COMMUNITY BANCORP, INC.
17 Pope Street
Hudson, Massachusetts 01749
(978) 568-8321
AMENDMENT NO. 1 TO
OFFER TO PURCHASE FOR CASH UP TO 222,222
SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
AT A PURCHASE PRICE OF $13.50 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE
AT 5:00 P.M., E.S.T., ON NOVEMBER 1, 2002,
UNLESS THE OFFER IS EXTENDED.
Questions or requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or other tender offer
materials may be directed to James A. Langway, President, or Donald R.
Hughes, Jr., Treasurer and Clerk, at Community Bancorp and such copies
will be furnished promptly at our expense.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE OFFER. HOWEVER,
NEITHER WE NOR OUR BOARD OF DIRECTORS MAKE ANY RECOMMENDATION TO ANY
SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES.
SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND,
IF SO, HOW MANY SHARES TO TENDER. THE COMPANY HAS BEEN ADVISED THAT
NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTEND TO TENDER SHARES
PURSUANT TO THIS OFFER.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON OUR BEHALF
AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING
SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
OTHER THAN THOSE CONTAINED IN THIS OFFER OR IN THE LETTER OF
TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION, INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US.
SUMMARY TERM SHEET
------------------
This summary highlights the most material terms of the Offer. However,
it does not describe all of the details of the Offer to the same extent
that they are described in the body of this document and the Letter of
Transmittal. We urge you to read this entire document and the related
Letter of Transmittal because they contain the full details of the
Offer. Where helpful, we have included references to the sections of
this document where you will find a more complete discussion of the item
referenced.
* We are offering to purchase up to 222,222 shares of our outstanding
Common Stock, par value $2.50, upon the terms and subject to the
conditions set forth in the Offer. See Sections 1, 2 and 8.
* As of August 31, 2002, there were 5,963,885 shares outstanding.
The shares we are offering to purchase represent approximately 3.7%
of the total outstanding shares as of August 31, 2002.
* We reserve the right to purchase additional shares up to 2% of our
outstanding shares of Common Stock, subject to applicable legal
requirements. The Offer is not conditioned on any minimum number
of shares being tendered. The offer is, however, subject to other
conditions. See Section 6.
* All shares validly tendered and not withdrawn will be purchased at
the Purchase Price of $13.50 per share, subject to the proration
terms described below. See Section 1.
* All of the shares that you tender in our offer may not be
purchased. If more than 222,222 shares are tendered, we will
purchase shares based on the following order of priority:
1. First, we will purchase shares from all holders of "odd lots" of
less than 100 shares who properly tender all of their shares.
See Section 2.
2. Second, we will purchase shares from all other shareholders who
properly tender their shares, on a pro rata basis, subject to
the conditions described in Section 1. As a result, we will
purchase the same percentage of shares tendered from each
tendering shareholder in this second category. We will announce
this proration percentage, if it is necessary, within <seven>
[three business] days of the expiration date.
* If your shares are purchased in our Offer, you will be paid the
Purchase Price, in cash, without interest, <as soon as is
practicable>[promptly] after the expiration of the offer period and
the acceptance of the shares for payment. See Section 5.
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* We plan to obtain the funds needed for the Offer from cash on hand
and from a special cash dividend to be declared by Community
National Bank on its Common Stock, which we wholly own. See
Section 10.
* You must properly complete and execute the Letter of Transmittal by
5:00 P.M. on Friday, November 1, 2002 in order to sell your shares
to us in this offer. See Sections 1 and 3.
* We may extend the offering period. If the offer is extended, we
will make a public announcement. See Section 15.
* You may withdraw tendered shares at any time prior to the
expiration date of the offering, which is currently scheduled at
5:00 P.M., EST, on November 1, 2002. Tenders will then be
irrevocable until November 11, 2002, at which time you may withdraw
your tender if we have not accepted it for payment. See Section 4.
* Shareholders who do not tender their shares will realize an
increased percentage ownership in us. This will include our
directors and executive officers, who do not intend to tender any
of their shares. See Sections 8 and 11.
* Generally, shareholders will be expected to recognize a gain or a
loss on the tendered shares equal to the difference between the
cash we pay for the shares and the shareholder's basis in the
purchased shares. See Section 14.
* Our Board of Directors has unanimously approved the offer.
However, neither we nor our Board of Directors make any
recommendation to any shareholder as to whether to tender or
refrain from tendering shares. Shareholders must make their own
decisions whether to tender shares and, if so, how many shares to
tender.
KEY TO AMENDMENT
- ----------------
Deleted language is enclosed by < >.
New language is enclosed by [ ].
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TABLE OF CONTENTS
-----------------
SECTION PAGE
- ------- ----
Summary Term Sheet ii
1. Number of Shares; Proration 1
2. Tenders by Owners of Fewer than 100 Shares 2
3. Procedure for Tendering Shares 3
4. Withdrawal Rights 5
5. Acceptance for Payment of Shares and Payment of
Purchase Price 6
6. Certain Conditions of the Offer 7
7. Price Range of Shares; Dividends 9
8. Purpose of the Offer; Certain Effects of the Offer 9
9. Certain Information About the Company 10
10. Source and Amount of Funds 11
11. Interest of Directors and Executive Officers;
Transactions and Arrangements Concerning the Shares 11
12. Effects of the Offer on the Market for Shares;
Registration Under the Securities Act 13
13. Certain Legal Matters; Regulatory Approvals 13
14. Certain Federal Income Tax Consequences 14
15. Extension of the Offer; Termination; Amendments 17
16. Solicitation Fees and Expenses 18
17. Miscellaneous 19
Additional Information 20
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1. NUMBER OF SHARES; PRORATION
---------------------------
Upon the terms and subject to the conditions described herein and in the
Letter of Transmittal, Community Bancorp, Inc., (the "Company") will
accept for payment and purchase 222,222 Shares or such lesser number of
Shares as are validly tendered on or prior to the Expiration Date. The
term "Expiration Date" means 5:00 P.M., E.S.T., on November 1, 2002,
unless the Company<,> <in its sole discretion, >shall [elect to]<have>
extend<ed> the period of time during which the Offer is open, in which
event the term "Expiration Date" shall refer to the latest time and date
at which the Offer, as so extended by the Company, shall expire. See
Section 15 for a description of the Company's right to extend the time
during which the Offer is open and to delay, terminate or amend the
Offer. See also Section 6.
