EXHIBIT 2.1
PURCHASE AND ASSUMPTION AGREEMENT
BY AND AMONG
FLEET FINANCIAL GROUP, INC.,
FLEET NATIONAL BANK, FLEET BANK-NH, BANKBOSTON, N.A.,
SOVEREIGN BANK
AND
SOVEREIGN BANCORP, INC.
September 3, 1999
PURCHASE AND ASSUMPTION AGREEMENT
This Purchase and Assumption Agreement (the "Agreement")
dated as of September 3, 1999 among Fleet Financial Group, Inc.,
a Rhode Island corporation with its principal office at One
Federal Street, Boston, Massachusetts 02110 ("Fleet"), Fleet
National Bank, a national banking association with an office at
One Federal Street, Boston, Massachusetts 02110 ("FNB"), Fleet
Bank-NH, a New Hampshire state-chartered bank with its principal
office at 1155 Elm Street, Manchester, New Hampshire 03101
("FBNH"), and BankBoston, N.A., a national banking association
with its principal office at 100 Federal Street, Boston,
Massachusetts 02110 ("BBNA") (FNB, FBNH and BBNA individually a
"Seller" and collectively the "Sellers"), Sovereign Bank, a
federally chartered savings bank with its principal office at
1130 Berkshire Boulevard, Wyomissing, Pennsylvania 19610
("Purchaser"), and Sovereign Bancorp, Inc., a Pennsylvania
corporation with its principal office at 2000 Market Street,
Philadelphia, Pennsylvania 19103 ("Sovereign").
WHEREAS, Sellers desire to sell, and Purchaser desires to
acquire, certain assets of the Business in accordance with the
terms and provisions of this Agreement; and
WHEREAS, Sellers desire to transfer to Purchaser, and
Purchaser desires to assume from Sellers, certain liabilities of
the Business in accordance with the terms and provisions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual promises and covenants contained herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound
hereby subject to the terms and conditions set forth herein,
Sellers, Fleet, Purchaser and Sovereign agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Accrued Interest" shall mean, as of any date, (a) with
respect to the Deposit Liabilities, the interest, dividends,
fees, costs and other charges that have been accrued on but not
paid, credited, or charged to the Deposit Liabilities, all as set
forth in the applicable Seller's general ledger and (b) with
respect to the Loans, the Advance Lines and the Negative
Deposits, interest, fees, premiums, consignment fees, costs and
other charges that have accrued on or been charged to the Loans,
the Advance Lines and the Negative Deposits but not paid by the
applicable borrower, or any guarantor, surety or other obligor
<PAGE 1> therefor, or otherwise collected by offset, recourse to
collateral or otherwise, all as set forth in the applicable
Seller's general ledger and the Final Loan Schedule.
"ADA" shall mean the Americans with Disabilities Act of
1990, as amended, and similar state and local laws, regulations,
rules and ordinances.
"Additional Employees" shall mean those employees of
Sellers, other than Business Employees and Business Related
Employees, designated by Sellers and Purchaser from time to time
hereafter, with functional descriptions previously provided by
Purchaser to Sellers, to whom Purchaser shall offer employment
pursuant to the Hiring Commitment and in accordance with
Section 9.6 hereof.
"Adjusted Payment Amount" shall have the meaning specified
in Section 3.3(a).
"Advance Lines" shall mean all overdraft lines of credit to
owners of the Deposit Liabilities, plus any and all Accrued
Interest thereon.
"Affiliate" shall mean, with respect to any Person, any
other Person that directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, such Person, or a director, officer, partner, joint
venturer or member of such Person and any successors or assigns
of such Person.
"Assignment and Assumption Agreement" shall have the meaning
specified in Section 5.2(c).
"Assumed Liabilities" shall have the meaning specified in
Section 2.2.
"Assumed Severance Obligations" shall have the meaning
specified in Section 9.6(b).
"ATM Lease Agreements" shall mean the lease or operating
agreements for the ATMs listed on Schedule 1.1(a) hereto, as such
agreements may be amended, renewed or extended in the ordinary
course of business.
"ATMs" shall mean the automated teller machines listed on
Schedule 1.1(b) hereto.
"BankBoston" shall mean BankBoston Corporation, a
Massachusetts corporation.
"BankBoston Residential Mortgage Loans" shall mean the loans
listed on Schedule 1.1(c) hereto secured by a first mortgage on a
one-to-four family residential property, but excluding the
servicing rights related to such loans. Each BankBoston
<PAGE 2> Residential Mortgage Loan shall include all documents
executed or delivered in connection with such loan to the extent
such documents are in the loan file related to such loan, any and
all collateral held as security therefor or in which a security
interest, Lien or mortgage has been granted and any and all
guarantees, insurance and other credit enhancements relating
thereto, together with Accrued Interest thereon, all as exists at
the close of business on the Closing Date; provided that
BankBoston Residential Mortgage Loans shall not include any loan
which is Nonperforming.
"BBNA" shall have the meaning specified in the preamble.
"BBNA Precious Metals" shall mean all Precious Metals
inventory owned by BBNA or Precious Metals which BBNA has the
right to receive, whether held by BBNA or a third party and
whether segregated from or commingled with other Precious Metals,
in each case as exists at the close of business on the Closing
Date. Attached hereto as Schedule 1.1(d) is a list of Precious
Metals owned by BBNA as of June 30, 1999 consigned to or
otherwise delivered to other Persons pursuant to Precious Metals
Loans.
"Board" shall mean the Board of Governors of the Federal
Reserve System.
"Branch Leases" shall mean the lease agreements for the
Branches listed on Schedule 1.1(e) hereto, as such agreements may
be amended, renewed or extended in the ordinary course of
business.
"Branches" shall mean the branch offices of Sellers listed
on Schedule 1.1(f) hereto.
"Bridge Facility" shall mean the senior secured bridge
facility described in the Commitment Letter.
"Business" shall mean the Consumer Bank Division, the Small
Business Bank Division, the Commercial Bank Division, and the CRA
Division.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or authorized by law
to be closed in the State of Connecticut, the Commonwealth of
Massachusetts, the State of New Hampshire, or the State of Rhode
Island.
"Business Employees" shall mean the Consumer Bank Employees,
the Small Business Bank Employees and the Commercial Bank
Employees.
"Business Related Employees" shall mean the employees of
Sellers (other than Business Employees and Additional Employees)
as shall be designated by Sellers from time to time hereafter in
<PAGE 3> writing to Purchaser for possible interviews for
employment with Purchaser following the Closing Date.
"Capital Transactions" shall mean (a) the Bridge Facility,
(b) the High Yield Financing, (c) the Senior Credit Facility or
(d) the New Equity Issuance, in each case as described in the
Commitment Letter.
"Cash" shall mean all petty cash, vault cash, teller cash,
ATM cash and prepaid postage located at the Branches (including
foreign currency), in each case as of the close of business at
the respective Branch (6:00 p.m. for each automated teller
machine) on the Closing Date.
"Cash Management Employees" shall mean the employees of
Sellers listed on Schedule 1.1(g) hereto, but excluding such
employees who shall leave a Seller's employ between the date
hereof and the close of business on the Closing Date but
including replacements of such employees made in the ordinary
course of business between the date hereof and the close of
business on the Closing Date and including any Person who fills a
vacant position between the date hereof and the Closing Date to
provide cash management services to Customers.
"Closing" shall have the meaning specified in Section
5.1(a).
"Closing Date" shall have the meaning specified in Section
5.1(a).
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
"Collateral Agent" shall mean FNB, in its capacity as
collateral agent under the Collateral Agency Agreement.
"Collateral Agency Agreement" shall mean a Collateral Agency
Agreement to be dated as of the Closing Date among Sellers,
Purchaser and the Collateral Agent, in substantially the form of
Exhibit P hereto.
"Collateral Assignment Instruments" shall mean such
assignments, financing statements, endorsements, stock powers or
other instruments as shall be required under applicable law to
transfer to the Collateral Agent in accordance with the terms of
the Collateral Agency Agreement the Letter of Credit/Liquidity
Support Agreement Collateral and the rights and remedies of
Sellers with respect thereto.
"Columbia Park Facility" shall mean the premises of Sellers
(or one or more Affiliates of Sellers) located at 2 Morrissey
Boulevard, Dorchester, Massachusetts, being a BankBoston data
processing center.
<PAGE 4>
"Columbia Park Lease" shall mean a lease agreement to be
dated as of the Closing Date between Fleet or an Affiliate
thereof (as tenant) and Purchaser (as landlord) for the Columbia
Park Facility and containing the terms set forth on Exhibit B
hereto, including without limitation terms to the effect that
such tenant will lease 200,000 square feet at the rent per square
foot indicated on Exhibit B for a term commencing on the Closing
Date and ending on the fifth anniversary thereof, and thereafter
100,000 square feet at the rent per square foot indicated on
Exhibit B for a term commencing on such fifth anniversary and
ending on the eighth anniversary of the Closing Date.
"Commercial Bank Assets" shall mean the Commercial Bank
Loans and the Precious Metals Assets.
"Commercial Bank Division" shall mean the Commercial Bank
Assets, the Commercial Bank Liabilities and the Commercial Bank
Employees.
"Commercial Bank Employees" shall mean the Middle Market
Employees, the Commercial Real Estate Employees, the Precious
Metals Employees, and the Cash Management Employees.
"Commercial Bank Liabilities" shall mean (a) the Commercial
Deposit Liabilities and (b) any and all liabilities and
obligations relating to or arising out of the Commercial Bank
Assets, to the extent that such liabilities and obligations arise
or accrue after the close of business on the Closing Date, but
including Unfunded Advances under the Loans included therein.
"Commercial Bank Loans" shall mean the Middle Market Loans,
the Commercial Real Estate Loans, the Precious Metals Loans and
the Supplemental Commercial Loans.
"Commercial Deposit Liabilities" shall mean the Middle
Market Deposit Liabilities, the Commercial Real Estate Deposit
Liabilities and the Precious Metals Deposit Liabilities.
"Commercial Real Estate Deposit Liabilities" shall mean all
of any Seller's obligations and liabilities relating to (a) the
deposit accounts listed on Schedule 1.1(h) hereto, and (b) the
deposit accounts which are opened between July 1, 1999 and the
close of business on the Closing Date by an obligor of a
Commercial Real Estate Loan, and (c) deposit accounts which are
security for any Commercial Real Estate Loans, including, without
limitation, all passbook accounts, statement savings accounts,
checking, money market and NOW accounts, certificates of deposit,
and IRA, Keogh Plan and Employee Pension Plan accounts, together
with Accrued Interest thereon all as exists at the close of
business on the Closing Date, but excluding any claim or other
liability relating to the origination of any such deposit account
or the administration of any such deposit account prior to the
close of business on the Closing Date.
<PAGE 5>
"Commercial Real Estate Employees" shall mean the employees
of Sellers listed on Schedule 1.1(i) hereto, but excluding such
employees who shall leave a Seller's employ between the date
hereof and the close of business on the Closing Date, but
including replacements of such employees made in the ordinary
course of business between the date hereof and the Closing Date,
and including any Person who fills a vacant position between the
date hereof and the Closing Date if such Person would have been a
relationship manager for a Commercial Real Estate Loan listed on
Schedule 1.1(j) if such Person had been employed by Sellers in
such position on the date hereof.
"Commercial Real Estate Loans" shall mean (a) the loans
listed on Schedule 1.1(j) hereto (exclusive of any reserves for
loan losses) and all obligations of a Seller to make additional
extensions of credit in connection with such loans, as such loans
may be increased, decreased, amended, renewed or extended in the
ordinary course of business between July 1, 1999 and the close of
business on the Closing Date (included within such loans shall be
any Letters of Credit, Liquidity Support Agreements, and ISDA
Transactions related to such loans) and (b) loans made in the
ordinary course of business by the Commercial Real Estate
Employees between July 1, 1999 and the close of business on the
Closing Date (exclusive of any reserves for loan losses) and all
obligations of a Seller to make additional extensions of credit
in connection with such loans, as such loans may be increased,
decreased, amended, renewed or extended in the ordinary course of
business between July 1, 1999 and the close of business on the
Closing Date (included within such loans shall be any Letters of
Credit, Liquidity Support Agreements and ISDA Transactions
relating to such loans); provided, however, that Commercial Real
Estate Loans shall not include any loan described above if such
loan, as of the Closing Date, is (a) subject to a current legal
proceeding related to a Customer's inability or refusal to pay
such loan, (b) not current and with respect to which proceedings
are pending against the obligor or obligors of such loan under
Title 11 of the United States Code or (c) Nonperforming. Each
Commercial Real Estate Loan shall include all documents executed
or delivered in connection with such loan to the extent such
documents are in the loan file relating to such loan, any and all
collateral held as security therefor or in which a security
interest, Lien or mortgage has been granted and any and all
guarantees, insurance and other credit enhancements relating
thereto, together with Accrued Interest thereon, all as exists at
the close of business on the Closing Date.
"Commitment Letter" shall mean that certain letter dated
September 3, 1999 from Salomon Smith Barney, Inc., Lehman
Commercial Paper Inc. and Lehman Brothers Inc. to Sovereign, a
copy of which has been provided to Sellers.
"Comparable Job" shall mean, with respect to any Business
Employee, Additional Employee or Business Related Employee, a
position with Purchaser (a) with the same base salary, (b) with
<PAGE 6> reasonably similar employment background and skill set
requirements, (c) with no significant changes in work
schedule and (d) (i) with respect to a Business Employee,
Additional Employee or Business Related Employee who is
classified as a non-exempt employee, to be performed within
thirty (30) miles of such employee's home or his or her current
commuting distance, whichever is greater, or (ii) with respect to
a Business Employee, Additional Employee or Business Related
Employee who is classified as an exempt employee, to be performed
within forty (40) miles of such employee's home or his or her
current commuting distance, whichever is greater.
"Confidentiality Agreement" shall mean that certain letter
agreement between Sovereign and Fleet dated as of May 24, 1999.
"Consigned Precious Metals" shall mean all outstanding
Precious Metals consigned or otherwise delivered on credit by
BBNA to its customers pursuant to the Precious Metals Agreements
as of the close of business on the Closing Date.
"Consumer Bank Assets" shall mean the Real Property, the
ATMs, the Fixed Assets, the Consumer Bank Loans, the Residential
Mortgage Loans, the Cash, the Branch Leases, the ATM Lease
Agreements, the Tenant Leases, the Lease Agreements, the Safe
Deposit Agreements and all keys for the related safe deposit
boxes, and the assigned leases for assets or property described
in the proviso to the definition of Excluded Fixed Assets.
"Consumer Bank Division" shall mean the Consumer Bank
Assets, the Consumer Bank Liabilities and the Consumer Bank
Employees.
"Consumer Bank Employees" shall mean the employees of
Sellers listed on Schedule 1.1(k) hereto, but excluding such
employees who shall leave a Seller's employ between the date
hereof and the close of business on the Closing Date, but
including replacements of such employees made in the ordinary
course of business between the date hereof and the Closing Date
and including any Person who fills a vacant position between the
date hereof and the Closing Date to provide Branch services to
Customers.
"Consumer Bank Liabilities" shall mean (a) the Consumer
Deposit Liabilities, (b) any and all liabilities and obligations
relating to or arising out of the Consumer Bank Assets, to the
extent that such liabilities and obligations arise or accrue
after the close of business on the Closing Date, but including
Unfunded Advances under the Loans included therein, and (c) the
obligations under the assigned leases described in the proviso to
the definition of Excluded Fixed Assets.
"Consumer Bank Loans" shall mean (a) the loans listed on
Schedule 1.1(l) hereto (exclusive of any reserves for loan
losses) and all obligations of a Seller to make additional
<PAGE 7> extensions of credit in connection with such loans, as
such loans may be increased, decreased, amended, renewed or
extended in the ordinary course of business between July 1, 1999
and the close of business on the Closing Date, (b) loans made in
the ordinary course of business between July 1, 1999 and the
close of business on the Closing Date and linked, including by
direct debit, to a Consumer Deposit Liability account (exclusive
of any reserves for loan losses) and all obligations of a Seller
to make additional extensions of credit in connection with such
loans, as such loans may be increased, decreased, amended,
renewed or extended in the ordinary course of business between
July 1, 1999 and the close of business on the Closing Date, and
(c) any application pending on the Closing Date for a loan which
would be linked, including by direct debit, to a Consumer Deposit
Liability account if such loan had been made by a Seller prior to
the Closing Date, provided, however, that Consumer Bank Loans
shall not include any loan described in subsections (a) or (b)
above, if such loan, as of the Closing Date, is (i) subject to a
current legal proceeding related to a Customer's inability or
refusal to pay such loan, (ii) not current and with respect to
which proceedings are pending against the obligor or obligors of
such loan under Title 11 of the United States Code or (iii)
Nonperforming. Each Consumer Bank Loan shall include all
documents executed or delivered in connection with such loan to
the extent such documents are in the loan file relating to such
loan, any and all collateral held as security therefor or in
which a security interest, Lien or mortgage has been granted and
any and all guarantees, insurance and other credit enhancements
relating thereto, together with Accrued Interest thereon, all as
exists at the close of business on the Closing Date.
"Consumer Deposit Liabilities" shall mean all of any
Seller's obligations and liabilities relating to (a) the deposit
accounts listed on Schedule 1.1(m) hereto, (b) deposit accounts
which are opened on behalf of a customer by a Consumer Bank
Employee between July 1, 1999 and the close of business on the
Closing Date, and (c) deposit accounts which are security for any
Consumer Bank Loans, including, without limitation, all passbook
accounts, statement savings accounts, checking, Money Market and
NOW accounts, certificates of deposit, and IRA, Keogh Plan and
Employee Pension Plan accounts, together with Accrued Interest
thereon, all as exists at the close of business on the Closing
Date but excluding any claim or other liability relating to the
origination of any such deposit account or the administration of
any such deposit account prior to the close of business on the
Closing Date.
"Contribution Agreement" shall mean that certain
Contribution Agreement dated as of October 28, 1997, as amended
on February 20, 1998, by and between Advanta Corporation and
Fleet.
"CRA" shall mean the Community Reinvestment Act (12 U.S.C.
Sections 2901-2907). <PAGE 8>
"CRA Assets" shall mean the CRA Loans, the CRA Equity
Holdings and the CRA Commitments.
"CRA Commitments" shall mean the Sellers' written
commitments listed on Schedule 1.1(n) hereto.
"CRA Division" shall mean the CRA Assets and the CRA
Liabilities.
"CRA Equity Holdings" shall mean the capital stock,
partnership interests and LLC membership interests owned by a
Seller and listed on Schedule 1.1(p) hereto.
"CRA Groups" shall mean the Persons listed on
Schedule 1.1(q) hereof.
"CRA Liabilities" shall mean any and all liabilities and
obligations relating to or arising out of the CRA Assets, to the
extent that such liabilities and obligations arise and accrue
after the close of business on the Closing Date, but including
any Unfunded Advances under the Loans included therein.
"CRA Loans" shall mean (a) the loans listed on
Schedule 1.1(r) hereof (exclusive of any reserves for loan
losses), as such loans may be increased, decreased, amended,
renewed or extended in the ordinary course of business between
July 1, 1999 and the close of business on the Closing Date and
(b) loans made in the ordinary course of business between July 1,
1999 and the close of business on the Closing Date pursuant to
the terms of the CRA Commitments (exclusive of any reserves for
loan losses), as such loans may be increased, decreased, amended,
renewed or extended in the ordinary course of business between
July 1, 1999 and the close of business on the Closing Date;
provided, however, that CRA Loans shall not include any loan
described in subsection (a) or (b) above, if such loan, as of the
Closing Date, is (i) subject to a current legal proceeding
related to a Customer's inability or refusal to pay such loan,
(ii) not current and with respect to which proceedings are
pending against the obligor or obligors of such loan under
Title 11 of the United States Code or (iii) Nonperforming. Each
CRA Loan shall include all documents executed or delivered in
connection with such loan to the extent such documents are in the
loan file relating to such loan, any and all collateral held as
security therefor or in which a security interest, Lien or
mortgage has been granted and any and all guarantees, insurance
and other credit enhancements relating thereto, together with
Accrued Interest thereon, all as exists at the close of business
on the Closing Date.
"CTA" shall mean the Connecticut Transfer Act (Connecticut
General Statutes Section 22a-134 et. seq.)
<PAGE 9>
"Customers" shall mean, individually and collectively, (a)
the Persons named as the owners of the deposit accounts relating
to the Deposit Liabilities, (b) the primary obligors under the
Loans and (c) the parties (other than Sellers and their
Affiliates) to the Safe Deposit Agreements.
"Customer Notices" shall have the meaning specified in
Section 10.3(a).
"Cut-off Date" shall have the meaning specified in Section
3.3(d).
"Damages" shall have the meaning specified in Section 15.1.
"Deposit Liabilities" or "Deposit Liability" shall mean,
collectively, the Consumer Deposit Liabilities, the Small
Business Bank Deposit Liabilities, and the Commercial Deposit
Liabilities, but shall exclude the Excluded IRA/Keogh/Employee
Pension Plan Deposits and the Excluded Deposits.
"Designated Employees" shall have the meaning specified in
Section 15.3.
"Draft Closing Statement" shall mean a draft closing
statement dated as of the close of business of the fifth (5th)
Business Day immediately preceding the Closing Date setting forth
an estimate of the Purchase Price (including all adjustments and
prorations thereto).
"East Providence Facility" shall mean the offices of Sellers
(or one or more Affiliates of Sellers) located at One BankBoston
Way, East Providence, Rhode Island, being a BankBoston consumer
lending call facility.
"East Providence Lease" shall mean a lease agreement to be
dated as of the Closing Date between Fleet or an Affiliate
thereof (as tenant) and Purchaser (as landlord) for the East
Providence Facility and containing the terms set forth in
Exhibit C hereto, including without limitation terms to the
effect that such tenant will lease 60,000 square feet at the rent
per square foot indicated on Exhibit C for a term commencing on
the Closing Date and ending on the third, fourth or fifth
anniversary thereof.
"Employee Pension Plan" shall mean any employee pension plan
for which a Seller serves as a trustee, including but not limited
to, employee pension benefit plans as defined in Section 3(2) of
ERISA, retirement plans qualified under the requirements of
Section 401(a) of the Code, nonqualified deferred compensation
plans, excess benefit plans and supplemental executive retirement
plans.
<PAGE 10>
"Employee Pension Plan Deposit Liability" shall mean a
Deposit Liability in an account owned by an Employee Pension
Plan.
"Environmental Consultant" shall have the meaning specified
in Section 11.2.
"Environmental Due Diligence Date" shall mean the thirtieth
(30th) day following the execution hereof or, if such day shall
not be a Business Day, the next Business Day thereafter, unless
said date is extended in accordance with Section 11.2(c), in
which case, said date shall mean the date to which extended
thereunder.
"Environmental Due Diligence Period" shall mean the period
commencing on the date hereof and ending on the Environmental Due
Diligence Date.
"Environmental Hazard" shall mean the presence of any
Hazardous Materials in violation of any Environmental Laws.
"Environmental Laws" shall mean all Federal, state or local
laws, rules, regulations, codes, ordinances, or by-laws, and any
judicial or administrative interpretations thereof, including
orders, decrees, judgments, rulings, directives or notices of
violation, that create duties, obligations or liabilities with
respect to (a) human health or (b) environmental pollution,
impairment or disruption, including, without limitation, laws
governing the existence, use, storage, treatment, discharge,
release, containment, transportation, generation, manufacture,
refinement, handling, production, disposal, or management of any
Hazardous Materials, or otherwise regulating or providing for the
protection of the environment, and further including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et
seq.), the Public Health Service Act (42 U.S.C. Section 300 et seq.),
the Pollution Prevention Act (42 U.S.C. Section 13101 et seq.), the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Section
136 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), the Safe Drinking Water Act (21 U.S.C. Section
349, 42 U.S.C. Sections 201, 300f), the Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq. ), and similar
state and local statutes, and all regulations adopted pursuant
thereto.
"Environmental Remediation" shall mean performing response
actions in relation to identified Environmental Hazards,
including removal, disposal, treatment or in-place containment
actions, which are reasonably required to achieve permanent
regulatory closure with respect to such Environmental Hazard in
accordance with applicable Environmental Laws.
<PAGE 11>
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended (11 U.S.C. Section 1101 et seq.)
"Estimated Payment Amount" shall have the meaning specified
in Section 3.2.
"Estimated Purchase Price" shall mean the estimate of the
Purchase Price set forth on the Draft Closing Statement.
XX
"Excluded Deposits" shall mean all Deposit Liabilities (a)
owned by employees of Sellers or their Affiliates (other than
Transferred Employees) or Affiliates of Sellers, (b) which were
assumed by FNB in connection with the consummation of the
transactions contemplated by the Contribution Agreement, in each
case as exists at the close of business on the Closing Date and
(c) Consumer Bank Deposit Liabilities not assumed pursuant to
Section 8.3(e).
"Excluded Fixed Assets" shall mean (a) artwork, supplies,
signs, marketing aids, or trade fixtures or equipment in each
case specifically identifying or relating to a Seller or any of
its Affiliates located at the Facilities, (b) telephone systems
located at the Facilities, software, source and object code, user
manuals and related documents and all updates, upgrades or other
revisions thereto and all copies or duplicates thereof located at
the Facilities, (c) copying machines, facsimile machines,
scanners, computers, printers, modems, peripheral equipment,
electronic teller station hardware and other hardware related to
teller stations and platforms located at the Facilities (except
for the ATMs), and (d) any other personal property of a Seller or
any of its Affiliates identified on Schedule 1.1(t) hereto, less
any such items consumed or disposed of, plus new similar items
acquired or obtained, in the ordinary course of the operation of
the Facilities through the close of business on the Closing Date;
provided that to the extent (x) Sellers own (or lease pursuant to
a lease agreement to which a Seller or one of its Affiliates is a
party covering only) such telephone systems, copying machines,
facsimile machines, scanners, computers, printers, modems,
peripheral equipment, electronic teller station hardware and
other hardware related to teller stations and platforms, (y)
Sellers are not restricted or limited in the transfer or
assignment thereof under any lease agreement, contract, license
or other undertaking, and (z) such transfer or assignment will
not void or otherwise materially adversely affect any service or
maintenance agreements with respect to any assets or properties
retained or leased by Sellers or their Affiliates following the
Closing Date, any such owned assets shall be included in the
Fixed Assets and any rights under leases assigned by Sellers with
respect to such assets or properties shall be included in the
Consumer Bank Assets and the obligations under such leases shall
be deemed Assumed Liabilities.
"Excluded IRA/Keogh/Employee Pension Plan Deposits" shall
have the meaning specified in Section 12.12(a). <PAGE 12>
"Facilities" shall mean the Branches, the ATM locations, the
Columbia Park Facility and the East Providence Facility.
"Fair Market Value" shall mean, on any day, with respect to
the calculation of the dollar value of Precious Metals, (a) with
respect to Gold, Palladium or Platinum, the dollar per ounce
Second London Fixing for Gold, Palladium or Platinum, for such
day, and (b) with respect to Silver, the dollar per ounce Handy
and Harman noon price for Silver for such day, in each case times
the number of ounces of Gold, Palladium, Platinum or, as the case
may be, Silver, for which such dollar value is being calculated.
