples’ stockholdersMNB shareholders will not be known until the exchange agent tallies the results of the cash/stock elections made by Peoples’ stockholders.MNB’s shareholders. If a Peoples stockholderan MNB shareholder does not make an election, the type of consideration such stockholderthat shareholder will receive will depend on the consideration elected by other Peoples’ stockholders.MNB shareholders.
Exchange of PeoplesMNB Stock Certificates for Independent Stock CertificatesMerger Consideration On or beforeAt least one business day prior to the closing date of the merger, Independent will cause to be delivered to the exchange agent certificates representing the shares of Independent common stock, or evidence of the shares in book entry form, to be issued in the merger. In addition, Independent will deliver to the exchange agent an aggregate amount of cash sufficient to pay the aggregate cash consideration payable in the merger, as well as cash payable in lieu of fractional shares of Independent common stock. Independent has selected Computershare Limited to act as the exchange agent in connection with the merger.
If the merger is approved, Peoples’ stockholdersMNB’s shareholders will receive separate instructions for the exchange of certificates representing PeoplesMNB common stock. No later than five business days following the effective time of the merger, the exchange agent will mail to each Peoples stockholderMNB shareholder of record at the effective time of the merger who did not previously surrender Peopleshis or her MNB stock certificates, a letter of transmittal and instructions for use in surrendering the stockholder’s Peoplesshareholder’s MNB stock certificates. When such Peoples’ stockholdersMNB shareholders deliver their PeoplesMNB stock certificates to the exchange agent along with a properly completed and duly executed letter of transmittal and any other required documents, their PeoplesMNB stock certificates will be cancelled and in exchange they will receive: an Independent stock certificate representing the number of whole shares of Independent common stock, if any, that they are entitled to receive under the merger agreement; a check representing the amount of cash, if any, they are entitled to receive under the merger agreement as payment of merger consideration; and/or a check representing the amount of cash that they are entitled to receive in lieu of fractional shares, if any. No interest will be paid or accrued on any cash constituting merger consideration.consideration, including cash payable in lieu of fractional shares of Independent common stock. Peoples’ stockholdersMNB shareholders are not entitled to receive any dividends or other distributions on Independent common stock with a record date after the closing date of the merger until they have surrendered their PeoplesMNB stock certificates in exchange for an Independent stock certificate.certificate representing the shares of Independent common stock they are entitled to receive (or evidence of the shares in book entry form). After the surrender of their PeoplesMNB stock certificates, Peoples’ stockholdersMNB shareholders of record will be entitled to receive any dividend or other distribution, without interest, which had become payable with respect to their Independent common stock.
Independent will only issue a stock certificate for Independent common stock (or evidence of the shares in book entry form) or a check for cash in payment of merger consideration or in lieu of a fractional share in a name other than the name in which a surrendered PeoplesMNB stock certificate is registered if the exchange agent is presented with all documents required to show and effect the unrecorded transfer of ownership, together with evidence that any applicable stock transfer taxes have been paid. Stock Options and Restricted Stock
Stock Options
All outstanding unvested Peoples stock options will become fully vested immediately prior to the effective time of the merger. Peoples options will be cancelled upon consummation of the merger, and each option holder will receive a cash payment upon such cancellation in an amount equal to the product of (i) the number of shares of Peoples common stock provided for by such option and (ii) the excess, if any, of $21.00 over the exercise price of the option. Any option for which the exercise price exceeds $21.00 shall be cancelled as of the effective time of the merger.
The cash payment will be made without interest and will be net of all applicable withholding taxes. As of the record date of October 16, 2014, there were outstanding options to purchase 642,735 shares of Peoples common stock.
Restricted Stock
All outstanding unvested shares of Peoples restricted stock will become fully vested immediately prior to the effective time of the merger. All of such shares will be treated as outstanding Peoples shares for all purposes under the merger agreement, including for purposes of the holders’ right to receive the merger consideration, subject to applicable withholding. As of the record date of October 16, 2014, there were 206,707 shares of unvested Peoples restricted stock outstanding.
Representations and Warranties The merger agreement contains customary representations and warranties of Independent and PeoplesMNB relating to their respective businesses. With the exception of certain representations that must be true and correct in all material respects, or true and correct except to a de minimis extent, no representation or warranty will be deemed untrue or incorrect as a consequence of the existence or absence of any fact, circumstance or event unless that fact, circumstance or event, individually or when taken together with all other facts, circumstances or events, has had or iswould reasonably likelybe expected to have a material adverse effect on Peoplesthe party making the representation or its ability to timely complete the merger and the bank merger.representation. In determining whether a material adverse effect has occurred or iswould reasonably likely,be expected to occur, the parties will disregard any effects resulting from (1) changes in banking and similar laws of general applicability or interpretations thereof by governmental authorities, (2) changes in generally accepted accounting principles or regulatory accounting requirements applicable to banks or bank holding companies generally, (3) any modifications or changes to Peoples’MNB’s valuation policies and practices in connection with the merger or restructuring charges taken in connection with the merger, in each case in accordance with generally accepted accounting principles and with Independent’s prior written consent, (4) changes after the date of the merger agreement in general economic or capital market conditions affecting financial institutions or their market prices generally and not disproportionately affecting PeoplesMNB or Independent, including, but not limited to, changes in levels of interest rates generally, (5) the effects of compliance with the merger agreement on the operating performance, business or financial condition of PeoplesMNB or Independent, including the expenses incurred by PeoplesMNB or Independent in negotiating, documenting, effecting and consummating the transactions contemplated by the merger agreement, (6) the effects of any action or omission taken by PeoplesMNB with the prior consent of Independent, and vice versa, or as otherwise expressly permitted or contemplated by the merger agreement, (7) the impact of the merger agreement and the transactions contemplated by the merger agreement on relationships with customers or employees (including the loss of personnel subsequent to the date of the merger agreement), and (8) any fact, change, event, development, effect or circumstance resulting from the public disclosure of the merger agreement or the transactions contemplated by the merger agreement.agreement, (9) transaction expenses incurred by MNB of a type and in an amount customary for transactions of this nature, (10) changes in national or international political or social conditions including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon or within the United States, and (11) national disaster or other force majeure event. The representations and warranties of each of Independent and Peoples have been made solely for the benefit of the other party and such representations and warranties should not be relied on by any other person. In addition, such representations and warranties:MNB: have been qualified by information set forth in confidential disclosure schedules exchanged by the parties in connection with signing the merger agreement, which modifies, qualifies and creates exceptions to the representations and warranties in the merger agreement; will not survive consummation of the merger and cannot be the basis for any claims under the merger agreement by the other party after termination of the merger agreement; may be intended not as statements of fact, but rather as a way of allocating the risk to one of the parties to the merger agreement if those statements turn out to be inaccurate; are subject to the materiality standard described in the merger agreement, which may differ from what may be viewed as material by you; and were made only as of the date of the merger agreement or such other date as is specified in the merger agreement. Each of Independent and PeoplesMNB has made representations and warranties to the other regarding, among other things: capital stock; corporate matters, including due organization and qualification; organization and ownership of subsidiaries; their authority to execute and deliver the merger agreement and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the merger; the filing of securities and regulatory reports, and reports; the absence of agreements with regulatory agencies or investigations by regulatory agencies; governmental filings and regulatory approvals and consents necessary to complete the merger; deposit insurance;financial statements and the absence of undisclosed liabilities;
absence of certain changes or events; compliance with applicable laws; regulatory capitalization; loan,non-performing and classified assets; trust business and fiduciary accounts; allowance for loan losses;
the Community Reinvestment Act and anti-money laundering requirements; legal proceedings; broker’s fees payable in connection with the merger; employee benefit matters; labor matters; environmental matters; tax matters; information security; and the accuracy of information supplied for inclusion in this document and other similar documents. In addition, PeoplesMNB has made other representations and warranties about itself and its subsidiaries to Independent as to: matters relating to certain material contracts; investment securities; derivative transactions; investment management; repurchase agreements; allowance for loan losses; transactions with affiliates and insiders; tangible properties and assets; intellectual property; insurance; the inapplicability of state anti-takeover laws; the receipt of a fairness opinion; and transaction costs. Conduct of Business Pending the Merger PeoplesMNB has undertaken customary covenants that place restrictions on it and its subsidiaries until the effective time of the merger. In general, PeoplesMNB has agreed that during this period it will, and will cause each of its subsidiaries to: (1) conduct its business in the ordinary course consistent with past practice; and (2) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships, including retaining the services of key officers and key employees and the goodwill of customers and other parties. PeoplesMNB further has agreed that, with certain exceptions, PeoplesMNB will not, and will not permit any of its subsidiaries to, among other things, undertake the following actions without the prior written consent of Independent:actions:
issue, or enter into an agreement to issue, shares of common stock except pursuant to the exercise of PeoplesMNB stock options outstanding as of the date of the merger agreement, accelerate the vesting of any rights to acquire shares of common stock, or change the number of, or provide for the exchange of, shares of Peoples stock, any securities convertible into or exchangeable for any additional shares of stock, any rights issued and outstanding prior to the effective date of the merger as a result of a stock split, stock dividend, recapitalization, reclassification, or similar transaction with respect to its outstanding stock or any other such securities; | rights to acquire shares of common stock, or change the number of, or provide for the exchange of, shares of MNB stock, any securities convertible into or exchangeable for any additional shares of stock, any rights issued and outstanding prior to the effective date of the merger as a result of a stock split, stock dividend, recapitalization, reclassification, or similar transaction with respect to its outstanding stock or any other such securities; |
make, declare, set aside or pay any dividends or other distributions on any shares of its capital stock, other than (1) dividends paid by any of the wholly owned subsidiaries of PeoplesMNB to PeoplesMNB or to any of its wholly owned subsidiaries, and (2) regular quarterly cash dividends at a rate not to exceed $0.05 per share;subsidiaries; enter into or amend or renew any employment, consulting, severance, retention, change in control or similar agreements or arrangements with any director, officer, employee of PeoplesMNB or any of its subsidiaries, or grant any salary or wage increase or increase any employee benefit plan or grant any equity compensation or pay any incentive, commission or bonus payments, subject to certain exceptions primarily intended to permit increases in compensation and the payment of bonuses in the ordinary course of business; hire any person except for at-willat will employees at an annual rate of salary not to exceed $65,000$50,000 to fill vacancies that may arise from time to time in the ordinary course of business, or promote any employee, except fill vacancies that may arise in the ordinary course of business or to satisfy contractual obligations existing as of the date of the merger agreement;agreement, unless Independent first consents in writing (which consent will not be unreasonably withheld, conditioned or delayed); with certain exceptions, enter into, establish, adopt, amend, modify or terminate any benefit plan or other pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any related trust agreement, related thereto, in respect of any current or former director, officer or employee; make, accrue or credit to on behalf of any participant under the Peoples Federal Bancshares, Inc. and Peoples Federal Savings Bank Amended and Restated Voluntary Deferred Compensation and Supplemental Employee Stock Ownership Plan for Executives any contributions with respect to compensation contingent upon the execution of the merger agreement or the consummation of the transactions contemplated thereby (including transaction bonuses, severance benefits, change in control payments, salary continuation payments, or income associated from the exercise or cancellation of stock options or the accelerated vesting of restricted stock);
except pursuant to agreements in effect as of the date of the merger agreement, pay, loan or advance any amount to, or sell, transfer or lease any properties or assets to, or enter into any agreement with, any of its officers or directors or any of their immediate family members or any affiliates or associates of any of its officers or directors other than compensation or business expense reimbursement in the ordinary course of business consistent with past practice; except in the ordinary course of business consistent with past practice,certain exceptions, sell, transfer, mortgage, pledge, encumber or otherwise dispose or discontinue any of its assets, deposits, business or properties, other than real estate owned, or cancel or release any indebtedness owed to PeoplesMNB or any of its subsidiaries;
other than in the ordinary course of business and consistent with past practice, acquire other than by way of foreclosures or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary course of business and consistent with past practice, acquire all or any portion of the assets, business, deposits or properties of any other entity;
with certain exceptions, make any capital expenditures other than in the ordinary course of business consistent with past practice and expenditures reasonably necessary to maintain existing assets in good repair, each in amounts not exceeding $50,000$25,000 in the aggregate unless consented to in writing by Independent;Independent (which consent will not be unreasonably withheld, conditioned or delayed);
with a certain exception, amend its articles of incorporationorganization or bylaws or any equivalent documents of any PeoplesMNB subsidiary;
implement or adopt any change in its accounting principles, practices or methods, other than as may be required by applicable laws, or regulations or generally accepted accounting principles in the United States of America;America or at the written direction of a governmental authority; with certain exceptions, enter into, materially amend, modify, terminate or terminatewaive any material provision of any material contract, lease, or insurance policy; with certain exceptions, enter into any settlement or similar agreement with respect to any action, suit, proceeding, order or investigation to which PeoplesMNB or any of its subsidiaries or directors or Executive Officers is a party or becomes a party after the date of the merger agreement, which settlement or agreement involves payment of an amount exceeding $50,000 individually or $100,000 in the aggregate and/(provided that, in connection with the settlement or would imposeagreement, the individual and aggregate amounts are exclusive of any material restriction on the businessamount of Peoplesproceeds indirectly paid under any insurance policy, but are inclusive of any amount of proceeds paid by MNB or any of its subsidiaries;subsidiaries as a deductible or retention), unless Independent acting through its General Counsel or his designee(s) first consents in writing; enter into any new material line of business or materially change in any material respect its lending, investment, underwriting, risk and asset liability management and other banking and operativeoperating policies, except as required by applicable law regulation or policies imposed by any governmental authority, or file any application or make any contract or commitment with respect to branching or site location or relocation;authority; enter into any derivatives transactions;transactions, unless consented to in writing by Independent (which consent will not be unreasonably withheld, conditioned or delayed); with certain exceptions, incur, modify, extend or renegotiate any indebtedness or in any way assume the indebtedness of another personfor borrowed money (except deposits, FHLB borrowings, or federal funds purchased, in each case in the ordinary course of business) or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other person;person, unless consented to in writing by Independent (which consent will not be unreasonably withheld, conditioned or delayed); with certain exceptions and other than by way of foreclosures or acquisitions in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, acquire, sell or otherwise dispose of any debt security or equity investment, unless consented to in writing by Independent;Independent (which consent will not be unreasonably withheld, conditioned or delayed); make any changes in deposit pricing that are not in the ordinary course of business consistent with recent past practice;practice, unless consented to in writing by Independent (which consent will not be unreasonably withheld, conditioned or delayed); with respect to loans: except for certain commercial loans approved and/or committed,Milford National may make or renew any commercial loan, commercial loan commitment, commercial letter of credit or other extension of commercial credit unless any such commercial loan, commercial loan commitment, commercial letter of credit or other extension of commercial credit, unless Peoples Federal Savings Bank has approved itup to $1,000,000 that is made in the ordinary course of business in accordancea manner consistent with the current pricingpolicies and credit underwriting guidelines of Peoples Federal Savings Bankprocedures and consistent with recent past practicespractice or, if more than $2,500,000, has been$1,000,000, only if consented to in writing by Independent;Independent (which consent will not be unreasonably withheld, conditioned or delayed);
except for residential loans approved and/or committed,Milford National may make or renew any residential loan or residential loan commitment unless Peoples Federal Savings Bank has approved itup to $750,000 that is made in the ordinary course of business in accordance with Peoples Federal Savings Bank’s current pricing and credit underwriting guidelinesa manner consistent with current policies and procedures and recent past practicespractice, so long as the residential loan or residential loan commitment has aloan-to-value ratio that is in compliance with Milford National’s current and certain other policies and procedures, complies with certain interest rate restrictions and is a qualified mortgage under applicable regulatory guideline or, if more than $1,000,000, has been$750,000, only if consented to in writing by Independent;Independent (which consent will not be unreasonably withheld, conditioned or delayed); and
except for home equitywith the sole and only exception of consumer loans approved and/or committed as of the date of the merger agreement, make or renew any home equity loan or home equity loan commitment in excess of $250,000 or make or renew any otheroverdraft protection lines up to $10,000 associated with consumer loan or consumer loan commitment in excess of $25,000,deposit accounts, and unless Peoples Federal Savings Bank has approved them in the ordinary course of business in accordance with Peoples Federal Savings Bank’s current pricing and credit underwriting guidelines consistent with recent past practices or, if larger than the stated limits, has been consented to in writing by Independent;
Independent (which consent will not be unreasonably withheld, conditioned or delayed), Milford National may not (a) sell any loan participations to, or enter into any loan participations with, any third party, (b) renegotiate, increase, extend or modify any loan, loan commitment, letter of credit or other extension of credit, unless Peoples Federal Savings Bank has approved it in the ordinary courseand (c) purchase loans of business in accordance with Peoples Federal Savings Bank’s current pricing and credit underwriting guidelines consistent with recent past practicesany type, or if more than $1,000,000, has been consented to in writing by Independent; purchase(d) make or renew any loans, unless Peoples Federal Savings Bank has approved it in the ordinary course of business in accordance with Peoples Federal Savings Bank’s current pricing and credit underwriting guidelines consistent with recent past practiceshome equity loan or if more than $1,000,000, has been consented to in writing by Independent;consumer loan;
make any investment or commitment to invest in real estate or in any real estate development project other than by way of foreclosure or deed in lieu thereof;of foreclosure; make or change any materialincome tax election, file any material amended tax return, enter into any material closing agreement, settle or compromise any material liability with respect to taxes, agree to any material adjustment of any tax attribute, file any claim for a material refund of taxes, consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment, or knowingly take any action that would prevent or impede the merger or the bank merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; commit any act or omission which constitutes a material breach or default of an agreement with any governmental authority or any other material agreement, lease or license; except for foreclosures in process as of the date of the merger agreement, foreclose on or take a deed or title to any real estate other than single-family residential properties without first conducting a Phase I environmental assessment of the property or foreclose on or take a deed or title to any real estate other than single-family residential properties if suchthe environmental assessment indicates the presence of hazardous substances or other regulated materials;substances; except as may be required by applicable law or regulation, or by generally accepting accounting principles, take or fail to take, or adopt any resolutions of its board of directors in support of, any action which would result in (1) any of Peoples’MNB’s representations and warranties in the merger agreement becoming untrue in any material respect, (2) any of the conditions to the merger not being satisfied, or (3) a material violation of any provision of the merger agreement; subject to certain exceptions,directly or indirectly repurchase, redeem or otherwise acquire any shares of itsMNB capital stock or any securities convertible into or exercisable for any shares of itsMNB capital stock;
enter into any contract with respect to, or otherwise agree to do any of the actions prohibited by the preceding bullet points;
with certain exceptions, merge or consolidate itself or any of its subsidiaries with any other person, or restructure, reorganize or completely or partially liquidate or dissolve it or any of its subsidiaries; except as may be required by applicable law or regulation, or otherwise expressly contemplated by the merger agreement, make application for the opening, relocation or closing of any, or open, relocate, or close any, branch office, loan production or servicing facility or automated banking facility; or compromise, resolve, or otherwise “workout” any delinquent or troubled loan unless done in the ordinary course of business, consistent with Milford National’s current policies and procedures and recent past practice.practice, unless consented to in writing by Independent (which consent will not be unreasonably withheld, conditioned or delayed); except as may be required by applicable law, enter into any new material line of business in connection with, or change in any material respect, its investment management business, its trust services business, its retirement, estate, investment or educational planning business, its insurance business, its brokerage services business, and any other services related to its wealth management business or any operating policies relating to any of the foregoing; or enter into any contract with respect to, or otherwise agree or commit to do, any of the foregoing. Independent has agreed that, except with Peoples’MNB’s prior written consent, Independent will not, and will cause each of its subsidiaries not to, among other things, undertake the following actions: except as may be required by applicable law or regulation, take any action or fail to take any action that is intended or reasonably likely to result in: a delay in the consummation of the merger or the transactions contemplated by the merger agreement; any impediment to its ability to consummate the merger or the transactions contemplated by the merger agreement; any of its representations and warranties contained in the merger agreement being or becoming untrue in any material respect at or prior to the effective time; any of the conditions contained in the merger agreement not being satisfied; or a material violation of any provision of the merger agreement; knowingly take any action that would prevent or impede the merger or bank merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; or enter into any contract with respect to, or otherwise agree to do any of the actions prohibited by the preceding bullet point; orforegoing actions. knowingly take any action that would prevent or impedeIndependent will deposit the merger orconsideration with the bank merger from qualifying as a reorganization withinexchange agent at least one business day prior to the meaning of Section 368(a)closing date of the Code;
merger.The merger agreement also contains mutual covenants relating to preparation of this document, access to information of the other company, public announcements with respect to the transactions contemplated by the merger agreement, regulatory filings and consents, notification of certain changes, board packages and director resignations, litigation, information systems conversion, coordination of dividends and agreements by PeoplesMNB allowing Independent access to Peoples’MNB’s customers and suppliers and to conduct environmental assessments of certain real property owned by Peoples.MNB. StockholderShareholder Approval
PeoplesMNB has called the special meeting to consider and vote upon approval of the merger agreement and any other matters required to be approved by Peoples’ stockholders in order to permit consummation of the transactions contemplated by the merger agreement, as well as to vote upon a proposal to approve one or more adjournments of the special meeting if necessary to permit further solicitation of proxies in favor of the PeoplesMNB merger agreement proposal and a non-binding advisory resolution approving certain compensation payable to the named executive officers of Peoples in connection with the merger. Peoples has agreed to use commercially reasonable efforts to convene the meeting within 45 days following the time when the registration statement becomes effective. PeoplesMNB adjournment proposal. MNB has agreed to take all lawful action to solicit stockholdershareholder approval of the merger agreement, although under certain circumstances Peoples’MNB’s board of directors may recommend to Peoples’ stockholdersMNB shareholders a Superior Proposal (as defined below) in the exercise of its fiduciary duties, as described below under “– No Solicitation of Alternative Transactions.”
Under the merger agreement, Peoples’MNB’s board of directors must, at all times prior to and during the special meeting, recommend approval of the merger agreement by Peoples’ stockholdersMNB shareholders and may not withhold, withdraw, amend or modify its recommendation in any manner adverse to Independent or take any other action or make any other public statement inconsistent with its recommendation, except as and to the extent described below under “– No Solicitation of Alternative Transactions.” No Solicitation of Alternative Transactions With certain exceptions described below, PeoplesMNB has agreed that it, its subsidiaries and their officers and directors will not, and PeoplesMNB will cause each of its and its subsidiaries’ representatives not to, directly or indirectly: solicit, initiate or encourage any inquiry with respect to, or the making of, any proposal that constitutes or could reasonably be expected to lead to, an Acquisition Proposal (as defined below); participate in any negotiations regarding an Acquisition Proposal with, or furnish any nonpublic information relating to an Acquisition Proposal to, any party that has made or, to theMNB’s knowledge, of Peoples, is considering making an Acquisition Proposal; or engage in discussions regarding an Acquisition Proposal with any party that has made, or, to Peoples’MNB’s knowledge, is considering making, an Acquisition Proposal. However, prior to the time that Peoples’ stockholdersMNB shareholders approve the merger agreement and the transactions it contemplates, if PeoplesMNB receives a written and unsolicited Acquisition Proposal that Peoples’ board of directors reasonably believes to be credible and which Peoples’MNB’s board of directors determines in good faith (after consultation with its financial advisers and legal counsel) isconstitutes or is reasonably likely to lead to a Superior Proposal (as defined below), PeoplesMNB may take the following actions: furnish nonpublic information with respect to MNB and its subsidiaries to the party making suchthe Superior Proposal, but only if (1) prior to so furnishing suchthe nonpublic information, PeoplesMNB has entered into a customary confidentiality agreement with suchthe party on terms no less favorable to PeoplesMNB than the confidentiality agreement between PeoplesMNB and Independent, and (2) all suchthe nonpublic information has previously been provided to Independent or is provided to Independent prior to or contemporaneously with the time it is provided to the party making suchthe Superior Proposal; and engage or participate in any discussions or negotiations with suchthe party with respect to the Superior Proposal. PeoplesMNB must promptly advise Independent of the receipt of:
any proposal that constitutes or couldis reasonably be expectedlikely to lead to an Acquisition Proposal and the material terms of the proposal; and any request for non-public information relating to PeoplesMNB or any of its subsidiaries other than requests for information not reasonably expectedlikely to be related to an Acquisition Proposal. Thereafter, PeoplesMNB must keep Independent reasonably informed on a reasonably current basis (and in any event at least once every 48 hours)two business days) of the status of any such Acquisition Proposal (including any material change to the terms thereof)its terms). Except as described below, Peoples’MNB’s board of directors mayshall not: withhold, withdraw, or modify (or publicly propose to withhold, withdraw or modify), in a manner adverse to Independent, its recommendation that Peoples’ stockholdersMNB shareholders approve the merger agreement and the transactions it contemplates; or approve or recommend (or publicly propose to approve or recommend ) any Acquisition Proposal. Except as set forth below, Peoples mayMNB shall not, and its board of directors mayshall not allow it to, and Peoples mayMNB shall not allow any of its subsidiaries to, enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or other agreement (except for customary confidentiality agreements as described above) relating to any AcquisitionSuperior Proposal. Notwithstanding the previous paragraphs, Peoples’MNB’s board of directors may, prior to the time Peoples’ stockholdersMNB shareholders approve the merger agreement and the transactions it contemplates, in response to a Superior Proposal which did not result in a breach of the merger agreement, (1) change its recommendation that Peoples’ stockholdersMNB shareholders approve the merger agreement and the transactions it contemplates or (2) terminate the merger agreement (and concurrently with suchthe termination cause PeoplesMNB to enter into a definitive agreement with respect to the Superior Proposal), in either case if and only if theMNB’s board of directors has determined in good faith, after consulting with its legal counsel, that the failure to take such action would be inconsistent with the directors’ fiduciary duties. However, the board of directors may not take any such action in connection with an Acquisition Proposal unless: the MNB board of directors has determined that the Acquisition Proposal constitutes a Superior Proposal; prior to terminating the merger agreement, PeoplesMNB provides written notice to Independent at least four business days in advance of its intention to take such action (which notice must specify all material terms and conditions of the Superior Proposal, including documentation related thereto and the identity of the party making the Superior Proposal); during thefour-day notice period, PeoplesMNB negotiates with Independent in good faith if Independent proposes to make adjustments in the terms and conditions of thisthe merger agreement so that the Acquisition Proposal ceases to constitute a Superior Proposal; and the Acquisition Proposal continues to constitute a Superior Proposal after taking into account any amendments that Independent agrees to make to the merger agreement.agreement prior to the end of thefour-day notice period. As used in the merger agreement, the term “Acquisition Proposal” means any proposal or offer after the date of the merger agreement with respect to any of the following transactions involving Peoples:MNB: any merger, consolidation, share exchange, business combination or other similar transaction; any sale, lease, exchange, mortgage, pledge (excluding any FHLBFederal Home Loan Bank of Boston or FRBFederal Reserve Bank of Boston pledges), transfer or other disposition of assets and/or liabilities that constitute 25%20% or more of the assets of PeoplesMNB in a single transaction or series of transactions; any tender offer or exchange offer for 25%20% or more of the outstanding shares of Peoples’MNB’s capital stock or the filing of a registration statement under the Securities Act in connection therewith;with a tender offer or exchange offer; or any public announcement by any partyperson of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing. As used in the merger agreement, the term “Superior Proposal” means any bona fide written Acquisition Proposal with respect to more than 50% of the combined voting power of the shares of PeoplesMNB common stock then outstanding or all or substantially all of the assets of Peoples:MNB: that is on terms which Peoples’MNB’s board of directors determines in good faith, after consultation with its financial advisor, to be more favorable from a financial point of view to Peoples’ stockholdersMNB shareholders than the transactions contemplated by the merger agreement; that constitutes a transaction that, in the good faith judgment of Peoples’MNB’s board of directors, is reasonably likely to be consummated on the terms set forth, taking into account all legal, financial, regulatory and other aspects of suchthe proposal; and for which financing, to the extent required, is then committed pursuant to a written commitment letter. Employee Benefits Matters Benefit Plans The merger agreement provides that following the effectiveclosing date of the merger, Independent will providemay choose to maintain any or all of MNB benefit plans in its sole discretion; provided, however, that for any MNB benefit plan terminated for which there is a comparable Independent benefit plan of general applicability, those individuals who are employees of PeoplesMNB and its subsidiaries and who continue as employees of Independent or any of its subsidiaries with employee benefit plans of general applicability for which Independent has analogous plans with such employee plans being either those of Peoples or Independent as selected by Independent; provided, however, that all such employees will be entitled to participate in allthe Independent benefit plans of general applicability then maintained by Independentplan to the same extent as similarly-situated employees of Independent. Independent or Rockland Trust. With respect to suchthe comparable Independent benefit plan, for purposes of determining eligibility to participate, vesting, entitlement to benefits and vacation entitlement (but not for accrual of benefits under any Independent benefit plan, including any post-retirement welfare benefit plan), service by an MNB employee with Peoples or any of its subsidiaries will be recognized to the same extent such service was recognized immediately prior to the effective time of the merger, or if there is no such comparable employee benefit plan, to the same extent such service was recognized under the PeoplesMilford National 401(k) plan immediately prior to the effective time of the merger to the extent applicable; provided however, that such service shall not be recognized to the extent such recognition would result in a duplication of benefits. Independent will make all commercially reasonable efforts to cause each benefit plan providing medical, health or dental benefits to continuing employees to waive any preexisting condition limitations relating to any conditions that were covered under the applicable medical, health or dental plans of PeoplesMNB and its subsidiaries, take into account all eligibleprovide full credit for any deductible,co-payment andout-of-pocket expenses incurred for purposesby the employees and their beneficiaries during the portion of satisfying the deductible and coinsuranceplan year prior to participation, and waive any waiting period limitation or evidence of insurability requirement which would otherwise be applicable to the continuing employee.employee, in each case to the extent the employee had satisfied any similar limitation or requirement under an analogous plan prior to the effective time of the merger for the plan year in which the effective time of the merger occurs. Severance Pay Plan In addition to the settlement agreements referenced elsewhere in this proxy statement/prospectus and individual severance arrangements offered to certain key employees, Independent has agreed to a severance pay plan that provides for severance benefits for eligible employees, who are not covered by any contractual severance arrangement, in connection with certain terminations of employment that occur within one year after the effective datetime of the merger. Under this severance pay plan, eligible employees whose employment is terminated without cause during the one year following the effective time of the merger would beare entitled to receive severance pay in accordancethe amount of two weeks’ pay for every year of service with, Peoples’ existingin the aggregate, MNB or any of its subsidiaries and Independent and any of its subsidiaries, with a minimum of eight weeks’ severance policy.and up to a maximum of 26 weeks’ severance.
The Peoples Federal Savings Bank Employee Stock Ownership PlanRetention Bonuses
The Peoples Federal Savings Bank Employee Stock Ownership Plan (the “ESOP”)Certain employees of Milford National will be terminated immediately priorentitled, subject to, and effective asat the option of Independent, the effective time of the merger, and all shares held by the ESOP will be converted into the right to receive the merger consideration. Any outstanding ESOP indebtedness will be repaid from unallocated ESOP assets and the balance of the unallocated shares and any other assets remaining unallocated will be allocated and distributed to ESOP participants (subject to the receiptemployee’s execution of a favorable determination letter from the IRS), asrelease provided for in the ESOP unless otherwise required by applicable law. PriorIndependent, to the effective time of the merger, Peoples, and following the effective time of the merger, Independent will usea retention bonus if they maintain their commercially reasonable efforts in good faith to obtain a favorable determination letter (including, but not limited to, making such changes to the ESOP and the proposed allocations as may be requested by the IRS as a condition to its issuance of a favorable determination letter). Peoples, and following the effective time of the merger, Independent will adopt such amendments to the ESOP as may be reasonably required by the IRS as a condition to granting such favorable determination letter on termination. Neither Peoples, nor following the effective time of the merger, Independent will make any distribution from the ESOP to any Peoples employees who continue employment with Independent, except as may be required by applicable law,Milford National until receipt of such favorable determination letter.that person’s job function has been converted or transitioned and that person does not accept an offer for continued employment with Rockland Trust.
Conditions to Complete the Merger Our respective obligations to complete the merger are subject to the fulfillment or waiver if legally permitted (except for the condition set forth in the third bullet below, which may not be waived in any circumstance) of mutual conditions, including: receipt of approval of the merger agreement by Peoples’ stockholders;MNB shareholders; the effectiveness of the registration statement of which this document is a part, with respect to the Independent common stock to be issued in the merger under the Securities Act and the absence of any stop order or proceedings initiated or threatened by the Securities and Exchange Commission or any other governmental authority for that purpose; the receipt by each party of a legal opinion from its counsel with respect to certain U.S. federal income tax consequences of the merger; the receipt and effectiveness of all regulatory approvals, registrations, and consents (none of which shall impose a term, condition or restriction that independent reasonably determines to be a burdensome condition) and the expiration or termination of all waiting periods required to complete the merger; the absence of any judgment, order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition prevent the consummation of any of the transactions contemplated by the merger agreement, as well as the absence of any statute, rule, regulation, rule,order, injunction or decree, injunction or other order in effect by any court or other governmental entityauthority that prohibits completionor makes illegal the consummation of any of the transactions contemplated by the merger agreement; and the listing on the Nasdaq Global Market of the shares of Independent common stock issuable pursuant to the Merger,merger, subject to official notice of issuance; and the board of directors of Independent and the board of directors of Rockland Trust each shall increase by one (1) the number of directors constituting the entire boards of directors of Independent and Rockland Trust, respectively, effective as of and contingent upon the occurrence of the effective time of the merger and appoint one member of the current Peoples board of directors to such position.issuance.
Each of Peoples’MNB’s and Independent’s obligations to complete the merger is also separately subject to the satisfaction or waiver of a number of conditions, including the performance by the other party in all material respects of its obligations under the merger agreement, and the other party’s representations and warranties in the merger agreement being true and correct in all material respects (except that, except for certain exceptions, no representation or warranty will be deemed not to be true and correct unless the failure of suchthe representation or warranty to be true and correct, together with all other failures, would have a material adverse effect on the party). Independent’s obligation to complete the merger is further subject to the condition that as of the effective time of the merger, (i) a majority of the board of directors of the Peoples Federal Savings Bank Charitable Foundation shall consist of individuals acceptable to Independent in its sole discretion, and (ii) the name of the Peoples Federal Savings Bank Charitable Foundation shall have been changed to “Rockland Trust – Peoples Federal Foundation.” Independent’s obligation to complete the merger is further subject to the conditions that the number of outstanding shares of PeoplesMNB common stock shall not exceed 6,239,436, except to198,845 and the extent increased as a resultholders of no more than 10% of
MNB outstanding common stock will have taken the actions required by Part 13 of Chapter 156D of the exercise ofMassachusetts Business Corporation Act to qualify their MNB common stock options outstanding on the date of the merger agreement.as dissenters’ shares. We cannot provide assurance as to when or if all of the conditions to the merger can or will be satisfied or waived by the appropriate party. As of the date of this document, we have no reason to believe that any of these conditions will not be satisfied. Termination of the Merger Agreement General The merger agreement may be terminated at any time prior to the completioneffective time of the merger by our mutual consent authorized by each of our boards of directors, as determined by a majority vote of a majority of its respective members,each, or by either Independent or PeoplesMNB if: a governmental entity which must grant a regulatory approval as a condition to the merger denies approval of the merger or bank merger or any governmental entity has issued an order prohibiting the merger and such action has become final andnon-appealable; the requisite stockholdershareholder approval is not obtained from Peoples’ stockholders;MNB shareholders; the merger is not completed by April 30, 2015March 31, 2019 (other than because of a material breach of the Agreement caused by the party seeking termination); or the other party breaches the merger agreement in a way that would entitle the party seeking to terminate the agreement not to consummate the merger, subject to the right of the breaching party to cure the breach by 30 days following written notice (unless it is not possible due to the nature or timing of the breach for the breaching party to cure the breach). The merger agreement may also be terminated by Independent if PeoplesMNB has materially breached its “non-solicitation”“non-solicitation” obligations; the PeoplesMNB board of directors has failed to recommend in this proxy statement/prospectus the approval of the merger agreement, or has withdrawn, modified or qualified,made a change in any manner adverserecommendation to Independent, its recommendation that its stockholders approveshareholders; the merger agreement; the PeoplesMNB board of directors has recommended, proposed or publicly announced its intention to recommend or propose to engage in an Acquisition Transaction (as defined below under “– Termination Fee”) with any person other than Independent or a subsidiary or affiliate of Independent; a tender or exchange offer for 20% or more of the outstanding shares of MNB common stock is commenced and the board of directors of Peoples has failedMNB fails to publicly recommend against a publicly announced Acquisition Proposalthe tender or exchange offer within five business days of being requested to do so by Independent; or Peoples has failedMNB fails to call, give notice of, convene and hold the special meeting of Peoples’ stockholders.MNB shareholders. Additionally, PeoplesMNB may terminate the merger agreement: if it enters into a Superior Proposal as described under “The Merger Agreement – No Solicitation of Alternative Transactions,” so long as it pays a termination fee of $5.3 million$1,600,000 to Independent; or pursuant to a “walk away” right that is subject to a “top up” option, if (a) the ten dayten-day VWAP of Independent’s common stock as of a measurement date prior to closing is less than $60.09, which would be more than 20% below the ten dayten-day VWAP of Independent’s common stock for the trading period ended May 25, 2018 ($75.11), (b) the decrease in theten-day VWAP of Independent’s common stock for the trading period ending August 4, 2014, (b)on May 25, 2018 compared to the drop in the ten dayten-day VWAP of Independent’sIndependent common stock between August 5, 2014 andending on the measurement date is more than 20% greater than any dropthe decrease in the ten day average price of the Nasdaq Bank Stock Index during such measurement period,the same time periods, (c) PeoplesMNB elects to terminate the agreement by a majority vote of Peoples’MNB’s directors, and (d) following notice to Independent by MNB of such electionthe exercise of its “walk away” right, Independent does not exercise its “top up” option under the merger agreement to increase the exchange ratio to a number that would compensate Peoples’ stockholdersMNB shareholders for the extent of the dropdecrease in Independent’s common stock price below the lowest price per share at which the walk away“walk away” right would not have been triggered. If Independent does exerciseexercises its “top up” option, then no termination will occur. Effect of Termination In the event the merger agreement is terminated as described above, the merger agreement will become void and neither Independent nor PeoplesMNB will have any liability under the merger agreement, except that: both Independent and PeoplesMNB will remain liable for any willful and material breach of the merger agreement; provided that in no event will a party be liable for any punitive damages; and designated provisions of the merger agreement, including those relating to the termination fee, the payment of fees and expenses,non-survival of the representations and warranties, and confidential treatment of information will survive the termination. Termination Fee Conditions Requiring Payment of Termination Fee PeoplesMNB has agreed to pay a termination fee in the amount of $5.3 million$1,600,000 to Independent in the following circumstances:
if PeoplesMNB terminates the merger agreement because Peoples’MNB’s board of directors has approved, and PeoplesMNB enters into, a definitive agreement with respect to a Superior Proposal (as defined above under “– No Solicitation of Alternative Transactions”); if Independent terminates the merger agreement because: PeoplesMNB materially breaches itsnon-solicitation obligations;
Peoples’MNB’s board of directors fails to recommend that Peoples’ stockholdersMNB shareholders approve the merger agreement and the transactions it contemplates, or the board of directors withdraws the recommendation or modifies itmade a change in a manner adverse to Independent;recommendation;
Peoples’MNB’s board of directors recommends, proposes or publicly announces its intention to recommend or propose to engage in an Acquisition Transaction (as defined below)above) with any party other than Independent or a subsidiary or affiliate of Independent;
Peoples’A tender or exchange offer for 20% or more of the outstanding shares of MNB common stock is commenced and the MNB board of directors shall have failedfails to publicly recommend against a publicly announced Acquisition Proposalthe tender or exchange offer within five business days of being requested to do so by Independent; or
PeoplesMNB materially breaches its obligations to call, give notice of, convene and hold a meeting of Peoples’ stockholdersMNB shareholders in order to approve the merger agreement and the transactions it contemplates; or
in the event that (1) an Acquisition Proposal, whether or not conditional, has been publicly announced (or any person has publicly announced an intention, whether or not conditional, to make an Acquisition Proposal) or (2) Peoples’MNB’s board of directors has withheld, withdrawn or modified (or publicly proposed to withhold, withdraw or modify) its recommendation for the merger, prior to or on the date of the stockholdershareholder meeting or at any adjournment or postponement thereof at which the vote on the merger agreement is held; and the merger agreement is terminated: by Independent or PeoplesMNB because stockholdershareholder approval is not obtained by Peoples’ stockholders;MNB shareholders; by Independent or PeoplesMNB because the merger is not completed on or before April 30, 2015;March 31, 2019; or by Independent because PeoplesMNB materially breaches the merger agreement, subject to the right of PeoplesMNB to cure the breach; and within 12 months following the date of termination, PeoplesMNB enters into a definitive agreement with respect to any Acquisition Transaction, the MNB board of directors recommends any Acquisition Transaction or PeoplesMNB consummates any Acquisition Transaction, then PeoplesMNB must pay the termination fee to Independent. PeoplesIndependent, less any amount up to $550,000 reimbursed to Independent with respect to its and its subsidiaries’ reasonably documentedout-of-pocket fees and expenses in connection with the merger agreement. MNB must pay the termination fee prior to the earlier of PeoplesMNB entering into a definitive agreement for or consummating suchthe Acquisition Transaction; provided, however, that all references in the definition of Acquisition Transaction to “20% or more” shall instead refer to “50% or more.” In addition, in the event that the merger agreement is terminated (a) by Independent or MNB because the merger is not completed on or before March 31, 2019 or (b) by Independent because MNB materially breaches the merger agreement, subject to the right of MNB to cure the breach, following the occurrence of (x) an Acquisition Proposal, whether or not conditional, being publicly announced (or any person having publicly announced an intention, whether or not conditional, to make an Acquisition Proposal) or (y) the withholding, withdrawing or modification (or public proposal to withhold, withdraw or modify) by MNB’s board of directors of its recommendation for the merger, prior to or on the date of the shareholder meeting or at any adjournment or postponement thereof at which the vote on the merger agreement is held, prior to such termination, then MNB must immediately reimburse Independent up to $550,000 of its and its subsidiaries’ reasonably documentedout-of-pocket fees and expenses in connection with the merger agreement if a termination fee has not been paid or is not payable by MNB to Independent because, within 12 months following the date of termination, MNB has not entered into a definitive agreement with respect to any Acquisition Transaction, the MNB board of directors has not recommended any Acquisition Transaction or MNB has not consummated any Acquisition Transaction. As used in the merger agreement, the term “Acquisition Transaction” means any of the following transactions involving Peoples:MNB: any merger, consolidation, share exchange, business combination or other similar transaction; any sale, lease, exchange, mortgage, pledge (excluding any FHLBFederal Home Loan Bank of Boston or FRBFederal Reserve Bank of Boston pledges), transfer or other disposition of assets and/or liabilities that constitute a substantial portion20% or more of the net revenues, net income or assets of PeoplesMNB in a single transaction or series of transactions; or any tender offer or exchange offer for 25%20% or more of the outstanding shares of Peoples’MNB’s capital stock or the filing of a registration statement under the Securities Act in connection therewith.with a tender offer or exchange offer. Waiver or Amendment of the Merger Agreement Except for the receipt of opinions from Day Pitney LLP and Bingham McCutchenNutter McClennen & Fish LLP to the effect that the merger will be treated for federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code, which may not be waived in any circumstance, weeither party may waive a provision of the merger agreement and both parties may agree to amend the merger agreement at any time prior to completion of the merger. However, after any approval of the merger by Peoples’ stockholders,MNB shareholders, there may not be, without further approval of the stockholders,shareholders, any amendment of the merger agreement that requires such further approval by stockholdersshareholders under applicable law. Fees and Expenses EachExcept as otherwise described above, each party will bear all expenses incurred by it in connection with the merger agreement and the transactions it contemplates, including fees and expenses of its own financial consultants, accountants and legal counsel.counsel, provided that nothing contained in the merger agreement shall limit either party’s rights to recover any liabilities or damages arising out of the other party’s willful breach of any provision of the merger agreement.
Restrictions on Resales by Affiliates Shares of Independent common stock to be issued to Peoples’ stockholdersMNB shareholders in the merger will have been registered under the Securities Act and may be traded freely and without restriction by those stockholdersshareholders not deemed to be affiliates (as that term is defined under the Securities Act) of Independent after the merger. Anymerger, except that Kevin P. Meehan and his spouse have certain limitations on the number of shares that they can sell pursuant to the shareholders agreement that they executed with Independent as described in “The Merger – Shareholders Agreement,” beginning on page [●] of this proxy statement/prospectus. However, any subsequent transfer of shares however, by any Peoples stockholderMNB shareholder who is deemed an affiliate of Independent after the merger will, under existing law, require either: the further registration under the Securities Act of the Independent common stock to be transferred; or the availability of another exemption from registration. An “affiliate” of Independent is a person who directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, Independent. These restrictions are expected to apply to the directors and executive officers of Independent and to the holders of 10% or more of the outstanding Independent common stock. The same restrictions apply to the spouses and certain relatives of those persons and any trusts, estates, corporations or other entities in which those persons have a 10% or greater beneficial or equity interest. Independent will give stop transfer instructions to the exchange agent with respect to the shares of Independent common stock to be received by persons subject to these restrictions. VOTING AGREEMENTS Concurrently with the execution of the merger agreement, the directors and Patricia M. Meehan, the spouse of Peoples and certain Peoples executive officersKevin P. Meehan, the Chairman of the Board of MNB, separately entered into voting agreements with Independent under which they agreed, with respect to shares of MNB common stock that they own directly or jointly, to: restrict their ability to transfer or dispose of their shares of PeoplesMNB common stock;stock during the term of the voting agreement; appear at the stockholderMNB shareholder meeting or otherwise cause their shares of PeoplesMNB common stock to be counted as present thereatat the shareholder meeting for purposes of calculating a quorum; vote their shares of PeoplesMNB common stock in favor of approval of the merger agreement and the transactions it contemplates; vote their shares of PeoplesMNB common stock against any action or agreement that would result in a breach of any covenant, representation or warranty, or other obligation or agreement, of PeoplesMNB contained in the merger agreement; vote their shares of PeoplesMNB common stock against any proposal to acquire PeoplesMNB by any person other than Independent or against any action, agreement or transaction that is intended to, or could reasonably be expected to, materially impede, interfere or be inconsistent with, delay, postpone, discourage or materially and adversely affect the consummation of the transactions contemplated by the merger agreement; and not to vote or execute any written consent to rescind or amend in any manner any prior vote or written consent, as a stockholdershareholder of Peoples,MNB, to approve or adopt the merger agreement unless the merger agreement is terminated in accordance with its terms. The voting agreements were executed as a condition of Independent’s willingness to enter into the merger agreement, and as an indication of the directors’support of MNB’s directors and such officers’ supportMrs. Meehan for the merger agreement and the transactions contemplated by it and their willingness to vote their shares of PeoplesMNB common stock in favor of the merger agreement at the stockholderMNB shareholder meeting. On the record date of October 16, 2014,[●], these directors and officersMrs. Meehan individually or jointly owned an aggregate of Peoples had sole or shared voting power over 949,196[●] shares, orwhich they have agreed to vote in favor of the merger agreement at the MNB shareholder meeting. These shares represent approximately 15.2%,[●]% of the outstanding shares of PeoplesMNB common stock. Because the holders of more thantwo-thirds of the outstanding shares of MNB common stock have already committed to vote in favor of the merger, absent a breach of the voting agreements, the approval of the merger is assured. No separate consideration was paid to any of the directors or Mrs. Meehan for entering into these voting agreements. However, the directors of PeoplesMNB may be deemed to have interests in the merger as directors that are different from or in addition to those of other Peoples stockholders.MNB shareholders. See “The Merger – Interests of Peoples’MNB’s Executive Officers and Directors in the Merger” beginning on page 58[●] of this proxy statement/prospectus. ACCOUNTING TREATMENT Independent has determined that the merger represents a business combination and will account for the merger by applying the acquisition method of accounting, in accordance with the provisions of Topic 805 “Business Combinations” of the Financial Accounting Standards Board Accounting Standard Codification. As of the date of the merger, Peoples’Independent will recognize the assets acquired, including intangible assets, and liabilities will be recordedassumed at their respective estimated fair values. To the extent that the purchase price exceeds the estimated fair value of the net assets acquired, Independent will allocate the excess purchase price to all identifiable intangible assets. Any remaining excess will then be allocated to goodwill. The goodwill resulting from the merger will not be amortized to expense, but instead will be reviewed for impairment at least annually. To the extent goodwill is impaired, its carrying value would be written down to its implied fair value and a charge would be made to earnings. Core deposit and other intangibles with definite useful lives will be amortized to expense over their estimated useful lives. The financial statements of Independent issued after the merger will reflect the results attributable to the acquired operations of PeoplesMNB beginning on the date the merger is completed. MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER The following section describes the anticipated material U.S. federal income tax consequences of the merger to U.S. holders (as defined below) of PeoplesMNB common stock. This discussion addresses only those holders that hold their PeoplesMNB common stock as a capital asset within the meaning of Section 1221 of the Internal Revenue Code, of 1986, as amended (the “Internal Revenue Code”), and does not address all the U.S. federal income tax consequences that may be relevant to particular holders in light of their individual circumstances or to holders that are subject to special rules, such as: financial institutions; insurance companies; individual retirement and othertax-deferred accounts; mutual funds; persons subject to the alternative minimum tax provisions of the Internal Revenue Code; entities treated as partnerships or other flow-through entities for U.S. federal income tax purposes; tax-exempt organizations; dealers or brokers in securities;securities or foreign currencies; controlled foreign corporations or passive foreign investment companies; persons whose functional currency is not the U.S. dollar; traders in securities that elect to use a mark to market method of accounting; regulated investment companies, real estate investment trusts and regulated mortgage investment conduits; persons whose MNB common stock is qualified small business stock for purposes of Section 1202 of the Code; persons that hold PeoplesMNB common stock as part of a straddle, hedge, constructive sale or conversion transaction; andor persons who acquired their shares of PeoplesMNB common stock through the exercise of an employee stock option or otherwise as compensation.compensation, through the exercise of warrants, or through atax-qualified retirement plan. In addition, this discussion does not address the tax consequences of the merger to holders of MNB stock other than U.S. holders or holders of MNB stock who exercise appraisal and/or dissenters rights. The following is based upon the Internal Revenue Code, its legislative history, Treasury regulations promulgated pursuant to the Internal Revenue Code and published rulings and decisions, all as currently in effect as of the date of this document, and all of which are subject to change, possibly with retroactive effect, and to differing interpretations. Tax considerations under state, local and foreign laws, or federal laws other than those pertaining to U.S. federal income tax, are not addressed in this document. Holders of Peoples common stock should consult with their own tax advisers as to the U.S. federal income tax consequences of the merger as well as the effect of state, local, foreign and other tax laws and of proposed changes to applicable tax laws, in light of their particular circumstances.