Subject to Section 2, if the Offer is oversubscribed, tendered Shares
will be subject to proration. The proration period also expires on the
Expiration Date.
The Company reserves the right<, in its sole discretion,>[ ]to purchase
more than 222,222 Shares pursuant to the Offer.
If (i) the Company increases or decreases the price to be paid for
Shares, increases the number of Shares being sought and any such
increase in the number of Shares being sought exceeds 2% of the
outstanding Shares, or decreases the number of Shares being sought, and
(ii) the Offer is scheduled to expire less than ten business days from
and including the date that notice of such increase or decrease if first
published, sent or given in the manner specified in Section 15, the
Offer will be extended for ten business days from and including the date
of such notice. For purposes of the Offer, a "business day" means any
day other than a Saturday, Sunday or federal holiday and consists of the
time period from 12:01 A.M. through 12:00 midnight, E.S.T.
All Shares purchased pursuant to the Offer will be purchased at the
Purchase Price. All Shares not purchased pursuant to the Offer,
including Shares not purchased because of proration, will be returned to
the tendering shareholders at the Company's expense <as >promptly <as
practicable >following the Expiration Date.
If the number of Shares validly tendered prior to the Expiration Date is
less than or equal to 222,222 Shares (or such greater number of Shares
as the Company may elect to purchase pursuant to the Offer), the Company
will, upon the terms and subject to the conditions of the Offer,
purchase at the Purchase Price all Shares so tendered.
Upon the terms and subject to the conditions of the Offer, in the event
that prior to the Expiration Date more than 222,222 Shares (or such
greater number of Shares as the Company elects to purchase) are validly
tendered at the Purchase Price, the Company will accept Shares for
purchase in the following order of priority;
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(a) first, all Shares validly tendered prior to the Expiration
Date by any Odd Lot Owner (as defined in Section 2) who:
(1) tenders all Shares beneficially owned by such Odd Lot
Owner (partial tenders will not qualify for this
preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of
Guaranteed Deliver; and
(b) then, after purchase of all of the foregoing Shares, all
other Shares validly tendered before the Expiration Date on
a pro rata basis, if necessary (with adjustments to avoid
purchases of fractional Shares).
On May 21, 1996, the Company's Board of Directors declared a dividend
distribution of one Right for each Share outstanding on that date (the
"Record Date"). Shares issued subsequent to the Record Date
automatically receive the Rights. The Rights expire on May 20, 2006
unless redeemed earlier by the Company. Each Right entitles the
registered holder to purchase from the Company a unit consisting of one
one-thousandth of a share of Series A Participating Cumulative Preferred
Stock of the Company at an exercise price of $22.50, subject to
adjustment to prevent dilution. The Rights are not currently
exercisable and trade together with the Shares associated therewith.
The Rights will not become exercisable or separately tradeable as a
result of the Offer. Absent circumstances causing the Rights to become
exercisable or separately tradeable prior to the Expiration Date, the
tender of any Shares pursuant to the Offer will include the tender of
the associated Rights. No separate consideration will be paid for such
Rights. Upon our purchase of Shares pursuant to the Offer, the sellers
of the Shares so purchased will no longer own the Rights associated with
such Shares.
As described in Section 14, the number of Shares the Company will
purchase from a shareholder may affect the federal income tax
consequences to the shareholder of such purchase and therefore may be
relevant to a shareholder's decision whether to tender Shares.
2. TENDERS BY OWNERS OF FEWER THAN 100 SHARES
------------------------------------------
The Company, upon the terms and subject to the conditions of the Offer,
will accept for payment, without proration, all Shares validly tendered
on or prior to the Expiration Date by or on behalf of shareholders who
beneficially held, as of the close of business on September 30, 2002,
and continue to own beneficially as of the Expiration Date, an aggregate
of fewer than 100 Shares ("Odd Lot Owners"). To avoid proration,
however, an Odd Lot Owner must validly tender all Shares that such Odd
Lot Owner beneficially owns; partial tenders will not qualify for this
preference. This preference is not available to holders of 100 or more
Shares, even if such holders have separate stock certificates for fewer
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than 100 Shares. Any Odd Lot Owner wishing to tender all Shares
beneficially owned by him or her free of proration pursuant to this
Offer must complete the section captioned "Odd Lots" in the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery.
The special Odd Lot purchase rules described above do not apply to any
Shares held in the Company's 401(k) Savings Plan.
3. PROCEDURE FOR TENDERING SHARES
------------------------------
PROPER TENDER OF SHARES. For Shares to be validly tendered pursuant
to the Offer:
(a) the certificates for such Shares, together with a properly
completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees, and any other
documents required by the Letter of Transmittal, must be received
on or before the Expiration Date by the Company; or
(b) the tendering shareholder must comply with the guaranteed
delivery procedure set forth below.
In addition, Odd Lot Owners who tender all their Shares must complete
the section entitled "Odd Lots" in the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery in order to qualify for
the preferential treatment available to Odd Lot Owners as set forth in
Section 1.
SIGNATURE GUARANTEES AND METHOD OF DELIVERY. No signature guarantee is
required on the Letter of Transmittal (i) if the Letter of Transmittal
is signed by the registered holder of the Shares exactly as the name of
the registered holder appears on the certificate tendered therewith, and
payment and delivery are to be made directly to such registered holder,
or (ii) if Shares are tendered for the account of a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office, branch or agency in the United States (each
such entity, an "Eligible Institution"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If a certificate representing Shares is registered in the name of a
person other than the signer of a Letter of Transmittal, or if payment
is to be made, or Shares not purchased or tendered are to be issued, to
a person other than the registered holder, the certificate must be
endorsed or accompanied by an appropriate stock power, in either case
signed exactly as the name of the registered holder appears on the
certificate, with the signature on the certificate or stock power
guaranteed by an Eligible Institution.
In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Company of certificates for such Shares, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
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signature guarantees and any other documents required by the Letter of
Transmittal.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING STOCK CERTIFICATES,
THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE
ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED.
FEDERAL INCOME TAX BACKUP WITHHOLDING. To prevent federal income tax
backup withholding equal to 31% of the gross payments made pursuant to
the Offer, each shareholder who does not otherwise establish an
exemption from such withholding must notify the Company of such
shareholder's correct taxpayer identification number (or certify that
such taxpayer is awaiting a taxpayer identification number) and provide
certain other information by completing a Substitute Form W-9 (included
in the Letter of Transmittal). See Instruction of the Letter of
Transmittal.
