AGREEMENT AND PLAN OF MERGER
By and Between
SHAWMUT NATIONAL CORPORATION
and
NORTHEAST FEDERAL CORP.
Dated as of June 11, 1994
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 11, 1994 (this
"Agreement"), by and between Shawmut National Corporation, a Delaware
corporation ("Parent"), and Northeast Federal Corp., a Delaware corporation
("Target").
WHEREAS, the Boards of Directors of Parent and Target have
determined that it is in the best interests of their respective companies and
their shareholders to consummate the business combination transaction provided
for herein in which a subsidiary of Parent ("Merger Sub") will, subject to the
terms and conditions set forth herein, merge (the "Merger") with and into
Target; and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to
be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Delaware General Corporation Law (the
"DGCL"), at the Effective Time (as defined in Section 1.2 hereof), Merger Sub
shall merge with and into Target. Target shall be the surviving corporation
(hereinafter sometimes called the "Surviving Corporation") in the Merger, and
shall continue its corporate existence under the laws of the State of Delaware
as a wholly owned subsidiary of Parent. Upon consummation of the Merger, the
separate corporate existence of Merger Sub shall terminate.
1.2 Effective Time. The Merger shall become effective as set
forth in the certificate of merger (the "Certificate of Merger") which shall be
filed with the Secretary of State of the State of Delaware (the "Secretary") on
the Closing Date (as defined in Section 9.1 hereof). The term "Effective Time"
shall be the date and
time when the Merger becomes effective, as set forth in the Certificate of
Merger.
1.3 Effects of the Merger. At and after the Effective Time,
the Merger shall have the effects set forth in Sections 259 and 261 of the
DGCL.
1.4 Conversion of Target Common Stock; Target Preferred Stock.
(a) At the Effective Time, subject to Section 2.2(e) hereof, each share of the
common stock, par value $0.01 per share, of Target (the "Target Common Stock")
issued and outstanding immediately prior to the Effective Time (other than
shares of Target Common Stock held (x) in Target's treasury or (y) directly or
indirectly by Parent or Target or any of their respective Subsidiaries (as
defined below) (except for Trust Account Shares and DPC Shares, as such terms
are defined in Section 1.4(b) hereof)) shall, by virtue of this Agreement and
without any action on the part of the holder thereof, be converted into the
number of shares (the "Exchange Ratio") of common stock, par value $.01 per
share, of Parent ("Parent Common Stock") (together with the number of Parent
Rights (as defined in Section 4.2 hereof) associated therewith) determined as
follows:
(i) if the Parent Common Stock Average Price (as defined in
Section 8.1(g) hereof) is greater than or equal to
$26.235, the Exchange Ratio will be .415;
(ii) if the Parent Common Stock Average Price is less than
$26.235 but equal to or greater than $21.465, the
Exchange Ratio will be (i) $10.875 divided by (ii) the
Parent Common Stock Average Price; or
(iii) if the Parent Common Stock Average Price is less than
$21.465, the Exchange Ratio will be .507.
All of the shares of Target Common Stock converted into Parent
Common Stock pursuant to this Article I shall no longer be outstanding and
shall automatically be cancelled and shall cease to exist, and each certificate
(each a "Certificate") previously representing any such shares of Target Common
Stock shall thereafter represent the right to receive (i) a certificate
representing the number of whole shares of Parent Common Stock and (ii) cash in
lieu of fractional shares into which the shares of Target Common Stock
represented by such Certificate have been converted pursuant to this Section
1.4(a) and Section 2.2(e) hereof. Certificates previously representing shares
of Target Common
Stock shall be exchanged for certificates representing whole shares of Parent
Common Stock and cash in lieu of fractional shares issued, in consideration
therefor upon the surrender of such Certificates in accordance with Section
2.2 hereof, without any interest thereon. If prior to the Effective Time
Parent should split or combine its common stock, or pay a dividend or other
distribution in such common stock, then the Exchange Ratio shall be
appropriately adjusted to reflect such split, combination, dividend or
distribution.
(b) At the Effective Time, all shares of Target Common Stock
that are owned by Target as treasury stock and all shares of Target Common
Stock that are owned directly or indirectly by Parent or Target or any of their
respective Subsidiaries (other than shares of Target Common Stock held directly
or indirectly in trust accounts, managed accounts and the like or otherwise
held in a fiduciary capacity that are beneficially owned by third parties (any
such shares, and shares of Parent Common Stock which are similarly held,
whether held directly or indirectly by Parent or Target or any of their
respective subsidiaries, as the case may be, being referred to herein as "Trust
Account Shares") and other than any shares of Target Common Stock held by
Parent or Target or any of their respective Subsidiaries in respect of a debt
previously contracted (any such shares of Target Common Stock, and shares of
Parent Common Stock which are similarly held, whether held directly or
indirectly by Parent or Target or any of their respective subsidiaries, being
referred to herein as "DPC Shares")) shall be cancelled and shall cease to
exist and no stock of Parent or other consideration shall be delivered in
exchange therefor. All shares of Parent Common Stock that are owned by Target
or any of its Subsidiaries (other than Trust Account Shares and DPC Shares)
shall become treasury stock of Parent.
(c) At and after the Effective Time each share of the $8.50
Cumulative Preferred Stock, Series B, of Target (the "Target Series B Preferred
Stock"), outstanding shall remain outstanding.
1.5 Conversion of Merger Sub Common Stock. Each of the 100
shares of the common stock, par value $1.00 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall by virtue of this
Agreement and without any action on the part of the holder thereof, be
converted into and exchangeable for one share common stock, par value $1.00, of
the Surviving Corporation, which shall thereafter constitute all of the issued
and outstanding shares of Common Stock of the Surviving Corporation.
1.6 Options and Warrants. At the Effective Time, each option
and warrant granted by Target to purchase shares of Target Common Stock which
is outstanding and unexercised immediately prior thereto shall be converted
automatically into an option or warrant, as the case may be, to purchase shares
of Parent Common Stock in an amount and at an exercise price determined as
provided below (and, in the case of options, otherwise subject to the terms of
the 1983 Stock Option Plan of Target, The 1986 Stock Option Plan of Target, the
Target 1993 Stock Option Plan, or the Target 1993 Stock Option Plan for Three
Year Term Outside Directors, as the case may be (each a "Target Stock Option
Plan"; collectively the "Target Stock Option Plans") or, in the case of
warrants, otherwise subject to the terms of the Stock Warrants, each dated
April 22, 1992, of Target (the "Target Warrants")):
(a) The number of shares of Parent Common Stock to be subject
to the new option or warrant shall be equal to the product of the
number of shares of Target Common Stock subject to the original option
or warrant and the Exchange Ratio, provided that any fractional shares
of Parent Common Stock resulting from such multiplication shall be
rounded to the nearest whole share; and
(b) The exercise price per share of Parent Common Stock under
the new option or warrant shall be equal to the exercise price per
share of Target Common Stock under the original option or warrant
divided by the Exchange Ratio, provided that such exercise price shall
be rounded to the nearest cent.
The adjustment provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code")) shall be and is intended to be effected in a manner
which is consistent with Section 424(a) of the Code. The duration and other
terms of the new option or warrant shall be the same as the original option or
warrant, except that all references to Target shall be deemed to be references
to Parent.
1.7 Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of Target, as in effect at the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation.
1.8 By-Laws. At the Effective Time, the By-Laws of Merger Sub,
as in effect immediately prior to the Effective Time, shall be the By-Laws of
the Surviving
Corporation until thereafter amended in accordance with applicable law.
1.9 Directors and Officers. The directors and officers of
Merger Sub immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and By-Laws of the Surviving Corporation until
their respective successors are duly elected or appointed and qualified,
provided that so long as the Target Series B Preferred Stock is outstanding by
the terms thereof, and DEPCO or any Nominee (each as defined in Section 3.27)
is entitled to elect directors of Target pursuant to the terms of the Target
Series B Preferred Stock, the directors elected by the holders of the Target
Series B Preferred Stock shall be directors of the Surviving Corporation.
1.10 Tax Consequences. It is intended that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of the Code,
and that this Agreement shall constitute a "plan of reorganization" for the
purposes of Section 368 of the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available. As of the Effective Time,
Parent shall deposit, or shall cause to be deposited, with a bank or trust
company selected by Parent (which may be a Subsidiary of Parent) (the "Exchange
Agent"), for the benefit of the holders of Certificates, for exchange in
accordance with this Article II, certificates representing the shares of Parent
Common Stock and the cash in lieu of fractional shares (such cash and
certificates for shares of Parent Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") to be issued pursuant to Section 1.4 and paid pursuant to
Section 2.2(a) in exchange for outstanding shares of Target Common Stock.
2.2 Exchange of Shares. (a) As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate or Certificates a form letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon actual receipt of the Certificates by the Exchange Agent)
and
instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing the shares of Parent Common Stock and
cash in lieu of fractional shares, if any, into which the shares of Target
Common Stock previously represented by such Certificate or Certificates shall
have been converted pursuant to this Agreement. Upon proper surrender to the
Exchange Agent of a Certificate for exchange and cancellation, together with
such properly completed letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor (x) a
certificate representing that number of whole shares of Parent Common Stock to
which such holder of Target Common Stock shall have become entitled pursuant to
the provisions of Article I hereof and (y) a check representing the amount of
cash in lieu of fractional shares, if any, which such holder has the right to
receive in respect of the Certificate surrendered pursuant to the provisions of
this Article II, and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the cash in lieu of
fractional shares and unpaid dividends and distributions, if any, payable to
holders of Certificates. Notwithstanding anything to the contrary contained
herein, no certificate representing Parent Common Stock or cash in lieu of a
fractional share interest shall be delivered to a person who is an Affiliate
(as defined in Section 6.5) of Target unless such Affiliate has theretofore
executed and delivered to Parent the agreement referred to in Section 6.5.
(b) No dividends or other distributions payable after the
Effective Time with respect to Parent Common Stock shall be paid to the holder
of any unsurrendered Certificate until the holder thereof shall duly surrender
such Certificate in accordance with this Article II. After the surrender of a
Certificate in accordance with this Article II, the record holder thereof shall
be entitled to receive any dividends or other distributions, without any
interest thereon, which became payable with respect to the shares of Parent
Common Stock represented by such Certificate after the Effective Time but on or
before the time of such surrender. No holder of an unsurrendered Certificate
shall be entitled, until the surrender of such Certificate, to vote the shares
of Parent Common Stock into which his or her Target Common Stock shall have
been converted.
(c) If any certificate representing shares of Parent Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate
instrument of transfer) and otherwise in proper form for transfer, and that the
person requesting such exchange shall pay to the Exchange Agent in advance any
transfer or other taxes required by reason of the issuance of a certificate
representing shares of Parent Common Stock in any name other than that of the
registered holder of the Certificate surrendered, or required for any other
reason, or shall establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of Target of the shares of Target Common Stock which
were issued and outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of Parent Common Stock as provided in this
Article II.
(e) Notwithstanding anything to the contrary contained herein,
no certificates or scrip representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Parent Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a shareholder of
Target. In lieu of the issuance of any such fractional share, Parent shall pay
to each former stockholder of Target who otherwise would be entitled to receive
a fractional share of Parent Common Stock an amount in cash determined by
multiplying (i) the average of the closing-sale prices of Parent Common Stock
on the New York Stock Exchange as reported by The Wall Street Journal for the
five trading days immediately preceding the date of the Effective Time by (ii)
the fraction of a share of Parent Common Stock to which such holder would
otherwise be entitled to receive pursuant to Section 1.4 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed by
the stockholders of Target for six months after the Effective Time shall be
paid to Parent. Any stockholders of Target who have not theretofore complied
with this Article II shall thereafter look only to Parent for payment of their
shares of Parent Common Stock, cash in lieu of fractional shares and unpaid
dividends and distributions on the Parent Common Stock deliverable in respect
of each share of Target Common Stock such stockholder holds as determined
pursuant to this Agreement, in each case, without any interest thereon.
Notwithstanding
the foregoing, none of Parent, Target, the Exchange Agent or any other person
shall be liable to any former holder of shares of Target Common Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such person of a bond in such amount as Parent may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of Parent Common Stock and cash in
lieu of fractional shares and unpaid dividends and distributions on Parent
Common Stock deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TARGET
Target hereby represents and warrants to Parent and Merger Sub
as follows:
3.1 Corporate Organization. (a) Target is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Target has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect (as defined
below) on Target. As used in this Agreement, the term "Material Adverse
Effect" means, with respect to Parent, Target or the Surviving Corporation, as
the case may be, a material adverse effect on the business, properties, assets,
liabilities, prospects, results of operations or financial condition of such
party and its Subsidiaries taken as a whole or the ability of any party to
consummate the transactions contemplated hereby on the terms hereof, it being
understood that a Material Adverse Effect will not include a change with
respect to, or effect on, such entity resulting from a change in law, rule,
regulation, generally accepted or regulatory accounting
principles, or a change with respect to, or effect on, such entity resulting
from any other matter affecting financial institutions or their holding
companies generally. As used in this Agreement, the word "Subsidiary" when
used with respect to any party means any corporation, partnership or other
organization, whether incorporated or unincorporated, which is consolidated
with such party for financial reporting purposes or of which the party holds
25% or more of the shares. Target is duly registered as a savings and loan
holding company under the Home Owners' Loan Act, as amended ("HOLA"). The
copies of the Certificate of Incorporation and By-laws of Target which have
previously been delivered to Parent are true, complete and correct copies of
such documents as in effect as of the date of this Agreement.