For purposes of this discussion, the term “U.S. holder” means a beneficial owner of PeoplesMNB common stock that is: a U.S. citizen or resident, as determined for U.S. federal income tax purposes; a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any of its political subdivisions; a trust that is a U.S. resident trust for U.S. federal income tax purposes, i.e., a trust that (i) is subject to the supervision of a court within the United States and the control over substantial decisions of one or more U.S. persons or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; orwhich is | vested in one or more U.S. persons or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or |
an estate that is subject to United StatesU.S. federal income taxation on its income regardless of its source. The U.S. federal income tax consequences of a partner in a partnership holding PeoplesMNB common stock generally will depend on the status of the partner and the activities of the partnership. We recommend that partners in such a partnership consult their own tax advisers. This discussion is not intended to be tax advice to any particular holder of MNB common stock. Tax matters regarding the merger are complicated, and the tax consequences of the merger to you will depend on your particular situation. MNB shareholders are urged to consult their tax advisors as to the U.S. federal income tax consequences of the merger, as well as the effects of state, local, federalnon-income andnon-U.S. tax laws. Tax Consequences of the Merger Generally Independent and PeoplesMNB have structured the merger to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.Code, and it is anticipated that it will qualify as such. It is a condition to Independent’s obligation to complete the merger that Independent receive an opinion of its legal counsel, Day Pitney LLP, dated the closing date of the merger, to the effect that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code. It is a condition to Peoples’MNB’s obligation to complete the merger that PeoplesMNB receive an opinion of its legal counsel, Bingham McCutchenNutter McClennen & Fish LLP, dated the closing date of the merger, to the effect that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code. These opinions will be based on assumptions, representations, warranties and covenants, including those contained in the merger agreement and in letters and certificates provided by PeoplesMNB and Independent. The accuracy of such assumptions, representations and warranties, and compliance with such covenants, could affect the conclusions set forth in suchthe opinions. None of the tax opinions given in connection with the merger or the opinions described below will be binding on the Internal Revenue Service. Neither Independent nor PeoplesMNB intends to request any ruling from the Internal Revenue Service as to the U.S. federal income tax consequences of the merger. Consequently, no assurance can be given that the Internal Revenue Service will not assert, or that a court would not sustain, a position contrary to any of those set forth below. In addition, if any of the representations or assumptions upon which those opinions are based is inconsistent with the actual facts, the U.S. federal income tax consequences of the merger could be adversely affected. As a result ofBased on the merger qualifyingopinions that the Merger is anticipated to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, the following material U.S. federal income tax consequences of the merger will result:generally be as follows:
Exchange Solely for Independent Common Stock.No gain or loss generally will be recognized by a Peoples stockholderan MNB shareholder who receives solely shares of Independent common stock (except for cash received in lieu of fractional shares, as discussed below) in exchange for all of his or her shares of PeoplesMNB common stock. The aggregate adjusted tax basis of the shares of Independent common stock received by a Peoples stockholderan MNB shareholder in suchthe exchange generally will be equal (except for the basis attributable to any fractional shares of Independent common stock, as discussed below) to the aggregate adjusted tax basis of the PeoplesMNB common stock surrendered in exchange for the Independent common stock. The holding period of the Independent common stock received generally will include the holding period of shares of PeoplesMNB common stock surrendered in exchange for the Independent common stock. Exchange Solely for CashCash.. A Peoples stockholderAn MNB shareholder who receives solely cash in exchange for all of his or her shares of PeoplesMNB common stock (and is not treated as constructively owning Independent common stock after the merger under the circumstances referred to below under “– Possible Dividend Treatment”) generally will recognize gain or loss for U.S. federal income tax purposes equal to the difference between the cash received and such stockholder’sthe shareholder’s aggregate adjusted tax basis in the PeoplesMNB common stock surrendered in exchange for the cash. Such gain or loss generally will be a capital gain or loss. Such gain or loss will be long-term capital gain or loss if the Peoples stockholder’sMNB shareholder’s holding period is more than one year at the effective time of the merger. Long-term capital gains of certainnon-corporate U.S. holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The Internal Revenue Code contains limitations on the extent to which a taxpayer may deduct capital losses. Exchange for Independent Common Stock and CashCash.. A Peoples stockholderAn MNB shareholder who receives a combination of Independent common stock and cash (excluding cash received in lieu of a fractional share of Independent common stock) in exchange for his or her PeoplesMNB common stock generally will not be permitted to recognize any loss for federal income tax purposes. Such a stockholderThe shareholder generally will recognize gain, if any, equal to the lesser of (1) the amount of such cash received or (2) the amount of gain “realized” in the transaction. The amount of gain a Peoples stockholderan MNB shareholder “realizes” generally will equal the amount by which (a) suchthe cash plus the fair market value at the effective time of the merger of Independent common stock received exceeds (b) the stockholder’sshareholder’s aggregate adjusted tax basis in the PeoplesMNB common stock to be surrendered in the exchange for the cash and Independent common stock. Any recognized gain could be taxed as a capital gain or a dividend, as described below. The aggregate adjusted tax basis of the shares of Independent common stock received by such Peoples stockholderthe MNB shareholder generally will be the same as the basis of the shares of PeoplesMNB common stock surrendered in exchange for the shares of Independent common stock, reduced by the amount of cash received by the holder in the merger (excluding any cash received in lieu of a fractional share of Independent common stock) and increased by the amount of gain, if any, recognized by the holder (excluding any gain or loss resulting from the deemed receipt and exchange of fractional shares of Independent common stock). The holding period for shares of Independent common stock received by such Peoples stockholderthe MNB shareholder generally will include such stockholder’sthe shareholder’s holding period for the PeoplesMNB common stock surrendered in exchange for the Independent common stock.
If a U.S. holder of PeoplesMNB common stock acquired different blocks of PeoplesMNB common stock at different times or different prices, any gain or loss will be determined separately with respect to each block of PeoplesMNB common stock and suchthe U.S. holder’s bases and holding periods in their shares of Independent common stock may be determined with reference to each block of PeoplesMNB common stock. Any such holders should consult their tax advisors regarding the manner in which cash and Independent common stock received in the merger should be allocated among different blocks of PeoplesMNB common stock and regarding their bases and holding periods in the particular shares of Independent common stock received in the merger. Possible Dividend Treatment.In certain circumstances, a Peoples stockholderan MNB shareholder who receives solely cash or a combination of cash and Independent common stock in the merger may receive dividend income, rather than capital gain, treatment on all or a portion of the gain recognized by that stockholdershareholder if the receipt of cash “has the effect of the distribution of a dividend.” The determination of whether a cash payment has suchthat effect generally is based on a comparison of the Peoples stockholder’sMNB shareholder’s proportionate interest in Independent after the merger with the proportionate interest the stockholdershareholder would have had if the stockholdershareholder had received solely Independent common stock in the merger. Possible dividend treatment could apply because of a stockholder’sshareholder’s purchase (or the purchase by a family member or certain entities described below) of additional Independent stock or a repurchase of shares by Independent. For purposes of this comparison, the Peoples stockholderMNB shareholder may be deemed to constructively own shares of Independent common stock held by certain members of the stockholder’sshareholder’s family or certain entities in which the stockholdershareholder has an ownership or beneficial interest and certain stock options may be aggregated with the stockholder’sshareholder’s shares of Independent common stock. The amount of the cash payment that may be treated as a dividend is generally limited to the stockholder’sshareholder’s ratable share of the accumulated earnings and profits of PeoplesMNB at the effective time of the merger.merger, although the applicable law on this point is not entirely clear. Dividends which are “qualified dividends,” as defined in Section 1(h)(11) of the Code, may be taxed as capital gains. Dividends which are not “qualified dividends” are generally taxed at ordinary income rates. Any gain that is not treated as a dividend generally will be taxed as a capital gain. Because the determination of whether a cash payment will be treated as having the effect of a dividend depends primarily upon the facts and circumstances of each Peoples stockholder, stockholdersMNB shareholder, MNB shareholders are urged to consult their own tax advisors regarding the tax treatment of any cash received in the merger. Cash in Lieu of Fractional Shares. A Peoples stockholderAn MNB shareholder who holds PeoplesMNB common stock as a capital asset and who receives in the merger, in exchange for such stock, solely Independent common stock and cash in lieu of a fractional share interest in Independent common stock generally will be treated as having received such fractional share and then having received such cash in redemption of such fractional share. Gain or loss generally will be recognized based on the difference between the amount of cash received in lieu of the fractional share and the portion of the stockholder’sshareholder’s aggregate adjusted basis in the shares of PeoplesMNB common stock surrendered which is allocable to the fractional share. Such gain or loss generally will be long-term capital gain or loss if the shareholder’s holding period for its PeoplesMNB common stock exceeds one year at the effective time of the Merger.merger. Tax Treatment of the Entities.No gain or loss will be recognized by Independent or PeoplesMNB as a result of the merger. The tax basis of the assets of PeoplesMNB in the hands of Independent generally will be the same as the tax basis of such assets in the hands of PeoplesMNB immediately prior to the Merger.merger. Reporting Requirements A Peoples stockholderAn MNB shareholder who receives Independent common stock as a result of the merger will be required to retain records pertaining to the merger. Certain Peoples stockholdersMNB shareholders are subject to certain reporting requirements with respect to the merger. In particular, such stockholdersshareholders will be required to attach a statement to their tax returns for the year of the merger that contains the information listed in Treasury RegulationSection 1.368-3(b). Such The statement must include the stockholder’sshareholder’s adjusted tax basis in its PeoplesMNB common stock and other information regarding the reorganization. Peoples’ stockholdersMNB’s shareholders are urged to consult with their tax advisers with respect to these and other reporting requirements applicable to the merger.
Withholding Requirements Certain Peoples stockholdersMNB shareholders may be subject to U.S. federal backup withholding (currently at a rate of 28%24%), on cash received pursuant to the merger. Backup withholding will not apply, however, to a Peoples stockholderan MNB shareholder who provides proof of an applicable exemption or furnishes its taxpayer identification number, and otherwise complies with all applicable requirements of the backup withholding rules. Amounts withheld, if any, generally are generally not an additional tax and may be refunded or credited against the Peoples stockholder’sMNB shareholder’s U.S. federal income tax liability, provided that the Peoples stockholderMNB shareholder timely furnishes the required information to the Internal Revenue Service. THE PRECEDING DISCUSSION IS A SUMMARY OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX CONSEQUENCES RELEVANT THERETO. STOCKHOLDERSSHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISERS AS TO THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF THE MERGER (INCLUDING, BUT NOT LIMITED TO, TAX RETURN REPORTING REQUIREMENTS), AS WELL AS THE EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND ANY PROPOSED CHANGES TO APPLICABLE TAX LAWS. THE COMPANIES INDEPENDENT Independent is a state chartered bank holding company headquartered in Rockland, Massachusetts corporation organizedthat was incorporated under Massachusetts law in 1985 and1985. Independent is registered with the Federal Reserve as a bank holding company under the Bank Holding Company Act. Independent is the sole stockholdershareholder of Rockland Trust, and its primary business is serving as the holding company of Rockland Trust. Rockland Trust is a Massachusetts-chartered trust company. Rockland Trust was chartered in 1907. Rockland Trust’s deposits are insured by the Deposit Insurance Fund of the FDIC up to applicable limits. Rockland Trust offers a full range of banking services through a network of 78 bankapproximately 100 retail branches, in eastern Massachusettscommercial and its commercialresidential lending centers, and investment management offices in eastern Massachusetts, including Greater Boston, the South Shore, Cape Cod and Martha’s Vineyard, and Providence, Rhode Island. Rockland Trust provides investment management and trust services to individuals, institutions, small businesses, and charitable institutions throughout eastern Massachusetts and Rhode Island. At June 30, 2014,March 31, 2018, Independent had total consolidated assets of approximately $6.3$8.1 billion, net loans of approximately $4.8$6.3 billion, total deposits of approximately $5.3$6.8 billion, and total stockholders’shareholders’ equity of approximately $616.5$956.1 million. At June 30, 2014, Independent had (a) a total risk-based capital ratio of 12.38%, (b) a Tier 1 risk-based capital ratio of 10.65%, and (c) a Tier 1 leverage capital ratio of 8.62%. Independent is not subject to any written agreement, order, capital directive, or prompt corrective action directive issued by the Federal Reserve to meet and maintain a specific capital level for any capital measure. Rockland Trust’s capital levels meet or exceed the minimum capital levels required to be considered a “well capitalized institution” as defined by federal banking agencies.
You can find more information about Independent in Independent’s filings with the Securities and Exchange Commission referenced in the sections in this document titled “Where You Can Find More Information” and “Incorporation of Certain Documents by Reference” beginning on page 95.[●]. PEOPLESMNB
Peoples is a Maryland corporation that owns 100% of the common stock of Peoples Federal Savings Bank. PeoplesMNB was incorporated under Massachusetts law in March 20101998 to become the holding company of Peoples Federal Savings BankMilford National, a national bank chartered by the Office of the Comptroller of the Currency in connection with Peoples Federal Savings Bank’s mutual to stock conversion in July 2010.1849. Headquartered in Brighton,Milford, Massachusetts, PeoplesMNB operates its business from eightthree banking offices in Worcester County, Massachusetts: two of which are located in Brighton, Allston, West Roxbury, Jamaica Plain, Brookline, West Newton, WestwoodMilford, Massachusetts and Norwood. Peoplesone of which is engaged principallylocated in the business of providingMendon, Massachusetts. MNB, through Milford National, provides a variety of financial services to individuals and small businesses primarily in the form of various deposit products, and residential and commercial mortgage lending products.mortgages, and commercial loans and lines of credit.
At June 30, 2014, PeoplesMarch 31, 2018, MNB had total consolidated assets of $606$365.3 million, net loans of $493$304 million, total deposits of $435$300.8 million, and total stockholders’shareholders’ equity of $104$27.2 million. You can find more information about Peoples in Peoples’ filings with the Securities and Exchange Commission referenced in the sections in this document titled “Where You Can Find More Information” and “Incorporation of Certain Documents by Reference” beginning on page 95.
DESCRIPTION OF INDEPENDENT’S CAPITAL STOCK Independent is authorized to issue up to 75,000,000 shares of common stock, par value $0.01 per share, with 23,911,67827,524,228 shares issuedoutstanding as of September 30, 2014.May 1, 2018. Independent is also authorized to issue up to 1,000,000 shares of preferred stock, par value $0.01 per share, none of which was issued as of September 30, 2014. Independent has designated 15,000 shares of preferred stock as nonredeemable Series B Junior Participating Cumulative Preferred Stock (the “Independent Series B Preferred Stock”), none of which was outstanding as of September 30, 2014.May 1, 2018. The capital stock of Independent does not represent or constitute a deposit account and is not insured by the FDIC or by the Depositors Insurance Fund. The following description of the Independent capital stock does not purport to be complete and is qualified in all respects by reference to Independent’s articles of organization and bylaws, and the Massachusetts Business Corporation Act. Common Stock General Each share of Independent’sIndependent common stock has the same relative rights and is identical in all respects with each other share of common stock. Voting Rights Each holder of common stock is entitled to one vote in person or by proxy for each share held on all matters voted upon by stockholders. Stockholdersshareholders. Shareholders are not permitted to cumulate votes in elections of directors. Preemptive Rights Holders of common stock do not have any preemptive rights with respect to any shares that may be issued by Independent in the future. Thus, Independent may sell shares of its common stock without first offering them to the then holders of common stock. Liquidation In the event of any liquidation or dissolution of Independent, whether voluntary or involuntary, the holders of Independent’sIndependent common stock would be entitled to receive pro rata, after payment of all debts and liabilities of Independent (including all deposits of subsidiary banks and interest on those deposits), all assets of Independent available for distribution, subject to the rights of the holders of any preferred stock which may be issued with a priority in liquidation or dissolution over the holders of common stock. Preferred Stock The Independent board of directors is authorized, subject to limitations by its articles of organization and by applicable law, to issue preferred stock in one or more series. The Independent board of directors may fix the dividend, redemption, liquidation and conversion rights of each series of preferred stock, and may provide for a sinking fund or redemption or purchase account to be provided for the preferred stock. The board of directors may also grant voting rights to the holders of any series of preferred stock, subject to certain limitations in Independent’s articles of organization. Specifically, the holders of any series of preferred stock may not be given the right to more than one vote per share on any matters requiring the approval or vote of the holders of Independent’sIndependent common stock, except as otherwise required by applicable law, the right to elect more than two Independent directors or, together with the holders of all other series of preferred stock, the right to elect in the aggregate more than six Independent directors. Independent has designated 15,000 shares of preferred stock as Independent Series B Preferred Stock, none of which was outstanding as of June 30, 2014 and none of which will be issued in connection with the merger. Other Provisions The articles of organization and bylaws of Independent contain a number of provisions that may have the effect of discouraging or delaying attempts to gain control of Independent, including provisions: classifying the Independent board of directors into three classes to serve for three years, with one class being elected annually; authorizing the Independent board of directors to fix the size of the Independent board of directors; limiting for removal of directors by a majority of stockholdersshareholders to removal for cause; and increasing the amount of stock required to be held by stockholdersshareholders seeking to call a special meeting of stockholdersshareholders above the minimum established by statute. Massachusetts has adopted a “business combination” statute (Chapter 110F of the Massachusetts Business Corporation Law)Act) that may also have additional anti-takeover effects to provisions in Independent Bank’sIndependent’s articles of organization and bylaws. Massachusetts has also adopted a “control share” statute (Chapter 110D of the Massachusetts Business Corporation Law)Act), the provisions of which Independent has provided in its bylaws shall not apply to “control share acquisitions” of Independent within the meaning of said Chapter 110D. Transfer Agent The transfer agent and registrar for Independent common stock is Computershare Limited. COMPARISON OF RIGHTS OF STOCKHOLDERSSHAREHOLDERS OF PEOPLESMNB AND INDEPENDENT This section describes the differences between the rights of holders of PeoplesMNB common stock and the rights of holders of Independent common stock. While we believe that the description covers the material differences between the rights of the holders, this summary may not contain all of the information that is important to you. You should carefully read this entire document and refer to the other documents discussed below for a more complete understanding of the differences between your rights as a holder of PeoplesMNB common stock and your rights as a holder of Independent common stock.stock. As a stockholdershareholder of Peoples,MNB, a MarylandMassachusetts corporation, your rights are governed by MarylandMassachusetts law, Peoples’MNB’s articles of incorporation,organization, as currently in effect, and Peoples’MNB’s bylaws, as currently in effect. When the merger becomes effective you will become a stockholder of Independent, a Massachusetts corporation, whenand you receive Independent common stock in exchange for your Peoples shares.MNB shares, you will become a shareholder of Independent, a Massachusetts corporation. Independent’s common stock is listed on the NASDAQNasdaq Global Select Market under the symbol “INDB.” As an Independent stockholder,shareholder, your rights will be governed by Massachusetts law, Independent’s articles of organization, as in effect from time to time, and Independent’s bylaws, as in effect from time to time. The following discussion of the rights of MNB shareholders and Independent shareholders under Massachusetts law, and the similarities and material differences between (i) the rights of Peoples’ stockholdersMNB shareholders under Maryland law and the articles of incorporation and bylaws of Peoples and (ii) the rights of Independent stockholders under Massachusetts law and the articles of organization and bylaws of MNB and (ii) the rights of Independent shareholders under the articles of organization and bylaws of Independent. This discussion is only a summary of some provisions and is not a complete description of these similarities and differences. This discussion is qualified in its entirety by reference to Maryland law, Massachusetts law and the full texts of the articles of incorporationorganization and bylaws of PeoplesMNB and of the articles of organization and bylaws of Independent. Capitalization PeoplesMNB
The total authorized capital stock of PeoplesMNB consists of 100,000,0001,000,000 shares of common stock, $0.01 par value per share, and 50,000,000 shares of preferred stock, $0.01$1.00 par value per share. As of the record date, there were 6,239,436[●] shares of common stock outstanding, including 206,707 shares of unvested restricted common stock and 568,943 shares held in the Peoples Federal Savings Bank Employee Stock Ownership Plan, 642,735 shares of common stock reserved for future issuance pursuant to outstanding options granted under Peoples’ equity plan and no shares of preferred stock outstanding. Independent The total authorized capital stock of Independent consists of 75,000,000 shares of common stock, par value $0.01 per share and 1,000,000 shares of preferred stock, par value $0.01 per share. As of the record date, there were 23,949,600[●] shares of common stock outstanding, including 22,027[●] shares in the form of unvested performance based restricted stock awards without dividend or voting rights and 477,263[●] shares reserved for future issuance pursuant to outstanding options granted under Independent’s benefit plans and no shares of preferred stock outstanding. 15,000 shares of the preferred stock are designated as Independent Series B Preferred Stock, although none of such shares are outstanding nor will any be issued in connection with the merger. The board of directors of Independent may issue authorized shares of preferred stock without stockholder approval.
Preemptive Rights A preemptive right allows a stockholdershareholder to maintain its proportionate share of ownership of a corporation by permitting the stockholdershareholder to purchase a proportionate share of any new stock issuances. Preemptive rights protect the stockholdersshareholders from dilution of value and control upon new stock issuances. For a Maryland corporation incorporated on or after October 1, 1995, unless the articles of incorporation expressly grants such rights to the stockholder, a stockholder does not have any preemptive rights. Peoples’ articles of incorporation states that stockholders will not have preemptive rights except for those approved by the board of directors pursuant to a resolution approved by a majority of the board of directors. Currently, Peoples’ stockholders do not have preemptive rights. Under Massachusetts law, unless the articles of organization say otherwise, stockholdersshareholders have no preemptive rights.
MNB MNB does not have a provision authorizing preemptive rights; in fact, MNB’s articles of organization contain provisions specifically denying them. Accordingly, MNB’s shareholders do not have preemptive rights. Independent Independent also does not have a provision authorizing preemptive rights; in fact, Independent’s articles of organization contain provisions specifically denying them. Accordingly, Independent stockholdersIndependent’s shareholders do not have preemptive rights. Dividends and Other Stock Rights PeoplesMNB
HoldersSubject to applicable Massachusetts law and the MNB articles of Peoples common stock are entitled to receiveorganization and share equally in such dividends as the board of directorsbylaws, MNB may declare out of funds legally available for such payment. If any Peoples preferred stock were outstanding, holders of Peoples preferred stock, however, would have priority over holders of common stock with respect to payments of such dividends. The Peoples board of directors is authorized to (i) to provide for the issuance of the shares of Preferred Stock in series, (ii) to establish from time to time the number of shares to be included in each such series, (iii) to fix the preferences, conversiondeclare and other rights, voting powers, restrictions, limitations as topay dividends qualifications and terms and conditions of redemption of theon outstanding shares of each such series, and (iv) other such determinations with respect to preferredits capital stock.
Independent Independent can also pay dividends on its common stock in accordance with Massachusetts law. Independent’s board of directors is also authorized to issue “blank check” preferred stock to (i) designate preferred stock, (ii) set dividend rates or the amount of dividends to be paid on the preferred stock, (iii) determine voting powers of the preferred stock, (iv) determine whether suchthe preferred stock is redeemable by Independent, (v) determine the amount or amounts payable upon the preferred stock in the event of a voluntary or involuntary liquidation, dissolution or winding up of Independent, (vi) determine whether the preferred stock is entitled to the benefits of a sinking or retirement fund to be applied to the preferred stock, (vii) determine whether the preferred stock is convertible or exchangeable for shares of another class of Independent stock, (viii) determine the purchase price of the preferred stock, and (ix) make other such determinations with respect to preferred stock. When and if a quarterly cash dividend is declared by the board of directors, if any Independent Series B Preferred Stock wereshares of preferred stock are outstanding, the holders of shares of Series B Preferred Stock wouldpreferred stock will be entitled to receive dividends in an amount per share described in Independent’s articles of organization, subject to the rights of the holders of any shares of any series of preferred stock ranking prior and superior to the Independent Series B Preferred Stockpreferred stock with respect to dividends. Shares of Independent Series B Preferred Stock, if issued, would not be redeemable. Right to Call Special Meetings of StockholdersShareholders PeoplesMNB
Special meetings may be called: by the chairman of the board;president; by a majority of the total number of directors Peoples would have if there were no vacancies on the board of directors; or by the secretary, or in case of Peoplesthe death, absence, incapacity or refusal of the secretary, by any other officer, upon written application of one or more shareholders who hold at least 10% of the written request of stockholderscapital stock entitled to cast at least a majority of all the votes entitled to be castvote at the meeting. Independent Special meetings may be called: by the chairman of the board, if any; by the president; by a majority of the directors; andor by the clerksecretary, or in case of the death, absence, incapacity or refusal of the secretary, by any other officer, at the written direction of the holders of at leasttwo-thirds of the capital stock of the Independent entitled to vote at the meeting. For stockholdersshareholders to call a special meeting, Independent requires the written application of the holders of at leasttwo-thirds of the capital stock, as opposed to the majoritywritten application of all the votesholders of at least 10% of MNB capital stock entitled to be castvote at the speciala meeting that is required for Peoples’ stockholdersMNB shareholders to call a special meeting. Therefore, it may be more difficult for Independent’s stockholdersshareholders to call a special meeting. Notice of StockholderShareholder Meetings PeoplesMNB
PeoplesMNB requires that notice of stockholdershareholder meetings be given not less than 10 days nor more than 90at least 7 days before the meeting.
Independent Independent requires that notice of stockholdershareholder meetings be given not less than 7 days nor more than 60 days before the meeting. Board of Directors – Number and Term of Office PeoplesMNB
Peoples’ bylaws andNeither MNB’s articles of incorporationorganization nor MNB’s bylaws set the size of the board of directors, but the bylaws provide that the number of directors is fixed by the shareholders. Massachusetts law provides that, if the corporation has more than one shareholder, the number of directors shall not be less than three, except that, where a corporation has only two shareholders, the Corporationnumber of directors shall by virtue of Peoples’ election made tonot be governed by Section 3-804(b) ofless than two. In addition, the Maryland General Corporation Law (the “MGCL”), be fixed from time to time exclusively by votesize of the board of directors; provided, however, that such number shall neverdirectors may be less thanincreased or decreased by one or more directors by a vote of a majority of the minimumshareholders then present and voting at any annual or special meeting of shareholders or by a vote of a majority of the directors then in office. The number of directors requiredmay not be enlarged by the MGCL. Peoples’ bylaws andaddition of more than two directors in any year.
MNB’s articles of incorporationorganization provide that the board of directors other than those who mayshall be elected byon an annual basis and hold office until the holdersnext meeting of preferred stock, shall be divided into three classes, as nearly equally as possible, creating a staggered boardthe shareholders of directors.the company. The vote of a plurality of the votes cast at a meeting of shareholders is required to elect directors of Peoples. A majorityMNB. Each director serves until the election and qualification of his or her successor and for a term ending on the date of the next annual meeting of shareholders or, if the director was not elected at an annual meeting, until the next annual meeting. Upon attaining the age of 75, directors must be residents of a city or county in which Peoples or any of its subsidiaries has an office, or any county contiguous to such cities or counties. Peoples’ directors may not also be a director of officer of another banking entity that has an office in any city or county in which Peoples or its subsidiaries has an office, or in any county contiguous to such cities or counties. A person is not qualifiedare no longer eligible to serve as a directordirectors of Peoples if he or she: (1) is under indictment for, or has ever been convicted of, a criminal offense involving dishonesty or breach of trustMNB and the penalty for such offense could be imprisonment for more than one year, (2) is a person against whom a banking agency has, within the past ten years, issued a cease and desist order for conduct involving dishonesty or breach of trust and that order is final and not subject to appeal, or (3) has been found either by a regulatory agency whose decision is final and not subject to appeal or by a court to have (i) breached a fiduciary duty involving personal profit, or (ii) committed a willful violation of any law, rule or regulation governing banking, securities, commodities or insurance, or any final cease and desist order issued by a banking, securities, commodities or insurance regulatory agency.must retire. Peoples’MNB’s bylaws also provide that any vacancy occurring in the board of directors, including vacanciesa vacancy resulting from an increase in the numberenlargement of directors,the size of the board, unless and until filled by the shareholders, may be filled only by a vote of two-thirdsmajority of the directors then in office (even if suchpresent at any meeting of the directors do not constituteat which a quorum).quorum is present. A director elected to fill a vacancy will be elected to serve forhold office until the remaindernext meeting of shareholders at which directors are elected, unless the full term ofdirector resigns or is removed from office. If a director resigns, is removed from office or dies and the classremaining directors do not fill the vacancy within 45 days, then the number of directors in whichis automatically decreased by the vacancy occurred and until the director’s successor is elected and qualified.number of unfilled vacancies.
Independent Independent’s bylaws and articles of organization provide that the number of directors shall be between three and 25 as fixed from time to time by vote of the board of directors at any regular or special meeting thereof. The board of directors may increase or decrease the number of directors in one or more classes to ensure that the three classes shall be as nearly equal as possible. “Preference Stock Directors” are those who may be elected by the holders of any class or series of stock having a preference over the common stock as to dividends or upon liquidation. Directors other than Preference Stock Directors shall be divided into three classes as nearly equally as possible, creating a staggered board of directors. At each annual meeting of stockholders, the successors Independent’s bylaws and governance principles provide for majority voting in uncontested director elections. In an uncontested election, if an incumbent director standing for election is not reelected by a majority of the classvotes cast, the director is required to promptly tender a notice of resignation to the board of directors. The resignation is not effective unless accepted by the board of directors. The nominating committee would then recommend whether the board of directors whose termshould accept or reject a tendered resignation. In determining whether to accept a tendered resignation, the board of directors would consider the potential impact of the resignation on compliance with applicable legal and listing standards and any other factors deemed relevant. An election is expiring shalluncontested if the number of persons nominated does not exceed the number of director positions to be elected byfilled at the meeting. In contested elections, the vote standard would be a plurality of the stockholders for a term of three years. votes cast. No director shall continue to serve once he or she attains the age of 72. Except for Preference Stock Directors, newly created directorships and vacancies on the board of directors shall be filled by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum. Any director so elected shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred. The bylaws and articles of incorporation of both Peoples and Independent provide for boards of directors divided into three classes. Independent provides for an additional class of directors, the Preference Stock Directors, elected by preferred stock holders.
Board of Director Nominations PeoplesMNB
NominationsNeither MNB’s articles of organization nor MNB’s bylaws address the process whereby persons are nominated for the election of directors may be brought at a meeting of stockholders at which directors are to be elected by the board of directorsdirectors; however, the bylaws provide that no person shall be eligible to be a director unless such person: (i) is not, and has not been for a period of Peoples or by any stockholder of record on the date such stockholder gives notice and on the record date for the determination of stockholders entitled to vote at such meeting. Such stockholder must provide written notice to the corporate secretary of Peoples not less than 80 days nor more than 90 daysleast six months prior to any such meeting; provided, however, that if less than 90 days’ notice or prior public disclosure of the date of the meeting is given to stockholders, such written notice shall be deliveredhis or mailed to and received by the Secretaryher election, an officer or director of Peoples at the principal executive officeany bank (other than a subsidiary of Peoples not later than the tenth day following the day on which noticeMNB), any bank holding company (as defined in Section 2 of the meeting was mailed to stockholdersBank Holding Company Act of 1956, as amended) or such public disclosure was made. Such notice must beany company in writingcompetition with MNB or any subsidiary thereof; and set forth (a) all information relating(ii) has been a United States citizen for at least six months. Massachusetts law does not prescribe a process for nominations to the proposed nominee that would indicate such person’s qualification under Article 2, Section 12board of Peoples’ bylaws, including an affidavit that such person would not be disqualified under the provisions of Article 2, Section 12(b) of the bylaws and such information relating to such person that is required to be disclosed in connection with solicitations of proxies for election of directors, or is otherwise required, pursuant to Regulation 14A under the Exchange Act, or any successor rule or regulation; and (b) as to the stockholder giving the notice: (i) the name and address of such stockholder as they appear on Peoples’ books and of the beneficial owner, if any, on whose behalf the nomination is made; (ii) the class or series and number of shares of capital stock which are owned beneficially or of record by such stockholder and such beneficial owner; (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act or any successor rule or regulation. Such notice must be accompanied by a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected.directors.
Independent Nominations for election to the board of directors at the annual meeting of stockholdersshareholders may be made by or at the direction of the board of directors, the nominating committee, or by any stockholdershareholder entitled to vote for the election of directors at the time of the nomination and at the time of the meeting who provides appropriate written notice to the clerk.secretary. Notice shall be delivered to or mailed and received at the principal executive offices of the corporation not less than 75 nor more than 125 days prior to the anniversary date of the immediately preceding annual meeting of stockholders;shareholders; provided, however, that in the event that the meeting is called for a date more than 75 days prior to such anniversary date, notice must be so received not later than the close of business on the 20th day following the day on which notice of the date of the meeting was mailed or public disclosure of the date of the meeting was made, whichever first occurs. The notice shall set forth (a) as to each person whom such stockholderthe shareholder proposes to nominate for election orre-election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of capital stock of Independent, if any, which are beneficially owned by the person, (iv) any other information regarding the nominee as would be required to be included in a proxy statement or other filings required to be filed pursuant to the proxy rules, and (v) the consent of each nominee to serve if elected; and (b) as to the stockholdershareholder giving notice, (i) the name and record address of the stockholder,shareholder, (ii) the class and number of shares of capital stock of Independent beneficially owned by the stockholdershareholder as of the record date for the meeting (if suchthe date has been made publicly available) and as of the date of suchthe notice, (iii) a representation that the stockholdershareholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (iv) a representation that the stockholdershareholder (and any party on whose behalf or in concert with whom such stockholderthe shareholder is acting) is qualified at the time of giving such notice to have suchthe individual serve as the nominee of such stockholderthe shareholder (and any party on whose behalf or in concert with whom such stockholderthe shareholder is acting) if suchthe individual is elected, accompanied by copies of any notification or filings with, or orders or other actions by, any governmental authority which are required in order for such stockholderthe shareholder (and any party on whose behalf such stockholderthe shareholder is acting) to be so qualified, (v) a description of all arrangements or understandings between such stockholderthe shareholder and each such nominee and any other person or persons (naming suchthe person or persons) pursuant to which the nomination or nominations are to be made by such stockholderthe shareholder, and (vi) such other information regarding such stockholderthe shareholder as would be required to be included in a proxy statement or other filings required to be filed pursuant to the proxy rules contained in the securities laws. Removal and Resignation of Directors PeoplesMNB
Peoples’MNB’s bylaws provide that a director may resign at any time by givingdelivering a written notice of such resignation to MNB or to the president or the secretary, which will become effective upon receipt unless it specifies to be effective some other time or upon the happening of Peoples at Peoples’ principal office.some other event.
Peoples’ articles of incorporationMNB’s bylaws provide that subject to the rights of the holders of any series of preferred stock then outstanding, anya director or the entire board of directors, may be removed from office at any time, but only for cause and only by the affirmativea vote of the holders of at least 80%a majority of the voting power of all of the then-outstanding shares of capital stockshareholders entitled to vote generally in the election of directors, which shareholders are present or represented and voting, together asor by vote of a single class. Peoples’majority of directors then in office. MNB’s bylaws also provide that a director may be removed for cause only after reasonable notice and opportunity to be heard before the board of directors maybody proposing to remove any director from the board of directors upon a director’s unexcused absence of three consecutive regularly scheduled meetings of the board of directors.him or her.
Independent Independent does not make specific provision for a method of resignation, but the bylaws do provide that vacancies can arise from resignation. A director may be removed for cause by the affirmative vote of the holders of a majority of all shares of the corporation outstanding and then entitled to vote generally in the election of directors. Amendment of Bylaws PeoplesMNB
Peoples’Generally, MNB’s bylaws may be amended or repealed by a majority of the total number of directors that Peoples would have if there were no vacancies on the board of directors at the time any such resolution is presented to the board of directors for adoption (the “Whole Board”). The bylaws may also be amended or repealed by an affirmative vote of the holders of at least 80%a majority of the outstanding shares of capital stock of PeoplesMNB and entitled to vote generallywho are present or represented and voting at any annual or special meeting of shareholders; provided, that notice of the substance of the proposed amendment is stated in the electionnotice of such meeting. The directors may also make, amend or repeal bylaws, in whole or in part, by the affirmative vote of a majority of directors voting together as a single class.then in office. Any bylaws adopted by the directors may be amended or repealed by the shareholders entitled to vote thereon.
However, Sections 2, 3, 4, 5, and 6 of Article II of MNB’s bylaws, which concern the election and eligibility of directors, vacancies on the board of directors, enlargement of the size of the board of directors, tenure of directors and removal of directors, respectively, may not be altered, amended or repealed except by the affirmative vote of at least 66 2/3 percent of the total number of directors then in office or by the affirmative vote of at least 66 2/3 percent of the holders of the shares of each class of outstanding stock entitled to vote who are present and represented and voting. Independent The bylaws may be amended by the stockholdersshareholders if appropriate notice has been given setting forth the substance of the proposed change.amendment. The board of directors may alter, amend, repeal, adopt or otherwise modify the bylaws, except those provisions that specify otherwise or as prohibited by the bylaws, the articles or organization or law. Independent’s bylaws provide further that any bylaws adopted by the directors may be amended or repealed by the board of directors. Independent’s bylaws provide that the stockholders may amend the bylaws, but make no provision for repeal by the stockholders. Independent’s bylaws may be amended or repealed by the directors.shareholders.
Amendment of Articles of Organization PeoplesMNB
Peoples’The articles of incorporation provide that Peoples reserves the rightorganization of MNB are silent as to amend or repeal any provision ofamendments to the articles of incorporation as prescribed by the MGCL, of any of the outstanding stock by classification, reclassification or otherwise, and no stockholder approval shallorganization. Massachusetts law provides that amendments be required if the approval of stockholders is not required for the proposed amendment or repeal by the MGCL, and all rights conferred upon stockholders are granted subject to this reservation. The board of directors, pursuant to a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number), and without action by the stockholders, may amend the articles of incorporation to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series.
No proposed amendment or repeal of any provision of the articles of incorporation is required to be submitted to a stockholder vote unless the board of directors (1) approved the proposed amendment or repeal, (2) determined that it is advisable, and (3) directed that it be submitted for consideration at either an annual or special meeting of the stockholders pursuant to a resolution approved by the board of directors. The amendment or repeal of any provision of the articles of incorporation must be approved by at least two-thirds of all votes entitled to be cast by the holders of shares of capital stock entitled to vote on the matter, except that the proposed amendment or repeal of a provision of the articles of incorporation need only be approved by the vote of a majority of all the votes entitled to be cast by the holders of shares of capital stock entitled to vote on the matter if the amendment or repeal of such provision is approvedadopted by the board of directors pursuantand submitted to a resolution approvedvote of shareholders except that certain “housekeeping” amendments that do not affect substantive shareholder rights in any meaningful way may be effected by at least two-thirdsaction of the Whole Board (rounded up to the nearest whole number).
In addition to anyboard of directors without a shareholder vote. For amendments requiring a shareholder vote, such amendments require an affirmative vote of at leasttwo-thirds of the holdersstock outstanding and entitled to vote; provided, however, that the affirmative vote of only a majority of the stock outstanding and entitled to vote is required for amendments to increase or decrease any class or series of authorized capital stock, to change the stock required by lawnumber of authorized shares or by the articlesexchange shares on a pro rata basis for a different number of incorporation, the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of the capital stock of entitledsame class or series, or to vote generally inchange the election of directors, voting together as a single class, shall be required to amend or repeal certain provisions of the articles of incorporation. Such provisions are titled “Amendment of the Articles of Incorporation,” “Preferred Stock,” “Restrictions on Voting Rights of the Corporation’s Equity Securities,” “Majority Vote,” “Quorum,” “Directors,” “Bylaws,” “Evaluation of Certain Offers,” “Indemnification, etc. of Directors and Officers,” and “Limitation of Liability.”corporate name.
Independent Generally, the articles of incorporationorganization of Independent may be amended or repealed only by a majority vote of the stockholders.shareholders. Sections 4 and 5 of Article VI, dealing with preemptive rights and the amendment of the articles of incorporation,organization, may be amended or repealed only by atwo-thirds majority vote of the stockholders.shareholders. Limitation of Liability and Indemnification PeoplesMNB
Peoples’MNB’s articles of incorporationorganization provide that, (1) directors and officersnotwithstanding any provisions of Peoples shalllaw imposing liability, no director will be indemnified by Peoplespersonally liable to the maximum extent permitted by law, and (2) other employees and agents shall be indemnified to such extent as authorizedMNB or its shareholders for monetary damages for breach of fiduciary duty by the board of directors and permitted by law;director as a director; provided, however, that the articles of organization do not eliminate or limit the liability of a director (i) for any breach of the director’s duty of loyalty to MNB or its shareholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law; (iii) for any illegal distributions under Massachusetts law or any loan to directors or officers that is not repaid unless a majority of disinterested directors or a majority of disinterested shares had approved the loan; or (iv) for any transaction from which the director derived an improper personal benefit. No amendment or appeal of the limitation of liability portion of the articles of organization will apply to or have any effect on the liability or alleged liability of any director for or with respect to proceedingsany acts or omissions of the director occurring prior to enforce rightsthe amendment or appeal.
MNB’s bylaws provide for indemnification of each person (and his heirs, executors, administrators, or other legal representatives) who is or has been a director, officer, employee or agent of MNB or any person who is serving, or will serve, as a director, officer, employee or agent of another organization, or who is serving or shall serve at the request of MNB in any capacity with respect to indemnification, Peoples shall indemnifyany employee benefit plan, against all liabilities and expenses (including judgments, fines, penalties and attorneys’ fees and all amounts paid, other than to MNB or such employee benefit plan, in compromise or settlement) reasonably incurred by any such indemniteeperson in connection with, or arising out of, any action, suit or proceeding in which any such director, office, or person may be a proceeding (or part thereof) initiateddefendant or with which the person may be threatened or otherwise involved, directly or indirectly, by such indemnitee only if such proceeding (or part thereof) was authorized byreason of the board of directors of Peoples. Maryland law applicable to Peoples generally provides that a corporation may indemnifyperson being or having been a director, officer, employee or agent of MNB or such other organization or by reason of the person serving or having served in any such capacity with respect to an employee benefit plan, except in relation to matters as to which the director, officer who isor person will be finally adjudged (other than by consent) in the action, suit or proceeding not to have acted in good faith and in a partymanner the person reasonably believed to a threatened, pendingbe in or completed proceeding unless it is established that (1) the director’s act or omission was materialnot opposed to the matter giving risebest interests of MNB or such other organization, or to the proceedingextent such matter relates to services with respect to an employee benefit plan, the best interests of the participants in or beneficiaries of such employee benefit plan, and, was committed in bad faith or was the result of active and deliberate dishonesty; (2) the director actually received an improper personal benefit in money, property, or services; or (3) in the case ofwith respect to any criminal action or proceeding, the directorperson had no reasonable cause to believe his or her conduct was unlawful. However, indemnity shall not be made with respect to any amounts paid in compromise or settlement or by consent, unless the MNB board of directors determines in good faith that the actdirector, officer or omission was unlawful. Peoples’ articles of incorporation also provide for payment of expenses actually and reasonably incurred by a directorperson making the compromise, settlement or officer of Peoplesconsent acted, in connection with the matter or matters out of which the compromise, settlement, or consent arose, in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of MNB, such other organization or the participants in or beneficiaries of such employee benefit plan, and, with respect to any threatened, pendingcriminal action or completed proceeding.proceeding, the person had no reasonable cause to believe his or her conduct was unlawful. Indemnification may include payment by MNB of expenses in defending a civil or criminal action or proceeding in advance of the final disposition of the action or proceeding upon receipt of any undertaking by the indemnified person to repay such payment if he or she is adjudicated to not be entitled to indemnification, which undertaking may be accepted without reference to the financial ability of the person to make repayment. Independent Independent’s bylaws and articles of organization provide for the limitation on liability of directors and officers. Under the bylawsarticles of organization, a director or officer shall not be personally liable to Independent or its stockholdersshareholders for monetary damages for breach of fiduciary duty as a director or officer. However,officer; provided, however, that the bylawsarticles of organization do not eliminate or limit the liability of a director or officer (i) for any breach of the director’s or officer’s duty of loyalty to the Independent or its stockholders,shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for improper distributions under Section 6.40 of Chapter 156D of the General Laws of Massachusetts, or (iv) for any transaction from which the director or officer derived an improper personal benefit. The stated intention of the bylaw provision of the articles of organization is to limit the liability of a director or officer to the maximum extent allowed by law. To that end, the bylawsarticles of organization further provide that if the Massachusetts Business Corporation Act is amended to authorize the further elimination of, or limitation on, the liability of directors or officers, then the liability of a director or officer of Independent, in addition to the limitation of personal liability provided herein, shall be limited to the full extent permitted by suchthe amendment or amendments. Independent’s bylaws and articles of organization provide for indemnification of a director or officer by Independent against all liabilities incurred or suffered by the director or officer or on his or her behalf in connection with any threatened, pending, or completed proceeding (without regard to whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity for or on behalf of the corporation while serving as a director or officer) or any claim, issue or matter therein, which proceeding such director or officer is, or is threated to be made, a party to or participant by reason of such director’s or officer’s corporate status, but only if (i)(A) the director or officer conducted himself or herself in good faith; (B) he or she reasonably believed that his or her conduct was in the best interests of Independent or that his or her conduct was at least not opposed to the best interests of Independent; and (C) in the case of any criminal proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful; or (ii) the director or officer engaged in conduct for which he or she shall not be liable under Section 7 of Article VI of the articles of organization. However, Independent is not required to indemnify or advance expenses to a director or officer in connection with a proceeding initiated by the director or officer (including, without limitation, any cross-claim or counterclaim), unless the initiation of such proceeding was authorized by the board of directors. The rights of indemnification continue as to a director or officer and inure to the benefit of his or her heirs, estate, executors, administrators and personal representatives. As with the limitation on liability of directors and officers, the articles of organization provide that, if the Massachusetts Business Corporation Act is amended, then the indemnification of a director or officer, in addition to the indemnification provided in the articles of organization, shall be provided to the fullest extent permitted by the amendment or amendments. In addition, the termination of a proceeding by judgment, order, settlement or conviction, or upon a plea ofnolo contendere or its equivalent, is not, of itself, determinative that the director or officer did not meet the relevant standard described above. The bylaws and articles of organization further provide that a director’s or officer’s conduct with respect to an employee benefit plan for a purpose he or she reasonably believed to be in the interests of the participants in, and the beneficiaries of, the plan is conduct that satisfies the requirement that his or her conduct was at least not opposed to the best interests of Independent. Except in the circumstances described above, Independent may only indemnify a director or officer if so ordered by a court. The determination of whether an officer or director has met the requirements for indemnification shall be made (i) if there are two or more disinterested directors, by the board of directors by a majority vote of all the disinterested directors, a majority of whom shall for such purpose constitute a quorum, or by a majority of the members of a committee of two or more disinterested directors appointed by vote; (ii) by special legal counsel;counsel selected in the manner prescribed in the articles or organization and the bylaws; (iii) by the stockholders,shareholders, but shares owned by or voted under the control of a director who at the time does not qualify as a disinterested director may not be voted on the determination. Independent may, in some circumstances, advance expenses to a director or officer who is a party to a proceeding. Approval of Business Combinations
Peoples
The articles of incorporation of Peoples contain a special provision that provides that the affirmative vote of the holders of a majority of the total number of shares of all classes of Peoples outstanding and entitled to vote on all matters, including business combinations, will be valid and effective.
Independent
The bylaws and articles of organization of Independent do not contain any special provisions relating to the approval of business combinations, and therefore business combinations requiring a vote of Independent’s stockholders are subject to the default rule under the Massachusetts Business Corporation Act requiring the affirmative vote of two-thirds of the outstanding shares entitled to vote thereon.
LEGAL MATTERS Day Pitney LLP will issuehas issued a legal opinion concerning the validity of the shares of Independent common stock to be issued in connection with the merger. Nutter McClennen & Fish LLP, on behalf of MNB, and Day Pitney LLP, on behalf of Independent, will pass upon certain legal matters to the effect that the merger will constitute atax-free “reorganization” within the meaning of Section 368(a) of the Code. EXPERTS The consolidated financial statements of Independent, included in Independent’s Annual Report (Form(Form 10-K) for the year ended December 31, 2013,2017, and the effectiveness of Independent’s internal control over financial reporting as of December 31, 2017, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reportreports thereon, included therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing. The consolidated financial statements of Peoples, included in Peoples’ Annual Report (Form 10-K) for the year ended September 30, 2013, have been audited by Shatswell, MacLeod & Company, P.C., independent registered public accounting firm, as set forth in their report thereon, included therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such reportreports given on the authority of such firm as experts in accounting and auditing.