If no such price is available for a particular day, the Fair
Market Value for such day shall be the price for the immediately
preceding day for which such price is available. In the event
that the London Bullion Brokers or Handy and Harman shall
discontinue or alter its usual practice of quoting a price for
the applicable Precious Metal(s), the Fair Market Value for such
day shall be BBNA's so called "spot price" per an ounce of
applicable Precious Metal(s) times the number of such Precious
Metal(s) ounces for which a dollar value is being calculated.
"FBNH" shall have the meaning specified in the preamble.
"FDIA" shall mean the Federal Deposit Insurance Act of 1991,
as amended (12 U.S.C. Sections 1811 et seq.).
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Funds Rate" shall mean, for the period involved,
the average of the interest rates for each day of the period set
forth in H.15(519) opposite the caption "Federal Funds
(Effective)". H.15(519) means the weekly statistical release
designated as such, or any successor publication, published by
the Board.
"Final" shall mean, as applied to any governmental order or
action, that such order or action has not been stayed, vacated or
otherwise rendered ineffective and either (a) the time period for
taking an appeal therefrom shall have passed without an appeal
therefrom having been taken, or (b) if any such appeal shall have
been dismissed or resolved, all applicable periods for further
appeal of such order or action shall have passed.
"Final Approval Date" shall mean, with respect to the
transactions contemplated hereby, the date upon which the last of
the following has occurred: (a) all Regulatory Approvals have
been obtained; (b) all applicable regulatory notices which are
required to be published or given prior to consummation of the
transactions contemplated hereby have been published or given;
(c) the filing of all applicable regulatory reports; and (d) the
expiration of all applicable regulatory comment and waiting
periods.
<PAGE 13>
"Final Loan Schedule" shall have the meaning specified in
Section 3.3(a).
"FIRPTA Affidavits" shall mean affidavits pursuant to
Section 1445 of the Code certifying to the non-foreign entity
status of a Seller.
"Fixed Assets" shall mean all of the furniture, fixtures,
equipment and other assets of the Sellers set forth on
Schedule 1.1(u) hereto, including but not limited to leasehold
improvements, less any items consumed or disposed of, plus new
items acquired or obtained, in the ordinary course of the
operation of the Facilities or the Leased Facilities through the
close of business on the Closing Date, but excluding the Excluded
Fixed Assets (other than the assets described in the proviso to
the definition of Excluded Fixed Assets).
"Fleet" shall have the meaning specified in the preamble.
"Fleet Boston Divestiture Severance Plan" shall mean a
severance plan of Fleet and its Affiliates to be dated as of the
Closing Date and containing the terms set forth on Exhibit D
hereto.
"Fleet Residential Mortgage Loans" shall mean the loans
listed on Schedule 1.1(v) hereto secured by a first mortgage on a
one-to-four family residential property, but excluding the
servicing rights related to such loans. Each Fleet Residential
Mortgage Loan shall include all documents executed or delivered
in connection with such loan to the extent such documents are in
the loan file related to such loan, any and all collateral held
as security therefor or in which a security interest, Lien or
mortgage has been granted and any and all guarantees, insurance
and other credit enhancements relating thereto, together with
Accrued Interest thereon, all as exists at the close of business
on the Closing Date; provided, however, that Fleet Residential
Mortgage Loans shall not include any loan which is Nonperforming.
"FNB" shall have the meaning specified in the preamble.
"Forward Contracts" shall mean all agreements for the
purchase or sale by BBNA of Precious Metals for delivery and
payment at a future date which have not been consummated as of
the close of business on the Closing Date.
"GAAP" shall have the meaning specified in Section 1.2.
"Gold" shall mean gold measured in troy ounces having
fineness of not less than .9995, without regard to whether such
gold is alloyed or unalloyed, in bullion form or contained or
processed into other materials which contain elements other than
gold.
<PAGE 14>
"Hazardous Materials" means (a) any "hazardous material",
"hazardous substance", "hazardous waste", "oil", "regulated
substance", "toxic substance" or words of similar import as
defined under any of the Environmental Laws, (b) asbestos in any
form, (c) urea formaldehyde foam insulation, (d) polychlorinated
biphenyls, (e) radon gas, (f) flammable explosives,
(g) radioactive materials, (h) any chemical, contaminant,
solvent, material, pollutant or substance that may be dangerous
or detrimental to any of the Facilities, the environment or the
health and safety of employees or other occupants of any of the
Facilities and (i) any substance, the generation, storage,
transportation, utilization, disposal, management, release or
location of which, on, under or from any of the Facilities is
prohibited or otherwise regulated pursuant to any of the
Environmental Laws.
"High Yield Financing" shall mean the issuance of the high
yield securities described in the Commitment Letter.
"Hiring Commitment" shall mean Purchaser's commitment on or
prior to the close of business on the Closing Date to extend an
offer of employment for Comparable Jobs in accordance with
Section 9.6 hereof to at least 1352 Additional Employees.
"Hiring Commitment Adjustment" shall mean, in the event the
number of Additional Employees offered Comparable Jobs is less
than the Hiring Commitment, an amount equal to such shortfall
multiplied by $35,000.
"Indemnified Party" shall have the meaning specified in
Section 15.3.
"Indemnitor" shall have the meaning specified in Section
15.3.
"IRA" shall mean an individual retirement account as
specified in Section 408 and 408A of the Code.
"IRA Deposit Liability" shall mean a Deposit Liability in a
deposit account which is an IRA.
"IRS" shall mean the Internal Revenue Service of the United
States.
"ISDA Agreements" shall mean those International Securities
Dealer Agreements between a Customer or other Person and a Seller
or one of its Affiliates evidencing an ISDA Transaction.
"ISDA Transactions" shall mean (a) those transactions set
forth on Schedule 1.1(x) hereto, as such transactions may be
renewed or extended in the ordinary course of business between
July 1, 1999 and the close of business on the Closing Date and
(b) any and all interest rate swap, currency swap, forward, hedge
or similar transactions entered into between July 1, 1999 and the
<PAGE 15> close of business on the Closing Date which relate to a
Loan, each as exists as of the close of business on the Closing
Date.
"ISP98" shall mean the International Standby Practices
(ISP98), ICC Publication No. 590.
"Items" shall mean (a) transfers of funds by wire or through
the Automated Clearing House, checks, drafts, negotiable orders
of withdrawal and items of a like kind which are drawn on or
deposited and credited to the Deposit Liabilities, and (b)
payments, advances, disbursements, fees, reimbursements and items
of a like kind which are debited or credited to the Loans.
"Keogh Plan" shall mean an Employee Pension Plan covering
self-employed individuals.
"Keogh Plan Deposit Liability" shall mean a Deposit
Liability in a deposit account which is owned by a Keogh Plan.
"Knowledge" shall mean, with respect to a Seller, the actual
knowledge as of the date hereof, without further investigation,
of any of such Seller's officers that hold the title of senior
vice president or above and have responsibility with respect to
the operations of the Business.
"Landlord Consents" shall have the meaning set forth in
Section 5.2(e).
"Lease Agreements" shall mean those lease agreements to be
dated as of the Closing Date between Fleet or an Affiliate
thereof (as landlord or sublandlord) and Purchaser (as tenant or
subtenant) for certain premises located at (a) 75 State Street,
Boston, Massachusetts, (b) 1221 Silas Deane Highway,
Wethersfield, Connecticut, (c) 100 Pearl Street, Hartford,
Connecticut, (d) 15 Westminster Street, Providence, Rhode Island,
and (e) One BankBoston Plaza, Providence, Rhode Island, and (f)
One Federal Street, Boston, Massachusetts, and containing the
terms set forth on Exhibits E(1), (2), (3), (4), (5) and (6)
hereto, respectively, and any lease agreement for any premises to
be leased pursuant to Section 11.2(e) hereof containing the terms
set forth on Exhibit E(7) hereto.
"Lease Assignments" shall have the meaning set forth in
Section 5.2(d).
"Leased Facilities" shall mean the premises leased to
Purchaser pursuant to a Lease Agreement or Sublease Agreement.
"Letter of Credit Customer" shall mean an obligor under a
Loan for whose account a Letter of Credit was issued.
"Letters of Credit" shall mean (a) those letters of credit
listed on Schedule 1.1(y) hereto, (b) all letters of credit
<PAGE 16> issued in connection with a Loan between July 1, 1999
and the close of business on the Closing Date and (c) any letter
of credit applied for by a Customer (but not yet issued by a
Seller) as of the Closing Date, each as exists as of the close of
business on the Closing Date. To the extent Purchaser shall
assume (and the issuing Seller has been released from) any Letter
of Credit or Purchaser has issued a replacement letter of credit,
whether on or after the Closing Date, each as described in
Section 12.11(c), the assumed or replaced Letter of Credit shall
no longer be deemed a "Letter of Credit" hereunder.
"Letter of Credit/Liquidity Support Collateral" shall mean
(a) all collateral in which a Seller, as issuer of a Letter of
Credit or obligor under a Liquidity Support Agreement, has been
granted a Lien, security interest or encumbrance, whether
pursuant to a pledge, collateral assignment, security agreement,
mortgage or otherwise, and (b) any other security for any such
Letter of Credit or Liquidity Support Agreement for the benefit
of such Seller, including without limitation, any guaranties,
subordination agreements, insurance or other credit enhancements
and any collateral therefor.
"Letter of Credit Disbursement" shall mean an amount equal
to the sum of (a) the amount drawn under any Letter of Credit in
connection with a Request plus (b) all reasonable and customary
out-of-pocket charges and expenses which Sellers may pay or incur
relative to such Request which are chargeable to the Customer
under the related Reimbursement Agreement.
"License Agreement" shall mean a license agreement between
Sellers or an Affiliate of Sellers, as licensor, and Purchaser,
as licensee, granting to Purchaser a non-exclusive non-
transferable license to use the software owned by such licensor
described on Schedule 1.1(w) at no charge and on such other terms
as are described on Exhibit Q hereto.
"Lien" shall mean any lien, easement, restrictions, pledge,
charge, encumbrance, security interest, mortgage, deed of trust,
lease, option or other adverse claim of any kind or description.
"Liquidity Support Agreements" shall mean (a) the liquidity
support obligations of Sellers or their Affiliates entered into
in connection with the Loans listed on Schedule 1.1(z) hereto,
(b) all liquidity support obligations entered into in connection
with any Loan between July 1, 1999 and the close of business on
the Closing Date and (c) any application pending with Sellers on
the Closing Date for liquidity support obligations relating to a
Loan, each as exists as of the close of business on the Closing
Date. To the extent Purchaser shall have assumed (and the
applicable Seller has been released from) all of its obligations
under any such Liquidity Support Agreement, whether on or after
the Closing Date, the assumed Liquidity Support Agreement shall
no longer be deemed a "Liquidity Support Agreement" hereunder.
<PAGE 17>
"Liquidity Support Disbursement" shall mean an amount equal
to the sum of (a) the amount of the extension of credit or other
financial accommodation made available under any Liquidity
Support Agreement in connection with a Support Request plus (b)
all reasonable and customary out-of-pocket charges and expenses
which Sellers may pay or incur relative to such Support Request
which are chargeable to the Customer under such Liquidity Support
Agreement.
"Loan Value" shall mean, as of any date, the unpaid
principal balance of the Loans, plus Accrued Interest thereon, as
set forth in the applicable Seller's general ledger and, for
purposes of Section 3.3, on the Final Loan Schedule, less (a)
accrued servicing fees under arrangements with third parties to
service such Loans, less (b) Accrued Interest which as of the
Closing Date shall be outstanding and unpaid for more than ninety
(90) days after it shall have first become due and payable. For
purposes hereof, the unpaid principal balance of any Precious
Metals Loans denominated in Precious Metals shall be the Fair
Market Value of the Precious Metals outstanding thereunder as of
the date of determination.
"Loans" shall mean, collectively, the Consumer Bank Loans,
the Residential Mortgage Loans, the SBA Loans, the Small Business
Bank Loans, the Commercial Bank Loans, and the CRA Loans.
"Material Adverse Effect" shall mean any circumstance,
change in or effect on the Purchased Assets or the Assumed
Liabilities that is materially adverse to the business,
operation, results of operations or the financial condition of
the Business, taken as a whole; provided, however, that "Material
Adverse Effect" shall not include any circumstance, change in or
effect on the Business directly or indirectly arising out of or
attributable to (a) changes in general economic, legal,
regulatory or political conditions, (b) changes in prevailing
interest rates, (c) changes in GAAP, (d) any actions taken or
omitted to be taken pursuant to this Agreement, (e) changes in
the employee base of the Business or (f) the announcement of the
transactions contemplated by this Agreement, other agreements
entered into in connection with the Merger and relating to the
divestiture by Sellers or any of their Affiliates of certain of
their respective assets and liabilities or the Merger Agreement.
"Merger" shall mean the merger of Fleet and BankBoston
pursuant to the terms of the Merger Agreement.
"Merger Agreement" shall mean that certain Agreement and
Plan of Merger dated as of March 14, 1999 by and between Fleet
and BankBoston, as the same may be amended or modified from time
to time.
"Middle Market Deposit Liabilities" shall mean all of any
Seller's obligations and liabilities relating to (a) the deposit
accounts listed on Schedule 1.1(aa) hereto, (b) the deposit
<PAGE 18> accounts which are opened between July 1, 1999 and the
close of business on the Closing Date by an obligor of a Middle
Market Loan, (c) the deposit accounts which are opened between
July 1, 1999 and the close of business on the Closing Date on
behalf of a non-borrowing customer by a Middle Market Employee,
and (d) deposit accounts which are security for Middle Market
Loans, including, without limitation, all passbook accounts,
statement savings accounts, checking, Money Market and NOW
accounts, certificates of deposit, and IRA, Keogh Plan and
Employee Pension Plan accounts, together with Accrued Interest
thereon, all as exists at the close of business on the Closing
Date but excluding any claim or other liability relating to the
origination of any such deposit account or the administration of
any such deposit account prior to the close of business on the
Closing Date.
"Middle Market Employees" shall mean the employees of
Sellers listed on Schedule 1.1(bb) hereto, but excluding such
employees who shall leave a Seller's employ between the date
hereof and the close of business on the Closing Date, but
including replacements thereof made in the ordinary course of
business between the date hereof and the close of business on the
Closing Date and including any Person who fills a vacant position
between the date hereof and the Closing Date if such Person would
have been a relationship manager for a Middle Market Loan listed
on Schedule 1.1(cc) if such Person had been employed by Sellers
in such position on the date hereof.
"Middle Market Loans" shall mean (a) the loans listed on
Schedule 1.1(cc) hereto (exclusive of any reserves for loan
losses) and all obligations of a Seller to make additional
extensions of credit in connection with such loans, as such loans
may be increased, decreased, amended, renewed or extended in the
ordinary course of business between July 1, 1999 and the close of
business on the Closing Date (included within such loans shall be
any Letters of Credit, Liquidity Support Agreements and ISDA
Transactions related to such loans), (b) loans made in the
ordinary course of business by the Middle Market Employees
between July 1, 1999 and the close of business on the Closing
Date (exclusive of any reserves for loan losses) and all
obligations of a Seller to make additional extensions of credit
in connection with such loans, as such loans may be increased,
decreased, amended, renewed or extended in the ordinary course of
business between July 1, 1999 and the close of business on the
Closing Date (included within such loans shall be any Letters of
Credit, Liquidity Support Agreements and ISDA Transactions
related to such loans) and (c) any application pending on the
Closing Date for a loan whose relationship manager would be a
Middle Market Employee if such loan was made by a Seller prior to
the Closing Date; provided, however, that Middle Market Loans
shall not include any loan described in subsections (a) or (b)
above, if such loan, as of the Closing Date, is (i) subject to a
current legal proceeding related to a Customer's inability or
refusal to pay such loan or (ii) not current and with respect to
<PAGE 19> which proceedings are pending against the obligor or
obligors of such loan under Title 11 of the United States Code or
(iii) Nonperforming. Each Middle Market Loan shall include all
documents executed or delivered in connection with such loan to
the extent such documents are in the loan file relating to such
loan, any and all collateral held as security therefor or in
which a security interest, Lien, or mortgage has been granted and
any and all guarantees, insurance and other credit enhancements
relating thereto, together with Accrued Interest thereon, all as
exists at the close of business on the Closing Date.
"Negative Deposits" shall mean overdrafts in Deposit
Liability accounts which are not covered by Advance Lines, plus
any and all Accrued Interest thereon.
"New Equity Issuance" shall mean the issuance of common
stock described in the Commitment Letter.
"Nonperforming" shall mean, as of the close of business on
the Closing Date, any Loan with respect to which any principal or
interest shall be due and unpaid by the borrower thereunder for
more than ninety (90) days prior to the Closing Date.
"Offering Memorandum" shall mean those certain Offering
Memoranda provided to Purchaser pursuant to the terms of the
Confidentiality Agreement and describing the Business.
"Other Capital Transactions" shall have the meaning
specified in Section 15.3 hereof.
"Other Precious Metals Contracts" shall mean all agreements
for the present purchase or sale by BBNA of Precious Metals with
respect to which the Precious Metals covered thereby have not
been delivered to the applicable purchaser as of the close of
business on the Closing Date.
"Outstanding Credit Exposure" shall mean, at any time, the
aggregate maximum amount available to be drawn or advanced under
each Outstanding Credit Obligation, the determination of such
maximum amount to assume (a) compliance with all conditions for
drawing or advance under the specific Letter of Credit or
Liquidity Support Agreement, and (b) no reduction (i) for any
amount drawn under any Outstanding Credit Obligation unless such
amount is not to be reinstated under the terms of the specific
Letter of Credit or Liquidity Support Agreement, or (ii) for any
amount not available to be drawn or advanced under the terms of
the specific Letter of Credit or Liquidity Support Agreement.
"Outstanding Credit Obligations" shall mean, at any time,
those Letters of Credit and Liquidity Support Agreements (a)
which have not been replaced or terminated, and (b) as to which
the applicable Seller has not been released from liability.
<PAGE 20>
"Palladium" shall mean palladium measured in troy ounces
having a fineness of not less than .9999, without regard to
whether such palladium is alloyed or unalloyed, in bullion form
or contained in or processed into other materials which contain
elements other than palladium.
"Participation Agreement" shall mean a participation
agreement between Sellers and Purchaser to be dated as of the
Closing Date covering the Supplemental Commercial Loans, which
participation agreement shall be negotiated in good faith between
the parties hereto and which shall contain customary terms and
conditions.
"Permitted Liens" shall mean (a) Liens for taxes,
assessments, governmental charges or levies not yet due and
payable or which although delinquent can be paid without penalty
or are being contested in good faith by appropriate proceedings,
(b) Liens resulting from a filing by a lessor as a precautionary
filing for a lease, (c) landlords' Liens under the Branch Leases
and ATM Lease Agreements, (d) Liens imposed by law, such as
carriers', warehousemen's and mechanics' Liens and other similar
Liens arising in the ordinary course of business which secure
payment of obligations not more than ninety (90) days past due or
which are being contested in good faith by appropriate
proceedings, (e) any other Liens affecting the Purchased Assets
which do not impede the ownership, operation or value of such
Purchased Assets in any material respect and (f) with respect to
Consigned Precious Metals, the rights of the applicable Customer
of BBNA to the Consigned Precious Metals delivered to such
Customer.
"Person" shall mean any individual, partnership, joint
venture, corporation, trust, limited liability company,
unincorporated organization, government or other entity.
"Platinum" shall mean platinum measured in troy ounces
having a fineness of not less than .9990, without regard to
whether such platinum is alloyed or unalloyed, in bullion form or
contained in or processed into other materials which contain
elements other than platinum.
"Precious Metals" means Gold, Silver, Platinum and
Palladium.
"Precious Metals Agreements" shall mean all consignment
agreements, precious metals sales agreements, documents and other
agreements evidencing the obligation of a customer of BBNA to
purchase and/or redeliver Precious Metals in connection with a
Precious Metals Loan.
"Precious Metals Assets" shall mean, collectively, the
Precious Metals Agreements, Consigned Precious Metals, the BBNA
Precious Metals, the Other Precious Metals Contracts, the Forward
<PAGE 21> Contracts, the Precious Metals Options and the Precious
Metals Storage Contracts.
"Precious Metals Deposit Liabilities" shall mean all of any
Seller's obligations and liabilities relating to (a) the deposit
accounts listed on Schedule 1.1(dd) hereto, (b) the deposit
accounts which are opened between July 1, 1999 and the close of
business on the Closing Date by an obligor of a Precious Metals
Loan, (c) the deposit accounts which are opened between July 1,
1999 and the close of business on the Closing Date on behalf of a
non-borrowing customer by a Precious Metals Employee, and
(d) deposit accounts which are security for any Precious Metal
Loans, including, without limitation, all passbook accounts,
statement savings accounts, checking, Money Market and NOW
accounts, certificates of deposit, and IRA, Keogh Plan and
Employee Pension Plan accounts, together with Accrued Interest
thereon, all as exists at the close of business on the Closing
Date but excluding any claim or other liability relating to the
origination of any such deposit account or the administration of
any such deposit account prior to the close of business on the
Closing Date.
"Precious Metals Employees" shall mean the employees of
Sellers listed on Schedule 1.1(ee) hereto, but excluding such
employees who shall leave a Seller's employ between the date
hereof and the close of business on the Closing Date, but
including replacements of such employees made in the ordinary
course of business between the date hereof and the Closing Date,
and including any Person who fills a vacant position between the
date hereof and the Closing Date if such Person would be a
relationship manager for a Precious Metals Loan listed on
Schedule 1.1(ff) if such Person had been employed by Sellers in
such position on the date hereof.
"Precious Metals Liabilities" shall mean (a) the Precious
Metals Deposit Liabilities and (b) any and all liabilities and
obligations relating to or arising out of the Precious Metals
Assets, to the extent that such liabilities and obligations arise
or accrue after the close of business on the Closing Date, but
including Unfunded Advances under the Loans included therein.
"Precious Metals Loans" shall mean (a) the consignments,
loans and other extensions of credit listed on Schedule 1.1(ff)
hereto (in each instance exclusive of any reserves for loan
losses) pursuant to which BBNA does any of the following:
(i) consigns Precious Metals to its customers; (ii) sells
Precious Metals to its customers for present delivery but future
pricing and payment; or (iii) makes other extensions of credit
and all obligations of BBNA to make additional extensions of
credit in connection with such loans, as such loans may be
increased, decreased, amended, renewed or extended in the
ordinary course of business between July 1, 1999 and the close of
business on the Closing Date (included within such loans shall be
any Letters of Credit, Liquidity Support Agreements and ISDA
<PAGE 22> Transactions related to such loans), (b) loans,
consignments and other extensions of credit made in the ordinary
course of business by the Precious Metals Employees between July
1, 1999 and the close of business on the Closing Date (in each
instance exclusive of any reserves for loan losses) and all
obligations of BBNA to make additional extensions of credit in
connection with such loans, as such loans may be increased,
decreased, amended, renewed or extended in the ordinary course of
business between July 1, 1999 and the close of business on the
Closing Date (included within such loans shall be any Letters of
Credit, Liquidity Support Agreements and ISDA Transactions
related to such loans), and (c) any application pending on the
Closing Date for a loan, consignment and other extension of
credit whose relationship manager would be a Precious Metals
Employee if such loan, consignment or other extension of credit
was made by BBNA prior to the Closing Date; provided, however,
that Precious Metals Loans shall not include any loan,
consignment or other extension of credit, described in subsection
(a) or (b) above if such loan, consignment or other extension of
credit, as of the Closing Date, is (i) subject to a current legal
proceeding related to a Customer's inability or refusal to pay
such loan, (ii) not current and with respect to which proceedings
are pending against the obligor or obligors of such loan under
Title 11 of the United States Code or (iii) Nonperforming. Each
Precious Metals Loan shall include all documents executed or
delivered in connection with such loan, consignment or extension
of credit to the extent such documents are in the loan file
relating to such loan, consignment or extension of credit, any
and all collateral held as security therefor or in which a
security interest, Lien or mortgage has been granted, and any and
all guarantees, insurance and other credit enhancements relating
thereto, together with Accrued Interest thereon, all as exists at
the close of business on the Closing Date.
"Precious Metals Options" shall mean all outstanding options
held by BBNA or granted by BBNA as of the close of business on
the Closing Date with respect to the purchase or sale of Precious
Metals.
"Precious Metals Storage Contracts" shall mean all
outstanding contracts of BBNA with third parties for the storage
or transportation of Precious Metals as of the close of business
on the Closing Date.
"Purchase Price" shall have the meaning specified in Section
3.1.
"Purchased Assets" shall have the meaning specified in
Section 2.1(a).
"Purchaser" shall have the meaning specified in the
preamble.
<PAGE 23>
"Purchaser Regulatory Approvals" shall have the meaning
specified in Section 7.5(a).
"Purchaser's Account" shall have the meaning specified in
Section 3.2.
"Purchaser's Letter of Credit" shall mean a standby letter
of credit issued by Purchaser in favor of Sellers, in
substantially the form of Exhibit F hereto, in a face amount
equal to the sum of the aggregate maximum amount available to be
drawn or advanced under each Letter of Credit and Liquidity
Support Agreement as of the Closing Date, the determination of
such maximum amount to assume (a) compliance with all conditions
for drawing or advance under the specific Letter of Credit or
Liquidity Support Agreement and (b) no reduction (i) for any
amount drawn or advanced under any Letter of Credit or Liquidity
Support Agreement unless such amount is not to be reinstated
under the terms of the specific Letter of Credit or Liquidity
Support Agreement or (ii) for any amount not available to be
drawn or advanced under the terms of the specific Letter of
Credit or Liquidity Support Agreement.
"Quitclaim Deeds" shall have the meaning specified in
Section 5.2(a).
"Real Property" shall mean each parcel of real property
owned by a Seller on which a Facility is located, and all
improvements thereon, all as more fully described on
Schedule 1.1(hh) hereto, including without limitation the
Columbia Park Facility and the East Providence Facility.
"Real Property Purchase Price" shall mean, with respect to
any parcel or parcels of Real Property, the purchase price
specified on Schedule 1.1(ii) hereto; provided that the purchase
price for the Columbia Park Facility and the East Providence
Facility shall be reflected as an aggregate amount.
"Registration Statement" shall mean the registration
statement to be filed by Sovereign, registering the New Equity
Issuance under the Securities Act of 1933, as amended.
"Regulatory Approvals" shall mean the Seller Regulatory
Approvals and the Purchaser Regulatory Approvals.
"Reimbursement Agreement" shall mean all documents and
agreements evidencing, securing or insuring the obligation of a
Letter of Credit Customer to repay, or the rights of a Seller to
recover, sums paid under a Letter of Credit.
"Release" shall mean releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, ejecting, escaping,
leaching, disposing, seeping, infiltrating, draining or dumping.
<PAGE 24>
"Released Parties" shall have the meaning specified in
Section 15.3.
"Releasing Parties" shall have the meaning specified in
Section 15.3.