(b) Northeast Savings, F.A. ("Target Bank") is a federal
savings and loan association or savings bank duly organized, validly existing
and in good standing under the laws of the United States. The deposit accounts
of Target Bank are insured by the Federal Deposit Insurance Corporation (the
"FDIC") through the Savings Association Insurance Fund (the "SAIF") to the
fullest extent permitted by law, and all premiums and assessments required in
connection therewith have been paid by Target Bank. Target Bank is the only
direct Subsidiary of Target, and is the only Subsidiary of Target that is a
"Significant Subsidiary" as such term is defined in Regulation S-X promulgated
by the Securities and Exchange Commission (the "SEC"). Target Bank has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or the location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect on Target. The copies of the Federal Stock Charter and
By-laws of Target Bank which have previously been delivered to Parent are true,
complete and correct copies of such documents as in effect as of the date of
this Agreement.
(c) The minute books of Target and Target Bank accurately
reflect in all material respects all corporate actions held or taken since
January 1, 1989 of their respective stockholders and Boards of Directors
(including committees of their respective Boards of Directors).
3.2 Capitalization. (a) The authorized capital stock of
Target consists of 25,000,000 shares of Target Common Stock and 15,000,000
shares of preferred stock, par
value $.01 per share ("Target Preferred Stock"). As of March 31, 1994, there
are (x) 13,519,193 shares of Target Common Stock issued and outstanding and
no shares of Target Common Stock held in Target's treasury and 402,576 shares
of Target Series B Preferred Stock issued and outstanding, (y) no shares of
Target Common Stock reserved for issuance upon exercise of outstanding stock
options or warrants or otherwise except for (i) 1,497,292 shares of Target
Common Stock reserved for issuance pursuant to the Target Stock Option Plans
and (ii) 800,000 shares of Target Common Stock reserved for issuance pursuant
to the Target Warrants and (z), except for the 402,576 shares of Target
Series B Preferred Stock issued and outstanding and shares of such stock
which may be issued in payment for dividends on the Target Series B Preferred
Stock, no shares of Target Preferred Stock are issued or outstanding or
reserved for issuance. All of the issued and outstanding shares of Target
Common Stock and Target Series B Preferred Stock have been authorized and
validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. Except as referred to above or reflected in Section 3.2(a) of the
Disclosure Schedule which is being delivered to Parent concurrently herewith
(the "Target Disclosure Schedule"), Target does not have and is not bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of Target Common Stock or Target Preferred Stock or any other equity security
of Target or any securities representing the right to purchase or otherwise
receive any shares of Target Common Stock or any other equity security of
Target. The names of the optionees, the date of each option to purchase Target
Common Stock granted, the number of shares subject to each such option, the
expiration date of each such option, and the price at which each such option
may be exercised under the Target Stock Option Plans are set forth in Section
3.2(a) of the Target Disclosure Schedule. Except as set forth in
Section 3.2(a) of the Target Disclosure Schedule, since March 31, 1994, Target
has not issued any shares of its capital stock or any securities convertible
into or exercisable for any shares of its capital stock, other than pursuant to
the exercise of employee or director stock options granted prior to such date
and except for Series B Preferred Stock issued in payment of dividends on
outstanding shares of Series B Preferred Stock. Section 3.2(a) of the Target
Disclosure Schedule sets forth the number of shares of Target Common Stock
issued and outstanding as of the date of this Agreement. Target has reserved
an adequate number of shares to cover exercise of options under the
currently outstanding options granted pursuant to the Target Stock Option Plans.
(b) Section 3.2(b) of the Target Disclosure Schedule sets forth
a true and correct list of all of the Target Subsidiaries as of the date of
this Agreement. Except as set forth in Section 3.2(b) of the Target Disclosure
Schedule, Target owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the Target Subsidiaries, free
and clear of all liens, charges, encumbrances and security interests whatso-
ever, and all of such shares are duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. Each Target Subsidiary is duly
organized and validly existing as a corporation or partnership under the laws
of its jurisdiction of organization. No Target Subsidiary has or is bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares
of capital stock or any other equity security of such Subsidiary. Assuming
compliance by Parent with Section 1.6 hereof and except pursuant to the DEPCO
Agreement (as defined in Section 3.27), at the Effective Time, there will not
be any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character by which Target or any of its Subsidiaries will be
bound calling for the purchase or issuance of any shares of the capital stock
of Target or any of its Subsidiaries.
3.3 Authority; No Violation. (a) Target has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Target. The Board of Directors
of Target has directed that this Agreement and the transactions contemplated
hereby be submitted to Target's stockholders for approval at a meeting of such
stockholders and, except for the adoption of this Agreement by the requisite
vote of Target's stockholders, no other corporate proceedings on the part of
Target are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Target and constitutes a valid and binding obligation
of Target.
(b) Except as set forth in Section 3.3(b) of the Target
Disclosure Schedule, neither the execution and delivery of this Agreement by
Target nor the consummation by Target of the transactions contemplated hereby
or thereby, nor compliance by Target with any of the terms or provisions hereof
or thereof, will (i) violate any provision of the Certificate of Incorporation
or By-Laws of Target or the certificate of incorporation, by-laws or similar
governing documents of Target Bank or (ii) assuming that the consents and
approvals referred to in Section 3.4 hereof are duly obtained, (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Target or Target Bank, or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of Target or Target Bank under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Target or Target Bank is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of clause
(y) above) for such violations, conflicts, breaches or defaults which, either
individually or in the aggregate, would not have or be reasonably likely to
have a Material Adverse Effect on Target.
3.4 Consents and Approvals. Except for (a) the filing of
applications and notices, as applicable, with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") under the Bank Holding
Company Act of 1956, as amended (the "BHC Act") and approval of such
applications and notices, (b) the filing of applications with the Office of
Thrift Supervision (the "OTS") under the HOLA and approval of such
applications, (c) the filing of any required applications or notices with any
state agencies and approval of such applications (the "State Approvals"), (d)
the filing with the SEC of a proxy statement in definitive form relating to any
meeting of Target's stockholders to be held in connection with this Agreement
and the transactions contemplated hereby (the "Proxy Statement"), (e) the
approval of this Agreement by the requisite vote of the stockholders of Target,
(f) the filing of the Certificate of Merger with the Secretary pursuant to the
DGCL, and (g) such filings, authorizations or approvals as may be set forth in
Section 3.4 of the Target Disclosure Schedule, no consents or approvals of or
filings or registrations with any court, administrative agency or commission or
other governmental authority or instrumentality (each a "Governmental Entity")
or with any third party are necessary in connection with (1) the execution and
delivery by Target of this Agreement and (2) the consummation by Target of the
Merger and the other transactions contemplated hereby.
3.5 Loan Portfolio; Reports. (a) Except as set forth in
Section 3.5(a) of the Target Disclosure Schedule, as of March 31, 1994, neither
Target nor any of its Subsidiaries is a party to any written or oral (i) loan
agreement, note or borrowing arrangement (including, without limitation,
leases, credit enhancements, commitments, guarantees and interest-bearing
assets) (collectively, "Loans"), other than Loans the unpaid principal balance
of which does not exceed $100,000, under the terms of which the obligor was, as
of March 31, 1994, over 90 days delinquent in payment of principal or interest
or in default under any other provision, or (ii) Loan to any director,
executive officer or ten percent stockholder of Target or any of its
Subsidiaries or, to the knowledge of Target, any person, corporation or
enterprise controlling, controlled by or under common control with any of the
foregoing. Section 3.5(a) of the Target Schedule sets forth (i) all of the
Loans of Target or any of its Subsidiaries the unpaid principal amount in
excess of (A) $100,000 that as of the date of this Agreement are internally
classified as "Substandard," "Doubtful," "Loss," or "Classified," (B) $100,000
that as of the date of this Agreement are internally classified as
"Criticized," "Other Loans Especially Mentioned" or "Special Mention",
(C) $750,000 that as of the date of this Agreement are internally classified as
"Credit Risk Assets," "Concerned Loans," "Watch List" or words of similar
import, in each case together with the principal amount of and accrued and
unpaid interest on each such Loan and the identity of the borrower thereunder,
and (ii) by category of Loan (i.e., commercial, consumer, etc.), all of the
other Loans of Target and its Subsidiaries that as of the date of this
Agreement are classified as such, together with the aggregate principal amount
of and accrued and unpaid interest on such Loans by category. Target shall
promptly inform Parent of any Loan that becomes classified in the manner
described in the previous sentence, or any Loan the classification of which is
changed, at any time after the date of this Agreement. Target and its
Subsidiaries have internally classified, in the manner described above, all
Loans that any auditor or government examiner has criticized or classified, and
the internal classification of such Loans is at
least as strict as the criticism or classification thereof by an auditor or
government examiner.
(b) Target and Target Bank have timely filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since January 1, 1990
with (i) the Federal Reserve Board, (ii) the FDIC, (iii) the OTS, (iv) any
state regulatory authority (each a "State Regulator") and (v) any self-
regulatory organization ("SRO") (collectively "Regulatory Agencies"), and all
other material reports and statements required to be filed by them since
January 1, 1989, including, without limitation, any report or statement
required to be filed pursuant to the laws, rules or regulations of the United
States, any state, the Federal Reserve Board, the FDIC, the OTS, any State
Regulator or any SRO, and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of Target and its Subsidiaries,
and except as otherwise disclosed in Section 3.5(b) of the Target Disclosure
Schedule, no Regulatory Agency has initiated any proceeding or, to the best
knowledge of Target, investigation into the business or operations of Target or
any of its Subsidiaries since January 1, 1989. Except as otherwise disclosed
in Section 3.5(b) of the Target Disclosure Schedule, there is no material
unresolved violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of Target or
any of its Subsidiaries.
3.6 Financial Statements. Target has previously delivered to
Parent copies of (a) the consolidated balance sheets of Target and its
Subsidiaries as of December 31, for the fiscal years ended December 31, 1992
and 1993, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the fiscal years in the three
year period ended December 31, 1993, as reported in Target's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993 filed with the SEC under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
accompanied by the audit reports of Deloitte & Touche or Coopers & Lybrand,
independent public accountants with respect to Target, and (b) the unaudited
consolidated balance sheets of Target and its Subsidiaries as of March 31, 1993
and March 31, 1994 and the related unaudited consolidated statements of income,
cash flows and changes in stockholders' equity for the three month periods then
ended as reported in Target's Quarterly Report on Form 10-Q for the period
ended March 31, 1994 filed with the SEC under the Exchange Act. The March 31,
1994 consolidated
balance sheet of Target (including the related notes, where applicable) fairly
presents the consolidated financial position of Target its Subsidiaries as of
the date thereof, and the other financial statements referred to in this
Section 3.6 (including the related notes, where applicable) fairly present,
and the financial statements referred to in Section 6.8 hereof will fairly
present (subject, in the case of the unaudited statements recurring audit
adjustments normal in nature and amount), the results of the consolidated
operations and consolidated financial position of Target a Subsidiaries for
the respective fiscal periods or as of the respective dates therein set forth;
each of such statements (including the related notes, applicable) comply, and
the financial statements referred to in Section 6.8 hereof will comply, in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and each of
such statements (including the related notes, where applicable) has been, and
the financial statements referred to in Section 6.8 hereof will be, prepared
in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except in the case of
unaudited statements, as permitted by Form 10-Q. The books records of Target
and Target Bank have been, and are being, maintained in all material respects
in accordance with GAAP and any other applicable legal accounting requirements
and reflect only actual transactions.
3.7 Broker's Fees. Neither Target nor any Target Subsidiary
nor any of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with any of the transactions contemplated by this Agreement,
except that Target has engaged, and will pay a fee or commission to, Lehman
Brothers Inc. ("Lehman Brothers") in accordance with the terms of a letter
agreement between Lehman Brothers and Target, a true, complete and correct copy
of which has been previously delivered by Target to Parent.
3.8 Absence of Certain Changes or Events. (a) Except as may
be set forth in Section 3.8(a) of the Target Disclosure Schedule or as
disclosed in Target's Quarterly Report on Form 10-Q for the quarter ended March
31, 1994, true, complete and correct copies of which have previously been
delivered to Parent, since December 31, 1993, (i) neither Target nor any of its
Subsidiaries has incurred any material liability, except in the ordinary course
of its business consistent with prudent banking practices, and
(ii) no events have occurred which have had, individually or in the aggregate, a
Material Adverse Effect on Target.
(b) Except as set forth in Section 3.8(b) of the Target
Disclosure Schedule or as disclosed in Target's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994, since December 31, 1993, Target and its
Subsidiaries have carried on their respective businesses in the ordinary and
usual course consistent with prudent banking practices.