EACH SHAREHOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO WHETHER SUCH
SHAREHOLDER IS SUBJECT TO OR EXEMPT FROM FEDERAL INCOME TAX WITHHOLDING.
For a discussion of certain other federal income tax consequences to
tendering shareholders, see Section 14.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant
to the Offer and such shareholder's certificates are not immediately
available or time will not permit all required documents to reach the
Company by the Expiration Date, such Shares may nevertheless be tendered
provided that all of the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Company receives (by hand, mail, telegram or facsimile
transmission), on or prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery
substantially in the form the Company has provided with this
Offer and includes a guarantee by an Eligible Institution in the
form set forth in such Notice; and
(c) the certificates for all tendered Shares in proper form for
transfer, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other
documents required by the Letter of Transmittal, are received by
the Company within five business days after the date the Company
receives such Notice of Guaranteed Delivery.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of
Shares to be accepted, the form of documents and the validity, form,
eligibility (including the time of receipt) and acceptance for payment
of any tender of Shares will be determined by the Company, <in its sole
discretion, which determination shall be final and binding on all >[in
its reasonable discretion.]
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<parties.> The Company reserves the absolute right to reject any or all
tenders it determines not to be in proper form or the acceptance of or
payment for which may be unlawful. The Company also reserves the
absolute right to waive any of the conditions of the Offer or any defect
or irregularity in the tender of any particular Shares. No tender of
Shares will be deemed to be validly made until all defects and
irregularities have been cured or waived. [Any waiver shall apply to all
shareholders.] Neither the Company nor any other person is or will be
obligated to give notice of any defects or irregularities in tenders,
and neither the Company nor any other person will incur any liability
for failure to give such notice.
RULE 14E-4. It is a violation of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), for a
person (directly or indirectly) to tender Shares for his own account
unless, at the time of tender and at the end of the proration period
(including any extension thereof), the person so tendering (i) has a net
long position equal to or greater than the amount of (x) Shares tendered
or (y) other securities immediately convertible into, exercisable, or
exchangeable for the amount of Shares tendered and will acquire such
Shares for tender by conversion, exercise of exchange of such other
securities, and (ii) will cause such Shares to be delivered in
accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf
of another person. The tender of Shares pursuant to any one of the
procedures described above will constitute the tendering shareholder's
acceptance of the terms and conditions of the Offer as well as the
tendering shareholders' representation and warranty that (i) such
shareholder has a net long position in the Shares being tendered within
the meaning of Rule 14e-4, and (ii) the tender of such Shares complies
with Rule 14e-4. The Company's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement
between the tendering shareholder and the Company upon the terms and
subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS
-----------------
Except as otherwise provided in this Section 4, the tender of Shares
pursuant to the Offer is irrevocable. Shares tendered pursuant to the
Offer may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by the Company, may also be
withdrawn after 5:00 P.M., E.S.T., on November 11, 2002. For a
withdrawal to be effective, the Company must receive in a timely manner
(at the address set forth on the last page of this Offer) a written,
telegraphic or facsimile transmission notice of withdrawal. Such notice
of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the
name of the registered holder, if different from that of the person who
tendered such Shares. If the certificates have been delivered or
otherwise identified to the Company, then, prior to the release of such
certificates, the tendering shareholder must also submit the serial
numbers shown on the particular certificates evidencing the Shares to be
withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution (except in the case of Shares
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tendered by an Eligible Institution). All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be
determined by the Company, in its <sole >[reasonable] discretion[.]<, which
determination shall be final and binding on all parties.> Neither the
Company nor any other person is or will be obligated to give notice of
any defects or irregularities in any notice of withdrawal, and neither
the Company nor any other person will incur any liability for failure to
give such notice. Any Shares properly withdrawn will thereafter be
deemed not validly tendered for purposes of the Offer. Withdrawn Shares
may, however, be retendered by the Expiration Date by again following
any of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares
or is unable to purchase Shares pursuant to the Offer for any reason,
then without prejudice to the Company's rights under the Offer, the
Company may, subject to applicable law, retain all tendered Shares, and
the Shares may not be withdrawn except to the extent tendering
shareholders are entitled to withdrawal rights as described in this
Section 4.
5. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE
--------------------------------------------------------------
Upon the terms and subject to the conditions of the Offer, the Company
will purchase and pay the Purchase Price for 222,222 Shares (subject to
increase or decrease as provided in Section 1 and Section 15) or such
lesser number of Shares as are validly tendered<, as> promptly <as
practicable >after the Expiration Date.
Payment for Shares purchased pursuant to the Offer will be made by the
Company. In the event of proration, the Company will determine the
proration factor and pay for those tendered Shares accepted for payment
<as soon as practicable>[promptly] after the Expiration Date; however, the
Company does not expect to be able to announce the final results of any
such proration until approximately <ten >[three] business days after the
Expiration Date. Certificates for all Shares not purchased, including
all Shares not purchased due to proration, will be returned <as soon as
practicable>[promptly] after the Expiration Date or termination of the
Offer without expense to the tendering shareholder. Under no
circumstances will the Company pay interest on the Purchase Price. In
addition, if certain events occur, the Company may not be obligated to
purchase Shares pursuant to the Offer. See Section 6.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the offer; provided,
however, that (i) if payment of the Purchase Price is to be made to, or
(ii) (in the circumstances permitted by the Offer) if unpurchased Shares
are to be registered in the name of, any person other than the
registered owner, or if tendered certificates are registered in the name
of any person other than the person signing the Letter of Transmittal,
the amount of all stock transfer taxes, if any (whether imposed on the
registered owner or such other person), payable on account of the
transfer to such person will be deducted from the Purchase Price unless
evidence satisfactory to the Company of the payment of such taxes or
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exemption therefrom is submitted. See Instruction 6 of the Letter of
Transmittal.
THE COMPANY MAY BE REQUIRED TO WITHHOLD AND REMIT TO THE INTERNAL
REVENUE SERVICE (THE "IRS"), 31% OF THE GROSS PROCEEDS PAID TO ANY
TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND
SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. SEE
SECTION 3.