"Request" shall have the meaning specified in Section
12.11(c).
"Residential Mortgage Loans" shall mean the Fleet
Residential Mortgage Loans and the BankBoston Residential
Mortgage Loans.
"Safe Deposit Agreements" shall mean the agreements between
a Seller and a Customer or Customers relating to safe deposit
boxes located in the Branches as of the close of business on the
Closing Date.
"SBA" shall mean the United States Small Business
Administration.
"SBA Consents" shall mean all consents necessary to transfer
to Purchaser the SBA Loans.
"SBA Loans" shall mean the loans listed on Schedule 1.1(jj)
hereto (exclusive of any reserves for loan losses) and all
obligations of a Seller to make additional extensions of credit
in connection with such loans, as such loans may be increased,
decreased, amended, renewed, or extended in the ordinary course
of business between July 1, 1999 and the close of business on the
Closing Date (included within such loans shall be any Letters of
Credit, Liquidity Support Agreements, and ISDA Transactions
related to such loans), (b) loans made in the ordinary course of
business between July 1, 1999 and the close of business on the
Closing Date by Small Business Bank Employees or Consumer Bank
Employees, which loans are secured by an SBA guaranty, whether in
whole or in part (exclusive of any reserves for loan losses)
(included within such loans shall be any Letters of Credit,
Liquidity Support Agreements and ISDA Transactions related to
such loans) and all obligations of a Seller to make additional
extensions of credit in connection with such loans, as such loans
may be increased, decreased, amended, renewed, or extended in the
ordinary course of business between July 1, 1999 and the close of
business on the Closing Date and (c) any application pending on
the Closing Date for a loan whose relationship manager would be a
Small Business Bank Employee if such loan were made by a Seller
prior to the Closing Date and which loan would be secured by a
SBA guaranty, whether in whole or in part; provided, however,
that SBA Loans shall not include any loan described in
subsections (a) or (b) above if such loan, as of the Closing
Date, is (i) subject to a current legal proceeding related to a
Customer's inability or refusal to pay such loan, (ii) not
current and with respect to which proceedings are pending against
the obligor or obligors of such loan under Title 11 of the United
<PAGE 25> States Code, or (iii) Nonperforming; and provided,
further, that with respect to any such loan, to the extent that
as of the Closing Purchaser shall not have received an SBA
Consent, such loan shall no longer be deemed a "SBA Loan"
hereunder. Each SBA Loan shall include all documents executed or
delivered in connection with such loan to the extent such
documents are in the loan file relating to such loan, any and all
collateral held as security therefor or in which a security
interest, Lien or mortgage has been granted and any and all
guarantees, insurance and other credit enhancements relating
thereto, together with Accrued Interest thereon, all as exists at
the close of business on the Closing Date.
"Second London Fixing" shall mean on any determination date,
the so-called "second fixing price" quoted by the London Bullion
Brokers' Board of Gold, Palladium or Platinum, as applicable.
"Seller" shall have the meaning specified in the preamble.
"Sellers" shall have the meaning specified in the preamble.
"Seller Regulatory Approvals" shall have the meaning
specified in Section 6.16(a).
"Senior Credit Facility" shall mean the senior secured
credit facility described in the Commitment Letter.
"Servicing Agreement" shall mean a servicing agreement for
the Fleet Residential Mortgage Loans to be dated as of the
Transfer Date between Purchaser and Fleet Mortgage Corp., a
subsidiary of FNB, substantially in the form of Exhibit G hereto
for the servicing by Fleet Mortgage Corp. of all the Fleet
Residential Mortgage Loans.
"Silver" shall mean silver measured in troy ounces having
fineness of not less than .9999, without regard to whether such
silver is alloyed or unalloyed, in bullion form or contained in
or processed into other materials which contain elements other
than silver.
"Small Business Bank Assets" shall mean the Small Business
Bank Loans and the SBA Loans.
"Small Business Bank Deposit Liabilities" shall mean all of
any Seller's obligations and liabilities relating to (a) the
deposit accounts listed on Schedule 1.1(kk) hereto, (b) the
deposit accounts which are opened between July 1, 1999 and the
close of business on the Closing Date by an obligor of a Small
Business Bank Loan or a SBA Loan, (c) the deposit accounts which
are opened between July 1, 1999 and the close of business on the
Closing Date on behalf of a non-borrowing small business customer
by a Small Business Bank Employee or a Consumer Bank Employee,
and (d) deposit accounts which are security for any Small
Business Bank Loans, including, without limitation, all passbook
<PAGE 26> accounts, statement savings accounts, checking, Money
Market and NOW accounts, certificates of deposit, and IRA, Keogh
Plan and Employee Pension Plan accounts, together with Accrued
Interest thereon, all as exists at the close of business on the
Closing Date but excluding any claim or other liability relating
to the origination of any such deposit account or the
administration of any such deposit account prior to the close of
business on the Closing Date.
"Small Business Bank Division" shall mean the Small Business
Bank Assets, the Small Business Bank Liabilities and the Small
Business Bank Employees.
"Small Business Bank Employees" shall mean the employees of
Sellers listed on Schedule 1.1(ll) hereof, but excluding such
employees who shall leave a Seller's employ between the date
hereof and the close of business on the Closing Date, but
including replacements thereof made in the ordinary course of
business between the date hereof and the Closing Date, and
including any Person who fills a vacant position between the date
hereof and the Closing Date if such Person would have been a
relationship manager for an SBA Loan listed on Schedule 1.1(jj)
or a Small Business Bank Loan listed on Schedule 1.1(mm) if such
Person had been employed by Sellers in such position on the date
hereof.
"Small Business Bank Liabilities" shall mean (a) the Small
Business Bank Deposit Liabilities, and (b) any and all
liabilities and obligations relating to or arising out of the
Small Business Bank Assets, to the extent that such liabilities
and obligations arise and accrue after the close of business on
the Closing Date, but including any Unfunded Advances under the
Loans included therein.
"Small Business Bank Loans" shall mean (a) the loans listed
on Schedule 1.1(mm) hereto (exclusive of any reserves for loan
losses) and all obligations of a Seller to make additional
extensions of credit in connection with such loans, as such loans
may be increased, decreased, amended, renewed or extended in the
ordinary course of business between July 1, 1999 and the close of
business on the Closing Date (included within such loans shall be
any Letters of Credit, Liquidity Support Agreements, and ISDA
Transactions related to such loans), (b) loans made to small
businesses in the ordinary course of business by the Small
Business Bank Employees or the Consumer Bank Employees between
July 1, 1999 and the close of business on the Closing Date
(exclusive of any reserves for loan losses) and all obligations
of a Seller to make additional extensions of credit in connection
with such loans, as such loans may be increased, decreased,
amended, renewed or extended in the ordinary course of business
between July 1, 1999 and the close of business on the Closing
Date (included within such loans shall be any Letters of Credit,
Liquidity Support Agreements, and ISDA Transactions related to
such loans), (c) VISA Loans and (d) any application pending on
<PAGE 27> the Closing Date for a loan whose relationship manager
would be a Small Business Bank Employee if such loan was made by
a Seller prior to the Closing Date; provided, however, that Small
Business Bank Loans shall not include any loan described in
subsections (a), (b) or (c) above if such loan, as of the Closing
Date, is (i) subject to a current legal proceeding related to a
Customer's inability or refusal to pay such loan, (ii) not
current and with respect to which proceedings are pending against
the obligor or obligors of such loan under Title 11 of the United
States Code or (iii) Nonperforming. Each Small Business Bank
Loan shall include all documents executed or delivered in
connection with such loan to the extent such documents are in the
loan file relating to such loan, and any and all collateral held
as security therefor or in which a security interest, Lien or
mortgage has been granted and any and all guarantees, insurance
and other credit enhancements relating thereto, together with
Accrued Interest thereon, all as exists at the close of business
on the Closing Date.
"Stay Bonus Payments" shall mean bonus payments in the
amount set forth on Schedule 1.1(nn) hereto to be paid to the
employees of Sellers listed on Schedule 1.1(nn) hereto.
"Sublease Agreement" shall have the meaning specified in
Section 8.3(b).
"Supplemental Commercial Loans" shall mean the loans and/or
loan particpations listed on Schedule 1.1(oo) hereto.
"Support Request" shall have the meaning specified in
Section 12.11(e) hereto.
"Swap Market Value of the ISDA Transactions" shall be equal
to the aggregate of bid-offer spread for each ISDA Transaction,
calculated by a nationally recognized securities dealer mutually
acceptable to Fleet and Sovereign and calculated as if an Early
Termination Event (as defined in the standard form of ISDA
Agreement) has occurred on the Closing Date; provided however,
that in the event that Fleet and Sovereign are unable to mutually
agree upon such securities dealer, then Fleet shall designate a
nationally recognized securities dealer, Sovereign shall
designate a nationally recognized securities dealer and such
securities dealers shall designate a third nationally recognized
securities dealer to calculate such aggregate bid-offer spread.
"Swap Portfolio Adjustment" shall be an amount equal to the
Swap Market Value of the ISDA Transactions.
"Tenant Leases" shall mean leases or subleases between a
Seller, as lessor, and the tenants, if any, listed on
Schedule 1.1(pp) hereto.
"Transfer Date" shall mean the first Business Day following
the Closing Date. <PAGE 28>
"Transferred Employees" shall mean the Business Employees,
the Additional Employees and the Business Related Employees who
accept offers of employment from Purchaser as contemplated by
Section 9.6(a).
"UCC" shall mean the Uniform Commercial Code in effect in
the Commonwealth of Massachusetts.
"UCC Article 5" shall mean Article 5 of the UCC.
"UCP 500" shall mean the Uniform Customs and Practice for
Documentary Credits, 1993 Revision, ICC Publication No. 500.
"Unfunded Advance" shall mean an advance requested under a
Loan on or prior to the Closing Date pursuant to the terms and
provisions of such Loan which the applicable Seller is not
obligated to fund until following the Closing Date.
"VISA Loans" shall mean the VISA credit cards issued to
Persons listed on Schedule 1.1(qq) hereto and the receivables
related thereto, each as exists at the close of business on the
Closing Date; provided, however, that VISA Loans shall not
include any such Loan described above if such loan, as of the
Closing Date, is (a) subject to a current legal proceeding
related to a Customer's inability or refusal to pay such Loan,
(b) not current and with respect to which proceedings are pending
against the obligor or obligors of such Loan under Title 11 of
the United States Code, or (c) Nonperforming. Each VISA Loan
shall include all credit agreements and other documents executed
or delivered in connection with such loan to the extent such
documents are in the loan file relating to such loan, and any and
all collateral held as security therefor or in which a security
interest, Lien or mortgage has been granted and any and all
guarantees, insurance and other credit enhancements relating
thereto, together with Accrued Interest thereon, all as exists at
the close of business on the Closing Date.
"WARN Act" shall mean the Worker Adjustment and Retraining
Notification Act, as amended (29 U.S.C. Section 2101, et seq.) and
similar state and local laws, regulations and other issuances.
Section 1.2. Accounting Terms. All accounting terms not
otherwise defined herein shall have the respective meanings
assigned to them in accordance with "generally accepted
accounting principles" consistently applied as are in effect from
time to time in the United States of America ("GAAP").
ARTICLE II
PURCHASE AND SALE OF PURCHASED ASSETS AND
ASSIGNMENT AND ASSUMPTION OF ASSUMED LIABILITIES
Section 2.1. Purchase and Sale of Assets; No Other Assets
Purchased. <PAGE 29>
(a) Subject to the terms and conditions hereof, including
without limitation the assumption by Purchaser of the Assumed
Liabilities, as of the close of business on the Closing Date,
Sellers shall sell, convey, assign, transfer and deliver to
Purchaser, and Purchaser shall purchase and accept from Sellers,
all of Sellers' right, title and interest in, to and under
certain assets of the Sellers as described below (collectively,
the "Purchased Assets"):
(i) The Commercial Bank Assets;
(ii) The Consumer Bank Assets;
(iii) The CRA Assets;
(iv) The Small Business Bank Assets;
(v) All of Sellers' rights with respect to the
contracts and relationships giving rise to the Deposit
Liabilities;
(vi) The Advance Lines and the Negative Deposits, each
as of the Closing Date;
(vii) All insurance premiums paid by Sellers to the
FDIC which are allocated to insurance coverage for the
Deposit Liabilities following the Closing Date, to the
extent a proration or adjustment is made with respect
thereto pursuant to Section 3.5;
(viii) All of Sellers' right, title and interest in
and to all books and records relating to the Purchased
Assets described in the other subsections of this
Section 2.1(a) and the Assumed Liabilities, as such books
and records may exist and as are held by Sellers at the
Branches;
(ix) The ISDA Agreements; and
(x) A 100% participation interest in the Letters of
Credit and the Liquidity Support Agreements as contemplated
by Section 12.11.
(b) Purchaser understands and agrees that it is purchasing
only the Purchased Assets (and assuming only the Assumed
Liabilities) specified in this Agreement and except as may be
expressly provided for in this Agreement, Purchaser has no
interest in (i) any other business relationship which Sellers or
their Affiliates have or may have with any Customer or (ii) any
other customer of Sellers or their Affiliates. Purchaser further
understands and agrees that Sellers and their Affiliates are
retaining any and all rights and claims which any of them may
have, including but not limited to indemnification or
reimbursement rights, with respect to the Purchased Assets and
<PAGE 30> the Assumed Liabilities, to the extent that such rights
or claims relate to the conduct of the business of the Business
prior to the Closing unless such rights or claims relate to
liabilities, duties, responsibilities and obligations of Sellers
arising or accruing on or prior to the Closing Date which are
included in the Assumed Liabilities, including without limitation
those described in Section 2.2(a)(x)(A).
Section 2.2. Assumed Liabilities. (a) Subject to the
terms and conditions of this Agreement, including without
limitation the transfer of the Purchased Assets to Purchaser, on
the Closing Date, Purchaser shall assume, and thereafter honor
and fully and timely, pay, perform and discharge when due, the
following liabilities of Sellers and shall perform all duties,
responsibilities, and obligations of Sellers under the following,
to the extent that such liabilities, duties, responsibilities and
obligations arise or accrue after close of business on the
Closing Date (other than those described in Section 2.2(a)(x)(A),
which shall not be so limited) (collectively, the "Assumed
Liabilities"):
(i) The Commercial Bank Liabilities;
(ii) The Consumer Bank Liabilities;
(iii) The CRA Liabilities;
(iv) The Small Business Bank Liabilities;
(v) All of Sellers' duties and responsibilities
relating to the Deposit Liabilities, including without
limitation, with respect to: (x) the abandoned property
laws of any state; (y) any legal process which is served on
a Seller on or before the Closing Date with respect to
claims against or related to the Deposit Liabilities; or (z)
any other applicable law;
(vi) The Assumed Severance Obligations and the Stay
Bonus Payments;
(vii) The Advance Lines and the Negative Deposits,
each as of the Closing Date;
(viii) Any of Sellers' accrued and unpaid expenses
related to the operations of the Business to the extent a
proration or adjustment is made with respect thereto
pursuant to Section 3.5;
(ix) The ISDA Agreements;
(x) Any and all liabilities or obligations of any
Seller or Fleet or any of their Affiliates under
Environmental Laws relating to, resulting from or arising
out of: <PAGE 31>
(A) Use or operation of the Real Property (other
than Real Property leased to Purchaser pursuant to
Section 11.2 hereof) prior to, on or after the Closing
Date, or
(B) Use or operation of the Real Property, the
Leased Facilities or the Facilities by the Purchaser on
or after the Closing Date,
in either case including without limitation (1) the
presence of any Hazardous Materials or a release or the
threat of a release on, at or from the Real Property, the
Leased Facilities or the Facilities, (2) investigative,
containment, removal, clean up and other remedial actions
with respect to a release or the threat of release on, at or
from the Real Property, the Leased Facilities or Facilities,
or (3) human exposure to any Hazardous Materials or
nuisances of whatever kind to the extent the same arise from
the condition of the Real Property or Facilities or the
ownership, use, operation, sale, transfer or conveyance
thereof.
(xi) Any and all other liabilities and
obligations relating to or arising out of the Purchased
Assets or Assumed Liabilities to be performed after the
Closing or arising out of the operation of the Facilities,
the Leased Facilities or the Real Property from and after
the Closing Date, but only to the extent that such
liabilities or obligations arise or accrue after the close
of business on the Closing Date; and
(xii) Unfunded Advances under the Loans; and
(xiii) The participation obligations as
contemplated in Section 12.11 relating to the Letters of
Credit and the Liquidity Support Agreements.
(b) Except for the Assumed Liabilities and except as
otherwise set forth in this Agreement, Purchaser shall not assume
or be bound by any duties, responsibilities, obligations or
liabilities of any kind or nature, whether known or unknown,
whether asserted or unasserted, whether accrued or unaccrued,
whether contingent or otherwise.
ARTICLE III
PURCHASE PRICE; PAYMENT;
SETTLEMENT; TAX ALLOCATION
Section 3.1. Purchase Price. The purchase price for the
Purchased Assets shall be an amount computed as follows (the
"Purchase Price"):
<PAGE 32>
(a) An amount equal to twelve percent (12.0%) of Deposit
Liabilities transferred to Purchaser as of the close of business
on the Closing Date; PLUS
(b) The aggregate of the Real Property Purchase Prices for
all of the Real Property; (other than the Real Property leased
pursuant to Section 11.2); PLUS
(c) The aggregate net book value of the Fixed Assets (other
than Fixed Assets not purchased by Purchaser pursuant to
Section 8.3(e)) as reflected on the general ledgers of the
applicable Sellers as of the close of business on the Closing
Date; PLUS
(d) The Loan Value of the Loans as of the close of business
on the Closing Date; PLUS
(e) The aggregate unpaid principal balance of the Advance
Lines and the Negative Deposits, plus Accrued Interest thereon
(to the extent such Accrued Interest shall be outstanding and
unpaid for ninety (90) days or less prior to the Closing Date),
each as set forth on the general ledgers of the applicable
Sellers, as of the close of business on the Closing Date, PLUS
(f) The aggregate net book value of the owned ATMs, as set
forth on the general ledgers of the applicable Sellers, as of the
close of business on the Closing Date; PLUS
(g) The aggregate amount of Cash as of the close of
business on the Closing Date; PLUS
(h) The aggregate net book value of the CRA Equity Holdings
as set forth on the general ledgers of the applicable Sellers, as
of the close of business on the Closing Date; PLUS
(i) The Fair Market Value of the BBNA Precious Metals
(exclusive of such BBNA Precious Metals already included within a
Loan Value of a particular Loan under Section 3.1(d) hereof);
PLUS
(j) (i) The Swap Portfolio Adjustment, if such adjustment
is a positive number or (ii) if the Swap Portfolio Adjustment is
a negative number, MINUS the absolute value of the Swap Portfolio
Adjustment; PLUS
(k) The Hiring Commitment Adjustment.
Section 3.2. Payment at Closing. On or prior to the second
Business Day immediately preceding the Closing Date, Sellers
shall deliver to Purchaser the Draft Closing Statement. On the
Closing Date, Sellers shall pay to Purchaser by wire transfer of
immediately available funds to such account as Purchaser shall
advise Sellers no later than three (3) Business Days prior to the
Closing ("Purchaser's Account"), the amount by which the
<PAGE 33> aggregate balance (including Accrued Interest) of the
Deposit Liabilities as of the close of business on the fifth
(5th) Business Day preceding the Closing Date exceeds the
Estimated Purchase Price (the "Estimated Payment Amount").
Section 3.3. Adjustment of Estimated Payment Amount.
(a) On or before 12:00 noon on the thirtieth (30th) day
following the Closing Date, Sellers shall deliver to Purchaser a
statement setting forth (i) the Purchase Price (including all
adjustments and prorations thereto) and each component thereof
(including with respect to the Loans a schedule as of the close
of business on the Closing Date of the Loans (the "Final Loan
Schedule")) and (ii) the amount of Deposit Liabilities (including
Accrued Interest thereon) transferred to Purchaser as of the
close of business on the Closing Date. Sellers shall make
available to Purchaser such work papers, schedules and other
supporting data as may be reasonably requested by Purchaser to
enable Purchaser to verify such determinations. Such statement
shall also set forth the amount (the "Adjusted Payment Amount")
by which the aggregate balance of the Deposit Liabilities
(including Accrued Interest thereon) transferred to Purchaser
exceeded the Purchase Price (including all adjustments and
prorations thereto) calculated as of the close of business on the
Closing Date.
(b) On or before 12:00 noon on the sixtieth (60) day
following the Closing Date, Sellers shall pay to Purchaser by
wire transfer of immediately available funds to Purchaser's
Account, an amount equal to the excess of the Adjusted Payment
Amount over the Estimated Payment Amount, plus interest
calculated using the Federal Funds Rate on such excess amount
from the Closing Date to but excluding the payment date, or, if
the Estimated Payment Amount exceeds the Adjusted Payment Amount,
Purchaser shall pay to Sellers by wire transfer of immediately
available funds to such account as Sellers shall advise
Purchaser, an amount equal to such excess, plus interest thereon
calculated using the Federal Funds Rate from the Closing Date to
but excluding the payment date. Any payment pursuant to this
Section 3.3(b) shall be treated for all purposes as an adjustment
to the Purchase Price.
(c) In the event (i) Sellers are debited by VISA for a
chargeback in respect of a purchase made by a cardholder on an
account on or before the Closing Date or a check from a
cardholder in payment of amounts owed on a credit card account,
which was credited to such account on or before the Closing Date,
is returned unpaid by the drawee on or after the Closing Date, or
(ii) Sellers receive a credit on or after the Closing Date with
respect to a transaction charged to an account on or before the
Closing Date, and such debit or credit is not reflected in the
calculation of the Adjusted Payment Amount, Sellers or Purchaser,
as the case may be, shall reimburse the other party for such
<PAGE 34> debit, unpaid amount or recovery, without regard to any
discount or premium.
(d) Except as provided in the next sentence, all payments
with respect to any Loan received by any Seller or Purchaser on
or prior to the close of business on the Closing Date (the "Cut-
off Date") shall be the property of Sellers, and all payments
with respect to any Loan received by any Seller or Purchaser
after the Cut-off Date shall be the property of Purchaser. Any
payments with respect to any Loan received by any Seller prior to
the Cut-off Date that are not reflected in the calculation of the
Adjusted Payment Amount and any payments with respect to any Loan
received after the Cut-off Date shall be promptly forwarded by
such Seller to Purchaser.
Section 3.4. Allocation of Purchase Price.
(a) Purchaser and Sellers agree that, upon final
determination of the Purchase Price, the Purchase Price shall be
allocated in accordance with Schedule 3.4(a) hereto.
(b) Purchaser and Sellers shall report the transaction
contemplated by this Agreement (including income tax reporting
requirements imposed pursuant to Section 1060 of the Code) in
accordance with the allocation specified on Schedule 3.4(a)
hereto. In the event any party hereto receives notice of a tax
audit with respect to the allocation of the Purchase Price
specified herein, such party shall immediately notify the other
party in writing as to the date and subject of such audit.
(c) If any federal, state or local tax return report or
filing by Purchaser or Sellers relating to the transactions
contemplated hereby and filed on the basis of the allocation set
forth on Schedule 3.4(a) hereto, is challenged by the taxing
authority with which such return, report or filing was filed, the
filing party shall assert and maintain in good faith the validity
and correctness of such allocation during the audit thereof until
the issuance by the taxing authority of a "30 Day Letter", or a
determination of liability equivalent thereto, to such party,
whereupon such party shall, in its sole discretion, have the
right to pay, compromise, settle, dispute or otherwise deal with
its alleged tax liability. If such a tax return, report or
filing is challenged as herein described, the party filing such
return, report or filing shall timely keep the other party
apprised of its decisions and the current status and progress of
all administrative and judicial proceedings, if any, that are
undertaken at the election of the filing party.
(d) If either party (including permitted successors and
assigns thereof) to this Agreement defaults under this Section
3.4, it shall pay as damages to the other party, so long as such
other party is not in default under this Section 3.4, an amount
which, after reduction for all income or gain taxes, including
without limitation interest and penalties, which would be
<PAGE 35> incurred (calculated at the highest marginal rate
applicable in the relevant jurisdictions) as a result of
receiving said amount, is equal to the result (but not less than
zero) of subtracting the amount in (ii) below from the amount in
(i) below:
(i) The total amount of income or gains taxes
(including interest and penalties calculated at the highest
marginal rate applicable in the relevant jurisdictions) to
all jurisdictions imposing such taxes upon the non-
defaulting party with respect to the transactions
contemplated hereby; and
(ii) The total amount of income or gains taxes
which would have been incurred (including interest and
penalties calculated at the highest marginal rate applicable
in the relevant jurisdictions) to all jurisdictions imposing
such taxes upon the non-defaulting party with respect to the
transactions contemplated hereby, if such taxing
jurisdictions had accepted the allocations specified in
Schedule 3.4(a) hereto.
Section 3.5. Proration; Other Closing Date Adjustments.
(a) Except as otherwise specifically provided in this
Agreement, it is the intention of the parties that Sellers will
operate the Facilities for their own account and own the Loans
and other Purchased Assets until the close of business on the
Closing Date, and that Purchaser shall operate the Facilities,
own the Loans and other Purchased Assets and assume the Deposit
Liabilities and other Assumed Liabilities for its own account
from and after the close of business on the Closing Date. Thus,
except as otherwise specifically provided in this Agreement,
items of income and expense shall be prorated as of the close of
business on the Closing Date, and shall be settled between
Sellers and Purchaser as of the Closing Date, whether or not such
adjustment would normally be made as of such time. Items of
proration will be handled as an adjustment to the Purchase Price
and not as adjustments to the Estimated Payment Amount, unless
otherwise agreed by the parties hereto.
(b) For purposes of this Agreement, items of proration and
other adjustments shall include, without limitation: (i) amounts
prepaid and unused for safe deposit rentals; (ii) rental and
other payments under the Branch Leases, ATM Lease Agreements and
Tenant Leases, including security deposits; (iii) sales, real
estate and use taxes (other than such sales, real estate and use
taxes that arise as a result of the transactions contemplated by
this Agreement which shall be paid by Purchaser or Sellers in
accordance with Sections 4.1 and 17.1 hereof); (iv) insurance
premiums paid or payable to the FDIC attributable to insurance
coverage for the Deposit Liabilities; (v) fees for customary
annual or periodic assignable licenses or permits that benefit
Purchaser; (vi) water, sewer, fuel and utility charges; (vii)
<PAGE 36> amounts received or to be received under the Precious
Metals Options, the Forward Contracts, and the Other Precious
Metals Contracts; (viii) amounts prepaid under the Precious
Metals Storage Contracts; and (ix) other prepaid items, in each
case as of the close of business on the Closing Date; provided
that items of proration and other adjustments shall not include
commitment and other fees paid in advance by Customers with
respect to Loans, Letters of Credit, Liquidity Support Agreements
and ISDA Agreements. Notwithstanding the foregoing, if accurate
arrangements cannot be made as of the Closing Date for any of the
foregoing items of proration, the parties shall apportion the
charges for the foregoing items on the basis of the bill therefor
for the most recent billing period prior to the Closing Date.