(c) Except as set forth in Section 3.8(c) of the Target
Disclosure Schedule, since December 31, 1993, neither Target nor any of its
Subsidiaries has (i) except for normal increases in the ordinary course of
business consistent with past practice or except as required by applicable law,
increased the wages, salaries, compensation, pension, or other fringe benefits
or perquisites payable to any executive officer, employee, or director from the
amount thereof in effect as of December 31, 1993, granted any severance or
termination pay, entered into any contract to make or grant any severance or
termination pay, or paid any bonus other than year-end bonuses for fiscal 1993
and 1994 as listed in Section 3.8 of the Target Disclosure Schedule or
(ii) suffered any strike, work stoppage, slow-down, or other labor disturbance.
3.9 Legal Proceedings. (a) Except as set forth in
Section 3.9(a) of the Target Disclosure Schedule, neither Target nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
Target's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of
any nature against Target or any of its Subsidiaries as to which there is a
reasonable probability of an adverse determination and (i) which, if adversely
determined, would, individually or in the aggregate, have a Material Adverse
Effect on Target or the Surviving Corporation or (ii) challenging the validity
or propriety of the transactions contemplated by this Agreement.
(b) Except as otherwise disclosed in Section 3.9(b) of the
Target Disclosure Schedule, there is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Target, any of its Subsidiaries or the
assets of Target or any of its Subsidiaries which has had, or might reasonably
be expected to have, a Material Adverse Effect on Target or the Surviving
Corporation.
(c) Section 3.9(c) of the Target Disclosure Schedule sets forth
all pending litigation involving any
claim against the Target Bank or any of its Subsidiaries, whether directly or by
counterclaim, involving a "lender liability" cause of action.
3.10 Taxes and Tax Returns. (a) Except as may be reflected in
Section 3.10 of the Target Disclosure Schedule or, in the aggregate, otherwise
would not have a Material Adverse Effect on Target, Parent or the Surviving
Corporation, each of Target and its Subsidiaries has duly filed all Federal,
state, and to the best of its knowledge, county, local and foreign Tax returns
(including, without limitation, information returns and returns of estimated
tax) required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete) and has duly paid or made adequate
provision for the payment of all Taxes (as defined below) that have been
incurred by it or are due or claimed to be due from it by Federal, state,
county, local or foreign taxing authorities on or prior to the date of this
Agreement (including, without limitation, if and to the extent applicable,
those due in respect of its properties, income, business, capital stock,
deposits, franchises, licenses, sales and payrolls) other than Taxes that are
being contested in good faith (and which are set forth in Section 3.10 of the
Target Disclosure Schedule). The income tax returns of Target and its
Subsidiaries have been examined by the Internal Revenue Service (the "IRS") for
all years through and including 1979, and the deficiencies (if any) asserted as
a result of such examination either, in the aggregate, were not material, or
have been satisfied. Except as may be reflected in Section 3.10 of the Target
Disclosure Schedule there are no material disputes pending, or claims asserted
for, Taxes or assessments upon Target or any of its Subsidiaries, nor does
Target or any of its Subsidiaries have outstanding any currently effective
waivers extending the statutory period of limitation applicable to any Federal,
state, county, local or foreign income tax return for any period. In addition,
(i) proper and accurate amounts have been withheld by Target and its
Subsidiaries from their employees, customers, depositors, shareholders and
others from whom they are required to withhold Tax in compliance with all
applicable Federal, state, county, local and foreign laws, except where the
failures to do so would not, in the aggregate, have a Material Adverse Effect
on Target, Parent or the Surviving Corporation and (ii) there are no Tax liens
upon any property or assets of the Target or its Subsidiaries except liens for
current Taxes not yet due. Except as, in the aggregate, would not have a
Material Adverse Effect on Target, Parent or the Surviving Corporation, or as
disclosed in Section 3.10 of the Target Disclosure Schedule, to the best of its
knowledge, (i) no property of Target or
any of its Subsidiaries is property that Target or any of its Subsidiaries is
or will be required to treat as being owned by another person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended (as in effect prior to its amendment by the Tax Reform Act of 1986)
or is "tax-exempt use property" within the meaning of Section 168(h) of the
Code; (ii) neither Target nor any of its Subsidiaries has been required to
include in income any adjustment pursuant to Section 481 of the Code by
reason a voluntary change in accounting method initiated by Target or any of
its Subsidiaries, and the Internal Revenue Service has not initiated or
proposed any such adjustment or change in accounting method; and (iii)
neither Target nor any of its Subsidiaries has entered into a transaction
which is being accounted for as an installment obligation under Section 453
of the Code.
(b) As used in this Agreement, the term "Tax" or "Taxes" means
all Federal, state, county, local, and foreign income, excise, gross receipts,
ad valorem, profits, gains, transfer gains, property, sales, transfer, use,
payroll, employment, severance, withholding, backup withholding, intangibles,
franchise, and other taxes, governmental charges, levies or like assessments
together with all penalties and additions to Tax and interest thereon.
(c) Target Bank, at the close of its most recent taxable year,
qualified, and on the Closing Date will qualify either as a "domestic building
and loan association" within the meaning of Section 7701(a)(19) of the Code or
as a "mutual savings bank" within the meaning of Section 591(b) of the Code
that meets the requirements of Section 7701(a)(19)(C) of the Code.
3.11 Employees. (a) The Target Reports (as defined in Section
3.12 hereof) accurately describe all bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock and stock option plans, all employment
or severance contracts, other material employee benefit plans and any
applicable "change of control" or similar provisions in any plan, contract or
arrangement which cover employees or former employees of Target or its
Subsidiaries (collectively, the "Compensation and Benefit Plans") required to
be described in such Target Reports. The Compensation and Benefit Plans and
all other benefit plans, contracts or arrangements covering directors,
employees or former employees of Target or its Subsidiaries (the "Employees"),
including, but not limited to, "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), are listed in Section 3.11 of the Target Disclosure Schedule. True
and complete copies of all Compensation and Benefit Plans and such other
benefit plans, contracts or arrangements, including, but not limited to, any
trust instruments and/or insurance contracts, if any, forming a part of any
such plans and agreements, and all amendments thereto, including but not
limited to (i) the actuarial report for such plan (if applicable) for each of
the last two years, and (ii) the most recent determination letter from the IRS
(if applicable) for such plan, have heretofore been delivered to Parent.
(b) All employee benefit plans, other than "multiemployer
plans" within the meaning of Sections 3(37) or 4001(a)(3) of ERISA, covering
Employees (the "Plans"), to the extent subject to ERISA, are in substantial
compliance with ERISA. Each Plan which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA ("Pension Plan") and which is
intended to be qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code"), has received a favorable determination letter
from the IRS, and Target is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. The 1985 Target
Employee Stock Ownership Plan satisfies the requirements for an employee stock
ownership plan under Section 4975(e)(7) of the Code. There is no material
pending or threatened litigation relating to the Plans. Neither Target nor any
of its Subsidiaries has engaged in a transaction with respect to any Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
could subject Target or any of its Subsidiaries to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA in an amount which
would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by Target or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with Target or any of its Subsidiaries under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). Target and its Subsidiaries
have not incurred and do not expect to incur any withdrawal liability with
respect to a multiemployer plan under Subtitle E of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate). No
notice of a "reportable event", within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been required
to be filed for any Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof.
(d) All contributions required to be made under the terms of
any Plan have been timely made. Neither any Pension Plan nor any single-
employer plan of an ERISA Affiliate has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA. Neither Target nor its Subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any single-employer
plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(e) Under each Pension Plan which is a single-employer plan, as
of the last day of the most recent plan year ended prior to the date hereof,
the actuarially determined present value of all "benefit liabilities", within
the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Plan's most recent actuarial valuation),
did not exceed the then current value of the assets of such Plan, and there has
been no material change in the financial condition of such Plan since the last
day of the most recent Plan Year. The withdrawal liability of Target and its
Subsidiaries under each Benefit Plan which is a multiemployer plan to which
Target, its Subsidiaries or an ERISA Affiliate has contributed during the
preceding 12 months, determined as if a "complete withdrawal", within the
meaning of Section 4203 of ERISA, had occurred as of the date hereof, does not
exceed $100,000.
(f) Neither Target nor its Subsidiaries has any obligations for
retiree health and life benefits under any Plan, except as set forth in Section
3.11 of the Target Disclosure Schedule. Except as set forth in Section 3.11 of
the Target Disclosure Schedule, there are no restrictions on the rights of
Target or its Subsidiaries to amend or terminate any such Plan without
incurring any liability thereunder.
(g) Target and its Subsidiaries have no material unfunded
liabilities with respect to any Pension Plan which covers foreign Employees.
(h) Neither Target nor any of its Subsidiaries is a party
to, or is bound by, any collective bargaining agreement, contract, or other
agreement or understanding with a labor union or labor organization, nor is
Target or any of its Subsidiaries the subject of any material proceeding
asserting that Target or any such Subsidiary has
committed an unfair labor practice or seeking to compel Target or such
Subsidiary to bargain with any labor organization as to wages or conditions of
employment, nor is there any strike involving Target or any of its
Subsidiaries pending or, to the best of Target's knowledge, threatened, nor
is Target aware of any activity involving its or any of its Subsidiaries'
employees seeking to certify a collective bargaining unit or engaging in any
other organizational activity.
3.12 SEC Reports. Target has made or will make available to
Parent an accurate and complete copy of each (a) registration statement,
prospectus, report, schedule, proxy statement, information statement or other
stockholder communication used, circulated or filed after January 1, 1990 by
Target, and no such registration statement, prospectus, report, schedule, proxy
statement, information statement or communication, each in the form (including
exhibits and amendments thereto) filed with the SEC (or if not so filed, in the
form first used or circulated) (collectively, the "Target Reports"), contained,
as of its date, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading. Target has timely filed, and will timely file, all Target Reports
and other documents required to be filed by it under the Securities Act of
1933, as amended (the "Securities Act") and the Exchange Act, and, as of their
respective dates, all Target Reports complied in all material respects with the
published rules and regulations of the SEC with respect thereto.
3.13 Target Information The information relating to or
provided by Target and its Subsidiaries to be contained or incorporated by
reference in the Proxy Statement and the registration statement on Form S-4
(the "S-4") in which the Proxy Statement will be included as a prospectus, or
in any other document filed with any other regulatory agency in connection
herewith, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not misleading.
The Proxy Statement (except for such portions thereof that relate only to
Parent or any of its Subsidiaries) will comply in all material respects with
the provisions of the Exchange Act and the rules and regulations thereunder.
3.14 Compliance with Applicable Law. Except as disclosed in
Section 3.14 of the Target Disclosure Schedule, Target and each of its
Subsidiaries hold, and have at all
times held, all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to all, and have complied with and are not in default in any respect
under any, applicable laws, statutes, orders, rules, regulations, policies
and/or guidelines of any Governmental Entity relating to Target or any of its
Subsidiaries, except where the failure to hold such license, franchise, permit
or authorization or such noncompliance or default would not, individually or in
the aggregate, have a Material Adverse Effect on Target or the Surviving
Corporation, and neither Target nor any of its Subsidiaries knows of, or has
received notice of, any violations of any of the above.
3.15 Certain Contracts. (a) Except as set forth in
Section 3.15(a) of the Target Disclosure Schedule, neither Target nor any of
its Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) with respect to the
employment of any directors, officers, employees or consultants, (ii) which,
upon the consummation of the transactions contemplated by this Agreement will
(either alone or upon the occurrence of any additional acts or events) result
in any payment (whether of severance pay or otherwise) becoming due from
Parent, Target, Target Bank, the Surviving Corporation or any of their
respective Subsidiaries to any officer or employee thereof, (iii) which is a
material contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC)
to be performed after the date of this Agreement that has not been filed or
incorporated by reference in the Target Reports filed with the SEC during 1994,
(iv) which is a consulting agreement (including data processing, software
programming and licensing contracts) not terminable on 60 days or less notice
involving the payment of more than $100,000 per annum, in the case of any such
agreement with an individual, or $500,000 per annum, in the case of any other
such agreement, (v) which materially restricts the conduct of any line of
business by Target or Target Bank, or (vi) (including any stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan)
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement. Target has previously delivered to Parent true and correct copies
of all employment, consulting and deferred compensation agreements which are in
writing and to which Target or any of its Subsidiaries is a party. Each
contract, arrangement, commitment or understanding of the type described in
this
Section 3.15(a), whether or not set forth in Section 3.15(a) of the Target
Disclosure Schedule, is referred to herein as a "Target Contract," and neither
Target nor any of its Subsidiaries knows of, or has received notice of, any
material violation of the above.
(b) Except as set forth in Section 3.15(b) of the Target
Disclosure Schedule, (i) each Target Contract is valid and binding and in full
force and effect, (ii) Target and each of its Subsidiaries has in all material
respects performed all obligations required to be performed by it to date under
each Target Contract, except where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect on Target, and (iii) no
event or condition exists which constitutes or, after notice or lapse of time
or both, would constitute, a material default on the part of Target or any of
its Subsidiaries under any such Target Contract, except where such default,
individually or in the aggregate, would not have a Material Adverse Effect on
Target.