6. CERTAIN CONDITIONS OF THE OFFER
-------------------------------
Notwithstanding any other provision of the Offer, the Company shall not
be required to accept for payment, purchase or pay for any Shares
tendered, and may terminate or amend the Offer or may postpone the
acceptance for payment of, the purchase of and the payment for, Shares
tendered, subject to Rule 13e-4(f) under the Exchange Act (see Section
15), if<,> <in the sole judgment of the Company, >at any time on or after
October 1, 2002 and at or before [the expiration of the Offer ]<the time of
purchase of any such Shares, >any of the following events shall have
occurred[:]< (or shall have been determined by the Company to have
occurred) which, regardless of the circumstances (including any action
or omission to act by the Company), makes it inadvisable to proceed with
the Offer or with such purchase or payment:>
(a) there shall have been threatened, instituted or pending any
action or proceeding by any government or governmental,
regulatory or administrative agency or authority or tribunal or
any other person, domestic or foreign, or before any court or
governmental, regulatory or administrative authority or agency or
tribunal, domestic or foreign, which: (i) challenges the making
of the Offer, the acquisition of Shares pursuant to the Offer or
otherwise relates in any manner to the Offer or (ii) <in the
Company's sole judgment, >could materially affect the business,
condition (financial or other), income, operations or prospects
of the Company and its subsidiary, taken as a whole, or
otherwise materially impair in any way the contemplated future
conduct of the business of the Company or its subsidiary or
materially impair the Offer's contemplated benefits to the
Company; or
(b) there shall have been any action threatened or taken, or approval
withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted,
entered, amended, [or ]enforced <or deemed to be >applicable to
the Offer or the Company or its subsidiary, by any court or any
government or governmental, regulatory or administrative
authority or agency or tribunal, domestic or foreign, <which, in
the Company's sole judgment, >[which ]would <or might >directly or
indirectly: (i) make the acceptance for payment of, or payment
for, some or all of the Shares illegal or otherwise restrict or
prohibit consummation of the Offer, (ii) delay or restrict the
ability of the Company, or render the Company unable, to accept
for payment or pay for some or all of the Shares, (iii)
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materially impair the contemplated benefits of the Offer to the
Company or (iv) materially affect the business, condition
(financial or other), income, operations or prospects of the
Company and its subsidiary, taken as a whole, or otherwise
materially impair in any way the contemplated future conduct of
the business of the Company or its subsidiary; or
(c) there shall have occurred: (i) the declaration of any banking
moratorium or suspension of payments in respect of banks in the
United States, (ii) any general suspension of trading in, or
limitation on prices for, securities on any United States
national securities exchange or in the over-the-counter market,
(iii) the commencement or escalation of a war, armed hostilities
or any other national or international crisis directly or
indirectly involving the United States, (iv) any limitation
(whether or not mandatory) by any governmental, regulatory or
administrative agency or authority on, or any event which<,> <in
the Company's sole judgment,>might affect, the extension of
credit by banks or other lending institutions in the United
States, (v) any significant decrease in the market price of the
Shares or in the general level of market prices of equity
securities in the United States or abroad or any change in the
general political, market, economic or financial conditions in
the United States or abroad that could have a material adverse
effect on the Company's business, operations or prospects or the
trading in the Shares or that<,> <in the sole judgment of the
Company, >makes it inadvisable to proceed with the Offer or (vi)
in the case of any of the foregoing existing at the time of the
commencement of the Offer, <in the Company's sole judgment, >a
material acceleration or worsening thereof; or
(d) any change shall have occurred or be threatened in the business,
condition (financial or other), income, operations, Share
ownership or prospects of the Company and its subsidiary, taken
as a whole, which[ ]<, in the Company's sole judgment, >is or may be
material to the Company or any other event shall have occurred
which<,> <in the Company's sole judgment, >materially impairs the
Offer's contemplated benefits; or
(e) a tender or exchange offer for any or all of the Shares (other
than the Offer), or any merger, business combination or other
similar transaction with or involving the Company or its
subsidiary, shall have been proposed, announced or made by any
entity or person; or
(f) any entity or person shall have acquired or proposed to acquire
beneficial ownership of more than 5% of the outstanding Shares
(other than any such entity or person which has acquired
beneficial ownership of more than 5% of the outstanding Shares
prior to October 1, 2002.)
The foregoing conditions are for the Company's sole benefit and may be
asserted by the Company regardless of the circumstances giving rise to
-8-
any such condition <(including any action or inaction by the Company) >or
may be waived by the Company [in its reasonable discretion ]in whole or
in part. The Company's failure at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any
time and from time to time [prior to the expiration of the offer].< Any
determination by the Company concerning the events described in this
Section 6 shall be final and shall be binding on all parties.>
7. PRICE RANGE OF SHARES; DIVIDENDS
--------------------------------
There is currently no established trading market for the Shares
(excluding limited or sporadic trading). During the first three
quarters of 2002, trades of Shares took place at prices between $12.00
and $12.50 per share. The most recent trade occurred at a price of
$12.50 per share.
The Company customarily declares quarterly cash dividends on its
outstanding common stock. The following table sets forth the cash
dividends per share declared for each quarter during the years 2000 and
2001, and for the first two quarters of 2002.
2000 2001 2002
---- ---- ----
First quarter $ .049 $ .058 $ .073
Second quarter .051 .062 .075
Third quarter .053 .066 N/A
Fourth quarter .056 .071 N/A
8. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER TO PURCHASE
--------------------------------------------------------------
As of June 30, 2002, the Company had accumulated equity capital of
$38,543,128, representing 9.26% of its total assets. The Company's
Board of Directors believes the purchase of Shares is an attractive use
of a portion of the Company's available capital on behalf of its
shareholders and that it is consistent with the Company's long-term goal
of increasing shareholder value. The Company has sufficient resources,
in available cash and dividends it will receive from the Bank, to fund
the amount required to purchase Shares under the offer and pay related
expenses.
The Offer is designed to reposition the Company's balance sheet to
increase return on equity by redeploying that portion of the Company's
equity capital that is not necessary for the Company's Massachusetts-
based, core banking business. Following completion of the Offer, the
Company and the Bank will continue to have strong capital positions.
The Bank will continue to qualify as a "well capitalized" financial
institution under the prompt corrective action program enacted by the
Federal Deposit Insurance Corporation Improvement Act of 1991.