SUBMISSION OF BUSINESS PROPOSALS AND STOCKHOLDER NOMINATIONS
Peoples will hold an annual meeting for the year ending September 30, 2014 only if the merger is not completed. Peoples must receive proposals that stockholders seek to include in the proxy statement for Peoples’ next annual meeting no later than September 19, 2014. If the next annual meeting is held on a date more than 30 calendar days from February 18, 2015, a stockholder proposal must be received by a reasonable time before Peoples begins to print and mail its proxy solicitation for such annual meeting. Any stockholder proposals will be subject to the requirements of the proxy rules adopted by the Securities and Exchange Commission.
Peoples’ Bylaws generally provides that any stockholder desiring to make a proposal for new business at an annual meeting of stockholders or to nominate one or more candidates for election as directors must submit written notice filed with Peoples’ Corporate Secretary not less than 80 days nor more than 90 days prior to any such annual meeting; provided, however, that if less than 90 days’ notice or prior public disclosure of the date of the annual meeting is given to stockholders, such written notice shall be delivered or mailed to and received by Peoples’ Corporate Secretary at Peoples’ principal executive office not later than the tenth day following the day on which notice of the meeting was mailed to stockholders or such public disclosure was made. If the merger is not completed, the 2015 annual meeting of stockholders is expected to be held on February 17, 2015. For the 2015 annual meeting of stockholders, the notice would have to be received between November 19, 2014 and November 29, 2014. The stockholder must also provide certain information in the notice, as set forth in Peoples’ Bylaws. Failure to comply with these advance notice requirements will preclude such nominations or new business from being considered at the meeting.
Nothing in this proxy statement/prospectus or Peoples’ Bylaws shall be deemed to require Peoples to include in its proxy statement and proxy relating to an annual meeting any stockholder proposal that does not meet all of the requirements for inclusion established by the Securities and Exchange Commission in effect at the time such proposal is received.
WHERE YOU CAN FIND MORE INFORMATION Independent and Peoples filefiles annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any reports, statements, or other information that Independent and Peoples filefiles with the Securities and Exchange Commission at the Securities and Exchange Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at1-800-SEC-0330. The Securities and Exchange Commission filings of Independent and Peoples are also available to the public from commercial document retrieval services and at the web site maintained by the Securities and Exchange Commission at http://www.sec.gov. Reports, proxy statements, and other information concerning Independent and Peoples also may be inspected at the offices of Nasdaq located at 1735 K Street, N.W., Washington, D.C. 20006. Independent’s Securities and Exchange Commission file number is 001-09047, and Peoples’ file number is 001-34801.001-09047. Independent has filed a registration statement on FormS-4 to register with the Securities and Exchange Commission to register the Independent common stock to be issued to Peoples’ stockholdersMNB shareholders in the merger. This document is a part of that registration statement and constitutes a prospectus of Independent in addition to beingconstituting a proxy statement for Peoples.MNB. As allowed by Securities and Exchange Commission rules, this document does not contain all the information you can find in Independent’s registration statement or the exhibits to the registration statement. Statements made in this document as to the content of any contract, agreement or other document referenced are not necessarily complete. With respect to each of those contracts, agreements or other documents to be filed or incorporated by reference as an exhibit to the registration statement, you should refer to the corresponding exhibit, when it is filed, for a more complete description of the matter involved and read all statements in this document in light of that exhibit. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Securities and Exchange Commission allows each of Independent and Peoples to incorporate by reference the information that each of Independent and Peoples files with the Securities and Exchange Commission. Incorporation by reference means that each of Independent and Peoples can disclose important information to you by referring you to other documents filed separately with the Securities and Exchange Commission that are legally considered to be part of this document, and later information that is filed by each of Independent and Peoples with the Securities and Exchange Commission will automatically update and supersede the information in this document and the documents listed below. For purposes of this proxy statement/prospectus, any statement contained in a document incorporated or deemed to be incorporated herein by reference shall be deemed to be modified or superseded to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated herein by reference modifies or supersedes suchthe statement in suchthe document. Independent incorporates by reference the specific documents listed below and any future filings that Independent makes with the Securities and Exchange Commission under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this document and prior to the later of the date of Peoples’ stockholdersthe MNB shareholders meeting or the date on which the offering of shares of Independent common stock under this document is terminated: Annual Report on Form10-K for the year ended December 31, 2013;2017; Quarterly Report on Form10-Q for the quarterthree months ended June 30, 2014;March 31, 2018; Current Reports on Form8-K filed with the Securities and Exchange Commission on January 23, 2014,2, 2018, January 27, 2014,5, 2018, January 18, 2018, February 13, 2014,8, 2018, March 20, 2014,7, 2018, March 26, 2014,15, 2018, April 17, 2014, April19, 2018, May 15, 2018, May 22, 2018, May 29, 2018, May 31, 2018, and June 21, 2014, May 20, 2014, June 19, 2014, June 25, 2014, July 17, 2014, July 21, 2014, August 5, 2014, August 7, 2014, August 13, 2014, September 9, 2014, September 18, 2014 and October 16, 20142018 (except, with respect to each of the foregoing, for portions of such reports which were deemed to be furnished and not filed); and Definitive proxy statement on Schedule 14A for the 20142018 annual meeting of stockholders.shareholders. You can obtain any of the Independent documents incorporated by reference into this document, and any exhibits specifically incorporated by reference as an exhibit in this document, at no cost, by contacting Independent at: Independent Bank Corp. 288 Union Street Rockland, Massachusetts 02370 Attention: Edward H. Seksay, General Counsel (781)982-6158 Peoples incorporates by reference the specific documents listed below and any future filings that Peoples makes with the Securities and Exchange Commission under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this document and prior to the later of the date of Peoples’ stockholders meeting or the date on which the offering of shares of Independent common stock under this document is terminated:
Annual Report on Form 10-K for the year ended September 30, 2013;
Quarterly Report on Form 10-Q for the quarter ended June 30, 2014;
Current Reports on Form 8-K filed with the Securities and Exchange Commission on January 22, 2014, January 23, 2014, January 30, 2014, February 19, 2014, April 16, 2014, April 29, 2014, July 16, 2014, July 30, 2014, August 5, 2014, and August 12, 2014 (except, with respect to each of the foregoing, for portions of such reports which were deemed to be furnished and not filed); and
Definitive proxy statement for the 2014 annual meeting of stockholders.
You can obtain any of the Peoples documents incorporated by reference into this document, and any exhibits specifically incorporated by reference as an exhibit in this document, at no cost, by contacting Peoples at:
Peoples Federal Bancshares, Inc.
435 Market Street
Brighton, MA 02135
Attention: Maurice H. Sullivan, Jr., Chairman and Chief Executive Officer
(617) 254-0707
You should rely only on the information contained or incorporated by reference into this document. Independent has supplied all information contained or incorporated by reference into this document relating to Independent. PeoplesMNB has supplied all information contained or incorporated by reference intoin this document relating to Peoples.MNB. Neither Independent nor Peoples haveMNB has authorized anyone to provide you with information that is different from what is contained in this document. This document is dated October 22, 2014.[●], 2018. You should not assume that the information contained in this document is accurate as of any date other than that date. Neither the mailing of this document to Peoples’ stockholdersMNB shareholders nor the issuance of Independent common stock in the merger creates any implication to the contrary. AnnexANNEX A – AGREEMENT AND PLAN OF MERGER
Execution Version AGREEMENT AND PLAN OF MERGER DATED AS OF AUGUST 5, 2014MAY 29, 2018 BY AND AMONG INDEPENDENT BANK CORP., ROCKLAND TRUST COMPANY, PEOPLES FEDERAL BANCSHARES, INC.,MNB BANCORP,
AND PEOPLES FEDERAL SAVINGSTHE MILFORD NATIONAL BANK
AND TRUST COMPANY
Table of Contents | | | | | Table of Contents
| | | | | | | Page | | ARTICLE I THE MERGER | | | A-1A-5 | | Section 1.01 The Merger | | | A-1A-5 | | Section 1.02 Articles of Organization and Bylaws | | | A-1A-5 | | Section 1.03 Directors and Officers of Surviving Entity | | | A-1A-6 | | Section 1.04 Effective Time; Closing | | | A-2A-6 | | Section 1.05 Tax Consequences | | | A-2A-6 | | Section 1.06 Additional Actions | | | A-2A-6 | | | | ARTICLE II MERGER CONSIDERATION; EXCHANGE PROCEDURES | | | A-2A-7 | | Section 2.01 Merger Consideration | | | A-2A-7 | | Section 2.02 Rights as Stockholders;Shareholders; Stock Transfers | | | A-3A-7 | | Section 2.03 Fractional Shares | | | A-3A-7 | | Section 2.04 Election Procedures | | | A-3A-7 | | Section 2.05 Exchange Procedures | | | A-5A-9 | | Section 2.06 Anti-Dilution Provisions | | | A-6 | | Section 2.07 Options and Restricted Stock
| | | A-7 | | Section 2.08 No Dissenters’ Rights
| | | A-7A-11 | | | | ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY | | | A-7A-11 | | Section 3.01 Making of Representations and Warranties | | | A-7A-11 | | Section 3.02 Organization, Standing and Authority | | | A-8A-12 | | Section 3.03 Capital Stock | | | A-8A-12 | | Section 3.04 Subsidiaries | | | A-9A-13 | | Section 3.05 Corporate Power; Minute Books | | | A-9A-13 | | Section 3.06 Corporate Authority | | | A-10A-13 | | Section 3.07 Regulatory Approvals; No Defaults | | | A-10A-14 | | Section 3.08 SEC Documents; Other Reports; Internal Controls | | | A-11A-14 | | Section 3.09 Financial Statements; Undisclosed Liabilities | | | A-12A-15 | | Section 3.10 Absence of Certain Changes or Events | | | A-12A-16 | | Section 3.11 Legal Proceedings | | | A-13A-16 | | Section 3.12 Compliance With Laws | | | A-13A-17 | | Section 3.13 Material Contracts; Defaults | | | A-14A-17 | | Section 3.14 Agreements with Regulatory Agencies | | | A-14A-18 | | Section 3.15 Brokers | | | A-15A-18 | | Section 3.16 Employee Benefit Plans | | | A-15A-18 | | Section 3.17 Labor Matters | | | A-17A-20 | | Section 3.18 Environmental Matters | | | A-17A-20 | | Section 3.19 Tax Matters | | | A-18A-21 | | Section 3.20 Investment Securities | | | A-20A-23 | | Section 3.21 Derivative Transactions | | | A-20A-23 | | Section 3.22 Regulatory Capitalization | | | A-20A-23 | | Section 3.23 Loans; Nonperforming and Classified Assets | | | A-20A-23 | | Section 3.24 Allowance for Loan Losses | | | A-21A-24 | | Section 3.25 Trust Business; Administration of Fiduciary Accounts | | | A-21A-24 | | Section 3.26 Investment Management and Related Activities | | | A-21A-25 | | Section 3.27 Repurchase Agreements | | | A-22A-25 | | Section 3.28 Deposit Insurance | | | A-22 | | Section 3.29 CRA, Anti-Money Laundering and Customer Information Security
| | | A-22A-25 | | Section 3.303.29 Transactions with Affiliates | | | A-22A-26 | | Section 3.313.30 Tangible Properties and Assets | | | A-23A-26 | | Section 3.31 Intellectual Property | | | A-27 | | Section 3.32 Insurance | | | A-27 | | Section 3.33 Anti-Takeover Provisions | | | A-27 | | Section 3.34 Fairness Opinion | | | A-27 | |
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| | | | | Section 3.32 Intellectual Property
| | | A-23 | | Section 3.33 Insurance
| | | A-23 | | Section 3.34 Anti-Takeover Provisions
| | | A-24Page | | Section 3.35 Fairness OpinionProxy Statement-Prospectus | | | A-24A-27 | | Section 3.36 Proxy Statement-ProspectusTransaction Costs | | | A-24A-28 | | Section 3.37 Transaction CostsInformation Security | | | A-24A-28 | | Section 3.38 Disclosure | | | A-24A-28 | | Section 3.39 No Other Representations or Warranties | | | A-28 | | | | ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER | | | A-24A-28 | | Section 4.01 Making of Representations and Warranties | | | A-24A-28 | | Section 4.02 Organization, Standing and Authority | | | A-25A-29 | | Section 4.03 Capital Stock | | | A-25A-29 | | Section 4.04 Corporate Power; Minute Books | | | A-25A-29 | | Section 4.05 Corporate Authority | | | A-26A-30 | | Section 4.06 SEC Documents; Other Reports; Internal Controls | | | A-26A-30 | | Section 4.07 Financial Statements; Undisclosed Liabilities | | | A-27A-31 | | Section 4.08 Regulatory Approvals; No Defaults | | | A-28A-31 | | Section 4.09 Agreements with Regulatory Agencies | | | A-28A-32 | | Section 4.10 Absence of Certain Changes or Events | | | A-28A-32 | | Section 4.11 Compliance with Laws | | | A-29A-32 | | Section 4.12 Proxy Statement-Prospectus Information; Registration Statement | | | A-29A-33 | | Section 4.13 Legal Proceedings | | | A-29A-33 | | Section 4.14 Brokers | | | A-29A-33 | | Section 4.15 Employee Benefit Plans | | | A-30A-33 | | Section 4.16 Labor Matters | | | A-30A-34 | | Section 4.17 Tax Matters | | | A-30A-34 | | Section 4.18 Loans: Nonperforming and Classified Assets | | | A-31A-35 | | Section 4.19 CRA, and Anti-Money Laundering and Customer Information Security | | | A-32A-35 | | Section 4.20 Regulatory Capitalization | | | A-32A-36 | | Section 4.21 Environmental Matters | | | A-36 | | Section 4.22 Administration of Trust and Fiduciary Accounts | | | A-32 | | Section 4.22 Financing
| | | A-32A-36 | | Section 4.23 SubsidiariesInformation Security | | | A-32A-36 | | Section 4.24 Allowance for Loan LossesDisclosure | | | A-33A-36 | | Section 4.25 Proxy Statement-ProspectusNo Other Representations or Warranties | | | A-33 | | Section 4.26 Ownership of Company Common Stock
| | | A-33 | | Section 4.27 Environmental Matters
| | | A-33 | | Section 4.28 Disclosure
| | | A-33A-36 | | | | ARTICLE V COVENANTS | �� | | A-34A-37 | | Section 5.01 Covenants of Company | | | A-34A-37 | | Section 5.02 Covenants of Buyer | | | A-38A-41 | | Section 5.03 Commercially Reasonable Effort | | | A-38A-41 | | Section 5.04 StockholderShareholder Approval | | | A-38A-41 | | Section 5.05 Registration Statement; Proxy Statement-Prospectus; Nasdaq Listing | | | A-39A-42 | | Section 5.06 Regulatory Filings; Consents | | | A-40A-43 | | Section 5.07 Publicity | | | A-40A-44 | | Section 5.08 Access; Information | | | A-41A-44 | | Section 5.09 No Solicitation by Company | | | A-41A-45 | | Section 5.10 Indemnification; Directors’ and Officers’ Insurance | | | A-43A-46 | | Section 5.11 Employees; Benefit Plans | | | A-44A-47 | | Section 5.12 Notification of Certain Changes | | | A-46A-49 | | Section 5.13 Current Information | | | A-46A-49 | | Section 5.14 [Reserved]Board Packages and Meetings | | | A-46A-49 | |
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| | | | | Section 5.15 Transition; Informational Systems Conversion | | | A-46A-50 | | Section 5.16 Access to Customers and Suppliers | | | A-46A-50 | | Section 5.17 Environmental Assessments | | | A-47A-50 | | Section 5.18 CertainShareholder Litigation and Claims | | | A-47A-51 | | Section 5.19 Stock Exchange De-listingDirector Resignations | | | A-47A-51 | |
| | | | | | | Page | | Section 5.20 Director ResignationsThird Party Consents | | | A-47A-51 | | Section 5.21 Coordination of Dividends | | | A-47A-51 | | Section 5.22 CoordinationMerger | | | A-48A-52 | | Section 5.23 Bank MergerCharitable Foundation | | | A-48A-52 | | Section 5.24 Section 16(a) | | | A-49 | | Section 5.25 Representation on Buyer Board and Buyer Bank Board
| | | A-49 | | Section 5.26 Certain Transactional Expenses
| | | A-49A-52 | | | | ARTICLE VI CONDITIONS TO CONSUMMATION OF THE MERGER | | | A-49A-53 | | Section 6.01 Conditions to Obligations of the Parties to Effect the Merger | | | A-49A-53 | | Section 6.02 Conditions to Obligations of Company | | | A-50A-53 | | Section 6.03 Conditions to Obligations of Buyer | | | A-50A-54 | | Section 6.04 Frustration of Closing Conditions | | | A-51A-54 | | | | ARTICLE VII TERMINATION | | | A-51A-54 | | Section 7.01 Termination | | | A-51A-54 | | Section 7.02 Termination Fee; Reimbursement | | | A-53A-57 | | Section 7.03 Effect of Termination | | | A-54A-58 | | | | ARTICLE VIII DEFINITIONS | | | A-54A-58 | | Section 8.01 Definitions | | | A-54A-58 | | | | ARTICLE IX MISCELLANEOUS | | | A-62A-66 | | Section 9.01 Survival | | | A-62A-66 | | Section 9.02 Waiver; Amendment | | | A-62A-66 | | Section 9.03 Governing Law; Waiver | | | A-62A-66 | | Section 9.04 Expenses | | | A-62A-66 | | Section 9.05 Notices | | | A-62A-66 | | Section 9.06 Entire Understanding; No Third Party Beneficiaries | | | A-63A-67 | | Section 9.07 Severability | | | A-63A-67 | | Section 9.08 Enforcement of the Agreement | | | A-64A-67 | | Section 9.09 Interpretation | | | A-64A-68 | | Section 9.10 Assignment | | | A-64A-68 | | Section 9.11 Counterparts | | | A-64A-68 | | | | EXHIBITS
| | | | | Exhibit A Form of Voting Agreement
| | | | | Exhibit B Forms of Settlement Agreement
| | | | |
iii
ThisAGREEMENT AND PLAN OF MERGER (this “Agreement”) is dated as of August 5, 2014,May 29, 2018, by and among Independent Bank Corp. (“Buyer”), Rockland Trust Company, a wholly owned subsidiary of Buyer (“Buyer Bank”), Peoples Federal Bancshares, Inc.MNB Bancorp (“Company”), and Peoples Federal SavingsThe Milford National Bank and Trust Company, a wholly owned subsidiary of Company (“Company Bank”). Capitalized terms used in this Agreement are defined to have the meaning set forth in Article VIII. W I T N E S S E T H WHEREAS, the board of directors of Buyer and the board of directors of Company havehas each (i) determined that this Agreement and the business combination and related transactions it contemplates are in the best interests of their respective entities, shareholders, and stockholders;other constituencies; and (ii) approved this Agreement; WHEREAS, in accordance with the terms of this Agreement, (i) Company will merge with and into the Buyer, with Buyer as the surviving entity (the “Merger”), and thereafter (ii) Company Bank will immediately thereafter merge with and into Buyer Bank, with Buyer Bank as the surviving entity (the “Bank Merger”); WHEREAS, as a material inducement to Buyer and Buyer Bank to enter into this Agreement, (a) each of the directors and executive officersdirector of Company has entered into a voting agreement with Buyer dated as of thethis date hereof (a “Voting Agreement”), substantially in the form attached asExhibit A, pursuant to which each of them has agreed to vote all sharesShares of Company Common Stock (as defined herein) they ownin this Agreement) he or she owns in favor of the approval of this Agreement and the transactions it contemplates; WHEREAS, as a material inducement to Buyer to enter into this Agreement, certain officers and (b) Kevin P. Meehan, Chairman of the board of directors of Company and the holder of a majority of Shares of Company Bank haveCommon Stock, has entered into settlement agreementsa Shareholders Agreement with Buyer dated as of thethis date hereof (each a “Settlement(the “Shareholders Agreement”), in the formsform attached asExhibit B, regarding terminationconcerning his ownership of employment asBuyer Common Stock (as defined in this Agreement) following the Closing (as defined in this Agreement) of the Effective Timetransactions contemplated by this Agreement;
WHEREAS, the parties intend that the Merger shall qualify as a “reorganization” under Section 368(a) of the Code (as defined in this Agreement) and satisfactionrelevant Treasury Regulations, and that this Agreement shall constitute a “plan of certain paymentsreorganization” for purposes of Sections 354 and other obligations to such officers;361 of the Code and relevant Treasury Regulations; and WHEREAS, the parties desire to make certain representations, warranties, and agreements and prescribe certain conditions in connection with the transactions described in this Agreement and to prescribe certain conditions thereto.Agreement. NOW, THEREFORE, in consideration of the mutual promises herein containedin this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties agree as follows: ARTICLE I THE MERGER Section 1.01The Merger. Subject to the terms and conditions of this Agreement, at the Effective Time, Company shall merge with and into Buyer in accordance with the Massachusetts Business Corporation Act (the “MBCA”), regulatory requirements, and the requirements of the Massachusetts Board of Bank Incorporation and the MGCL.other applicable law. Upon consummation of the Merger, the separate corporate existence of Company shall cease and Buyer shall survive and continue to exist as a corporation incorporated under the General Laws of MassachusettsMBCA. (Buyer, as the surviving entity in the Merger, is sometimes being referred to hereinin this Agreement as the “Surviving Entity”.). Section 1.02Articles of Organization and Bylaws. The Articles of Organization and Bylaws of the Surviving Entity upon consummation of the Merger shall be the Articles of Organization and Bylaws of Buyer as in effect immediately prior to consummation of the Merger. Section 1.03Directors and Officers of Surviving Entity. The directors of the Surviving Entity immediately after the Merger shall be the directors of Buyer in office immediately prior to the Effective Time, plus the Director Designee as set forth in Section 5.25.Time. The executive officersExecutive Officers of the Surviving Entity immediately after the Merger shall be the executive officersExecutive Officers of Buyer immediately prior to the Merger. Each of the directorsdirector and executive officersExecutive Officer of the Surviving Entity immediately after the Merger shall hold office until his or her successor is elected and qualified or otherwise in accordance with the Articles of Organization and Bylaws of the Surviving Entity. Section 1.04Effective Time; Closing. (a) Subject to the terms and conditions of this Agreement, Buyer and Company willshall make all such filings as may be required to consummate the Merger by applicable laws and regulations.Laws. The Merger shall become effective as set forth in the articles of merger related to the Merger (the “Articles of Merger”) that shall be filed with the Massachusetts Secretary of the Commonwealth and the Maryland State Department of Assessments and TaxationMassachusetts on the Closing Date. The “Effective Time” of the Merger shall be the date and time when the Merger becomes effective as set forth in the Articles of Merger. (b) AThe closing of the Merger (the “Closing”) shall take place immediately prior to the Effective Time by the electronic (PDF), facsimile, or overnight courier exchange of executed documents or at the offices of Day Pitney LLP, One International Place, Boston, MA 02110, on or suchbefore November 30, 2018 assuming the satisfaction or waiver (subject to applicable law) of the conditions set forth in Article VI (the “Closing Conditions”), other placethan those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or on such other date as the parties may mutually agree upon (such date, thewaiver of those conditions (the “Closing Date”); provided, however, that if the Closing Conditions are not satisfied or waived until after November 30, 2018, the Closing Date shall occur no later than five (5) Business Days after such satisfaction or waiver (unless otherwise agreed to by the parties). At the Closing, there shall be delivered to Buyer and Company the certificates and other documents required to be delivered under Article VI hereof.of this Agreement. Section 1.05Tax Consequences. It is intended that the Merger shall qualify as a “reorganization” under Section 368(a) of the Code and therelevant Treasury Regulations, promulgated thereunder, and that this Agreement shall constitute a “plan of reorganization” for purposes of Sections 354 and 361 of the Code and relevant Treasury Regulations. From and after the Treasury Regulations promulgated thereunder.date of this Agreement and until the Closing, each party shall use its reasonable best efforts to cause the Merger and the Bank Merger each to qualify as a reorganization under Section 368(a) of the Code and shall refrain from taking any action that reasonably could be expected to cause the Merger and the Bank Merger each to fail to qualify as such a reorganization. Section 1.06Additional Actions. If, at any time after the Effective Time, Buyer shall consider or be advised that any further deeds, documents, assignments, or assurances in lawLaw or any other acts are necessary or desirable to (i) vest, perfect or confirm, of record or otherwise, in Buyer its right, title or interest in, to or under any of the rights, properties, or assets of Company or any Company Subsidiary, or (ii) otherwise carry out the purposes of this Agreement, Company and its officers and directors shall be deemed to have granted to Buyer an irrevocable power of attorney to execute and deliver in such official corporate capacities, all such deeds, assignments, documents, or assurances in law orLaw and to perform any other acts as are necessary or desirable to (a) vest, perfect, or confirm, of record or otherwise, in Buyer its right, title or interest in, to or under any of the rights, properties, or assets of Company or (b) otherwise carry out the purposes of this Agreement, and the officers and directors of the Buyer are authorized in the name of Company or otherwise to take any and all such action.additional actions they deem necessary or advisable. ARTICLE II MERGER CONSIDERATION; EXCHANGE PROCEDURES Section 2.01Merger Consideration. Subject to the provisions of this Agreement, at the Effective Time, automatically by virtue of the Merger and without any action on the part of Buyer, Company or any stockholdershareholder of Company: (a) Each share of Buyer Common Stock that is issued and outstanding immediately prior to the Effective Time shall remain outstanding following the Effective Time and shall be unchanged by the Merger. (b) Each share of Company Common Stock (i) held as treasury stock or (ii) owned directly by Buyer (other than, in the case of clause (ii), shares in trust accounts, managed accounts and the like for the benefit of customers or shares held in satisfaction of a debt previously contracted) shall be cancelled and retired immediately prior to the Effective Time shall be cancelled and retired at the Effective Time without any conversion, thereof, and no payment shall be made with respect thereto.to them. (c) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than treasury stockDissenters’ Shares and shares described in Section 2.01(b)(ii) above) shall become and be converted into, as provided in and subject to the limitations set forth in this Agreement, the right to receive at the election of the holder thereof and subject to the limitations set forth in Section 2.04of such share of Company Common Stock either: (i) $21.00$275.00 in cash (the “Cash Consideration”); or (ii) 0.55233.55 shares (the “Exchange Ratio)Ratio”) of Buyer Common Stock (the “Stock Consideration”). The Cash Consideration, the Stock Consideration, and any cash in lieu of fractional shares paid pursuant to Section 2.03 are sometimes referred to herein collectively as the “Merger Consideration.”Consideration”. (d) Notwithstanding anything in this Agreement to the contrary, Buyer shall not pay for any shares of Company Common Stock, the holders of which have exercised their rights under Part 13 of Chapter 156D of the MBCA (“Dissenters’ Shares”) and any holders of Dissenters’ Shares shall not be entitled to receive any Merger Consideration; provided, that if appraisal rights under Part 13 of Chapter 156D of the MBCA with respect to any Dissenters’ Shares shall have been effectively withdrawn or lost they will cease to be treated as Dissenters’ Shares and shall be converted into the right to receive the Merger Consideration pursuant to Section 2.01(c). Section 2.02Rights as Stockholders;Shareholders; Stock Transfers. All shares of Company Common Stock, if and when converted as provided in Section 2.01(c), shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each Certificate previously evidencing such sharesthem shall thereafter represent only the right to receive for each such share of Company Common Stock, the Merger Consideration and any cash in lieu of fractional shares of Buyer Common Stock in accordance with this Article II and the right to receive any unpaid dividend with respect to the Company Common Stock with a record date that is prior to the Effective Time. At the Effective Time, holders of Company Common Stock shall cease to be, and shall have no rights as, stockholders of Company, other than the right to receive the Merger Consideration and cash in lieu of fractional shares of Buyer Common Stock as provided under this Article II and the right to receive any unpaid dividend with respect to the Company Common Stock with a record date that is prior to the Effective Time.Consideration. After the Effective Time, there shall be no transfers on the stock transfer books of Company of shares of Company Common Stock, other than transfers of Company Common Stock that have occurred prior to the Effective Time.Stock. Section 2.03Fractional Shares. Notwithstanding any other provision hereof,of this Agreement, no fractional shares of Buyer Common Stock and no certificates or scrip therefor, or other evidence of ownership thereof, will be issued in the Merger. In lieu thereof, Buyer shall instead pay to each holder of a fractional share of Buyer Common Stock an amount of cash (without interest) determined by multiplying the fractional share interest to which such holder would otherwise be entitled by the VWAP of the Buyer Common Stock for the five (5) consecutive trading days ending on the fifth trading day immediately preceding the Closing Date, rounded to the nearest whole cent. Section 2.04Election Procedures. (a) An election form and other appropriate and customary transmittal materials (which shall specify that delivery shall be effected, and risk of loss and title to Certificates shall pass, only upon proper delivery of such Certificates to a bank or trust company designated by Buyer and reasonably satisfactory to Company (the “Exchange Agent”))the Exchange Agent in such form as Company and Buyer shall mutually agree (the “Election Form”), shall be mailed no more than forty (40) and no less than twenty (20) Business Days prior to the anticipated Election Deadline (the “Mailing Date”) to each holder of record of Company Common Stock.Stock other than holders of Dissenters’ Shares. Each Election Form shall permit the holder of record of Company Common Stock, other than holders of Dissenters’ Shares (or in the case of nominee record holders, the beneficial owner through proper instructions and documentation), to (i) elect to receive the Cash Consideration for all or a portion of suchthe holder’s shares (a “Cash Election”), (ii) elect to receive the Stock Consideration for all or a portion of suchthe holder’s shares (a “Stock Election”), or (iii) make no election with respect to the receipt of the Cash Consideration or the Stock Consideration (a “Non-Election”“Non-Election”); provided that, subject to Section 2.04(d), sixtyseventy-five percent (60%(75%) of the total number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time excluding any treasury stock and(such number of shares described in Section 2.01(b)(ii) (theof Company Common Stock, the “Stock Conversion Number”), shall be converted into the Stock Consideration and fortytwenty-five percent (40%(25%) of such shares of Company Common Stock shall be converted into the Cash Consideration in accordance with the allocation procedures set forth in Section 2.04(c). In arriving at the Stock Conversion Number and the number of Shares converted into the Cash Consideration, treasury stock and other shares described Section 2.01(b) shall be excluded. A record holder acting in different capacities or acting on behalf of other Persons in any way will be entitled to submit an Election Form for each capacity in which such record holder so acts with respect to each Person for which it so acts. Shares of Company Common Stock as to which a Cash Election has been made are referred to herein as “Cash Election Shares.”Shares”. Shares of Company Common Stock as to which a Stock Election has been made are referred to herein as “Stock Election Shares.”Shares”. Shares of Company Common Stock as to which no election has been made (or as to which an Election Form is not properly completed and returned in a timely fashion)returned) are referred to herein as “Non-Election Shares.”“Non-Election Shares”. The aggregate number of shares of Company Common Stock with respect to which a Stock Election has been made is referred to herein as the “Stock Election Number.”Number”. (b) To be effective, a properly completed Election Form shall be submitted to the Exchange Agent onby or before 5:00 p.m., New York City time, on a date no later than the 5thfifth (5th) Business Day prior to the Closing Date to be mutually agreed upon by the parties (which date shall be publicly announced by Buyer as soon as practicable prior to such date) (the “Election Deadline”), accompanied by the Certificates as to which such Election Form is being made or by an appropriate guarantee of delivery of such Certificates, as set forth in the Election Form, from a member of any registered national securities exchange or a commercial bank or trust company in the United States (provided that such Certificates are in fact delivered to the Exchange Agent by the time required in suchby the guarantee of delivery; failure to deliver shares of Company Common Stock covered by suchthe guarantee of delivery within the time set forth on such guaranteerequired shall be deemed to invalidate any otherwise properly made election, unless otherwise determined by Buyer, in its sole discretion). Buyer shall publicly announce the Election Date as soon as practicable after it has been determined. For shares of Company Common Stock held in book entry form, Buyer shall establish delivery procedures for delivery of such shares, which procedures shall be reasonably acceptable to Company. If a holder of Company Common Stock either (i) does not submit a properly completed Election Form in a timely fashion or (ii) revokes the holder’s Election Form prior to the Election Deadline (without later submitting a properly completed Election Form prior to the Election Deadline), the shares of Company Common Stock held by suchof that holder shall be designatedNon-Election Shares. In addition, all Election Forms shall automatically be revoked, and all Certificates returned, if the Exchange Agent is notified in writing by Buyer and Company that this Agreement has been terminated. Subject to the terms of this Agreement and of the Election Form, the Exchange Agent shall have reasonable discretion to determine whether any election, revocation, or change has been properly or timely made and to disregard immaterial defects in any Election Form, and any good faith decisions of the Exchange Agent regarding such matters shall be binding and conclusive. Neither Buyer nor the Exchange Agent shall be under any obligation to notify any Person of any defect in an Election Form. (c) The allocation among the holders of shares of Company Common Stock of rights to receive the Cash Consideration and the Stock Consideration will be made as follows: (i) If the Stock Election Number exceeds the Stock Conversion Number, then all Cash Election Shares and allNon-Election Shares shall be converted into the right to receive the Cash Consideration, and, subject to Section 2.03 hereof,of this Agreement, each holder of Stock Election Shares will be entitled to receive the Stock Consideration in respect of that number of Stock Election Shares held by such holder equal to the product obtained by multiplying (x) the number of Stock Election Shares held by such holder by (y) a fraction, the numerator of which is the Stock Conversion Number and the denominator of which is the Stock Election Number, with the remaining number of suchthe holder’s Stock Election Shares being converted into the right to receive the Cash Consideration; (ii) If the Stock Election Number is less than the Stock Conversion Number (the amount by which the Stock Conversion Number exceeds the Stock Election Number being referred to hereinin this Agreement as the “Shortfall Number”), then all Stock Election Shares shall be converted into the right to receive the Stock Consideration and theNon-Election Shares and the Cash Election Shares shall be treated in the following manner: (A) if the Shortfall Number is less than or equal to the number ofNon-Election Shares, then all Cash Election Shares shall be converted into the right to receive the Cash Consideration and, subject to Section 2.03 hereof,of this Agreement, each holder ofNon-Election Shares shall receive the Stock Consideration in respect of that number ofNon-Election Shares held by suchthe holder equal to the product obtained by multiplying (x) the number ofNon-Election Shares held by suchthe holder by (y) a fraction, the numerator of which is the Shortfall Number and the denominator of which is the total number ofNon-Election Shares, with the remaining number of suchthe holder’sNon-Election Shares being converted into the right to receive the Cash Consideration; or (B) if the Shortfall Number exceeds the number ofNon-Election Shares, then allNon-Election Shares shall be converted into the right to receive the Stock Consideration, and, subject to Section 2.03 hereof,of this Agreement, each holder of Cash Election Shares shall receive the Stock Consideration in respect of that number of Cash Election Shares equal to the product obtained by multiplying (x) the number of Cash Election Shares held by suchthe holder by (y) a fraction, the numerator of which is the amount by which (1) the Shortfall Number exceeds (2) the total number ofNon-Election Shares and the denominator of which is the total number of Cash Election Shares, with the remaining number of suchthe holder’s Cash Election Shares being converted into the right to receive the Cash Consideration. (d) It is intended that each of the Merger and the Bank Merger shall constitute a reorganization within the meaning of Section 368(a) of the Code, and that this Agreement shall constitute a “plan of reorganization” as that term is used in Sections 354 and 361 of the Code. From and after the date of this Agreement and until the Closing, each party hereto shall use its reasonable best efforts to cause the Merger and the Bank Merger each to qualify as a reorganization under Section 368(a) of the Code and shall refrain from taking any action that reasonably could be expected to cause the Merger and the Bank Merger each to fail to qualify as such a reorganization. If the tax opinions referred to in Section 6.01(e) cannot be rendered (as reasonably determined by Day Pitney LLP and Bingham McCutchenNutter McClennen & Fish LLP, respectively) as a result of the Merger potentially failing to qualify as a reorganization under Section 368(a) of the Code, then Buyer may, in its sole discretion, increase the number of shares of Company Common Stock entitled to receive the Stock Consideration by the minimum amount necessary to enable suchthe tax opinions to be rendered. Section 2.05Exchange Procedures. (a) On or beforeAt least one Business Day prior to the Closing Date, for the benefit of the holders of Certificates (other than holders of Dissenters’ Shares), (i) Buyer shall cause to be delivered to the Exchange Agent, for exchange in accordance with this Article II, certificates representing the shares of Buyer Common Stock issuable pursuant to this Article II or evidence of shares in book entry form (“New Certificates”) and (ii) Buyer shall deliver, or shall cause to be delivered, to the Exchange Agent cash equal to the aggregate amount of the Cash Consideration issuable pursuant to this Article II plus an estimated amount of cash to be paid in lieu of fractional shares of Buyer Common Stock (such(that cash and New Certificates, being hereinafter referred to as the “Exchange Fund”). Buyer shall instruct the Exchange Agent to timely pay the Merger Consideration in accordance with this Agreement. (b) As promptly as practicable, but in any event no later than five (5) Business Days following the Effective Time, and provided that Company has delivered, or caused to be delivered, to the Exchange Agent all information that is necessary for the Exchange Agent to perform its obligations, as specified herein, the Exchange Agent shall mail to each holder of record of a Certificate or Certificates who has not previously surrendered suchtheir Certificate orof Certificates with an Election Form, a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent) and instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration as provided for in this Agreement. Upon proper surrender of a Certificate for exchange and cancellation to the Exchange Agent, together with a properly completed letter of transmittal, duly executed, the holder of suchthe Certificate shall be entitled to receive in exchange, therefor, as applicable, (i) a New Certificate representing that number of shares of Buyer Common Stock (if any) to which suchthe former holder of Company Common Stock shall have become entitled pursuant to this Agreement, (ii) a check representing that amount of cash (if any) to which suchthe former holder of Company Common Stock shall have become entitled pursuant to this Agreement and/or (iii) a check representing the amount of cash (if any) payable in lieu of a fractional share of Buyer Common Stock which suchthe former holder has the right to receive in respect of the Certificate surrendered pursuant to this Agreement, and the Certificate so surrendered shall forthwith be cancelled. Until surrendered as contemplated by this Section 2.05(b), each Certificate (other than Certificates representing treasury stock or shares described in Section 2.01(b)(ii)) and each Certificate representing Dissenters’ Shares) shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration as provided for in this Agreement and any unpaid dividends and distributions thereon as provided in paragraph (c) of this Section 2.05 and any unpaid dividend with respect to the Company Common Stock with a record date that is prior to the Effective Time.2.05. No interest shall be paid or accrued on any cash constituting Merger Consideration (including any cash in lieu of fractional shares) and any unpaid dividends and distributions payable to holders of Certificates. For shares of Company Common stock held in book entry form, Buyer shall establish procedures for delivery of such shares, which procedures shall be reasonably acceptable to Company. (c) No dividends or other distributions with a record date after the Effective Time with respect to Buyer Common Stock shall be paid to the holder of any unsurrendered Certificate until the holder thereof shall surrender suchhis or her Certificate in accordance with this Section 2.05. After the surrender of a Certificate in accordance with this Section 2.05, 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 Buyer Common Stock represented by suchthe Certificate. None of Buyer, Company or the Exchange Agent shall be liable to any Person in respect of any shares of Company Common Stock (or dividends or distributions with respect thereto)to them) or cash from the Exchange Fund delivered, as required by law,Law, to a public official pursuant to any applicable abandoned property, escheat, or similar law.Law. (d) The Exchange Agent and Buyer, as the case may be, shall not be obligated to deliver cash and/or a New Certificate or New Certificates representing shares of Buyer Common Stock to which a holder of Company Common Stock would otherwise be entitled as a result of the Merger until such holder surrenders the Certificate or Certificates representing the shares of Company Common Stock for exchange as provided in this Section 2.05, or an appropriate affidavit of loss and indemnity agreement and a bond in such amount as shall be required in each case by Buyer (but not more than the amount required under Buyer’s contract with its transfer agent). If any New Certificates evidencing shares of Buyer Common Stock are to be issued in a name other than that in which the Certificate evidencing Company Common Stock surrendered in exchange therefor is registered, it shall be a condition of the issuance thereof that the Certificate so surrendered shall be properly endorsed or accompanied by an executed form of assignment separate from the Certificate and otherwise in proper form for transfer, and that the Person requesting suchthe exchange pay to the Exchange Agent any transfer or other recordation tax required by reason of the issuance of a New Certificate for shares of Buyer Common Stock in any name other than that of the registered holder of the Certificate surrendered or otherwise establish to the satisfaction of the Exchange Agent that suchany tax has been paid or is not payable. (e) Any portion of the Exchange Fund that remains unclaimed by the stockholdersshareholders of Company for six (6) months after the Effective Time (as well as any interest or proceeds from any investment thereof)of the Exchange Fund) shall be delivered by the Exchange Agent to Buyer. Any stockholdersshareholders of Company who have not theretofore complied with Section 2.05(b) shall thereafter look only to the Surviving Entity for the Merger Consideration deliverable in respect of each share of Company Common Stock such stockholderthe shareholder holds as determined pursuant to this Agreement, in each case without any interest. If outstanding Certificates for shares of Company Common Stock are not surrendered or the payment for them is not claimed prior to the date on which such shares of Buyer Common Stock or cash would otherwise escheat to or become the property of any governmental unit or agency, the unclaimed items shall, to the extent permitted by abandoned property and any other applicable Law, become the property of Buyer (and to the extent not in its possession shall be delivered to it), free and clear of all claims or interest thereon.of any Person previously entitled to the property. Neither the Exchange Agent nor any party to this Agreement shall be liable to any holder of shares of Company Common Stock represented by any Certificate for any consideration paid to a public official pursuant to applicable abandoned property, escheat, or similar Laws. Buyer and the Exchange Agent shall be entitled to rely upon the stock transfer books of Company to establish the identity of those Persons entitled to receive the Merger Consideration specified in this Agreement, which books shall be conclusive with respect thereto.deemed conclusive. In the event of a dispute with respect to ownership of any shares of Company Common Stock represented by any Certificate, Buyer and the Exchange Agent shall be entitled to tender to the custody of any court of competent jurisdiction any Merger Consideration represented by suchthe Certificate and file legal proceedings interpleading all parties to such dispute, and will thereafter be relieved with respect to any claims thereto.claims. (f) Buyer (through the Exchange Agent, if applicable) shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement to any holder of shares of Company Common Stock suchany amounts as Buyer is required to deduct and withhold under applicable law.Law. Any amounts so deducted and withheld shall be treated for all purposes of this Agreement as having been paid to the holder of Company Common Stock in respect of which suchfor whom the deduction and withholding was made by Buyer. Section 2.06Anti-Dilution Provisions. In the event Buyer changes (or establishes a record date for changing) the number of, or provides for the exchange of, shares of Buyer Common Stock issued and outstanding prior to the Effective Time as a result of a stock split, reverse stock split, stock dividend, recapitalization, reclassification, or similar transaction with respect to the outstanding Buyer Common Stock, the Exchange Ratio shall be proportionately and appropriately adjusted so as to provide the holders of the Company Common Stock the same economic benefit as contemplated by this Agreement prior to suchthat event; provided that, for the avoidance of doubt, no such adjustment shall be made with regard to the Buyer Common Stock if (i) Buyer issues additional shares of Buyer Common Stock and receives consideration for such shares (including, without limitation, upon the exercise of outstanding stock options or other equity awards) or (ii) Buyer issues employee or director stock grants or similar equity awards in the ordinary course of business consistent with past practice. Section 2.07Options and Restricted Stock.
(a) Each option to purchase Company Common Stock (each sometimes referred to as an “Option,” and collectively sometimes referred to as the “Options”) granted under the Company’s 2011 Equity Incentive Plan (the “Company Equity Plan”), whether vested or unvested, which is outstanding immediately prior to the Effective Time and which has not been exercised or canceled prior thereto shall, at the Effective Time, fully vest (to the extent not vested) and be canceled and, on the Closing Date, Company or Company Bank shall pay to the holder thereof cash in an amount equal to the product of (i) the number of shares of Company Common Stock provided for in each such Option, and (ii) the excess, if any, of the Cash Consideration over the Option Exercise Price (the “Option Cash Payment”). Any Option for which the Option Exercise Price exceeds the Cash Consideration shall be cancelled as of the Effective Time. For purposes of this Section 2.07, “Option Exercise Price” shall mean the exercise price per share of Company Common Stock provided for in such Option. The Option Cash Payment shall be paid in cash within five (5) calendar days after the Closing Date, shall be made without interest and shall be net of all applicable withholding taxes. Prior to the Closing Date, Company shall use its reasonable best efforts to obtain the written acknowledgment and consent of each holder of a then-outstanding Option to the termination of the Option and the payment of the Option Cash Payment in accordance with the terms of this Section 2.07. The Company shall prohibit the exercise of any Option beginning on and after the fifth trading day immediately preceding the Closing Date. At the Effective Time, the Company Equity Plan shall terminate and the provisions in any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of Company shall be of no further force and effect.
(b) All unvested shares of restricted Company Common Stock awarded under the Company Equity Plan shall automatically vest in full according to the terms governing such award as of the Effective Time, to the extent not previously forfeited. At the Effective Time, the Company Equity Plan shall terminate and the provisions in any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of Company shall be of no further force and effect.