3.16 Agreements with Regulatory Agencies. Except as disclosed
in the Target Reports or as set forth in Section 3.16 of the Target Disclosure
Schedule, neither Target nor any of its Subsidiaries is subject to any cease-
and desist or other order issued by, or is a party to any written agreement,
consent agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
or has adopted any board resolutions at the request of (each, whether or not
set forth on Section 3.16 of the Target Disclosure Schedule, a "Regulatory
Agreement"), any Regulatory Agency or other Governmental Entity that restricts
the conduct of its business or that in any manner relates to its capital
adequacy, its credit policies, its management or its business, nor has Target
or any of its Subsidiaries been advised by any regulatory Agency or other
Governmental Entity that it is considering issuing or requesting any Regulatory
Agreement.
3.17 Investment Securities. Section 3.17 of the Target
Disclosure Schedule sets forth the book and market value as of March 31, 1994
of the investment securities, mortgage backed securities and securities held
for sale of Target and its Subsidiaries. Section 3.17 of the Target Disclosure
Schedule sets forth an investment securities report which includes security
descriptions, CUSIP numbers, pool face values, book values, coupon rates,
market values,
book yields and weighted average coupon, in each case as of
March 31, 1994.
3.18 Intellectual Property. Except where there would be no
Material Adverse Effect on Target, Target and each of its Subsidiaries owns or
possesses valid and binding licenses and other rights to use without payment
all material patents, copyrights, trade secrets, trade names, servicemarks and
trademarks used in its businesses and neither Target nor any of its
Subsidiaries has received any notice of conflict with respect thereto that
asserts the right of others. Target and each of its Subsidiaries have in all
material respects performed all the obligations required to be performed by
them and are not in default in any material respect under any contract,
agreement, arrangement or commitment relating to any of the foregoing, except
where such nonperformance or default would not, individually or in the
aggregate, have a Material Adverse Effect on Target.
3.19 Undisclosed Liabilities. Except (a) as set forth in
Section 3.19 of the Target Disclosure Schedule, (b) for those liabilities that
are fully reflected or reserved against on the consolidated balance sheet of
Target included in its Form 10-Q for the period ended March 31, 1994 and
(c) for liabilities incurred in the ordinary course of business consistent with
past practice since March 31, 1994, neither Target nor any of its Subsidiaries
has incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due) that, either alone or
when combined with all similar liabilities, is, or could reasonably be expected
to have, a Material Adverse Effect on Target or the Surviving Corporation.
3.20 Takeover Restrictions. (a) The Board of Directors of
Target has approved the transactions contemplated by this Agreement such that
the supermajority vote provisions of Section 203 of the DGCL and Section 8 of
Target's Certificate of Incorporation will not apply to this Agreement or any
of the transactions contemplated hereby.
(b) No "business combination", "moratorium", "control
share", or other federal or state antitakeover statute or regulation
(collectively, "Antitakeover Provisions") other than HOLA or the Federal
Deposit Insurance Act (i) prohibits or restricts Target's ability to perform
its obligations under this Agreement, or its ability to consummate the
transactions contemplated hereby, (ii) would have the effect of invalidating or
voiding this Agreement, or any provision hereof, (iii) would subject
Parent or Merger Sub to any material impediment or condition in connection with
the exercise of any of its rights under this Agreement, or (iv) would provide
any rights to, or permit the exercise of rights by, Target's stockholders.
3.21 Administration of Fiduciary Accounts. Each of Target and
Target Bank has properly administered in all material respects all accounts for
which it acts as a fiduciary, including but not limited to accounts for which
it serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the
governing documents and applicable state and federal law and regulation and
common law. Neither Target nor Target Bank nor any of their respective
directors, officers or employees has committed any breach of trust with respect
to any such fiduciary account which has had or could reasonably be expected to
have a Material Adverse Effect on Target, and the accountings for each such
fiduciary account are true and correct in all material respects and accurately
reflect the assets of such fiduciary account.
3.22 Environmental Matters. Except as set forth in
Section 3.22 of the Target Disclosure Schedule, to the knowledge of Target:
(a) Each of Target, its Subsidiaries, the Participation
Facilities and the Loan/Fiduciary Properties (each as hereinafter defined) are,
and have been, in compliance with all applicable laws, rules, regulations,
standards and requirements of all federal, state, local and foreign laws and
regulations relating to pollution or protection of human health or the
environment (including without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of Hazardous Material or
petroleum or petroleum products, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Material or petroleum or petroleum products), except for
violations which, either individually or in the aggregate, have not had and
cannot reasonably be expected to have a Material Adverse Effect on Target;
(b) There is no suit, claim, action, proceeding, investigation
or notice pending or threatened (or past or present actions, activities,
circumstances, conditions, events or incidents that could form the basis of any
such suit, claim, action, proceeding, investigation or notice), before any
Governmental Entity or other forum in which Target, any of its Subsidiaries,
any Participation Facility or any Loan/Fiduciary Property (or person or entity
whose
liability for any such suit, claim, action, proceeding, investigation or
notice Target, any of its Subsidiaries, Participation Facility or
Loan/Fiduciary Property has or may have retained or assumed either
contractually or by operation of law), has been or, with respect to threatened
suits, claims, actions, proceedings, investigations or notices may be, named as
a defendant (x) for alleged noncompliance (including by any predecessor), with
any environmental law, rule or regulation or (y) relating to the release or
threatened release into the environment of any Hazardous Material (as
hereinafter defined) or petroleum or petroleum products whether or not
occurring at or on a site owned, leased or operated by Target or any of its
Subsidiaries, any Participation Facility or any Loan/Fiduciary Property, except
where such noncompliance or release has not had, and cannot be reasonably
expected to have, either individually or in the aggregate, a Material Adverse
Effect on Target;
(c) During the period of (x) Target's or any of its
Subsidiaries' ownership or operation of any of their respective current
properties, (y) Target's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) Target's or any of its
Subsidiaries' holding of a security or other interest in a Loan/Fiduciary
Property, there has been no release of Hazardous Material or petroleum or
petroleum products in, on, under or affecting any such property, except where
such release or threatened release has not had and cannot reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect on Target. Prior to the period of (x) Target's or any of its
Subsidiaries' ownership or operation of any of their respective current
properties, (y) Target's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) Target's or any of its
Subsidiaries' holding of a security or other interest in a Loan/Fiduciary
Property, there was no release or threatened release of Hazardous Material or
petroleum or petroleum products in, on, under or affecting any such property,
Participation Facility or Loan/Fiduciary Property, except where such release
has not had and cannot be reasonably expected to have, either individually or
in the aggregate, a Material Adverse Effect on Target; and
(d) The following definitions apply for purposes of this
Section 3.22: (x) "Loan/Fiduciary Property" means any property owned or
controlled by Target or any Target Subsidiary or in which Target or any of its
Subsidiaries holds a security or other interest, and, where required by the
context, said term means the owner or operator of such
property; (y) "Participation Facility" means any facility in which Target or
any of its Subsidiaries participates in the management and, where required by
the context, said term means the owner or operator of such property; and (z)
"Hazardous Material" means any pollutant, contaminant, waste or hazardous or
toxic substance.
3.23 Derivative Transactions. Section 3.23 of the Target
Disclosure Schedule sets forth the market value, as of May 31, 1994, of all
holdings by Target or any of its Subsidiaries of positions in forwards,
futures, options on futures, swaps and any other instrument within the scope of
Target's Board-approved investment policy ("Derivative Instruments"). Except
as set forth in Section 3.23 of the Target Disclosure Schedule, since December
31, 1993 neither Target nor any of its Subsidiaries has engaged in any
transactions in or involving Derivative Instruments except as agent on the
order and for the account of others. None of the counterparties to any
contract or agreement with respect to any such instrument is in default with
respect to such contract or agreement and no such contract or agreement, were
it to be a Loan held by Target or any of its Subsidiaries, would be classified
as "Other Loans Especially Mentioned," "Special Mention," "Substandard,"
"Doubtful," "Loss," "Classified," "Criticized," "Credit Risk Assets,"
"Concerned Loans" or words of similar import. The financial position of Target
and its Subsidiaries on a consolidated basis under or with respect to each such
instrument has been reflected in the books and records of Target and such
Subsidiaries in accordance with GAAP consistently applied, and no open exposure
of Target or any of its Subsidiaries with respect to any such instrument (or
with respect to multiple instruments with respect to any single counterparty)
exceeds $500,000.
3.24 Accuracy of Information. The statements contained in this
Agreement, the Target Disclosure Schedules or in any other written document
delivered by or on behalf of Seller pursuant to the terms of this Agreement are
true and correct, and such statements and documents do not omit any fact
necessary to make the statements contained therein not misleading.
3.25 Opinion. Target has received an opinion, dated the date
of this Agreement, from Lehman Brothers to the effect that, subject to the
terms, conditions and qualifications set forth therein, as of the date thereof
the consideration to be received by the stockholders of Target pursuant to the
Merger is fair to such stockholders from a financial point of view.
3.26 Assistance Agreements. Except as set forth in
Section 3.26 of the Target Disclosure Schedule, neither Target nor any of its
Subsidiaries is a party to any agreement or arrangement entered into in
connection with the consummation of a federally or state assisted acquisition
of a depository institution pursuant to which Target or any of its Subsidiaries
is entitled to receive financial assistance or indemnification from any
governmental agency.
3.27 DEPCO Directors. On the date hereof, (i) the Rhode Island
Depositors Economic Protection Corporation ("DEPCO") or any "Nominee" as
defined in the Stock and Warrant Purchase Agreement dated as of April 21, 1992,
by and between DEPCO and Target (the "DEPCO Agreement") (A) owns all of the
issued and outstanding shares of Target's Series B Preferred Stock and (B) has
the right to elect and has elected at least one current member of Target's
Board of Directors and (ii) on the date hereof, and at all times through and
including the Effective Date, the Directors elected by DEPCO or any "Nominee"
as defined in the DEPCO Agreement pursuant to the terms of the Target Series B
Preferred Stock shall represent less than 20% of the members of Target's Board
of Directors.
3.28 Qualified Thrift Lender. Target Bank is a "qualified
thrift lender" within the meaning set forth in Section 10(m) of HOLA.
3.29 Knowledge as to Conditions. Target knows of no reason why
the Requisite Regulatory Approvals (as defined below) should not be obtained.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent hereby represents and warrants to Target as follows:
4.1 Corporate Organization. (a) Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Parent has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such
licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Parent.
Parent is duly registered as a bank holding company under the BHC Act. The
Certificate of Incorporation and By-laws of Parent, copies of which have
previously been made available to Target, are true, complete and correct copies
of such documents as in effect as of the date of this Agreement.
(b) Merger Sub is or will be a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
(c) Each Significant Subsidiary of Parent is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Each Significant Subsidiary of Parent has the corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as it is now being conducted, and is duly licensed or qualified to
do business in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where the failure
to be so licensed or qualified would not have a Material Adverse Effect on
Parent.
4.2 Capitalization. (a) The authorized capital stock of
Parent consists of 150,000,000 shares of Parent Common Stock and 10,000,000
shares of preferred stock, without par value ("Parent Preferred Stock"). At
the close of business on March 31, 1994 there were 95,927,307 shares of Parent
Common Stock, 700,000 shares of Parent Preferred Stock (of stated value of
$50.00 per share), and 5,750,000 shares of Parent Depositary Shares (each
representing a one-tenth interest in a share of 9.30% cumulative preferred
stock ($250 stated value)) issued and outstanding, and 543 shares of Parent
Common Stock held in Parent's treasury. On March 31, 1994, no shares of Parent
Common Stock or Parent Preferred Stock were reserved for issuance, except that
13,052,807 shares of Parent Common Stock were reserved for issuance pursuant to
Parent's dividend reinvestment and stock purchase plans, 6,115,251 shares of
Parent Common Stock were reserved for issuance upon the exercise of stock
options pursuant to the Parent Stock Option and Restricted Stock Award Plan and
the Parent 1989 Nonemployee Directors' Restricted Stock Plan (collectively, the
"Parent Stock Plans"), 9,357,452 shares of Parent Common Stock were reserved
for issuance upon consummation of the merger of New Dartmouth Bank ("New
Dartmouth") with a Subsidiary of Parent, pursuant to the Agreement and Plan of
Merger, dated
as of March 23, 1993, as amended, between Parent and New Dartmouth, 8,453,445
shares of Parent Common Stock were reserved for issuan upon consummation of the
merger of Peoples Bancorp of Worcester, Inc. ("Peoples") with a Subsidiary of
Parent, pursuant to the Agreement and Plan of Merger dated as of August 26,
1993, as amended, between Parent and Peoples, 7,627,301 shares of Parent
Common Stock were reserved for issuance upon consummation of the merger of
Gateway Financial Corporation ("Gateway") with a Subsidiary of Parent,
pursuant to the Agreement and Plan of Merger between Parent, Shawmut Service
Corporation and Gateway dated as of November 5, 1993, and 1,500,000 shares of
Parent Series A Junior Participating Preferred Stock were reserved for
issuance upon exercise of the rights (the "Parent Rights") distributed to
holders of Parent Common Stock pursuant to the Shareholder Rights Agreement,
dated as of February 28, 1989, between Parent and Manufacturers Hanover Trust
Company, as Rights Agent (the "Parent Shareholder Rights Agreement"). In
addition, Parent has issued and outstanding 1,329,115 warrants to purchase
Parent Common Stock. All of the issued and outstanding shares of Parent
Common Stock and Parent Preferred Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of the date of this
Agreement, except as referred to above or reflected in Section 4.2(a) of the
Disclosure Schedule which is being delivered by Parent to Target herewith
(the "Parent Disclosure Schedule") and except for the Parent Shareholder
Rights Agreement, Parent does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Parent Common
Stock or Parent Preferred Stock or any other equity securities of Parent or
any securities representing the right to purchase or otherwise receive any
shares of Parent Common Stock or Parent Preferred Stock. The shares of Parent
Common Stock to be issued pursuant to the Merger will authorized and validly
issued and, at the Effective Time, all such shares will be fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof.