As described above, the Offer is part of a plan intended to enhance
shareholder value. The Offer will enable shareholders to sell a portion
of their Shares while retaining a continuing equity interest in the
Company if they so desire. The Offer will increase the Company's
leverage, with an attendant increase in the risks and rewards for
-9-
persons who retain a continuing equity interest in the Company. In
addition, persons who determine not to accept the Offer will realize a
proportionate increase in their relative equity interest in the Company,
and thus in the Company's future earnings and assets, subject to
increased risks resulting from higher leverage and to the Company's
ability to issue additional Shares or other equity securities in the
future.
The Offer may provide shareholders who are considering a sale of all or
a portion of their Shares the opportunity to sell those Shares for cash
without the usual transaction costs associated with open-market sales.
To the extent the purchase of Shares in the Offer results in a reduction
in the number of shareholders of record, the costs of the Company for
services to shareholders may be reduced.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY
OR ALL OF SUCH SHAREHOLDER'S SHARES AND HAS NOT AUTHORIZED ANY PERSON TO
MAKE ANY SUCH RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE
CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT AND
TAX ADVISORS AND MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND,
IF SO, HOW MANY SHARES TO TENDER.
Following completion of the Offer, the Company may repurchase additional
Shares in the open market, in privately negotiated transactions or
otherwise. Any such purchases may be on the same terms or on terms
which are more or less favorable to shareholders than the terms of the
Offer. Rule 13e-4 under the Exchange Act prohibits the Company and its
affiliates from purchasing any Shares, other than pursuant to the Offer,
until at least ten business days after the Expiration Date. Any
possible future purchases by the Company will depend on many factors,
including the market price of the Shares, the results of the Offer, the
Company's business and financial position and general economic and
market conditions.
Shares the Company acquires pursuant to the Offer will be held in the
Company's treasury and will be available for the Company to issue
without further shareholder action (except as required by applicable
law). Such Shares could be issued without shareholder approval for such
purposes as, among others, the raising of additional capital for use in
the Company's business.
9. CERTAIN INFORMATION ABOUT THE COMPANY
-------------------------------------
Community Bancorp, Inc., a Massachusetts corporation, is a registered
bank holding company under the Bank Holding Company Act of 1956, as
amended. It is subject to the supervision and examination of the Board
of Governors of the Federal Reserve System (the "Federal Reserve
Board"), and it files with the Federal Reserve Board the reports as
required under the Bank Holding Company Act. The Company has one
subsidiary, Community National Bank, a national banking association (the
"Bank"), and it owns all the outstanding Shares of the Bank. At
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present, the Company conducts no activities independent of the Bank. As
of August 31, 2002, the Bank constituted 100% of the consolidated assets
of the Company.
The Company's principal executive offices are located at 17 Pope Street,
Hudson, Massachusetts, 01749, and the Company's telephone number is
(978) 568-8321.
ADDITIONAL INFORMATION. The Company is subject to the informational
requirements of the Exchange Act and in accordance therewith files
periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other
matters. The Company is required to disclose in such proxy statements
and reports certain information, as of particular dates, concerning the
Company's directors and officers, their remuneration, the principal
owners of the Company's securities and any material interest of such
persons in transactions with the Company. The Company has also filed an
Issuer Tender Offer Statement on Schedule TO (the "Schedule TO") with
the Commission, which includes certain additional information relating
to the Offer. Such material may be inspected at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and also via the Internet in the EDGAR
archives located at the Commission's World Wide Web site found at
http://www.sec.gov. Copies may also be obtained by mail for prescribed
rates from the Commission's Public Reference Room, 450 Fifth Street,
N.W., Washington, D.C. 20549.
10. SOURCE AND AMOUNT OF FUNDS
--------------------------
Assuming that the Company purchases 222,222 Shares pursuant to the
Offer, at a Purchase Price of $13.50 per Share, the Company expects the
maximum aggregate cost, including all fees and expenses applicable to
the Offer, to be approximately $3,010,000.
The Company plans to obtain the funds needed for the Offer from cash on
hand of approximately $800,000 and from a special cash dividend to be
declared by the Bank on its common stock, which is wholly owned by the
Company. The Company will not borrow any of the funds needed pursuant
to the Offer.
11. INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND
--------------------------------------------------------------
ARRANGEMENTS CONCERNING THE SHARES
----------------------------------
As of August 31, 2002 the Company had 5,963,885 Shares of its common
stock outstanding, including shares allocated pursuant to the Company's
401(k) Savings Plan (the "401(k) Savings Plan), and it had reserved an
additional 414,000 Shares for issuance upon exercise of outstanding
stock options. The 222,222 Shares the company is offering to purchase
represent approximately 3.7% of the outstanding Shares. As of August
31, 2002, the directors and executive officers of the Company and the
Bank as a group (13 persons) beneficially owned an aggregate of
1,994,130 Shares (including 19,025 Shares covered by currently
exercisable options granted under the Company's 2001 Incentive Stock
-11-
Option Plan for Key Employees and the 2001 Directors' Plan, and 62,051
shares held by the 401(k) Savings Plan on behalf of the executive
officers, for which the executive officers have voting power in certain
circumstances), representing approximately 33.3% of the total
outstanding Shares, assuming the exercise by such persons of their
currently exercisable options. As of August 31, 2002, a total of
399,785 or approximately 6.7% of the outstanding Shares were held in the
401(k) Savings Plan (including 62,051 shares for which the Company's
executive officers have voting power in certain circumstances, and which
are included in the aggregate director and executive officer beneficial
ownership figure set forth above). The Company has been advised that
the trustee of the 401(k) Savings Plan (the Bank), does not intend to
tender any Shares pursuant to the Offer. Directors, officers and
employees of the Company and the Bank who own the Company's Shares may
participate in the Offer on the same basis as the Company's other
shareholders. The Company has been advised that none of its directors
or executive officers intend to tender Shares pursuant to the Offer.
Assuming the Company purchases 222,222 Shares pursuant to the Offer, and
that neither the trustee of the 401(k) Savings Plan or any of the
directors or executive officers of the Company or the Bank tender any
Shares pursuant to the Offer, then after the purchase of Shares pursuant
to the Offer, the Company's directors and executive officers as a group
would own beneficially approximately 34.6% of the total outstanding
Shares, assuming the exercise by such persons of their currently
exercisable options.