Section 3.6. Post-Closing Adjustments. (a) Following the
Closing, the Purchase Price shall be reduced by an amount equal
to all properly paid Stay Bonus Payments paid to Transferred
Employees during the twelve (12) months following the Closing
Date (which amount shall be determined as provided below).
(b) On the last day of the thirteenth (13th) month
following the Closing Date, Purchaser shall deliver to Sellers a
statement as to the amount of all Stay Bonus Payments paid to
Transferred Employees, including a listing of such Transferred
Employees and the amount and date of any such payments made to
each such Transferred Employee.
(c) Unless Sellers shall reasonably object in writing to
such statement within thirty (30) days of the receipt thereof by
Sellers, Sellers shall pay to Purchaser by wire transfer an
amount equal to such Stay Bonus Payments plus interest thereon
calculated using the Federal Funds Rate from the date of payment
of the respective Stay Bonus Payments to but excluding the date
of payment by Sellers, or in the event of such objection, such
portion thereof plus interest thereon as determined above as
shall not be in dispute.
(d) In the event of any dispute as to the amount of such
Stay Bonus Payments, the parties shall attempt to mutually agree
to resolve such dispute for a period of thirty (30) days
following notice of any objection by Sellers. If no such
resolution is reached, either party may proceed to enforce the
terms and provisions of this Section.
ARTICLE IV
TAXES
Section 4.1. Sales, Transfer and Use Taxes. Except as
otherwise provided in this Agreement, any sales, transfer, use or
similar taxes, including but not limited to all transfer taxes
required in connection with the transfer of the Real Property to
Purchaser, which are payable or arise as a result of this
<PAGE 37> Agreement or the consummation of the transactions
contemplated hereby, shall be paid by Purchaser on the Closing
Date.
Section 4.2. Information Reports. Purchaser and Sellers
shall each provide to the IRS on a timely basis and otherwise as
required by law Forms 1099INT, 1099R, W-2P, 5498 and any other
required forms and reports with respect to each Deposit Liability
concerning interest paid on, or contributions to and
distributions from, the Deposit Liability accounts, as
appropriate, for the periods during which Purchaser and Sellers,
respectively, administered such accounts, including without
limitation, any information required by the IRS pursuant to any
request for back-up withholding and taxpayer identification
number certification records and documents. Sellers shall make
such reports for interest paid or credited to Customers through
and including the Closing Date and Purchaser shall make such
reports after the Closing Date.
ARTICLE V
CLOSING
Section 5.1. Closing Date.
(a) Upon the terms and subject to the conditions of this
Agreement, the purchase and sale of the Purchased Assets and the
assumption of the Assumed Liabilities contemplated by this
Agreement shall take place at a closing (the "Closing") to be
held at the offices of Edwards & Angell, LLP, 101 Federal Street,
23rd Floor, Boston, Massachusetts 02110 at 10:00 a.m. (which
Closing shall be effective as of the close of business on the
Closing Date) on the Friday next following the seventh (7th)
Business Day following the satisfaction or waiver of all
conditions to the obligations of the parties set forth in Article
XIII hereof (other than obligations to be performed at the
Closing), or at such other time or on such other date as Sellers
and Purchaser may mutually agree in writing; provided, however,
that either Fleet or Purchaser shall be permitted to extend the
Closing Date to such date, which shall be no later than April 28,
2000, if such extension is necessary for Sellers to be prepared
to convert Sellers' account information as to the Deposit
Liabilities and the Loans onto Purchaser's data processing system
or for Purchaser to be prepared to accept and process such
account information onto Purchaser's data processing system, or
at such other place (the day on which the Closing takes place
being the "Closing Date").
(b) It is anticipated that the Transfer Date shall coincide
with the conversion of Sellers' account information as to the
Deposit Liabilities and the Loans onto Purchaser's data
processing system in accordance with the provisions of Schedule
14.1 hereof. Sellers and Purchaser shall each use their
commercially reasonable efforts to take such actions, and Sellers
<PAGE 38> and Purchaser shall cooperate with each other, to
ensure that such initial conversion is completed on the Transfer
Date. However, notwithstanding the foregoing, in the event of an
extraordinary data processing occurrence on or prior to the
Transfer Date which prevents such initial conversion, then at
either party's option (i) the Closing may be postponed to a date
which shall be no later than April 28, 2000, or (ii) the Closing
shall take place and the parties shall negotiate in good faith
one or more interim servicing agreements in accordance with the
provisions of Schedule 14.1 hereof.
Section 5.2. Sellers' Deliveries. On or before the Closing
Date, Sellers shall deliver to Purchaser, duly executed and
acknowledged where required:
(a) Deeds for the Real Property in substantially the forms
of Exhibits H(1), (2), (3) and (4) hereto, pursuant to which the
Real Property (other than Real Property leased pursuant to
Section 11.2 hereof) shall be transferred to Purchaser "AS IS",
"WHERE IS" and with all faults but with the benefit of any
statutory quitclaim covenants (the "Quitclaim Deeds");
(b) A bill of sale for the Purchased Assets in
substantially the form of Exhibit I hereto, pursuant to which the
Purchased Assets (other than the Real Property) shall be
transferred to Purchaser "AS IS", "WHERE IS" and with all faults;
(c) An assignment and assumption agreement with respect to
the Assumed Liabilities in substantially the form of Exhibit J
hereto (the "Assignment and Assumption Agreement");
(d) Lease assignment and assumption agreements with respect
to each of the Branch Leases and ATM Lease Agreements in
substantially the form of Exhibit K hereto (the "Lease
Assignments");
(e) Subject to the provisions of Section 8.3, such consents
of landlords under the Branch Leases and ATM Lease Agreements as
shall be required pursuant to the terms of such Branch Leases and
ATM Lease Agreements to the assignment of the Branch Leases and
ATM Lease Agreements to Purchaser and (to the extent practicable)
to the release of Sellers from liability thereunder (the
"Landlord Consents") and any required consents of the landlords
to the execution of the Lease Agreements;
(f) An Officer's Certificate in substantially the form of
Exhibit L hereto;
(g) An opinion of counsel of Sellers and Fleet (which
opinion shall not be from in-house counsel), dated the Closing
Date, in form and substance reasonably satisfactory to Purchaser
to the effect that: (i) each of Sellers and Fleet is duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its formation or incorporation, with full
<PAGE 39> corporate power and authority to enter into and perform
its obligations under this Agreement; and (ii) this Agreement and
the other closing documents delivered and executed by any of the
Sellers or Fleet have been duly and validly authorized, executed
and delivered by each of Sellers and Fleet and (assuming due
authorization, execution and delivery by Purchaser and Sovereign)
are legal, valid and binding obligations of each of Sellers and
Fleet to the extent it is a party thereto, enforceable against
each of Sellers and Fleet in accordance with their respective
terms, except as enforcement may be limited by receivership,
conservatorship, and supervisory powers of bank regulatory
agencies generally as well as bankruptcy, insolvency,
reorganization, moratorium or other laws of general applicability
relating to or affecting creditor's rights, or the limiting
effect of rules of law governing specific performance, equitable
relief and other equitable remedies or the waiver of rights or
remedies;
(h) The Draft Closing Statement;
(i) The resignation of Sellers as trustee or custodian, as
applicable, with respect to each IRA, Keogh Plan or Employee
Pension Plan deposit account included in the Deposit Liabilities
and the designation of Purchaser as successor trustee or
custodian with respect thereto;
(j) A limited power of attorney granting Purchaser the
authority to execute certain documents on behalf of Sellers in
substantially the form of Exhibit M hereto;
(k) The Servicing Agreement;
(l) The Lease Agreements;
(m) The FIRPTA Affidavits;
(n) Physical possession of all Purchased Assets as are
capable of physical delivery;
(o) Possession of the BBNA Precious Metals in the
possession of Sellers, together with an inventory thereof as of
the close of business on the Closing Date;
(p) The Columbia Park Lease and the East Providence Lease;
(q) Possession of all loan files held in the Facilities and
collateral in the custody of Sellers relating to the Loans;
(r) The License Agreement;
(s) The Collateral Agency Agreement and the Collateral
Assignment Instruments;
(t) The Participation Agreement; and <PAGE 40>
(u) Such other documents as are necessary to effect the
transactions contemplated hereby as Purchaser shall reasonably
request.
Section 5.3. Purchaser's Deliveries. On or before the
Closing Date, Purchaser shall deliver to Sellers, duly executed
and acknowledged where required:
(a) The Assignment and Assumption Agreement;
(b) Purchaser's acceptance of its appointment as successor
trustee or custodian, as applicable, as of the close of business
on the Closing Date, of the IRA, Keogh Plan and Employee Pension
Plan deposit accounts included in the Deposit Liabilities and its
assumption of the fiduciary obligations of the trustee or
custodian with respect thereto;
(c) The Lease Assignments and such other instruments and
documents as any landlord under a Branch Lease or ATM Lease
Agreement may reasonably require as necessary or desirable for
providing for the assumption by Purchaser of such Branch Lease or
ATM Lease Agreement, as applicable, each such instrument and
document in the form and substance reasonably satisfactory to the
parties hereto and dated as of the Closing Date;
(d) An Officer's Certificate in substantially the form of
Exhibit N hereto;
(e) An opinion of counsel of Purchaser and Sovereign (which
opinion shall not be from in-house counsel), dated the Closing
Date, in the form and substance reasonably satisfactory to
Sellers, to the effect that (i) each of Purchaser and Sovereign
is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation or incorporation,
with full corporate power and authority to enter into and perform
its obligations under this Agreement; and (ii) this Agreement and
the other closing documents executed and delivered by Purchaser
or Sovereign have been duly and validly authorized, executed and
delivered by each of Purchaser and Sovereign, and (assuming due
authorization, execution and delivery by Sellers and Fleet) are
legal, valid and binding obligation of each of Purchaser and
Sovereign, to the extent it is a party thereto, enforceable
against Purchaser and Sovereign in accordance with their
respective terms, except as enforcement may be limited by
receivership, conservatorship and supervisory powers of bank
regulatory agencies generally as well as bankruptcy, insolvency,
reorganization, moratorium or other laws of general applicability
relating to or affecting creditors' rights, or the limiting
effect of rules of law governing specific performance, equitable
relief and other equitable remedies of the waiver of rights or
remedies;
(f) The Servicing Agreement;
<PAGE 41>
(g) The Purchaser's Letter of Credit and the Collateral
Agency Agreement and the Collateral Assignment Instrument;
(h) The SBA Consents;
(i) The Lease Agreements;
(j) The Columbia Park Lease and the East Providence Lease;
(k) The License Agreement;
(l) The Participation Agreement; and
(m) Such other documents as are necessary to effect the
transactions contemplated hereby as Sellers shall reasonably
request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Purchaser as follows:
Section 6.1. Organization. Each Seller is a bank duly
organized, validly existing and in good standing under the laws
of its jurisdiction of formation. Fleet is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Rhode Island.
Section 6.2. Authority. Each Seller and Fleet has the
power and authority to enter into and perform this Agreement and
any other documents executed pursuant hereto. This Agreement and
any other documents or instruments executed pursuant hereto and
the execution, delivery and performance hereof and thereof have
been duly authorized and approved by all necessary corporate
action on the part of each Seller and Fleet, and this Agreement
and the instruments and documents executed pursuant hereto
constitutes, or when executed will constitute, the valid and
binding obligations of each Seller and Fleet, enforceable against
each Seller and Fleet in accordance with its terms, except as
enforcement may be limited by receivership, conservatorship and
supervisory powers of bank regulatory agencies generally as well
as by bankruptcy, insolvency, reorganization, moratorium or other
laws of general applicability relating to or affecting creditors'
rights, or the limiting effect of rules of law governing specific
performance, equitable relief and other equitable remedies or the
waiver of rights or remedies.
Section 6.3. Non-Contravention. The execution and delivery
of this Agreement and the instruments and documents executed
pursuant hereto by Sellers do not and, subject to the receipt of
all Regulatory Approvals, the consummation of the transactions
contemplated by this Agreement will not constitute (a) a material
breach or violation of or default under any law, rule, <PAGE 42>
regulation, judgment, order, governmental permit or license of
Sellers or to which either Seller is subject, which breach,
violation, or default would prevent or materially delay Sellers
or Fleet from being able to perform their respective obligations
under this Agreement in all material respects or (b) a breach or
violation of or a default under the articles of association or
bylaws of any Seller or Fleet or any material contract to which
any Seller or Fleet is a party or by which any of them is bound,
which breach, violation or default would prevent or materially
delay Sellers or Fleet from being able to perform their
respective obligations under this Agreement in all material
respects.
Section 6.4. Compliance with Law. To the Knowledge of
Sellers, the business and operations of the Business are being
conducted in accordance with all applicable laws, rules and
regulations of all governmental authorities, other than those
laws, rules and regulations of governmental authorities the
penalty or liability for the violation of which, if imposed or
asserted, would not have a Material Adverse Effect.
Section 6.5. Legal Proceedings. There are no actions,
suits, or proceedings, whether civil, criminal or administrative,
pending as of the date of the Agreement or, to the Knowledge of
Sellers, threatened as of the date of the Agreement against or
affecting Sellers, (a) which would reasonably be expected to have
a Material Adverse Effect or (b) which would prevent or
materially delay Sellers or Fleet from being able to perform
their respective material obligations under this Agreement in all
material respects.
Section 6.6. Tenants; Branch Leases.
(a) Except for the tenants listed on Schedule 1.1(pp)
hereto, there are no tenants or, to the Knowledge of Sellers,
other occupants of the Facilities owned by Sellers.
(b) Except as set forth in Schedule 6.6(b) hereto, each of
the Branch Leases and ATM Lease Agreements is in full force and
effect, and to the Knowledge of Sellers, the Seller which is a
party to such Branch Lease or ATM Lease Agreement is not in
default under any of its obligations thereunder, except for such
defaults which would not have a Material Adverse Effect.
Section 6.7. Purchased Assets. (a) A Seller or an
Affiliate thereof is the lawful owner of each of the Purchased
Assets (other than the Real Property), free and clear of all
Liens other than Permitted Liens and, except for consents
required to transfer the Purchased Assets, on the Closing Date
Sellers will have the right to sell, convey, transfer, assign and
deliver to Purchaser all of the Purchased Assets.
(b) A Seller or an Affiliate thereof is the lawful owner of
the Real Property as shown on the title commitments related to
<PAGE 43> such Real Property previously delivered to Purchaser,
free and clear of all Liens except Liens shown on said title
commitments, Permitted Liens and easements and restrictions of
record, applicable zoning laws, and the right of any tenants.
Section 6.8. Loans. (a)(i) Each Loan represents the legal,
valid and binding obligation of the related borrower, enforceable
by the holder thereof in accordance with its terms subject, as to
enforcement, to applicable bankruptcy, insolvency,
reorganization, liquidation and other similar laws and equitable
principles relating to or affecting the enforcement of creditors'
rights generally.
(ii) Each Loan (A) was originated or purchased by a
Seller, (B) to the extent secured is secured by a valid and
enforceable Lien in the collateral therefor, which Lien is
assignable, and (C) contains customary and enforceable
provisions such that the rights and remedies of the holder
thereof shall be adequate for practical realization against
any collateral therefor.
(iii) Each Loan complied at the time the Loan was
originated in all material respects with all applicable
requirements of applicable federal, state, and local laws,
and regulations thereunder.
(iv) The servicing practices of Sellers used with
respect to the Loans have been customary industry practices
in all material respects.
(b) Except as set forth in Section 6.8 above, neither
Sellers nor Fleet make any representation or warranty of any kind
to Purchaser relating to the Loans and neither Sellers nor Fleet
shall be responsible for (i) the due execution, legality,
validity, enforceability, genuineness, sufficiency, value or
collectibility of the Loans or any document, instrument or
agreement in the loan file, including, without limitation,
documents granting a Seller a security interest in any collateral
relating to a Loan, (ii) any representation, warranty or
statement made by an obligor or other party in or in connection
with any Loan, (iii) the financial condition or creditworthiness
of any primary or secondary obligor under any Loan or any
guarantor or surety or other obligor thereof, (iv) the
performance by the obligor or compliance with any of the terms or
provisions of any of the documents, instruments and agreements
relating to any Loan, (v) inspecting any of the property, books
or records of any obligor, or (vi) any of the warranties set
forth in Section 3-417 of the UCC.
Section 6.9. No Broker. Other than Credit Suisse First
Boston Corporation and Keefe Bruyette & Woods (each of whose fees
and expenses will be paid solely by Fleet), no broker or finder,
or other party or agent performing similar functions, has been
retained by Sellers or their Affiliates or is entitled to be paid
<PAGE 44> based on any arrangements, agreements or understandings
made by Sellers or their Affiliates in connection with the
transactions contemplated hereby, and no brokerage fee or other
commission has been agreed to be paid by Sellers or their
Affiliates on account of such transactions.
Section 6.10. Assumed Deposit Liabilities. The Deposit
Liabilities are insured by the FDIC through the Bank Insurance
Fund or the Savings Association Insurance Fund to the extent
permitted by law, and all premiums and assessments required to be
paid in connection therewith have been paid when due by Sellers.
Section 6.11. No Assessable Improvements. To the Knowledge
of Sellers, no material assessments for public improvements have
been made against the Real Property or the Facilities which
remain unpaid.
Section 6.12. No Adverse Notices. No notices or citations
of any applicable private restrictions or of the violation of any
zoning regulation or other law, rule, regulation or directive of
any governmental authority or authorities having jurisdiction
relating to the Real Property or the Facilities or any part
thereof have been received by Sellers relating to any material
matter affecting the Real Property or the Facilities. No notices
have been issued and served upon the Sellers or upon the Real
Property or the Facilities from or by any constituted authority
concerning the making of any required material alterations,
repairs or corrections of any condition or act affecting the Real
Property or the Facilities which remain uncomplied with or
unpaid.
Section 6.13. No Change in Assessment. To the Knowledge of
Sellers, Sellers have not received any notice or order from any
governmental authority with respect to any proposed change in
valuation of the Real Property or the Facilities for real estate
tax purposes from that assessed for the current assessment
period.
Section 6.14. Licenses and Permits. Sellers have all
material licenses, permits, easements and rights of way,
including proof of dedication, building permits, certificates of
occupancy and occupancy permits which are required from any
governmental authority having jurisdiction over the Real Property
and the Facilities (other than permits or authorizations required
pursuant to Environmental Laws) or from private parties as
necessary to make use of the Real Property and the Facilities and
in order to insure adequate vehicular and pedestrian ingress and
egress to the Real Property and the Facilities, except where the
failure to hold such licenses, permits, easements and rights of
way would not result in a Material Adverse Effect.
Section 6.15. No Condemnation. To the Knowledge of
Sellers, there are no condemnation proceedings or other
<PAGE 45> proceedings in the nature of eminent domain with
respect to the Real Property or the Facilities.
Section 6.16. Regulatory Matters.
(a) The execution, delivery and performance of this
Agreement and the other agreements to be entered into in
connection herewith by Fleet and Sellers do not and will not
require any consent, approval, authorization or other order of,
action by, filing or registration with or notification to any
governmental authority except as set forth on Schedule 6.16
hereto ("Seller Regulatory Approvals").
(b) There are no pending, or to the Knowledge of Sellers,
threatened disputes or controversies between Sellers or Fleet and
any federal, state or local governmental authority, including
without limitation with respect to capital requirements or year
2000 readiness that (i) would reasonably be expected to prevent
or materially delay Sellers or Fleet from being able to perform
their respective obligations under this Agreement or (ii) would
reasonably be expected to impair the validity or consummation of
this Agreement or the transactions contemplated hereby. Neither
Sellers nor Fleet has received any indication from any federal,
state or other governmental authority that such governmental
authority would oppose or refuse to grant or issue its consent or
approval, if required, with respect to the transactions
contemplated hereby.
Section 6.17. Interim Operations. From May 30, 1999
through the date hereof, other than in connection with the
transactions contemplated by this Agreement or any similar
agreement relating to the divestiture of assets in connection
with the Merger and other than in connection with the
transactions contemplated by the Merger Agreement, each Seller
has conducted the Business in the usual, regular and ordinary
course consistent with past practices.
Section 6.18. Limitations on and Disclaimer of
Representations and Warranties and Purchaser's Release in
Connection Therewith. Except as otherwise expressly set forth in
this Agreement:
(a) Neither Sellers nor Fleet make any representations or
warranties, express or implied, as to the physical condition of
the Fixed Assets or the Precious Metals, except that Sellers and
Fleet represent and warrant that the fineness of the Precious
Metals, included in the Purchased Assets, which are in the
possession of the Sellers shall be not less than the fineness set
forth in its respective definition set forth in Article I hereof.
(b) Neither Sellers nor Fleet make any representations or
warranty, express or implied, of any type or nature with respect
to the physical condition of the Facilities or Real Property
which are being sold "AS IS, "WHERE IS" without recourse and with
<PAGE 46> all faults, without any obligation on the part of the
Sellers. Except as otherwise expressly set forth in this
Agreement, by closing this transaction, Purchaser hereby releases
and agrees to hold harmless Sellers and Fleet and waives any
claims which Purchaser may now or hereafter have against Sellers
or Fleet relating to the physical condition of the Facilities or
the Real Property from and after the Closing, including without
limitation with respect to claims under Environmental Laws or
with respect to the presence of Hazardous Materials or with
respect to claims under the ADA.
(c) Neither Sellers nor Fleet make any representations or
warranties to Purchaser as to whether, or the length of time
during which, any accounts relating to Deposit Liabilities will
be maintained by the owners of such Deposit Liabilities at the
Branches after the Transfer Date.
(d) Except as specifically provided for in this Agreement,
Sellers and Fleet disclaim and make no representations or
warranties whatsoever with respect to the Business, Purchased
Assets or Assumed Liabilities, express or implied, including,
without limitation, any representations or warranties with
respect to merchantability, fitness, title, enforceability,
collectibility, documentation or freedom from Liens (in whole or
in part) and disclaim any liability and responsibility for any
negligent representation, warranty, statement or information
otherwise made or communicated, by oversight or information
otherwise made or communicated (orally or in writing), to
Purchaser in connection with the transactions contemplated hereby
(including without limitation, any opinion, information,
projection, statement or advice contained in the Offering
Memorandum or which may have been provided to Purchaser by any
employee, officer, agent, stockholder or other representative of
Sellers, Fleet or their Affiliates in connection with the
transactions contemplated hereby).
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND
SOVEREIGN
Purchaser and Sovereign represent and warrant to Sellers as
follows:
Section 7.1. Organization. Purchaser is a federal savings
bank duly organized, validly existing and in good standing under
the laws of the United States and is a "qualified thrift lender",
as defined in 12 U.S.C. Section 1467a. Sovereign is a corporation duly
organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania.
Section 7.2. Authority. Each of Purchaser and Sovereign
has the power and authority to enter into and perform this
Agreement and any instruments or other documents executed
<PAGE 47> pursuant hereto. This Agreement and any instruments or
other documents executed pursuant hereto, and the execution,
delivery and performance hereof and thereof have been duly
authorized and approved by all necessary corporate action on the
part of each of Purchaser and Sovereign, and this Agreement
constitutes a valid and binding obligation of each of Purchaser
and Sovereign, enforceable against each of Purchaser and
Sovereign in accordance with its terms, except as enforcement may
be limited by receivership, conservatorship and supervisory
powers of bank regulatory agencies generally as well as
bankruptcy, insolvency, reorganization, moratorium or other laws
of general applicability relating to or affecting creditors'
rights, or the limiting effect of rules of law governing specific
performance, equitable relief and other equitable remedies or the
waiver of rights or remedies.
Section 7.3. Non-Contravention. The execution and delivery
of this Agreement and any instruments or other documents executed
pursuant hereto by Purchaser do not and, subject to the receipt
of all Regulatory Approvals, the consummation of the transactions
contemplated by this Agreement, will not constitute (a) a breach
or violation of or default under any law, rule, regulation,
judgment, order, governmental permit or license of Purchaser or
Sovereign or to which either is subject, which breach, violation
or default would prevent or materially delay Purchaser or
Sovereign from being able to perform their respective obligations
under this Agreement in all material respects, or (b) a breach or
violation of or a default under the charter or bylaws of
Purchaser or Sovereign or any material contract or other
instrument to which either of them is a party or by which either
of them is bound which breach, violation or default would prevent
Purchaser or Sovereign from performing its obligations under this
Agreement in all material respects.
Section 7.4. Legal Proceedings. There are no actions,
suits, or proceedings, whether civil, criminal or administrative,
pending or, to the knowledge of Purchaser or Sovereign threatened
against or affecting Purchaser or Sovereign which could prevent
or materially delay Purchaser or Sovereign from performing its
obligations under this Agreement in all material respects.
Section 7.5. Consents and Other Regulatory Matters.
(a) The execution, delivery and performance of this
Agreement and the other agreements to be entered into in
connection herewith by Purchaser and Sovereign do not and will
not require any consent, approval, authorization or other order
of, action by, filing or registration with or notification to (i)
any governmental authority except as set forth on Schedule 7.5(a)
hereto ("Purchaser Regulatory Approvals") or (ii) any other
party.
(b) There are no pending, or to the knowledge of Purchaser,
threatened disputes or controversies between Purchaser or
<PAGE 48> Sovereign and any federal, state or local governmental
authority, including without limitation with respect to capital
requirements or year 2000 readiness that (i) would reasonably be
expected to prevent or materially delay Purchaser or Sovereign
from being able to perform its obligations under this Agreement
or (ii) would reasonably be expected to impair the validity or
consummation of this Agreement or the transactions contemplated
hereby. Neither Purchaser nor Sovereign has received any
indication from any federal, state or other governmental
authority that such governmental authority would oppose or refuse
to grant or issue its consent or approval, if required, with
respect to the transactions contemplated hereby. Assuming
consummation of the Capital Transactions and/or borrowings under
the Senior Credit Facility and Bridge Facility, Purchaser
believes that it can satisfy all capital and other regulatory
requirements necessary to obtain all Purchaser Regulatory
Approvals.
(c) The deposits of Purchaser are insured by the FDIC in
accordance with the FDIA, and Purchaser has paid all premiums and
assessments when due and has filed all reports required to be
filed by it by the FDIC.
(d) As of the date hereof, without giving effect to the
transactions contemplated hereby, (and following the transactions
contemplated hereby, including the transactions contemplated by
the Commitment Letter), Purchaser: (i) is (or will be following
consummation (A) of the Capital Transactions, and (B) the
borrowings under the Senior Credit Facility and Bridge Facility)
at least "adequately capitalized", as defined in the FDIA; and
(ii) meets (or will meet following consummation of (A) the
Capital Transactions and (B) the borrowings under the Senior
Credit Facility and Bridge Facility) all capital requirements,
standards and ratios required by each state or federal bank
regulator with jurisdiction over Purchaser, including without
limitation, any such higher requirement, standard or ratio as
applies to institutions engaging in the acquisition of insured
institution deposits, assets or branches, and assuming
consummation of (A) the Capital Transactions and (B) the
borrowings under the Senior Credit Facility and Bridge Facility,
no such regulator is likely to, or has indicated that it will,
condition any of the Purchaser Regulatory Approvals upon an
increase in Purchaser's capital or compliance with any capital
requirement, standard or ratio.