Section 2.08No Dissenters’ Rights. Consistent with the relevant provisions of the MGCL and Company’s Articles of Incorporation, no stockholder of Company shall have appraisal rights with respect to the Merger.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY Section 3.01Making of Representations and Warranties. (a) On or prior to the date hereof,of this Agreement, Company has delivered to Buyer a schedule (the “Company Disclosure Schedule”) setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereofof this Agreement or as an exception to one or more representations or warranties contained in Article III or to one or more of its covenants contained in Article V; provided, however, that (a) the mere inclusion of an item inon the Company Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by a partyCompany that such item represents ana material exception or fact, event or circumstance or that absent such inclusion in the Company Disclosure Schedule, such item is or would reasonably be reasonably likelyexpected to result inhave a Material Adverse Effect with respect to Company.Company, and (b) any disclosure made with respect to a section of this Article III shall be deemed to qualify any other section of this Article III specifically referenced or cross-referenced. (b) Except as set forth inon the Company Disclosure Schedule, Company and Company Bank hereby represent and warrant, jointly and severally, to Buyer that the statements contained in this Article III are correct as of the date of this Agreement and will be correct as of the Closing Date (as though made on and as of the Closing Date), except as to any representation or warranty which specifically speaks as of an earlier date (including without limitation representations made as of “the date hereof”of this Agreement”), which only need be correct as of suchthe specified earlier date. No representation or warranty of Company contained in this Article III shall be deemed untrue or incorrect, and Company shall not be deemed to have breached a representation or warranty, as a consequence of the existence of any fact, circumstance or event unless such fact, circumstance, or event, individually or taken together with all other facts, circumstances or events inconsistent with any section of this Article III, has had or would reasonably be expected to have a Material Adverse Effect with respect to Company, disregarding for the purposes of this Section 3.01(b) any materiality or Material Adverse Effect qualification contained in any representation or warranty; provided, however, that the foregoing standard shall not apply to the representations and warranties contained in Sections 3.02, 3.03, 3.04(a), 3.04(b), 3.05, 3.06, 3.15, 3.16(c), 3.16(f), 3.16(g)3.08, 3.10 and 3.16(h)3.15, which shall be deemed untrue, incorrect, and breached if they are not true and correct in all material respects. Section 3.02Organization, Standing and Authority. (a) Company is a MarylandMassachusetts corporation duly organized, validly existing, and in good standing under the lawsLaws of the StateCommonwealth of Maryland,Massachusetts, and is duly registered with the FRB as a savings and loanbank holding company under the HOLA.BHC Act and meets the applicable requirements for qualification as a bank holding company under the BHC Act and the regulations of the FRB. Company has full corporate power and authority to carry on its business as now conducted. Except as set forth onCompany Disclosure Schedule 3.02, Company is duly licensed or qualified to do business in Thethe Commonwealth of Massachusetts and each other foreign jurisdiction where its ownership or leasing of property or the conduct of its business requires such qualification, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. (b) Company Bank is a federally-chartered stock savingsnational banking association duly organized, validly existing, and in good standing under the laws of the United States. Company Bank’s deposits are insured by the FDIC in the manner and to the full extent providedpermitted by applicable law, and all premiums and assessments required to be paid in connection therewithto the FDIC have been paid by Company Bank when due. Company Bank is a member in good standing of the FHLB. Section 3.03Capital Stock. The authorized capital stock of Company consists of 50,000,000 shares of Company Preferred Stock and 100,000,0001,000,000 shares of Company Common Stock. As of the date of this agreement,Agreement, there were (i) no shares of Company Preferred Stock outstanding, (ii) 6,241,436198,845 shares of Company Common Stock issued and outstanding (including 568,943 shares held in the ESOP and 244,395 shares of unvested restricted stock), (iii) noentitled to vote, (ii) 1,215 shares held in treasury (iv)and (iii) no shares held by Company Subsidiaries,Subsidiaries.Company Disclosure Schedule 3.03 lists the holders of record identified by Company’s stock transfer books for each outstanding share of Company Common Stock as of the date of this Agreement and (v) 642,735also describes any outstanding shares reserved for future issuance pursuantof Company Common Stock owned by Company directors and Executive Officers that, to outstanding Options granted underCompany’s Knowledge, are subject as of the Company Equity Plan.date of this Agreement to any written agreement to be sold or subject to any other transfer of ownership or control prior to Closing Date. The outstanding shares of Company Common Stock have been duly authorized and are validly issued and are fully paid andnon-assessable.Company Disclosure Schedule 3.03 sets forth the name of each holder of an unvested award of restricted stock or outstanding Option granted under the Company Equity Plan, identifying the nature of the award; as to Options, the number of shares of Company Common Stock subject to each Option, the grant, vesting and expiration dates and the exercise price relating to the Options held; and for restricted stock awards, the number of shares of Company Common Stock subject to each award, and the grant and vesting dates. There are no options, warrants, or other similar rights, convertible or exchangeable securities, “phantom stock” rights, stock appreciation rights, stock based performance units, agreements, arrangements, commitments or understandings to which Company is a party, whether or not in writing, of any character relating to the issued or unissued capital stock or other securities of Company or any of Company’s Subsidiaries or obligating Company or any of Company’s Subsidiaries to issue (whether upon conversion, exchange or otherwise) or sell any share of capital stock of, or other equity interests in or other securities of, Company or any of Company’s Subsidiaries other than those listed inCompany Disclosure Schedule 3.03.Subsidiaries. All shares of Company Common Stock subject to issuance as set forth in this Section 3.03 orCompany Disclosure Schedule 3.03 shall, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, be duly authorized, validly issued, fully paid, and nonassessable. There are no obligations, contingent or otherwise, of Company or any of Company’s Subsidiaries to repurchase, redeem, or otherwise acquire any shares of Company Common Stock or capital stock of any of Company’s Subsidiaries or any other securities of Company or any of Company’s Subsidiaries or to provide funds to or make any investment (in the form of a loan, capital contribution, or otherwise) in any such Subsidiary or any other entity. All of the outstanding shares of capital stock of each of Company’s Subsidiaries are duly authorized, validly issued, fully paid, and nonassessable and not subject to preemptive rights, and all such shares are owned by Company or another Subsidiary of Company free and clear of all security interests, liens, claims, pledges, taking actions, agreements, limitations in Company’s voting rights, charges or other encumbrances of any nature whatsoever, exceptnonassessable. Except as set forth inonCompany Disclosure Schedule 3.03. Neither, neither Company nor any of its Subsidiaries has any trust capital securities or other similar securities outstanding. No bonds, debentures, notes or other indebtedness issued by Company or any of its Subsidiaries (i) having the right to vote on any matters on which shareholders of Company may vote (or which is convertible into, or exchangeable for, securities having such right), or (ii) the value of which is directly based upon or derived from the capital stock, voting securities or other ownership interests of Company, are issued or outstanding. Section 3.04Subsidiaries. (a)(i)Company Disclosure Schedule 3.04 sets forth a complete and accurate list of all of Company’s Subsidiaries, including the jurisdiction of organization of each such Subsidiary, (ii) except as set forth onCompany Disclosure Schedule 3.04, Company owns, directly or indirectly, all of the issued and outstanding equity securities of each Subsidiary, (iii) no equity securities of any of Company’s Subsidiaries are or may become required to be issued (other than to Company) by reason of any contractual right, preemptive right, or otherwise, (iv) there are no contracts, commitments, understandings, or arrangements by which any of such Subsidiaries is or may be bound to sell or otherwise transfer any of its equity securities (other than to Company or a wholly-owned Subsidiary of Company), (v) there are no contracts, commitments, understandings, or arrangements relating to Company’s rights to vote or to dispose of suchthe securities of any Subsidiary and (vi) all of the equity securities of each such Subsidiary held by Company, directly or indirectly, are validly issued, fully paid and nonassessable, are not subject to preemptive or similar rights and are owned by Company free and clear of all Liens. (b) Except as set forth onCompany Disclosure Schedule 3.04 orCompany Disclosure Schedule 3.20, Company does not own (other than in a bona fide fiduciary capacity or in satisfaction of a debt previously contracted) beneficially, directly or indirectly, any equity securities or similar interests of any Person, or any interest in a partnership or joint venture of any kind. (c) Each of Company’s Subsidiaries has been duly organized and qualified and is in good standing under the lawsLaws of the jurisdiction of its organization and, as applicable, is duly qualified to do business and is in good standing in the jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. A complete and accurate list of all such jurisdictions, as applicable, is set forth onCompany Disclosure Schedule 3.04. Section 3.05Corporate Power; Minute Books. Company and each of its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and to own all its properties and assets; and each of Company and Company Bank has the corporate power and authority to execute, deliver, and perform its obligations under this Agreement and to consummate the transactions contemplated hereby,transactions, subject to receipt of all necessary approvals of Governmental Authorities and the approval of Company’s stockholdersshareholders of this Agreement and the Company of the Plan of Bank Merger. The Company has heretofore made available to Buyer complete and correct copies of the minutes (or, in the case of draft minutes, the most recent drafts thereof)drafts) of all meetings of the Boardboard of directors and each committee of the board of directors of Company Board and the Boardboard of Directorsdirectors and each committee thereof of the boards of directors of Company’s Subsidiaries held since January 1, 2012;2017; provided, that, thesuch minutes of the Company, Board or committees did not contain any discussions related to any potential corporate transaction involving the Company otherwise related to deliberations of the boards of directors of Company Boardand Company’s Subsidiaries with respect to the consideration of strategic alternatives.the sale of Company to Buyer and were redacted to exclude any discussions of regulatory examination ratings or other confidential supervisory information and other acquisition opportunities. The minute books of Company and each of its Subsidiaries contain true, complete and accurate records of all corporate actions taken by stockholdersshareholders of Company and each of its Subsidiaries and the Boardboards of the Directorsdirectors of Company (including committees of Company’s board of directors) and each of its Subsidiaries. Subsidiaries (including committees of such boards of directors).Section 3.06Corporate Authority. Subject only to the approval of the Merger and this Agreement by the holders of at least a majoritytwo-thirds of the outstanding shares of Company Common Stock entitled to vote on the Agreement(the “Requisite Company Shareholder Approval”) and the transactions contemplated hereby (“Requisiteapproval of the Bank Merger and Plan of Bank Merger by Company, Stockholder Approval”),the sole shareholder of Company Bank, this Agreement and the transactions contemplated herebyby this Agreement have been authorized by all necessary corporate action of Company and Company Bank and Company’s Boardand Company Bank’s board of directors on or prior to the date hereof.of this Agreement. Company’s Boardboard of directors has directed that this Agreement be submitted to Company’s stockholdersshareholders for approval at a meeting of such stockholders and, except for the receipt of the Requisite Company StockholderShareholder Approval in accordance with the MGCL,MBCA, Company’s Articles of IncorporationOrganization and Bylaws, no other vote of the stockholdersshareholders of Company is required by law, theLaw, Company’s Articles of Incorporation of Company, theOrganization or Bylaws of Company or otherwise to approve this Agreement and the transactions it contemplates.contemplated by this Agreement. Each of Company and Company Bank each has duly executed and delivered this Agreement and, assuming due authorization, execution, and delivery by Buyer and Buyer Bank, this Agreement is a valid and legally binding obligation of Company and Company Bank, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, and similar lawsLaws of general applicability relating to or affecting creditors’ rights or by general equity principles). Section 3.07Regulatory Approvals; No Defaults. (a) Except as set forth inonCompany Disclosure Schedule 3.07(a)3.07, no consents or approvals of, or waivers by, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by Company or any of its Subsidiaries in connection with the execution, delivery, or performance by Company of this Agreement or to consummate the contemplated transactions contemplated by this Agreement,(including the Bank Merger), except for (i) as applicable, filings of, applications or notices with, and consents, approvals or waivers by, or the making of satisfactory arrangements with, the FRB, the Comptroller,FDIC, the FDIC,OCC, the Massachusetts Commissioner of Banks, and the Massachusetts Housing Partnership Fund and the Massachusetts Board of Bank Incorporation;Fund; (ii) the Requisite Company StockholderShareholder Approval, (iii) the approval of the Bank Merger and the Plan of Bank Merger by at least two-thirds of the entire Company Bank board of directors, such board approval being required prior to the notification to and the filing of the Plan of Bank Merger with the Comptroller referred to in clause (vi) of this Section 3.07(a) (which such approval has been obtained prior to the execution of this Agreement), (iv) the approval of Bank Merger and the Plan of Bank Merger by Company, the sole stockholdershareholder of Company Bank; (v) the filing and effectiveness of the Proxy Statement-ProspectusRegistration Statement with the SEC;SEC, and (vi) the filing of the Articles of Merger with the Secretary of the Commonwealth of Massachusetts and the Maryland Department of Assessments and Taxation and notification to and the filing of the Plan of Bank Merger with the Comptroller, (vii) the surrender of the Federal Stock Savings Bank Charter of Company Bank to the Comptroller as soon as practical after the Effective Time, and (viii) the notification to and the filing of a Company Bank Charter Amendment with the Comptroller as referenced inCompany Disclosure Schedule 3.34.Massachusetts. Each consent, approval, receipt, or waiver by the FRB, the FDIC, the Comptroller,OCC, and The Massachusetts Commissioner of Banks and the Massachusetts Board of Bank Incorporation as referred to in clause (i) hereof is a “Regulatory Approval”. AsTo Company’s Knowledge as of the date hereof, Companyof this Agreement, there is not aware of any reasonno fact or circumstance relating to Company whythat could reasonably be expected to result in any of the approvals set forth above and referred to in Section 6.01(b) will not bebeing received in order to permit consummation of the Merger and Bank Merger on a timely manner or will include a Burdensome Condition as defined in Section 5.06.basis. (b) Except as set forth inCompany Disclosure Schedule 3.07(b), subjectSubject to receipt, or the making, of the consents, approvals, waivers and filings referred to in the immediately preceding paragraph, and the expiration of related waiting periods, the execution, delivery and performance of this Agreement by Company and Company Bank, as applicable, and the consummation of the transactions contemplated herebytransactions do not and will not (i) constitute a breach or violation of, or a default under, the Articles of IncorporationOrganization or Bylaws (or similar governing documents) of Company or Company Bank, (ii) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Company or Company Bank, or any of its properties or assets, or (iii) violate, conflict with, result in a breach of any provision 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, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the properties or assets of Company or Company Bank under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, contract, agreement or other instrument or obligation to which Company or Company Bank is a party, or by which it or any of its properties or assets may be bound, except, in the case of clauses (ii) and (iii) above, for such violations, conflicts, breaches, defaults, terminations, cancellations, accelerations or affected.creations which would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect with respect to Company. Section 3.08SEC Documents; Other Reports; Internal Controls. (a) Neither Company has filed all required reports, forms, schedules, registration statements and other documents with the SEC since September 30, 2010 (the “Company Reports”) and has paid all fees and assessments due and payable in connection therewith. As of their respective dates of filing with the SEC (or, if amended or superseded by a subsequent filing prior to the date hereof, as of the date of such subsequent filing), Company Reports complied as to form in all material respects with the requirements of the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as the case may be, and the rules and regulations of the SEC thereunder applicable to such Company Reports, and none of the Company Reports when filed with the SEC, and if amended prior to the date hereof, as of the date of such amendment, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Company has made available to Buyer true, correct and complete copies of all written correspondence between the SEC and Company andnor any of its Subsidiaries occurring since September 30, 2010 and prior to the date of this Agreement. There are no outstanding comments from or unresolved issues raised by the SEC with respect to any of the Company Reports. None of Company’s Subsidiaries is required to file periodic reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. (b) Except as set forth onCompany Disclosure Schedule 3.08, Company and each of its Subsidiaries have timely filed all reports, forms, schedules, registrations, statements and other documents, together with any amendments required to be made with respect thereto,amendments, that they were required to file since September 30, 2010December 31, 2014 with any Governmental Authority (other than the Company Reports) and have paid all fees and assessments due and payable in connection therewith.with any filings Company was required to make. Except for normal examinations conducted by a Governmental Authority in the regular course of the business of Company and its Subsidiaries, no Governmental Authority has notified Company that it has initiated any proceeding or, to theCompany’s Knowledge, of Company, threatened anany investigation into the business or operations of Company or any of its Subsidiaries since September 30, 2010. ThereDecember 31, 2014. Except as set forth onCompany Disclosure Schedule 3.08, there is no material unresolved violation or exception by any Governmental Authority with respect to any report, form, schedule, registration, statement or other document filed by, or relating to any examinations by any such Governmental Authority of, Company or any of its Subsidiaries. (c) Company has disclosed, basedBased on its most recent evaluation prior to the date hereof,of this Agreement, Company has not had to disclose to Company’s outside auditors and the audit committee of Company’s board of directors and has listed inCompany Disclosure Schedule 3.08(c)(i) any significant deficiencies andor material weaknesses in the design or operation of internal controlscontrol over financial reporting which are reasonably likely to adversely affect in any material respect Company’s ability to record, process, summarize, and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in Company’s internal controls over financial reporting. (d) The records, systems, controls, data and information of Company and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of Company or its Subsidiaries or accountants (including all means of access thereto and therefrom)to them), except for anynon-exclusive ownership andnon-direct control that would not reasonably be expected to have a Material Adverse Effect on the system of internal accounting controls described in the following sentence. Company and its Subsidiaries have devised and maintained and currently maintain a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. (e) Company has designed, implemented, and has maintained and currently maintains disclosure controls and procedures (within the meaning of Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information relating to Company and its Subsidiaries is made known to the management of Company by others within those entities as appropriate to allow timely decisions regarding required disclosure and to make the certificationsas otherwise required by the Exchange Act with respect to the Company Reports.Law. (f) Since September 30, 2010,December 31, 2014, (x) neither Company nor any of its Subsidiaries nor, to theCompany’s Knowledge, of Company, any director, officer, employee, auditor, accountant or representative of Company or any of its Subsidiaries, has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Company or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that Company or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (y) no attorney representing Company or any of its Subsidiaries, whether or not employed by Company or any of its Subsidiaries, has reported evidence of a material violation of securities laws,Laws, breach of fiduciary dutyduties or similar violation by Company or any of its officers, directors, employees, or agents to the board of directors of Company or any committee thereofof the board of directors or, to Company’s Knowledge, to any director or officer of Company. Section 3.09Financial Statements; Undisclosed Liabilities. (a) The financial statements of Company (including any related notes and schedules thereto) included in the Company Reportsschedules) complied as to form, as of their respective dates, of filing with the SEC (or, if amended or superseded by a subsequent filing prior to the date hereof, as of the date of such subsequent filing), in all material respects, with all applicable accounting requirements, and with the published rules and regulations of the SEC with respect thereto (except, in the case of unaudited statements, as permitted by the rules of the SEC), have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be expressly disclosed therein)in the financial statements or in the notes thereto), and fairly present, in all material respects, the consolidated financial position of Company and its Subsidiaries and the consolidated results of operations, changes in stockholders’shareholders’ equity and cash flows of such companiesCompany and its Subsidiaries as of the dates and for the periods shown. The books and records of Company and its Subsidiaries have been, and are being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions. (b) Except for (i) those liabilities that are fully reflected or reserved for in the unaudited consolidated financial statements of Company included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2013, as filed with the SEC;of March 31, 2018; (ii) liabilities or obligations incurred in the ordinary course of business since September 30, 2013March 31, 2018 in amounts consistent with past practice (including such liabilities contained in the Company Reports);practice; (iii) liabilities that have been discharged or paid in full before the Effective Date; or (iv) liabilities or obligations incurred directly as a result of this Agreement; or (iv) liabilities that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect,Agreement, neither Company nor any of its Subsidiaries has incurred any material liability of any nature whatsoever (whether absolute, accrued or contingent or otherwise and whether due or to become due), and, except as set forth in Company Disclosure Schedule 3.09, there is no existing condition, situation or set of circumstances that would reasonably be expected to result in such a liability, other than pursuant to or as contemplated by this Agreement.Agreement or that, either alone or when combined with all other liabilities of a type not described in (i) or (ii), has had or would be reasonably expected to have, a Material Adverse Effect with respect to Company. Section 3.10Absence of Certain Changes or Events. Except as disclosed in the Company Reports filed prior to the date hereof or inset forth onCompany Disclosure Schedule 3.10, or as otherwise expressly permitted or expressly contemplated by this Agreement, since September 30, 2013December 31, 2017 (the “Company Balance Sheet Date”), there has not been (i) any change or development in the business, operations, assets, liabilities, condition (financial or otherwise), results of operations, cash flows, or properties of Company or any of its Subsidiaries which has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to Company, and to the Knowledge of Company, no fact or condition exists which is reasonably likely to cause a Material Adverse Effect with respect to Company in the future, (ii) any change by Company or any of its Subsidiaries in its accounting methods, principles or practices, other than changes required by applicable lawLaw or GAAP or regulatory accounting as concurred in by Company’s independent accountants, (iii) any entry by Company or any of its Subsidiaries into any contract or commitment of (A) more than $100,000(A) $50,000 in the aggregate or (B) $50,000$25,000 per annum with a term of more than one year, other than borrowings, loans and loan commitments in the ordinary course of business, (iv) any declaration, setting aside or payment of any dividend or distribution in respect of any capital stock of Company or any of its Subsidiaries or any redemption, purchase or other acquisition of any of its securities, other than in the ordinary course of business consistent with past practice, (v) any increase in or establishment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including, without limitation, the granting of stock options, stock appreciation rights, performance awards, or restricted stock awards), stock purchase or other employee benefit plan, or any other increase in the compensation payable or to become payable to any directors, officers or employees of Company or any of its Subsidiaries, or any grant of severance or termination pay, or any contract or arrangement entered into to make or grant any severance or termination pay, any payment of any bonus (except in the ordinary course of business consistent with past practice), 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 Company or any of its Subsidiaries, (vi) any material election made by Company or any of its Subsidiaries for federal or state income tax purposes, (vii) any material change in the credit policies or procedures of Company or any of its Subsidiaries, the effect of which was or is to make any such policy or procedure less restrictive, (viii) other than loans and loan commitments, and investment securities, and other real estate owned in the ordinary course of business and consistent with past practice, any material acquisition or disposition of any assets or properties, or any contract for any such acquisition or disposition entered into, or (ix) any material lease of real or personal property entered into, other than in connection with foreclosed property or in the ordinary course of business consistent with past practice. Section 3.11Legal Proceedings. (a) Other thanExcept as set forth inonCompany Disclosure Schedule 3.11, there are no civil, criminal, administrative or regulatory actions, suits, demand letters, demands for indemnification, claims, hearings, notices of violation, arbitrations, investigations, orders to show cause, market conduct examinations, notices of non-compliance or other proceedings of any nature pending or, to Company’s Knowledge, threatened against Company or any of its Subsidiaries. (b) Neitherneither Company nor any of its Subsidiaries is a party to any, nor are there any pending or, to Company’s Knowledge, threatened, civil, criminal, administrative or regulatory actions, suits, demand letters, claims, hearings, notices of violation, arbitrations, investigations, orders to show cause, market conduct examinations, notices ofnon-compliance or other proceedings of any nature against Company or any of its Subsidiaries that would reasonably be expected to have,
either individually or in which, to Company’s Knowledge, there isthe aggregate, a reasonable probability of any material recovery against or other Material Adverse Effect with respect to Company, or which challengeschallenge the validity or propriety of the transactions contemplated by this Agreement. (c)(b) There is no injunction, order, judgment, or decree imposed upon Company, or any of its Subsidiaries, or the assets of Company or any of its Subsidiaries, and neither Company nor any of its Subsidiaries has been advised of, or is aware of, the threat of any such action.
Section 3.12Compliance With Laws. (a) Except as set forth onCompany Disclosure Schedule 3.12, Company and each of its Subsidiaries is and since September 30, 2010December 31, 2014 has been in compliance with all applicable federal, state, local and foreign statutes, laws,Laws, regulations, ordinances, rules, judgments, orders or decrees or applicable thereto or to theCompany, its Subsidiaries and their respective employees, conducting such businesses, including, without limitation, any applicable Law, including without limitation, all Laws related to data protection or privacy, the USA PATRIOT Act, the Bank Secrecy Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act and any other Law relating to discriminatory lending, financing or leasing practices, Sections 23A and 23B of the Federal Reserve Act, the Sarbanes-Oxley Act and the Dodd-Frank Act.Act, except where noncompliance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with respect to Company. (b) Company and each of its Subsidiaries has all material permits, licenses, authorizations, orders and approvals of, and have made all filings, applications and registrations with, all Governmental Authorities that are required in order to permit it to own or lease their properties and to conduct their business as presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to Company’s Knowledge, no suspension or cancellation of any of them is threatened. (c) Other thanExcept as set forth inonCompany Disclosure Schedule 3.12, neither Company nor any of its Subsidiaries has received, since September 30, 2010,December 31, 2014, notification or communication from any Governmental Authority (i) asserting that it is not in compliance with any of the statutes, regulations or ordinances which such Governmental Authority enforces or (ii) threatening to revoke any license, franchise, permit or governmental authorization (nor, to Company’s Knowledge, do any grounds for any of the foregoing exist). (d) Company has not engaged in any activities permissible only permissible for a financial holding company under Section 4(k) of the BHC Act. Section 3.13Material Contracts; Defaults. (a) Other than as disclosed in the Company Reports filed prior to the date hereof or as set forth inonCompany Disclosure Schedule 3.13, neither Company nor any of its Subsidiaries is a party to, bound by or subject to any agreement, contract, arrangement, commitment or understanding (whether written or oral) or amendment thereto (i) with respect to the employment of any directors, officers, employees or consultants, (ii) which would entitle any present or former director, officer, employee or agent of Company or any of its Subsidiaries to indemnification from Company or any of its Subsidiaries, (iii) the benefits of which will be increased, or the vesting of 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, (iv) which grants any right of first refusal, right of first offer, or similar right with respect to any material assets or properties of Company and or Subsidiaries;Subsidiaries, (v) which provides for payments to be made by Company or any of its Subsidiaries upon a change in control, thereof; (vi) which provides for the lease of personal property having a value in excess of $25,000 individually or $100,000$50,000 in the aggregate;aggregate, (vii) which relates to capital expenditures and involves future payments in excess of $10,000$25,000 individually or $50,000 in the aggregate;aggregate, (viii) which relates to the disposition or acquisition of assets or any interest in any business enterprise outside the ordinary course of Company’s business;business, (ix) which is not terminable on sixty (60) days or less notice and involving the payment of more than $25,000 per annum;annum, or (x) which materially restricts the conduct of any business by Company of any of its Subsidiaries (collectively, “Material Contracts”). Company has previously deliveredmade available to Buyer true, complete, and correct copies of each such document.Material Contract. (b) NeitherTo Company’s Knowledge, neither Company nor any of its Subsidiaries is in default under any contract, agreement, commitment, arrangement, lease, insurance policy or other instrument to which it is a party, by which its assets, business, or operations may be bound or affected, or under which it or its assets, business, or operations receives benefits, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. No power of attorney or similar authorization given directly or indirectly by Company is currently outstanding. (c) To Company’s Knowledge, other than the consents, approvals, authorizations, notices or other actions (collectively, “Company Third Party Consents”) required under Material Contracts as set forth onCompany Disclosure Schedule 3.13, no third party consent by any Person is required in connection with the execution, delivery, and performance of this Agreement and the consummation of the transactions it contemplates. Section 3.14Agreements with Regulatory Agencies. Neither Company nor any of its Subsidiaries is subject to anycease-and-desist or other order issued by, or is a party to any written agreement, consent agreement or public memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is a recipient of any extraordinary supervisory letter from, or is subject to any order or directive by, or has adopted any board resolutions at the request of (each, whether or not set forth inCompany Disclosure Schedule 3.14, a “Company Regulatory Agreement”) any Governmental Authority that currently restricts or by its terms will in the future restrict,any material respect the conduct of its business or that in any manner relates to its capital adequacy, its credit or risk management policies, its dividend policies, its management, its business or its operations (each, a “Company Regulatory Agreement”), nor has Company or any of its Subsidiaries been advised in writing or orally, by any Governmental Authority that it is considering issuing, initiating, ordering, or requesting (or is considering the appropriateness of issuing or requesting) any such Company Regulatory Agreement. To theCompany’s Knowledge, of Company, there are no investigations relating to any material regulatory matters pending before any Governmental Authority with respect to Company or any of its Subsidiaries.
Section 3.15Brokers. Neither Company, Company Bank nor any of its officers or directors has employed any broker or finder or incurred any liability for any broker’s fees, commissions, or finder’s fees in connection with any of the transactions contemplated by this Agreement, except that Company has engaged, and will pay a fee or commission to, Sandler O’Neill & Partners, L.P. (“Sandler”) in accordance with the terms of a letter agreement between Sandler O’Neill & Partners, L.P. and Company, a true, complete, and correct copy of which has been previously delivered by Company to Buyer. Section 3.16Employee Benefit Plans. (a) All benefit and compensation plans, contracts, policies, or arrangements (whether or not written) (i) covering current or former employees of Company or any of its Subsidiaries (the “Company Employees”), (ii) covering current or former directors of Company or any of its Subsidiaries, or (iii) with respect to which Company or any Subsidiary has or may have any liability or contingent liability (including liability arising from affiliation under Section 414 of the Code or Section 4001 of ERISA) including, but not limited to, “employee benefit plans” within the meaning of Section 3(3) of ERISA, and deferred compensation, stock option, stock purchase, stock appreciation rights, stock based, incentive and bonus plans (the “Company Benefit Plans”), are identified and described inonCompany Disclosure Schedule 3.16(a)3.16. True and complete copies of all Company Benefit Plans including, but not limited to, any trust instruments and insurance contracts forming a part of any Company Benefit Plans and all amendments thereto, Internal Revenue Serviceto them, IRS Forms 5500 (for the three most recently completed plan years), current summary plan descriptions, and the most recent IRS determination or opinion letters with respect thereto,to them, have been made available to Buyer.Buyer, in each case, to the extent applicable. (b) To Company’s Knowledge, all Company Benefit Plans are in compliance in form and operation with all applicable Laws, including ERISA and the Code. Each Company Benefit Plan which is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA (a “Company Pension Plan”) and which is intended to be qualified under Section 401(a) of the Code, has received a favorable determination or opinion letter from the IRS that is currently in effect, and Company is not aware of any circumstance that would reasonably be expected to result in revocation of any such favorable determination letter or the loss of the qualification of suchthe Company Pension Plan under Section 401(a) of the Code. There is no pending or, to Company’s Knowledge, threatened litigation relating to the Company Benefit Plans. To Company’s Knowledge, neitherNeither Company nor any of its Subsidiaries has engaged in, or is aware of, a transaction with respect to any Company Benefit Plan or Company Pension Plan that, assuming the taxable period of suchthe transaction expired as of the date hereof,of this Agreement, would reasonably be expected to subject Company or any of its Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA. (c) Except as described inCompany Disclosure Schedule 3.16(c), no liability under Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by Company or any of its Subsidiaries with respect to any ongoing, frozen or terminated “single employer plan,” within the meaning of Section 4001(a)(15) of ERISA (including any multiple employer plan as described in 29 C.F.R. Section 4001.2), currently or formerly maintained or contributed to byNeither Company, any of its Subsidiaries, ornor any entity which is considered one employer with Company or any of its Subsidiaries under Section 4001 of ERISA or Section 414 of the Code (an “ERISA Affiliate”). None of Company or has at any ERISA Affiliate hastime during thesix-year period ending on the Closing Date contributed to (or been obligated to contribute to) (i) a “multiemployer plan” within the meaning of Section 3(37) of ERISA ator (ii) any time duringemployee benefit plan that is subject to Subtitle C or D of Title IV of ERISA or Section 412 of the six-year period ending on the Closing Date, and neitherCode. Neither Company nor any of its Subsidiaries has within the last six (6) years incurred, and does not expect toor could incur, any withdrawal liability with respect to a multiemployer plan under Subtitle E of Title IV of ERISA (regardless of whether based on contributions of an ERISA Affiliate). No notice of a “reportable event,” within the meaning of Section 4043 of ERISA for which the 30-day reporting requirement has not been waived, has been required to be filed for any Company Pension Plan or by any ERISA Affiliate within the 36 month period ending on the date hereof or will be required to be filed in connection with the transactions contemplated by this Agreement.
(d) All material contributions required to be made with respect to all Company Benefit Plans have been timely made or have been reflected on the financial statements of Company. No Company Pension Plan or single-employer plan of an ERISA Affiliate has an “accumulated funding deficiency” (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA or has otherwise failed to satisfy the minimum funding requirements of Section 412 of the Code or Sections 302 and 303 of ERISA, and none of Company or any ERISA Affiliate has an outstanding funding waiver. No Company Plan is considered to be an “at-risk” plan within the meaning of Section 430 of the Code or Section 303 of ERISA. (e) Other than as set forth inonCompany Disclosure Schedule 3.16(e)3.16, neither Company nor any of its Subsidiaries has any obligations for retiree health or life benefits under any Company Benefit Plan, other than coverage as may be required under Section 4980B of the Code or Part 6 of Title I of ERISA, or under the continuation of coverage provisions of the lawsLaws of any state or locality. To Company’s Knowledge, allAll Company Benefit Plans that are group health plans have been operated in compliance with the group health plan continuation requirements of Section 4980B of the Code and Sections601-609 of ERISA, the certification of prior coverage and other requirements of Sections701-702 and711-713 of ERISA and the terms and conditions of the Patient Protection and Affordable Care Act. Company may amend or terminate any such Company Benefit Plan at any time without incurring any liability thereunder, other than routine administrative costs. (f) Other than as set forth inonCompany Disclosure Schedule 3.16(f)3.16 or as otherwise expressly provided for in this Agreement, the execution of this Agreement, stockholdershareholder approval of this Agreement or consummation of any of the transactions contemplated by this Agreement will not (i) entitle any Company Employee to severance pay or any increase in severance pay upon any termination of employment after the date hereofof this Agreement under any Company Benefit Plans, (ii) accelerate the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any of the Company Benefit Plans, (iii) result in any breach or violation of, or a default under, any of the Company Benefit Plans, (iv) result in any payment under any Company Benefit Plans that would be a “parachute payment” to a “disqualified individual” as those terms are defined in Section 280G of the Code, without regard to whether such payment is reasonable compensation for personal services performed or to be performed in the future, (v) limit or restrict the right of Company or Company Bank or, after the consummation of the transactions contemplated hereby,by this Agreement, Buyer or any of its Subsidiaries, to merge, amend, or terminate any of the Company Benefit Plans, (vi) result in payments under any of the Company Benefit Plans which would not be deductible under Section 162(m) or Section 280G of the Code, or (vii) result in any accounting accruals under any Company Benefit Plans not in the ordinary course of business. (g) Each Company Benefit Plan that is a deferred compensation plan is in compliance with Section 409A of the Code, to the extent applicable. All elections made with respect to compensation deferred under an arrangement subject to Section 409A of the Code have been made in accordance with the requirements of Section 409(a)(4) of the Code, to the extent applicable. Neither Company nor any of its Subsidiaries (i) has taken any action, or has failed to take any action, that has resulted or would reasonably be expected to result in the interest and tax penalties specified in Section 409A(a)(1)(B) of the Code being owed by any participant in a Company Benefit Plan or (ii) has agreed to reimburse or indemnify any participant or beneficiary in a Company Benefit Plan for any of the interest and the penalties specified in Section 409A(a)(1)(B) of the Code that may be currently due or triggered in the future. (h)Company Disclosure Schedule 3.16(h)3.16 contains a schedule showingsets forth the monetary amounts payable as of the date specified, in such schedule, whether individually or in the aggregate (including good faith estimates of all amounts not subject to precise quantification as of the date of this Agreement, such as tax indemnification payments in respect of income or excise taxes), under any employment,change-in-control, severance or similar contract, plan or arrangement with or which covers any present or former director, officer, or employee of Company or any of its Subsidiaries who may be entitled to any such amount and identifying the types and estimated amounts of thein-kind benefits due under any Company Benefit Plans (other than a plan qualified under Section 401(a) of the Code) for each such person, specifying the assumptions in such schedule and providing estimates of other required contributions to any trusts for any related fees or expenses. (i) Each Option (A) was granted in compliance with all applicable Laws and all of the terms and conditions of the applicable plan pursuant to which it was issued, (B) has an exercise price per share equal to or greater than the fair market value of a share of Company Common Stock on the date of such grant (as determined pursuant to the Company Equity Plan), (C) has a grant date identical to the date on which Company’s board of directors or compensation committee actually awarded it, and (D) qualifies for the tax and accounting treatment afforded to such award in Company’s tax returns and Company’s financial statements, respectively. (j) To Company’s Knowledge, Company and its Subsidiaries have correctly classified all individuals who directly or indirectly perform services for Company or any of its Subsidiaries for purposes of each Company Benefit Plan, ERISA, the Code, tax withholding, unemployment compensation laws,Laws, workers’ compensation lawsLaws and all other applicable Laws.
Section 3.17Labor Matters. Neither Company nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement, contract, or other agreement or understanding with a labor union or labor organization, nor is there any proceeding pending or, to Company’s Knowledge threatened, asserting that Company or any of its Subsidiaries has committed an unfair labor practice (within the meaning of the National Labor Relations Act, as amended)Act) or seeking to compel Company or any of its Subsidiaries to bargain with any labor organization as to wages or conditions of employment, nor is there any strike or other labor dispute involving it pending or, to Company’s Knowledge, threatened, nor, to Company’s Knowledge, is Company aware ofthere any activity involving its employees seeking to certify a collective bargaining unit or engaging in other organizational activity. Section 3.18Environmental Matters. (a) Other than as set forth inCompany Disclosure Schedule 3.18, toTo Company’s Knowledge, no real property (including buildings or other structures) currently owned or operated by Company or any of its Subsidiaries or any predecessor, or any property in which Company or any of its Subsidiaries holds a security interest, Lien or a fiduciary or management role (“Company Loan Property”), or has had any presence or Release of, any Hazardous Substance in a manner that violates Environmental Law or requires reporting, investigation, remediation, or monitoring under Environmental Law. (b) Other than as set forth inCompany Disclosure Schedule 3.18, toTo Company’s Knowledge, no real property (including buildings or other structures) formerly owned or operated by Company or any of its Subsidiaries had, during such ownership or operation, any presence or Release of any Hazardous Substance in a manner that violated Environmental Law or required reporting, investigation, remediation, or monitoring under Environmental Law. (c) Except as disclosed onCompany Disclosure Schedule 3.18, toTo Company’s Knowledge, Company and each of its Subsidiaries is in compliance, in all material respects, with applicable Environmental Law. (d) To Company’s Knowledge, neither Company nor any of its Subsidiaries could be deemed the owner or operator of, or to have participated in the management of, any Company Loan Property which has had presence or any Release of, any Hazardous Substance in a manner that violates Environmental Law or requires reporting, investigation, remediation, or monitoring under Environmental Law. (e) To Company’s Knowledge, neither Company nor any of its Subsidiaries nor any predecessor has any liability under Environmental Law arising from the presence, Release or disposal of any Hazardous Substance on any real property currently or formerly owned by Company or any of its Subsidiaries or any predecessor, or any Company Loan Property or any other location.Property. (f) Neither Company nor any of its Subsidiaries has received (i) any written notice, demand letter, or claim alleging any violation of, or liability under, any Environmental Law or (ii) any written request for information reasonably indicating an investigation or other inquiry by any Government Authority concerning a possible violation of, or liability under, any Environmental Law. (g) No Lien or encumbrance has been imposed on property owned by Company or on any Company Loan Property in connection with any liability or potential liability arising from or related to Environmental Law and to Company’s Knowledge, there is no action, proceeding, writ, injunction, or claim pending or threatened which could result in the imposition orof any such Lien or encumbrance. (h) Neither Company nor any of its Subsidiaries is, or has been, subject to any order, decree, or injunction relating to a violation of or allegation of liability under any Environmental Law. (i) Except as disclosed onCompany Disclosure Schedule 3.18, toTo Company’s Knowledge, there are no circumstances or conditions (including the presence of asbestos, underground storage tanks, lead products, polychlorinated biphenyls, prior manufacturing operations,dry-cleaning, or automotive services) involving Company, any of its Subsidiaries, any predecessor, any currently or formerly owned or operated property, or any Company Loan Property, that would reasonably be expected pursuant to applicable Environmental Law to (i) result in any claim, liability, or investigation against Company or any of its Subsidiaries, (ii) result in any restriction on the ownership, use, or transfer of any property, or (iii) adversely affect the value of any Company Loan Property. (j) Company has deliveredTo Company’s Knowledge, it does not possess or have the right to Buyer copies of allobtain any environmental reports, studies,report, study, sampling data, correspondence, filingsfiling and other information in its possession or reasonably available to it relating to environmental conditions at or on any real property (including buildings or other structures) currently or formerly owned or operated by Company or any of its Subsidiaries or any Company Loan Property.Company Disclosure Schedule 3.18 includes a list of environmental reports and other information provided. (k) There is no litigation pending or, to theCompany’s Knowledge, of Company, threatened against Company or any of its Subsidiaries relating to any property now or formerly owned or usedoperated by Company or any of its Subsidiaries or any predecessor or any Company Loan Property, before any court, or Governmental Authority (i) for alleged noncompliance (including by any predecessor) with any Environmental Law or (ii) relating to the presence or Release into the environment of any Hazardous Substance, whether or not occurring at, on or involving a Company Loan Property.Substance. (l) Except as disclosed onCompany Disclosure Schedule 3.18, toTo Company’s Knowledge, there are no underground storage tanks on, in or under any property currently owned or operated by Company or any of its Subsidiaries, or any Company Loan Property and, to theCompany’s Knowledge, of Company, no underground storage tank has been closed or removed from any Company Loan Property except in compliance with Environmental Law. Section 3.19Tax Matters. (a) Company and each of its Subsidiaries has timely filed all income, franchise, and other material Tax Returns that it was required to file under applicable laws and regulationsLaws prior to the Effective Time, other than Tax Returns that are not yet due or for which a request for extension was filed consistent with requirements of applicable law or regulation.Laws. All such Tax Returns were correct and complete in all material respects and were prepared in substantial compliance with all applicable laws and regulations. Except as set forth in Company Disclosure Schedule 3.19,Laws. Taxes due and owing by Company or any of its Subsidiaries (whether or not shown on any Tax Return) have been paid, other than any such Taxes that have been reserved or accrued on the balance sheet of Company or which Company is contesting in good faith. Neither Company nor any Subsidiary is the beneficiary of any extension of time within which to file any Tax Return, other than any such extension obtained in the ordinary course of business of the Company or its Subsidiary, as applicable, and except as set forth in Company Disclosure Schedule 3.19, neither Company nor any of its Subsidiaries
currently has any open tax years.years for which the applicable statute of limitations has been extended or suspended. No written claim has ever been made by an authority in a jurisdiction where Company or any Subsidiary does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Liens for Taxes (other than statutory liens for Taxes not yet due and payable, or Taxes that are being contested in good faith and for which adequate provision has been made on the balance sheet of the Company) upon any of the assets of Company or any of its Subsidiaries. (b) Company and each Subsidiary have withheld and paid all material Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder,shareholder, or other third party. (c) Except as set forth in Company Disclosure Schedule 3.19(c), noNo foreign, federal, state, or local tax audits or administrative or judicial Tax proceedings are being conducted or, to theCompany’s Knowledge, of Company, are pending with respect to Company or any Subsidiary. Except as set forth inCompany Disclosure Schedule 3.19, otherOther than with respect to audits that have already been completed and resolved, neither Company nor any Subsidiary has received from any foreign, federal, state, or local taxing authority (including in jurisdictions where Company or any Subsidiary has not filed Tax Returns) any (i) written notice indicating an intent to open an audit or other review, (ii) written request for information related to Tax matters, or (iii) written notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any taxing authority against Company or any Subsidiary. (d) Company has made available to Buyer true and complete copies of the United States federal, state, local, and foreign income Tax Returns filed with respect to Company and each Subsidiary for taxable periods ended September 30, 2013, 2012December 31, 2017 and 2011.2016. Company has deliveredmade available to Buyer correct and complete copies of all examination reports and statements of deficiencies assessed against or agreed to by Company or any Subsidiary filed for the years ended September 30, 2013, 2012December 31, 2017 and 2011.2016. Company and each Subsidiary have timely and properly taken such actions in response to and in compliance with notices Company or any Subsidiary has received from the IRS in respect of information reporting and backup and nonresident withholding as are required by law.Law. Company has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. (e) Neither Company nor any Subsidiary has been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii). Company and each Subsidiary have disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662. Neither Company nor any Subsidiary is a party to or bound by any Tax allocation or sharing agreement (other than an unwritten agreement with Company Bank and its Subsidiaries). Neither Company nor any Subsidiary (i) has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was Company), or (ii) has liability for the Taxes of any individual, bank, corporation, partnership, association, joint stock company, business trust, limited liability company, or unincorporated organization (other than Company or any Subsidiary) under IRS Reg.Section 1.1502-6 (or any similar provision of state, local, or foreign law)Law), as a transferee or successor, by contract, or otherwise. (f) The unpaid Taxes of Company and each Subsidiary (i) did not, as of the end of the most recent period covered by the Company Reports filed on or prior to the date hereof,December 31, 2017, exceed the reserve for Tax liability (which reserve is distinct and different from any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the financial statements included in theof Company Reports filed on or prior to the date hereofas of December 31, 2017 (rather than in any notes thereto)to such financial statements), and (ii) do not exceed that reserve as adjusted for the passage of time through the Effective Time in accordance with the past custom and practice of Company in filing its Tax Returns. Since the end of the most recent period covered by the Company Reports filed prior to the date hereof,December 31, 2017 neither Company nor any Subsidiary has incurred any liability for Taxes arising from extraordinary gains or losses, as that term is used in GAAP, outside the ordinary course of business consistent with past custom and practice.GAAP. (g) Neither Company nor any Subsidiary shall be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) “closing agreement” as described in Code Section 7121 (or any corresponding or similar provision of state, local or foreign income Tax law)Law) executed on or prior to the Closing Date; (iii) intercompany transactions or any excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or foreign income Tax law)Law); (iv) installment sale or open transaction disposition made on or prior to the Closing Date; or (v) prepaid amount received on or prior to the Closing Date. (i)(h) Neither Company nor any Subsidiary has distributed stock of another Person or had its stock distributed by another Person in a transaction that was purported or intended to be governed in whole or in part by Section 355 or Section 361 of the CodeCode.
(j)(i) Neither Company nor any Subsidiary is or has been a party to any “listed transaction,”transaction”, as defined in Code Section 6707A(c)(2) and Reg.Section 1.6011-4(b)(2).
(k)(j) Company has not taken or agreed to take any action and has no knowledgeKnowledge of any fact, agreement, plan, or other circumstance that is reasonably likely to prevent or impede the Merger and Bank Merger from qualifying as a “reorganization” under Section 368(a) of the Code.
Section 3.20Investment Securities.Company Disclosure Schedule 3.20 sets forth, as of June 30, 2014May 1, 2018, the investment securities, mortgage backed securities and any other securities held for saleowned by Company or any of Company,its Subsidiaries, as well as with respect to such securities,their descriptions, thereof, CUSIP numbers, book values, fairmarket values and coupon rates. NeitherOther than Company’s ownership of capital stock of Company Bank, neither Company nor any of its Affiliates owns in excess of 5% of any class of voting securities or the outstanding equity of any savings bank, savings and loan association, savings and loan holding company, credit union, bank or bank holding company, insurance company, mortgage or loan broker, or any other financial institution. Section 3.21Derivative Transactions. (a) All Derivative Transactions entered into by Company or any of its Subsidiaries or for the account of any of its customers were entered into in accordance with applicable laws, rules, regulations and regulatory policies of any Governmental Authority, and in accordance with the investment, securities, commodities, risk management and other policies, practices and procedures employed by Company or any of its Subsidiaries, and were entered into with counterparties believed at the time by Company or any of its Subsidiaries, as applicable, to be financially responsible and able to understand (either alone or in consultation with its advisers) and to bear the risks of such Derivative Transactions. Company and each of its Subsidiaries have duly performed, in all material respects, all of their obligations under the Derivative Transactions to the extent that such obligations to perform have accrued, and, to theCompany’s Knowledge, of Company, there are no breaches, violations, or defaults or allegations or assertions of suchdefault by any party thereunder.to the Derivative Transactions. (b) Except as set forth inonCompany Disclosure Schedule 3.21, no Derivative Transaction, were it to be a Loan held by Company, would be classified as “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Credit Risk Assets,” “Concerned Loans,” “Watch List” or words of similar import. Each such Derivative Transaction is listed onCompany Disclosure Schedule 3.21, and the financial position of Company under or with respect to each has been reflected in the books and records of Company in accordance with GAAP consistently applied and no open exposure of Company with respect to any such instrument (or with respect to multiple instruments with respect to any single counterparty) exceeds $25,000. Section 3.22Regulatory Capitalization. Company Bank is “well-capitalized,“well capitalized,” as such term is defined in the rules and regulations promulgated by the Comptroller.OCC. Section 3.23Loans; Nonperforming and Classified Assets. (a) Except as set forth inonCompany Disclosure Schedule 3.23, as of the date hereof,of this Agreement, neither Company nor any of its Subsidiaries is a party to any written or oral loan, loan agreement, note or borrowing arrangement (including,arrangement (including, without limitation, leases, credit enhancements, commitments, guarantees and interest-bearing assets) (collectively, “Loans”), under the terms of which the obligor was, as of June 30, 2014, overMarch 31, 2018, more than sixty (60) days delinquent in payment of principal or interest.interest or in default of any other material provision.Company Disclosure Schedule 3.23 identifies (x) each Loan that, as of June 30, 2014March 31, 2018, was classified as “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Credit Risk Assets,” “Concerned Loans,” “Watch List” or words of similar import by Company, Company Bank, or any bank examiner, together with the principal amount of and accrued and unpaid interest on each such Loan and the identity of the borrower, thereunder, and (y) each asset of Company that as of June 30, 2014March 31, 2018 was classified as other real estate owned (“OREO”) and theits book value thereof as of the date of this Agreement. Set forth inonCompany Disclosure Schedule 3.23 is a true and correct copy of Company’s PolicyLoan Exception Report as of June 30, 2014.March 31, 2018.