(b) Section 4.2(b) of the Parent Disclosure Schedule sets forth
a true and correct list of all of the Parent Subsidiaries as of the date of
this Agreement. Except as set forth in Section 4.2(b) of the Parent Disclosure
Schedule, Parent owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the Parent Subsidiaries, free
and clear of all liens, charges, encumbrances and security interests what-
soever, and all of such shares are duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. No Parent Subsidiary has or is
bound by any outstanding subscriptions, options, warrants, calls, commitments
or agreements of any character with any party that is not a direct or indirect
Subsidiary of Parent calling for the purchase or issuance of any shares of
capital stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
4.3 Authority; No Violation. (a) Parent has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Parent, and no other corporate
proceedings on the part of Parent are necessary to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Parent and constitutes a valid and binding obligation of Parent.
(b) Except as set forth in Section 4.3(b) of the Parent
Disclosure Schedule, neither the execution and delivery of this Agreement by
Parent, nor the consummation by Parent or Merger Sub, as the case may be, of
the transactions contemplated hereby or thereby, nor compliance by Parent or
Merger Sub with any of the terms or provisions hereof or thereof, will
(i) violate any provision of the Certificate of Incorporation or By-Laws of
Parent or the Certificate of Incorporation or By-Laws of Merger Sub, as the
case may be, or (ii) assuming that the consents and approvals referred to in
Section 4.4 are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Parent or
any of its Significant Subsidiaries or any of their respective properties or
assets, or (y) violate, conflict with, result in a breach of any provision of
or the loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or result
in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of Parent or any of its Subsidiaries under, any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Parent or any of its Subsidiaries is a party, or by which
they or any of their respective properties or assets may be bound or affected,
except (in the case of clause (y) above) for such violations, conflicts,
breaches or defaults which either individually or in the aggregate will not
have a Material Adverse Effect on Parent.
4.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Federal Reserve Board under
the BHC Act and approval of such applications and notices, (ii) the filing of
applications with the OTS under HOLA and approval of such applications,
(iii) the State Approvals, (iv) the filing with the SEC of the S-4, (v) the
approval of this Agreement by Parent as the sole stockholder of Merger Sub,
(vi) the filing of the Certificate of Merger with the Secretary pursuant to the
DGCL, (vii) such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in connection with
the issuance of the shares of Parent Common Stock pursuant to this Agreement,
and (viii) such filings, authorizations or approvals as may be set forth in
Section 4.4 of the Parent Disclosure Schedule, no consents or approvals of or
filings or registrations with any Governmental Entity or with any third party
are necessary in connection with (1) the execution and delivery by Parent of
this Agreement and (2) the consummation by Parent and Merger Sub of the Merger
and the other transactions contemplated hereby. The affirmative vote of the
holders of the outstanding shares of Parent Common Stock is not required to
approve this Agreement or the transactions contemplated hereby.
4.5 Financial Statements. Parent has previously delivered to
Target copies of (a) the consolidated balance sheets of Parent and its
Subsidiaries as of December 31 for the fiscal years 1992 and 1993 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1991 through 1993, inclusive, as reported in
Parent's Annual Report on Form 10-K for the fiscal year ended December 31, 1993
filed with the SEC under the Exchange Act, in each case accompanied by the
audit report of Price Waterhouse, independent public accountants with respect
to Parent, and (b) the unaudited consolidated balance sheet of Parent and its
Subsidiaries as of March 31, 1994 and March 31, 1993 and the related unaudited
consolidated statements of income, changes in shareholders' equity and cash
flows for the three month periods then ended as reported in Parent's Quarterly
Report on Form 10-Q for the period ended March 31, 1994
filed with the SEC under the Exchange Act. The December 31, 1993 consolidated
balance sheet of Parent (including the related notes, where applicable) fairly
presents the consolidated financial position of Parent and its Subsidiaries as
of the date thereof, and the other financial statements referred to in this
Section 4.5 (including the related notes, where applicable) fairly present and
the financial statements referred to in Section 6.8 hereof will fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount), the results of the consolidated
operations and changes in shareholders' equity and consolidated financial
position of Parent and its Subsidiaries for the respective fiscal periods or as
of the respective dates therein set forth; each of such statements (including
the related notes, where applicable) comply, and the financial statements
referred to in Section 6.8 hereof will comply, in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been, and the financial statements
referred to in Section 6.8 hereof will be, prepared in accordance with GAAP
consistently applied during the periods involved, except as indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form
10-Q. The books and records of Parent and its Significant Subsidiaries have
been, and are being, maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements and reflect
only actual transactions.
4.6 Broker's Fees. Neither Parent, Merger Sub nor any Parent
Subsidiary, nor any of their respective officers or directors, has employed any
broker or finder or incurred any liability for any broker's fees, commissions
or finder's fees in connection with any of the transactions contemplated by
this Agreement, except that Parent has engaged, and will pay a financial
advisory service fee to, Morgan Stanley & Co. Incorporated.
4.7 Absence of Certain Changes or Events. Except as may be set
forth in Section 4.7 of the Parent Disclosure Schedule, or as disclosed in
Parent's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994 or
in any Current Reports of Parent on Form 8-K filed prior to the date of this
Agreement, true, complete and correct copies of which have previously been
delivered to Target, since December 31, 1993, no event has occurred which has
had or is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Parent.
4.8 Legal Proceedings. Except as set forth in Section 4.8 of
the Parent Disclosure Schedule or in Parent's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1994, neither Parent nor any of its Subsidiaries is
a party to any and there are no pending or, to the best of Parent's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against
Parent or any of its Subsidiaries as to which there is a reasonable probability
of an adverse determination and (i) which, if adversely determined, would,
individually or in the aggregate, have a Material Adverse Effect on Parent or
(ii) challenging the validity or propriety of the transactions contemplated by
this Agreement. There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Parent, any of its Subsidiaries or the assets of
Parent or any of its Subsidiaries which has had, or might reasonably be
expected to have, a Material Adverse Effect on Parent.
4.9 Compliance with Applicable Law. Parent and each of its
Subsidiaries hold, and have at all times held, all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of
their respective businesses under and pursuant to all, and have complied with
and are not in default in any respect under any, applicable laws, statutes,
orders, rules, regulations, policies and/or guidelines of any Governmental
Entity relating to Parent or any of its Subsidiaries, except where the failure
to hold such license, franchise, permit or authorization or such non-compliance
or default would not, individually or in the aggregate, have a Material Adverse
Effect on Parent, and neither Parent nor any of its Subsidiaries knows of, or
has received notice of violation of, any material violations of any of the
above.
4.10 SEC Reports. Parent has made or will make available to
Target an accurate and complete copy of each (a) registration statement,
prospectus, report, schedule, proxy statement, information statement or other
stockholder communication used, circulated or filed after January 1, 1990 by
Parent, and no such registration statement, prospectus, report, schedule, proxy
statement, information statement or other stockholder communication used, each
in the form (including exhibits and amendments thereto) filed with the SEC (or
if not so filed, in the form first used or circulated) (collectively, the
"Parent Reports"), contained, as of its date, any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were
made, not misleading. Parent has timely filed, and will timely file, all
Parent Reports and other documents required to be filed by it under the
Securities Act and the Exchange Act, and, as of their respective dates, all
Parent Reports complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
4.11 Parent Information. The information relating to or
provided by Parent and its Subsidiaries to be contained or incorporated by
reference in the Proxy Statement and the S-4, or in any other document filed
with any other regulatory agency in connection herewith, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein not misleading. The S-4 (except for such
portions thereof that relate only to Target or any of its Subsidiaries) will
comply in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.
4.12 Accuracy of Information. The statements contained in this
Agreement, the Parent Disclosure Schedule or in any other written document
delivered by or on behalf of Parent pursuant to the terms of this Agreement are
true and correct in all material respects, and such statements and documents do
not omit any material fact necessary to make the statements contained therein
not misleading.
4.13 Undisclosed Liabilities. Except (a) as set forth in
Section 4.13 of the Parent Disclosure Schedule, (b) for those liabilities that
are fully reflected or reserved against on the consolidated balance sheet of
Parent included in its Form 10-Q for the quarter ended March 31, 1994 and
(c) for liabilities incurred in the ordinary course of business consistent with
past practice, since December 31, 1993, neither Parent nor any of its Subsidia-
ries has incurred any liability of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether due or to become due) that, either
alone or when combined with all similar liabilities, is, or could reasonably be
expected to have a Material Adverse Effect.
4.14 Knowledge as to Conditions. Parent knows of no reason why
the Requisite Regulatory Approvals should not be obtained.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of Target. During the period from the date of
this Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written consent
of Parent, Target and its Subsidiaries shall carry on their respective
businesses in the ordinary course and consistent with prudent banking practice.
Target will, and will use its best efforts to cause each of its Subsidiaries,
to (x) preserve intact its and their business organizations, (y) keep available
to itself and Parent the present services of its and their employees and
(z) preserve intact for itself and Parent the goodwill of its and their
customers and others with whom business relationships exist. Without limiting
the generality of the foregoing, and except as consented to in writing by
Parent, Target shall not, and shall not permit any of its Subsidiaries to:
(a) solely in the case of Target, declare or pay any dividends
on, or make other distributions in respect of, any of its capital stock except
for regular dividends on Target Series B Preferred Stock;
(b) (i) adjust, split, combine or reclassify any shares of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock (other than payment of regular dividends on Target Series B Pre-
ferred Stock) or grant any stock appreciation rights except upon the exercise
or fulfillment of rights or options issued or existing pursuant to employee or
director benefit plans, programs or arrangements, all to the extent outstanding
and in existence on the date of this Agreement and listed in Section 3.11 of
the Target Disclosure Schedule, or (ii) repurchase, redeem or otherwise acquire
(except for the acquisition of Trust Account Shares and DPC Shares, as such
terms are defined in Section 1.4(b) hereof or as required by the DEPCO
Agreement) any shares of the capital stock of Target or any Target Subsidiary,
or any securities convertible into or exercisable for any shares of the capital
stock of Target or any Target Subsidiary;
(c) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock (other than
payment of regular dividends on Target Series B Preferred Stock) or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect
to any of the foregoing, other than the grant of options required pursuant to
the Subsequent Grant provision of the Target 1993 Stock Option Plan For Three
Year Term Outside Directors (the "Subsequent Options") and the issuance of
Target Common Stock upon exercise of Subsequent Options, the issuance of Target
Common Stock upon exercise of Subsequent Options, the issuance of Target Common
Stock pursuant to stock options or similar rights to acquire Target Common
Stock granted pursuant to the Target Stock Option Plans and outstanding prior
to the date of this Agreement or pursuant to the Target Warrants, in each case
in accordance with their terms on the date hereof;
(d) amend its Certificate of Incorporation, By-laws or other
similar governing documents;
(e) authorize or permit any of its officers, directors,
employees or agents directly or indirectly to solicit, initiate or encourage
any inquiries relating to, or other making of any proposal which constitutes, a
"takeover proposal" (as defined below), or, except to the extent legally
required for the discharge of the fiduciary duties of the Board of Directors of
Target as advised in writing by such Board's outside counsel, recommend or
endorse any takeover proposal, or participate in any discussions or
negotiations, or provide third parties with any nonpublic information, relating
to any such inquiry or proposal or otherwise facilitate any effort or attempt
to make or implement a takeover proposal; provided, however, that Target may
communicate information about any such takeover proposal to its stockholders
if, in the judgment of Target's Board of Directors with the written advice of
such Board's outside counsel, such communication is required under applicable
law. Target will immediately cease and cause to be terminated any existing
activities, discussions or negotiations previously conducted with any parties
other than Parent with respect to any of the foregoing and shall demand the
return of any confidential information provided to any other person and will
enforce its rights, under any confidentiality agreement, to the return of any
confidential information in the event any such other person does not return
such information. Target will take all actions necessary or advisable to
inform the appropriate individuals or entities referred to in the first
sentence of this Section 5.1(e) of the obligations undertaken in this
Section 5.1(e). Target will notify Parent immediately if any such inquiries or
takeover proposals are received by, any such information is requested from, or
any such negotiations or discussions are sought to be initiated or continued
with, Target, and Target will promptly inform
Parent in writing of all of the relevant details with respect to the foregoing.