(e) To the knowledge of Purchaser, it will not be required
to divest any of the Purchased Assets or Assumed Liabilities or
any other asset or liability as a condition to the receipt of any
of the Purchaser Regulatory Approvals.
(f) Purchaser was rated "Satisfactory" or "Outstanding"
following its most recent CRA examination by the regulatory
agency responsible for its supervision. Purchaser has received
no notice of and has no knowledge of any planned or threatened
<PAGE 49> objection by any community group to the transactions
contemplated hereby.
Section 7.6. WARN Act. Purchaser is not planning or
contemplating, and has not made or taken, any decisions or
actions concerning the Transferred Employees after the Closing
that would require the service of notice under the WARN Act.
Section 7.7. Capital Transactions. (a) Purchaser will have
by January 31, 2000 sufficient capital to support the acquisition
of the Business and to perform Purchaser's other obligations
hereunder and under any of the other documents executed in
connection herewith; provided, however that Purchaser's
obligation to purchase the Purchased Assets and to assume the
Assumed Liabilities and to perform Purchaser's other obligations
hereunder is not conditioned on raising any equity capital,
issuing any debt, obtaining specific financing thereof, obtaining
the consent of any lender or any other matter.
(b) For purposes of this Section 7.7, amounts
deposited in escrow shall be deemed to be capital if the release
of funds from escrow is subject only to the condition that the
parties hereto consummate the Closing on or prior to April 28,
2000 in conformity in all material respects with the terms and
with satisfaction of all material conditions of this Agreement in
effect as of the date of execution hereof without giving effect
to any amendment, waiver or other modification to any material
term or condition; provided, however, that notwithstanding the
fact that any such funds may be held in escrow, Fleet in its sole
and absolute discretion may determine that Purchaser and
Sovereign do not have such sufficient capital as of such date in
which event Purchaser and Sovereign shall be deemed to have
materially breached their representations and warranties under
this Section.
(c) Sovereign has delivered to Fleet a true and complete
copy of all agreements, instruments or other documents, including
without limitation the Commitment Letter, evidencing any of the
Capital Transactions, which agreements, instruments or other
documents remain in full force and effect and have not been
amended, modified or supplemented in any way.
Section 7.8. No Broker. Other than Salomon Smith Barney,
Inc., Lehman Commercial Paper, Inc. and Lehman Brothers, Inc.
(whose fees and expenses will be paid solely by Sovereign), no
broker or finder, or any other party or agent performing similar
functions, has been retained by Purchaser or its Affiliates or is
entitled to be paid based on any arrangements, agreements or
understandings made by Purchaser or its Affiliates in connection
with the transactions contemplated hereby and no brokerage fee or
other commission has been agreed to be paid by Purchaser or its
Affiliates on account of such transactions.
ARTICLE VIII <PAGE 50>
COVENANTS OF SELLERS
Sellers covenant and agree with Purchaser as follows:
Section 8.1. Conduct of the Business. (a) From the date
hereof through the Closing Date, each Seller shall (i) conduct
its business relating to the Purchased Assets and Assumed
Liabilities in the usual, regular and ordinary course consistent
with past practice, (ii) use commercially reasonable efforts to
maintain and preserve intact its relationships generally with its
Business Employees and Customers, and (iii) take no action which
would adversely affect or delay the ability of any party hereto
to obtain the Purchaser Regulatory Approvals or the Seller
Regulatory Approvals or to perform its covenants and agreements
under this Agreement; provided, however that Sellers shall be
under no obligation to advertise or promote new or substantially
new customer services in the principal market area of, or for the
benefit of, the Business.
(b) Without limitation of the foregoing, from the date
hereof through the Closing Date no Seller shall:
(i) Sell, lease or transfer, or agree to sell, lease
or transfer any Purchased Assets except for Purchased Assets
sold, leased or transferred in the ordinary course of
business;
(ii) Solicit, encourage or induce a Customer to
transfer, before the Closing Date, such Customer's business
to a branch other than a Branch or otherwise to transfer
such Customer's business such that it will not constitute
part of the Business;
(iii) Make or grant (A) any increase in the
compensation payable or to become payable greater than four
percent (4%) of base salary, to any Transferred Employee, or
(B) except in accordance with Sellers' normal compensation
practices, any increase in any contribution or payment under
any of the Sellers' employee benefit plans or arrangements,
except in either case in the ordinary course of business;
(iv) With respect to the Loans, other than in the
usual, regular and ordinary course consistent with past
practice, amend the terms of any Loan to reduce the interest
rate applicable to such Loan to a rate that is below the
market rate of interest for similar loans with the same
credit rating that are originated by such Seller for its own
portfolio at the time of such amendment, if such amendment
would, in the aggregate, result in a change in the
characteristics of such portfolio of Loans that would have a
material adverse effect on the Loan Value of the Loans,
taken as a whole; or
<PAGE 51>
(v) With respect to the Deposit Liabilities other than
in the usual, regular and ordinary course consistent with
past practice, solicit, encourage or induce a depositor to
transfer any Deposit Liability to a branch other than a
Branch, or (B) offer deposit accounts at a Branch at
interest rates or on other terms which are different than
those offered by such Seller at any branch other than a
Branch if such actions described in subsections (A) and (B),
would, in the aggregate, have a Material Adverse Effect.
Section 8.2. Purchaser Regulatory Approvals. Sellers shall
use their commercially reasonable efforts to assist Purchaser in
obtaining the Purchaser Regulatory Approvals. Sellers shall
provide Purchaser or the appropriate governmental authorities
with all information reasonably required to be submitted by
Sellers in connection with the Purchaser Regulatory Approvals.
Section 8.3. Branch and ATM Consents; Other Facilities
Consents.
(a) Sellers shall use their commercially reasonable efforts
(which shall not require any Seller or its Affiliates to pay any
money or other consideration to any Person or to initiate any
claim or proceeding against any Person) to cause every landlord
of a Branch Lease or ATM Lease Agreement, the consent of which is
required under the terms of the applicable Branch Lease or ATM
Lease Agreement to the assignment of such Branch Lease or ATM
Lease Agreement to Purchaser, to execute in favor of Purchaser a
Landlord Consent.
(b) If, despite Sellers' commercially reasonable efforts, a
Landlord Consent to assignment of a Branch Lease or ATM Lease
Agreement cannot be obtained, or cannot be obtained without the
payment of an assignment fee or similar lump sum or rent
increase, Sellers shall, if permitted without the consent of the
Landlord under the Branch Lease or ATM Lease Agreement, sublease
the Branch or ATM location to Purchaser pursuant to a sublease
agreement which shall be for the remainder of the existing term
of the Branch Lease or ATM Lease Agreement, as applicable, and
which shall provide for Purchaser to perform all of the
obligations of Sellers under such Branch Lease or ATM Lease
Agreement and which otherwise shall contain mutually agreeable
terms (a "Sublease Agreement").
(c) If Sellers shall be unable to deliver (i) a Landlord
Consent with respect to a Branch Lease or ATM Lease Agreement or
(ii) a Sublease Agreement, Sellers shall make available to
Purchaser space at such Branch or ATM location necessary for the
operations of the applicable Branch or ATM pursuant to a Use and
Occupancy Agreement substantially in the form of Exhibit O
hereto.
(d) Anything contained in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement
<PAGE 52> to assign any Purchased Asset, contract, Deposit
Liability or other Assumed Liability, or any claim or right or
any benefit arising thereunder or resulting therefrom if an
attempted assignment thereof, without the consent of a third
party thereto, would constitute a breach thereof or in any way
affect the rights of any Seller thereunder or be contrary to
applicable law. If any such consent or approval is not obtained,
Sellers will use their commercially reasonable efforts (which
shall not require any Seller or its Affiliates to pay any money
or other consideration to any Person or to initiate any claim or
proceeding against any Person) to secure an arrangement
reasonably satisfactory to Purchaser insuring that Purchaser will
receive the benefits under the agreement for which such consent
is being sought following the Closing; provided, however, that
Sellers shall have no obligation to obtain such consent or
approval or to provide such an alternative arrangement other than
the undertaking to use commercially reasonable efforts to obtain
the same as set forth in this Section 8.3 and Purchaser shall
remain obligated to close the transactions contemplated herein,
subject to the other provisions hereof, and shall have no remedy
for Sellers' failure to obtain any such consent or approval or to
provide any such alternative arrangement.
(e) Notwithstanding anything to the contrary contained in
this Agreement, if Sellers are unable to obtain for Purchaser the
right to occupy a Branch, whether pursuant to a Landlord Consent
or a Sublease Agreement, Purchaser may elect, if in the
reasonable opinion of counsel to Purchaser the applicable Branch
Lease or ATM Lease Agreement does not authorize Sellers to enter
into a Use and Occupancy Agreement with respect thereto, not to
enter into such Use and Occupancy Agreement. Notwithstanding
such election, Purchaser shall not be entitled to terminate this
Agreement and Purchaser shall remain obligated to perform all of
its obligations hereunder, including without limitation, the
assumption of the Deposit Liabilities and the payment of the full
Purchase Price without any reduction or adjustment; provided that
Purchaser shall not be obligated to assume such Branch Lease or
ATM Lease Agreement or to purchase the Fixed Assets associated
with the applicable Branch or ATM location and, with respect to
any such Branch, subject to approval of the United States
Department of Justice Purchaser shall not be entitled nor
obligated to acquire and assume the Consumer Bank Deposit
Liabilities of Customers whose accounts with respect to such
Consumer Bank Deposit Liabilities are maintained at such Branch.
Section 8.4. Nonsolicitation. For a period of two (2)
years following the Closing Date, no Seller and no Affiliate of
any Seller shall use any list of Customers as a means to offer
the same or similar products and services of the Business to any
Customer as was provided to such Customer by the Business
immediately prior to the Closing Date. Notwithstanding the
foregoing sentence, Sellers and their respective Affiliates shall
be permitted to (a) engage in advertising, solicitations or
marketing campaigns, programs or other efforts not primarily
<PAGE 53> directed to or targeted at the Customers, including
without limitation such campaigns, programs or efforts in
connection with lending, deposit, safe deposit, trust or other
financial services relationships with the public (including the
Customers generally), (b) engage in other lending, deposit, safe
deposit, trust or other financial services relationships,
(c) respond to unsolicited inquiries, and (d) provide notices or
communications relating to the transactions contemplated hereby
in accordance with the provisions hereof.
Section 8.5. Nonsolicitation of Purchaser's Employees. (a)
In consideration of the consummation of the transactions
contemplated hereby, each Seller agrees that, for a period of two
(2) years following the Closing Date, it shall not, directly or
indirectly, solicit for employment, retain as an independent
contractor or consultant, induce to terminate employment with
Purchaser or otherwise interfere with Purchaser's employment
relationship with any Transferred Employee; provided, however,
that this Section 8.5 shall not apply (i) if any such employee
has been terminated by Purchaser or any of its Affiliates for any
reason or (ii) if such employee is hired by a Seller or any of
its Affiliates as a result of a general solicitation for
employment in newspaper advertisements or other periodicals of
general circulation not specifically targeted to employees of
Purchaser.
(b) For a period of two (2) years following the Closing
Date, Sellers shall notify Purchaser in writing, within thirty
(30) days of the date of hire, of any Seller's hiring of any then
current employee of Purchaser or its Affiliates.
Section 8.6. Additional Employees. Sellers shall use
commercially reasonable efforts to designate employees of Sellers
to be interviewed by Purchaser for purposes of satisfying its
obligation to offer employment to the specified number of
Additional Employees pursuant to the Hiring Commitment and
Section 9.6, whose functional descriptions shall conform to those
previously provided by Purchaser to Sellers.
Section 8.7. Regulatory Approvals and Standards. Sellers
shall use commercially reasonable efforts to obtain as
expeditiously as possible the Seller Regulatory Approvals and
will file within sixty (60) days after the execution of this
Agreement all necessary applications of Sellers to obtain the
Seller Regulatory Approvals. Sellers shall supply to Purchaser,
at least five (5) Business Days prior to filing, copies of all
proposed regulatory applications and filings (other than the
confidential portions thereof) and will use commercially
reasonable efforts to reflect any material comments of Purchaser
in such filings. As of the Closing Date, Sellers will satisfy
any and all of the standards and requirements reasonably within
their control imposed as a condition to obtaining or necessary to
comply with the Seller Regulatory Approvals. Sellers shall pay
any fees charged by any governmental authorities to which they
<PAGE 54> must apply to obtain any of the Seller Regulatory
Approvals. Sellers shall not take any action which would
adversely affect or delay the ability of any other party hereto
to obtain any `Regulatory Approval or to perform its covenants
and agreements under this Agreement. Sellers shall notify the
Purchaser promptly (and in no event later than 24 hours following
notice) of any significant development with respect to any
application or notice filed by Sellers with any governmental
authority in connection with the transactions contemplated by
this Agreement.
Section 8.8. No Shop. Except during any period during which
Fleet or any Seller are exercising their rights pursuant to
Schedule 9.8(b) hereof and except as otherwise agreed to by the
parties hereto in writing, neither Fleet nor any Seller nor any
of their Affiliates shall authorize or permit any of their
directors, officers, employees or agents, to directly or
indirectly respond to, solicit, initiate or encourage any
inquiries relating to, or the making of any proposal which
relates to, the sale or disposition of all or any portion of the
Purchased Assets, the Assumed Liabilities or the Business.
ARTICLE IX
COVENANTS OF PURCHASER AND
SOVEREIGN
Purchaser and Sovereign covenant and agree with Sellers as
follows:
Section 9.1. Regulatory Approvals and Standards.
(a) Purchaser will use its commercially reasonable efforts
to obtain as expeditiously as possible the Purchaser Regulatory
Approvals and SBA Consents. Purchaser will file by
September 30, 1999 (except any state regulatory approval
Purchaser determines to be required which shall be filed by
October 15, 1999) all necessary initial applications of Purchaser
to obtain the Purchaser Regulatory Approvals and will obtain the
Purchaser Regulatory Approvals on or before January 15, 2000.
Purchaser will also file within sixty (60) days after the
execution of this Agreement all necessary applications of
Purchaser to obtain the SBA Consents. Purchaser will supply to
Sellers, at least five (5) Business Days prior to filing, copies
of all proposed regulatory applications and filings (other than
the confidential portions thereof) and will use reasonable
efforts to reflect any material comments of Sellers in such
filings. As of the Closing Date, Purchaser will satisfy any and
all of the standards and requirements reasonably within its
control imposed as a condition to obtaining or necessary to
comply with the Purchaser Regulatory Approvals and the SBA
Consents. Purchaser shall pay any fees charged by any
governmental authorities to which it must apply to obtain any of
the Purchaser Regulatory Approvals or the SBA Consents.
<PAGE 55> Purchaser shall take no action which would adversely
affect or delay the ability of any other party hereto to obtain
any Regulatory Approval or to perform its covenants and
agreements under this Agreement. Purchaser shall notify Sellers
promptly (and in no event later than 24 hours following notice)
of any significant development with respect to any application or
notice Purchaser files with any governmental authority in
connection with the transactions contemplated by this Agreement.
(b) Purchaser shall use commercially reasonable efforts to
assist Sellers in obtaining any Seller Regulatory Approvals.
Purchaser shall provide Sellers or appropriate governmental
authorities with all information reasonably required to be
submitted by Purchaser in connection with the Seller Regulatory
Approvals.
(c) From the date hereof through the Transfer Date,
Purchaser shall (i) remain at least "adequately capitalized", as
defined in the FDIA, (ii) meet all capital requirements,
standards and ratios required by each state or federal bank
regulator with jurisdiction over Purchaser, including without
limitation, any such higher requirement, standard or ratio as
shall apply to institutions engaging in the acquisition of
insured institution deposits, assets or branches and
(iii) maintain its CRA ratings.
(d) Purchaser hereby confirms that after the Transfer Date
it is Purchaser's intention to conduct a banking business at the
Branches, and therefore as of the date of this Agreement it is
not expected that the transactions contemplated by this Agreement
will result in the closing, consolidation or relocation of any of
the Branches. Purchaser agrees that it shall be solely
responsible for complying with any required branch closing or
other notices to regulators and customers in the event Purchaser
should at any time determine to close, consolidate or relocate
any of the Branches or to close, consolidate or relocate any
branch of Purchaser in connection with or relating to the
transactions contemplated by this Agreement.
Section 9.2. Consents; Compliance with Law. Purchaser
shall provide such financial and other information as shall be
reasonably requested by landlords under the Branch Leases and ATM
Lease Agreements and in connection with obtaining landlords'
consents to the Lease Agreements. Notwithstanding anything to
the contrary contained herein, Purchaser agrees that the form of
Landlord Consent with respect to a Branch Lease or an ATM Lease
Agreement and in connection with the Lease Agreements, may be
modified at the request of a landlord to incorporate any and all
conditions, terms and agreements such landlord may require with
respect to such landlord's required consent to the assignment of
such Branch Lease or ATM Lease Agreement to Purchaser; provided
that such conditions, terms and agreements do not constitute a
material or monetary modification or alteration of the terms,
covenants and conditions of such Branch Lease or ATM Lease
<PAGE 56> Agreement or to the respective Seller's lease of those
premises which will be subleased to Purchaser pursuant to the
Lease Agreements or otherwise impose any material burden on
Sellers or Purchaser not otherwise contemplated by such Branch
Lease or ATM Lease Agreement or by the Lease Agreements.
Section 9.3. Solicitation of Accounts. Prior to the Closing
Date, neither Purchaser nor any of its Affiliates shall solicit
Customers through advertising specifically referencing or
specifically targeted to such Customers for the purpose of
(a) inducing such Customers to close Deposit Liability accounts
and open deposit accounts directly with Purchaser or any of its
Affiliates, or (b) causing the transfer of all or a portion of an
existing Deposit Liability from any Seller. Notwithstanding the
foregoing sentence, Purchaser and its Affiliates shall be
permitted to (i) engage in advertising, solicitations or
marketing campaigns not primarily directed to or targeted at such
Customers, (ii) engage in lending, deposit, safe deposit, trust
or other financial services relationships existing as of the date
hereof with such Customers through branch offices of Purchaser,
(iii) respond to unsolicited inquiries by such Customers with
respect to banking or other financial services offered by
Purchaser and (iv) provide notices or communications relating to
the transactions contemplated hereby in accordance with the
provisions hereof.
Section 9.4. Nonsolicitation of Sellers' Employees. (a) In
consideration of, among other things, the willingness of Sellers
to provide Purchaser with the opportunity to interview and hire
the Business Related Employees, Purchaser and its Affiliates
agree that, except in accordance with this Section 9.4, for a
period of two (2) years following the Closing Date, it shall not,
directly or indirectly, solicit for employment, retain as an
independent contractor or consultant, induce to terminate
employment with Sellers or otherwise interfere with Sellers'
employment relationship with, any employee or officer of Sellers
or any of their respective Affiliates who is not employed by
Purchaser pursuant to Section 9.6; provided, however, that this
Section 9.4 shall not apply (i) if any such employee has been
terminated by Sellers or any of their Affiliates for any reason,
(ii) if such employee is hired by Purchaser or any of its
Affiliates as a result of a general solicitation for employment
in newspaper advertisements or other periodicals of general
circulation not specifically targeted to employees of Sellers, or
(iii) if Fleet indicates by written consent that it shall not
apply to any employee.
(b) For a period of two (2) years following the Closing
Date, Purchaser shall notify Sellers in writing, within (30) days
of the date of hire, of Purchaser's hiring of any then current
employee of Sellers or their Affiliates.
Section 9.5. Recording of Instruments of Assignment.
<PAGE 57>
(a) No later than ten (10) Business Days following the
Closing Date, Purchaser shall have recorded all deeds relating to
the Real Property.
(b) No later than six (6) months following the Closing
Date, Purchaser shall have recorded all other instruments
required, necessary or desirable to evidence the acquisition,
assignment and assumption of the Purchased Assets and the Assumed
Liabilities, including, without limitation, all assignments of
mortgage, financing statements, and security agreements relating
to the Loans.
Section 9.6. Transferred Employees. Purchaser covenants to
Sellers that it will do or cause the following to occur:
(a) No later than the Final Approval Date, Purchaser shall
offer employment beginning as of the Closing Date to all Business
Employees and at least one thousand three hundred fifty two
(1352) Additional Employees upon terms and conditions described
in subsection (c) below and subject to the Closing. Purchaser
may but shall not be obligated to offer employment to any
Business Related Employee on the same terms as required hereunder
for offers of employment to Business Employees; provided,
however, that Purchaser must offer employment to such Business
Related Employees no later than thirty (30) days following the
date on which a list of such Business Related Employees is
provided to Purchaser. The position offered to each Business
Employee, each Additional Employee and each Business Related
Employee must be a Comparable Job. Subject to the provisions of
this Section 9.6, Transferred Employees will be subject to the
employment terms, conditions and rules applicable to other
employees of Purchaser. Nothing contained in this Agreement
shall be construed as an employment contract between Purchaser
and any Transferred Employee.
(b) Effective as of the Closing Date, Purchaser shall
assume the Fleet Boston Divestiture Severance Plan and all
obligations for all severance benefits payable pursuant to such
plan (the "Assumed Severance Obligations") to any Business
Employee to whom Purchaser does not provide a Comparable Job in
accordance with Section 9.6(a) hereof; provided, however, that
transitional assistance programs for which Purchaser shall be
responsible under the Fleet Boston Divestiture Severance Plan
shall be limited to outplacement services. For a period of one
(1) year following the Closing Date, Purchaser shall provide
severance benefits to any Transferred Employee who is terminated
by Purchaser on or after the Closing Date pursuant to the terms
of the Fleet Boston Divestiture Severance Plan. Purchaser shall
compute severance benefits by giving all Transferred Employees
full credit for all years of service with Sellers, their
Affiliates and predecessors. After the one (1) year period
provided for herein, Purchaser shall provide Transferred
Employees with severance benefits in accordance with Purchaser's
<PAGE 58> severance policy, if any, crediting Transferred
Employees with years of service as provided under this Agreement.
(c) Each Business Employee, Additional Employee and
Business Related Employee shall be offered employment subject to
the following terms and conditions:
(i) Salary or base wages shall be equivalent to the
base salary or base wage paid by the applicable Seller to
such employee as of the close of business on the Closing
Date until such time that Purchaser's compensation policies
would entitle such employee to an increased salary or base
wage; and
(ii) Vacation benefits shall be equivalent to vacation
benefits provided by the applicable Seller to such employee
as of the close of business on the Closing Date, until
December 31, 2000. Any vacation balance to which such
employee is entitled in the year of Closing shall carry over
to Purchaser. As of January 1, 2001, Transferred Employees
shall receive in the aggregate for vacation, sick and
personal days the amount of paid time off to which they are
entitled under Purchaser's policies as in effect then and
from time to time thereafter.
(d) Purchaser shall treat each Transferred Employee as a
new hire of Purchaser (other than a Transferred Employee who is
not a full-time active employee, who for purposes of this Section
9.6(d) shall not be treated as a new hire under this Section
9.6(d) until such Transferred Employee becomes a full-time active
employee of Purchaser) but shall provide each Transferred
Employee with the following:
(i) Each Transferred Employee will be eligible to
participate in any qualified profit sharing plan/40l(k)
plan or plans of Purchaser, based on each plan's eligibility
criteria as of the close of business on the Closing Date.
Purchaser shall credit each Transferred Employee with the
period of years of service with a Seller, its Affiliates and
predecessors in determining eligibility to participate,
vesting and level of matching contributions in such plan or
plans.
(ii) Each Transferred Employee will be eligible to
participate in the Purchaser's qualified employee stock
ownership plan, based on such plan's eligibility criteria as
of the close of business on the Closing Date. Purchaser
shall credit each Transferred Employee with the period of
years of service with a Seller, its Affiliates and
predecessors in determining eligibility to participate,
vesting, benefit accrual and eligibility to receive benefits
in Purchaser's pension plan(s); provided, however, that (i)
such crediting of service shall not operate to duplicate any
benefit or the funding of any benefit for any period of
<PAGE 59> service and (ii) such Transferred Employee shall
become eligible to participate in Purchaser's employee stock
ownership plan on January 1, 2001 if he or she is employed
by Purchaser or one of its Affiliates as of such date.
(iii) Each Transferred Employee will receive credit
for years of service with a Seller, its Affiliates and
predecessors for purposes of calculation of benefits and
waiting period eligibility (except as provided in
subparagraph (d)(ii) above) in Purchaser's other
miscellaneous benefits programs, including but not limited
to, vacation, severance, leaves of absence, education
assistance, sick leave, short and long-term disability plans
and other similar benefits.
(iv) On the Closing Date each Transferred Employee
(other than a Transferred Employee who is not a full-time
active employee, who for purposes of this Section 9.6(d)(iv)
shall not be treated as a new hire under Section 9.6(d)(iv)
until such Transferred Employee becomes a full-time active
employee of Purchaser) will become immediately eligible to
participate in the Purchaser's health and welfare plans,
including but not limited to, dental, life insurance and
short and long-term disability plans, as such plans may
exist, on the same basis as other similarly-situated
employees of Purchaser. Purchaser shall waive any pre-
existing condition limitations with respect to such
Transferred Employee and his or her dependents. Purchaser
shall cause each such Transferred Employee to be eligible as
of the Closing Date for at least the amount of insurance
coverage that he or she maintained under the applicable
Seller's plans, without requiring such Transferred Employee
to provide any evidence of insurability, except to the
extent that the amount of such Transferred Employee's
insurance coverage exceeds $680,000;
(v) Upon conclusion of his or her short term
disability or temporary leave of absence, subject to the
terms and conditions of Purchaser's plans and policies and
applicable law, each Transferred Employee on such leave as
of the Closing Date (other than a Transferred Employee who
is not a full-time active employee, who for purposes of this
Section 9.6(d)(v) shall not be treated as a new hire under
this Section 9.6(d)(v) until such Transferred Employee
becomes a full-time active employee of Purchaser) shall
receive the greater of the salary and vacation benefits in
effect (y) when he or she went on leave or (z) upon the
conclusion of such leave to the extent that such Transferred
Employee is entitled to any pay increase or vacation
entitlement during such leave of absence pursuant to the
applicable Seller's leave of absence policies, shall
otherwise be treated as a Transferred Employee and shall be
offered by Purchaser the same or a substantially equivalent
<PAGE 60> position to his or her position with Sellers prior
to the leave; and
(vi) To the extent that Purchaser provides any
Transferred Employee with benefit or other plans and such
plans accept cash roll-overs, Purchaser shall allow such
Transferred Employee to roll over into such plans any cash
distributions or contributions received from Sellers or
their respective plans, including any outstanding loan
balances from a Seller's qualified or thrift retirement
plan.
(e) No later than one (1) year following the Closing Date
Purchaser shall pay the Stay Bonus Payments.