(b) Each Loan held in Company Bank’s loan portfolio (“Company Loan”) (i) is evidenced by notes, agreements, or other evidences of indebtedness that are true, genuine, and what they purport to be, (ii) to the extent secured, has been secured by valid Liens which have been perfected and (iii) to theCompany’s Knowledge, of Company, is a legal, valid, and binding obligation of the obligor named therein,in such documents, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance, and other lawsLaws of general applicability relating to or affecting creditors’ rights and to general equity principles. (c) All currently outstanding Company Loans were solicited, originated, and, currently exist in material compliance with all applicable requirements of Law and Company Bank’s lending policies at the time of origination or purchase of suchthe Company Loans, and the loan documents with respect to each such Company Loan are complete and correct.correct in all material respects. There are no oral modifications or amendments or additional agreements related to the Company Loans that are not reflected in the written records of Company Bank. Other than loans pledged to the FHLB or the Federal Reserve Bank of Boston,FRB, all such Company Loans are owned by Company Bank free and clear of any Liens. No claims of defense as to the enforcement of any Company Loan have been asserted in writing against Company Bank for which there is a reasonable possibility of an adverse determination, and each of Company and Company Bank is aware of no acts or omissions which would give rise to any claim or right of rescission,set-off, counterclaim, or defense for which there is a reasonable possibility of an adverse determination to Company Bank. Except as set forth inonCompany Disclosure Schedule 3.23, none of the Company Loans are presently serviced by third parties, and there is no obligation which could result in any Loan becoming subject to any third partythird-party servicing. (d) Neither Company nor Company Bank is a party to any agreement or arrangement with (or otherwise obligated to) any Person whichthat obligates Company to repurchase from any suchthat Person any Loan or other asset of Company or Company Bank, unless there is material breach of a representation or covenant by Company or its Subsidiaries. Section 3.24Allowance for Loan Losses. Company’s allowance for loan losses as reflected in Company’s audited balance sheet at September 30, 2013as of December 31, 2017 was, and the allowance shown on the balance sheets in Company Reportsfinancial statements for periods ending after such date, in the opinionreasonable judgment of management, was as of thetheir dates, thereof, in compliance with Company’s existing methodology for determining the adequacy of its allowance for loan losses as well as the standards established by applicable Governmental Authority, the Financial Accounting Standards Board and GAAP, and is adequate under all such standards. Section 3.25Trust Business; Administration of Fiduciary Accounts. (a) Each trust or wealth management customer of Company or any of its Subsidiaries has been in all material respects originated and serviced (i) in conformity with the applicable policies of Company and its Subsidiaries, (ii) in accordance with the terms of any applicable contract governing the relationship with such customer, (iii) in accordance with any instructions received from such customers and their authorized representatives and authorized signers, (iv) consistent with each customer’s risk profile, and (v) in compliance with all applicable Laws and Company’s and its Subsidiaries’ constituent documents, including any policies and procedures adopted by Company Bank do not engageand/or its Subsidiaries. Each contract governing a relationship with a trust or wealth management customer of Company or any of its Subsidiaries has been duly and validly executed and delivered by Company and each Subsidiary and, to Company’s Knowledge, the other contracting parties, and each contract constitutes a valid and binding obligation of the parties, except as enforceability may be limited by (A) the effect of bankruptcy, insolvency, fraudulent transfer, reorganization, receivership, conservatorship, arrangement, moratorium or other Laws affecting or relating to the rights of creditors generally or (B) the rules governing the availability of specific performance, injunctive relief, or other equitable remedies and general principles of equity, regardless of whether considered in a proceeding in equity or at law, and Company and its Subsidiaries and the other contracting parties have duly performed in all material respects their obligations, and Company and its Subsidiaries and, to Company’s Knowledge, all other contracting parties are in compliance with each of their obligations. (b) No contract governing a relationship with a trust or wealth management customer of Company or any of its Subsidiaries provides for any material reduction of fees charged (or in compensation payable to Company or any of its Subsidiaries thereunder) by reason of this Agreement or the consummation of the Merger. (c) Except as set forth onCompany Disclosure Schedule 3.25, (A) none of Company, any of its Subsidiaries, or any of their respective directors, officers, or employees is the beneficial owner of any interest in any of the accounts maintained on behalf of any trust business, nor does either administer or maintain accounts forwealth management customer of Company or any of its Subsidiaries and (B) none of the directors, officers and employees of Company or any of its Subsidiaries is a party to any contract pursuant to which either acts as fiduciary (other than individual retirement accounts, Keogh accountsit is obligated to provide service to, or receive compensation or benefits from, any of the trust or wealth management customers of Company or any of its Subsidiaries after the Closing Date. (d) Each account opening document, margin account agreement, any advisory contract and health savings accounts), including, but not limitedcustomer disclosure statement with respect to accounts for which either serves as a trustee, agent, custodian, personal representative, guardian, conservatorany trust or investment advisor.wealth management customer of Company or any of its Subsidiaries conforms in all material respects to the forms made available to Buyer prior to the date of this Agreement. (e) All other books and records primarily related to the trust or wealth management businesses of Company and each of its Subsidiaries include documented risk appetite profiles signed by each such customer. Section 3.26Investment Management and Related Activities. Except as set forth onCompany Disclosure Schedule 3.26, none of Company, any of its Subsidiaries or Company’s or its Subsidiaries’ directors, officers, or employees is required to be registered, licensed, or authorized under the laws or regulationsLaws issued by any Governmental Authority as an investment adviser, a broker or dealer, an insurance agency or company, a commodity trading adviser, a commodity pool operator, a futures commission merchant, an introducing broker, a registered representative or associated person, investment adviser, representative or solicitor, a counseling officer, an insurance agent, a sales person or in any similar capacity with a Governmental Authority. Section 3.27Repurchase Agreements. With respect to all agreements pursuant to which Company or any of its Subsidiaries has purchased securities subject to an agreement to resell, if any, Company or any of its Subsidiaries, as the case may be, has a valid, perfected first lien or security interest in the government securities or other collateral securing the repurchase agreement, and, as of the date of this Agreement, the value of such collateral equals or exceeds the amount of the debt secured thereby.it secures. Section 3.28Deposit Insurance. The deposits of Company Bank are insured by the FDIC in accordance with the Federal Deposit Insurance Act (“FDIA”) to the full extent permitted by law, and has paid all premiums and assessments and filed all reports required by the FDIA. No proceedings for the revocation or termination of such deposit insurance are pending or, to the Knowledge of Company, threatened. Section 3.29CRA, Anti-Money Laundering and Customer Information Security. Neither Company nor any of its Subsidiaries is a party to any agreement with any individual or group regarding Community Reinvestment Act matters and, Company is not aware of, andto Company’s Knowledge, none of Company and its Subsidiaries has been advised of, or has any reason to believe (because of Company Bank’s Home Mortgage Disclosure Act data for the fiscal year ended September 30, 2013,December 31, 2017, filed with the FDIC, or otherwise) that any facts or circumstances exist which would cause Company Bank: (i) to be deemed not to be in satisfactory compliance with the Community
Reinvestment Act and theits implementing regulations, promulgated thereunder, or to be assigned a rating for Community Reinvestment Act purposes by federal or state bank regulators of lower than “satisfactory”“Satisfactory”; or (ii) to be deemed to be operating in violation of the Bank Secrecy Act and its implementing regulations (31 C.F.R. Part 103), the USA PATRIOT Act, any order issued with respect to anti-money laundering by the U.S. Department of the Treasury’s Office of Foreign Assets Control, or any other applicable anti-money laundering statute, rule, or regulation; or (iii) to be deemed not to be in satisfactory compliance with the applicable privacy of customer information requirements contained in any federal and state privacy laws and regulations,Laws, including, without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999 and its implementing regulations, promulgated thereunder, as well as the provisions of the information security program adopted by Company Bank pursuant to Appendix B to 12 C.F.R. Part 364. Furthermore, the board of directors of Company Bank has adopted and Company Bank has implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that has not been deemed ineffective by any Governmental Authority and that meets the requirements of Sections 352 and 326 of the USA PATRIOT Act. Company Bank has implemented a program with respect to the beneficial ownership requirements set forth in the final rule on Customer Due Diligence Requirements for Financial Institutions found in 81 Federal Register 29397 (July 11, 2016) and 31 C.F.R. § 1010 et seq. Section 3.303.29Transactions with Affiliates. Except as set forth inonCompany Disclosure Schedule 3.303.29, there are no outstanding amounts payable to or receivable from, or advances by Company or any of its Subsidiaries to, and neither Company nor any of its Subsidiaries is otherwise a creditor or debtor to, any director, Executive Officer, five percent or greater stockholdershareholder, or other Affiliate of Company or any of its Subsidiaries, or to theCompany’s Knowledge, of Company, any person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing, other than part of the normal and customary terms of such persons’ employment or service as a director with Company or any of its Subsidiaries and other than deposits held by Company Bank in the ordinary course of business. Except as set forth inonCompany Disclosure Schedule 3.303.29, neither Company nor any of its Subsidiaries is a party to any transaction or agreement with any of its respective directors, Executive Officers, or other Affiliates other than deposit accounts of suchthose individuals at Company Bank. All agreements between Company and any of its Affiliates comply, to the extent applicable, with Sections 23A and 23B of the Federal Reserve Act and the FRB’s Regulation W of the FRB. (12 C.F.R. Part 223).Section 3.313.30Tangible Properties and Assets. (a)Company Disclosure Schedule 3.313.30 sets forth a true, correct, and complete list of all realpersonal property owned by Company and each of its Subsidiaries. Except as set forth inonCompany Disclosure Schedule 3.313.30, and except for properties and assets disposed of in the ordinary course of business or as permitted by this Agreement, and except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect with respect to Company, Company or its Subsidiary has good, valid, and marketable title to, valid leasehold interests in or otherwise legally enforceable rights to use all of the real property, personal property, and other assets (tangible or intangible), used, occupied, and operated or held for use by it in connection with its business as presently conducted in each case, free and clear of any Lien, except for (i) statutory Liens for amounts not yet delinquent and (ii) Liens incurred in the ordinary course of business or imperfections of title, easements, and encumbrances, if any, that, individually and in the aggregate, are not material in character, amount or extent, and do not materially detract from the value and do not materially interfere with the present use, occupancy, or operation of any material asset. (b)Company Disclosure Schedule 3.313.30 sets forth a true, correct, and complete schedule of all leases, subleases, licenses and other agreements under which Company uses or occupies or has the right to use or occupy, now or in the future, real property (the “Leases”). Each of the Leases is valid, binding, and in full force and effect and neither Company nor any of its Subsidiaries has received a written notice of, and otherwise has no Knowledge of any, default or termination with respect to any Lease. There has not occurred any event and no condition exists that would constitute a termination event or a material breach by Company or any of its Subsidiaries of, or material default by Company or any of its Subsidiaries in, the performance of any covenant, agreement, or condition contained in any Lease, and to Company’s Knowledge, no lessor under a Lease is in material breach or default in the performance of any material covenant, agreement, or condition contained in such Lease. Except as set forth onCompany Disclosure Schedule 3.313.30, there is no pending or, to Company’s Knowledge, threatened legal, administrative, arbitral or other proceeding, claim, action, or governmental or regulatory investigation of any nature with respect to the real property that Company or any of its Subsidiaries uses or occupies or has the right to use or occupy, now or in the future, including without limitation a pending or threatened taking of any of such real property by eminent domain. Company and each of its Subsidiaries has paid all rents and other charges to the extent due under the Leases. Section 3.323.31Intellectual Property.Company Disclosure Schedule 3.323.31 sets forth a true, complete, and correct list of all Company Intellectual Property. Company or its Subsidiaries owns or has a valid license to use all Company Intellectual Property, free and clear of all Liens, royalty, or other payment obligations (except for royalties or payments with respect tooff-the- shelf Software at standard commercial rates). The Company Intellectual Property constitutes all of the Intellectual Property necessary to carry on the business of Company as currently conducted. The Company Intellectual Property owned by Company, and to theCompany’s Knowledge, of Company, all other Company Intellectual Property, is valid and enforceable and has not been cancelled, forfeited, expired, or abandoned, and neither Company nor any of its Subsidiaries has received notice challenging the validity or enforceability of Company Intellectual Property. To theCompany’s Knowledge, of Company, the conduct of the business of Company or any of its Subsidiaries does not violate, misappropriate, or infringe upon the intellectual property rights of any third party. The consummation of the transactions contemplated herebyby this Agreement will not result in the loss or impairment of the right of Company or any of its Subsidiaries to own or use any of Company Intellectual Property. Section 3.333.32Insurance. (a)Company Disclosure Schedule 3.333.32 identifies all of the material insurance policies, binders, or bonds currently maintained by Company and its Subsidiaries, other than credit-life policies (the “Insurance Policies”), including the insurer, policy numbers, amount of coverage, effective and termination dates and any pending claims thereunder involving more than $25,000. Company and each of its Subsidiaries is insured with reputable insurers against such risks and in such amounts as the management of Company reasonably has determined to be prudent in accordance with industry practices. All the Insurance Policies are in full force and effect, and neither Company nor any of its Subsidiaries is in material default thereunderof them and all claims thereunderunder the Insurance Policies have been filed in due anda timely fashion. (b)Company Disclosure Schedule 3.333.32 sets forth a true, correct and complete description of all bank owned life insurance (“BOLI”) owned by Company or its Subsidiaries, including the value of BOLI as of the end of the month prior to the date hereof.March 31, 2018. The value of such BOLI is and has been fairly and accurately reflected in the Company Balance SheetCompany’s balance sheet in accordance with GAAP. Section 3.343.33Anti-Takeover Provisions. Except as set forth inThe board of directors of Company Disclosure Schedule 3.34, no “control share acquisition,” “business combination moratorium,” “fair price” or other formhas taken all necessary and appropriate action to render Chapters 110D and 110F of antitakeover statute or regulation is applicablethe MBCA inapplicable to this Agreement, the Merger, and the other transactions contemplated hereby.by this Agreement. Section 3.353.34Fairness Opinion. The board of directors of Company has received the written opinion of Sandler O’Neill & Partners, L.P. to the effect that, subject to the terms, conditions and qualifications set forth therein, as of the date hereofof this Agreement the Merger Consideration is fair to the holders of Company Common Stock from a financial point of view. Section 3.363.35Proxy Statement-Prospectus. As of the date of the Proxy Statement- Prospectus and the date of the Company Meeting to which such Proxy Statement-Prospectus relates, none of the information supplied or to be supplied by Company for inclusion or incorporation by reference in the Proxy Statement-Prospectus will contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein,contained in the Proxy Statement-Prospectus, in light of the circumstances under which they were made, not misleading; provided, however, that information as of a later date shall be deemed to modify information as of an earlier date. Section 3.373.36Transaction Costs.Company Disclosure Schedule 3.373.36 sets forth the attorneys’ fees, investment banking fees, accounting fees and other costs or fees that Company and its Subsidiaries have accrued through June 30, 2014,March 31, 2018, and to Company’s Knowledge as of the most reasonable practicable date, a good faith estimate of the attorneys’ fees, investment banking fees, and accounting fees that Company and its Subsidiaries expect to pay to retained representatives in connection with the transactions contemplated by this Agreement. All accounting and attorney fees will be billed at no more than current standard hourly rates. Section 3.37Information Security. Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect with respect to Company, to Company’s Knowledge, since January 1, 2015, no third party has gained unauthorized access to any information technology networks controlled by and material to the operation of the business of Company and its Subsidiaries. Section 3.38Disclosure. The representations and warranties contained in this Article III, when considered as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Article III not misleading. Section 3.39No Other Representations or Warranties. Except as expressly set forth in this Article III, none of Company, any Subsidiary of Company, their respective representatives or any other Person is making or has made, and none of them shall have liability in respect of, any written or oral representation or warranty, express or implied, at law, in equity or otherwise, with respect to Company or any of its Subsidiaries or otherwise, and whether express or implied at law, in equity or otherwise, in respect of this Agreement or the transactions contemplated by this Agreement, or in respect of any other matter whatsoever. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Section 4.01Making of Representations and Warranties. (a) On or prior to the date hereof,of this Agreement, Buyer has delivered to Company a schedule (the “Buyer Disclosure Schedule”) setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereofof this Agreement or as an exception to one or more representations or warranties contained in this Article IV or to one or more of its covenants contained in Article V; provided, however, that (a) the mere inclusion of an item inon the Buyer Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by a partyBuyer that such item represents ana material exception or fact, event or circumstance or that absent such inclusion in the Buyer Disclosure Schedule, such item is or would reasonably be reasonably likelyexpected to result inhave a Material Adverse Effect with respect to Buyer.Buyer, and (b) any disclosure made with respect to a section of this Article III shall be deemed to qualify any other section of this Article IV specifically referenced or cross-referenced. (b) Except as set forth in the Buyer Disclosure Schedule, Buyer and Buyer Bank hereby represent and warrant, jointly and severally, to Company that the statements contained in this Article IV are correct as of the date of this Agreement and will be correct as of the Closing Date (as though made on and as of the Closing Date), except as to any representation or warranty which specifically relates to an earlier date, which only need be correct as of suchthe earlier date. No representation or warranty of Buyer contained in this Article IV shall be deemed untrue or incorrect, and Buyer shall not be deemed to have breached a representation or warranty, as a consequence of the existence of any fact, circumstance, or event unless such fact, circumstance or event, individually or taken together with all other facts, circumstances, or events inconsistent with any section of this Article IV, has had or would reasonably be expected to have a Material Adverse Effect with respect to Buyer, disregarding for the purposes of this Section 4.01(b) any materiality or Material Adverse Effect qualification contained in any representation or warranty; provided, however, that the foregoing standard shall not apply to the representations and warranties contained in Sections 4.02, 4.03, 4.04, 4.05 4.23(a) and 4.23(b),4.12, which shall be deemed untrue, incorrect, and breached if they are not true and correct in all material respects. Section 4.02Organization, Standing and Authority. Buyer is a Massachusetts corporation duly organized, validly existing, and in good standing under the lawsLaws of Thethe Commonwealth of Massachusetts, and is duly registered with the FRB as a bank holding company under the Bank Holding CompanyBHC Act and meets the applicable requirements for qualification as such under the BHC Act and the regulations of 1956, as amended.the FRB. Buyer has full corporate power and authority to carry on its business as now conducted. Buyer is duly licensed or qualified to do business in the Commonwealth of Massachusetts and each other foreign jurisdictionsjurisdiction where its ownership or leasing of property or the conduct of its business requires such qualification, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Buyer Bank is a Massachusetts-chartered bank and trust company duly organized, validly existing and in good standing under the lawsLaws of Thethe Commonwealth of Massachusetts. Buyer Bank’s deposits are insured by the FDIC in the manner and to the full extent providedpermitted by applicable law,Law, and all premiums and FDIC assessments required to be paid in connection therewith have been paid by Buyer Bank when due. Buyer Bank is a member in good standing of the FHLB. Section 4.03Capital Stock. As of June 30, 2014,the date of this Agreement, the authorized capital stock of Buyer consists solely of (a) 1,000,000 shares of preferred stock, $0.01 par value per share, of which no shares are outstanding and (b) 75,000,000 shares of Buyer Common Stock, of which (i) 23,925,60927,579,460 shares are outstanding as of the date hereofof this Agreement (including 21,53748,647 shares in the form of unvested performance based restricted stock awards without dividend or voting rights), (ii) no shares are held by Buyer Subsidiaries and (iii) 481,76361,000 shares are reserved for future issuance pursuant to outstanding options granted under the Buyer Benefit Plans. The outstanding shares of Buyer Common Stock have been duly authorized and validly issued and are fully paid andnon-assessable. All of the outstanding shares of capital stock of each of Buyer’s Subsidiaries are duly authorized, validly issued, fully paid, and nonassessable and not subject to preemptive rights, and all such shares are owned by Buyer or another Subsidiary of Buyer free and clear of all security interests, liens, claims, pledges, taking actions, agreements, limitations in Buyer’s voting rights, charges or other encumbrances of any nature whatsoever. There are no options, warrants, or other similar rights, convertible or exchangeable securities, “phantom stock” rights, stock appreciation rights, stock based performance units, agreements, arrangements, commitments or understandings to which Buyer is a party, whether or not in writing, of any character relating to the issued or unissued capital stock or other securities of Buyer or any of Buyer’s Subsidiaries or obligating Buyer or any of Buyer’s Subsidiaries to issue (whether upon conversion, exchange, or otherwise) or sell any share of capital stock of, or other equity interests in or other securities of, Buyer or any of Buyer’s Subsidiaries, except for (i) shares of Buyer Common Stock issuable pursuant to the Buyer Benefits Plans and (ii) by virtue of this Agreement. The shares of Buyer Common Stock to be issued pursuant to this Agreement, when issued in accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid, and nonassessable and will not be subject to preemptive rights. Section 4.04Corporate Power; Minute Books. Buyer and Buyer Bank have the corporate power and authority to carry on their business as it is now being conducted and to own all their properties and assets; and Buyer and Buyer Bank have the corporate power and authority to execute, deliver, and perform their obligations under this Agreement and to consummate the transactions contemplated hereby,by this Agreement, subject to receipt of all necessary approvals of Governmental Authorities.Authorities and Buyer of the Plan of Bank Merger. Buyer has made available to Company complete and correct copies of the minutes (or, in the case of draft minutes, the most recent drafts) of all meetings of the board of directors held since January 1, 2017, with any discussions of regulatory examination ratings and acquisition opportunities redacted. The minute books of Buyer and Buyer Bankeach of its Subsidiaries contain true, complete, and accurate records of all corporate actions taken by the stockholdersshareholders of Buyer and Buyer Bankeach of its Subsidiaries and the board of directors of Buyer and Buyer Bank (including committees of the Buyer’s and Buyer Bank’s boardsboard of directors). and each of its Subsidiaries. Section 4.05Corporate Authority. This Agreement and the transactions contemplated herebyby this Agreement have been authorized by all necessary corporate action of Buyer and Buyer Bank on or prior to the date hereof.of this Agreement. No vote of the shareholders of Buyer is required by law,Law, the Articles of Organization of Buyer, the Bylaws of Buyer or otherwise to approve this Agreement and the transactions contemplated hereby.it contemplates. Buyer and Buyer Bank haveeach has duly executed and delivered this Agreement and, assuming due authorization, execution, and delivery by Company and Company Bank, this Agreement is a valid and legally binding obligation of Buyer and Buyer Bank, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, and similar lawsLaws of general applicability relating to or affecting creditors’ rights or by general equity principles). Section 4.06SEC Documents; Other Reports; Internal Controls. (a) Except as set forth onBuyer Disclosure Schedule 4.06(a), Buyer has filed all required reports, forms, schedules, registration statements and other documents with the SEC since December 31, 20102014 (the “Buyer Reports”) and has paid all associated fees and assessments due and payable in connection therewith.payable. As of their respective dates of filing with the SEC (or, if amended or superseded by a subsequent filing, prior to the date hereof, as of the date of suchthat subsequent filing), the Buyer Reports complied as to form in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Buyer Reports, and none of the Buyer Reports when filed with the SEC, and if amended, prior to the date hereof, as of the date of suchthe amendment, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements, therein, in light of the circumstances under which they were made, not misleading. There are no outstanding comments from or unresolved issues raised by the SEC, as applicable, with respect to any of the Buyer Reports. None of Buyer’s Subsidiaries is required to file periodic reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. (b) Buyer and each of its Subsidiaries have timely filed all reports, schedules, forms, registrations, statements and other documents, together with any amendments required to be made with respect thereto,to them, that they were required to file since December 31, 20102014 with any Governmental Authority (other than Buyer Reports) and have paid all fees and assessments due and payable in connection therewith.payable. Except for as set forth in the Buyer Disclosure Schedule 4.06(b) and except for normal examinations conducted by a Governmental Authority in the regular course of the business of Buyer and its Subsidiaries, no Governmental Authority has notified Buyer that it has initiated any proceeding or, to theBuyer’s Knowledge, of Buyer, threatened an investigation into the business or operations of Buyer or any of its Subsidiaries since December 31, 2010.2014, which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to Buyer. There is no material unresolved violation or exception by any Governmental Authority with respect to any report, form, schedule, registration, statement or other document filed by, or relating to any examinations by any such Governmental Authority of, Buyer or any of its Subsidiaries. (c) Buyer has disclosed, based on its most recent evaluation prior to the date hereof,of this Agreement, to Buyer’s auditors and the audit committee of Buyer’s board of directors and inhas listed on theBuyer Disclosure Schedule 4.06(c) (i) any significant deficiencies andor material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect in any material respect Buyer’s ability to record, process, summarize, and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in Buyer’s internal controls over financial reporting. (d) The records, systems, controls, data, and information of Buyer and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical, or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of Buyer or its Subsidiaries or accountants (including all means of access theretoto and therefrom)from), except for anynon-exclusive ownership ownership andnon-direct control that would not reasonably be expected to have a Material Adverse Effect onwith respect to the system of internal accounting controls described in the following sentence. Buyer and its Subsidiaries have devised and maintain a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.
(e) Buyer has designed, implemented, and has maintained and currently maintains disclosure controls and procedures (within the meaning of Rules13a-15(e) and15d-15(e) of the Exchange Act) to ensure that material information relating to Buyer and its Subsidiaries is made known to the management of Buyer by others within those entities as appropriate to allow timely decisions regarding required disclosure and to make the certifications required by the Exchange Act with respect to the Buyer Reports. (f) Since December 31, 2010,2014, (x) neither Buyer nor any of its Subsidiaries nor, to theBuyer’s Knowledge, of Buyer, any director, officer, employee, auditor, accountant, or representative of Buyer or any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies, or methods of Buyer or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion, or claim that Buyer or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (y) no attorney representing Buyer or any of its Subsidiaries, whether or not employed by Buyer or any of its Subsidiaries, has reported evidence of a material violation of securities laws,Laws, breach of fiduciary duty, or similar violation by Buyer or any of its officers, directors, employees, or agents to the board of directors of Buyer or any board committee thereof or to any director or officer of Buyer. Section 4.07Financial Statements; Undisclosed Liabilities. (a) The financial statements of Buyer (including any related notes and schedules thereto)schedules) included in the Buyer Reports complied as to form, as of their respective dates of filing with the SEC (or, if amended or superseded by a subsequent filing, prior to the date hereof, as of the date of such subsequent filing), in all material respects, with all applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto (except, in the case of unaudited statements, as permitted by the rules of the SEC), have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be disclosed therein)otherwise disclosed), and fairly present, in all material respects, the consolidated financial position of Buyer and its Subsidiaries and the consolidated results of operations, changes in stockholders’shareholders’ equity and cash flows of such companies as of the dates and for the periods shown. The books and records of Buyer and its Subsidiaries have been, and are being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions. (b) Except for (i) those liabilities that are fully reflected or reserved for in the consolidated financial statements of Buyer included in its Annual Report filed on Form10-K for the fiscal year ended December 31, 2013,2017, as filed with the SEC, (ii) liabilities or obligations incurred in the ordinary course of business since December 31, 20132017 in amounts consistent with past practice (including such liabilities contained in the Buyer Reports); (iii) liabilities that have been discharged or paid in full before the Effective Date; or (iv) liabilities or obligations incurred directly as a result of this Agreement; or (v) liabilities that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect,Agreement, neither Buyer nor any of its Subsidiaries has incurred any liability of any nature whatsoever (whether absolute, accrued or contingent or otherwise and whether due or to become due), and there is no existing condition, situation or set of circumstances that would reasonably be expected to result in such a liability that, either alone or when combined with all other liabilities of a type not described in clause (i) or (ii), has had, or would be reasonably expected to have, a Material Adverse Effect onwith respect Buyer. Section 4.08Regulatory Approvals; No Defaults. (a) No consents or approvals of, or waivers by, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by Buyer or any of its Subsidiaries or affiliates Affiliates in connection with the execution, delivery or performance by Buyer of this Agreement, or to consummate the transactions contemplated by this Agreement, except for (i) as applicable, filings of, applications or notices with, and consents, approvals or waivers by, or the making of satisfactory arrangements with, the FRB, the Comptroller, the FDIC, the Massachusetts Board of Bank Incorporation, the Massachusetts Housing Partnership Fund, the Massachusetts Commissioner of Banks; (ii) the approval of the Bank Merger and Plan of Bank Merger by Buyer, as sole shareholder of Buyer Bank, (iii) the filing and effectiveness of the Registration Statement with the SEC; (iii)(iv) the approval of the listing on The Nasdaq Global Select Market (“Nasdaq”) of the Buyer Common Stock to be issued in the Merger and (iv)(v) the filing of the Articles of Merger with the Secretary of Thethe Commonwealth of Massachusetts and the Maryland Department of Assessments and Taxation and notification to and the filing of the Plan of Bank Merger with the Comptroller. AsMassachusetts. To Buyer’s Knowledge as of the date hereof,of this Agreement, there is no fact or circumstance relating to Buyer is not awarethat could reasonably be expected to result in any of any reason why the approvals set forth above willand referred to in Section 6.01(b) not bebeing received in order to permit consummation of the Merger and Bank Merger on a timely mannerbasis or will includein the imposition of a Burdensome Condition as defined in Section 5.06. (b) Subject to receipt, or the making, of the consents, approvals, waivers and filings referred to in the immediately preceding paragraph and expiration of the related waiting periods, the execution, delivery, and performance of this Agreement by Buyer and Buyer Bank, as applicable, and the consummation of the transactions contemplated herebyby this Agreement do not and will not (i) constitute a breach or violation of, or a default under, the charterarticles of organization or bylaws (or similar governing documents) of Buyer or any of its Subsidiaries or affiliates,Affiliates, (ii) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Buyer or any of its Subsidiaries, or any of their respective properties or assets or (iii) violate, conflict with, result in a breach of any provision 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, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of Buyer or any of its Subsidiaries or affiliatesAffiliates under, any of the terms, conditions, or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, contract, agreement or other instrument or obligation to which Buyer or any of its Subsidiaries or affiliatesAffiliates is a party, or by which they or any of their respective properties or assets may be bound or affected. Section 4.09Agreements with Regulatory Agencies. Neither Buyer nor any of its Subsidiaries is subject to anycease-and-desist or other order issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is a recipient of any extraordinary supervisory letter from, or is subject to any order or directive by, or has adopted any board resolutions at the request of (each, whether or not set forth in theBuyer Disclosure Schedule 4.09, “Buyer Regulatory Agreement”), any Governmental Authority that restricts, or by its terms in the future will restrict, the conduct of its business or that in any manner relates to its capital adequacy, its credit or risk management policies, its dividend policy, its management, its business or its operations, nor has Buyer or any of its Subsidiaries been advised by any Governmental Authority that it is considering issuing or requesting (or is considering the appropriateness of issuing or requesting) any Buyer Regulatory Agreement. To theBuyer’s Knowledge, of Buyer, there are no investigations relating to any material regulatory matters pending before any Governmental Authority with respect to Buyer or any of its Subsidiaries. Section 4.10Absence of Certain Changes or Events. Except as reflected in Buyer’s audited balance sheet as of December 31, 20132017 or in the Buyer Reports filed prior to the date hereof,of this Agreement, since December 31, 2013,2017, there has been no change or development or combination of changes or developments which, individually or in the aggregate, has had or is reasonably likelyexpected to have a Material Adverse Effect with respect to Buyer or its Subsidiaries, and to theBuyer’s Knowledge, of Buyer, no fact or condition exists which is reasonably likely to cause a Material Adverse Effect with respect to Buyer in the future. Section 4.11Compliance with Laws. (a) Buyer and each of its Subsidiaries is and since December 31, 20102014 has been in compliance with all applicable federal, state, local, and foreign statutes, laws, regulations, ordinances, rules,Laws, judgments, orders or decrees applicable thereto or to the it and its employees conducting such businesses, including, without limitation, any applicable Law, including without limitation, all Laws related to data protection or privacy, the USA PATRIOT Act, the Bank Secrecy Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act and any other Law relating to discriminatory lending, financing or leasing practices, Sections 23A and 23B of the Federal Reserve Act, the Sarbanes-Oxley Act and the Dodd-Frank Act. (b) Buyer and each of its Subsidiaries has all material permits, licenses, authorizations, orders, and approvals of, and have made all filings, applications and registrations with, all Governmental Authorities that are required in order to permit it to own or lease their properties and to conduct their business as presently conducted; all such permits, licenses, certificates of authority, orders, and approvals are in full force and effect and, to Buyer’s Knowledge, no suspension or cancellation of any of them is threatened. (c) Other thanExcept as set forth inonBuyer Disclosure Schedule 4.11, neither Buyer nor any of its Subsidiaries has received, since December 31, 2010,2014, notification or communication from any Governmental Authority (i) asserting that it is not in compliance with any of the statutes, regulations, or ordinances which such Governmental Authority enforces or (ii) threatening to revoke any license, franchise, permit, or governmental authorization (nor, to Buyer’s Knowledge, do any grounds for any of the foregoing exist). Section 4.12Proxy Statement-Prospectus Information; Registration Statement. As of the date of the Proxy Statement-Prospectus and the date of the Company Meeting to which such Proxy Statement-Prospectus relates, none of the information supplied or to be supplied by Buyer for inclusion or incorporation by reference in the Proxy Statement-Prospectus and the registration statement on FormS-4 (the “Registration Statement”) will contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements, therein, in light of the circumstances under which they were made, not misleading; provided, however, that that information as of a later date shall be deemed to modify information as of an earlier date. Section 4.13Legal Proceedings. (a) Other thanExcept as set forth inonBuyer Disclosure Schedule 4.13, there are no civil, criminal, administrative or regulatory actions, suits, demand letters, demands for indemnification, claims, hearings, notices of violation, arbitrations, investigations, orders to show cause, market conduct examinations, notices ofnon-compliance or other proceedings of any nature pending or, to Buyer’s Knowledge, threatened against Buyer or any of its Subsidiaries. (b) Neither Buyer nor any of its Subsidiaries is a party to any, nor are there any pending or, to Buyer’s Knowledge, threatened, civil, criminal, administrative or regulatory actions, suits, demand letters, claims, hearings, notices of violation, arbitrations, investigations, orders to show cause, market conduct examinations, notices ofnon-compliance or other proceedings of any nature against Buyer or any of its Subsidiaries in which, to Buyer’s Knowledge, there is a reasonable probability of any material recovery against or other Material Adverse Effect with respect to Buyer or which challenges the validity or propriety of the transactions contemplated by this Agreement. (c) There is no injunction, order, judgment or decree imposed upon Buyer or any of its Subsidiaries, or the assets of Buyer or any of its Subsidiaries, and neither Buyer nor any of its Subsidiaries has been advised of, or is aware of, the threat of any such action.
Section 4.14Brokers. None of Buyer, Buyer Bank, or any of their officers or trustees has employed any broker or finder or incurred any liability for any broker’s fees, commissions or finder’s fees in connection with any of the transactions contemplated by this Agreement, except thatAgreement. Buyer has engaged and will pay a fee or commission to, Keefe, Bruyette & Woods Inc. to render a fairness opinion to be considered by the Buyer’s Board of Directors in accordanceconnection with the termsapproval of a letter agreement between Keefe, Bruyette & Woods, Inc. and Buyer.this Agreement.
Section 4.15Employee Benefit Plans. (a) All material benefit and compensation plans, contracts, policies or arrangements covering current or former employees of Buyer or any of its Subsidiaries and current or former directors of Buyer or any of its Subsidiaries including, but not limited to, “employee benefit plans” within the meaning of Section 3(3) of ERISA, and deferred compensation, stock option, stock purchase, stock appreciation rights, stock based, incentive and bonus plans (the “Buyer Benefit Plans”), including, but not limited to, any trust instruments and insurance contracts forming a part of any Buyer Benefit Plans and all amendments thereto,to them, have been made available to Company. (b) To Buyer’s Knowledge, allAll Buyer Benefit Plans are in substantial compliance in form and operation with all applicable Laws, including ERISA and the Code. Section 4.16Labor Matters. Neither Buyer nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement, contract, or other agreement or understanding with a labor union or labor organization, nor is there any proceeding pending or, to Buyer’s Knowledge threatened, asserting that Buyer or any of its Subsidiaries has committed an unfair labor practice (within the meaning of the National Labor Relations Act, as amended)Act) or seeking to compel Buyer or any of its Subsidiaries to bargain with any labor organization as to wages or conditions of employment, nor is there any strike or other labor dispute involving it pending or, to Buyer’s Knowledge, threatened, nor is Buyer aware of any activity involving its employees seeking to certify a collective bargaining unit or engaging in other organizational activity. Section 4.17Tax Matters. (a) Buyer and each of its Subsidiaries hashave filed all income, franchise, and other material Tax Returns that it wasthey were required to file under applicable laws and regulationsLaws prior to the Effective Time, other than Tax Returns that are not yet due or for which a request for extension was filed consistent with requirements of applicable law or regulation.Laws. All such Tax Returns were correct and complete in all material respects and were prepared in substantial compliance with all applicable laws and regulations.Laws. All Taxes due and owing by Buyer or any of its Subsidiaries (whether or not shown on any Tax Return) have been paid other than any such Taxes that have been reserved or accrued on the balance sheet of Buyer or which Buyer is contesting in good faith. Neither Buyer nor any Subsidiary is the beneficiary of any extension of time within which to file any Tax Return, other than any such extension obtained in the ordinary course of business of Buyer or its Subsidiary, as applicable, and neither Buyer nor any of its Subsidiaries currently has any open tax years. No written claim has ever been made by an authority in a jurisdiction where Buyer or any Subsidiary does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Liens for Taxes (other than statutory liens for Taxes not yet due and payable, or Taxes that are being contested in good faith and for which adequate provision has been made on the balance sheet of Buyer or a Subsidiary of the Buyer) upon any of the assets of Buyer or any of its Subsidiaries. (b) Buyer has withheld and paid all material Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder,shareholder, or other third party. (c) Except as set forth onBuyer Disclosure Schedule 4.17(c), noNo foreign, federal, state, or local tax audits or administrative or judicial Tax proceedings are being conducted or to theBuyer’s Knowledge of Buyer are pending with respect to Buyer or any Subsidiary. Other than with respect to audits that have already been completed and resolved, neither Buyer nor any of its Subsidiaries has not received from any foreign, federal, state, or local taxing authority (including jurisdictions where Buyer or its Subsidiaries has not filed Tax Returns) any (i) written notice indicating an intent to open an audit or other review, (ii) written request for information related to Tax matters, or (iii) written notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any taxing authority against Buyer. (d) Buyer has made available to Company true and complete copies of the United States federal, state, local and foreign income Tax Returns filed with respect to Buyer and each Subsidiary for taxable period ended December 31, 2013. Buyer has delivered to Company correct and complete copies of all examination reports, and statements of deficiencies assessed against or agreed to by Buyer or any Subsidiary filed for the year ended December 31, 2013. Buyer and each Subsidiary have timely and properly taken such actions in response to and in compliance with notices Buyer or any Subsidiary has received from the IRS in respect of information reporting and backup and nonresident withholding as are required by law. Buyer has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.its Subsidiaries.
(e)(d) The unpaid Taxes of Buyer (i) did not, as of the end of the most recent period covered by the Buyer Reports filed on or prior to the date hereof,of this Agreement, exceed the reserve for Tax liability (which reserve is distinct and different from any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the financial statements included in the Buyer Reports filed on or prior to the date hereofof this Agreement (rather than in any notes thereto)notes), and (ii) do not exceed that reserve as adjusted for the passage of time through the Closing DateEffective Time in accordance with the past custom and practice of Buyer in filing its Tax Returns. Since the end of the most recent period covered by the Buyer Reports filed prior to the date hereof,of this
Agreement, Buyer has not incurred any liability for Taxes arising from extraordinary gains or losses, as that term is used in GAAP, outside the ordinary course of business consistent with past custompractice. (e) Buyer and practice.each Subsidiary have disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662. Neither Buyer nor any Subsidiary is a party to or bound by any Tax allocation or sharing agreement (other than an unwritten agreement with Buyer Bank and its Subsidiaries). Neither Buyer nor any Subsidiary (i) has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was Buyer), or (ii) has liability for the Taxes of any individual, bank, corporation, partnership, association, joint stock company, business trust, limited liability company, or unincorporated organization (other than Buyer or any Subsidiary) under IRS Reg.Section 1.1502-6 (or any similar provision of state, local, or foreign Law), as a transferee or successor, by contract, or otherwise. (f) Neither Buyer nor any Subsidiary shall be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) “closing agreement” as described in Code Section 7121 (or any corresponding or similar provision of state, local or foreign income Tax law)Law) executed on or prior to the Closing Date; (iii) intercompany transactions or any excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or foreign income Tax law)Law); (iv) installment sale or open transaction disposition made on or prior to the Closing Date; or (v) prepaid amount received on or prior to the Closing Date. (g) Neither Buyer nor any Subsidiary has distributed stock of another Person or had its stock distributed by another Person in a transaction that was purported or intended to be governed in whole or in part by Section 355 or Section 361 of the Code. (h) Neither Buyer nor any Subsidiary is or has been a party to any “listed transaction,”transaction”, as defined in Code Section 6707A(c)(2) and Reg.Section 1.6011-4(b)(2).
(i)(h) Buyer has not taken or agreed to take any action and has no knowledgeKnowledge of any fact, agreement, plan or other circumstance that is reasonably likely to prevent or impede the Merger and Bank Merger from qualifying as a “reorganization” under Section 368(a) of the Code.
Section 4.18Loans: Nonperforming and Classified Assets. (a) Except as set forth inonBuyer Disclosure Schedule 4.18, as of the date hereof,of this Agreement, neither Buyer nor any of its Subsidiaries is a party to (i) any Loans under the terms of which the obligor was, as of June 30, 2014,March 31, 2018, over sixty (60) days delinquent in payment of principal or interest or in default of any other material provision, or (ii) Loan with any director, Executive Officer or five percent or greater stockholdershareholder of Buyer or any of its Subsidiaries, or to theBuyer’s Knowledge, of Buyer, any person, corporation or enterprise controlling, controlled by, or under common control with any of the foregoing.Buyer Disclosure Schedule 4.18 identifies (x) each Loan that as of June 30, 2014March 31, 2018 was classified as “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Credit Risk Assets,” “Concerned Loans,” “Watch List” or words of similar import by Buyer, Buyer Bank, or any bank examiner, together with the principal amount of and accrued and unpaid interest on each such Loan and the identity of the borrower, thereunder, and (y) each asset of Buyer that as of June 30, 2014March 31, 2018 was classified as OREO and theits book value thereof as of the date of this Agreement. (b) Each Loan held in Buyer Bank’s loan portfolio (i) is evidenced by notes, agreements or other evidences of indebtedness that are true, genuine, and what they purport to be, (ii) to the extent secured, has been secured by valid Liens which have been perfected and (iii) to theBuyer’s Knowledge, of Buyer, is a legal, valid, and binding obligation of the obligor named, therein, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance, and other lawsLaws of general applicability relating to or affecting creditors’ rights and to general equity principles. Section 4.19CRA, and Anti-Money Launderingand Customer Information Security. Neither Buyer nor any of its Subsidiaries is a party to any agreement with any individual or group regarding Community Reinvestment Act matters and, Buyer is not aware of, andto Buyer’s Knowledge, none of Buyer and its Subsidiaries has been advised of, or has any reason to believe (because of the Buyer Bank’s Home Mortgage Disclosure Act data for the year ended December 31, 2013,2017, filed with the FDIC, or otherwise) that any facts or circumstances exist which would cause Buyer Bank: (i) to be deemed not to be in satisfactory compliance with the Community Reinvestment Act, and theits implementing regulations, promulgated thereunder, or to be assigned a rating for Community Reinvestment Act purposes by federal or state bank regulators of lower than “satisfactory;” or“Satisfactory”; (ii) to be deemed to be operating in violation of the Bank Secrecy Act and its implementing regulations (31 C.F.R. Part 103), the USA PATRIOT Act, any order issued with respect to anti-money laundering by the U.S. Department of Treasury’s Office of Foreign Assets Control, or any other applicable anti-money laundering statute.statute, rule, or regulation; or (iii) to be deemed not to be in satisfactory compliance with the applicable privacy of customer information requirements contained in any federal and state privacy Laws, including, without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999 and its implementing regulations, as well as the provisions of the information security program adopted by Buyer Bank pursuant to 12 C.F.R. Part 364. Furthermore, the board of directors of Buyer Bank has adopted and Buyer Bank has implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that has not been deemed ineffective by any Governmental Authority and that meets the requirements of Sections 352 and 326 of the USA PATRIOT Act. Buyer Bank has implemented a program with respect to the beneficial ownership requirements set forth in the final rule on Customer Due Diligence Requirements for Financial Institutions found in 81 Federal Register 29397 (July 11, 2016) and 31 C.F.R. § 1010 et seq. Section 4.20Regulatory Capitalization. Buyer Bank is “well-capitalized,“well capitalized,” as such term is defined in the rules and regulations promulgated by the FDIC. Buyer is “well-capitalized”“well capitalized,” as such term is defined in the rules and regulations promulgated by the FRB. Section 4.21Administration of Trust and Fiduciary Accounts. Buyer has properly administered all 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, in accordance with the terms of the governing documents and applicable state and federal law and regulation and common law, and Buyer has not received any unresolved customer demands, complaints or other communications (whether written or oral) asserting facts or circumstances that would, if true, constitute a breach of trust with respect to any such fiduciary or agency account. Section 4.22Financing. Buyer has, or will have available to it prior to the Closing, all funds necessary to satisfy all of its obligations hereunder. Buyer anticipates that, on a pro forma basis upon consummation of the transactions contemplated hereby, it and Buyer Bank will continue to have the capital levels required to be “well capitalized” on a consolidated basis under applicable law.
Section 4.23Subsidiaries.
(a)(i)Buyer Disclosure Schedule 4.23 sets forth a complete and accurate list of all of Buyer’s Subsidiaries, including the jurisdiction of organization of each such Subsidiary, (ii) except as set forth onBuyer Disclosure Schedule 4.23, Buyer owns, directly or indirectly, all of the issued and outstanding equity securities of each Subsidiary, (iii) no equity securities of any of Buyer’s Subsidiaries are or may become required to be issued (other than to Buyer) by reason of any contractual right or otherwise, (iv) there are no contracts, commitments, understandings or arrangements by which any of such Subsidiaries is or may be bound to sell or otherwise transfer any of its equity securities (other than to Buyer or a wholly-owned Subsidiary of Buyer), (v) there are no contracts, commitments, understandings or arrangements relating to Buyer’s rights to vote or to dispose of such
securities and (vi) all of the equity securities of each such Subsidiary held by Buyer, directly or indirectly, are validly issued, fully paid and nonassessable, are not subject to preemptive or similar rights and are owned by Buyer free and clear of all Liens.
(b) Except as set forth onBuyer Disclosure Schedule 4.23, Buyer does not own (other than in a bona fide fiduciary capacity or in satisfaction of a debt previously contracted) beneficially, directly or indirectly, any equity securities or similar interests of any Person, or any interest in a partnership or joint venture of any kind.
(c) Each of Buyer’s Subsidiaries has been duly organized and qualified and is in good standing under the laws of the jurisdiction of its organization and is duly qualified to do business and is in good standing in the jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. A complete and accurate list of all such jurisdictions is set forth onBuyer Disclosure Schedule 4.23.
Section 4.24Allowance for Loan Losses. Buyer’s allowance for loan losses as reflected in Buyer’s audited balance sheet at December 31, 2013 was, and the allowance shown on the balance sheets in Buyer Reports for periods ending after such date, in the opinion of management, was as of the dates thereof, in compliance with Buyer’s existing methodology for determining the adequacy of its allowance for loan losses as well as the standards established by applicable Governmental Authority, the Financial Accounting Standards Board and GAAP, and is adequate under all such standards.
Section 4.25Proxy Statement-Prospectus. As of the date of the Proxy Statement- Prospectus and the date of the Company Meeting to which such Proxy Statement-Prospectus relates, none of the information supplied or to be supplied by Buyer for inclusion or incorporation by reference in the Proxy Statement-Prospectus will contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that information as of a later date shall be deemed to modify information as of an earlier date.
Section 4.26Ownership of Company Common Stock. As of the date hereof and prior to the Effective Time, except for this Agreement and the Voting Agreements, neither the Buyer, Buyer Bank or any of their Affiliates (i) beneficially owns, directly or indirectly, or (ii) is or will be a party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of the Common Stock of the Company.
Section 4.27Environmental Matters. To Buyer’s Knowledge, no real property (including buildings or other structures) currently owned or operated by Buyer or any of its Subsidiaries or any predecessor, or any property in which Buyer or any of its Subsidiaries holds a security interest, Lien or a fiduciary or management role, has had any presence or Release of any Hazardous Substance in that would create a material liability to Buyer or its Subsidiaries caused by a violation of Environmental Law.