Based upon the Company's records, and upon information provided to the
Company by its directors, executive officers and affiliates, neither the
Company nor its subsidiary nor, to the best of the Company's knowledge,
any of its executive officers or directors, nor any affiliate of any of
the foregoing, had effected any transactions involving the Shares during
the 60 days prior to the date hereof.
Except for the outstanding options to purchase Shares granted during
2001 and 2002 to the directors and certain officers (including executive
officers) of the Company and the Bank pursuant to the Company's 2001
Incentive Stock Option Plan for Key Employees and the 2001 Directors'
Plan, and as otherwise set forth in this Offer, neither the Company nor,
to the best of the Company's knowledge, any of its affiliates, executive
officers or directors, or any of the executive officers or directors of
its subsidiary, is a party to any contract, arrangement, understanding
or relationship with any other person relating, directly or indirectly,
to the Offer with respect to any securities of the Company (including,
but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or
withholding of proxies, consents or authorizations).
Except as set forth in this Offer, neither the Company nor, to the best
of the Company's knowledge, its directors or executive officers have any
-12-
current plans or proposals which relate to or would result in:
* the acquisition by any person of additional securities of the
Company or the disposition of securities of the Company;
* an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or its
subsidiary;
* purchase, sale or transfer of a material amount of assets of the
Company or its subsidiary;
* any change in the present Board of Directors or management of the
Company;
* any material change in the present dividend rate or policy, or
indebtedness or capitalization of the Company;
* any other material change in the Company's corporate structure or
business; or
* any change in the Company's Articles of Incorporation or Bylaws or
any actions which may impede the acquisition or control of the
Company;
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER
-----------------------------------------------------------------
THE SECURITIES ACT
------------------
There is currently no established trading market for the Shares
(excluding limited or sporadic trading). The Company's purchase of
Shares pursuant to the Offer will reduce the number of Shares that might
otherwise be traded publicly and may reduce the number of shareholders.
The Shares are registered under the Securities Act which requires, among
other things, that the Company furnish certain information to its
shareholders and the U.S. Securities and Exchange Commission.
13. LEGAL MATTERS; REGULATORY APPROVALS
-----------------------------------
As a registered bank holding company, the Company is subject to the
supervision of the Federal Reserve Board. The Company does not require
prior regulatory approval to consummate the Offer.
The Bank Holding Company Act of 1956 and the Change in Bank Control Act
each set forth thresholds with respect to the ownership of voting Shares
of a bank holding company of 5% and 10%, respectively, over which the
owner of such voting Shares may be determined to control such bank
holding company. If, as a result of the Offer, the ownership interest
of any shareholder in the Company is increased over these thresholds,
such shareholder may be required to reduce its ownership interest in the
Company. Each shareholder whose ownership interest may be so increased
is urged to consult the shareholder's own legal counsel with respect to
the consequences to the shareholder of the offer.
-13-
14. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
---------------------------------------
The following summary is a general discussion of certain of the United
States federal income tax consequences of the Offer. This summary is
based upon laws, regulations, rulings and decisions now in effect, all
of which are subject to change, possibly retroactively. No ruling as to
any matter discussed in this summary has been requested or received from
the IRS.
IN GENERAL. A shareholder's exchange of Shares for cash pursuant to the
Offer will be a taxable transaction for federal income tax purposes, and
may also be a taxable transaction under applicable state, local, foreign
or other tax laws. This summary does not discuss any aspects of state,
local, foreign or other tax laws. Certain shareholders (including
insurance companies, tax-exempt organizations, financial institutions,
broker dealers and shareholders who have acquired their Shares upon the
exercise of options or otherwise as compensation) may be subject to
special rules not discussed below. For purposes of this discussion,
shareholders are assumed to hold their Shares as capital assets.
TREATMENT AS A SALE OR EXCHANGE. Under Section 302 of the Internal
Revenue Code of 1986, as amended (the "Code"), a transfer of Shares to
the Company pursuant to the Offer will, as a general rule, be treated as
a sale or exchange of the Shares (rather than as a corporate
distribution) if the receipt of cash upon the sale (a) is "substantially
disproportionate" with respect to the shareholder, (b) results in a
"complete termination" of the shareholder's interest in the Company or
(c) is "not essentially equivalent to a dividend" with respect to the
shareholder. These tests (the "Section 302 tests") are explained more
fully below.
If any of the Section 302 tests is satisfied, a tendering shareholder
will recognize capital gain or loss equal to the difference between the
amount of cash received by the shareholder pursuant to the Offer and the
shareholder's basis in the Shares sold pursuant to the Offer. If the
Shares have been held for more than one year, the gain or loss will be
long-term capital gain or loss. Net long-term capital gain from the
sale of Shares held for more than one year is taxed at not more than 20
percent for Federal purposes. Therefore, a tendering Shareholder may
wish to take the various bases and holding periods of his Shares, if
such characteristics are not uniform, into account in determining which
Shares to tender.
CONSTRUCTIVE OWNERSHIP OF STOCK. In determining whether any of the
Section 302 tests is satisfied, a shareholder must take into account not
only Shares actually owned by the shareholder, but also Shares that are
constructively owned pursuant to Section 318 of the Code. Under Section
318, a shareholder may constructively own Shares actually owned, and in
some cases constructively owned, by certain related individuals and
entities in which the shareholder has an interest, or, in the case of
shareholders that are entities, by certain individuals or entities that
have an interest in the shareholder, as well as any Shares the
shareholder has a right to acquire by exercise of an option or by the
-14-
conversion or exchange of a security, such as the Convertible
Securities. With respect to option and convertible security
attribution, the IRS takes the position that Shares constructively owned
by a shareholder by reason of a right on the shareholder's part to
acquire the Shares from the Company are not to be considered outstanding
for purposes of applying the Section 302 tests to other shareholders;
however, there are both contrary and supporting judicial decisions with
respect to this issue.
THE SECTION 302 TESTS. One of the following tests must be satisfied in
order for the exchange of Shares pursuant to the Offer to be treated as
a sale rather than as a dividend distribution.
(a) Substantially Disproportionate Test. The receipt of cash by a
shareholder will be substantially disproportionate with respect
to the shareholder if the percentage of the outstanding Shares
actually and constructively owned by the shareholder immediately
following the exchange of Shares pursuant to the Offer (treating
Shares exchanged pursuant to the Offer as not outstanding) is
less than 80% of the percentage of the outstanding Shares
actually and constructively owned by the shareholder immediately
before the exchange (treating Shares exchanged pursuant to the
Offer as outstanding).