(f) Purchaser shall be responsible for all obligations
(including obligations to provide notices) or liabilities, if
any, which may arise in connection with any Transferred Employee
under the WARN Act. Purchaser shall indemnify and hold Sellers
harmless for any WARN Act obligations or liabilities of Sellers
that are triggered by any mass layoff, plant closing or other
employment action by Purchaser within the ninety (90) day period
following the Closing Date.
Section 9.7. Interviews. Purchaser shall be solely
responsible for any acts or omissions which are wrongful, illegal
or in contravention of this Agreement made by it in connection
with interviewing or hiring the Business Employees, Additional
Employees and Business Related Employees. Purchaser shall
reimburse the Business Employees, Additional Employees and
Business Related Employees (if applicable) for transportation
costs to and from the location where Purchaser shall interview
such employees.
Section 9.8. Additional Requirements.
(a) Sovereign shall file the Registration Statement by no
later than September 30, 1999. Sovereign will supply to Sellers,
at least five (5) days prior to filing, a draft of the proposed
Registration Statement and will use reasonable efforts to reflect
any material comments of Sellers in such filings. Sellers will
use commercially reasonable efforts upon request to assist
Sovereign in providing any required information for such filing.
(b) Purchaser and Sovereign shall comply with the terms of
Schedule 9.8(b) hereof.
(c) Upon execution of any agreement, instrument, debenture,
note, or other documentation with respect to any Capital
Transaction, or any amendment, modification or termination
thereof, and upon execution of any agreement, instrument,
debenture, note or other documentation with respect to any other
transaction the purpose of which is to raise Purchaser's capital
to support the acquisition of the Purchased Assets or the Assumed
<PAGE 61> Liabilities, Purchaser and Sovereign will provide a
copy thereof to Fleet, certified by the Chief Financial Officer
of Sovereign to be a true and correct copy thereof.
Section 9.9. No Other Transactions. Except as described on
Schedule 9.9 hereto, between the date hereof and the Closing Date
neither Purchaser nor Sovereign nor any of their Affiliates will
undertake or agree to undertake any material acquisition of the
business, assets (except loan portfolios and other assets
acquired in the ordinary course of business) or equity interests
of any Person, directly or indirectly, whether by merger,
consolidation, combination, subscription, purchase or otherwise.
Section 9.10. Sovereign Bancorp, Inc. Guaranty. Subject to the
terms and conditions of the Agreement, Sovereign hereby
guarantees the performance by Purchaser of Purchaser's
obligations (a) hereunder, and (b) under any other agreements
made or documents executed in connection herewith.
ARTICLE X
ACCESS; EMPLOYEE AND CUSTOMER COMMUNICATIONS
Section 10.1. Access by Purchaser. Upon execution of this
Agreement, Sellers shall provide Purchaser and its
representatives, accountants and counsel reasonable access during
normal business hours and upon one (1) Business Days notice to
Sellers to the Facilities, Business Employees, Additional
Employees, Business Related Employees, depository records, Loan
files, books and records and all other documents and other
information relating to the Facilities, the Business, the
Purchased Assets, the Assumed Liabilities and the Transferred
Employees as Purchaser may reasonably request; provided that a
representative of Sellers shall be permitted to be present at all
times and provided further that with respect to information
concerning Business Employees, Additional Employees and Business
Related Employees, Sellers' sole obligation shall be to provide
Purchaser with information concerning the name, position, date of
hire and salary of the Business Employees, Additional Employees
and Business Related Employees and Sellers shall not be required
to provide Purchaser with access to or copies of any personnel
files or other individualized employee files or documents, all of
which shall remain the sole property of Sellers. Notwithstanding
the foregoing, in no event shall Sellers be required to provide
(a) any information that is not available from Persons who are
not Affiliates of Sellers on commercially reasonable terms which
Sellers', in their sole discretion, deem proprietary, including
without limitation, Sellers' "credit scoring" system, branch or
credit practices, policies or procedures, or staffing models,
(b) any information which is protected by the attorney-client
privilege, or (c) its or any of its Affiliates' tax returns.
Section 10.2. Communications to Employees; Training.
<PAGE 62>
(a) Sellers and Purchaser agree that promptly following the
execution of this Agreement, meetings shall be held at such
location as Purchaser and Sellers shall mutually agree, provided
that representatives of Sellers shall be permitted to attend such
meetings, to announce Purchaser's proposed acquisition of the
Business to the Business Employees. Sellers and Purchaser shall
mutually agree as to the scope and content of all communications
to the Business Employees, Additional Employees and Business
Related Employees. Except as specifically provided in this
Section 10.2, in no event shall Purchaser contact any Business
Employee, Additional Employee or Business Related Employee
without the prior written consent of Sellers, which will not be
unreasonably withheld.
(b) At mutually agreed upon times following the initial
announcement described in Section 10.2(a), Purchaser shall be
permitted to meet with the Business Employees, Additional
Employees and Business Related Employees to discuss employment
opportunities with Purchaser, provided that representatives of
Sellers shall be permitted to attend any such meeting. From and
after the Final Approval Date, Purchaser shall also be permitted
to conduct training sessions outside of normal business hours or
at other times as Sellers may agree, with the Business Employees,
Additional Employees and Business Related Employees (if
applicable) and may, with Sellers' consent, which will not be
unreasonably withheld, conduct such training seminars at the
Branches; provided that Purchaser will in good faith attempt to
schedule such training sessions in a manner which does not
unreasonably interfere with Sellers' normal business operations.
Purchaser shall reimburse the Business Employees, Additional
Employees and Business Related Employees (if applicable) for
transportation costs to and from the locations where Purchaser
shall train such employees and compensate the Business Employees,
Additional Employees and Business Related Employees (if
applicable) or reimburse Sellers at the Business Employees,
Additional Employees and Business Related Employees (if
applicable) respective applicable standard or overtime rates for
the time spent in such training.
Section 10.3. Communications with Customers.
(a) Following the Final Approval Date but not earlier than
thirty (30) days prior to the anticipated Closing Date, Purchaser
shall send statements to the Customers announcing the
transactions contemplated hereby (such statements being herein
called "Customer Notices"). The form and content of each
Customer Notice shall be subject to the approval of both parties
and the cost of printing and mailing the Customer Notices shall
be borne solely by Purchaser (except as provided in Section 12.17
hereof). Following the Final Approval Date, Purchaser shall also
be entitled to provide solely at its own expense such other
notices or communications to Customers relating to the
transactions contemplated hereby as may be required by law;
provided that the text of any such notice or communication and
<PAGE 63> the timing of such notice or communication which is
provided prior to the Closing shall be approved in advance by
Sellers, which approval shall not unreasonably be withheld or
delayed.
(b) Except as specifically provided herein, in no event
will Purchaser or its Affiliates contact any Customers prior to
the Final Approval Date without the prior written consent of
Sellers which may be granted or withheld in their sole
discretion; provided that Purchaser may contact Customers in
connection with (i) advertising, solicitations or marketing
campaigns not primarily directed to or targeted at Customers,
(ii) lending, deposit, safe deposit, trust or other financial
services relationships of Purchaser with Customers through branch
offices of Purchaser existing as of the date hereof,
(iii) unsolicited inquiries by Customers to Purchaser with
respect to banking or other financial services provided by
Purchaser, and (iv) notices or communications relating to the
transactions contemplated hereby in accordance with the
provisions hereof.
ARTICLE XI
FACILITIES
Section 11.1. Connecticut Transfer Act. Purchaser agrees
that certain Real Property on which some or all of the Facilities
in Connecticut are located may be "establishments" within the
meaning of the CTA and that it is Purchaser's sole and exclusive
responsibility (a) to determine the "establishment" status for
each such property and Facility, (b) to perform, at its sole cost
and expense, including, without limitation, preparing and
executing appropriate forms and making any other necessary
filings required under the CTA, any requirement under the CTA for
investigations or assessments, and any remediations of
contamination at or emanating from such property, and (c) to pay
any transfer fees due the Connecticut Department of Environmental
Protection and other related fees or costs; provided, that
Sellers shall execute and deliver to Purchaser and the
Connecticut Department of Environmental Protection such forms as
may reasonably be required to be executed by Sellers in
conformance with the CTA and provided that Purchaser shall have
submitted to Sellers such assessments or other supporting
documentation as may reasonably be required to support Sellers'
certifications and execution of such forms. By closing this
transaction, Purchaser hereby releases Sellers and their
Affiliates and waives any claims which Purchaser may now or
hereafter have against Sellers or their Affiliates arising under
the CTA, including, without limitation, Section 22a-134b thereof
(regarding recovery of damages by a transferee from a
transferor).
Section 11.2. Environmental Due Diligence.
<PAGE 64>
(a) Purchaser may conduct, and if so, shall complete within
the Environmental Due Diligence Period and at Purchaser's own
expense, environmental investigations for purpose of identifying
Environmental Hazards, including, at Purchaser's election, so-
called "Phase I" assessments and/or "Phase II" subsurface
investigations, by an independent, qualified environmental
engineer or consultant ("Environmental Consultant") of the Real
Property during the Environmental Due Diligence Period, provided
that Purchaser shall use its commercially reasonable efforts to
commence any such investigation within five (5) Business Days
from the date hereof.
(b) In the event any such environmental investigation
involves any subsurface investigation of any of the Real
Property, Purchaser shall provide not less than five (5) Business
Days notice of same to Sellers, identifying the particular Real
Property involved and describing generally the location and
extent of the subsurface investigation to be conducted.
(c) In the event that any such environmental investigations
are not completed within the Environmental Due Diligence Period
through no fault of Purchaser or its Environmental Consultant,
Purchaser may request, prior to the expiration of the initial
thirty (30) day period, an extension of the Environmental Due
Diligence Period for a reasonable period of time, not exceeding
thirty (30) days, solely to permit completion of such
investigations, and Sellers shall approve same, such approval not
to be unreasonably withheld or delayed. If so approved, the
Environmental Due Diligence Period shall be deemed to extend for
such additional period of time.
(d) In the event that as a result of such investigation,
potential Environmental Hazards are disclosed, the Environmental
Remediation of which, in the reasonable judgment of Purchaser's
Environmental Consultant, is or will be the responsibility of
Sellers, or of Purchaser should it acquire such parcel, and which
in the reasonable judgment of Environmental Consultant to a
reasonable degree of professional certainty will cost more than
fifty thousand dollars ($50,000) (or, in the case of either the
Columbia Park Facility or the East Providence Facility, five
percent (5%) of the book value thereof on the books of the
current owner), Purchaser shall deliver to Sellers on or before
the close of the Environmental Due Diligence Period the written
report of the Environmental Consultant presenting all necessary
information regarding the Environmental Hazards and the
Environmental Remediation required. Sellers shall have the right
to review and to deliver to Purchaser Sellers' response, which
shall include whether Sellers agree or disagree regarding the
cost of any such Environmental Remediation. Sellers shall
deliver such response to Purchaser in writing not more than
fifteen (15) days after receipt of such report, and if the
Sellers disagree with Purchaser's position, a statement of the
reasons for such disagreement.
<PAGE 65>
(e) In the event that Sellers agree with the conclusions of
Purchaser's Environmental Consultant in connection with the cost
of Environmental Remediation at any parcel of Real Property,
Sellers may, at their election:
(i) make an adjustment to the Purchase Price for the
estimated costs of the Environmental Remediation of any such
Environmental Hazard(s) in excess of fifty thousand dollars
($50,000) (or, in the case of either the Columbia Park
Facility or the East Providence Facility, five percent (5%)
of such book value thereof), which shall not have been
completed on or prior to the Closing Date, with respect to
such parcel of Real Property; or
(ii) take such steps as are necessary to perform
Environmental Remediation by the Closing Date (or make
provisions to take such steps following the Closing Date as
shall be reasonably satisfactory to Sellers and Purchaser);
or
(iii) lease to Purchaser such parcel of Real Property
for an initial period of ten (10) years pursuant to a Lease
Agreement in the form specified by Exhibit E(7); provided
that if, during the term of such Lease Agreement or renewal
or extension thereof Sellers shall deliver to Purchaser a
report of an Environmental Consultant certifying that the
Environmental Remediation of any Environmental Hazards at or
on any such leased parcel of Real Property has been
completed, Purchaser shall be required to purchase such
parcel of Real Property, at the Real Property Purchase
Price, in the event such report is delivered within six (6)
months of the Closing Date, and, thereafter, at the fair
market value of such real property as agreed to by the
parties hereto or, if no such agreement is reached within
thirty (30) days of delivery of such report, as determined
pursuant to a real estate appraisal performed by an
experienced real estate appraiser selected by two other real
estate appraisers designated by Sellers and Purchaser,
respectively.
(f) In the event that Sellers do not agree with the
conclusions of Purchaser's Environmental Consultant regarding a
parcel of Real Property, the parties agree to refer the matter to
a third Environmental Consultant reasonably acceptable to all
parties (or, if the parties cannot agree, selected by the
parties' respective Environmental Consultants) for dispute
resolution as follows:
(i) The parties, through their respective
Environmental Consultants, may make reasonable presentations
to the third Environmental Consultant of their respective
positions regarding the cost of Environmental Remediation
required to address the identified Environmental Hazards at
such parcel of Real Property, and following such <PAGE 66>
presentations, the third Environmental Consultant shall
render his or her opinion regarding the extent and cost of
the required Environmental Remediation. The parties agree
that the determination of the third Environmental Consultant
regarding the cost of any required Environmental Remediation
shall be final and binding on the parties for purposes of
the applicability of this Section 11.2. In the event that
the third Environmental Consultant determines that the cost
of such Environmental Remediation will exceed fifty thousand
dollars ($50,000) (or, in the case of either the Columbia
Park Facility or the East Providence Facility, five percent
(5%) of such book value thereof), the provisions of Section
11.2(e), above, shall apply, and Purchaser shall be
considered the "prevailing party" for purposes of
subparagraph (ii), immediately below. In the event such
cost shall be fifty thousand dollars ($50,000) or less,
Sellers shall be such "prevailing party".
(ii) Each of the parties shall bear their own fees and
expenses in connection with the resolution of disputes
hereunder, and the fees and expenses of the third
Environmental Consultant shall be borne by the party who did
not prevail in its position before the third Environmental
Consultant.
(iii) With respect to any dispute to be resolved
hereunder involving a parcel of Real Property located in any
state in which environmental professionals are licensed by
such state (such as, in Connecticut, "Licensed Environmental
Professionals," or in Massachusetts, "Licensed Site
Professionals"), each of the three Environmental Consultants
participating in the dispute resolution process hereunder
shall be so licensed.
(g) Purchaser agrees that it and its Environmental
Consultant shall conduct any environmental investigations
permitted pursuant to this Section with reasonable care and
subject to customary practices among environmental consultants
and engineers, including without limitation, following completion
thereof, the restoration of any site to the extent practicable to
its condition prior to such investigation and in the case of any
subsurface investigations, the removal of all monitoring wells
(unless Seller requests such monitoring wells to remain).
Purchaser's Environmental Consultant must be duly licensed under
applicable state laws and provide proof of adequate liability and
professional errors and omissions insurance (which insurances
shall, in each instance, name Seller as an additional insured
upon Seller's request, and shall be in an amount not less than
one million dollars ($1,000,000) per claim and ten million
dollars ($10,000,000) in the aggregate).
ARTICLE XII
TRANSITIONAL MATTERS <PAGE 67>
Section 12.1. Payment of Deposit Liabilities.
(a) From and after the Closing Date, Purchaser shall (i)
pay all properly drawn and presented checks, negotiable orders of
withdrawal, drafts, debits and other withdrawal orders presented
to Purchaser by Deposit Liability account customers, whether
drawn on checks, negotiable orders of withdrawal, drafts, or
other withdrawal order forms provided by Sellers or by Purchaser
and (ii) in all other respects discharge, in the usual course of
the banking business, all of the duties and obligations of
Sellers with respect to the balances due and owing to the
Customers who have Deposit Liability accounts. If any Customer
who has a Deposit Liability account draws checks, drafts, or
negotiable orders of withdrawal against the Deposit Liabilities
which are presented or delivered to Sellers not later than ninety
(90) days after the Closing Date, Sellers shall use their
commercially reasonable efforts to batch all such checks, drafts,
negotiable orders of withdrawal, or other withdrawal order forms
and to deliver the same to Purchaser at Purchaser's sole expense.
Purchaser acknowledges that any delay, failure, or inability on
its part to comply with the obligations imposed upon it as a
depository institution under applicable federal or state law,
with regard to such checks, drafts, negotiable orders of
withdrawal or other withdrawal orders shall not result in any
liability or obligation of Sellers and shall not affect any of
the rights of Sellers under this Agreement. Sellers shall not be
deemed to have made any representations or warranties to
Purchaser with respect to any such checks, drafts, negotiable
orders of withdrawal or other withdrawal orders and any such
representations or warranties implied by law are hereby
disclaimed and are the responsibility of Purchaser, except that
Sellers shall be chargeable with the warranties and
representations implied by law with respect to any such check,
draft, negotiable orders of withdrawal order, or other withdrawal
order, which is paid by Sellers over the counter.
(b) Purchaser hereby acknowledges that if, after the
Closing Date, any Customer who has a Deposit Liability account,
instead of accepting the obligation of Purchaser to pay the
Deposit Liabilities (including Accrued Interest thereon) shall
demand payment from Sellers for all or any part of any such
Deposit Liabilities (including Accrued Interest thereon), Sellers
shall not be liable or responsible for making such payment.
(c) It is Sellers' intent that all Deposit Liability
transactions will be referred to Purchaser; provided however
that, if, after the Closing Date, Sellers honor and pay any
Deposit Liabilities which are presented to Sellers for payment,
pay any check, draft, negotiable order of withdrawal or other
withdrawal order, Purchaser shall upon demand by Sellers
reimburse Sellers for such payment. Any payment made under this
Section 12.1 shall be made within three (3) Business Days after
demand by Sellers, by wire transfer of immediately available
funds to an account designated by Sellers. <PAGE 68>
Section 12.2. Delivery of Purchaser's Check Forms. Within
fifteen (15) Business Days following the Final Approval Date, but
not less than five (5) days prior to the Closing Date, Purchaser
shall, at its sole cost and expense, notify all Customers who
have a Deposit Liability account by letter, in a form reasonably
acceptable to Sellers, of Purchaser's assumption of the Deposit
Liabilities (other than Excluded Deposits) (which shall include a
notification to those Deposit Liability account Customers whose
accounts are then covered by any type of overdraft protection
offered by Sellers, including but not limited to Advance Lines,
that from and after the Closing Date all such overdraft
protection from Sellers shall terminate) and furnish each such
Customer with checks, deposit tickets, or other similar
instruments using the forms of Purchaser, which shall be
appropriately encoded with Purchaser's routing number and with
accurate account numbers, and with instructions to the customer
to utilize such checks, deposit tickets, or other similar
instruments on Purchaser's forms on and after the Closing Date
and thereafter to destroy any unused checks on Sellers' forms;
such notice and such delivery of checks by Purchaser shall be by
first class U.S. mail.
Section 12.3. Uncollected Checks Returned to Sellers. From
and after the Closing Date, Purchaser shall promptly pay to
Sellers an amount equivalent to the amount of any checks,
negotiable orders of withdrawal, drafts, or any other withdrawal
orders (net of the applicable deposit premium paid by Purchaser
with respect to the Deposit Liabilities represented by any such
instrument) credited as of the close of business on the Closing
Date to any Deposit Liability accounts which are returned
uncollected to Sellers after the Closing Date and which shall
include an amount equivalent to holds placed upon such Deposit
Liability accounts for Items cashed by Sellers (net of the
applicable deposit premium paid by Purchaser with respect to the
Deposit Liabilities represented by any such instrument), as of
the close of business on the Closing Date which Items are
subsequently dishonored; provided, however, that if Sellers shall
have failed to make or properly reflect in the information
provided to Purchaser any provisional credit or hold on any such
Deposit Liability accounts in respect of uncollected funds
represented by any such Item, Purchaser's obligations under this
Section 12.3 in respect of such Item shall be limited to the
amount of collected funds in such Deposit Liability accounts.
Section 12.4. Default on Loan Payments to Sellers. If the
balance due on any Loan has been reduced by Sellers as a result
of a payment by check or draft received prior to the close of
business on the Closing Date, which Item is returned to Sellers
after the Closing Date, the Loan Value of such Loan shall be
correspondingly increased and an amount in cash equal to such
increase shall be promptly paid by Purchaser to Sellers within
three (3) Business Days after demand by Sellers by wire transfer
of immediately available funds to an account designated by
Sellers. <PAGE 69>
Section 12.5. Notices to Obligors on Loans. (a) Purchaser
shall, following the Final Approval Date, but no later than
fifteen (15) days prior to the Closing Date, prepare and
transmit, at Purchaser's sole cost and expense, to each obligor
on each Loan, a notice in a form satisfying all legal
requirements and reasonably acceptable to Sellers to the effect
that the Loan will be transferred to Purchaser and directing that
payments be made after the Closing Date to Purchaser at any
address of Purchaser specified by Purchaser, with Purchaser's
name as payee on any checks or other instruments used to make
such payments, and, with respect to all such Loans on which
payment notices or coupon books have been issued, to issue new
notices or coupon books reflecting the name and address of
Purchaser as the person to whom and the place at which payments
are to be made. To the extent that Purchaser's notice pursuant
to the prior sentence shall be legally insufficient, Sellers
agree, at Purchaser's sole expense, to provide all Loan obligors
with all required notices of the assignment and transfer of the
Loans.
(b) To the extent that any of the Loans transferred from
Sellers to Purchaser involve a transfer of servicing as defined
and governed by the Real Estate Settlement Procedures Act (12
U.S.C. Section 2601 et seq.), Sellers and Purchaser will jointly
coordinate any appropriate required Customer notices.
Section 12.6. New Telephone Numbers. Purchaser shall, no
later than ten (10) days prior to the Closing Date, obtain new
telephone numbers for the Facilities in Purchaser's name;
provided that Sellers shall undertake reasonable operational
measures and such other actions as may reasonably be requested by
Purchaser to permit the existing telephone numbers to be utilized
by Purchaser following the Closing Date.
Section 12.7. New ATM/Debit Cards. Purchaser shall,
following the Final Approval Date, but no later than five (5)
days prior to the Closing Date, furnish ATM/Debit cards to
Customers who have Deposit Liability accounts to replace Sellers'
ATM/Debit cards. Purchaser shall, no later than five (5) days
prior to the Transfer Date, notify affected Customers to destroy
the Sellers' ATM/Debit cards as of the Transfer Date and shall
notify such Customers of Purchaser's withdrawal limits
immediately following the Closing by form of notice reasonably
acceptable to Sellers. Sellers shall undertake reasonable
operational measures and such other actions as may reasonably be
requested by Purchaser to provide existing personal
identification numbers of Customers in encrypted format to
Purchaser not later than five (5) Business Days prior to the
Closing Date.
Section 12.8. Installation of Equipment by Purchaser.
Subsequent to the Final Approval Date and prior to the Transfer
Date, Sellers shall cooperate with and permit Purchaser, at
Purchaser's option and sole cost and expense, to make provision
<PAGE 70> for the installation of teller equipment in the
Branches; provided, however, that Purchaser shall arrange for the
installation of such equipment at such times and in a manner that
does not significantly interfere with the normal business
activities and operation of the Branches and after obtaining the
consent of the landlord of any Branch Lease, if a landlord's
consent to such installation is required under the applicable
Branch Lease.
Section 12.9. Deactivation of ATMs and ATM/Debit Cards. On
the Transfer Date, Sellers shall deactivate all ATM/Debit cards
issued with respect to all Deposit Liability accounts and shall
electronically block access of those cards to the Deposit
Liability accounts, and shall deactivate the ATMs not later than
8:00 a.m. on the Transfer Date. Point of sale transactions shall
be settled between Purchaser and Sellers for a period of forty-
five (45) days after the Closing Date.
Section 12.10. Signage. During the seven (7) day period
immediately preceding the Transfer Date, Sellers shall cooperate
with any commercially reasonable request of Purchaser directed to
accomplishing the installation of signage of Purchaser's choosing
at the Facilities prior to the Closing Date; provided, however,
that all such installations shall be at the sole cost and expense
of Purchaser, that such installation shall be performed in such a
manner that does not significantly interfere with the normal
business activities and operations of the Facilities, that such
signage complies with the applicable Branch Lease and all
applicable zoning and permitting laws and regulations, that such
signage has, if necessary, received the prior approval of the
owner or landlord of the Real Property, and that all such
installed signage shall be covered in such a way as to be
unreadable at all times prior to the Closing. Immediately
following the Closing, Sellers shall, at their sole cost and
expense, cover all of its signage in such a way as to be
unreadable after the Closing and shall commence activities
directed to accomplishing the removal of all of Sellers' existing
signage at the Facilities and will diligently pursue such
activities in good faith so that such removal may be effected as
promptly as practicable following the Closing.
Section 12.11. Letters of Credit and Liquidity Support
Agreements.
(a) It is the intention of the parties that Purchaser
assume all risks and obligations arising or accruing after the
close of business on the Closing Date with respect to the Letters
of Credit and Liquidity Support Agreements. Accordingly,
Purchaser agrees to use its commercially reasonable efforts to
obtain prior to the Closing Date and, in any event, no later than
three (3) months following the Closing Date, (i) the consent of
the beneficiary (if necessary) to the assumption of (and the
resulting release of the issuing Seller from) the Letters of
Credit and/or to issue replacement letters of credit for those
<PAGE 71> Letters of Credit which are standby Letters of Credit,
and (ii) the consent of all necessary Persons (whether or not
parties thereto), including without limitation, all applicable
rating agencies, to the assumption of (and the resulting release
of the applicable Seller from) the Liquidity Support Agreements
and/or to enter into replacement liquidity support agreements
(and the resulting termination of the applicable Liquidity
Support Agreements).
(b) Until such time as there are no Letters of Credit
and/or Liquidity Support Agreements, Sellers hereby grant to
Purchaser, and Purchaser hereby agrees and commits to acquire, as
of the Closing Date, from Sellers a participation in the Letters
of Credit and Liquidity Support Agreements equal to one hundred
percent (100%) of the amount thereof.
(c) Sellers agree that, with respect to each request by a
beneficiary for a draw under or payment of a Letter of Credit, (a
"Request"), it will (i) promptly provide, by facsimile sent to
Purchaser, copies of documents submitted to support any Request;
(ii) wait 24 hours, or such shorter time period as may be
required under such Letter of Credit, after sending the facsimile
before acting on a Request; (iii) act in accordance with ISP98,
UCP 500 and/or UCC Article 5, as applicable, in deciding whether
or not to honor the Request unless directed in writing by
Purchaser to otherwise honor or dishonor a Request; (iv) provide
notice to Purchaser that the Request has been honored and the
amount of the Letter of Credit Disbursement that may become due
pursuant to Subsection 12.11(d), below; and (v) after honoring a
Request, send the documents submitted by the beneficiary in
support of a Request as directed by Purchaser.