Section 4.284.22Administration of Trust and Fiduciary Accounts. Buyer has administered all 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, in accordance with the terms of the governing documents and applicable state and federal Law and regulation and common law in all material respects, and Buyer has not received any written customer demands, complaints, or other communications that are unresolved and which assert facts or circumstances that would, if true, constitute a breach of trust with respect to any fiduciary or agency account. Section 4.23Information Security. Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect with respect to Buyer, to Buyer’s Knowledge, since January 1, 2015, no third party has gained unauthorized access to any information technology networks controlled by and material to the operation of the business of Buyer and its Subsidiaries. Section 4.24Disclosure. The representations and warranties contained in this Article IV, when considered as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Article IV not misleading. Section 4.25No Other Representations or Warranties. Except as expressly set forth in this Article IV, none of Buyer, any Subsidiary of Buyer, their respective representatives or any other Person is making or has made, and none of them shall have liability in respect of, any written or oral representation or warranty, express or implied, at law, in equity or otherwise, with respect to Buyer or any of its Subsidiaries or otherwise, and whether express or implied at law, in equity or otherwise, in respect of this Agreement or the transactions contemplated by this Agreement, or in respect of any other matter whatsoever. ARTICLE V COVENANTS Section 5.01Covenants of Company. During the period from the date of this Agreement and continuing until the Effective Time, except as expressly contemplated or permitted by this Agreement or with the prior written consent of Buyer, Company shall carry on its business in the ordinary course consistent with past practice and consistent with prudent banking practice and in compliance in all material respects with all applicable laws and regulations.Laws. Company will use commercially reasonable efforts to (i) preserve its business organization intact, (ii) keep available to itself and Buyer the present services of the current officers and employees of Company and its Subsidiaries and (iii) preserve for itself and Buyer the goodwill of the customers of Company and others with whom business relationships exist. Without limiting the generality of the foregoing, and except as set forth inon the Company Disclosure Schedule or as otherwise expressly contemplated or permitted by this Agreement or consented to in writing (which may include electronic mail) by Buyer neither Company nor any of its Subsidiaries shall: (a)Stock. Other than pursuant to stock options or stock-based awards outstanding as of the date hereof and listed on the Company Disclosure Schedule, (i) issue,Issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of its stock, any Rights, or any securities (including units of beneficial ownership interest in any partnership or limited liability company), (ii) enter into any agreement with respect to the foregoing, (iii) accelerate the vesting of any existing Rights, or (iv) change (or establish a record date for changing) the number of, or provide for the exchange of, shares of its stock, any securities (including units of beneficial ownership interest in any partnership or limited liability company) convertible into or exchangeable for any additional shares of stock, any Rights issued and outstanding prior to the Effective Time as a result of a stock split, stock dividend, recapitalization, reclassification, or similar transaction with respect to its outstanding stock or any other such securities. (b)Dividends; Other Distributions. Declare,Make, declare, set aside or pay any dividends on or make other distributions (whether in cash or otherwise) in respect of any of its capital stock, except (x) dividends by Subsidiaries of Company to suchthe Subsidiary’s parent or another Subsidiary of Company and (y) the regular quarterly dividends on Company Common Stock in the amount of no more than $0.05 per share of Company Common Stock.Company. (c)Compensation; Employment Agreements, Etc. Enter into or amend or renew any employment, consulting, severance, retention,change-in-control or similar agreements or arrangements with any director, officer, or employee of Company or any of its Subsidiaries, or grant any salary or wage increase or increase any employee benefit or pay any incentive, commission or bonus payments, or grant any equity compensation except for (i) normal increases in base compensation to employees, including officers, in the ordinary course of business consistent with past practice and pursuant to written policespolicies currently in effect, provided that such increases shall not result in an annual adjustment in total annual cash compensation of more than 5%3% for any individual or 3%in the aggregate for all employees of Company other than as disclosed onCompany Disclosure Schedule 5.01(c), (ii) as may be required by law,Law, or (iii) to satisfy written contractual obligations existing as of the date hereofof this Agreement and disclosed onCompany Disclosure Schedule 5.01(c), if any, (iv) bonus, commission and incentive compensation payments in the ordinary course of business consistent with past practices and pursuant to written policies currently in effect,provided that such payments shall not exceed the aggregate amount set forth onCompany Disclosure Schedule 5.01(c). Notwithstanding anything to the contrary contained in this Section 5.01(c), noneither Company nor any of its Subsidiaries shall provide compensation of any type shall be paid or granted to any “disqualified individual” for whomto the extent such paymentcompensation would be an “excess parachute payment” as defined in Section 280G of the Code. (d)Hiring; Promotions. (i) Hire any person as an employee of Company or any of its Subsidiaries, except for at-willat will employees at an annual rate of salary not to exceed $65,000$50,000 to fill vacancies that may arise from time to time in the ordinary course of business, or (ii) promote any employee, except to fill vacancies that may arise in the ordinary course of business or to satisfy contractual obligations existing as of the date hereofof this Agreement and set forth onCompany Disclosure Schedule 5.01(d), if any. unless Buyer acting through its Chief Financial Officer or his designee(s) first consents in writing (which consent will not be unreasonably withheld, conditioned or delayed). (e)Benefit Plans. Enter into, establish, adopt, amend, modify or terminate (except (i) as may be required by or to make consistent with applicable law,Law, subject to the provision of prior written notice to and consultation with respect thereto with Buyer, or (ii) to satisfy contractual obligations existing as of the date hereofof this Agreement and set forth onCompany Disclosure Schedule 5.01(e)) or as may be required by this Agreement), any Company Benefit Plan or other pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any related trust agreement (or similar arrangement) related thereto,, in respect of any current or former director, officer, or employee of Company or any of its Subsidiaries. It is the intention of the parties that no participant in the Supplemental ESOP portion of the Deferred Compensation and Supplemental ESOP Plan (the “Supplemental ESOP”) shall become entitled to a contribution to his account in the Supplemental ESOP with respect to compensation that is contingent on the Merger or as a result of the release or allocation of shares of Company Common Stock under the ESOP from any suspense account due to the repayment by the ESOP of any loans made to the ESOP in connection with the Merger. Accordingly, no contributions shall be made, accrued, or credited to or on behalf of any participant under the Supplemental ESOP with respect to compensation contingent upon (i) the execution of this Agreement or (ii) the consummation of the transactions contemplated thereby (including the Merger), (including transaction bonuses, severance benefits, change in control payments, salary continuation payments, or income associated from the exercise or cancelation of stock options or the accelerated vesting of restricted stock). (f)Transactions with Officers and Directors. Except pursuant to agreements or arrangements in effect on the date hereofof this Agreement and set forth onCompany Disclosure Schedule 5.01(f), pay, loan, or advance any amount to, or sell, transfer or lease any properties or assets (real, personal or mixed, tangible or intangible) to, or enter into any agreement or arrangement with, any of its officers or directors or any of their immediate family members or any affiliatesAffiliates or associates (as such terms are defined under the Exchange Act) of any of its officers or directors other than compensation or business expense reimbursement in the ordinary course of business consistent with past practice. (g)Dispositions. Except in the ordinary course of business consistent with past practice,as set forth onCompany Disclosure Schedule 5.01(g), sell, transfer, mortgage, pledge, encumber or otherwise dispose of or discontinue any of its assets, deposits, business or properties, other real estate owned, or cancel or release any indebtedness owed to Company or any of its Subsidiaries. (h)Acquisitions. Acquire (other than by way of foreclosures or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary and usual course of business consistent with past practice) all or any portion of the assets, business, deposits, or properties of any other entity. (i)Capital Expenditures. Except as set forth onCompany Disclosure Schedule 5.01(i), makeMake any capital expenditures other than capital expenditures in the ordinary course of business consistent with past practice and expenditures reasonably necessary to maintain existing assets in good repair, each in amounts not exceeding $50,000$25,000 in the aggregate, unless such capital expenditure is consented to in writing by Buyer acting through its Chief Financial Officer or his designee(s) (which consent will not be unreasonably withheld, conditioned or delayed). (j)Governing Documents. Except as set forth onCompany Disclosure Schedule 5.01(j), amendAmend Company’s Articles of IncorporationOrganization or Bylaws or any equivalent documents of Company’s Subsidiaries. (k)Accounting Methods. Implement or adopt any change in its accounting principles, practices or methods, other than as may be required by applicable lawsLaws, GAAP, or regulations or GAAP.at the written direction of a Governmental Authority. (l)Contracts. Except as set forth onCompany Disclosure Schedule 5.01(l)5.01(l), enter into, materially amend, modify, terminate or terminatewaive any material provision of, any Material Contract, Lease, or Insurance Policy. (m)Claims. EnterExcept for the matters and, as applicable, the amounts set forth on Company Disclosure Schedule 5.01(m), enter into any settlement or similar agreement with respect to any action, suit, proceeding, order or investigation to which Company or any of its Subsidiaries or directors or Executive Officers is a party or becomes a party after the date of this Agreement, which settlement or agreement involves payment by Company or any of its Subsidiaries of an amount which exceeds $50,000 individually or $100,000 in the aggregate and/(provided that, in connection with such settlement or would imposeagreement, such individual and aggregate amounts shall be exclusive of any material restriction on the businessamount of proceeds indirectly paid under any Insurance Policy but inclusive of any amount of proceeds paid by Company or any of its Subsidiaries.Subsidiaries as a deductible or retention), unless Buyer acting through it General Counsel or his designee(s) first consents in writing. (n)Banking Operations. Enter into any new material line of business;business or change in any material respect its lending, investment, underwriting, risk and asset liability management and other banking and operating policies, except as required by applicable law, regulation or policiesLaw imposed by any Governmental Authority; or file any application or make any contract or commitment with respect to branching or site location or branching or site relocation.Authority. (o)Derivative Transactions. Enter into any Derivative Transaction.Transaction unless Buyer acting through its Chief Financial Officer or his designee(s) first consents in writing (which consent will not be unreasonably withheld, conditioned or delayed). (p)Indebtedness. Incur,Except as set forth onCompany Disclosure Schedule 5.01(p), incur, modify, extend or renegotiate any indebtedness for borrowed money (other than deposits, FHLB borrowings, or federal funds purchased, or such substitute borrowings from the FRB or Bankers’ Bank, in each case in the ordinary course of business consistent with recent past practice) or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other Person.Person unless Buyer acting through its Chief Financial Officer or his designee(s) first consents in writing (which consent will not be unreasonably withheld, conditioned or delayed). (q)Investment Securities. Other than in the ordinary course of business and consistent with past practice,Except as set forth onCompany Disclosure Schedule 5.01(q), acquire (other than (i) by way of foreclosures or acquisitions in a bona fide fiduciary capacity or (ii) in satisfaction of debts previously contracted in good faith), sell or otherwise dispose of any debt security or equity investment, unless such acquisition, sale or disposal is consented to in writing by Buyer acting through its TreasurerChief Financial Officer or his designee(s) first consents in writing (which consent will not be unreasonably withheld, conditioned or delayed). (r)Deposits. Make any changes to deposit pricing that are not in the ordinary course of business consistent with recent past practice. (s)Loans. (i) Except for commercial loans approved and/or committed that are listed onCompany Disclosure Schedule 5.01(s), make or renew any commercial loan, commercial loan commitment, commercial letter of credit or other extension of commercial credit, unless Company Bank has approved it in the ordinary course of business in accordance with Company Bank’s current pricing and credit underwriting guidelines consistent with recent past practices or, if more than $2,500,000, unless the Buyer acting through its Chief Financial Officer or his designee(s) has consented in writing to the loan (which consent will not be unreasonably withheld or delayed).
(ii) Except for residential loans approved and/or committed that are listed onCompany Disclosure Schedule 5.01(s), make or renew any residential loan or residential loan commitment, unless Company Bank has approved it in the ordinary course of business in accordance with Company Bank’s current pricing and credit underwriting guidelines consistent with recent past practices or, if more than $1,000,000, unless the Buyer acting through its Chief Financial Officer or his designee(s) has consented in writing to the loan (which consent will not be unreasonably withheld or delayed).
(iii) Except for home equity or consumer loans approved and/or committed as of the date hereof that are listed onCompany Disclosure Schedule 5.01(s), make or renew any home equity loan or home equity loan commitment in excess of $250,000 or make or renew any other consumer loan or consumer loan commitment in excess of $25,000, unless Company Bank has approved them in the ordinary course of business in accordance with Company Bank’s current pricing and credit underwriting guidelines consistent with recent past practices or, if larger than the stated limits, unless the Buyer acting through its Chief Financial Officer or his designee(s) has consented in writing to the loan (which consent will not be unreasonably withheld or delayed).
(iv) Renegotiate, increase, extend or modify any loan, loan commitment, letter of credit or other extension of credit, unless Company Bank has approved it in the ordinary course of business in accordance with Company Bank’s current pricing and credit underwriting guidelines consistent with recent past practices or, if
more than the limits established by this section for a given loan type, unless the Buyer acting through its Chief Financial Officer or his designee(s) has consented in writing to the loan (which consent will not be unreasonably withheld or delayed).
(v) Purchase any loans, unless Company Bank has approved it in the ordinary course of business in accordance with Company Bank’s current pricing and credit underwriting guidelines consistent with recent past practices or, if more than $1,000,000,practice unless Buyer acting through its Chief Financial Officer or his designee(s) has consentedfirst consents in writing to the loan (which consent will not be unreasonably withheld, conditioned or delayed).”
(s)Loans. Except as expressly permitted below, take any actions with respect to loans. Loans or transactions already approved as of the date of this Agreement that are listed onCompany Disclosure Schedule 5.01(s) are excluded from the following requirements: | (i) | Commercial Loans:Company Bank may make or renew any commercial loan, commercial loan commitment, commercial letter of credit, or other extension of commercial credit up to $1,000,000 that is made in the ordinary course of business in a manner consistent with Company Bank’s current policies and procedures and recent past practice. Company Bank may not make or renew any commercial loan, commercial loan commitment, commercial letter of credit, or other extension of commercial credit that is greater than $1,000,000 unless Buyer acting through its President and Chief Commercial Banking Officer or his designee(s) first consents in writing (which consent will not be unreasonably withheld, conditioned or delayed). |
| (ii) | Residential Loans:Company Bank maymake or renew any residential loan or residential loan commitment up to $750,000 that is made in the ordinary course of business in a manner consistent with Company Bank’s current policies and procedures and recent past practice so long as (A) any residential loan or residential loan commitment has aloan-to-value ratio that is in compliance with Company Bank’s current policies and procedures and is priced for residential loans at an interest rate that is no less than the Freddie Mac Primary Mortgage Market Survey rate plus 0.125% and is priced for jumbo residential loans at an interest rate that is no less than the Freddie Mac Primary Mortgage Market Survey rate plus 0.375% and (B) is a “qualified mortgage” under applicable regulatory guidelines. Company Bank may not make or renew any residential loan or residential loan commitment greater than $750,000 unless Buyer acting through its Chief Financial Officer or his designee(s) first consents in writing (which consent will not be unreasonably withheld, conditioned or delayed). |
| (iii) | Home Equity Loans, Consumer Loans, Loan Participations, Loan Modifications, Loan Purchases, and Other Loans: With the sole and only exception of consumer overdraft protection lines up to |
| $10,000 associated with consumer deposit accounts, unless Buyer, acting through either its President and Chief Commercial Officer or its Chief Financial Officer, acting singly, or their designee(s), consents in writing (which consent will not be unreasonably withheld, conditioned or delayed), Company and Company Bank shall not: (a) sell any loan participations to, or enter into any loan participations with, any third party; (b) renegotiate, increase, extend or modify any loan, loan commitment, letter of credit or other extension of credit; and, shall not (c) purchase loans of any type; (d) make or renew any home equity loan or consumer loan. |
(t)Investments in Real Estate. Make any investment or commitment to invest in real estate or in any real estate development project other than by way of foreclosure or deed in lieu thereof.of foreclosure. (u)Taxes. (i) Make or change any materialincome Tax election, file any material amended Tax Return, enter into any material closing agreement, settle or compromise any material liability with respect to Taxes, agree to any material adjustment of any Tax attribute, file any claim for a material refund of Taxes, or consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment, provided, that, for purposes of this subsection (u), “material” shall mean affecting or relating to $25,000 or more of taxable income.assessment. (ii) Knowingly take any action that would prevent or impede the Merger or the Bank Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code. (v)Compliance with Agreements. Commit any act or omission which constitutes a material breach or default by Company under any agreement with any Governmental Authority or under any Material Contract, Lease or other material agreement or material license to which it is a party or by which it or its properties is bound or under which it or its assets, business, or operations receives benefits. (w)Environmental Assessments. ForecloseExcept for foreclosures in process as of the date of this Agreement, foreclose on or take a deed or title to any real estate other than single-family residential properties without first conducting an ASTM 1527-051527-13 Phase I Environmental Site Assessment of the property that satisfies the requirements of the all appropriate inquiries standard of CERCLA §101(35)(“§ 101(35) (“Phase I Assessment”), 42 U.S.C. §9601(35) and evaluates the possibility of Hazardous Substances in indoor air and building materials,§ 9601(35), or foreclose on or take a deed or title to any real estate other than single-family residential properties if such environmental assessment indicates the presence of Hazardous Substances or other materials regulated under Environmental Laws. (x)Adverse Actions. Take any action or fail to take, or adopt any resolutions of its board of directors in support of, any action that is intended or is reasonably likely to result in (i) any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (ii) any of the conditions to the Merger set forth in Article VI not being satisfied or (iii) a material violation of any provision of this Agreement, except, in each case, as may be required by applicable lawLaws or regulation.GAAP. (y)CommonCapital Stock Purchase. Except as set forth onCompany Disclosure Schedule 5.01(y), directlyDirectly or indirectly repurchase, redeem or otherwise acquire any shares of its capital stock or any securities convertible into or exercisable for any shares of its capital stock. (z)CommitmentsRestructuring.. Enter into any contract with respect to, Except as set forth onCompany Disclosure Schedule 5.01(z), merge or otherwise agreeconsolidate itself or commit to do, any of the foregoing.its Subsidiaries with any other person, or restructure, reorganize or completely or partially liquidate or dissolve it or any of its Subsidiaries. (aa)Facilities. Except as set forth inCompany Disclosure Schedule 5.01(aa) or as required by Law or otherwise expressly contemplated by this Agreement, make application for the opening, relocation or closing of any, or open, relocate or close any, branch office, loan production or servicing facility, or automated banking facility. (bb)Loan Workouts. Compromise, resolve, or otherwise “workout” any delinquent or troubled loan unless any such loan workout is done in the ordinary course of business, consistent with Company Bank’s current policies and procedures and recent past practice.practice unless Buyer acting through its Chief Financial Officer or his designee(s) first consents in writing (which consent will not be unreasonably withheld, conditioned or delayed). (cc)Investment Management Operations. Enter into any new material line of business in connection with, or change in any material respect, its investment management business, its trust services business, its retirement, estate, investment or educational planning business, its insurance business, its brokerage services business, and any other services related to its wealth management business or any operating policies relating to any of the foregoing, except as required by applicable Law imposed by any Governmental Authority. (dd)Commitments. Enter into any contract with respect to, or otherwise agree or commit to do, any of the foregoing. Section 5.02Covenants of Buyer. (a)Affirmative Covenants. From the date hereofof this Agreement until the Effective Time, except as expressly contemplated or permitted by this Agreement, Buyer will (i) carry on its business consistent with prudent banking practices and in compliance in all material respects with all applicable lawsLaws, and regulations.(ii) use reasonable best efforts to maintain and preserve intact its business organization, properties, leases, employees and advantageous business relationships and retain the service of its officer and key employees. (b)Negative Covenants. From the date hereofof this Agreement until the Effective Time, except as expressly contemplated or permitted by this Agreement, without the prior written consent of Company, Buyer will not, and will cause each of its Subsidiaries not to: (i)Adverse Actions. Take any action or fail to take any action that is intended or is reasonably likely to result in (A) a delay in the consummation of the Merger or the transactions contemplated by this Agreement, (B) any impediment to Buyer’s ability to consummate the Merger or the transactions contemplated by this Agreement, (C) any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (D) any of the conditions to the Merger set forth in Article VI not being satisfied, or (E) a material violation of any provision of this Agreement except, in each case, as may be required by applicable lawLaw or regulation, (ii)Tax Free Reorganization. Knowingly take any action that would prevent or impede the Merger or Bank Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code, or (iii)Commitments. Enter into any contract with respect to, or otherwise agree or commit to do, any of the foregoing, orforegoing. (iii)Tax Free Reorganization. Knowingly take any action that would prevent or impede the Merger or the Bank Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
Section 5.03Commercially Reasonable Effort. Subject to the terms and conditions of this Agreement, each of the parties agrees to use commercially reasonable efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws,Laws, so as to permit consummation of the transactions contemplated by this Agreement as promptly as practicable, including the satisfaction of the conditions set forth in Article VI hereof,of this Agreement, and shall cooperate fully to that end. Section 5.04StockholderShareholder Approval. Company agrees to take, in accordance with applicable law,Law, the Articles of IncorporationOrganization of Company and the Bylaws of Company, all action necessary to convene a meeting of its stockholdersshareholders to consider and vote upon the approval of this Agreement and any other matters required to be approved by Company’s stockholdersshareholders in order to permit consummation of the transactions contemplated herebyby this Agreement (including any adjournment or postponement, the “Company Meeting”) and, subject to Section 5.09, shall take all lawful action to solicit such approval by such stockholders.shareholders. Company agrees to use commercially reasonable efforts to convene the Company Meeting within forty-five (45) days following the time when the Registration Statement becomes effective. Except with the prior approval of Buyer, no other matters shall be submitted for the approval of Company stockholdersshareholders at the Company Meeting. TheCompany’s board of directors of Company shall at all times prior to and during the Company Meeting recommend approval of this Agreement by the stockholdersshareholders of Company and shall not withhold, withdraw, amend, or modify such recommendation in any manner adverse to Buyer or take any other action or make any other public statement inconsistent with such recommendation, except as and to the extent expressly permitted by Section 5.09 (a “Change in Recommendation”). Notwithstanding any Change in Recommendation, Company shall submit this Agreement to its stockholders for their consideration at the Company Meeting and nothing in this Agreement shall relieve Company of the obligation to do so. In the event that there is present at such meeting,the Company Meeting, in person or by proxy, sufficient favorable voting power to secure the Requisite Company StockholderShareholder Approval, Company will not adjourn or postpone the Company Meeting unless Company is advised by counsel that failure to do so would result in a breach of the U.S. federal securities lawsLaws or fiduciary duties of Company’s board of directors. Company shall keep Buyer updated with respect to the proxy solicitation results in connection with the Company Meeting as reasonably requested by Buyer.
Section 5.05Registration Statement; Proxy Statement-Prospectus; Nasdaq Listing. (a) Buyer and Company agree to cooperate in the preparation of the Registration Statement to be filed by Buyer with the SEC in connection with the issuance of the Buyer Common Stock in the Merger (including the Proxy Statement-Prospectus and all related documents). Each of Buyer and Company agree to use commercially reasonable efforts to cause the Registration Statement to be filed with the SEC within 45 days after the date hereof and to be declared effective by the SEC as promptly as reasonably practicable after its filing and to keep the filing thereof.Registration Statement effective as long as is necessary to consummate the Merger and the transactions it contemplates. Buyer also agrees to use commercially reasonable efforts to obtain any necessary state securities lawLaw or “blue sky” permits and approvals required to carry out the transactions contemplated by this Agreement. Company agrees to cooperate with Buyer and Buyer’s counsel and accountants in requesting and obtaining appropriate opinions, consents, and letters from the financial advisor and Company’s independent auditors in connection with the Registration Statement and the Proxy Statement-Prospectus. After the Registration Statement is declared effective under the Securities Act, Company, at its own expense, shall promptly mail or cause to be mailed the Proxy Statement-Prospectus to its stockholders.shareholders. (b) Buyer will promptly advise Company promptly after Buyer receivesreceived 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 Buyer 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. (c) The Proxy Statement-Prospectus and the Registration Statement shall comply as to form in all material respects with the applicable provisions of the Securities Act and the Exchange Act and thetheir implementing rules and regulations thereunder. Each partyregulations. Buyer will notify the other partyCompany promptly upon the receipt of any comments (whether written or oral) from the SEC or its staff and of any request by the SEC or its staff or any government officials for amendments or supplements to the Registration Statement, the Proxy Statement-Prospectus, or for any other filing or for additional information and will supply the other partyCompany with copies of all correspondence between such partyBuyer or any of its representatives, on the one hand, and the SEC, or its staff or any other government officials, on the other hand, with respect to the Registration Statement, the Proxy Statement-Prospectus, the Merger, or any other filing. If at any time prior to the Company Meeting there shall occur any event that should be disclosed in an amendment or supplement to the Proxy Statement-Prospectus or the Registration Statement, Company and Buyer shall use their commercially reasonable efforts to promptly prepare, file with the SEC (if required under applicable Law) and mail to Company stockholders suchshareholders an amendment or supplement. (d) Buyer will provide Company and its counsel with a reasonable opportunity to review and comment on the Registration Statement and the Proxy Statement-Prospectus and all responses to requests for additional information by and replies to comments of the SEC prior to filing such with, or sending such to, the SEC, and will provide Company and its counsel with a copy of all such filings made with the SEC.SEC filings. (e) Buyer agrees to use commercially reasonable efforts to list, prior to the Effective Date, on Nasdaq the shares of Buyer Common Stock to be issued in connection with the Merger. Merger, subject to official notice of issuance prior to the Effective Time.(f) Company acknowledges that Buyer is in or may be in the process of acquiring other bank holding companies, banks, financial institutions, and/or other entities and that in connection with other acquisitions, information concerning Company may be required to be included in the registration statements, if any, for the issuance of securities of Buyer or in Buyer Reports in connection with other acquisitions. Company agrees to provide Buyer with any information, certificates, documents or other materials about Company as are reasonably necessary to be included in such other SEC reports or registration statements, including the Registration Statements referenced in Section 5.05(a) and any other registration statements which may be filed by Buyer prior to the Effective Time. Company shall use its reasonable efforts to cause its attorneys and accountants to provide Buyer and any underwriters for Buyer with any consents, opinion letters, reports or information which are necessary to complete the registration statements and applications for any other acquisition or issuance of securities. Buyer shall reimburse Company for all expenses reasonably incurred by Company if another acquisition is terminated for any reason. Buyer shall not file with the SEC any registration statement or amendment or supplement containing information regarding Company unless Company shall have consented to the disclosure contained in the filing, which consent shall not be unreasonably delayed or withheld. Section 5.06Regulatory Filings; Consents. (a) Each of Buyer and Company and their respective Subsidiaries shall cooperate and use their respective commercially reasonable efforts (i) to promptly prepare all documentation (including the Proxy Statement-Prospectus), to effect all filings, to obtain all permits, consents, approvals and authorizations of all third parties and Governmental Authorities necessary to consummate the transactions contemplated by this Agreement, including, without limitation, all Regulatory Approvals and all other consents and approvals of a Governmental Authority required to consummate the Merger, in the manner contemplated herein, (ii) to comply with the terms and conditions of such permits, consents, approvals and authorizations and (iii) to cause the transactions contemplated by this Agreement to be consummated as expeditiously as practicable (including by avoiding or setting aside any preliminary or permanent injunction or other order of any United States federal or state court of competent jurisdiction or any other Governmental Authority); provided, however, that in no event shall Buyer be required to agree to any prohibition, limitation, or other requirement which would prohibit or materially limit the ownership or operation by Company or any of its Subsidiaries, or by Buyer or any of its Subsidiaries, of all or any material portion of the business or assets of Company or any of its Subsidiaries or Buyer or its Subsidiaries, or compel Buyer or any of its Subsidiaries to dispose of or hold separate all or any material portion of the business or assets of Company or any of its Subsidiaries or Buyer or any of its Subsidiaries (together, the “Burdensome Conditions”). Buyer and Company will furnish each other and each other’s counsel with all information concerning themselves, their Subsidiaries, directors, trustees, officers and stockholdersshareholders and such other matters as may be necessary or advisable in connection with the Proxy Statement-Prospectus and any application, petition, or any other statement or application made by or on behalf of Buyer or Company to any Governmental Authority in connection with the transactions contemplated by this Agreement. Provided that Company has cooperated as required herein, Buyer agrees to use commercially reasonable efforts to file the requisite applications with the FDIC and the Massachusetts Commissioner of Banks within 45 days after the date hereof. Each party hereto shall have the right to review and approve in advance all characterizations of the information relating to such partyit and any of its Subsidiaries that appear in any filing made in connection with the transactions contemplated by this Agreement with any Governmental Authority. In addition, Buyer and Company shall each furnish to the other for review a copy of each such filing made in connection with the transactions contemplated by this Agreement with any Governmental Authority prior to its filing. (b) Company will notify Buyer promptly and shall promptly furnish Buyer with copies of notices or other communications or summaries of oral communications received by Company or any of its Subsidiaries of (i) any communication, written or oral, from any Person alleging that the consent of such Person (or another Person) is or may be required in connection with the transactions contemplated by this Agreement (and the response thereto from Company, its Subsidiaries or its representatives), (ii) subject to applicable Laws and the instructions of any Governmental Authority, any communication, written or oral, from any Governmental Authority in connection with the transactions contemplated by this Agreement (and the response thereto from Company, its Subsidiaries or its representatives), and (iii) any legal actions threatened or commenced against or otherwise affecting Company or any of its Subsidiaries that are related to the transactions contemplated by this Agreement (and the response thereto from Company, its Subsidiaries or its representatives). With respect to any of the foregoing, Company will consult with Buyer and its representatives so as to permit Company and Buyer and their respective representatives to cooperate to take appropriate measures to avoid or mitigate any adverse consequences that may result from any of the foregoing. (c) Buyer will notify Company promptly and shall promptly furnish Company with copies of notices or other communications or summaries of oral communications received by Buyer or any of its Subsidiaries of (i) any communication, written or oral, from any Person alleging that the consent of suchthat Person (or other Person) is or may be required in connection with the transactions contemplated by this Agreement (and the response thereto from Buyer or its representatives), (ii) subject to applicable Laws and the instructions of any Governmental Authority, any communication, written or oral, from any Governmental Authority in connection with the transactions contemplated by this Agreement (and the response thereto from Buyer or its representatives), and (iii) any legal actions threatened or commenced against or otherwise affecting Company or any of its Subsidiaries that are related to the transactions contemplated by this Agreement (and the response thereto from Company, its Subsidiaries or its representatives). Section 5.07Publicity. Buyer and Company shall consult with each other before issuing any press release with respect to this Agreement or the transactions contemplated herebyit contemplates and shall not issue any such press release or make any such public statement without the prior consent of the other party, which shall not be unreasonably delayed, conditioned or withheld; provided, however, that a party may, without the prior consent of the other party (but after such consultation, to the extent practicable in the circumstances), issue such press release or make such public statements as may upon the advice of outside counsel be required by law.Law. Without limiting the reach of the preceding sentence, Buyer and Company shall (i) cooperate to develop all public announcement materials; and (ii) make appropriate management available at presentations related to the transactions contemplated by this Agreement as reasonably requested by the other. In addition, Company and its Subsidiaries shall coordinate with Buyer regarding all communications with customers, suppliers, employees, stockholders,shareholders, and the community in general related to the transactions contemplated hereby.by this Agreement. Section 5.08Access; Information. (a) Company and Buyer agree that upon reasonable notice and subject to applicable lawsLaws relating to the exchange of information, each shall afford the other party and its officers, employees, counsel, accountants, and other authorized representatives such access during normal business hours throughout the period prior to the Effective Time to its books, records (including, without limitation, Tax Returns and work papers of independent auditors), properties, and personnel and to such other information relating to it as the other party may reasonably request and, during such period, shall furnish promptly to the other party all information concerning its business, properties, and personnel as the other party may reasonably request. Notwithstanding the foregoing, neither Company nor Buyer shall be required to provide access to or to disclose information, where such access or disclosure wouldcould reasonably be expected to (i) violate the rights of such entity’s customers, (ii) jeopardize the attorney-client privilege of the entity in possession or control of such information, (iii) result in the disclosure of any trade secrets of third parties; (iv) violate any obligation of Company or Buyer with respect to confidentiality (provided that the party who owes an obligation of confidentiality makes a reasonable effort to obtain a waiver of such obligation); (v) interfere with the prudent operation of such entity; or (iv) contravene any law,Law, rule, regulation, order, judgment, decree, or binding agreement entered into prior to the date of this Agreement. The parties hereto will make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the previous sentence apply. (b) No investigation by a party hereto or its representatives shall be deemed to modify or waive any representation, warranty, covenant, or agreement of the other party set forth in this Agreement, or the conditions to the respective obligations of Buyer and Company to consummate the transactions contemplated hereby.by this Agreement. Section 5.09No Solicitation by Company. (a) Company and its Subsidiaries shall immediately cease, and Company and its Subsidiaries shall cause each of their respective representatives to immediately cease, any discussions or negotiations with any parties conducted prior to the date hereofof this Agreement with respect to an Acquisition Proposal. Except as permitted by this Section 5.09, after the execution and delivery of this Agreement, Company and its directors, executive officers and Subsidiaries shall not, and Company shall cause each of its and its Subsidiaries’ representatives not to, directly or indirectly, (i) solicit, initiate or encourage any inquiry with respect to, or the making of, any proposal that constitutes or could reasonably be expected to lead to an Acquisition Proposal, (ii) participate in any negotiations regarding an Acquisition Proposal with, or furnish any nonpublic information relating to an Acquisition Proposal to, any Person that has made or, to theCompany’s Knowledge, of Company, is considering making an Acquisition Proposal, or (iii) engage in discussions regarding an Acquisition Proposal with any Person that has made, or, to Company’s Knowledge, is considering making, an Acquisition Proposal, except to notify such Person of the existence of the provisions of this Section 5.09. (b) Notwithstanding Section 5.09(a), if, prior to the time Requisite Company StockholderShareholder Approval is obtained, Company receives a written and unsolicited Acquisition Proposal that the board of directors of Company reasonably believes to be credible, and which the board of directors of the Company determines in good faith (after consultation with its financial advisors and outside counsel) constitutes or is reasonably likely to lead to a Superior Proposal, Company may take the following actions: (1) furnish nonpublic information with respect to Company and its Subsidiaries to the Person making such Acquisition Proposal, but only if (A) prior to so furnishing such information, Company has entered into a customary confidentiality agreement with such Person on terms no less favorable to Company than the confidentiality agreement by and between Company and Buyer dated as of May 21, 2014,April 19, 2018, and (B) all such information has previously been provided to Buyer or is provided to Buyer prior to or contemporaneously with the time it is provided to the Person making such Superior Proposal or such Person’s representatives,representatives; and (2) engage or participate in any discussions or negotiations with such Person with respect to the Superior Proposal. Company promptly (and in any event within 48 hours) shall advise Buyer orally and in writing of the receipt of (i) any proposal that constitutes or couldis reasonably be expectedlikely to lead to an Acquisition Proposal and the material terms of such proposal (including the identity of the party making such proposal and, if applicable, copies of any documents or correspondence evidencing such proposal), and (ii) any request for information relating to Company or any of its Subsidiaries other than requests for information not reasonably expectedlikely to be related to an Acquisition Proposal. Company shall thereafter, keep Buyer reasonably informed on a reasonably current basis (and in any event at least once every 48 hours)two (2) Business Days) of the status of any such Acquisition Proposal (including any material change to the terms thereof)its terms). (c) Except as set forth in Section 5.09(d), the board of directors of Company shall not (i) withhold, withdraw, or modify (or publicly propose to withhold, withdraw or modify), in a manner adverse to Buyer, its recommendation referred to in Section 5.04, or (ii) approve or recommend (or publicly propose to approve or recommend) any Acquisition Proposal. Except as set forth in Section 5.09(d), Company shall not, and its board of directors shall not allow Company to, and Company shall not allow any of Company’s Subsidiaries to, enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, or other agreement (except for confidentiality agreements permitted under Section 5.09(b)) relating to any Superior Proposal. (d) Notwithstanding anything to the contrary set forth in this Agreement, the board of directors of Company may, prior to the time the Requisite Company StockholderShareholder Approval is obtained, in response to a Superior Proposal which did not result from a breach of Section 5.09(a) or (b), (i) make a Change in Recommendation and/or (ii) terminate this Agreement pursuant to Section 7.01 (and concurrently with such termination cause Company to enter into a definitive agreement with respect to the Superior Proposal), in each case of clauses (i) or (ii), if the board of directors of Company has determined in good faith, after consulting with its outside counsel, that the failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable Law; provided that the board of directors may not take any such action in connection with an Acquisition Proposal unless (1) the board of directors has determined that such Acquisition Proposal constitutes a Superior Proposal, (2) prior to terminating this Agreement pursuant to Section 7.01(g), Company provides prior written notice to Buyer at least four (4) Business Days in advance (the “Notice Period”) of its intention to take such action, which notice shall specify all material terms and conditions of such Superior Proposal (including the identity of the party making such Superior Proposal and copies of any documents or correspondence evidencing such Superior Proposal), and any material modifications to any of the foregoing, (3) during the Notice Period Company shall, and shall cause its financial advisors and outside counsel to, negotiate with Buyer in good faith should Buyer propose to make such adjustments in the terms and conditions of this Agreement so that such Superior Proposal ceases to constitute (in the good faith judgment of Company’s board of directors) a Superior Proposal and (4) such Superior Proposal continues to constitute (in the good faith judgment of Company’s board of directors) a Superior Proposal after taking into account any such amendments that Buyer shall have agreed to make prior to the end of the Notice Period. (e) Nothing contained in this Section 5.09 shall prohibit Company from (i) complying with its disclosure obligations under U.S. federal or state law with regard to an Acquisition Proposal, includingRule 14a-9, 14d-9 or 14e-2 promulgated under the Exchange Act, or making any disclosure to Company’s stockholdersshareholders if, after consultation with its outside legal counsel, Company determines that such disclosure would be required under applicable Law; provided, however, that any such disclosure relating to an Acquisition Proposal shall be deemed to be a Change in Recommendation unless it is limited to a stop, look, and listen communication or Company’s board of directors reaffirms the recommendation referred to in Section 5.04 in such disclosure and does not recommend that Company stockholdersshareholders tender their shares, or (ii) informing any Person of the existence of the provisions contained in this Section 5.09. Section 5.10Indemnification; Directors’Directors’ and Officers’Officers’ Insurance. (a) From and after the Effective Time, Buyer (the “Indemnifying Party”) shall indemnify and hold harmless, each present and former director andor officer of Company as applicable, determined asand its Subsidiaries (the “Indemnified Parties”) and any person who becomes an Indemnified Party between the date of this Agreement and the Effective Time, (the “Indemnified Parties”) against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities and amounts paid in settlement incurred after the Effective Time in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, based in whole or in part, or arising in whole or in part out of, or pertaining to the fact that he or she was a director or officer of Company or any of its Subsidiaries or is or was serving at the request of Company or any of its Subsidiaries as a director, officer, employee, trustee or other agent of any other organization or in any capacity with respect to any employee benefit plan of Company, including without limitation any matters arising in connection with or related to the negotiation, execution, and performance of this Agreement or any of the transactions contemplated hereby,it contemplates, to the full extent to which such Indemnified Parties would be entitled to have the right to advancements of expenses or to be indemnified under the Articles of IncorporationOrganization and Bylaws of Company as in effect on the date of this Agreement as though such Articles of IncorporationOrganization and Bylaws continue to remain in effect after the Effective Time and as permitted by applicable Law. Buyer’s obligations under this Section 5.10(a) shall continue in full force and effect for a period of six years from the Effective Time; provided, however, that all rights to indemnification in respect of any claim asserted or made within such period shall continue until the final disposition of such claim. (b) Any Indemnified Party wishing to claim indemnification under this Section 5.10, upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify the Indemnifying Party, but the failure to so notify shall not relieve the Indemnifying Party of any liability it may have to such Indemnified Party if such failure does not actually prejudice the Indemnifying Party and, if so, only to the extent of such actual prejudice. In the event of any such claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), (i) the Indemnifying Party shall have the right to assume the defense thereof and the Indemnifying Party shall not be liable to such Indemnified Parties for any legal expenses of other counsel or any other expenses subsequently incurred by suchthe Indemnified Parties in connection with the defense, thereof, except that if the Indemnifying Party elects not to assume such defense or counsel for the Indemnified Parties advises that there are issues which raise conflicts of interest between the Indemnifying Party and the Indemnified Parties, the Indemnified Parties may retain counsel which is reasonably satisfactory to the Indemnifying Party, and the Indemnifying Party shall pay, promptly as statements therefor are received, the reasonable fees and expenses of such counsel for the Indemnified Parties (which may not exceed one firm in any jurisdiction), (ii) the Indemnified Parties will cooperate in the defense of any such matter, (iii) the Indemnifying Party shall not be liable for any settlement effected without its prior written consent and (iv) the Indemnifying Party shall have no obligation hereunder in the event that a federal or state banking agency or a court of competent jurisdiction shall determine that indemnification of an Indemnified Party in the manner contemplated hereby is prohibited by applicable lawsLaws and regulations. (c) Prior to the Effective Time,Closing, Company shall and if Company is unable to, Buyer shall cause the Surviving Entity as of the Effective Time to obtain and fully pay the premium for the extension of Company’s existing directors’ and officers’ insurance policies, in each case for a claims reporting or discovery period of at least six (6) years from and after the Effective Time from an insurance carrier with the same or better credit rating as Company’s current insurance carrier with respect to directors’ and officers’ liability insurance (“D&O Insurance”) with terms, conditions, retentions, and limits of liability that are at least as favorable to the Indemnified Parties as Company’s existing policies with respect to any actual or alleged error, misstatement, misleading statement, act, omission, neglect, breach of duty or any matter claimed against a director or officer of Company or any of its Subsidiaries by reason of him or her serving in such capacity that existed or occurred at or prior to the Effective Time (including in connection with this Agreement or the transactions or actions contemplated hereby)it contemplates); provided, however, that in no event shall Company expend, or Buyer or the Surviving Entity be required to expend, for such “tail” policy in the aggregate and on an annual basis a premium amount in excess of an amount (the “Maximum D&O Tail Premium”) equal to (x) 200% of the annual premiums paid by Company for D&O Insurance in effect as of the date of this Agreement;Agreement less (y) the premium credit, if any, to which Company is entitled on account of the Merger under the D&O Insurance in effect immediately prior to the Effective Time; provided further,, that if the cost of such a tail policy exceeds the Maximum D&O Tail Premium, Company, Buyer or the Surviving Entity shall obtain a tail policy with the greatest coverage available for a cost not exceeding Maximum D&O Tail Premium. (d) If Buyer or any of its successors or assigns shall consolidate with or merge into any other entity and shall not be the continuing or surviving entity of such consolidation or merger or shall transfer all or substantially all of its assets to any other entity, then and in each case, proper provision shall be made so that the successors and assigns of Buyer shall assume the obligations set forth in this Section 5.10. (e) Nothing in this Agreement is intended to, shall be construed to or shall release, waive, or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company or its officers, directors and employees, and that the indemnification of this Section 5.10(e)5.10 is not a substitute for any such claims under any such policies. (f) Any indemnification payments made pursuant to this Section 5.10 are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(k)) and the regulations promulgated by the FDIC (12 C.F.R. Part 359). Section 5.11Employees; Benefit Plans. (a) All Company Employees who remain employed by Company or any of its Subsidiaries as of the Effective Time shall be subject to Buyer Bank’s normal and customary employment procedures and practices, including customary background screening and evaluation procedures, and satisfactory employment performance. In addition, Company and Company Bank agree, upon Buyer’s reasonable request, to facilitate discussions between Buyer and Company Employees regarding employment, consulting, or other arrangements to be effective prior to or following the Merger. Any interaction between Buyer and Company’s employeesCompany Employees shall be coordinated by Company. (b) Company Employees (other than those who are parties to an employment, change of control, or other type of agreement which provides for severance) as of the date of this Agreement who remain employed by Company or any of its Subsidiaries as of the Effective Time and whose employment is terminated by Buyer (absent termination for cause as determined by the employer) within one year after the Effective Time shall, subject to the execution by each such Company Employee of a standard release in favor of Buyer and Buyer Bank, (i) receive severance pay in accordancethe amount of two (2) weeks’ pay for every year of service with, Company’s existingin the aggregate, Company or any of its Subsidiaries and Buyer or any of its Subsidiaries, with a minimum of eight (8) weeks’ severance, policy set forth onSchedule 5.11(b), and (ii) be offered outplacement assistance. Suchup to a maximum oftwenty-six (26) weeks’ severance, pay will be made at Buyer Bank’s regular payroll intervals. Such severance payments will be in lieu of any severance pay plans that may be in effect at Company or any of its Subsidiaries prior to the Effective Time.Time, and (ii) be offered outplacement assistance. (c) Following the Closing Date, Buyer may choose to maintain any or all of the other Company Benefit Plans in its sole discretion, subject to the next sentence of this Section 5.11(c). For any Company Benefit Plan terminated for which there is a comparable Buyer Benefit Plan of general applicability, Company Employees shall be entitled to participate in such Buyer Benefit Plan to the same extent as similarly-situated employees of Buyer or Buyer Bank (it being understood that inclusion of Company Employees in the Buyer Benefit Plans may occur, if at all, at different times with respect to different plans). With respect to sucha comparable Buyer Benefit Plan, for purposes of determining eligibility to participate, vesting, entitlement to benefits and vacation entitlement (but not for accrual of benefits under any Buyer Benefit Plan, including any post-retirement welfare benefit plan of Buyer), service by ana Company Employee with the Company or any Subsidiary shall be recognized to the same extent such service was recognized immediately prior to the Effective Time under a comparable Plan in which such Company Employee was a participant immediately before the Effective Time, or if there is no such comparable employee benefit plan, to the same extent such service was recognized under the Company 401(k) Plan immediately prior to the Effective Time to the extent applicable; provided, however, that such service shall not be recognized to the extent such recognition would result in a duplication of benefits. (d) If employees of Company or any of its Subsidiaries become eligible to participate in a medical, dental, or health plan of Buyer or Buyer Bank upon termination of sucha similar plan of Company or any of its Subsidiaries, Buyer shall use commercially reasonable efforts to cause each such plan to (i) waive any preexisting condition limitations to the extent such conditions are covered under the applicable medical, health, or dental plans of Buyer or Buyer Bank, (ii) provide full credit under such plans for any deductible,co-payment, andout-of-pocket expenses incurred by the employees and their beneficiaries during the portion of the plan year prior to such participation, and (iii) waive any waiting period limitation or evidence of insurability requirement which would otherwise be applicable to such employee on or after the Effective Time, in each case to the extent such employee had satisfied any similar limitation or requirement under an analogous Planplan prior to the Effective Time for the plan year in which the Effective Time occurs. (e) Buyer shall honor, and the Surviving Entity shall continue to be obligated to perform, in accordance with their terms, all vested benefit obligations to, and contractual rights of, current and former employees and directors of Company existing as of the Effective Time, as well as all employment, severance, deferred compensation, retirement or “change-in-control”“change-in-control” agreements, plans, or policies of Company but only if such obligations, rights, agreements, plans or policies are set forth on the Company Disclosure Schedule. Buyer acknowledges that the consummation of the Merger will constitute a “change-in-control”“change-in-control” of Company for purposes of any benefit plans, agreements, and arrangements of Company. Nothing hereinin this Agreement shall limit the ability of Buyer or Buyer Bank to amend or terminate any of the Company Benefit Plans or Buyer Benefit Plans in accordance with their terms at any time after the Effective Time, subject to vested rights of employees and directors that may not be terminated pursuant to the terms of suchthe Company Benefit Plans. (f) In the event that Buyer or Buyer Bank terminates or lays off a sufficient number of employees following the Effective Date to trigger a notice requirement under the Worker Adjustment and Retraining Notification Act of 1988 or any similar applicable Law (“WARN”) with respect to (i) Company Employees employed during the90-day period preceding the Effective Time, and (ii) Company Employees employed by Buyer or Buyer Bank after the Effective Time, Buyer shall be solely responsible for compliance with, and any liabilities incurred pursuant to, WARN. Company and Company Bank shall cooperate in providing information reasonably requested by Buyer that is necessary for Buyer to prepare and distribute notices that Buyer may desire to provide prior to the Effective Time under the Worker Adjustment and Retraining Notification Act of 1988 (WARN Act).WARN. (g) Subject to the occurrence of the Effective Time, the ESOP shall be terminated immediately prior to and effective as of the Effective Time (all shares held by the ESOP shall be converted into the right to receive the Merger Consideration). Any outstanding ESOP indebtedness shall be repaid from unallocated ESOP assets and the balance of the unallocated shares and any other assets remaining unallocated shall be allocated and distributed to ESOP participants (subject to the receipt of a favorable determination letter from the IRS as provided for below), as provided for in the ESOP unless otherwise required by applicable law. Prior to the Effective Time, Company, and following the Effective Time, Buyer shall use their commercially reasonable efforts in good faith to obtain such favorable determination letter (including, but not limited to, making such changes to the ESOP and the proposed allocations as may be requested by the IRS as a condition to its issuance of a favorable determination letter). Company and following the Effective Time, Buyer, will adopt such amendments to the ESOP as may be reasonably required by the IRS as a condition to granting such favorable determination letter on termination. Neither Company, nor following the Effective Time, Buyer shall make any distribution from the ESOP to any Company Employees who continue employment with Buyer, except as may be required by applicable law, until receipt of such favorable determination letter. In the case of a conflict between the terms of this Section 5.11(h) and the terms of the ESOP, the terms of the ESOP shall control; however, in the event of any such conflict, Company before the Merger, and Buyer after the Merger, shall use their commercially reasonable efforts to cause the ESOP to be amended to conform to the requirements of this Section 5.11(h). (h) Nothing in this Section 5.11, expressed or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Section 5.11. Without limiting the foregoing, no provision of this Section 5.11 will create any third party beneficiary rights in any current or former employee, director, or consultant of Company or its Subsidiaries in respect of continued employment (or resumed employment) or any other matter. Nothing in this Section 5.11 is intended (i) to amend any Company Benefit Plan or any Buyer Benefit Plan, (ii) interfere with Buyer’s or the Surviving Entity’s right from and after the Closing Date to amend or terminate any Company Benefit Plan or Buyer Benefit Plan or (iii) interfere with Buyer’s or the Surviving Entity’s right from and after the Effective Time to terminate the employment or provision of services by any director, employee, independent contractor, or consultant.
(i)(h) Buyer and Company have made the agreementagreed to actions regarding employees of Company EmployeesBank and directors of Company as set forth onBuyer Disclosure Schedule 5.11(i)5.11(h).
Section 5.12Notification of Certain Changes. Buyer and Company shall promptly advise the other party of any change or event having, or which would reasonably be expected to have, a Material Adverse Effect with respect to it or which it believes would reasonably be expected to, cause or constitute a material breach of any of its representations, warranties or covenants contained herein. From time to time priorin this Agreement. Prior to the Effective Time (and on the date prior to the Closing Date), Buyer and Company will supplement or amend their respective Disclosure Schedules delivered in connection with the execution of this Agreement 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 such Disclosure Schedule or which is necessary to correct any information in such Disclosure Schedule which has been rendered materially inaccurate thereby.inaccurate. No supplement or amendment to the Buyer Disclosure Schedule or Company Disclosure Schedule shall have any effect for the purpose of determining satisfaction of the conditions set forth in Sections 6.02(a) or 6.03(a) hereof, as the case may be,, or compliance by Buyer or Company with the respective covenants and agreements of such parties set forth herein.agreements. Section 5.13Current Information. During the period from the date of this Agreement to the Effective Time, each of Company and Buyer will cause one or more of its designated representatives to confer on a regular and frequent basis (not less than weekly) with representatives of the other partyBuyer and to report the general status of the ongoing operations of Company and its Subsidiaries and Buyer and its Subsidiaries, respectively.Subsidiaries. Without limiting the foregoing, (A) Company and Buyer agreeagrees to provide to the otherBuyer (i) a copy of each report filed by Company or any of its Subsidiaries with a Governmental Authority (if permitted by law)Law) within one (1) Business Day following theits filing, thereof, and (ii) a consolidated balance sheet and a consolidated statement of operations, without related notes, within twenty-five (25)twenty (20) days after the end of each month, prepared in accordance with Company’s and Buyer’s respective current financial reporting practices, and (B) Company shall provide Buyer, on a monthly basis, with thea schedule of all new loan report, modifications reportloans, leases, extensions of credit, and renewal loans, leases and extensions of credit, or any increase in any customer’s aggregate credit outstanding or lease commitment (whether or not subject to one borrower report customarily provided for use by the Company’s managementprior approval under Section 5.01(s)), and provide Buyer with ana copy of, and the opportunity to discuss upon request, the relevant documentation for any such loan, extension of credit, lease, or renewal. Section 5.14[Reserved]Board Packages and Meetings. (a) Company shall distribute by overnight mail or by electronic mail a copy of any Company or Company Bank board package, including the agenda and any draft minutes, to Buyer at the same time in which it distributes a copy to the board of directors of Company or Company Bank; provided, however, that Company shall not be required to provide to Buyer copies of any documents that disclose (i) confidential discussions of this Agreement or the transactions it contemplates or any third-party proposal to acquire control of Company, (ii) any matter that Company’s board of directors has been advised by counsel may violate a confidentiality obligation or fiduciary duty or any Law or regulation, including with respect to the disclosure of regulatory examination ratings or other confidential supervisory information, or may result in a waiver of Company’s attorney-client privilege or violate the privacy rights of any customer, or (iii) any information provided to Company’s or Company Bank’s board of directors or the Loan Committee of Company’s or Company Bank’s board of directors and any other loan- or credit-related information, including, but not limited to, loan pricing or credit decisions (collectively, “Confidential Matters”). (b) Company, at the request of Buyer, shall allow a representative of Buyer to attend all Company and Company Bank board meetings, whether in person or by telephone conference call; provided, however, that the Buyer representative may be excluded from any meeting or portion of a meeting at which Confidential Matters are discussed. Section 5.15Transition; Informational Systems Conversion. From and after the date hereof,of this Agreement, Buyer and Company shall use their commercially reasonable efforts to facilitate the integration of Company with the business of Buyer following consummation of the transactions contemplated hereby,by this Agreement, and shall meet on a regular basis to discuss and plan for the conversion of the data processing and related electronic informational systems of Company and each of its Subsidiaries (the “Informational“Information Systems Conversion”) to those used by Buyer, which planning shall include, but not be limited to,to: (a) discussion of third-party service provider arrangements of Company and each of its Subsidiaries;(b) non-renewal, after the Effective Time, of personal property leases and software licenses used by Company and each of its Subsidiaries in connection with the systems operations; (c) retention of outside consultants and additional employees to assist with the conversion; (d) outsourcing, as appropriate after the Effective Time, of proprietary or self-provided system services; and (e) any other actions necessary and appropriate to facilitate the conversion, as soon as practicable following the Effective Time. Buyer shall promptly reimburse Company for any reasonableout-of-pocket fees, expenses, or charges that Company may incur as a result of taking, at the request of Buyer, any action to facilitate the InformationalInformation Systems Conversion. Section 5.16Access to Customers and Suppliers. (a)Access to Customers. Company and Buyer will work together to promote good relations between Company Bank and its customers and to retain and grow Company Bank customer relationships prior to and after the Effective Time. Company and Buyer agree that it may be necessary or advisable from and after the date of this Agreement for representatives of Company Bank and/or of Buyer Bank to meet with Company Bank customers to discuss the business combination and related transactions contemplated by this Agreement with Company Bank customers. Company Bank shall promptly make arrangements for discussions and Buyer will cooperate and confer on an ongoing basis to determine when meetings and discussions between Company Bank customers and representatives of Company Bank and/or of Buyer Bank are necessary or advisable,as reasonably requested by Buyer Bank and shall promptly make arrangements for any discussions and meetings with Company Bank customers as Company Bank solely deems to be appropriate. Company Bank representatives shall have the right to participate in any discussions or meetings withbetween Company Bank customers and may introduce Buyer Bank representatives to Company Bank customers when Company Bank determines that it would be useful to do so.Bank.