(b) Complete Termination Test. The receipt of cash by a shareholder
will be a complete termination of the shareholder's interest if
either (i) all of the Shares actually and constructively owned by
the shareholder are sold pursuant to the Offer or (ii) all of the
Shares actually owned by the shareholder are sold pursuant to the
Offer and the shareholder is eligible to waive, and effectively
waives, the attribution of Shares constructively owned by the
shareholder in accordance with the procedures described in
Section 302(c)(2) of the Code. Shareholders considering making
such an election should do so in consultation with their own tax
advisors.
(c) Not Essentially Equivalent to a Dividend Test. The receipt of
cash by a shareholder will not be essentially equivalent to a
dividend if the shareholder's exchange of Shares pursuant to the
Offer results in a "meaningful reduction" of the shareholder's
proportionate interest in the Company. Whether the receipt of
cash by a shareholder will result in a meaningful reduction of
the shareholder's proportionate interest will depend on the
shareholder's particular facts and circumstances. However, the
IRS has indicated in published rulings that even a small
reduction in the proportionate interest of a small minority
shareholder in a publicly held corporation, who exercises no
control over corporate affairs, may constitute such a "meaningful
reduction". Shareholders expecting to rely upon the "not
essentially equivalent to a dividend" test should consult their
own tax advisors as to its application in their particular
situation.
-15-
Although the issue is not free from doubt, a shareholder may be able to
take into account acquisitions or dispositions of Shares (including
market purchases and sales) substantially contemporaneous with the Offer
in determining whether any of the Section 302 tests is satisfied.
In the event that the Offer is oversubscribed, the Company's purchase of
Shares pursuant to the Offer will be prorated. Thus, in such case even
if all the Shares actually and constructively owned by a shareholder are
tendered pursuant to the Offer, not all of the Shares will be purchased
by the Company, which in turn may affect the shareholder's ability to
satisfy the Section 302 tests.
TREATMENT AS A DIVIDEND. If none of the Section 302 tests is satisfied
and, as anticipated (although there can be no assurances), the Company
has sufficient earnings and profits, a tendering shareholder will be
treated as having received a dividend includible in gross income in an
amount equal to the entire amount of cash received by the shareholder
pursuant to the Offer. This amount will not be reduced by the
shareholder's basis in the Shares exchanged pursuant to the Offer, and
(except as described below for corporate shareholders eligible for the
dividends-received deduction) the shareholder's basis in those Shares
will be added to the shareholder's basis in his remaining Shares. No
assurance can be given that any of the Section 302 tests will be
satisfied as to any particular shareholder, and thus no assurance can be
given that any particular shareholder will not be treated as having
received a dividend taxable as ordinary income. Any cash received for
Shares pursuant to the Offer in excess of the Company's earnings and
profits will be treated, first, as a non-taxable return of capital to
the extent of the shareholder's basis for such shareholder's Shares,
and, thereafter, as a capital gain to the extent it exceeds such basis.
SPECIAL RULES FOR CORPORATE SHAREHOLDERS. To the extent that the
exchange of Shares by a corporate shareholder is treated as a dividend,
the shareholder generally will be entitled to a dividends-received
deduction equal to 70% of the dividend, subject to applicable
limitations, including those relating to "debt-financed portfolio stock"
under Section 246A of the Code and to the 45-day holding period
requirement of Section 246(c) of the Code. Also, since it is expected
that purchases pursuant to the Offer will not be pro rata as to all
shareholders, any amount treated as a dividend to a corporate
shareholder generally is expected to constitute an "extraordinary
dividend" subject to the provisions of Section 1059 of the Code (except
as may otherwise be provided in regulations yet to be promulgated by the
Treasury Department). Under Section 1059 of the Code, a "corporate
dividend" that is equal to the deduction allowable under the dividends
received deduction rules, and, if such portion exceeds the shareholder's
tax basis for the stock, must treat any such excess as additional gain
on the subsequent sale or other disposition of such stock.
BACKUP WITHHOLDING. See Section 3 concerning the potential application
of federal backup withholding.
FOREIGN SHAREHOLDERS. The Company will assume that the exchange is a
-16-
dividend as to foreign shareholders and will therefore withhold federal
income tax at a rate equal to 30% of the gross proceeds paid to a
foreign shareholder or his agent pursuant to the Offer, unless the
Company determines that a reduced rate of withholding is available
pursuant to a tax treaty or that an exemption from withholding is
applicable because the gross proceeds are effectively connected with the
conduct of a trade or business by the foreign shareholder within the
United States. For this purpose, a foreign shareholder is any
shareholder that is not (a) a citizen or resident of the United States,
(b) a corporation, partnership or other entity created or organized in
or under the laws of the United States or any political subdivision
thereof, or (c) any estate or trust the income of which is subject to
United States federal income taxation regardless of the source of such
income.
Generally, the determination of whether a reduced rate of withholding is
applicable is made by reference to a foreign shareholder's address or to
a properly completed Form 1001 furnished by the shareholder, and the
determination of whether an exemption from withholding is available on
the grounds that gross proceeds paid to a foreign shareholder are
effectively connected with a United States trade or business is made on
the basis of a properly completed Form 4224 furnished by the
shareholder. The Company will determine a foreign shareholder's
eligibility for a reduced rate of, or exemption from, withholding by
reference to the shareholder's address and any Forms 1001 or 4224
submitted to the Company by a foreign shareholder unless facts and
circumstances indicate that such reliance is not warranted or unless
applicable law requires some other method for determining whether a
reduced rate of withholding is applicable. These forms can be obtained
from the Company. See the instructions to the Letter of Transmittal. A
foreign shareholder with respect to whom tax has been withheld may be
eligible to obtain a refund of all or a portion of the withheld tax if
the shareholder satisfies one of the Section 302 tests for capital gain
treatment or is otherwise able to establish that no tax or a reduced
amount of tax was due. Foreign shareholders are urged to consult their
own tax advisors regarding the application of federal income tax
withholding, including eligibility for a withholding tax reduction or
exemption and the refund procedure.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
PURPOSES ONLY. THE TAX CONSEQUENCES OF A SALE PURSUANT TO THIS OFFER
MAY VARY DEPENDING UPON, AMONG OTHER THINGS, THE PARTICULAR
CIRCUMSTANCES OF THE TENDERING SHAREHOLDER. NO INFORMATION IS PROVIDED
HEREIN REGARDING THE STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF THE
TRANSACTION CONTEMPLATED BY THIS OFFER. SHAREHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF TENDERING SHARES
PURSUANT TO THIS OFFER AND THE EFFECT OF THE STOCK OWNERSHIP ATTRIBUTION
RULES DESCRIBED ABOVE.