(d) In the event Sellers notify Purchaser that a Letter of
Credit Disbursement has been made and that either (A) the
affected Customer has failed to immediately reimburse such Letter
of Credit Disbursement pursuant to its Reimbursement Agreement or
(B) the related Reimbursement Agreement does not require that the
affected Customer immediately reimburse Seller for such Letter of
Credit Disbursement, then, Purchaser agrees to pay to Sellers on
the day so notified by Sellers, an amount equal to the Letter of
Credit Disbursement; provided, however, if such notice was not
given by Sellers to Purchaser prior to 2 p.m. on such day, then
such amount shall be paid by Purchaser not later than 10:00 a.m.
on the next Business Day. Whenever any amounts are due and
payable by Purchaser pursuant to this Subsection 12.11(d),
Sellers agree to submit a draw request to Purchaser in accordance
with the terms of the Purchaser's Letter of Credit stating the
amount due hereunder. Purchaser agrees to pay Sellers any
amounts due this Subsection 12.11(d) by wire transfer of
immediately available funds to an account previously designated
by Sellers.
(e) Sellers agree that, with respect to each request for an
extension of credit or other financial accommodation under a
<PAGE 72> Liquidity Support Agreement (a "Support Request"), they
will (i) promptly provide by facsimile sent to Purchaser, copies
of all documents relating to any such Support Request; (ii) wait
24 hours, or such shorter time period as may be required under
such Liquidity Support Agreement, before acting on a Support
Request; (iii) act in accordance with the terms and provisions of
the applicable Liquidity Support Agreement; and (iv) provide
notice to Purchaser that Sellers have made a Liquidity Support
Disbursement and the amount of the Liquidity Support Disbursement
that may become due pursuant to subsection (f) below.
(f) In the event Sellers notify Purchaser that a Liquidity
Support Disbursement has been made and that either (A) the
affected Customer has failed to immediately repay such Liquidity
Support Disbursement pursuant to its Liquidity Support Agreement
or (B) the related Liquidity Support Agreement does not require
that the affected Customer immediately repay Sellers for such
Liquidity Support Disbursement, then Purchaser agrees to pay to
Sellers on the day so notified by Sellers an amount equal to the
amount of such Liquidity Support Disbursement; provided, however,
if such notice was not given to Purchaser prior to 2:00 p.m. on
such day, then such amount shall be paid by Purchaser not later
than 10:00 a.m. on the next Business Day. Whenever any amounts
are due and payable by Purchaser pursuant to this Subsection
12.11(f), Sellers agree to submit a draw request to Purchaser in
accordance with the terms of the Purchaser's Letter of Credit
stating the amount due hereunder. Purchaser agrees to pay
Sellers any amounts due under this Subsection 12.11(f) by wire
transfer of immediately available funds to an account previously
designated by Sellers.
(g) Purchaser also agrees to pay Sellers (i) interest on
any and all amounts unpaid by Purchaser when due under
Subsections 12.11(d) and (f), above, from the date such amounts
become due until payment in full, such interest being payable on
demand and accruing at a fluctuating interest rate per annum
(computed on the basis of a year of 365 days for the actual
number of days elapsed) which shall at all times be equal to the
Federal Funds Rate during each day until such amounts are paid in
full (but such fluctuating interest rate shall in no event be
higher than the maximum rate permitted by then applicable law)
and (ii) any and all costs and expenses (including, without
limitation, reasonable attorneys' fees) reasonably incurred by
Sellers in exercising or enforcing any rights or performing any
obligations under Sections 12.11(d), (f) and (g).
(h) So long as Purchaser is not in default of its
obligations under this Section 12.11, Sellers shall promptly
remit to Purchaser any amounts subsequently received by Sellers
from Customers in respect of all Letter of Credit Disbursements
and Liquidity Support Disbursements.
(i) Sellers further agree that they will not, without the
prior written consent of Purchaser, amend or modify the terms of
<PAGE 73> any Letter of Credit, Reimbursement Agreement or
Liquidity Support Agreement. Purchaser and Sellers acknowledge
and agree that with respect to all Letters of Credit the expiry
date of which is, by the terms thereof, automatically extended,
(x) Sellers shall give notice in accordance with the terms of
such Letters of Credit that Sellers will not extend such expiry
date beyond the current expiry date unless Purchaser and Sellers
mutually agree to permit the extension of such Letter of Credit
and (y) Sellers shall not otherwise extend a Letter of Credit
without Purchaser's consent. Purchaser and Sellers further
acknowledge and agree that with respect to all Liquidity Support
Agreements the expiry date of which is, by the terms thereof,
automatically extended, (x) Sellers shall give notice in
accordance with the terms of such Liquidity Support Agreements,
(y) Sellers will not extend such expiry date beyond the current
expiry date unless Purchaser and Sellers mutually agree to permit
the extension of such Liquidity Support Agreements and
(z) Sellers shall not otherwise extend a Liquidity Support
Agreement without Purchaser's consent.
(j) After the Closing, Purchaser shall be entitled to any
and all fees paid under the terms of any Letter of Credit or
Liquidity Support Agreement, including, on a prorated basis, any
such fees paid prior to the Closing, if such fees are paid in
connection with any Letter of Credit, (including any replacement
issued by Purchaser therefor) or any Liquidity Support Agreement
(including any replacement issued by Purchaser therefor) which is
outstanding as of the close of business on the Closing Date, but
only to the extent Sellers shall not be obligated to refund any
portion of such fees upon termination of any replaced Letter of
Credit. Purchaser shall pay to Fleet a fee with respect to the
Outstanding Credit Exposure computed (on the basis of a year of
365 days for the actual number of days elapsed) at a rate per
annum determined in good faith to be fair and reasonable by the
parties hereto, taking into consideration the long-term debt
rating of Purchaser and Sovereign; provided that, for purposes of
this Section 12.11, any Letter of Credit or Liquidity Support
Agreement with respect to which Purchaser has not received all
fees paid thereunder for periods following the Closing Date shall
be excluded from Outstanding Credit Exposure. Such fee shall be
payable quarterly in arrears on each June 30, September 30,
December 31 and March 31, commencing on the quarter end
immediately following the Closing Date, and shall be calculated
on the average daily Outstanding Credit Exposure during each such
period. The initial fee shall be appropriately pro-rated.
Section 12.12. Actions With Respect to IRA, Keogh Plan and
Employee Pension Plan Deposit Liabilities.
(a) On or before the Closing Date, Sellers shall (i) resign
as of the close of business on the Closing Date as the trustee or
custodian, as applicable, of each IRA, Keogh Plan and Employee
Pension Plan of which it is the trustee or custodian, (ii) to the
extent permitted by the documentation governing each such IRA,
<PAGE 74> Keogh Plan or Employee Pension Plan and applicable law,
appoint Purchaser as successor trustee or custodian, as
applicable, of each such IRA, Keogh Plan or Employee Pension
Plan, and Purchaser hereby accepts each such trusteeship or
custodianship under the terms and conditions of Purchaser's plan
documents for its IRA, Keogh Plans and Employee Pension Plan, and
assumes all fiduciary and custodial obligations with respect
thereto as of the close of business on the Closing Date, and
(iii) deliver to the IRA grantor or Keogh Plan or Employee
Pension Plan named fiduciary of each such IRA, Employee Pension
Plan or Keogh Plan such notice of the foregoing as is required by
the documentation governing each such IRA, Employee Pension Plan
or Keogh Plan or applicable law. Purchaser shall be solely
responsible for delivering its IRA, Employee Pension Plan and
Keogh Plan documents to the applicable IRA grantor and Keogh Plan
or Employee Pension Plan named fiduciary, including but not
limited to a beneficiary designation form to be completed by the
applicable IRA grantor or Keogh Plan or Employee Pension Plan
participant; provided, however, that in the event that an IRA
grantor or Keogh Plan or Employee Pension Plan participant dies
before such time as Purchaser receives a properly completed
beneficiary designation form, Sellers shall make available to
Purchaser such information as may exist in Sellers' files
regarding any beneficiary designation it may have regarding such
decedent. If, pursuant to the terms of the documentation
governing any such IRA or Keogh Plan or Employee Pension Plan or
applicable law, (x) Sellers are not permitted to appoint
Purchaser as successor trustee or custodian, or the IRA grantor
or Keogh Plan or Employee Pension Plan named fiduciary objects in
writing to such designation, or is entitled to, and does, in
fact, name a successor trustee or custodian other than Purchaser,
or (y) such IRA or Keogh Plan or Employee Pension Plan includes
assets which are not Deposit Liabilities and are not being
transferred to Purchaser, or the assumption of such deposit
liabilities included in such IRA or Keogh Plan or Employee
Pension Plan would result in a loss of qualification of such IRA
or Keogh Plan or Employee Pension Plan under the Code or
applicable IRS regulations, all deposit liabilities of Sellers
held under such IRA or Keogh Plan or Employee Pension Plan shall
be excluded from the Deposit Liabilities (such excluded deposits
liabilities being herein called the "Excluded IRA/Keogh/Employee
Pension Plan Deposits"). Upon appointment as a successor
custodian for such IRA Deposit Liabilities or as a successor
trustee for such IRAs or Keogh Plans or Employee Pension Plans,
Purchaser shall perform the services and carry out the duties and
obligations required of it under the applicable plans, the Code
and applicable Federal and state laws and regulations.
(b) To the extent that the Deposit Liabilities include
certain IRAs, Keogh Plans and Employee Pension Plans that are
required to make certain periodic distributions to the IRA
account owner or Keogh Plan or Employee Pension Plan participant
(or beneficiary) either at the account owner's or participant's
request or because the account owner or participant has attained
<PAGE 75> age 70-1/2, effective as of the Transfer Date,
Purchaser agrees to continue to make such periodic distributions
in accordance with the distribution instructions forwarded by
Sellers to Purchaser. Purchaser hereby assumes the obligation to
pay each minimum distribution required by federal law by December
31 of the calendar year in which the Closing occurs and, in
consideration thereof, Sellers agree not to withhold the amount
of such distributions from the aggregate amount of the Deposit
Liabilities.
Section 12.13. Cash Management Agreements. Within thirty
(30) days prior to the Closing Date, Sellers shall give Customers
who have cash management agreements with Sellers all notices
required under the terms of such Sellers' cash management
agreements to terminate such agreements with the Customers as of
the close of business on the Closing Date, in order to permit
Purchaser to enter into its own cash management agreements with
such Customers effective as of the Closing Date.
Section 12.14. Bulk Transfer Laws. Sellers and Purchaser
hereby waive compliance with any applicable bulk transfer laws.
If by reason of any applicable bulk sales law any claims are
asserted by creditors of Sellers, such claims shall be the
responsibility of Purchaser in the case of claims arising under
any of the Purchased Assets or Assumed Liabilities.
Section 12.15. CRA Commitments. (a) From the date hereof
Purchaser agrees that it shall use its best efforts to obtain the
consent of all Persons necessary to transfer to Purchaser, and
release Sellers' from Sellers' obligations with respect to, the
CRA Commitments, effective as of the Closing Date.
(b) In the event that Purchaser is unable to obtain the
consent of the CRA Groups to the transfer of the CRA Commitments
in accordance with Section 12.15(a) hereof, Purchaser agrees that
it will use its best efforts to enter into new CRA commitments
with the CRA Groups, effective as of the Closing Date and on
terms no less favorable than those contained in the CRA
Commitments.
Section 12.16. Ancillary Agreements. At the Closing,
Purchaser and one or more of the Sellers will enter into the
Lease Agreements, the License Agreement, the Servicing Agreement
and the Purchaser's Letter of Credit, the Participation
Agreement, and the Collateral Agency Agreement (if such agreement
is required pursuant to the terms hereof.)
Section 12.17. Certain Expenses. Upon receipt of
supporting evidence therefor which shall be reasonably
satisfactory to Sellers, Sellers shall reimburse Purchaser for up
to three million dollars ($3,000,000) of the aggregate cost of
(a) printing and mailing of any notices by Purchaser sent
pursuant to and in accordance with Sections 10.3, 12.2, 12.5,
12.7, 12.12 and 12.13 and (b) increased rent under the Branch
<PAGE 76> Leases or ATM Leases and payments, fees or charges
payable to Landlords in connection with obtaining the Landlord
Consents.
ARTICLE XIII
CONDITIONS TO CLOSING
Section 13.1. Conditions to Obligations of Sellers and
Fleet. The obligations of Sellers and Fleet under this Agreement
are subject to the satisfaction (or, if applicable, waiver in the
sole discretion of Sellers, except as to the condition described
in 13.1(c)) on or before the Closing Date, of each of the
following conditions:
(a) All of the covenants and other agreements required by
this Agreement to be complied with and performed by Purchaser
and/or Sovereign on or before the Closing Date shall have been
duly complied with and performed in all material respects;
(b) The representations and warranties made by Purchaser
and/or Sovereign herein or in any certificate or other document
delivered pursuant to the provisions hereof or in connection with
the transactions contemplated hereby shall be true and correct in
all material respects, on and as of the Closing Date, with the
same force and effect as though such representations and
warranties had been made on the Closing Date; provided, however,
that the representations and warranties of Purchaser and/or
Sovereign herein or in any certificate or other document
delivered pursuant to the provisions hereof shall be deemed to be
true and correct in all material respects on and as of the
Closing Date, with the same force and effect as though made on
the Closing Date, unless the failure to be so true and correct
would have a material adverse effect on Purchaser's ability to
consummate the transactions contemplated by the Agreement;
(c) All Seller Regulatory Approvals shall have been
obtained and shall be Final;
(d) No court or governmental or regulatory authority of
competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order (whether temporary, preliminary
or permanent) which is in effect to enjoin, or which prohibits,
consummation of the transactions contemplated hereby;
(e) Sellers shall have received the items to be delivered
by Purchaser pursuant to Section 5.3.; and
(f) The transactions contemplated by the Merger Agreement
shall have been consummated.
Section 13.2. Conditions to Obligations of Purchaser and
Sovereign. The obligations of Purchaser and Sovereign under this
<PAGE 77> Agreement are subject to the satisfaction (or, if
applicable, waiver in the sole discretion of Purchaser, except as
to the condition described in Section 13.2(c)) on or before the
Closing Date, of each of the following conditions;
(a) All of the covenants and agreements required by this
Agreement to be complied with and performed by Sellers and/or
Fleet on or before the Closing Date shall have been duly complied
with and performed in all material respects; provided, however,
that Fleet and Sellers shall be deemed to have duly complied with
and performed such covenants and agreements in all material
respects unless the failure to so perform or comply would have a
Material Adverse Effect.
(b) The representations and warranties made by Sellers
and/or Fleet herein or in any certificate or other document
delivered pursuant to the provisions hereof or in connection with
the transactions contemplated hereby shall be true and correct in
all material respects, on and as of the Closing Date, with the
same force and effect as though such representations and
warranties had been made on the Closing Date; provided, however,
that the representations and warranties made by Sellers and/or
Fleet herein or in any certificate or other document delivered
pursuant to the provisions hereof shall be deemed to be true and
correct in all material respects on and as of the Closing Date,
with the same force and effect as though made on the Closing
Date, unless the failure to be so true and correct would have a
Material Adverse Effect;
(c) The Purchaser Regulatory Approvals shall have been
obtained and shall be Final;
(d) No court or governmental or regulatory authority of
competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order (whether temporary, preliminary
or permanent) which is in effect to enjoin, or which prohibits,
consummation of the transactions contemplated hereby; and
(e) Purchaser shall have received the items to be delivered
by Sellers pursuant to Section 5.2.
ARTICLE XIV
CONVERSION AND INTERIM SERVICING ARRANGEMENTS
Section 14.1. Conversion. Sellers and Purchaser shall
convert account information as to the Deposit Liabilities and the
Loans in accordance with the provisions of Schedule 14.1 hereof.
Section 14.2. Interim Servicing Agreement. Sellers and
Purchaser will negotiate in good faith the terms of an interim
servicing agreement, if required, in accordance with the
provisions of Schedule 14.1 hereof and on the Closing Date,
<PAGE 78> Sellers (or an Affiliate thereof) and Purchaser shall
execute and deliver any such interim servicing agreement.
ARTICLE XV
INDEMNITY
Section 15.1. Fleet's Indemnity. Fleet shall indemnify,
hold harmless and defend Purchaser, its Affiliates, and their
respective successors, permitted assigns, directors,
shareholders, officers, agents and employees from and against all
claims, losses, liabilities, demands and obligations of any
nature whatsoever (including reasonable legal fees and expenses)
(collectively, "Damages") which Purchaser or any of its
Affiliates or their respective successors, permitted assigns,
directors, shareholders, officers, agents or employees shall
receive, suffer or incur, arising out of or resulting from:
(a) Any liability of Sellers which is not an Assumed
Liability;
(b) The breach of any representation or warranty made by a
Seller or Fleet in this Agreement;
(c) The breach of any covenant or other agreement made by a
Seller or Fleet in this Agreement; or
(d) Except for Assumed Liabilities, all liabilities under
all pension and welfare benefit plans (as defined in Sections
3(1) and (2) of ERISA), or any supplemental unemployment benefit,
deferred compensation, or other employee benefit plan of Sellers
or their Affiliates with respect to any and all periods prior to
and subsequent to the Closing Date, including without limitation,
all liabilities under ERISA, any liabilities for any accumulated
funding deficiency as such term is defined in Section 302 of
ERISA and Section 412 of the Code and for any liability to the
Pension Benefit Guaranty Corporation, the IRS, participants,
beneficiaries, employees, or any other public or private person,
incurred with respect to or attributable to any plan of Sellers.
Section 15.2. Sovereign's Indemnity. Sovereign shall
indemnify, hold harmless and defend Sellers, their Affiliates and
their respective successors, permitted assigns, directors,
shareholders, officers, agents and employees from and against all
Damages which Sellers or any of their Affiliates or their
respective successors, permitted assigns, directors,
shareholders, officers, agents or employees shall receive, suffer
or incur, arising out of or resulting from:
(a) Any Assumed Liability;
(b) Any actions taken or omitted to be taken by Purchaser
from and after the date hereof with respect to the Business
Employees, the Additional Employees or the Business Related
<PAGE 79> Employees, and any suits or proceedings commenced in
connection therewith;
(c) Any actions taken or omitted to be taken by Purchaser
from or after the Closing Date and relating to the Purchased
Assets, Assumed Liabilities, or the Transferred Employees, and
any suits or proceedings commenced in connection therewith (other
than proceedings to prevent or limit the consummation of the
transactions contemplated by this Agreement);
(d) The breach of any representation or warranty made by
Purchaser or Sovereign in this Agreement;
(e) The breach of any covenant or other agreement made by
Purchaser or Sovereign in this Agreement; and
(f) Any claims arising under any of the Purchased Assets or
Assumed Liabilities made by creditors of Sellers under any
applicable bulk sales laws.
Section 15.3. Additional Indemnification and Release. In
addition to the provisions of Section 15.2 hereof, in
consideration of the assistance of certain employees of Sellers
designated by mutual agreement of the parties (the "Designated
Employees") in connection with the Capital Transactions and any
other transaction of Purchaser, Sovereign or both to raise
capital in connection with the transactions contemplated hereby
(the "Other Capital Transactions"), (a) Purchaser, on behalf of
itself, its Affiliates, predecessors, successors, directors,
officers, agents, employees, shareholders and assigns
(collectively "Releasing Parties") does hereby release and
forever discharge Fleet, Sellers, Designated Employees, their
Affiliates, predecessors, successors, directors, officers,
agents, employees, shareholders and assigns (collectively
"Released Parties") from any and all Damages arising out of or
relating to the activities, participation, assistance or
involvement of Designated Employees in connection with the
Capital Transactions or the Other Capital Transactions; except
for Damages which arise out of materially false or misleading
factual information provided in writing by the Released Parties
to the Releasing Parties for the express purpose of being used in
connection with the Capital Transactions or the Other Capital
Transactions.
(b) Releasing Parties hereby agree, jointly and severally,
to indemnify, defend and hold the Released Parties harmless from
and against any and all Damages arising out of or relating to the
activities, participation, assistance or involvement of
Designated Employees in connection with the Capital Transactions
and the Other Capital Transactions; except for Damages which
arise out of materially false or misleading factual information
provided in writing by the Released Parties to the Releasing
Parties for the express purpose of being used in connection with
the Capital Transactions or the Other Capital Transactions.
<PAGE 80>
Section 15.4. Indemnification Procedure. If a party
entitled to indemnification hereunder ("Indemnified Party") is
aware that a claim, demand or other circumstance exists that has
given or may reasonably be expected to give rise to a right of
indemnification under this Article XV (whether or not the amount
of the claim is then quantifiable), such Indemnified Party shall
promptly give written notice thereof to the other party
("Indemnitor"), and the Indemnified Party will thereafter keep
the Indemnitor reasonably informed with respect thereto, provided
that failure of the Indemnified Party to give the Indemnitor
prompt notice as provided herein shall not relieve the Indemnitor
of its obligations hereunder except to the extent, if any, that
the Indemnitor's rights shall have been prejudiced or the
Indemnitor's liability shall have been materially increased
thereby. In case any such action, suit or proceeding is brought
against an Indemnified Party, the Indemnitor shall be entitled to
participate in (and, in its discretion, to assume) the defense
thereof with counsel reasonably satisfactory to the Indemnified
Party, provided, however, that the Indemnified Party shall be
entitled to participate in any such action, suit or proceeding
with counsel of its own choice at the expense of the Indemnitor
if, in the good faith judgment of the Indemnified Party's
counsel, representation by the Indemnitor's counsel may present a
conflict of interest or there may be defenses available to the
Indemnified Party which are different from or in addition to
those available to the Indemnitor. The Indemnitor will not
settle any claim, action, suit or proceeding which would give
rise to the Indemnitor's liability under its indemnity unless
such settlement includes as an unconditional term thereof the
giving by the claimant or plaintiff of a release of the
Indemnified Party, in form and substance reasonably satisfactory
to the Indemnified Party and its counsel, from all liability with
respect to such claim, action, suit or proceeding. If the
Indemnitor assumes the defense of any claim, action, suit or
proceeding as provided in this Section 15.4, the Indemnified
Party shall be permitted to join in the defense thereof with
counsel of its own selection and at its own expense. If the
Indemnitor shall not assume the defense of any claim, action,
suit or proceeding, the Indemnified Party may defend against such
claim, action, suit or proceeding in such manner as it may deem
appropriate, provided that an Indemnified Party shall not settle
any claim, action, suit or proceeding which would give rise to
the Indemnitor's liability under its indemnity without the prior
written consent of the Indemnitor, which consent shall not be
unreasonably withheld.
Section 15.5. Nonsolicitation. Notwithstanding anything to
the contrary contained herein, if a Seller shall breach the
covenants set forth in Section 8.4, Purchaser will notify such
Seller in writing, which notice shall set forth in reasonable
detail the basis upon which Purchaser believes that such Seller
<PAGE 81> has violated such covenants. Seller shall promptly
investigate and shall within three (3) Business Days of receipt
of Purchaser's notice respond to Purchaser in writing, which
response will state whether or not such Seller agrees that such
covenants have been violated, and if so, such Seller shall
immediately cease and desist from committing any further
violation. If such Seller so ceases and desists, Purchaser shall
have no further remedy against such Seller. If such Seller
either (i) fails to respond to Purchaser's notice within three
(3) Business Days after receipt thereof or (ii) concludes that it
has not violated such covenants (and if Purchaser disagrees with
such Seller's conclusion), or if Seller agrees that it has
violated such covenants but does not immediately cease and
desist, then in any such event, Purchaser shall be free to pursue
any remedy, at law or in equity, which it may have against such
Seller or any other Person.
Section 15.6. Limitations on Liability.
(a) Notwithstanding anything to the contrary contained in this
Article XV, no party shall be entitled to indemnification
pursuant to Section 15.1(b) or 15.2(d) until its aggregate
Damages shall be in excess of fifteen million dollars
($15,000,000), at which time such party shall be entitled to
indemnification for the full amount of its Damages to the extent
such Damages exceed such amount. In no event shall the Damages
payable by the Sellers in the aggregate exceed one hundred
million dollars ($100,000,000) and in no event shall any party be
entitled to any incidental, consequential, special, exemplary or
punitive Damages.
(b) The provisions of Section 15.6(a) shall not apply to
the breach of the representation and warranty set forth in
Section 6.17.
Section 15.7. General.
(a) Each Indemnified Party shall be obligated in connection
with any claim for indemnification under this Article XV to use
all commercially reasonable efforts to obtain any insurance
proceeds available to such Indemnified Party with regard to the
applicable claims. The amount which any Indemnitor is or may be
required to pay to any Indemnified Party pursuant to this Article
XV shall be reduced (retroactively, if necessary) by any
insurance proceeds or other amounts actually recovered (net of
any direct relevant collections costs) by or on behalf of such
Indemnified Party in reduction of the related Damages. If an
Indemnified Party shall have received the payment required by
this Agreement from the Indemnitor in respect of Damages and
shall subsequently receive insurance proceeds or other amounts in
respect of such Damages, then such Indemnified Party shall
promptly repay to the Indemnitor a sum equal to the amount of
such insurance proceeds or other amounts actually received (net
of any direct relevant collection costs). The amount of any
Damages arising from a breach by a Seller of the representation
<PAGE 82> set forth Section 6.7(a) or 6.7(b) due to the existence
of a Lien which is not in respect of borrowed money and does not
materially impair the continued use and operation of any of the
Purchased Assets shall be limited to the lesser of (x) the cost
of satisfying or removing such Lien and (y) the actual impairment
to the Purchased Asset caused by the existence of such Lien.
(b) In addition to the requirements of paragraph (a) above,
each Indemnified Party shall be obligated in connection with any
claim for indemnification under this Article XV to use
commercially reasonable efforts to mitigate Damages upon and
after becoming aware of any event which could reasonably be
expected to give rise to such Damages.
(c) Subject to the rights of existing insurers of an
Indemnified Party, an Indemnitor shall be subrogated to any right
of action which the Indemnified Party may have against any other
Person with respect to any matter giving rise to a claim for
indemnification from such Indemnitor hereunder.
(d) Except for the parties' rights to specific performance
and injunctive relief as described in Section 17.14, the
indemnification provided in this Article XV shall be the
exclusive post-Closing Date remedy available to any Indemnified
Party with respect to any breach of any representation, warranty,
covenant or agreement made by Purchaser or Sellers in this
Agreement. The parties hereto further acknowledge that no
indemnity shall be payable for any Damages with respect to any
breach of representations or warranties in this Agreement if
prior to Closing such party receives a written notice from the
other party (i) disclosing such breach or breaches and (ii)
informing such party that such breach or breaches constitute a
Material Adverse Effect.
(e) All indemnification payments under this Article XV
shall be deemed adjustments to the Purchase Price as defined in
Section 3.1 of Article III.
Section 15.8. Survival. All representations, warranties
and covenants contained in or made pursuant to this Agreement
shall survive the execution and delivery of the Agreement and
shall continue in full force and effect for a period of eighteen
(18) months after the Closing Date and thereafter shall
terminate, except as to any claim for which written notice shall
have been given prior to such date; and provided, further, that
all covenants or agreements which by their terms are to be
performed more than eighteen (18) months after the Closing Date
shall survive until fully discharged.