(b)Access to Suppliers. From and after the date hereof,of this Agreement, Company shall, upon Buyer’s reasonable request, introduce Buyer and its representatives to suppliers of Company and its Subsidiaries for the purpose of facilitating the integration of Company and its business into that of the Buyer. Any interaction between Buyer and Company’s suppliers shall be coordinated by Company. Company shall have the right to participate in any discussions between Buyer and Company’s suppliers. Section 5.17Environmental Assessments. (a) Company shall cooperate with and grant access to an environmental consulting firm selected by Buyer and reasonably acceptable to Company, during normal business hours (and at such other times as may be agreed), to any real property set forth on(including buildings or other structures) currently owned or operated by Company or any of its Subsidiaries or any Company Disclosure Schedule 3.31Loan Property for the purpose of conducting at Buyer’s expense (i) Phase I Assessments (which also may include an evaluation of asbestos containing materials, polychlorinated biphenyls, lead based paint, lead in drinking water, mold, and radon); (ii) Phase II Environmental Assessments, including subsurface investigation of soil, soil vapor, and groundwater (“Phase II Assessment”); and/or (iii) surveys and sampling of indoor air and building materials for the presence of radon, asbestos containing materials, mold, microbial matter, polychlorinated biphenyls, and other Hazardous Substances. Buyer and its environmental consulting firm shall conduct all environmental assessments pursuant to this Section 5.17 at mutually agreeable times and so as to eliminate or minimize to the greatest extent possible interference with Company’s operation of its business, and Buyer shall maintain or cause to be maintained reasonably adequate insurance with respect to any assessment conducted. Buyer shall be required to restore each property to substantially itspre-assessment condition. All costs and expenses incurred in connection with any Phase I or Phase II Assessment and any restoration and clean up shall be borne solely by Buyer. (b) To the extent requested by the Buyer, each environmental assessment shall include an estimate by the environmental consulting firm preparing such environmental assessment of the costs of investigation, monitoring, personal injury, property damage, clean up, remediation, penalties, fines or other liabilities, as the case may be, relating to the “potential environmental condition(s)” or “recognized environmental condition(s)” or other conditions which are the subject of the environmental assessment. Section 5.18CertainShareholder Litigation and Claims. In the event that any stockholdershareholder litigation related to this Agreement or the Merger or the other transactions contemplated by this Agreement is brought or, to Company’s Knowledge, threatened, against Company and/or the members of the board of directors of Company prior to the Effective Time, Company shall consult with Buyer regarding the defense or settlement of suchthe litigation, and no such settlement shall be agreed to without Buyer’s prior written consent (not to be unreasonably withheld)withheld, conditioned or delayed). Company shall (i) promptly notify Buyer of any such stockholdershareholder litigation brought, or threatened, against Company and/or members of the board of directors of Company, (ii) keep Buyer reasonably informed with respect to the litigation’s status, thereof,provided, however, that no information need to be provided if doing so would jeopardize the attorney-client privilege or contravene any Law or binding agreement entered into prior to the date of this Agreement, and (iii) give Buyer the opportunity to participate at its own expense in the defense or settlement of any such stockholdershareholder litigation. InCompany shall consult with Buyer regarding the event of any such stockholder litigation, Company and Buyer shall discuss with each other and coordinate the retentionselection of counsel to bothrepresent Company and Buyer respectively in respect ofany such shareholder litigation. Section 5.19Stock Exchange De-listing. Prior to the Closing Date, Company shall cooperate with Buyer and use commercially reasonable efforts to take, or cause to be taken, all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under applicable Laws and rules and policies of Nasdaq to enable the de-listing by the Surviving Entity of the Company Common Stock from Nasdaq and the deregistration of the Company Common Stock under the Exchange Act as promptly as practicable after the Effective Time. Section 5.20Director Resignations. Company shall use commercially reasonable efforts to cause to be delivereddeliver to Buyer resignations of all the directors of itsCompany, Company Bank, and any of their Subsidiaries (other than Company Bank) to be effective as of the Effective Time.
Section 5.215.20Coordination of DividendsThird Party Consents. After the date of this Agreement, each of Buyer and Company shall coordinate withuse all commercially reasonable efforts to obtain the other the payment of dividends with respectCompany Third Party Consents prior to the Buyer Common Stock and Company Common Stock and the record dates and payment dates relating thereto, it being the intention of the parties that holders of Company Common Stock shall not receive two dividends, or fail to receive one dividend, for any Closing.single calendar quarter with respect to their shares of Company Common Stock or any share of Buyer Common Stock that any such holder receives in exchange for such shares of Company Common Stock in the Merger.
Section 5.225.21Coordination. (a) Company and Company Bank shall take any actions Buyer may reasonably request prior to the Effective Time to facilitate the consolidation of the operations of Company Bank with Buyer Bank, including, without limitation, the preparation and filing of all documentation that is necessary or desirable to obtain all permits, consents, approvals and authorizations of third parties or Governmental Authorities to close and/or consolidate any Buyer Bank or Company Bank branches or facilities. Without limiting the foregoing, senior officers of Company and Buyer shall meet from time to time as CompanyBuyer may reasonably request, and in any event not less frequently than monthly, to review the financial and operational affairs of Company and Company Bank, and Company shall give due consideration to Buyer’s input, on such matters, with the understanding that, notwithstanding any other provision contained in this Agreement, neither Buyer nor Buyer Bank shall under any circumstance be permitted to exercise control of Company or any of its Subsidiaries prior to the Effective Time. Company and Company Bank shall permit representatives of Buyer Bank to be onsite at Company Bank during normal business hours to facilitate consolidation of operations and assist with any other coordination efforts as necessary. (b) Upon Buyer’s reasonable request after the Determination Date (and prior to the Effective TimeTime) and consistent with GAAP, the rules and regulations of the SEC and applicable banking lawsLaws and regulations, (i) each of Company and its Subsidiaries shall modify or change its loan, OREO, accrual, reserve, tax, litigation, and real estate valuation policies and practices (including loan classifications and levels of reserves) so as to be applied on a basis that is consistent with that of Buyer and (ii) Company shall make such accruals under the Company Benefit Plans as Buyer may reasonably request to reflect the benefits payable under such Company Benefit Plans upon the completion of the Merger. Notwithstanding the foregoing, no such modifications, changes, or divestitures of the type described in this Section 5.22(b)5.21(b) need be made prior to the satisfaction of the conditions set forth in Sections 6.01(a) and 6.01(b). (c) Company and Company Bank shall, consistent with GAAP and regulatory accounting principles, use their commercially reasonable efforts to implement at Buyer’s request internal control procedures which are consistent with Buyer’s and Buyer Bank’s current internal control procedures to allow Buyer to fulfill its reporting requirement under Section 404 of the Sarbanes-Oxley Act, of 2002, provided, however, that no such modifications, changes, or divestitures need be made prior to the satisfaction of the conditions set forth in Sections 6.01(a) and 6.01(b). (d) No accrual or reserve or change in policy or procedure made by Company or any of its Subsidiaries pursuant to this Section 5.225.21 shall constitute or be deemed to be a breach, violation, of or failure to satisfy any representation, warranty, covenant, agreement, condition, or other provision of this Agreement or otherwise be considered in determining whether any such breach, violation, or failure to satisfy shall have occurred. The recording of any such adjustment shall not be deemed to imply any misstatement of previously furnished financial statements or information and shall not be construed as concurrence of Company or its management with any such adjustments. (e) Subject to Section 5.22(b)5.21(b), Buyer and Company shall cooperate (i) to minimize any potential adverse impact to the Buyer under ASC 805, and (ii) to maximize potential benefits to the Buyer and its Subsidiaries under Code Section 382 in connection with the transactions contemplated by this Agreement, in each case consistent with GAAP, the rules and regulations of the SEC, and applicable banking lawsLaws. (f) Buyer and regulations.Company have agreed to cooperate regarding a real estate matter as set forth onBuyer Disclosure Schedule 5.21(f). Section 5.235.22Bank Merger. Buyer and Company agree to take all action necessary and appropriate, including causing the entering into of an appropriate Plan of Bank Merger, to cause Company Bank to merge with Buyer Bank in accordance with applicable laws and regulationsLaws and the terms of the Plan of Bank Merger at such time, ifimmediately following the Effective Time. Section 5.23Charitable Foundation. Subject to any as determinednotification and/or approval required by Buyer. Section 5.24Section 16(a). Priorrelevant Governmental or Regulatory Authorities, (i) Company agrees to use all commercially reasonable efforts to terminate or dissolve Company Charitable Foundation and contribute its remaining assets to Buyer Charitable Foundation prior to the Closing or (ii) Buyer and Company agree to use all commercially reasonable efforts to, immediately after the Effective Time, consummate the merger of Company Charitable Foundation with and into Buyer shall, as applicable, take all such steps as may be required to cause any acquisitions ofCharitable Foundation, with Buyer Common Stock resulting fromCharitable Foundation the transactions contemplated by this Agreement by each individual who may be subject to the reporting requirements of surviving entity.
Section 16(a) of the Exchange Act with respect to Buyer to be exempt under Rule 16b-3 promulgated under the Exchange Act. Company agrees to promptly furnish Buyer with all requisite information necessary for Buyer to take the actions contemplated by this Section 5.24. Section 5.25Representation on Buyer Board and Buyer Bank Board. Prior to the Closing, the Board of Directors of Buyer and the Board of Directors of Buyer Bank each shall increase by one (1) the number of directors constituting the entire Boards of Directors of Buyer and Buyer Bank, respectively, effective as of and contingent upon the occurrence of the Effective Time, and shall duly elect, from among those serving on Company’s Board of Directors as of the date of this Agreement, an individual (the “Director Designee”) to become a director of Buyer and Buyer Bank, effective as of and contingent upon the occurrence of the Effective Time. Buyer shall select the Director Designee in its sole and absolute discretion from among those serving on the Company’s Board of Directors as of the date of this Agreement. The Director Designee shall be subject to Buyer’s customary background screening and evaluation procedures for potential directors and must meet all criteria set forth in Buyer’s governance principles with respect to qualifications for directors.
Section 5.265.24Certain Transactional Expenses. Company has provided inonCompany Disclosure Schedule 3.375.23 a reasonable good faith estimate of costs and fees that Company and its Subsidiaries expect to pay to retained counsel and investment advisorsrepresentatives in connection with the transactions contemplated by this Agreement.Agreement (collectively, “Company Expenses”). Upon the reasonable request of Buyer, not more frequently than quarterly, Company shall promptly provide an updated budget of Company Expenses to Buyer. Company shall promptly notify Buyer if or when it determines that it expects to materially exceed its budget.
ARTICLE VI CONDITIONS TO CONSUMMATION OF THE MERGER Section 6.01Conditions to Obligations of the Parties to Effect the Merger. TheExcept for the conditions set forth in Section 6.01(e) which may not be waived in any circumstance, the respective obligations of Buyer and Company to consummate the Merger are subject to the fulfillment or, to the extent permitted by applicable law and except for the conditions set forth in Section 6.01(e), which may not be waived in any circumstance,Law, written waiver by the parties hereto prior to the Closing Date of each of the following conditions: (a)StockholderShareholder Vote. This Agreement and the transactions contemplated herebyit contemplates shall have received the Requisite Company StockholderShareholder Approval at the Company Meeting. (b)Regulatory Approvals; No Burdensome ConditionApprovals. All Regulatory Approvals and all other consents and approvals of a Governmental Authority required to consummate the Merger in the manner contemplated herein shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired or been terminated. None of such regulatory approvals shall impose any term, condition or restriction upon Buyer or any of its Subsidiaries that Buyer reasonably determines is a Burdensome Condition. (c)No Injunctions or Restraints; Illegality. No judgment, order, injunction, or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of any of the transactions contemplated herebyby this Agreement shall be in effect. No statute, rule, regulation, order, injunction, or decree shall have been enacted, entered, promulgated, or enforced by any Governmental Authority that prohibits or makes illegal the consummation of any of the transactions contemplated hereby.by this Agreement. (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 Authority. (e)Tax Opinions Relating to the Merger. Buyer and Company, respectively, shall have received opinions from Day Pitney LLP and Bingham McCutchenNutter McClennen & Fish LLP, respectively, each dated as of the Closing Date, both in substance and form reasonably satisfactory to Company and Buyer, to the effect that, on the basis of the facts, representations, and assumptions set forth in such opinions, 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 their opinions, each of Day Pitney LLP and Bingham McCutchenNutter McClennen & Fish LLP may require and rely upon representations contained in certificates of officers of each of Company and Buyer. (f)Nasdaq Listing. The shares of Buyer Common Stock issuable pursuant to the Merger shall have been listed on the Nasdaq, Global Market, subject to official notice of issuance. Section 6.02Conditions to Obligations of Company. The obligations of Company to consummate the Merger also are subject to the fulfillment or written waiver by Company prior to the Closing Date of each of the following conditions: (a)Representations and Warranties. The representations and warranties of Buyer set forth in this Agreement shall be true and correct 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 Closing Date as though made on and as of the Closing Date, in any case subject to the standard set forth in Section 4.01. Company shall have received a certificate, dated as of the Closing Date, signed on behalf of Buyer by the Chief Executive Officer and the Chief Financial Officer of Buyer to suchthat effect. (b)Performance of Obligations of Buyer. Buyer shall have performed and complied with all of its obligations under this Agreement in all material respects at or prior to the Closing Date, and Company shall have received a certificate, dated as of the Closing Date, signed on behalf of Buyer by the Chief Executive Officer and the Chief Financial Officer of Buyer to suchthat effect. (c)Other Actions. Buyer shall have furnished Company with such certificates of their respective officers or others and such other documents to evidence fulfillment of the conditions set forth in Sections 6.01 and 6.02 as Company may reasonably request. (d)Charitable Foundation. As of the Effective Time, (i) a majority of the board of directors of the Company Charitable Foundation shall consist of individuals that are acceptable to Buyer in its sole discretion, and (ii) the name of the Company Charitable Foundation shall have been changed to “Rockland Trust – Peoples Federal Foundation”. By way of example, if the board of directors of the Company Charitable Foundation has 5 members, 3 of them shall be acceptable to Buyer in its sole discretion; if the board of directors of the Company Charitable Foundation has 6 or 7 members, 4 of them shall be acceptable to Buyer in its sole discretion, in each case as of the Effective Time.
Section 6.03Conditions to Obligations of Buyer. The obligations of Buyer to consummate the Merger also are subject to the fulfillment or written waiver by Buyer prior to the Closing Date of each of the following conditions: (a)Company Common Stock. Notwithstanding the standard set forth in Section 3.01, the number of shares of Company Common Stock outstanding as of the Closing Date of this Agreement shall not exceed 6,241,436, except to the extent increased as a result of the exercise, after the date of this Agreement, of one or more stock options listed on the Company Disclosure Schedule, provided such options are exercised in accordance with the terms existing as of the date of this Agreement and disclosed on the Company Disclosure Schedule.198,845. (b)Representations and Warranties. The representations and warranties of Company set forth in this Agreement shall be true and correct 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 Closing Date as though made on and as of the Closing Date, in any case subject to the standard set forth in Section 3.01. Buyer shall have received a certificate, dated the Closing Date, signed on behalf of Company by the Chief Executive Officer of Company to suchthat effect. (c)Performance of Obligations of Company. Company shall have performed and complied with all of its obligations under this Agreement in all material respects at or prior to the Closing Date, and Buyer shall have received a certificate, dated the Closing Date, signed on behalf of Company by the Chief Financial Officer and Chief OperatingExecutive Officer of Company to suchthat effect. (d)No Burdensome Regulatory Condition. No Burdensome Regulatory Condition shall exist with respect to Regulatory Approval required for consummation of the Merger and Bank Merger. (e)Dissenters’ Shares. As of the Effective Time, the holders of no more than ten percent (10%) of Company Common Stock shall have taken the actions required by Part 13 of Chapter 156D of the MBCA to qualify their Company Common Stock as Dissenters’ Shares. (f)Other Actions. Company shall have furnished Buyer with such certificates of its officers or others and such other documents to evidence fulfillment of the conditions set forth in Sections 6.01 and 6.03 as Buyer may reasonably request. Section 6.04Frustration of Closing Conditions. Neither Buyer nor Company may rely on the failure of any condition set forth in Section 6.01, 6.02, or 6.03, as the case may be, to be satisfied if such failure was caused by such party’s failure to use commercially reasonable efforts to consummate any of the transactions contemplated hereby,Merger, as required by and subject to Section 5.03. ARTICLE VII TERMINATION Section 7.01Termination. This Agreement may be terminated and the transactions contemplated herebyMerger and the Bank Merger may be abandoned: (a)Mutual Consent. At any time prior to the Effective Time, by the mutual consent of Buyer and Company if the board of directors of Buyer and the board of directors of Company each so determines by vote of a majority of the membersvote of its entire Board.board of directors. (b)No Regulatory Approval. By either Buyer or Company, if its board of directors so determines by a majority vote of a majority of the members of its entire Board,board of directors, in the event the approval of any Governmental Authority required for consummation of the transactions contemplated this AgreementMerger or Bank Merger shall have been denied by final, nonappealable action by such Governmental Authority or an application thereforseeking approval of the Merger or Bank Merger shall have been permanently withdrawn at the request of a Governmental Authority. (c)No StockholderShareholder Approval. By either Buyer or Company (provided in the case of Company that it shall not be in material breach of any of its obligations under Section 5.04), if the Requisite Company StockholderShareholder Approval shall not have been obtained by reason of the failure to obtain the required vote at a duly held meeting of such stockholders or at any adjournment or postponement thereof.of the shareholders meeting. (d)Breach of Representations and Warranties. By either Buyer or Company (provided that the terminating party is not then in material breach of any representation, warranty, covenant, or other agreement contained hereinin this Agreement in a manner that would entitle the other party not to consummate the agreement)Merger or Bank Merger) if there shall have been a breach of any of the representations or warranties set forth in this Agreement by the other party (subject to the standard set forth in Sections 3.01 and 4.01, respectively), which breach is not cured prior to thirty (30) days following written notice to the party committing suchthe breach from the other party, hereto, or whichif the breach, by its nature, cannot be cured prior to the Closing. (e)Breach of Covenants. By either Buyer or Company (provided that the terminating party is not then in material breach of any representation, warranty, covenant, or other agreement contained hereinin this Agreement in a manner that would entitle the other party not to consummate the agreement)Merger or Bank Merger) 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 prior to thirty (30) days following written notice to the party committing suchthe breach from the other party, hereto, or whichif the breach, by its nature, cannot be cured prior to the Closing. (f)Delay. It being understood that the parties shall use good faith efforts to submit regulatory filings in a timely manner and to take such other commercially reasonable actions to facilitate a closing on or before February 28, 2015, byBy either Buyer or Company if the Merger shall not have been consummated on or before April 30, 2015 (the “Termination Date”),March 31, 2019, unless the failure of the Closing to occur by suchthat date shall be due to a material breach of this Agreement by the party seeking to terminate this Agreement. (g)Superior Proposal. By Company if at any time after the date of this Agreement and prior to obtaining the Requisite Company StockholderShareholder Approval, Company receives an Acquisition Proposal; provided, however, that Company shall not terminate this Agreement pursuant to the foregoing clause unless: (i) Company shall have complied with Section 5.09 of this Agreement, including the conclusion by the board of directors of Company in good faith that suchthe Acquisition Proposal is a Superior Proposal; (ii) Company concurrently pays the Termination Fee payable pursuant to Section 7.02; and (iii) the board of directors of Company concurrently approves, and Company concurrently enters into, a definitive agreement with respect to suchthe Superior Proposal.Proposal; and
(iii) Company concurrently pays the Termination Fee payable pursuant to Section 7.02. (h)Failure to Recommend; Third-Party Acquisition Transaction; Etc. At any time prior to the Company Meeting, by Buyer if (i) Company shall have materially breached its obligations under Section 5.09, (ii) the board of directors of Company shall have failed to make its recommendation referred to in Section 5.04 or withdrawn such recommendation or modified or changed such recommendationmade a Change in a manner adverse in any respect to the interests of Buyer,Recommendation, whether or not permitted by Section 5.09, (iii) the board of directors of Company shall have recommended, proposed, or publicly announced its intention to recommend or propose, to engage in an Acquisition Transaction with any Person other than Buyer or a Subsidiary or Affiliate of Buyer, whether or not permitted by Section 5.09, (iv) a tender or exchange offer for 20% or more of the outstanding shares of Company Common Stock is commenced and the board of directors of Company shall have failed to publicly recommend against a publicly announced Acquisition Proposalsuch tender or exchange offer within five (5) Business Days of being requested to do so by Buyer, or (v) Company shall have materially breached its obligations under Section 5.04 by failing to call, give notice of, convene, and hold the Company Meeting in accordance with Section 5.04. (i)Price of the Buyer Common Stock. By Company, if the board of directors of Company so determines by the vote of a majority vote of its members, in the event that, as of the Determination Date, both of the following conditions are satisfied: (i) the Average Determination Price shall be less than 80% of the Buyer Starting Price; and (ii) (A) the number obtained by dividing the Average Determination Price by the Buyer Starting Price (such number, the “Buyer Ratio”) is less than (B) the number obtained by dividing the Final Index Price by the Initial Index Price and subtracting 0.20 from such quotient (such number, the “Index Ratio”). If Company elects to exercise its termination right pursuant to this Section 7.01(i), it shall give written notice to Buyer not later than the end of the third Business Day next following the Determination Date. During the five (5) Business Day period commencing with its receipt of such notice, Buyer may, at its option, increase the Exchange Ratio to a number equal to the lesser of (x) a quotient (rounded to the nearestone-ten-thousandth), the numerator of which is equal to the product of the Exchange Ratio (as then in effect) and the Index Ratio, and the denominator of which is equal to the Buyer Ratio, or (y) a quotient (rounded to the nearestone-ten-thousandth), the numerator of which is the product of the Exchange Ratio (as then in effect), the Buyer Starting Price and 0.80, and the denominator of which is the Average Determination Price. If Buyer makes an election contemplated by the preceding sentence within such five (5) Business Day period, it shall give prompt written notice to Company of such election and the revised Exchange Ratio whereuponand no termination shall have occurred pursuant to this Section 7.01(i) and this Agreement shall remain in effect in accordance with its terms (except asthat the Exchange Ratio shall have been sobe modified), and any references in this Agreement to “Exchange Ratio” shall thereafter be deemed to refer to the Exchange Ratio as adjusted pursuant to this Section 7.01(i). If the outstanding shares of Buyer Common Stock or any company belonging to the Index shall be changed into a different number of shares by reason of any stock dividend, reclassification, recapitalization,split-up, combination, exchange of shares, or similar transaction between the date of the Agreement and the Determination Date, the prices for the common stock of such company will be appropriately adjusted. For purposes of this Section 7.01(i), the following terms shall have the meanings set forth below: “Buyer Starting Price” shall mean the average, rounded to the nearestone-tenth of a cent, of the VWAP of the Buyer Common Stock for the ten trading day period ending on the day immediately preceding the date hereof.of this Agreement. “Average Determination Price” of the Buyer Common Stock shall mean the average, rounded to the nearestone-tenth of a cent, of the VWAP of the Buyer Common Stock for the ten (10) trading day period ending on the trading date immediately preceding the Determination Date. “Determination Date” means the date on which the last required approval of a Governmental Entity is obtained with respect to the Merger, without regard to any requisite waiting period. “Final Index Price” means the average, rounded to the nearestone-tenth of a cent, of the closing prices of the Index for the same trading days used in calculating the Average Determination Price. “Index” means the Nasdaq Bank Stock Index or, if such Index is not available, such substitute or similar index as substantially replicates the Nasdaq Bank Stock Index. “Initial Index Price” means the average, rounded to the nearestone-tenth of a cent, of the closing prices of the Index for the same trading days used in calculating the Buyer Starting Price. Section 7.02Termination Fee; Reimbursement. (a) In recognition of the efforts, expenses and other opportunities foregone by Buyer while structuring and pursuing the Merger, Company shall pay to Buyer by wire transfer of immediately available funds a termination fee equal to $5,300,000$1,600,000 (the “Termination Fee”) (i) in the event Company terminates this Agreement pursuant to Section 7.01(g), in which case Company shall pay the Termination Fee at or prior to the time of such termination, and (ii) in the event Buyer terminates this Agreement pursuant to Section 7.01(h), in which case Company shall pay the Termination Fee as promptly as practicable (but in any event within three (3) Business Days). (b) In the event that (A) (i) an Acquisition Proposal, whether or not conditional, shall have been publicly announced after the date hereofof this Agreement (or any Person shall have, after the date hereof,of this Agreement, publicly announced an intention, whether or not conditional, to make an Acquisition Proposal) or (ii) the board of directors of Company has made a Change in Recommendation (or publicly proposed to make a Change in Recommendation), prior to or on the date of Company Meeting (including any adjournment or postponement at which the vote on the Merger is held), and, (B) this Agreement is thereafter terminated (i) by either Buyer or Company pursuant to (X) Section 7.01(c) or (Y) Section 7.01(f) prior to or on the date of Company Meeting (including any adjournment or postponement at which the vote on the Merger is held), or (ii) by Buyer pursuant to Section 7.01(d) or Section 7.01(e), and (C) within 12twelve (12) months following the date of such termination, Company enters into a definitive agreement with respect to any Acquisition Transaction, the board of directors of Company recommends any Acquisition Transaction or Company consummates any Acquisition Transaction (whether or not such Acquisition Transaction resulted from or was related to the Acquisition Proposal referred to in the foregoing clause (A)(i), if applicable), then Company shall pay Buyer the Termination Fee, less the Buyer Reimbursement Amount (as defined in this Agreement) (but only to the extent that Company has actually paid to Buyer the Buyer Reimbursement Amount), which amount shall be payable by wire transfer of immediately available funds on or prior to the earlier of Company entering into a definitive agreement for or consummating such Acquisition Transaction, provided, however, that for purposepurposes of this clause (C), all references in the definition of Acquisition Transaction“Acquisition Transaction” to “20% or more” shall instead refer to “50% or more”. (c) In the event that this Agreement is terminated by Buyer under Section 7.01(d), Section 7.01(e) or Section 7.01(f) and a circumstance referred to in clause (A)(i) or (A)(ii) of Section 7.02(b) shall have occurred prior to such termination but the Termination Fee has not been paid and is not payable because the circumstances referred to in clause (C) of Section 7.02(b) shall not have occurred, then Company shall pay at Buyer’s direction as promptly as possible (but in any event within three (3) Business Days) following receipt of an invoice therefor up to $550,000 of Buyer’s and its Subsidiaries reasonably documentedout-of-pocket fees and expenses (including reasonable legal fees and expenses) actually incurred by Buyer and its Subsidiaries prior to the termination of this Agreement in connection with the negotiation, execution, delivery, or performance of this Agreement by Buyer and Buyer Bank (the “Buyer Reimbursement Amount”). (d) Company and Buyer each agree that the agreements contained in this Section 7.02 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Buyer would not enter into this Agreement; accordingly, if Company fails promptly to pay any amounts due under this Section 7.02 and, in order to obtain such payment, Buyer commences a suit that results in a judgment against Company for such amounts, Company shall pay interest on such amounts from the date payment of such amounts were due to the date of actual payment at the rate of interest equal to the sum of (x) the rate of interest published from time to time in The Wall Street Journal, Eastern Edition (or any successor publication thereto)publication), designated therein as the prime rate on the date such payment was due, plus 200 basis points, together with the costs and expenses of Buyer (including reasonable legal fees and expenses) in connection with suchthe suit. (d)Exclusivity of Remedy.(e) Notwithstanding anything to the contrary set forth in this Agreement, if Company pays or causes to be paid to Buyer or to Buyer Bank the Termination Fee, neither Company nor Company Bank (or any successor
in interest of Company or Company Bank) will have any further obligations or liabilities to Buyer or Buyer Bank with respect to this Agreement or the transactions contemplated by this Agreement.Agreement, except in the cases of fraud or intentional misrepresentation. However, nothing in this Agreement shall in any way limit the right of Company to seek damages, specific performance, or any remedies at law or in equity, in the event of a breach of this Agreement by Buyer. Section 7.03Effect of Termination. In the event of termination of this Agreement pursuant to this Article VII, no party to this Agreement shall have any liability or further obligation to any other party hereunder other than as set forth in Section 7.02, provided, however, that except as set forth in Section 7.02(e), termination will not relieve a breaching party from liability for any willful and material breach of any covenant, agreement, representation, or warranty of this Agreement giving rise to such termination and provided that in no event will a party be liable for any punitive damages. For purposes of this Agreement, “willful and material breach” shall mean a material breach that is a consequence of an act undertaken by the breaching party with the knowledge (actual or constructive) that the taking of such act would, or would be reasonably expected to, cause a breach of this Agreement. ARTICLE VIII DEFINITIONS Section 8.01Definitions. The following terms are used in this Agreement with the meanings set forth below: “Acquisition Proposal” means any proposal or offer after the date hereofof this Agreement with respect to any Acquisition Transaction or any public announcement by any Person (which shall include any regulatory application or notice) of a proposal, plan, or intention with respect to any Acquisition Transaction. “Acquisition Transaction” means any of the following (other than the transactions contemplated hereby)by this Agreement) involving Company: (a) any merger, consolidation, share exchange, business combination, or other similar transaction; (b) any sale, lease, exchange, mortgage, pledge (excluding any FHLB or FRB pledges), transfer or other disposition of assets and/or liabilities that constitute 25%20% or more of the assets of Company in a single transaction or series of transactions; or (c) any tender offer or exchange offer for 25%20% or more of the outstanding shares of its capital stock or the filing of a registration statement under the Securities Act in connection therewith.with a tender offer or exchange offer. “Affiliate” means, with respect to any Person, any other Person controlling, controlled by or under common control with such Person. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) means the possession, directly or indirectly, of power to direct or cause the direction of the management and policies of a Person whether through the ownership of voting securities, by contract or otherwise. “Agreement” means this Agreement and Plan of Merger (including Exhibits and Disclosure Schedules), as amended or modified from time to time in accordance with Section 9.02. “Articles of Merger” has the meaning set forth in Section 1.04(a). “Average Determination Price” has the meaning set forth in Section 7.01(i). “Bank Merger” has the meaning set forth in the recitals. “Bank Secrecy Act” means the Bank Secrecy Act of 1970, as amended. “Bankers’ Bank” means Bankers’ Bank Northeast, a Connecticut chartered bank. “BHC Act” means the Bank Holding Company Act of 1956, as amended.
“BOLI” has the meaning set forth in Section 3.33(b)3.32(b). “Burdensome Conditions” has the meaning set forth in Section 5.06(a). “Business Day” means Monday through Friday of each week, except a legal holiday recognized as such by the U.S. government or any day on which banking institutions in The Commonwealth of Massachusetts are authorized or obligated to close. “Buyer” has the meaning set forth in the preamble to this Agreement. “Buyer Bank” has the meaning set forth in the preamble to this Agreement. “Buyer Benefit Plans” has the meaning set forth in Section 4.15(a). “Buyer Charitable Foundation” means the Rockland Trust Company Charitable Foundation. “Buyer Common Stock” means the common stock, $0.01 par value per share, of Buyer. “Buyer Disclosure Schedule” has the meaning set forth in Section 4.01(a). “Buyer Ratio” has the meaning set forth in Section 7.01(i)(ii). “Buyer Regulatory Agreement” has the meaning set forth in Section 4.09. “Buyer Reimbursement Amount” has the meaning set forth in Section 7.02(c). “Buyer Reports” has the meaning set forth in Section 4.06(a). “Buyer Starting Price” has the meaning set forth in Section 7.01(i). “Cash Consideration” has the meaning set forth in Section 2.01(c). “Cash Election” has the meaning set forth in Section 2.04(a). “Cash Election Shares” has the meaning set forth in Section 2.04(a). “Certificate” means any certificate or book entry statement which immediately prior to the Effective Time represents shares of Company Common Stock. “Change in Recommendation” has the meaning set forth in Section 5.04. “Closing” and “Closing Date” have the meanings set forth in Section 1.04(b). “Closing Conditions” has the meaning set forth in Section 1.04(b). “Code” means the Internal Revenue Code of 1986, as amended. “Community Reinvestment Act” or “CRA” means the Community Reinvestment Act of 1977, as amended. “Company” has the meaning set forth in the preamble to this Agreement. “Company Balance Sheet Date” has the meaning set forth in Section 3.10. “Company Bank” has the meaning set forth in the preamble to this Agreement. “Company Benefit Plans” has the meaning set forth in Section 3.16(a). “Company Charitable Foundation” means the Peoples Federal SavingsThe Milford National Bank and Trust Company Charitable Foundation.Foundation, Inc. “Company Common Stock” means the common stock, $0.01$1.00 par value per share, of Company. “Company Disclosure Schedule” has the meaning set forth in Section 3.01(a). “Company Employees” has the meaning set forth in Section 3.16(a). “Company Equity Plan”Expenses” has the meaning set forth in Section 2.07(a).5.23. “Company Intellectual Property” means the Intellectual Property used in or held for use in the conduct of the business of Company and its Subsidiaries. “Company Loan” has the meaning set forth in Section 3.23(b). “Company Loan Property” has the meaning set forth in Section 3.18(a). “Company Meeting” has the meaning set forth in Section 5.04. “Company Pension Plan” has the meaning set forth in Section 3.16(b). “Company Preferred Stock” means the Preferred Stock, $0.01 par value per share, of Company. “Company Regulatory Agreement” has the meaning set forth in Section 3.14.
“Company Reports”Third Party Consents” has the meaning set forth in Section 3.08(a)3.13(c). “Comptroller” meansConfidential Matters” has the Office of the Comptroller of the Currency of the U.S.meaning set forth in Section 5.14(a). “D&O Insurance” has the meaning set forth in Section 5.10(c). “Deferred Compensation and Supplemental ESOP Plan” means the Peoples Federal Bancshares, Inc. and Peoples Federal Savings Bank Amended and Restated Voluntary Deferred Compensation and Supplemental Employee Stock Ownership Plan for Executives.
“Derivative Transaction” means any swap transactions, option, warrant, forward purchase or sale transactions, futures transactions, cap transactions, floor transactions, or collar transactions relating to one or more currencies, commodities, bonds, equity securities, loans, interest rates, catastrophe events, weather-related events, credit-related events, or conditions or any indexes, or any other similar transactions (including any option with respect to any of these transactions) or combination of any of these transactions, including collateralized mortgage obligations or other similar instruments or any debt or equity instruments evidencing or embedding any such types of transactions, and any related credit support, collateral or other similar arrangements related to such transactions.them. “Determination Date” has the meaning set forth in Section 7.01(i). “Director Designee”Dissenters’ Shares” has the meaning set forth in Section 5.25.2.01(d). “Dodd-Frank Act” means the Dodd-Frank Wall Street Reform and Consumer Protection Act. “Effective Time” has the meaning set forth in Section 1.04(a). “Election Deadline” has the meaning set forth in Section 2.04(b). “Election Form” has the meaning set forth in Section 2.04(a). “Environmental Law” means any federal, state or local law,Law, regulation, order, decree, permit, authorization, opinion, or agency requirement relating to: (a) pollution, the protection or restoration of the indoor or outdoor environment, human health, or natural resources, (b) the handling, use, presence, disposal, release or threatened release of any Hazardous Substance, or (c) any injury or threat of injury to persons or property in connection with any Hazardous Substance. The term Environmental Law includes, but is not limited to, the following statutes, as amended, any successor thereto,law, and any implementing regulations, promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: (a) the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. § 9601 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. § 6901, et seq.; the Clean Air Act, as amended, 42 U.S.C. § 7401, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. § 1251, et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. § 2601, et seq.; the Emergency Planning and Community Right to Know Act, 42 U.S.C. § 1101, et seq.; the Safe Drinking Water Act; 42 U.S.C. § 300f, et seq.; (b) common law that may impose liability (including without limitation strict liability) or obligations for injuries or damages due to the presence of or exposure to any Hazardous Substance. “Equal Credit Opportunity Act” means the Equal Credit Opportunity Act, as amended. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. “ERISA Affiliate” has the meaning set forth in Section 3.16(c). “ESOP”Exchange Act” means the Peoples Federal Savings Bank Employee Stock Ownership Plan. “Securities Exchange Act” has the meaning set forth in Section 3.08(a).Act of 1934, as amended.
“Exchange Agent” means such exchange agent as may be designated by Buyer and reasonably acceptable to Company to act as agent for purposes of conducting the exchange procedures described in Section 2.04(a)2.05(a) (which shall be Buyer’s transfer agent). “Exchange Fund” has the meaning set forth in Section 2.05(a). “Exchange Ratio” has the meaning set forth in Section 2.01(c). “Executive Officer” means each officer of Company or(i) Buyer as applicable, who files reports with the SEC pursuant to Section 16(a) of the Exchange Act. “FDIA” has the meaningAct, and (ii) those officers of Company set forth in Section 3.28.on Appendix A.
“Fair Credit Reporting Act” means the Fair Credit Reporting Act, as amended “Fair Housing Act” means the Fair Housing Act, as amended. “FDIC” means the Federal Deposit Insurance Corporation. “Federal Deposit Insurance Act” means the Federal Deposit Insurance Act of 1950, as amended. “Federal Reserve Act” means the Federal Reserve Act of 1913, as amended. “FHLB” means the Federal Home Loan Bank of Boston. “Final Index Price” has the meaning set forth in Section 7.01(i). “FRB” means the Federal Reserve Bank of Boston. “GAAP” means accounting principles generally accepted in the United States of America. “Governmental Authority” means any federal, state or local court, regulator, administrative agency, or commission or other governmental authority or instrumentality. “Gramm-Leach-Bliley Act of 1999” means the Financial Services Modernization Act of 1999, as amended, which is commonly referred to as the “Gramm-Leach-Bliley Act.” “Hazardous Substance” means any and all substances (whether solid, liquid or gas) defined, listed, or otherwise regulated as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, flammable or explosive materials, radioactive materials, or words of similar meaning or regulatory effect under any present or future Environmental Law or that may have a negative impact on human health or the environment, including but not limited to petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead, radon, radioactive materials, flammables and explosives, mold, mycotoxins and airborne pathogens (naturally occurring or otherwise). “HOLA” means the Home Owners’ Loan Act of 1933, as amended. “Home Mortgage Disclosure Act” means Home Mortgage Disclosure Act of 1975, as amended.
“Indemnified Parties” and “Indemnifying Party” have the meanings set forth in Section 5.10(a). “Index” has the meaning set forth in Section 7.01(i). “Index Ratio” has the meaning set forth in Section 7.01(i)(ii). “Initial Index Price” has the meaning set forth in Section 7.01(i). “InformationalInformation Systems Conversion” has the meaning set forth in Section 5.15. “Insurance Policies” has the meaning set forth in Section 3.33(a)3.32(a). “Intellectual Property” means (a) trademarks, service marks, trade names, Internet domain names, designs, logos, slogans, and general intangibles of like nature, together with all goodwill, registrations and applications related to the foregoing;them; (b) patents and industrial designs (including any continuations, divisionals,continuations-in-part, renewals, reissues, and applications for any of the foregoing)them); (c) copyrights (including any registrations and applications for any of the foregoing)them); (d) Software; and (e) technology, trade secrets and other confidential information,know-how, proprietary processes, formulae, algorithms, models, and methodologies. “IRS” means the Internal Revenue Service. “Knowledge” of any Person (including references to sucha Person being aware of a particular matter) as used with respect to Company and its Subsidiaries means those facts that are actually known, after reasonable inquiry, by the Executive Officers of Company and the directors of Company and Company Bank, and as used with respect to Buyer and its Subsidiaries means those facts that are actually known, after reasonable inquiry, by the Executive Officers of Buyer and the directors of Buyer. Without limiting the scope of the immediately preceding sentence, the term “Knowledge” includes any fact, matter, or circumstance set forth in any written notice received by Company or Buyer, respectively, from any Governmental Authority. “Law” means any statute, law, ordinance, rule, or regulation of any Governmental Authority that is applicable to the referenced Person. “Leases” has the meaning set forth in Section 3.31(b)3.30(b). “Liens” means any charge, mortgage, pledge, security interest, restriction, claim, lien or encumbrance, conditional and installment sale agreement, charge or other claim of third parties of any kind. “Loans” has the meaning set forth in Section 3.23(a). “Mailing Date” has the meaning set forth in Section 2.04(a). “Material Adverse Effect” means (a) with respect to any Person, any effect, circumstance, occurrence or change that is material and adverse to the financial position, results of operations, or business of such Person and its Subsidiaries, taken as a whole, or which would materially impair the ability of such Person to perform its obligations under this Agreement or otherwise materially impairs the ability of such Person to consummate the transactions contemplated hereby;by this Agreement; provided, however, that Material Adverse Effect shall not be deemed to include the impact ofof: (i) changes in banking and similar lawsLaws of general applicability or interpretations thereofof banking and similar Laws of general applicability by Governmental Authorities,Authorities; (ii) changes in GAAP or regulatory accounting requirements applicable to banks or bank holding companies generally,generally; (iii) any modifications or changes to Company valuation policies and practices in connection with the transactions contemplated herebyby this Agreement or restructuring charges taken in connection with the transactions contemplated hereby,by this Agreement, in each case in accordance with GAAP and with Buyer’s prior written consent,consent; (iv) changes after the date of this Agreement in general economic or capital market conditions affecting financial institutions or their market prices generally and not disproportionately affecting Company or Buyer, including, but not limited to, changes in levels of interest rates generally,generally; (v) the effects of compliance with this Agreement on the operating performance, business, or financial condition of Company or Buyer, including the expenses incurred by Company or Buyer in negotiating, documenting, effecting, and consummating the transactions contemplated by this agreement,Agreement; (vi) the effects of any action or omission taken by Company with the prior consent of Buyer, and vice versa, or as otherwise expressly permitted or contemplated by this Agreement; (vii) the impact of the Agreement and the transactions contemplated herebyit contemplates on relationships with customers or employees (including the loss of personnel subsequent to the date of this Agreement); and (viii) any fact, change, event, development, effect or circumstance resulting from the public disclosure of this Agreement or the transactions contemplated hereby.it contemplates; (ix) transaction expenses incurred by Company of a type and in an amount customary for transactions of this nature; (x) changes in national or international political or social conditions including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon or within the United States; and (xi) natural disaster or other force majeure event. “Material Contracts” has the meaning set forth in Section 3.13(a). “Maximum D&O Tail Premium” has the meaning set forth in Section 5.10(c). “MBCA” has the meaning set forth in Section 1.01. “Merger” has the meaning set forth in the recitals. “Merger Consideration” has the meaning set forth in Section 2.01(c). “MGCL” means the Maryland General Corporation Law, as amended. “Nasdaq” has the meaning set forth in Section 4.08(a).
“National Labor Relations Act” means the National Labor Relations Act of 1935, as amended. “New Certificates” has the meaning set forth in Section 2.05(a). “Non-Election” has the meaning set forth in Section 2.04(a). “Non-Election Shares” has the meaning set forth in Section 2.04(a). “Notice Period” has the meaning set forth in Section 5.09(d). “Option Cash Payment” hasOCC” means the meaning set forth in Section 2.07(a). “Option Exercise Price” hasOffice of the meaning set forth in Section 2.07(a).
“Options” hasComptroller of the meaning set forth in Section 2.07.Currency.
“OREO” has the meaning set forth in Section 3.23(a). “Patient Protection and Affordable Care Act” means the Patient Protection and Affordable Care Act, as amended. “Person” means any individual, bank, corporation, partnership, association, joint-stock company, business trust, limited liability company, unincorporated organization, or other organization or firm of any kind or nature. “Phase I Assessment” has the meaning set forth in Section 5.01(w). “Phase II Assessment” has the meaning set forth in Section 5.17(a). “Plan of Bank Merger” means the agreement and plan of merger to be entered into between Buyer Bank and Company Bank providing for the merger of Company Bank with and into Buyer Bank.Bank, with Buyer Bank the surviving entity. “Proxy Statement-Prospectus” means the proxy statement and prospectus and other proxy solicitation materials constituting a part thereof,of them, together with any amendments and supplements, thereto, to be delivered to holders of Company Common Stock in connection with the solicitation of their approval of this Agreement. “Registration Statement” has the meaning set forth in Section 4.12. “Regulatory Approval” has the meaning set forth in Section 3.07(a). “Release” means, with respect to any Hazardous Substance, any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the indoor or outdoor environment. “Requisite Company StockholderShareholder Approval” has the meaning set forth in Section 3.06. “Rights” means, with respect to any Person, warrants, options, rights, convertible securities, and other arrangements or commitments which obligate the Person to issue or dispose of any of its capital stock or other ownership interests. “Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended. “SEC” means the Securities and Exchange Commission. “Securities Act” hasmeans the meaning set forth in Section 3.08(a). Securities Act of 1933, as amended.“SettlementShareholders Agreement” has the meaning set forth in the recitals. “Shortfall Number” has the meaning set forth in Section 2.04(c)(ii). “Software” means computer programs, whether in source code or object code form (including any and all software implementation of algorithms, models and methodologies), databases, and compilations (including any and all data and collections of data), and all documentation (including user manuals and training materials) related to the foregoing.them. “Stock Consideration” has the meaning set forth in Section 2.01(c). “Stock Conversion Number” has the meaning set forth in Section 2.04(a). “Stock Election” has the meaning set forth in Section 2.04(a). “Stock Election Number” has the meaning set forth in Section 2.04(a). “Stock Election Shares” has the meaning set forth in Section 2.04(a). “Subsidiary” means, with respect to any party, any corporation or other entity of which a majority of the capital stock or other ownership interest having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by suchthe party. For purposes of this Agreement any reference to a Company Subsidiary means, unless the context otherwise requires, any current or former Subsidiary of Company. For the avoidance of doubt, Subsidiary shall not include the Company Charitable Foundation. “Superior Proposal” means any bona fide written Acquisition Proposal with respect to more than 50% of the combined voting power of the shares of Company Common Stock then outstanding or all or substantially all of the assets of Company that is (a) on terms which the board of directors of Company determines in good faith, after consultation with its financial advisor, to be more favorable from a financial point of view to Company’s stockholdersshareholders than the transactions contemplated hereby,by this Agreement, (b) that constitutes a transaction that, in the good faith judgment of the board of directors of Company, is reasonably likely to be consummated on the terms set forth, taking into account all legal, financial, regulatory, and other aspects of suchthe proposal, and (c) for which financing, to the extent required, is then committed pursuant to a written commitment letter. “Surviving Entity” shall have the meaning set forth in Section 1.01. “Tax” and “Taxes” mean all federal, state, local or foreign income, gross income, gains, gross receipts, sales, use, ad valorem, goods and services, capital, production, transfer, franchise, windfall profits, license, withholding, payroll, employment, disability, employer health, excise, estimated, severance, stamp, occupation, property, environmental, custom duties, unemployment or other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever imposed by a Taxing Authority, together with any interest, additions or penalties, thereto, whether disputed or not, andnot. “Taxing Authority” means any interest in respectGovernmental Authority responsible for the imposition, assessment or collection of such interest and penalties.any Tax. “Tax Returns” means any return, declaration or other report, claim for refund, or information return or statement relating to Taxes required to be filed with a Taxing Authority, including any scheduleschedules or attachment thereto, and including any amendment thereof. “Termination Date” has the meaning set forth in Section 7.01(f).