As used in this Agreement, "takeover proposal" shall mean any tender or exchange
offer, proposal for a merger, consolidation or other business combination
involving Target or any Subsidiary of Target or any proposal or offer to
acquire in any manner a substantial equity interest in, or a substantial portion
of the assets or deposits of, Target or any Subsidiary of Target other than the
transactions contemplated or permitted by this Agreement;
(f) except as set forth in Section 5.1 of the Target Disclosure
Schedule, make any capital expenditures other than in the ordinary course of
business, as necessary to maintain existing assets in good repair or capital
expenditures contemplated by the Target Business Plan dated as of April 15,
1994 previously furnished to Parent (the "Business Plan");
(g) enter into any new, or materially alter or expand any
present line of business other than new lines of businesses, or material
alterations or expansions of present lines of business contemplated by the
Business Plan;
(h) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or (other than in the ordinary course of business) otherwise
acquire any assets, other than in connection with foreclosures, settlements in
lieu of foreclosure or troubled loan or debt restructurings in the ordinary
course of business consistent with prudent banking practices, which would be
material, individually or in the aggregate, to Target or Target Bank, as the
case may be;
(i) except as required by law, take any action that is intended
or could reasonably be expected to result in any of its representations and
warranties set forth in this Agreement being or becoming untrue in any material
respect, or in any of the conditions to the Merger set forth in Article VII not
being satisfied, or in a violation of any provision of this Agreement;
(j) change its methods of accounting in effect at March 31,
1994, except as required by changes in GAAP or regulatory accounting principles
as concurred in by Target's independent auditors;
(k) except as set forth in Section 5.1 of the Target Disclosure
Schedule, (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew (for a term longer than
the prior term) or terminate any Plan or any agreement, arrangement, plan or
policy between Target or any Subsidiary of Target and one or more of its
current or former directors, officers or employees or (ii) except as set forth
in Section 5.1 of the Target Disclosure Schedule, except for normal increases
in the ordinary course of business consistent with past practice or except as
required by applicable law, increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not required
by any plan or agreement as in effect as of the date hereof (including, without
limitation, the granting of stock options, stock appreciation rights,
restricted stock, restricted stock units or performance units or shares) or
(iii) enter into, modify or renew (for a term longer than the prior term) any
contract, agreement, commitment or arrangement providing for the payment to any
director, officer or employee of such party of compensation or benefits
contingent, or the terms of which are materially altered, upon the occurrence
of any of the transactions contemplated by this Agreement;
(l) take or cause to be taken any action which would disqualify
the Merger as a tax free reorganization under Section 368 of the Code;
(m) other than activities in the ordinary course of business
consistent with prudent banking practice, sell, lease, encumber, assign or
otherwise dispose of, or agree to sell, lease, encumber, assign or otherwise
dispose of, any of its material assets, properties or other rights or
agreements;
(n) other than in the ordinary course of business consistent
with prudent banking practice or to cover expenses and obligations under this
Agreement, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity;
(o) file any application to relocate or terminate the
operations of any office of it or any of its Subsidiaries (other than the
previously announced move of Target's head office to Farmington, Connecticut);
(p) commit any act or omission which constitutes a breach or
default by Target or any of its Subsidiaries
under any Regulatory Agreement or a material breach or default by Target or any
of its Subsidiaries under any material contract or material license to which
Target or any of its Subsidiaries is a party or by which any of them or their
respective properties is bound;
(q) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosure, settlements in lieu of foreclosure or troubled
loan or debt restructurings in the ordinary course of business consistent with
prudent banking practices;
(r) create, renew, amend or terminate or give notice of a
proposed renewal, amendment or termination of, any material contract, agreement
or lease for goods, services or office space to which Target or any of its
Subsidiaries is a party or by which Target or any of its Subsidiaries or their
respective properties is bound except that Target may renew contracts,
agreements or leases in the ordinary course of business after consultation with
Parent;
(s) settle any claim, action or proceeding involving any
liability of Target or any Subsidiary of Target for material money damages or
material restrictions upon the operation of Target or any Subsidiary of Target;
(t) take any other action that would materially adversely
affect or materially delay the ability of Parent or Target to obtain the
Requisite Regulatory Approvals (as defined below) or otherwise materially
adversely affect Parent's ability to consummate the transactions contemplated
by this Agreement; or
(u) authorize or enter into any agreement or commitment to do
any of the foregoing.
5.2 Covenants of Parent. During the period from the date of
this Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written consent
of Target, Parent and its Subsidiaries shall carry on their respective
businesses in the ordinary course consistent with prudent banking practice.
Without limiting the generality of the foregoing, and except as consented to in
writing by Target, Parent shall not, and shall not permit any of its
Subsidiaries to:
(a) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement
being or becoming untrue in any material respect, or in any of the conditions
to the Merger set forth in Article VII not being satisfied or in a violation
of any provision of this Agreement, except, in every case, as may be required
by applicable law;
(b) take or cause to be taken any action which would disqualify
the Merger as a tax free reorganization under Section 368 of the Code;
(c) take any other action that would materially adversely
affect or materially delay the ability of Parent or Target to obtain the
Requisite Regulatory Approvals or otherwise materially adversely affect
Parent's ability to consummate the transactions contemplated by this Agreement;
(d) solely in the case of Parent, declare or pay any dividend
on, or make any other distributions in respect of, the Parent Common Stock
except for regular dividends and dividends or distributions in Parent Common
Stock;
(e) consolidate with or merge into any other person or convey,
transfer or lease its properties and assets substantially as an entirety to any
person unless such person shall expressly assume the obligations of Parent
hereunder; or
(f) authorize or enter into any agreement or commitment to do
any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) Target shall promptly prepare and
file with the SEC the Proxy Statement and Parent shall promptly prepare and
file with the SEC the S-4, in which the Proxy Statement will be included as a
prospectus. Each of Parent and Target shall use all reasonable efforts to have
the S-4 declared effective under the Securities Act as promptly as practicable
after such filing, and Target shall thereafter mail the Proxy Statement to its
stockholders. Parent shall also use all reasonable efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement, and Target shall
furnish all information concerning Target and the holders of Target Common
Stock as may be reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use
their reasonable best efforts promptly to prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Merger) (it being understood that
any amendments to the S-4 or a resolicitation of proxies as a consequence of an
acquisition agreement by Parent or any of its Subsidiaries shall not violate
this covenant). Target and Parent shall have the right to review in advance,
and to the extent practicable each will consult the other on, in each case
subject to applicable laws relating to the exchange of information, all the
information relating to Target or Parent, as the case may be, and any of their
respective Subsidiaries, which appear in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement; provided,
however, that nothing contained herein shall be deemed to provide either party
with a right to review any information provided to any Governmental Entity on a
confidential basis in connection with the transactions contemplated hereby. In
exercising the foregoing right, each of the parties hereto shall act reasonably
and as promptly as practicable. The parties hereto agree that they will
consult with each other with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated herein.
(c) Parent and Target shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of Parent, Target
or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.
(d) Parent and Target shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement
which causes such party to believe that there is a reasonable likelihood that
any Requisite Regulatory Approval will not be obtained the receipt of any such
approval will be materially delayed.
6.2 Access to Information. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of information, Target
shall, and shall cause each of its Subsidiaries to, afford to the officers,
employees, accountants, counsel and other representatives of Parent, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records and, during such
period, Target shall, and shall cause its Subsidiaries to, make available to
Parent (i) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the
requirements of Federal securities laws or Federal or state banking, savings
and loan or savings association laws (other than reports or documents which
Target is not permitted to disclose under applicable law) and (ii) all other
information concerning its business, properties and personnel as Parent may
reasonably request. Neither Target nor any of its Subsidiaries shall be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of Target's customers,
jeopardize the attorney-client privilege of the institution in possession or
control of such information or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply. Parent will hold all such information in confidence
to the extent required by, and in accordance with, the provisions of the
confidentiality agreement between Parent and Target (the "Confidentiality
Agreement").
(b) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, Parent shall, and shall cause its
Subsidiaries to, afford to the officers, employees, accountants, counsel and
other representatives of Target, access, during normal business hours during
the period prior to the Effective Time, to such information regarding Parent
and its Subsidiaries as shall be reasonably necessary for Target to fulfill its
obligations pursuant to this Agreement to prepare the Proxy Statement or which
may be reasonably necessary for Target to confirm that the representations and
warranties of Parent contained herein are true and correct and that the
covenants of Parent contained herein have been performed in all
material respects. Neither Parent nor any of its Subsidiaries shall be required
to provide access to or to disclose information where such access or disclosure
would violate or prejudice the rights of Parent's customers, jeopardize the
attorney-client privilege of the institution in possession or control of such
information or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(c) All information furnished by Parent to Target or its
representatives pursuant hereto shall be treated as the sole property of Parent
and, if the Merger shall not occur, Target and its representatives shall return
to Parent all of such written information and all documents, notes, summaries
or other materials containing, reflecting or referring to, or derived from,
such information. Target shall, and shall use its best efforts to cause its
representatives to, keep confidential all such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
continue for five years from the date the proposed Merger is abandoned and
shall not apply to (i) any information which (x) was legally in Target's
possession prior to the disclosure thereof by Parent; (y) was then generally
known to the public; or (z) was disclosed to Target by a third party not bound
by an obligation of confidentiality or (ii) disclosures made as required by
law. It is further agreed that, if in the absence of a protective order or the
receipt of a waiver hereunder Target is nonetheless, in the written opinion of
its outside counsel, compelled to disclose information concerning Parent to any
tribunal or governmental body or agency or else stand liable for contempt or
suffer other censure or penalty, Target may disclose such information to such
tribunal or governmental body or agency without liability hereunder.
(d) No investigation by either of the parties or their
respective representatives shall affect the representations and warranties of
the other set forth herein.
(e) Within ten business days of the date of this Agreement,
Target shall deliver to Parent amended Section 3.17 of the Target Disclosure
Statement setting forth an investment securities report which includes pay down
factors, paydown speeds, durations, and weighted average life, in each case as
of March 31, 1994.
6.3 Stockholders Meeting. Target shall take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
stockholders to be held as soon as is reasonably practicable after the date on
which the S-4 becomes effective for the purpose of voting upon the approval of
this Agreement. Target will, through its Board of Directors, except to the
extent legally required for the discharge of the fiduciary duties of such board
as advised in writing by such Board's outside counsel, recommend to its
stockholders approval of this Agreement and the transactions contemplated
hereby and such other matters as may be submitted to its stockholders in
connection with this Agreement. Target and Parent shall coordinate and
cooperate with respect to the foregoing matters.
6.4 Legal Conditions to Merger. Each of Parent and Target
shall, and shall cause its subsidiaries to, use their reasonable best efforts
(a) to take, or cause to be taken, all actions necessary, proper or advisable
to comply promptly with all legal requirements which may be imposed on such
party or its Subsidiaries with respect to the Merger and, subject to the
conditions set forth in Article VII hereof, to consummate the transactions
contemplated by this Agreement and (b) to obtain (and to cooperate with the
other party to obtain) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity and any other third party which is
required to be obtained by Target or Parent or any of their respective
Subsidiaries in connection with the Merger and the other transactions
contemplated by this Agreement.
6.5 Affiliates. Target shall use its best efforts to cause
each director, executive officer and other person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act) of Target (each an "Affiliate")
to deliver to Parent, as soon as practicable after the date of this Agreement,
and prior to the date of the stockholders meeting called by Target to approve
this Agreement, a written agreement, in substantially the form of Exhibit 6.5
hereto.
6.6 Stock Exchange Listing. Parent shall use its best efforts
to cause the shares of Parent Common Stock to be issued in the Merger to be
approved for listing on the New York Stock Exchange, Inc. (the "NYSE"), subject
to official notice of issuance, prior to the Effective Time.