15. EXTENSION OF THE OFFER; TERMINATION; AMENDMENTS
-----------------------------------------------
The Company expressly reserves the right, at any time or from time to
-17-
time, <in its sole discretion,>[to elect] to extend the period of time
during which the Offer is open by making a public announcement thereof.
The Company also expressly reserves the right<, in its sole discretion>
to terminate the Offer and not accept for payment or pay for any Shares
not theretofore accepted for payment or paid for or, subject to
applicable law, to postpone payment for Shares upon the occurrence of
any of the conditions specified in Section 6 by making a public
announcement of such termination or postponement. The Company's
reservation of the right to delay payment for Shares which it has
accepted for payment is limited by Rules 13e-4(f)(2) and 13e-4(f)(5)
promulgated under the Exchange Act. Rule 13e-4(f)(2) requires that the
Company permit Shares tendered pursuant to the Offer to be withdrawn:
(i) at any time during the period the Offer remains open; and (ii) if
not yet accepted for payment, after the expiration of forty business
days from the commencement of the Offer. Rule 13e-4(f)(5) requires that
the Company must either pay the consideration offered or return the
Shares tendered promptly after the termination or withdrawal of the
Offer. Subject to compliance with applicable law, the Company further
reserves the right<,> <in its sole discretion, >at any time or from time
to time to amend the Offer in any respect, including increasing or
decreasing the number of Shares the Company may purchase or the price it
may pay pursuant to the Offer. Amendments to the Offer may be made at
any time or from time to time effected by public announcement thereof,
such announcement, in the case of an extension, to be issued no later
than 9:00 A.M., E.S.T., on the next business day after the previously
scheduled Expiration Date. Any public announcement made pursuant to the
Offer will be disseminated promptly to shareholders in a manner
reasonably designed to inform shareholders of such change.
If the Company materially changes the terms of the Offer or the
information concerning the Offer, or if it waives a material condition
of the Offer, the Company will extend the Offer to the extent required
by Rule 13e-4 promulgated under the Exchange Act. These rules require
that the minimum period during which an offer must remain open following
material changes in the terms of the offer or information concerning the
offer (other than a change in price or a change in percentage of
securities sought) will depend on the facts and circumstances, including
the relative materiality of such terms of information. If (i) the
Company increases or decreases the price to be paid for Shares, or the
Company increases the number of Shares being sought and any such
increase in the number of Shares being sought exceeds 2% of the
outstanding Shares, or the Company decreases the number of Shares being
sought and (ii) the Offer is scheduled to expire at any time earlier
than the expiration of a period ending on the tenth business day from,
and including, the date that notice of such increase of decrease is
first published, sent or given, the Offer will be extended until the
expiration of such period of ten business days.
16. SOLICITATION FEES AND EXPENSES
------------------------------
The Company has retained Craig and Macauley Professional Corporation as
legal counsel in connection with the Offer. Craig and Macauley will
receive customary compensation for their services including
-18-
reimbursement for their reasonable out-of-pocket expenses relating to
the Offer. Craig and Macauley has rendered various other legal services
to the Company in the past, for which they have received customary
compensation. The Company has also retained Wolf & Company,
Professional Corporation as independent accountants in connection with
the Offer. Wolf & Company will receive customary compensation for their
services including reimbursement for their reasonable out-of-pocket
expenses related to the Offer. Wolf & Company was engaged as the
Company's independent accountant effective June 6, 2002. Wolf & Company
has not rendered accounting or auditing services to the Company prior to
that date, and has not received compensation by the Company prior to
that date.
The Company will not pay fees or commissions to any broker, dealer,
commercial bank, trust company or other person for soliciting any Shares
pursuant to the Offer. The Company will, however, on request, reimburse
such persons for customary handling and mailing expenses incurred in
forwarding materials in respect of the Offer to the beneficial owners
for which they act as nominees. No such broker, dealer, commercial bank
or trust company has been authorized to act as the Company's agent for
purposes of this Offer. The Company will pay (or cause to be paid) any
stock transfer taxes on its purchase of Shares, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
17. MISCELLANEOUS
-------------
The Offer is not being made to, nor will the Company accept tenders
from, holders of Shares in any jurisdiction in which the Offer or its
acceptance would not comply with the securities or Blue Sky laws of such
jurisdiction. The Company is not aware of any jurisdiction in which the
making of the Offer or the tender of Shares would not be in compliance
with the laws of such jurisdiction. However, the Company reserves the
right to exclude holders in any jurisdiction in which it is asserted
that the Offer cannot lawfully be made. So long as the Company makes a
good faith effort to comply with any state law deemed applicable to the
Offer, if it cannot do so, the Company believes that the exclusion of
holders residing in such jurisdiction is permitted under Rule 13e-
4(f)(9) promulgated under the Exchange Act.
COMMUNITY BANCORP, INC.
October 18, 2002
-19-
ADDITIONAL INFORMATION
- ----------------------
Facsimile ("Fax") copies of the Letter of Transmittal will be accepted.
The Letter of Transmittal and certificates for the Shares and any other
required documents should be sent or delivered by each shareholder or
his broker, dealer, commercial bank, trust company or their nominee to
the Company at the following address:
TO: COMMUNITY BANCORP, INC.
By Mail, Hand or Overnight Delivery:
------------------------------------
Community Bancorp, Inc.
17 Pope Street
Hudson, MA 01749
Phone: (978) 568-8321
By Facsimile Transmission:
--------------------------
Community Bancorp, Inc.
Attention: Joy Pare'
Fax: (978) 562-7129
You are directed to contact the Company at the telephone number and
address above with any questions or requests for assistance or for
additional copies of this Offer, the Letter of Transmittal or the Notice
of Guaranteed Delivery, or to confirm delivery of your Shares.
-20-