“Termination Fee” has the meaning set forth in Section 7.02(a). “The date hereof” or “the date of this Agreement” shall mean August 5, 2014.May 29, 2018. “Truth in Lending Act” means the Truth in Lending Act of 1968, as amended. “Treasury” means the United States Department of Treasury. “USA PATRIOT Act” means the USA PATRIOT Act of 2001, Public Law107-56, and the regulations promulgated thereunder.its implementing regulations. “Voting Agreement” has the meaning set forth in the recitals. “VWAP” means volume-weighted average trading price of a share of (i) Buyer Common Stock on Nasdaq (or if Buyer Common Stock is not then listed on Nasdaq, the principal securities market on which Buyer Common Stock is then listed or quoted), or (ii) the Index, in each case as reported by Bloomberg L.P. “WARN Act” has the meaning set forth in Section 5.11(f). ARTICLE IX MISCELLANEOUS Section 9.01Survival. No representations, warranties, agreements, and covenants contained in this Agreement shall survive the Effective Time (other than agreements or covenants contained herein that by their express terms are to be performed after the Effective Time) shall survive the Effective Time or the termination of this Agreement if this Agreement is terminated prior to the Effective Time (other than this Article IX, which shall survive any such termination). Notwithstanding anything in the foregoing to the contrary, no representations, warranties, agreements, and covenants contained in this Agreement shall be deemed to be terminated or extinguished so as to deprive a party hereto or any of its affiliatesAffiliates of any defense at law or in equity which otherwise would be available against the claims of any Person, including without limitation any stockholdershareholder or former stockholder.shareholder. Section 9.02Waiver; Amendment. Prior to the Effective Time, except for the condition set forth in Section 6.01(e) and the introductory language of Section 6.01 relating to Section 6.01(e), which may not be waived in any circumstance, any provision of this Agreement may be (a) waived by the party benefited by the provision or (b) amended or modified at any time, by an agreement in writing among the parties hereto executed in the same manner as this Agreement, except that after the Company Meeting no amendment shall be made which by lawLaw requires further approval by the stockholdersshareholders of Buyer or Company without obtaining suchthat approval. Section 9.03Governing Law; Waiver. (a) This Agreement shall be governed by, and interpreted in accordance with, the lawsLaws of Thethe Commonwealth of Massachusetts, without regard for conflictthe conflicts of law provisions.principles thereof. (b) Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues, and therefore each such party hereby irrevocably and unconditionally waives any right such party may have to a trial by jury in respect of any litigation directly or indirectly arising out of or relating to this agreement,Agreement, or the transactions contemplated by this Agreement.it contemplates. Each party certifies and acknowledges that (i) no representative, agent or attorney of any other party has represented, expressly or otherwise, that suchany other party would not, in the event of litigation, seek to enforce the foregoing waiver, (ii) each party understands and has considered the implications of this waiver, (iii) each party makes this waiver voluntarily, and (iv) each party has been induced to enter into this agreementAgreement by, among other things, the mutual waivers and certifications in this Section 9.03. Section 9.04Expenses. Except as otherwise provided in SectionSections 5.05(f) and 7.02, each party hereto will bear all expenses incurred by it in connection with this Agreement and the transactions contemplated hereby,it contemplates, including fees and expenses of its own financial consultants, accountants and counsel.counsel, provided that nothing in this Agreement shall limit either party’s rights to recover any liabilities or damages arising out of the other party’s willful breach of any provision of this Agreement. Section 9.05Notices. All notices, requests, and other communications hereunder to a party shall be in writing and shall be deemed given if personally delivered, mailed by registered or certified mail (return receipt requested), by properly addressed electronic mail delivery, or sent by reputable courier service to suchthe party at its address set forth below or such other address as such party may specify by notice to the parties hereto.notice. All notices shall be deemed effective upon delivery. If to Buyer: Independent Bank Corp. 288 Union Street Rockland, Massachusetts 02370 Attention: Edward H. Seksay, General Counsel Fax: (508) 732-7783E-mail: edward.seksay@rocklandtrust.com
With a copy (which shall not constitute notice) to: Day Pitney LLP 1 Jefferson Road Parsippany, NJ 07054 Attention: Michael T. Rave, Esq. Fax: (973) 206-6791E-mail: mrave@daypitney.com
If to Company: Peoples Federal Bancshares, Inc.MNB Bancorp
435 Market Street300 East Main St.
Brighton, Massachusetts 02135Milford, MA 01757
Attention: Maurice H. Sullivan, Jr., ChairmanKristin T. Carvalho, President and Chief Executive Officer Fax: (617) 254-8950E-mail: kcarvalh@mlfdbank.com
With a copy (which shall not constitute notice) to: Bingham McCutchenNutter McClennen & Fish LLP
One Federal Street155 Seaport Blvd
Boston, MA 0211002210 Attention: Neal J. Curtin,Michael K. Krebs, Esq. Fax: (617) 951-8736E-mail: mkrebs@nutter.com
Section 9.06Entire Understanding; No Third Party Beneficiaries. This Agreement, together with the Exhibits, and the Disclosure Schedules, hereto,and the confidentiality agreements between Company and Buyer, dated April 19, 2018, represents the entire understanding of the parties hereto and thereto with reference to the transactions contemplated hereby,by this Agreement, and this Agreement supersedes any and all other oral or written agreements heretoforepreviously made, except that the confidentiality agreements between the parties shall remain in full force and effect. Except for the Indemnified Parties’ rights under Section 5.10, which are expressly intended to be for the irrevocable benefit of, and shall be enforceable by, each Indemnified Party and his or her heirs and representatives, Buyer and Company hereby agree that their respective representations, warranties, and covenants set forth herein are solely for the benefit of the other party, hereto, in accordance with and subject to the terms of this Agreement, and this Agreement is not intended to, and does not, confer upon any Person (including any person or Employees who might be affected by Section 5.11), other than the parties, hereto, any rights or remedies, hereunder, including the right to rely upon the representations and warranties set forth herein.in this Agreement. The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties hereto.parties. Any inaccuracies in suchthe representations and warranties are subject to waiver by the parties hereto in accordance with Section 9.02 without notice or liability to any other Person. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with particular matters regardless of the knowledgeKnowledge of any of the parties hereto.parties. Consequently, Persons other than the parties hereto may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date. Section 9.07Severability. In the event that any one or more provisions of this Agreement shall for any reason be held invalid, illegal, or unenforceable in any respect, by any court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement and the parties shall use their reasonable efforts to substitute a valid, legal, and enforceable provision which, insofar as practical, implements the purposes and intentsintentions of this Agreement. Section 9.08Enforcement of the Agreement. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereofof this Agreement in any federal or state court in the Commonwealth of the United States or any stateMassachusetts having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.equity, and that the party seeking an injunction shall not be required to post any bond. Each party to this Agreement (a) irrevocably and unconditionally consents to and submits itself to the exclusive jurisdiction of the Business Litigation Session of the Superior Court of the Commonwealth of Massachusetts, or in the event, but only in the event, that such court does not have subject matter jurisdiction over such action or proceeding, the Superior Court of the Commonwealth of Massachusetts or the United States District Court for the District of Massachusetts (collectively, the “Massachusetts Courts”) in any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that all claims in respect of such action or proceeding may be heard and determined only in any such Massachusetts Courts, and (c) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such Massachusetts Courts. Each party to this Agreement waives any defense or inconvenient forum to the maintenance of any action or proceeding so brought in any such Massachusetts Courts and waives any bond, surety or other security that might be required of any other party in any such Massachusetts Courts with respect to such action or proceeding. To the full extent permitted by applicable law, any party may make service on another party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 9.05. Nothing in this Section 9.08, however, shall affect the right of any party to serve legal process in any other manner permitted by law. EACH OF BUYER, BUYER BANK AND COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. Section 9.09Interpretation. When a reference is made in this Agreement to sections, exhibits, or schedules, suchthe reference shall be to a section of, or exhibit or schedule to, this Agreement unless otherwise expressly indicated. The table of contents and headings contained in this Agreement are for reference purposes only and are not part of this Agreement. Whenever the words “include,” “includes”“includes,” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” Section 9.10Assignment. No party may assign either this Agreement or any of its rights, interests, or obligations hereunderunder this Agreement without the prior written approval of the other party. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Section 9.11Counterparts. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments or waivers hereto or thereto, may be executed by means of a facsimile machine or bye-mail delivery of a “.pdf” format data file and in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. Signatures delivered by facsimile machine or by electronice-mail delivery of a “.pdf” format data file shall have the same effect as originals. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine ore-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement and any signed agreement or instrument entered into in connection with this Agreement or any amendment or waivers hereto or thereto or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine ore-mail delivery of a “.pdf” format data file as a defense to the formation of a contract and each party hereto forever waives any such defense. [Signature Pages FollowPage Follows] IN WITNESS WHEREOF, the parties hereto have causedexecuted this Agreement to be executed in counterparts by their duly authorized officers, all as of the day and year first above written.on page one. | | | | | | By: | | /s/ Christopher Oddleifson |
| | | | Name: Christopher Oddleifson | | Title: President and Chief Executive Officer | | | ROCKLAND TRUST COMPANY |
| | | | | | By: | | /s/ Christopher Oddleifson |
| | | | Name: Christopher Oddleifson | | Title: Chief Executive Officer | | | MNB BANCORP |
| | | | | | By: | | /s/ Kristin T. Carvalho |
| | | | Name: Kristin T. Carvalho | | Title: President and Chief Executive Officer | | PEOPLES FEDERAL BANCSHARES, INC.THE MILFORD NATIONAL BANK AND
TRUST COMPANY |
| | | | | | By: | | /s/ Maurice H. Sullivan, Jr.Kristin T. Carvalho | Name: Maurice H. Sullivan, Jr. | Title: Chairman and Chief Executive Officer |
| PEOPLES FEDERAL SAVINGS BANK | | | By: | | /s/ Thomas J. Leetch, Jr. | Name: Thomas J. Leetch, Jr.Kristin T. Carvalho | | Title: President and Chief Executive Officer |
[Signature Page ofto Agreement and Plan of MergerMerger] Annex B
ANNEX B – OPINION OF SANDLER O’NEILL +& PARTNERS, L.P. August 5, 2014May 29, 2018
Board of Directors Peoples Federal Bancshares, Inc.MNB Bancorp
435 Market300 East Main Street
Brighton,Milford, MA 0213501757
Ladies and Gentlemen: Peoples Federal Bancshares, Inc.MNB Bancorp (“Peoples”Company”), Peoples Federal SavingsMilford National Bank and Trust Company, a wholly owned subsidiary of Company (“Company Bank”), Independent Bank Corp. (“Independent”Buyer”) and Rockland Trust Company, have entereda wholly owned subsidiary of Buyer (“Buyer Bank”), are proposing to enter into an Agreement and Plan of Merger dated as of August 5, 2014 (the “Agreement”), pursuant to which PeoplesCompany will merge with and into IndependentBuyer with Buyer being the surviving corporation (the “Merger”). Pursuant to the terms of the Agreement, uponat the effective date of the Merger,Effective Time, each share of Peoples common stock, $1.00 par value per share, of Company (“Company Common Stock”) issued and outstanding immediately prior to the Effective Time, other thanexcept for certain shares describedof Company Common Stock as specified in the Agreement, willshall become and be converted into, as provided in and subject to the limitations set forth in the Agreement, the right to receive, at the election of the holder thereof,of such share of Company Common Stock either: (i) 0.5523 shares of Independent common stock (the “Stock Consideration”) or (ii) $21.00$275.00 in cash (the “Cash Consideration”), subject to the limitations set forth in the Agreement which provide generally that 60% of the total number ofor (ii) 3.55 shares of Peoples common stock shall be converted into theBuyer Common Stock Consideration and 40% of such shares will be converted into the Cash Consideration.(the “Stock Consideration”). The Cash Consideration, the Stock Consideration and any cash in lieu of fractional shares paid pursuant to the Agreement are collectively referred to herein as the “Merger Consideration.” The otherAgreement provides, generally, that seventy-five percent (75%) of the total number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into the Stock Consideration and twenty-five percent (25%) of such shares of Company Common Stock shall be converted into the Cash Consideration in accordance with the allocation procedures set forth in Agreement. Capitalized terms used herein without definition have the meanings assigned to them in the Agreement. The terms and conditions of the Merger are more fully set forth in the Agreement, and capitalized terms used herein without definition shall have the meanings assigned to them in the Agreement. You have requested our opinion as to the fairness, from a financial point of view, of the Merger Consideration to the holders of Peoples common stock from a financial point of view.Company Common Stock.
Sandler O’Neill & Partners, L.P. (“Sandler O’Neill”, “we” or “our”), as part of its investment banking business, is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions. In connection with this opinion, we have reviewed and considered, among other things: (i) a draft of the Agreement;Agreement, dated May 23, 2018; (ii) certain publicly available financial statements and other historical financial information of PeoplesCompany and Company Bank that we deemed relevant, including a draft of Peoples’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2014;relevant; (iii) certain publicly available financial statements and other historical financial information of IndependentBuyer and Buyer Bank that we deemed relevant; (iv) budget information for the fiscal year ending September 30, 2014 prepared by Peoples management and guidance from senior management of Peoples for the years thereafter, management having advised us that no detailedinternal financial projections for periods subsequent to the fiscal year ending September 30, 2014 were available; (v) publicly available analyst earnings estimates for Peoples for the fiscal years ending September 30, 2014 and 2015; (vi) publicly available analyst earnings estimates for IndependentCompany for the years ending December 31, 20142018 through December 31, 2022, as provided by the senior management of Company; (v) publicly available consensus median analyst earnings per share estimates for Buyer for the years ending December 31, 2018 and 2015; (vii)December 31, 2019, as well as a long-term earnings per share growth rate for the years thereafter and dividends per share for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of Buyer; (vi) the pro forma financial impact of the Merger on IndependentBuyer based on certain assumptions relating to transaction expenses, purchase accounting adjustments and cost savings, as well as net income projections and other synergiesa long-term asset growth rate for Company for the years ending December 31, 2018 through December 31, 2022, as determinedprovided by the senior management of IndependentBuyer (collectively, the “Pro Forma Assumptions”); (vii) the publicly reported historical price and discussed with Peoples’ senior management; (viii)trading activity for Buyer Common Stock, including a comparison of certain financial and other information, including stock trading information for PeoplesBuyer Common Stock and Independent withcertain stock indices, as well as similar publicly available information for certain other companies, the securities of which are publicly traded thrifttraded; (viii) a comparison of certain financial information for Company and Buyer with similar financial institutions and commercial banks, respectively;for which information is publicly available; (ix) the financial terms of certain other recent merger and acquisition transactionsbusiness combinations in the banking sector;bank and thrift industry (on a regional and nationwide basis), to the extent publicly available; (x) the current market environment generally and the banking environment in particular; and (xi) such other information, financial studies, analyses and investigations and financial, economic and market criteria as we considered relevant. We also discussed with certain members of the senior management of PeoplesCompany the business, financial condition, results of operations and prospects of PeoplesCompany and held similar discussions with certain members of the senior management of IndependentBuyer and its representatives regarding the business, financial condition, results of operations and prospects of Independent.Buyer. In performing our review, we have relied upon the accuracy and completeness of all of the financial and other information that was available to and reviewed by us from public sources, that was provided to us by Peoples and IndependentCompany or Buyer or their respective representatives or that was otherwise reviewed by us, and we have assumed such accuracy and completeness for purposes of preparingrendering this letter.opinion without any independent verification or investigation. We have further relied on the assurances of the respective senior managementmanagements of each of PeoplesCompany and IndependentBuyer that they are not aware of any facts or circumstances that would make any of such information inaccurate or misleading in any material respect.misleading. We have not been asked to undertake, and have not undertaken an independent verification of any of such information and we do not assume any responsibility or liability for the accuracy or completeness thereof. We did not make an independent evaluation or perform an appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of PeoplesCompany or IndependentBuyer or any of their respective subsidiaries, nor have we reviewedbeen furnished with any individual credit filessuch evaluations or appraisals. We render no opinion or evaluation on the collectability of Peoplesany assets or Independent.the future performance of any loans of Company or Buyer. We did not make an independent evaluation of the adequacy of the allowance for loan losses of PeoplesCompany or IndependentBuyer, or of the combined entity after the Merger, and we have not reviewed any individual credit files relating to Company or Buyer. We have assumed, with your consent, that the respective allowances for loan losses for both PeoplesCompany and IndependentBuyer are adequate to cover such losses and will be adequate on a pro forma basis for the combined entity. In preparing its analyses, Sandler O’Neill used publicly available earnings estimates and guidance frominternal financial projections for Company for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of Peoples, and senior management of Peoples confirmed to us that the estimates used reflected the best judgments of management of the future financial performance of Peoples. With respect to Independent,Company. In addition, Sandler O’Neill used publicly available consensus median analyst earnings per share estimates for Buyer for the years ending December 31, 2018 and December 31, 2019, as discussed withwell as a long-term earnings per share growth rate for the years thereafter and dividends per share for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of Independent.Buyer. Sandler O’Neill also received and used in its pro forma analyses certain projections of transaction costs, purchase accounting adjustments and expected cost savings which were preparedthe Pro Forma Assumptions, as provided by and/or reviewed withthe senior management of Independent.Buyer. With respect to these projections, we have assumedthe foregoing information, the respective senior managements of Company and Buyer confirmed to us that they have been reasonably prepared on a basis reflectingsuch information reflected (or, in the case of the publicly available consensus median analyst estimates referred to above, were consistent with) the best currently available projections, estimates and judgments of such management,those respective senior managements as to the future financial performance of Company and Buyer, respectively, and the other matters covered thereby, and we assumed that the future financial performance reflected in such performanceinformation would be achieved. We express no opinion as to any such estimates or projectionsinformation, or the assumptions on which they aresuch information is based. We have also assumed that there has been no material change in the respective assets, financial condition, results of operations, business or prospects of PeoplesCompany or IndependentBuyer since the date of the most recent financial datastatements made available to us as of the date of this letter. us. We have assumed in all respects material to our analysis that PeoplesCompany and IndependentBuyer will remain as going concerns for all periods relevant to our analyses. analysis. We have also assumed, with your consent, that (i) each of the parties to the Agreement will comply in all material respects with all material terms and conditions of the Agreement and all related agreements, that all of the representations and warranties contained in such agreements are true and correct in all material respects, that each of the parties to such agreements will perform in all material respects all of the covenants and other obligations required to be performed by such party under thesuch agreements and that the conditions precedent in such agreements are not and will not be waived, (ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the Merger, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on Peoples, IndependentCompany, Buyer or the Merger or any related transactions, and (iii) the Merger and any related transactiontransactions will be consummated in accordance with the terms of the Agreement without any waiver, modification or amendment of any material term, condition or agreement thereof and in compliance with all applicable laws and other requirements. Finally, with your consent, we have relied upon the advice that Company has received from its legal, accounting and tax advisors as to all legal, accounting and tax matters relating to the Merger and the other transactions contemplated by the Agreement. We express no opinion as to any such matters. Our opinion is necessarily based on financial, economic, regulatory, market and other conditions as in effect on, and the information made available to us as of, the date hereof. Events occurring after the date hereof could materially affect our views.this opinion. We have not undertaken to update, revise, reaffirm or withdraw this letteropinion or otherwise comment upon events occurring after the date hereof. We express no opinion as to the prices at which the common stock of Peoples or Independent may trade at any time. We also express no opinion as to any of the legal, accounting and tax matters relating to the Merger and any other transactions contemplated in connection therewith. We have acted as Company’s financial advisor to the Board of Directors of Peoples in connection with the Merger and will receive a portion offee for our services, which transaction fee is contingent upon the closing of the Merger. We will also receive a fee for providingrendering this opinion. Peoplesopinion, which opinion fee will be credited in full towards the transaction fee which will become payable to Sandler O’Neill on the day of closing of the Merger. Company has also agreed to indemnify us against certain claims and liabilities arising out of our engagement and to reimburse us for certain of our out-of-pocket expenses incurred in connection with our engagement. In the past, we have provided certain Sandler O’Neill did not provide any other investment banking services for Peoples and have received compensation for such services. In addition, asto, or receive any fees from, Company in the two years preceding the date hereof. As we have previously advised you, we have in the pasttwo years preceding the date of this opinion, Sandler O’Neill has provided certain investment banking services to, Independent and have received compensation for such services and may provide, and receive compensation for, such servicesfees from, Buyer. Most recently, Sandler O’Neill rendered a fairness opinion to the board of directors of Buyer in the future.connection with Buyer’s acquisition of Island Bancorp, Inc., which transaction closed in May 2017. In addition, in the ordinary course of our business as a broker-dealer, we may purchase securities from and sell securities to PeoplesBuyer and Independent and theirits affiliates. We may also actively trade the equity and debt securities of PeoplesBuyer and Independentits affiliates for our own account and for the accounts of our customers and, accordingly, may at any time hold a long or short position in such securities.customers.
ThisOur opinion has been approved by Sandler O’Neill’s fairness opinion committee. This letter is directed to the Board of Directors of PeoplesCompany in connection with its consideration of the Agreement and the Merger and does not constitute a recommendation to any shareholder of PeoplesCompany as to how any such shareholder should vote at any meeting of shareholders called to consider and vote upon the Merger orapproval of the form of consideration such shareholder should elect inAgreement and the Merger. Our opinion is directed only to the fairness, from a financial point of view, of the Merger Consideration to the holders of Peoples common stockCompany Common Stock and does not address the underlying business decision of PeoplesCompany to engage in the Merger, the form or structure of the Merger or any other transactions contemplated in the Agreement, the relative merits of the Merger as compared to any other alternative transactions or business strategies that might exist for PeoplesCompany or the effect of any other transaction in which PeoplesCompany might engage. We also do not express any opinion as to the fairness of the amount or nature of the compensation to be received in the Merger by Peoples’ officers, directors,any officer, director or employees,employee of Company or Buyer, or any class of such persons, if any, relative to the compensation to be received in the Merger by any other shareholders of Peoples. Ourshareholder. This opinion ishas been approved by Sandler O’Neill’s fairness opinion committee. This opinion shall not to be quoted or referred to, in whole or in part, in a registration statement, prospectus, proxy statement or in any other document, nor shall this opinion be used for any other purposes,reproduced without Sandler O’Neill’s prior written consent.consent;provided, however, Sandler O’Neill will provide its consent for the opinion to be included in regulatory filings to be completed in connection with the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Merger Consideration is fair to the holders of Peoples common stockCompany Common Stock from a financial point of view. Very truly yours, /s/ Sandler O’Neill & Partners, L.P. Sandler O’Neill & Partners, L.P.
ANNEX C – MASSACHUSETTS LAW ON DISSENTERS’ RIGHTS Under Massachusetts law, dissenters’ rights are set forth in the Massachusetts Business Corporation Act, Chapter 156D, Section 13. The relevant provisions under Section 13 are as follows: Section 13.01. DEFINITIONS In this PART the following words shall have the following meanings unless the context requires otherwise: “Affiliate”, any person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control of or with another person. “Beneficial shareholder”, the person who is a beneficial owner of shares held in a voting trust or by a nominee as the record shareholder. “Corporation”, the issuer of the shares held by a shareholder demanding appraisal and, for matters covered in sections 13.22 to 13.31, inclusive, includes the surviving entity in a merger. “Fair value”, with respect to shares being appraised, the value of the shares immediately before the effective date of the corporate action to which the shareholder demanding appraisal objects, excluding any element of value arising from the expectation or accomplishment of the proposed corporate action unless exclusion would be inequitable. “Interest”, interest from the effective date of the corporate action until the date of payment, at the average rate currently paid by the corporation on its principal bank loans or, if none, at a rate that is fair and equitable under all the circumstances. “Marketable securities”, securities held of record by, or by financial intermediaries or depositories on behalf of, at least 1,000 persons and which were (a) listed on a national securities exchange, (b) designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc., or (c) listed on a regional securities exchange or traded in an interdealer quotation system or other trading system and had at least 250,000 outstanding shares, exclusive of shares held by officers, directors and affiliates, which have a market value of at least $5,000,000. “Officer”, the chief executive officer, president, chief operating officer, chief financial officer, and any vice president in charge of a principal business unit or function of the issuer. “Person”, any individual, corporation, partnership, unincorporated association or other entity. “Record shareholder”, the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. “Shareholder”, the record shareholder or the beneficial shareholder. Section 13.02. RIGHT TO APPRAISAL (a) A shareholder is entitled to appraisal rights, and obtain payment of the fair value of his shares in the event of, any of the following corporate or other actions: (1) consummation of a plan of merger to which the corporation is a party if shareholder approval is required for the merger by section 11.04 or the articles of organization or if the corporation is a subsidiary that is merged with its parent under section 11.05, unless, in either case, (A) all shareholders are to receive only cash for their shares in amounts equal to what they would receive upon a dissolution of the corporation or, in the case of shareholders already holding marketable securities in the merging corporation, only marketable securities of the surviving corporation and/or cash and (B) no director, officer or controlling shareholder has a direct or indirect material financial interest in the merger other than in his capacity as (i) a shareholder of the corporation, (ii) a director, officer, employee or consultant of either the merging or the surviving corporation or of any affiliate of the surviving corporation if his financial interest is pursuant to bona fide arrangements with either corporation or any such affiliate, or (iii) in any other capacity so long as the shareholder owns not more than five percent of the voting shares of all classes and series of the corporation in the aggregate; (2) consummation of a plan of share exchange in which his shares are included unless: (A) both his existing shares and the shares, obligations or other securities to be acquired are marketable securities; and (B) no director, officer or controlling shareholder has a direct or indirect material financial interest in the share exchange other than in his capacity as (i) a shareholder of the corporation whose shares are to be exchanged, (ii) a director, officer, employee or consultant of either the corporation whose shares are to be exchanged or the acquiring corporation or of any affiliate of the acquiring corporation if his financial interest is pursuant to bona fide arrangements with either corporation or any such affiliate, or (iii) in any other capacity so long as the shareholder owns not more than five percent of the voting shares of all classes and series of the corporation whose shares are to be exchanged in the aggregate; (3) consummation of a sale or exchange of all, or substantially all, of the property of the corporation if the sale or exchange is subject to section 12.02, or a sale or exchange of all, or substantially all, of the property of a corporation in dissolution, unless: (i) his shares are then redeemable by the corporation at a price not greater than the cash to be received in exchange for his shares; or (ii) the sale or exchange is pursuant to court order; or (iii) in the case of a sale or exchange of all or substantially all the property of the corporation subject to section 12.02, approval of shareholders for the sale or exchange is conditioned upon the dissolution of the corporation and the distribution in cash or, if his shares are marketable securities, in marketable securities and/or cash, of substantially all of its net assets, in excess of a reasonable amount reserved to meet unknown claims under section 14.07, to the shareholders in accordance with their respective interests within one year after the sale or exchange and no director, officer or controlling shareholder has a direct or indirect material financial interest in the sale or exchange other than in his capacity as (i) a shareholder of the corporation, (ii) a director, officer, employee or consultant of either the corporation or the acquiring corporation or of any affiliate of the acquiring corporation if his financial interest is pursuant to bona fide arrangements with either corporation or any such affiliate, or (iii) in any other capacity so long as the shareholder owns not more than five percent of the voting shares of all classes and series of the corporation in the aggregate; (4) an amendment of the articles of organization that materially and adversely affects rights in respect of a shareholder’s shares because it: (i) creates, alters or abolishes the stated rights or preferences of the shares with respect to distributions or to dissolution, including makingnon-cumulative in whole or in part a dividend theretofore stated as cumulative; (ii) creates, alters or abolishes a stated right in respect of conversion or redemption, including any provision relating to any sinking fund or purchase, of the shares; (iii) alters or abolishes a preemptive right of the holder of the shares to acquire shares or other securities; (iv) excludes or limits the right of the holder of the shares to vote on any matter, or to cumulate votes, except as such right may be limited by voting rights given to new shares then being authorized of an existing or new class; or (v) reduces the number of shares owned by the shareholder to a fraction of a share if the fractional share so created is to be acquired for cash under section 6.04; (5) an amendment of the articles of organization or of the bylaws or the entering into by the corporation of any agreement to which the shareholder is not a party that adds restrictions on the transfer or registration or any outstanding shares held by the shareholder or amends anypre-existing restrictions on the transfer or registration of his shares in a manner which is materially adverse to the ability of the shareholder to transfer his shares; (6) any corporate action taken pursuant to a shareholder vote to the extent the articles of organization, bylaws or a resolution of the board of directors provides that voting or nonvoting shareholders are entitled to appraisal; (7) consummation of a conversion of the corporation to nonprofit status pursuant to subdivision B of PART 9; or (8) consummation of a conversion of the corporation into a form of other entity pursuant to subdivision D of PART 9. (b) Except as otherwise provided in subsection (a) of section 13.03, in the event of corporate action specified in clauses (1), (2), (3), (7) or (8) of subsection (a), a shareholder may assert appraisal rights only if he seeks them with respect to all of his shares of whatever class or series. (c) Except as otherwise provided in subsection (a) of section 13.03, in the event of an amendment to the articles of organization specified in clause (4) of subsection (a) or in the event of an amendment of the articles of organization or the bylaws or an agreement to which the shareholder is not a party specified in clause (5) of subsection (a), a shareholder may assert appraisal rights with respect to those shares adversely affected by the amendment or agreement only if he seeks them as to all of such shares and, in the case of an amendment to the articles of organization or the bylaws, has not voted any of his shares of any class or series in favor of the proposed amendment. (d) The shareholder’s right to obtain payment of the fair value of his shares shall terminate upon the occurrence of any of the following events: (i) the proposed action is abandoned or rescinded; or (ii) a court having jurisdiction permanently enjoins or sets aside the action; or (iii) the shareholder’s demand for payment is withdrawn with the written consent of the corporation. (e) A shareholder entitled to appraisal rights under this chapter may not challenge the action creating his entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation. Section 13.03. ASSERTION OF RIGHTS BY NOMINEES AND BENEFICIAL OWNERS (a) A record shareholder may assert appraisal rights as to fewer than all the shares registered in the record shareholder’s name but owned by a beneficial shareholder only if the record shareholder objects with respect to all shares of the class or series owned by the beneficial shareholder and notifies the corporation in writing of the name and address of each beneficial shareholder on whose behalf appraisal rights are being asserted. The rights of a record shareholder who asserts appraisal rights for only part of the shares held of record in the record shareholder’s name under this subsection shall be determined as if the shares as to which the record shareholder objects and the record shareholder’s other shares were registered in the names of different record shareholders. (b) A beneficial shareholder may assert appraisal rights as to shares of any class or series held on behalf of the shareholder only if such shareholder: (1) submits to the corporation the record shareholder’s written consent to the assertion of such rights no later than the date referred to in subclause (ii) of clause (2) of subsection (b) of section 13.22; and (2) does so with respect to all shares of the class or series that are beneficially owned by the beneficial shareholder. Section 13.20. NOTICE OF APPRAISAL RIGHTS (a) If proposed corporate action described in subsection (a) of section 13.02 is to be submitted to a vote at a shareholders’ meeting or through the solicitation of written consents, the meeting notice or solicitation of consents shall state that the corporation has concluded that shareholders are, are not or may be entitled to assert appraisal rights under this Part and refer to the necessity of the shareholder delivering, before the vote is taken, written notice of his intent to demand payment and to the requirement that he not vote his shares in favor of the proposed action. If the corporation concludes that appraisal rights are or may be available, a copy of this Part shall accompany the meeting notice sent to those record shareholders entitled to exercise appraisal rights. (b) In a merger pursuant to section 11.05, the parent corporation shall notify in writing all record shareholders of the subsidiary who are entitled to assert appraisal rights that the corporate action became effective. Such notice shall be sent within 10 days after the corporate action became effective and include the materials described in section 13.22. Section 13.21. NOTICE OF INTENT TO DEMAND PAYMENT (a) If proposed corporate action requiring appraisal rights under section 13.02 is submitted to vote at a shareholders’ meeting, a shareholder who wishes to assert appraisal rights with respect to any class or series of shares: (1) shall deliver to the corporation before the vote is taken written notice of the shareholder’s intent to demand payment if the proposed action is effectuated; and (2) shall not vote, or cause or permit to be voted, any shares of such class or series in favor of the proposed action. (b) A shareholder who does not satisfy the requirements of subsection (a) is not entitled to payment under this chapter. Section 13.22. APPRAISAL NOTICE AND FORM (a) If proposed corporate action requiring appraisal rights under subsection (a) of section 13.02 becomes effective, the corporation shall deliver a written appraisal notice and form required by clause (1) of subsection (b) to all shareholders who satisfied the requirements of section 13.21 or, if the action was taken by written consent, did not consent. In the case of a merger under section 11.05, the parent shall deliver a written appraisal notice and form to all record shareholders who may be entitled to assert appraisal rights. (b) The appraisal notice shall be sent no earlier than the date the corporate action became effective and no later than 10 days after such date and must: (1) supply a form that specifies the date of the first announcement to shareholders of the principal terms of the proposed corporate action and requires the shareholder asserting appraisal rights to certify (A) whether or not beneficial ownership of those shares for which appraisal rights are asserted was acquired before that date and (B) that the shareholder did not vote for the transaction; (2) state: (i) where the form shall be sent and where certificates for certificated shares shall be deposited and the date by which those certificates shall be deposited, which date may not be earlier than the date for receiving the required form under subclause (ii); (ii) a date by which the corporation shall receive the form which date may not be fewer than 40 nor more than 60 days after the date the subsection (a) appraisal notice and form are sent, and state that the shareholder shall have waived the right to demand appraisal with respect to the shares unless the form is received by the corporation by such specified date; (iii) the corporation’s estimate of the fair value of the shares; (iv) that, if requested in writing, the corporation will provide, to the shareholder so requesting, within 10 days after the date specified in clause (ii) the number of shareholders who return the forms by the specified date and the total number of shares owned by them; and (v) the date by which the notice to withdraw under section 13.23 shall be received, which date shall be within 20 days after the date specified in subclause (ii) of this subsection; and (3) be accompanied by a copy of this chapter. Section 13.23. PERFECTION OF RIGHTS; RIGHT TO WITHDRAW (a) A shareholder who receives notice pursuant to section 13.22 and who wishes to exercise appraisal rights shall certify on the form sent by the corporation whether the beneficial owner of the shares acquired beneficial ownership of the shares before the date required to be set forth in the notice pursuant to clause (1) of subsection (b) of section 13.22. If a shareholder fails to make this certification, the corporation may elect to treat the shareholder’s shares as after-acquired shares under section 13.25. In addition, a shareholder who wishes to exercise appraisal rights shall execute and return the form and, in the case of certificated shares, deposit the shareholder’s certificates in accordance with the terms of the notice by the date referred to in the notice pursuant to subclause (ii) of clause (2) of subsection (b) of section 13.22. Once a shareholder deposits that shareholder’s certificates or, in the case of uncertificated shares, returns the executed forms, that shareholder loses all rights as a shareholder, unless the shareholder withdraws pursuant to said subsection (b). (b) A shareholder who has complied with subsection (a) may nevertheless decline to exercise appraisal rights and withdraw from the appraisal process by so notifying the corporation in writing by the date set forth in the appraisal notice pursuant to subclause (v) of clause (2) of subsection (b) of section 13.22. A shareholder who fails to so withdraw from the appraisal process may not thereafter withdraw without the corporation’s written consent. (c) A shareholder who does not execute and return the form and, in the case of certificated shares, deposit that shareholder’s share certificates where required, each by the date set forth in the notice described in subsection (b) of section 13.22, shall not be entitled to payment under this chapter. Section 13.24. PAYMENT (a) Except as provided in section 13.25, within 30 days after the form required by subclause (ii) of clause (2) of subsection (b) of section 13.22 is due, the corporation shall pay in cash to those shareholders who complied with subsection (a) of section 13.23 the amount the corporation estimates to be the fair value of their shares, plus interest. (b) The payment to each shareholder pursuant to subsection (a) shall be accompanied by: | (1) | financial statements of the corporation that issued the shares to be appraised, consisting of a balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, an income statement for that year, a statement of changes in shareholders’ equity for that year, and the latest available interim financial statements, if any; |
| (2) | a statement of the corporation’s estimate of the fair value of the shares, which estimate shall equal or exceed the corporation’s estimate given pursuant to subclause (iii) of clause (2) of subsection (b) of section 13.22; and |
| (3) | a statement that shareholders described in subsection (a) have the right to demand further payment under section 13.26 and that if any such shareholder does not do so within the time period specified therein, such shareholder shall be deemed to have accepted the payment in full satisfaction of the corporation’s obligations under this chapter. |
Section 13.25. AFTER-ACQUIRED SHARES (a) A corporation may elect to withhold payment required by section 13.24 from any shareholder who did not certify that beneficial ownership of all of the shareholder’s shares for which appraisal rights are asserted was acquired before the date set forth in the appraisal notice sent pursuant to clause (1) of subsection (b) of section 13.22. (b) If the corporation elected to withhold payment under subsection (a), it must, within 30 days after the form required by subclause (ii) of clause (2) of subsection (b) of section 13.22 is due, notify all shareholders who are described in subsection (a): (1) of the information required by clause (1) of subsection (b) of section 13.24; (2) of the corporation’s estimate of fair value pursuant to clause (2) of subsection (b) of said section 13.24; (3) that they may accept the corporation’s estimate of fair value, plus interest, in full satisfaction of their demands or demand appraisal under section 13.26; (4) that those shareholders who wish to accept the offer shall so notify the corporation of their acceptance of the corporation’s offer within 30 days after receiving the offer; and (5) that those shareholders who do not satisfy the requirements for demanding appraisal under section 13.26 shall be deemed to have accepted the corporation’s offer. (c) Within 10 days after receiving the shareholder’s acceptance pursuant to subsection(b), the corporation shall pay in cash the amount it offered under clause (2) of subsection (b) to each shareholder who agreed to accept the corporation’s offer in full satisfaction of the shareholder’s demand. (d) Within 40 days after sending the notice described in subsection (b), the corporation must pay in cash the amount if offered to pay under clause (2) of subsection (b) to each shareholder deserved in clause (5) of subsection (b). Section 13.26. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER (a) A shareholder paid pursuant to section 13.24 who is dissatisfied with the amount of the payment shall notify the corporation in writing of that shareholder’s estimate of the fair value of the shares and demand payment of that estimate plus interest, less any payment under section 13.24. A shareholder offered payment under section 13.25 who is dissatisfied with that offer shall reject the offer and demand payment of the shareholder’s stated estimate of the fair value of the shares plus interest. (b) A shareholder who fails to notify the corporation in writing of that shareholder’s demand to be paid the shareholder’s stated estimate of the fair value plus interest under subsection (a) within 30 days after receiving the corporation’s payment or offer of payment under section 13.24 or section 13.25, respectively, waives the right to demand payment under this section and shall be entitled only to the payment made or offered pursuant to those respective sections. Section 13.30. COURT ACTION (a) If a shareholder makes demand for payment under section 13.26 which remains unsettled, the corporation shall commence an equitable proceeding within 60 days after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the60-day period, it shall pay in cash to each shareholder the amount the shareholder demanded pursuant to section 13.26 plus interest. (b) The corporation shall commence the proceeding in the appropriate court of the county where the corporation’s principal office, or, if none, its registered office, in the commonwealth is located. If the corporation is a foreign corporation without a registered office in the commonwealth, it shall commence the proceeding in the county in the commonwealth where the principal office or registered office of the domestic corporation merged with the foreign corporation was located at the time of the transaction. (c) The corporation shall make all shareholders, whether or not residents of the commonwealth, whose demands remain unsettled parties to the proceeding as an action against their shares, and all parties shall be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law or otherwise as ordered by the court. (d) The jurisdiction of the court in which the proceeding is commenced under subsection (b) is plenary and exclusive. The court may appoint 1 or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers shall have the powers described in the order appointing them, or in any amendment to it. The shareholders demanding appraisal rights are entitled to the same discovery rights as parties in other civil proceedings. (e) Each shareholder made a party to the proceeding is entitled to judgment (i) for the amount, if any, by which the court finds the fair value of the shareholder’s shares, plus interest, exceeds the amount paid by the corporation to the shareholder for such shares or (ii) for the fair value, plus interest, of the shareholder’s shares for which the corporation elected to withhold payment under section 13.25. Section 13.31. COURT COSTS AND COUNSEL FEES (a) The court in an appraisal proceeding commenced under section 13.30 shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation, except that the court may assess cost against all or some of the shareholders demanding appraisal, in amounts the court finds equitable, to the extent the court finds such shareholders acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this chapter. (b) The court in an appraisal proceeding may also assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable: (1) against the corporation and in favor of any or all shareholders demanding appraisal if the court finds the corporation did not substantially comply with the requirements of sections 13.20, 13.22, 13.24 or 13.25; or (2) against either the corporation or a shareholder demanding appraisal, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this chapter. (c) If the court in an appraisal proceeding finds that the services of counsel for any shareholder were of substantial benefit to other shareholders similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to such counsel reasonable fees to be paid out of the amounts awarded the shareholders who were benefited. (d) To the extent the corporation fails to make a required payment pursuant to sections 13.24, 13.25, or 13.26, the shareholder may sue directly for the amount owed and, to the extent successful, shall be entitled to recover from the corporation all costs and expenses of the suit, including counsel fees. PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 20. Indemnification of Directors and Officers Independent is a Massachusetts corporation. Massachusetts General Laws Chapter 156D, Part 8, Subdivision E, provides that a corporation may, subject to certain limitations, indemnify its directors, officers, employees and other agents, and individuals serving with respect to any employee benefit plan, and must, in certain cases, indemnify a director or officer for his reasonable costs if he is wholly successful in his defense in a proceeding to which he was a party because he was a director or officer of the corporation. In certain circumstances, a court may order a corporation to indemnify its officers or directors or advance their expenses. Chapter 156D, Section 8.58 allows a corporation to limit or expand its obligation to indemnify its directors, officers, employees and agents in the corporation’s articles of organization, a bylaw adopted by the stockholders,shareholders, or a contract adopted by its board of directors or stockholders.shareholders. Both Chapter 156D, Section 8.57 and Independent���sIndependent’s articles of incorporationorganization provide that the corporation may purchase and maintain insurance against liability incurred by an officer or director in his capacity as officer or director or while serving at Independent’s request as a director, officer, partner, trustee, employee, or agent of another domestic or foreign corporation, partnership, joint venture, trust, employee benefit plan, or other entity, or arising out of his status as such. Independent currently maintains directors’ and officers’ liability insurance, which insures the officers and directors of Independent from any claim arising out of an alleged wrongful act by such person in their respective capacities as officers and directors of Independent. Under Independent’s articles of incorporationorganization and its bylaws, Independent may not indemnify a director or officer unless ordered to do so by a court if his or her conduct: (a) was a breach of the director’s or officer’s duty of loyalty to Independent or its stockholders,shareholders, (b) was not in good faith or involved intentional misconduct or a knowing violation of law, (c) resulted in an improper distribution under Section 6.40 of Chapter 156D of the Massachusetts General Laws, (d) was conduct from which the director or officer derived an improper personal benefit, or (e) was at least not opposed to the best interests of Independent, if the conduct was with respect to an employee benefit plan, for a purpose he or she reasonably believed to be in the interests of the participants in, and the beneficiaries of, the plan. The determination of whether the relevant standard of conduct have been met shall be made: (a) if there are two or more disinterested directors, by the board of directors by a majority vote of all the disinterested directors or by a majority of the members of a committee of two or more disinterested directors appointed by vote; (b) by special legal counsel selected by a majority vote of all the disinterested directors or by a majority of the members of a committee of two or more disinterested directors appointed by vote; (c) if there are fewer than two disinterested directors, selected by the board of directors, in which selection directors who do not qualify as disinterested directors may participate; or (d) by the stockholdersshareholders (but shares owned by or voted under the control of a disinterested director may not be voted on the determination). Independent is not obligated under its articles of incorporationorganization to indemnify or advance expenses to a director or officer of a predecessor of Independent, pertaining to conduct with respect to the predecessor, unless otherwise specifically provided. Independent’s articles provide that no amendment or repeal of the indemnification provision of its bylaws or of the relevant provisions of Chapter 156D shall affect or diminish the rights of any indemnified person to indemnification with respect to any action or proceeding arising out of or relating to any actions occurring prior to the final adoption of the amendment or repeal. Independent’s articles of organization provide that no amendment or repeal of the provision limiting the liability of directors shall adversely affect the rights and protections afforded to directors of Independent for acts or omissions occurring prior to the amendment or repeal. II-1
The articles also provide that if the Massachusetts Business Corporation Act is subsequently amended to increase the scope of permitted indemnification, indemnification under the articles shall be provided to the full extent permitted or required by the amendment. Item 21. Exhibits and Financial Schedules | | | | Number | | TitleDescription | | | | 2 | | Agreement and Plan of Merger, dated as of May 29, 2018, by and among Independent Bank Corp., Rockland Trust Company, Peoples Federal Bancshares, Inc.MNB Bancorp and Peoples Federal SavingsThe Milford National Bank dated as of August 5, 2014,and Trust Company, included as Annex A to this proxy statement/prospectus. | | | 5 5.1 | | Opinion of Day Pitney LLP as to the legality of the securities being issued (previously filed).issued. | | | 8 8.1 | | Opinion of Day Pitney LLP as to the tax consequences of the merger (previously filed).merger. | | | | 10.1 | | Form of Voting Agreement executed in connection with the Agreement and Plan of Merger, dated as of May 29, 2018, among Independent Bank Corp., Rockland Trust Company, MNB Bancorp and The Milford National Bank and Trust Company. | | | | 23.1 | | Consent of Ernst & Young LLPLLP. | | | | 23.2 | | Consent of Shatswell, MacLeod & Company, P.C. | | | 23.3 | | Consent of Day Pitney LLP (included in Exhibit 5Exhibits 5.1 and8.1 hereto). | | | | 24 | | Power of Attorney (previously filed)(included as part of the signature page). | | | | 99.1 | | Consent of Sandler O’Neill +& Partners, L.P. | | | | 99.2 | | Form of Proxy Card for Meeting of StockholdersShareholders of Peoples Federal Bancshares, Inc.MNB Bancorp.* |
| * | To be filed by amendment |
Financial Statement Schedules have been omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto which are incorporated by reference into this proxy statement/prospectus. Item 22. Undertakings 1. The undersigned registrant undertakes: a) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: i. To include any prospectus required by section 10(a)(3) of the Securities Act of 1933 (the “Securities Act”);Act; ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement. b) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-2
c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-2
2. The undersigned registrant undertakes that, for purposes of determining any liability under the Securities Act, of 1933, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3. The undersigned registrant undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form. 4. The registrant undertakes that every prospectus (i) that is filed pursuant to paragraph 3 immediately preceding, or (ii) that purports to meet the requirements of Section 10(a) (3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 5. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 6. The undersigned registrant undertakes to respond to requests for information that are incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. 7. The undersigned registrant undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-3
SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Hanover, Commonwealth of Massachusetts, on October 17, 2014.July 9, 2018. | | | | | | By: | | /s//s/ Christopher Oddleifson*Oddleifson
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| | | | Name: | | Christopher Oddleifson | | Title: | | President and Chief Executive Officer |
Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below makes, constitutes and appoints each of Edward H. Seksay and Patricia Natale as his or her true and lawful attorney, with full power of substitution to sign all amendments to this FormS-4 on his or her behalf. | | | | | | Signature | | Title | | Date | | | | /s/ Christopher Oddleifson*Oddleifson Christopher Oddleifson | | President, Chief Executive Officer and Director (Principal Executive Officer) | | October 17, 2014July 9, 2018 | | | | /s/ Donna L. Abelli*Abelli Donna L. Abelli | | Director and ChairmanChair of the Board | | October 17, 2014July 9, 2018 | | | | /s/ Robert Cozzone*D. Cozzone Robert D. Cozzone | | Chief Financial Officer and Treasurer (Principal Financial Officer) | | October 17, 2014July 9, 2018 | | | | /s/ Mark J. Ruggiero*Ruggiero Mark J. Ruggiero | | Controller (Principal Accounting Officer) | | October 17, 2014July 9, 2018 | | | | /s/ WilliamMichael P. Bissonette*Hogan WilliamMichael P. BissonetteHogan
| | Director | | October 17, 2014 | | | | /s/ Benjamin A. Gilmore, II*
Benjamin A. Gilmore, II
| | Director | | October 17, 2014July 9, 2018 | | | | /s/ Kevin J. Jones*Jones Kevin J. Jones | | Director | | October 17, 2014July 9, 2018 | | | | /s/ Mary L. Lentz Mary L. Lentz | | Director | | July 9, 2018 | | | | /s/ Eileen C. Miskell*Miskell Eileen C. Miskell | | Director | | October 17, 2014July 9, 2018 | | | | /s/ John J. Morrissey*Morrissey John J. Morrissey | | Director | | October 17, 2014July 9, 2018 | | | | /s/ Gerard F. Nadeau Gerard F. Nadeau | | Director | | July 9, 2018 | | | | /s/ Daniel F. O’Brien*O’Brien Daniel F. O’Brien | | Director | | October 17, 2014 | | | | /s/ Carl Ribeiro*
Carl Ribeiro
| | Director | | October 17, 2014July 9, 2018 |
II-4
| | | | | | Signature | | Title | | Date | | | | /s/ Carl Ribeiro Carl Ribeiro | | Director | | July 9, 2018 | | | | /s/ John H. Spurr, Jr.* John H. Spurr, Jr. | | Director | | October 17, 2014July 9, 2018 | | | | /s/ Frederick Taw Frederick Taw | | Director | | July 9, 2018 | | | | /s/ Brian S. Tedeschi*Tedeschi Brian S. Tedeschi | | Director | | October 17, 2014July 9, 2018 | | | | /s/ Thomas R. Venables*Venables Thomas R. Venables | | Director | | October 17, 2014July 9, 2018 |
| | | | | | | | | | | *By: | | /s/ Edward H. Seksay
| | | | | | | Edward H. Seksay, Attorney-in-fact | | | | |
II-5
EXHIBIT INDEX
| | | Number | | Title | | | 2 | | Agreement and Plan of Merger among Independent Bank Corp., Rockland Trust Company, Peoples Federal Bancshares, Inc. and Peoples Federal Savings Bank, dated as of August 5, 2014, included as Annex A to this proxy statement/prospectus. | | | 5 | | Opinion of Day Pitney LLP as to the legality of the securities being issued (previously filed). | | | 8 | | Opinion of Day Pitney LLP as to the tax consequences of the merger (previously filed). | | | 23.1 | | Consent of Ernst & Young LLP | | | 23.2 | | Consent of Shatswell, MacLeod & Company, P.C. | | | 23.3 | | Consent of Day Pitney LLP (included in Exhibit 5 hereto). | | | 24 | | Power of Attorney (previously filed). | | | 99.1 | | Consent of Sandler O’Neill + Partners, L.P. | | | 99.2 | | Form of Proxy Card for Meeting of Stockholders of Peoples Federal Bancshares, Inc. |
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