6.7 Indemnification; Directors' and Officers' Insurance. (a)
In the event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation in which
any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of Target or any of its Subsidiaries (the "Indemnified Parties") is,
or is threatened to be, made a party based in whole or in part on, or arising
in whole or in part out of, or pertaining to any action or omission by such
person in his or her capacity as a director, officer or employee of Target, any
of the Target Subsidiaries or any of their respective predecessors, whether in
any case asserted or arising before or after the Effective Time, the parties
hereto agree to cooperate and use their best efforts to defend against and
respond thereto. It is understood and agreed that after the Effective Time,
Parent shall indemnify and hold harmless, as and to the fullest extent provided
in Target's Certificate of Incorporation and Bylaws and permitted by Delaware
law, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including, to the extent so provided and
permitted, reasonable attorney's fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation upon receipt of any
undertaking required by applicable law or Target's Certificate of Incorporation
or Bylaws), judgments, fines and amounts paid in settlement in connection with
any such threatened or actual claim, action, suit, proceeding or investigation,
and in the event of any such threatened or actual claim, action, suit,
proceeding or investigation (whether asserted or arising before or after the
Effective Time), an Indemnified Party may retain counsel reasonably
satisfactory to him or her after consultation with Parent; provided, however,
that (1) Parent shall have the right to assume the defense thereof and upon
such assumption Parent shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred by
any Indemnified Party in connection with the defense thereof, except that if
Parent elects not to assume such defense or counsel for the Indemnified Parties
reasonably advises the Indemnified Parties that there are issues which raise
conflicts of interest between Parent and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with Parent, and Parent shall pay the reasonable fees and expenses
of such counsel for the Indemnified Parties, (2) Parent shall be obligated
pursuant to this paragraph to pay for only one firm of counsel for all
Indemnified Parties, (3) Parent shall not be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld) and (4) Parent shall have no obligation hereunder
to any Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited under applicable law. Any Indemnified Party
wishing to claim Indemnification under this Section 6.7, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify Parent
thereof, provided that the failure to so notify shall not affect the obligations
of Parent under this Section 6.7 except to the extent such failure to notify
materially prejudices Parent. Parent's obligations under this Section 6.7
continue in full force and effect for a period of six (6) years from the
Effective Time; provided, however, that all rights to indemnification in
respect of any claim (a "Claim") asserted or made within such period shall
continue until the final disposition of such Claim.
(b) Parent shall use its best efforts to cause the persons
serving as officers and directors of Target immediately prior to the Effective
Time to be covered for a period of four (4) years from the Effective Time by
the directors' and officers' liability insurance policy maintained by Target
(provided that Parent may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions, including limits,
deductibles and prior acts coverage, which are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity as such;
provided, however, that, in the event that the annual amount Parent would be
required to expend would be more than 200% of the current annual amount
expended by Target (the "Insurance Amount") to maintain insurance coverage for
such persons under Target's current policies, Parent may self insure; and
further provided that if Parent is unable to maintain or obtain the insurance
called for by this Section 6.7(b), Parent shall use its best efforts to obtain
as much comparable insurance as available for the Insurance Amount. Nothing in
this Section 6.7(b) shall be deemed to modify any existing contractual
obligations under any agreements of Target or any of its Subsidiaries.
(c) In the event Parent or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the extent
necessary, proper provision shall be made so that the successors and assigns of
Parent assume the obligations set forth in this section.
(d) The provisions of this Section 6.7 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
6.8 Subsequent Financial Statements. As soon as reasonably
available, but in no event more than 45 days after the end of each fiscal
quarter ending after the date of this Agreement, Parent will deliver to Target
and Target will deliver to Parent their respective Quarterly Reports on Form
10-Q, as filed with the SEC under the Exchange Act.
6.9 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, or to vest the Surviving Corporation with full
title to all properties, assets, rights, approvals, immunities and franchises
of any of the parties to the Merger, the proper officers and directors of each
party to this Agreement and their respective Subsidiaries shall take all such
necessary action as may be reasonably requested by, and at the sole expense of,
Parent.
6.10 Advice of Changes. Parent and Target shall promptly
advise the other party of any change or event having a Material Adverse Effect
on it or which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein. From time to time prior to the Effective Time,
each party will promptly supplement or amend the Disclosure Schedules delivered
in connection with the execution of this Agreement to reflect any matter which,
if existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such Disclosure Schedules or which is
necessary to correct any information in such Disclosure Schedules which has
been rendered inaccurate thereby. No supplement or amendment to such
Disclosure Schedules shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Section 7.2(a) or 7.3(a) hereof, as
the case may be, or the compliance by Target or Parent, as the case may be,
with the respective covenants set forth in Sections 5.1 and 5.2 hereof.
6.11 Current Information. During the period from the date of
this Agreement to the Effective Time, Target
will cause one or more of its designated representatives to confer on a regular
and frequent basis (not less than monthly) with representatives of Parent and
to report (i) the general status of the ongoing operations of Target and its
Subsidiaries and (ii) the status of, and the action proposed to be taken with
respect to, those Loans held by Target or any Target Subsidiary which,
individually or in combination with one or more other Loans to the same
borrower thereunder, have an unpaid principal amount of $100,000 or more and
are non-performing assets. Target will promptly notify Parent of any material
change in the normal course of business or in the operation of the properties
of Target or any of its Subsidiaries and of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of significant litigation
involving Target or any of its Subsidiaries, and will keep Parent fully
informed of such events.
6.12 Termination of Regulatory Agreements. Target shall, and
shall cause Target Bank to, use its reasonable best efforts in cooperation with
Parent to confirm that all Regulatory Agreements to which Target or Target Bank
is or becomes subject to will be terminated and of no further force and effect
at or prior to the Effective Time.
6.13 Tax Returns. Target shall prepare and file, as approved
and directed by Parent, any Tax returns (including, without limitation, New
York Real Property Transfer and Transfer Gains Tax pre-clearance forms) with
respect to the Merger as Parent shall reasonably request.
6.14 Employee Benefit Plans; Existing Agreements. (a) Except
as otherwise provided herein, the employees of Target and its Subsidiaries (the
"Target Employees") shall be entitled to participate in Parent's employee
benefit plans in which similarly situated employees of Parent participate, to
the same extent as comparable employees of Parent. As soon as administratively
practicable after the Effective Time, Parent shall permit the Target Employees
to participate in Parent's group hospitalization, medical, life and disability
insurance plans, defined benefit pension plan, thrift plan, severance plan and
similar plans, on the same terms and conditions as applicable to comparable
employees of Parent and its Subsidiaries (including the waiver of pre-existing
condition prohibitions), giving effect to years of service with Target and its
Subsidiaries (to the extent Target gave effect) as if such service were with
Parent, for purposes of eligibility and vesting, but not for benefit accrual
purposes (except as regards to
vacation, severance and short-term disability accruals or for purposes of
determining employer contributions for retiree medical benefits).
Notwithstanding anything in this Section 6.14 to the contrary, participation
by Target Employees in employee benefit plans and programs of Parent with
respect to which eligibility for employees of Parent to participate is at the
discretion of Parent shall be at the sole discretion of Parent.
(b) Following the Effective Time, Parent shall honor and
shall cause the Surviving Corporation to honor in accordance with their terms
all individual employment, severance and other compensation agreements existing
prior to the execution of this Agreement, which are between Target and any
director, officer or employee thereof and which have been disclosed in the
Target Disclosure Schedule.
(c) To the extent not duplicative of any agreement or
arrangement described in paragraph (b) above, Parent agrees to make the
payments and provide the benefits set forth on Exhibit 6.14(c)(1) to the
employees of Target or Target Bank (the names of which shall be set forth on
Section 3.11 of the Target Disclosure Schedule). Parent further agrees to
honor and cause the Surviving Corporation to honor the retirement plan, in
substantially the form attached as Exhibit 6.14(c)(2) hereto, previously
adopted for the members of the board of directors of Target.
(d) Notwithstanding anything in this Section 6.14 to the
contrary, Parent shall have sole discretion with respect to the determination
as to whether to terminate, merge or continue any employee benefit plans and
programs of Target; provided, however, that Parent shall continue to maintain
Target plans (other than stock-based or incentive plans) until Target Employees
are permitted to participate in Parent's plans.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been
approved and adopted by the affirmative vote of
the holders of at least a majority of the outstanding shares of Target Common
Stock entitled to vote thereon.
(b) NYSE Listing. The shares of Parent Common Stock which
shall be issued to the stockholders of Target upon consummation of the Merger
shall have been authorized for listing on the NYSE, subject to official notice
of issuance.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired; and the parties shall have procured all
other regulatory approvals, consents or waivers of governmental authorities
that are necessary to the consummation of this Agreement (other than immaterial
consents, the failure to obtain which would not have a Material Adverse Effect
on Parent (on a combined basis giving effect to the Merger)); provided,
however, that no approval, consent or waiver referred to in this Section 7.1(c)
shall be deemed to have been received if it shall include any condition or
requirement that, in the opinion of Parent, would so materially adversely
affect the economic or business benefits of the transactions contemplated by
this Agreement to Parent as to render inadvisable the consummation of the
Merger; provided further, that no condition or requirement which does no more
than subject Parent or Target to legal requirements generally applicable to a
bank holding company under the BHC Act or savings and loan holding company
under HOLA as a matter of law shall be deemed to affect materially and
adversely the economic or business benefits of the transactions contemplated by
this Agreement (all such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the S-4 shall
have been issued and no proceedings for that purpose shall have been initiated
or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the Merger
or any of the other transactions contemplated by this Agreement (an
"Injunction") shall be in effect. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or enforced
by any Governmental Entity
which prohibits, restricts or makes illegal consummation of the Merger.
(f) Federal Tax Opinion. Parent and Target shall have received
an opinion of Sullivan & Cromwell, counsel to Parent, in form and substance
reasonably satisfactory to Parent and Target, dated as of the Closing Date,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Merger will be treated for Federal
income tax purposes as a reorganization within the meaning of Section 368 of
the Code and that accordingly:
(i) No gain or loss will be recognized by Parent, Merger Sub
or Target as a result of the Merger; and
(ii) No gain or loss will be recognized by the stockholders
of Target who or which exchange their Target Common Stock solely for
Parent Common Stock pursuant to the Merger (except with respect to cash
received in lieu of a fractional share interest in Parent Common
Stock).
In rendering such opinion, Sullivan & Cromwell may require and
rely upon representations contained in certificates of officers of Parent,
Merger Sub, Target and others.
7.2 Conditions to Obligations of Parent. The obligation of
Parent to effect the Merger is also subject to the satisfaction or waiver by
Parent at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Target set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date. Parent shall
have received a certificate signed on behalf of Target by the Chief Executive
Officer and the Chief Financial Officer of Target to the foregoing effect.
(b) Performance of Obligations of Target. Target shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of Target by the Chief Executive
Officer and the Chief Financial Officer of Target to such effect.
(c) Consents Under Agreements. The consent, approval or waiver
of each person (other than the Governmental Entities referred to in Section
7.1(c)) whose consent or approval shall be required in order to permit the
succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of Target or any Subsidiary of Target under any
loan or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument shall have been obtained, except where the failure to
obtain such consent, approval or waiver would not materially adversely affect
the economic or business benefits of the transactions contemplated by this
Agreement to Parent as to render inadvisable the consummation of the Merger.
(d) No Pending Governmental Actions. No proceeding initiated
by any Governmental Entity seeking an Injunction shall be pending.
(e) DEPCO Directors. (i) DEPCO or any "Nominee" as defined in
the DEPCO Agreement (A) shall own all of the issued and outstanding shares of
Target Series B Preferred Stock and (B) shall have the right to elect and shall
have elected at least one current member of Target's Board of Directors and
(ii) the Directors elected by DEPCO or any "Nominee" as defined in the DEPCO
Agreement pursuant to the Target Series B Preferred Stock shall represent less
than 20% of the number of Target's Board of Directors.
(f) Accountant's Letter. Target shall have caused to be
delivered to Parent letters from Target's independent public accountants dated
the date on which the S-4 or last amendment thereto shall become effective, and
dated the Closing Date, and addressed to Parent and Target, with respect to
Target's consolidated financial position and results of operation, which
letters shall be based upon SAS 72 and certain agreed upon procedures to be
specified by Parent, which procedures shall be consistent with applicable
professional standards for letters delivered by independent accountants in
connection with comparable transactions.
7.3 Conditions to Obligations of Target. The obligation of
Target to effect the Merger is also subject to the satisfaction or waiver by
Target at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date.
Target shall have received a certificate signed on behalf of Parent by the
Chief Executive Officer and the Chief Financial Officer of Parent to the
foregoing effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Target shall have
received a certificate signed on behalf of Parent by the Chief Executive
Officer and the Chief Financial Officer of Parent to such effect.
(c) Consents Under Agreements. The consent or approval of each
person (other than the Governmental Entities referred to in Section 7.1(c))
whose consent or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument to which Parent or
any of its Subsidiaries is a party or is otherwise bound, except those for
which failure to obtain such consents and approvals would not, individually or
in the aggregate, have a material adverse effect on the business, operations or
financial condition of Parent and its Subsidiaries taken as a whole (after
giving effect to the transactions contemplated hereby), shall have been
obtained.