ARTICLE XVI
POST-CLOSING MATTERS
<PAGE 83>
Section 16.1. Further Assurances. From and after the
Closing Date:
(a) Except as specifically provided otherwise herein,
Sellers shall assist Purchaser in the orderly transition of the
operations of the Business and shall give such further assurances
and execute, acknowledge and deliver all such instruments as may
be necessary and appropriate to effectively vest in Purchaser
title in the Purchased Assets in the manner contemplated hereby;
provided that Sellers need not incur any out-of-pocket costs or
expenses in connection with its agreements in this Section 16.1
unless such costs or expenses are reimbursed by Purchaser.
(b) Except as specifically provided otherwise herein,
Purchaser shall give such further assurances to Sellers and shall
execute, acknowledge and deliver all such acknowledgments and
other instruments and take such further action as may be
necessary and appropriate to effectively relieve and discharge
Sellers from any obligations remaining with respect to the
Deposit Liabilities or other Assumed Liabilities; provided that
Purchaser need not incur any out-of-pocket costs or expenses in
connection with its agreements in this Section 16.1 unless such
costs or expenses are reimbursed by Sellers.
Section 16.2. Access to and Retention of Books and Records.
For a period of six (6) years from the Closing Date, each party
shall have commercially reasonable access to any books and
records of the other party relating to the Purchased Assets and
the Assumed Liabilities, and the requesting party, at its own
expense, may make copies and extracts when such copies and
extracts are required by regulatory authorities, for litigation
purposes, or for tax or accounting purposes; provided that in the
event that as of the end of such period, any tax year of the
Sellers is under examination by any taxing authority, such books
and records shall be maintained by Purchaser until a final
determination of the tax liability of Sellers for that year has
been made. If such copies or extracts require use of a party's
equipment or facilities, the user shall reimburse the other party
for all costs incurred, including without limitation employee
expenses.
Section 16.3. Deposit Histories. In case of any dispute
with or inquiry by any Customer whose Deposit Liability account
is included in the Assumed Liabilities, which dispute or inquiry
relates to the servicing of such account by Sellers prior to the
date for which a deposit history has been provided to Purchaser,
Sellers will provide Purchaser, where available and to the extent
reasonably requested by Purchaser and not already provided to
Purchaser, information regarding the Deposit Liability account
and copies of pertinent documents or instruments with respect to
such dispute or inquiry so as to permit Purchaser to respond to
such Customer within a period of time and in a manner which would
comply with standard banking practices and customs and all
applicable laws. <PAGE 84>
ARTICLE XVII
MISCELLANEOUS
Section 17.1. Expenses.
(a) Except as otherwise provided herein, Sellers and
Purchaser shall each pay all of their own out-of-pocket expenses
in connection with this Agreement, including investment banking,
appraisal, accounting, consulting, professional and legal fees,
if any, whether or not the transactions contemplated by this
Agreement are consummated.
(b) Purchaser shall pay all (i) recording, filing or other
fees, cost and expenses (including without limitation fees, costs
and expenses for (w) preparation of title commitments, abstracts
or searches, surveys, inspections, environmental audits or other
investigations, (x) filing of any forms (including without
limitation tax forms) with governmental authorities in connection
with the transfer of the Real Property or Fixed Assets, (y)
recording instruments or documents evidencing any transfers of
interests in real property), and (z) any real property transfer
stamps or taxes imposed on any transfers or interest in Real
Property and any fees or charges payable to landlords in
connection with Landlord Consents or Lease Agreements; provided
that Sellers shall pay all such fees, costs or expenses with
respect to matters described in (x), (y) and (z) which Sellers
are required by law to pay and which are customarily paid by
sellers of property in the applicable jurisdictions; and (ii)
costs and expenses relating to the preparation, execution and
recording of assignments of mortgages, financing statements,
notes, security agreements or other instruments applicable to or
arising in connection with the transfer, assignment or assumption
of the Purchased Assets and Assumed Liabilities including, but
not limited to, fees payable to the SBA in connection with the
transfer to Purchaser of the SBA Loans.
Section 17.2. Trade Names and Trademarks. (a) Purchaser
acknowledges and agrees that notwithstanding anything to the
contrary contained herein, it has, and following the Closing
shall have, no interest in or to the names "Fleet", "BankBoston",
"Fleet Boston" or any trade name, trademark or service mark, logo
or corporate name of any Seller, Fleet, BankBoston or any of
their respective Affiliates, including, without limitation, the
tradenames and trademarks listed on Schedule 17.2 hereto. After
the Closing Date, Sovereign shall not permit Purchaser or any of
its Affiliates to use any of the trade names, trademarks, service
marks, logos or corporate names of any Seller, Fleet, BankBoston
or any of their respective Affiliates, including, without
limitation, the tradenames and trademarks listed on Schedule 17.2
hereto.
(b) From and after the Closing, Purchaser agrees not to use
any forms or other documents bearing any Seller's name or logo,
<PAGE 85> or the name or logo of any Affiliate of Sellers,
without the prior written consent of Sellers, which consent may
be denied or given in Sellers' sole discretion. If such consent
is given, Purchaser hereby agrees that all forms or other
documents to which such consent relates will be stamped or
otherwise marked in such a way that identifies Purchaser as the
party using the form or document.
Section 17.3. Termination; Extension of Closing Date. This
Agreement shall terminate and shall be of no further force or
effect as between the parties hereto, except as provided on
Schedule 9.8(b) and except for liability for actual direct
damages due to a willful breach of any material representation,
warranty, covenant or agreement occurring or arising prior to the
date of termination, upon the occurrence of any of the following:
(a) Upon mutual agreement of the parties;
(b) Upon written notice by either Purchaser or Sellers to
the other parties immediately upon receipt by Purchaser or
Sellers of notice from any governmental authority that Purchaser
or Sellers, as the case may be, has been denied any Regulatory
Approval by Final order;
(c) Upon written notice by either Purchaser or Sellers to
the other parties, if the Closing has not occurred within one (1)
year following the closing of the transactions contemplated by
the Merger Agreement;
(d) By either the Purchaser or Sellers (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the
representations, warranties, covenants or other agreements set
forth in this Agreement on the part of any other party, which
breach is not cured within thirty (30) days following written
notice to the party committing such breach, or which breach, by
its nature, cannot be cured prior to the Closing; provided
however, that Purchaser shall not have the right to terminate
this Agreement pursuant to this Section 17.3(d) unless the breach
of representation, warranty, covenant, or other agreement
together with all other such breaches would have a Material
Adverse Effect;
(e) By Sellers upon written notice if Purchaser or
Sovereign (i) shall have breached the representations and
warranties contained in Section 7.7 hereof, (ii) shall not have
satisfied their obligations under Section 9.8 hereof or under
Schedule 9.8(b) hereto, (iii) on or before September 30, 1999
shall not have filed all necessary applications of Purchaser or
Sovereign to obtain the federal Purchaser Regulatory Approvals as
described on Schedule 7.5(a) hereto, (iv) on or before October
15, 1999 shall not have filed all necessary applications of
Purchaser or Sovereign to obtain the state Purchaser Regulatory
<PAGE 86> Approvals as described on Schedule 7.5(a) hereto, or
(v) on or before January 15, 2000 shall not have obtained the
Purchaser Regulatory Approvals;
(f) By Sellers at any time by notice to Purchaser (i) if
any funds held in escrow pursuant to the terms of the Commitment
Letter are released from escrow prior to April 28, 2000 (other
than in connection with the Closing) and as a result of such
release Fleet in its sole and absolute discretion shall determine
that Purchaser shall not have obtained sufficient capital to
support the acquisition of the Business and to perform
Purchaser's and Sovereign's other obligations hereunder or (ii)
(A) if the Closing does not occur prior to April 28, 2000
(provided that Sellers are not then in material breach of any
representation, warranty, covenant or agreement contained herein)
because there shall have been a material breach of any of the
representations, warranties, covenants or other agreements set
forth in this Agreement of Purchaser or Sovereign and (B) any
funds held in escrow pursuant to the terms of the Commitment
Letter are released from escrow and as a result of such release
Fleet in its sole and absolute discretion shall determine that
Purchaser shall not have obtained sufficient capital to support
the acquisition of the Business and to perform Purchaser's and
Sovereign's other obligations hereunder;
(g) By Sellers at any time by notice to Purchaser if the
Commitment Letter is terminated, unless Purchaser shall have
sufficient capital for purposes of supporting the acquisition of
the Business; provided that Fleet in its sole and absolute
discretion may determine that Purchaser and Sovereign shall not
as of the termination of the Commitment Letter have such
sufficient capital, in which event Sellers shall be entitled to
terminate this Agreement pursuant to this Section 17.3(g);
(h) By Sellers at any time by notice to Purchaser if the
Merger Agreement is terminated for any reason; or
(i) By Sellers at any time by notice to Purchaser if
Sellers have failed to satisfy a condition imposed by the United
States Department of Justice or the Board requiring the
divestiture of the Business within a specified period of time
and, as a result of such failure, Sellers are required by the
Board or the United States Department of Justice to terminate the
Agreement.
Section 17.4. Modification and Waiver. No modification of
any provision of this Agreement shall be binding unless in
writing and executed by the party or parties sought to be bound
thereby. Performance of or compliance with any covenant given
herein or satisfaction of any condition to the obligations of
either party hereunder may be waived by the parties to whom such
covenant is given or whom such condition is intended to benefit,
except as otherwise provided in this Agreement or to the extent
<PAGE 87> any such condition is required by law; provided, that,
any such waiver must be in writing.
Section 17.5. Binding Effect; Assignment. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted
assigns; provided, however, that neither this Agreement nor any
rights, privileges, duties or obligations of the parties hereto
may be assigned without the prior written consent of the other
parties hereto.
Section 17.6. Confidentiality.
(a) From and after the date hereof, the parties hereto and
their Affiliates shall keep confidential the terms of this
Agreement and the negotiations relating hereto and all documents
and information obtained by a party from another party in
connection with the transactions contemplated hereby, except (i)
to the extent this Agreement and such negotiations need to be
disclosed to obtain a Regulatory Approval, (ii) for disclosures
made in accordance with the terms of this Agreement, and (iii) to
the extent required by applicable law, regulations or rules of
any applicable national securities exchange. This section shall
survive any termination of this Agreement.
(b) Except as otherwise required by law, regulations or
rules, including the rules of any self regulatory organization
(as defined in the Securities Exchange Act of 1934, as amended),
the parties hereto shall each furnish to the other the text of
all notices and communications, written or oral, proposed to be
sent by the furnishing party regarding the transactions
contemplated hereby. Except as otherwise required by law,
regulations or rules of any national stock exchange, the
furnishing party shall not send or transmit such notices or
communications or otherwise make them public unless and until the
consent of the other parties is received, which consent shall not
be unreasonably withheld or delayed. This section shall survive
any termination of this Agreement.
(c) Sovereign and Fleet shall issue mutually agreed upon
press releases on the date of this Agreement and on the Closing
Date or the first Business Day thereafter.
Section 17.7. Entire Agreement; Governing Law. This
Agreement, together with the exhibits and schedules attached
hereto and made a part hereof, contains the entire agreement
between the parties hereto with respect to the transactions
covered and contemplated hereunder, and supersedes all prior
agreements or understandings between the parties hereto relating
to the subject matter hereof, provided that the terms of the
Confidentiality Agreement, to the extent not inconsistent with
the terms hereof, shall continue to apply and provided further
that the terms of that certain letter agreement dated the date
hereof among Fleet, Sellers and Sovereign shall continue to
<PAGE 88> apply. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts (without reference to conflicts or choice of law
provisions).
Section 17.8. Consent to Jurisdiction; Waiver of Jury
Trial. EACH PARTY HERETO, TO THE EXTENT IT MAY LAWFULLY DO SO,
HEREBY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS AND THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF MASSACHUSETTS, AS WELL AS TO THE
JURISDICTION OF ALL COURTS FROM WHICH AN APPEAL MAY BE TAKEN OR
OTHER REVIEW SOUGHT FROM THE AFORESAID COURTS, FOR THE PURPOSE OF
ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF SUCH PARTY'S
OBLIGATIONS UNDER OR WITH RESPECT TO THIS AGREEMENT OR ANY OF THE
AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY (OTHER
THAN THE CONFIDENTIALITY AGREEMENT), AND EXPRESSLY WAIVES ANY AND
ALL OBJECTIONS IT MAY HAVE AS TO VENUE IN ANY OF SUCH COURTS.
EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONCERNED
WITH THIS AGREEMENT OR ANY OF THE AGREEMENTS, INSTRUMENTS OR
DOCUMENTS CONTEMPLATED HEREBY. NO PARTY HERETO, NOR ANY ASSIGNEE
OR SUCCESSOR OF A PARTY HERETO SHALL SEEK A JURY TRIAL IN ANY
LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION
PROCEDURE BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF
THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY. NO
PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY
TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS
HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN
ANYWAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE
PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
Section 17.9. Waiver of Certain Damages. EACH OF THE
PARTIES HERETO TO THE FULLEST EXTENT PERMITTED BY LAW IRREVOCABLY
WAIVES ANY RIGHTS THAT THEY MAY HAVE TO PUNITIVE, SPECIAL,
INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY
RELATED AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS OR ACTIONS OF ANY OF THEM RELATING THERETO.
Section 17.10. Severability. In the event that any
provision of this shall be held invalid, illegal, or
unenforceable in any respect, the validity, legality, and
enforceability of the remaining provisions contained in this
Agreement shall not in any way be affected or impaired thereby,
and this Agreement shall otherwise remain in full force and
effect.
Section 17.11. Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective
<PAGE 89> when one or more counterparts have been signed by each
of the parties hereto.
Section 17.12. Notices. All notices, consents, requests,
instructions, approvals, waivers, stipulations and other
communications provided for herein to be given by one party
hereto to the other party shall be deemed validly given, made or
served, if in writing and delivered personally or sent by
certified mail, return receipt requested, nationally recognized
overnight delivery service, or facsimile transmission, if to
Sellers or to Fleet addressed to:
Fleet Financial Group, Inc.
One Federal Street
37th Floor
Boston, MA 02110
Attention: Brian T. Moynihan
Facsimile number: (617) 346-0137
and
BankBoston Corporation
100 Federal Street
Boston, MA 02110
Attention: Peter J. Manning
Facsimile number: (617) 434-7825
with copies to:
William C. Mutterperl, Esq.
Executive Vice President, General Counsel and Secretary
Fleet Financial Group, Inc.
One Federal Street
37th Floor
Boston, MA 02110
Facsimile number: (617) 346-0131
and to:
Gary A. Spiess, Esq.
General Counsel
BankBoston Corporation
100 Federal Street
Boston, MA 02110
Facsimile number: (617) 434-6525
and to:
V. Duncan Johnson, Esq.
Edwards & Angell, LLP
2800 BankBoston Plaza
Providence, RI 02903-2499
Facsimile number: (401) 276-6625
and to: <PAGE 90>
Norman J. Shachoy, Esq.
Neal J. Curtin, Esq.
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
Facsimile number: (617) 951-8736
and if to Purchaser or Sovereign addressed to:
Jay S. Sidhu
President and Chief Executive Officer
Sovereign Bancorp, Inc.
1130 Berkshire Blvd.
Wyomissing, PA 19610
Facsimile number: (610) 208-6143
with a copy to:
Joseph M. Harenza, Esq.
Stevens & Lee
111 N. Sixth Street
Reading, PA 19603
Facsimile number: (610) 376-5610
Notice by certified mail shall be deemed to be received
three (3) Business Days after mailing of the same. Either party
may change the persons or addresses to whom or to which notices
may be sent by written notice to the others.
Section 17.13. Interpretation. Article titles, headings to
sections and any table of contents are inserted for convenience
of reference only and are not intended to be a part of or to
affect the meaning or interpretation hereof. The Schedules and
Exhibits referred to herein shall be construed with and as an
integral part of this Agreement to the same extent as if they
were set forth verbatim herein. As used herein, "include",
"includes" and "including" are deemed to be followed by "without
limitation" whether or not they are in fact followed by such
words or words of like import; "writing", "written" and
comparable terms refer to printing, typing, lithography and other
means of reproducing words in a visible form; references to a
person are also to its successors and assigns; except as the
context may otherwise require, "hereof", "herein", "hereunder"
and comparable terms refer to the entirety hereof and not to any
particular article, section or other subdivision hereof or
attachment hereto; references to any gender include the other;
except as the context may otherwise require, the singular
includes the plural and vice versa; references to any agreement
or other document are to such agreement or document as amended
and supplemented from time to time; references to "Article",
"Section" or another subdivision or to an "Exhibit" or "Schedule"
are to an article, section or subdivision hereof or an "Exhibit"
or "Schedule". The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the
<PAGE 91> normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation, construction and
enforcement of this Agreement or any amendment, schedule or
exhibit hereto.
Section 17.14. Specific Performance. The parties hereto
acknowledge that monetary damages could not adequately compensate
either party hereto in the event of a breach of this Agreement by
the other, that the non-breaching party would suffer irreparable
harm in the event of such breach and that the non-breaching party
shall have, in addition to any other rights or remedies it may
have at law or in equity, specific performance and injunctive
relief as a remedy for the enforcement hereof.
Section 17.15. No Third Party Beneficiaries. The parties
hereto intend that this Agreement shall not benefit or create any
right or cause of action in or on behalf of any person other than
the parties hereto. No future or present employee or customer of
either of the parties not their affiliates, successors or assigns
or other person shall be treated as a third party beneficiary in
or under this Agreement.
Section 17.16. Survival. Except for Articles XV and XVI
and Sections 17.1 and 17.2 and Sections 17.4 through 17.16, no
representations, warranties, covenants or agreements made by the
parties herein shall survive termination of this Agreement.
[Remainder of Page Intentionally Left Blank]
<PAGE 92>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed, by their duly authorized
representatives, as of the day and year first above written.
/s/ FLEET FINANCIAL GROUP, INC.
/s/ FLEET NATIONAL BANK
/s/ FLEET BANK - NH
/s/ BANKBOSTON, N.A.
/s/ SOVEREIGN BANCORP, INC.
/s/ SOVEREIGN BANK
<PAGE 93>
SCHEDULE 9.8(b)
Additional Requirements
1. By no later than December 15, 1999, (i) Purchaser shall
have obtained five hundred million dollars ($500,000,000) of
capital solely for the purpose of supporting the acquisition of
the Business and to perform Purchaser's and Sovereign's
respective obligations under this Agreement, (ii) if on December
14, 1999 Purchaser shall not have raised sufficient capital to
support the acquisition of the Business and to perform
Purchaser's and Sovereign's respective obligations under this
Agreement, such determination to be in Fleet's sole and absolute
discretion, the Bridge Facility and the Senior Credit Facility
shall be finalized by the parties thereto, and (iii) if on
December 14, 1999 Purchaser shall not have raised sufficient
capital to support the acquisition of the Business and to perform
Purchaser's and Sovereign's respective obligations under this
Agreement, such determination to be in Fleet's sole and absolute
discretion, Purchaser shall have delivered to Fleet a Purchaser
Confirmation Notice, dated as of December 14, 1999. For purposes
of this Schedule 9.8(b), amounts deposited in escrow shall be
deemed to be capital if the release of funds from escrow is
subject only to the condition that the parties hereto consummate
the Closing on or prior to April 28, 2000 in conformity in all
material respects with the terms and with satisfaction of all
material conditions of this Agreement in effect as of the date of
execution hereof without giving effect to any amendment, waiver
or other modification to any material term or condition;
provided, however, that notwithstanding the fact that any such
funds may be held in escrow, Fleet in its sole and absolute
discretion may determine that Purchaser shall not have obtained
five hundred million dollars ($500,000,000) of capital on or
before such date in which event Purchaser and Sovereign shall be
deemed to have failed to perform their obligations under this
Agreement and to be in material breach under this Agreement.
2. By no later than January 31, 2000, Purchaser shall have
obtained sufficient capital solely for purposes of supporting the
acquisition of the Business and to perform Purchaser's and
Sovereign's respective other obligations hereunder. For purposes
of this Schedule 9.8(b), amounts deposited in escrow shall be
deemed to be capital if the release of funds from escrow is
subject only to the condition that the parties hereto consummate
the Closing on or prior to April 28, 2000 in conformity in all
material respects with the terms and with satisfaction of all
material conditions of this Agreement in effect as of the date of
execution hereof without giving effect to any amendment, waiver
or other modification to any material term or condition;
provided, however, that notwithstanding the fact that any such
funds may be held in escrow, Fleet in its sole and absolute
discretion may determine that Purchaser shall not have obtained
such sufficient capital on or before such date in which event
<PAGE 94> Purchaser and Sovereign shall be deemed to have failed
to perform their obligations under this Agreement and to be in
material breach under this Agreement.
3. In the event that by December 15, 1999 Purchaser shall
have failed to obtain at least five hundred million dollars
($500,000,000) of capital solely for the purposes of supporting
the acquisition of Business and to perform Purchaser's and
Sovereign's respective other obligations under this Agreement
(such failure to be determined by Fleet in its sole and absolute
discretion), then (i) within one (1) Business Day following
notice from Fleet of its request for a Purchaser Confirmation
Notice, Fleet shall receive a Purchaser Confirmation Notice,
dated the date one (1) Business Day following the date notice of
a request therefor was given by Fleet, and (ii) no later than
12:00 p.m. on each of December 24, 1999, December 31, 1999,
January 7, 2000, January 14, 2000, January 21, 2000 and
January 28, 2000, Fleet shall receive a Purchaser Confirmation
Notice dated as of such respective dates.
4. In the event that by January 31, 2000, Purchaser shall
have failed to obtain sufficient capital solely for purposes of
supporting the acquisition of the Business and to perform
Purchaser's and Sovereign's other obligations hereunder (such
failure to be determined by Fleet in its sole and absolute
discretion), until such time as Sellers exercise their rights
under Section 17.3(e) of this Agreement, (i) within one (1)
Business Day following notice from Fleet of a request for a
Purchaser Confirmation Notice, Fleet shall receive a Purchaser
Confirmation Notice, dated the date one (1) Business Day
following the date notice of a request therefor was given, and
(ii) no later than 12:00 p.m. on each Friday following
January 31, 2000, Fleet shall receive a Purchase Confirmation
Notice, dated as of such respective dates.
5. Following December 15, 1999, within one (1) Business
Day following a request by Fleet for a Lender Confirmation, the
Senior Lenders, the Bridge Lenders, or both, will provide a
Lender Confirmation.
6. Following December 15, 1999, within one (1) Business
Day following a request by Fleet, Sovereign shall confirm the
current status of the Capital Transactions and all other
transactions in which Sovereign, Purchaser, or both, are involved
related to the raising of capital by Sovereign, Purchaser or both
in connection with the transactions contemplated hereby.
7. For purposes of this Agreement:
"Lender Confirmation" shall mean a discussion between
the Bridge Lender, the Senior Lender, or both, and Fleet
confirming the current status of the Capital Transactions and any
other transactions in which such Lenders are involved related to
<PAGE 95> the raising of capital by Purchaser or Sovereign or
both in connection with the transactions contemplated hereby.
"Purchaser Confirmation Notice" shall mean, as of any
date, an officer's certificate signed by Purchaser confirming
(a) which conditions to funding the Bridge Facility and Senior
Credit Facility have been satisfied, and which conditions thereto
remain unsatisfied and the status thereof, (b) that Purchaser has
not received notice from the Bridge Lender or the Senior Lender
that they will not fund the Bridge Facility or the Senior Credit
Facility, as the case may be, and (c) that to Purchaser's
knowledge, after consulting with the Bridge Lender and the Senior
Lender, no event or events has occurred, or is reasonably likely
to occur, or condition exists, or is reasonably likely to exist,
which would permit either the Bridge Lender or the Senior Lender
to fail to make available to Purchaser the full principal amount
of the Bridge Facility or the Senior Credit Facility, as the case
may be.
8. In the event Sellers terminate the Agreement pursuant
to Section 17.3(c), (f) or (g) of this Agreement, Purchaser shall
pay to Sellers as liquidated damages an amount equal to Fifty
Million Dollars ($50,000,000). Such liquidated damages shall be
paid within ten (10) days following termination of this Agreement
and shall bear interest at the Federal Funds Rate from the tenth
day following termination until payment in full.
9. In the event of (i) a breach by Purchaser or Sovereign
of any of the representations and warranties contained in Section
7.7 of this Agreement or of any of their obligations under
Section 9.8 of this Agreement or this Schedule 9.8(b), (ii) the
failure of Purchaser to file on or before September 30, 1999
(October 15, 1999 with respect to any state regulatory approval
Purchaser determines to be required) all necessary applications
of Purchaser to obtain the Purchaser Regulatory Approvals, (iii)
the failure of Purchaser to obtain on or before January 15, 2000
the Purchaser Regulatory Approval, or (iv) the failure of the
Closing to occur by April 28, 2000 and as a result of the Closing
not having occurred Fleet in its sole and absolute discretion
shall determine that Purchaser does not have sufficient capital
to support the acquisition of the Business and the performance of
Purchaser's and Sovereign's obligations under this Agreement,
notwithstanding anything to the contrary contained herein or in
any other agreement, undertaking, instrument or other document to
which any of the parties hereto is a party, Fleet and Sellers may
solicit bids for and otherwise market all or any portion of the
Purchased Assets, the Assumed Liabilities or the Business and
negotiate and enter into agreements with respect to sale or other
disposition thereof to any Person and shall have no obligations
or liabilities to Purchaser or Sovereign with respect thereto or
as a result of any such actions or such a sale or other
disposition to any Person, other than the obligation to notify
Purchaser and Sovereign no later than five (5) Business Days
prior to the exercise by Fleet and Sellers of their rights under
<PAGE 96> this subsection 9 of this Schedule 9.8(b). If pursuant
to the provisions of this subsection 9 to this Schedule 9.8(b)
Fleet and Sellers enter into agreements with respect to the sale
or other disposition of all of the Purchased Assets, the Assumed
Liabilities or the Business, Fleet shall terminate this Agreement
pursuant to the provisions of Section 17.3(e) of this Agreement.
10. Purchaser and Sovereign hereby agree that in the event
that Fleet and Sellers exercise their rights under subsection 9
of this Schedule 9.8(b) neither Purchaser nor Sovereign will take
any action whatsoever to impede, adversely affect or otherwise
interfere with Fleet's and Sellers' exercise of their rights
under subsection 9 of this Schedule 9.8(b), including, without
limitation, the filing of any type of court action (whether at
law or in equity and whether on a federal or state level) to
prohibit the exercise of such rights. Purchaser and Sovereign
also agree that in the event that Fleet and Sellers exercise
their rights pursuant to subsection 9 of this Schedule 9.8(b),
Purchaser and Sovereign will take all actions requested by Fleet
and Sellers to confirm that Fleet and Sellers are entitled to
(i) solicit bids for and otherwise market all or any portion of
the Purchased Assets, the Assumed Liabilities or the Business,
and (ii) negotiate and enter into any agreements with respect to
the sale or other disposition of all or any portion of the
Purchased Assets, the Assumed Liabilities or the Business,
including, without limitation, the delivery by Sovereign of a
certificate from the Chairman and Chief Executive Officer of
Sovereign so confirming such rights of Fleet and Sellers.
<PAGE 97>