(d) No Pending Governmental Actions. No proceeding initiated
by any Governmental Entity seeking an Injunction shall be pending.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the matters
presented in connection with the Merger by the stockholders of Target:
(a) by mutual consent of Parent and Target in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either Parent or Target upon written notice to the other
party (i) ninety (90) days after the date on which any request or application
for a Requisite Regulatory Approval shall have been denied or withdrawn at the
request or recommendation of the Governmental Entity which must grant such
Requisite Regulatory Approval, unless within the 90-day period following such
denial or withdrawal a petition for rehearing or an amended application has
been filed with the applicable Governmental Entity, provided, however, that no
party shall have the right to terminate this Agreement pursuant to this Section
8.1(b)(i) if such denial or request or recommendation for withdrawal shall be
due to the failure of the party seeking to terminate this Agreement to perform
or observe the covenants and agreements of such party set forth herein or (ii)
if any Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the consummation of any
of the transactions contemplated by this Agreement;
(c) by either Parent or Target if the Merger shall not have
been consummated on or before June 30, 1995, unless the failure of the Closing
to occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein;
(d) by either Parent or Target (provided that if the
terminating party is Target, Target shall not be in material breach of any of
its obligations under Section 5.1(e) or 6.3) if any approval of the
stockholders of Target required for the consummation of the Merger shall not
have been obtained by reason of the failure to obtain the required vote at a
duly held meeting of stockholders or at any adjournment or postponement
thereof;
(e) by either Parent or Target (provided that the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material breach
of any of the representations or warranties set forth in this Agreement on the
part of the other party, which breach is not cured within forty-five (45) days
following written notice to the party committing such breach, or which breach,
by its nature, cannot be cured prior to the Closing;
(f) by either Parent or Target (provided that the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material breach
of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which breach shall not have been cured
within forty-five (45) days following receipt by the breaching party of written
notice of such breach from the other party hereto; or
(g)(i) by Target, if (either before or after the approval by the
stockholders of this Agreement) its Board of Directors so determines by a vote
of a majority of the members of its entire Board, at any time during the five-
day period commencing with the Determination Date, if the Parent Common Stock
Average Price on the Determination Date shall be less than $21.465; subject,
however, to subsection (g)(ii).
(ii) If Target elects to exercise its termination right
pursuant to subsection (g)(i), it shall give prompt written notice to Parent
(provided that such notice of election to terminate may be withdrawn at any
time within the aforementioned five-day period). During the three-day period
commencing with its receipt of such notice, Parent shall have the option of
increasing the consideration to be received by holders of Target Common Stock
hereunder by adjusting the Exchange Ratio to equal a number equal to $10.875
divided by the Parent Common Stock Average Price. If Parent makes an election
contemplated by this subsection (g)(ii) within such three-day period, it shall
give prompt written notice to Target of such election and the revised Exchange
Ratio, whereupon no termination shall have occurred pursuant to this subsection
(g) and this Agreement shall remain in effect in accordance with its terms
(except as the Exchange Ratio shall have been so modified), and any references
in this Agreement to "Exchange Ratio" shall thereafter be deemed to refer to
the Exchange Ratio as adjusted pursuant to this subsection (g).
For purposes of this subsection (g), the following terms shall
have the meanings indicated:
"Determination Date" means the date on which the last regulatory
approval required to consummate the Merger has been obtained and all statutory
waiting periods in respect thereof have expired.
"Parent Common Stock Average Price" means the average of the
daily closing sales prices of Parent Common Stock as reported on the NYSE
Composite Transactions reporting system (as reported by The Wall Street Journal
or, if not reported thereby, another authoritative source as chosen by Parent)
for the 15 consecutive full trading days in which such shares are traded on the
NYSE ending at the
close of trading on the trading day immediately prior to the Determination Date.
8.2 Fee. (a) Target hereby agrees to pay Parent and Parent
shall be entitled to payment of, a fee (the "Fee") of $11,000,000 following the
occurrence of a Purchase Event (as defined below); provided that Parent shall
have sent written notice of such entitlement within 90 days following such
Purchase Event. Such payment shall be made in immediately available funds
within five business days after delivery of such notice. The right to receive
the Fee shall terminate if any of the following (a "Fee Termination Event")
occurs prior to a Purchase Event: (i) the Effective Time of the Merger, (ii)
termination of this Agreement in accordance with the provisions hereof if such
termination occurs prior to the occurrence of a Preliminary Purchase Event,
except a termination by Parent pursuant to Sections 8.1(e) or (f) hereof
(unless the breach by Target is non-volitional), or (iii) if termination of
this Agreement follows the occurrence of a Preliminary Purchase Event (x) the
passage of twenty-four months after termination of this Agreement (eighteen
months in the case of a Preliminary Purchase Event listed in subsection (c)(iv)
or (c)(v)) if such termination is by Parent pursuant to Sections 8.1(e) or (f)
of this Agreement (unless the breach by Target is non-volitional) or pursuant
to Section 8.1(d), or (y) if such termination is otherwise pursuant to Section
8.1. The "Last Preliminary Purchase Event" shall mean the last Preliminary
Purchase Event to expire.
(c) The term "Preliminary Purchase Event" shall mean any of
the following events or transactions occurring after the date hereof:
(i)Target or any of the Target Subsidiaries without having received
Parent's prior written consent, shall have entered into an agreement
to engage in an Acquisition Transaction (as defined below) with any person
(the term "person" for purposes of this Agreement having the meaning assign
-ed thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Securities Exchange Act") and the rules and
regulations thereunder) other than Parent or any of the Parent
Subsidiaries or the Board of Directors of Target shall have recommended
that the shareholders of Target approve or accept any Acquisition
Transaction with any person other than Parent or any Parent Subsidiary.
For purposes of this Agreement, "Acquisition Transaction" shall mean
(A) a merger or consolidation, or any similar transaction, involving
Target or any Target Significant Subsidiary, (B) a purchase, lease or
other acquisition of all or substantially all of the assets or deposits
of Target or any Target
Significant Subsidiary, (C) a purchase or other acquisition (including
by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of Target or a
Target Significant Subsidiary; provided that the term "Acquisition
Transaction" does not include any internal merger or consolidation
involving only Target and/or Target Subsidiaries;
(ii) (A) Any person (other than Parent or any Parent
Subsidiary) shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares
of Target Common Stock (the term "beneficial ownership" for purposes of
this Agreement having the meaning assigned thereto in Section 13(d) of
the Securities Exchange Act, and the rules and regulations thereunder),
or (B) any group (as such term "group" is defined in Section 13(d)(3)
of the Securities Exchange Act), other than a group of which Parent or
any Parent Subsidiary is a member, shall have been formed that
beneficially owns 10% or more of the Target Common Stock then
outstanding;
(iii) Any person other than Parent or any Parent Subsidiary
shall have made a bona fide proposal to Target or its shareholders, by
public announcement or written communication that is or becomes the
subject of public disclosure, to engage in an Acquisition Transaction
(including, without limitation, any situation which any person other
than Parent or any Parent Subsidiary shall have commenced (as such term
is defined in Rule 14d-2 under the Securities Exchange Act) or shall
have filed a registration statement under the Securities Act with
respect to, a tender offer or exchange offer to purchase any shares of
Target Common Stock such that, upon consummation of such offer, such
person would own or control 10% or more of the then outstanding shares
of Target Common Stock (such an offering referred to herein as a
"Tender Offer" or an "Exchange Offer", respectively));
(iv) After a proposal is made by a third party to Target or
its shareholders to engage in an Acquisition Transaction, or such third
party states its intention to Target to make such a proposal if the
Plan terminates, Target shall have breached any representation,
covenant or obligation contained in
this Agreement and such breach would entitle Parent to terminate this
Agreement under Sections 8.01(e) or (f) of this Agreement (without
regard to the cure periods provided for therein unless such cure is
promptly effected without jeopardizing consummation of the Merger
pursuant to the terms of this Agreement); or
(v) the holders of Target Common Stock shall not have
approved this Agreement at the meeting of such stockholders held for
the purpose of voting on this Agreement or such meeting shall not have
been held or shall have been canceled prior to termination of this
Agreement, in each case after any person (other than Parent or any
Parent Subsidiary) shall have (A) made, or disclosed an intention to
make, a bona fide proposal to engage in an Acquisition Transaction or
(B) commenced a Tender Offer or filed a registration statement under
the Securities Act with respect to an Exchange Offer.
(d) The Term "Purchase Event" shall mean either of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person, other than Parent or any
Parent Subsidiary, alone or together with such person's affiliates and
associates, or any group (as defined in Section 13(d)(3) of the Securities
Exchange Act), of beneficial ownership of 50% or more of the Target
Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event described
in Section 8.2(c)(i) except that the percentage referred to in clause
(C) shall be 50%.
(e) Target shall notify Parent promptly in writing of its knowledge
of the occurrence of any Preliminary Purchase Event or Purchase Event; provided,
however, that the giving of such notice by Target shall not be a condition to
the right of Parent to the Fee.
8.3 Effect of Termination. (a) In the event of termination of
this Agreement by either Parent or Target as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect except (i) the last
sentence of Section 6.2(a), and Sections 6.2(c), 8.2, 8.3, 9.3 and 9.4, shall
survive any termination of this Agreement, and (ii) notwithstanding anything to
the contrary contained in this Agreement, no party shall be relieved or
released from any liabilities or damages arising out of its willful breach of
any provision of this Agreement.
8.4 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized
by their respective Boards of Directors, at any time before or after approval
of the matters presented in connection with the Merger by the common
stockholders of Target; provided, however, that after any approval of the
transactions contemplated by this Agreement by Target's common stockholders,
there may not be, without further approval of such stockholders, any amendment
of this Agreement which reduces the amount or changes the form of the
consideration to be delivered to the Target stockholders hereunder other than
as contemplated by this Agreement. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
8.5 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Board of Directors, may, to the extent legally allowed, (a) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein; provided,
however, that after any approval of the transactions contemplated by this
Agreement by Target's common stockholders, there may not be, without further
approval of such stockholders, any extension or waiver of this Agreement or any
portion thereof which reduces the amount or changes the form of the
consideration to be delivered to the Target stockholders hereunder other than
as contemplated by this Agreement. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") will take place at 10:00
a.m. on a date to be selected by Parent, which shall be the tenth business day
after the
satisfaction or waiver (subject to applicable law) of the latest to occur of
the conditions set forth in Article VII hereof (the "Closing Date"), at the
offices of Parent, unless another time, date or place is writing by the
parties hereto.
9.2 Alternative Structure. Notwithstanding anything to the
contrary contained in this Agreement, prior to the Effective Time, Parent shall
be entitled to revise the structure of the Merger and related transactions
provided that each of the transactions comprising such revised structure shall
(i) not subject any of the stockholders of Target to adverse tax consequences
or change the amount of consideration to be received by such stockholders and
(ii) be capable of consummation without material delay. This Agreement and any
related documents shall be appropriately amended in order to reflect any such
revised structure.
9.3 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for those covenants and agreements contained
herein and therein which by their terms apply in whole or in part after the
Effective Time.
9.4 Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall he paid by
the party incurring such expense, provided, however, that the costs and
expenses of printing and mailing the Proxy Statement, and all filing and other
fees paid to the SEC in connection with the Merger, shall be borne equally by
Parent and Target, provided, further, however, that in the event of termination
of this Agreement in accordance with the provisions hereof, except a
termination by Parent pursuant to Section 8.1(e) or (f) hereof, Parent shall
pay for the accountant's letters pursuant to Section 7.2(f).
9.5 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified mail (return
receipt requested) or delivered by an express courier (with confirmation) to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent, to:
Shawmut National Corporation
777 Main Street
Hartford, CT 06115
Fax: (203) 728-4205
Attn: Chief Executive Officer
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Fax: (212) 558-3588
Attn: Donald J. Toumey, Esq.
and
(b) if to Target, to:
Northeast Federal Corp.
50 State House Square
Hartford, CT 06103
Fax: (203) 280-0008
Attn: Chief Executive Officer
with a copy to:
Muldoon, Murphy & Faucette
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Fax: (202) 966-9409
Attn: Thomas J. Haggerty, Esq.
9.6 Interpretation. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
9.7 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the
parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.8 Entire Agreement. This Agreement (including the documents
and the instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, other than the
Confidentiality Agreement.
9.9 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and wholly to be performed in such state.
9.10 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained in
the last sentence of Section 6.2(a) and in Section 6.2(c) of this Agreement
were not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of the last sentence of
Section 6.2(a) and Section 6.2(c) of this Agreement and to enforce specifically
the terms and provisions thereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
9.11 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
9.12 Publicity. Except as otherwise required by law or the
rules of the NYSE or the National Association of Securities Dealers, so long as
this Agreement is in effect, neither Parent nor Target shall, or shall permit
any of its Subsidiaries to, issue or cause the publication of any press release
or other written statement for general circulation with respect to the transac-
tions contemplated by this Agreement, without the consent of the other party,
which consent shall not be unreasonably withheld.
9.13 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties,
and any purported such assignment shall be null and void. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns. Except as otherwise specifically provided in Section 6.7 hereof,
this Agreement (including the documents and instruments referred to herein)
is not intended to, and shall not, confer upon any person other than the
parties hereto any rights or remedies hereunder.
IN WITNESS WHEREOF, Parent and Target have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the
date first above written.
SHAWMUT NATIONAL CORPORATION
By
Name:
Title:
NORTHEAST FEDERAL CORP.
By
Name:
Title: