AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 28, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SIS BANCORP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MASSACHUSETTS 6036 04-3303264
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
1441 MAIN STREET, SPRINGFIELD, MASSACHUSETTS 01102
(413) 748-8000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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F. WILLIAM MARSHALL, JR.
SIS BANCORP, INC.
1441 MAIN STREET
SPRINGFIELD, MASSACHUSETTS 01102
(413) 748-8000
TELECOPY: (413) 748-8464
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
STEPHEN J. COUKOS, ESQ. J. GILBERT SOUCIE WILLIAM W. BOUTON III, ESQ.
SULLIVAN & WORCESTER LLP GLASTONBURY BANK & TYLER COOPER & ALCORN, LLP
ONE POST OFFICE SQUARE TRUST COMPANY CITYPLACE--35TH FLOOR
BOSTON, MASSACHUSETTS 2461 MAIN STREET HARTFORD, CONNECTICUT 06103
02109 GLASTONBURY, CONNECTICUT (860) 725-6200
(617) 338-2800 06033 TELECOPY: (860) 278-3802
TELECOPY: (617) 338-2880 (860) 633-4695
TELECOPY: (860) 657-4187
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the merger of SIS Interim Bank with and into Glastonbury Bank &
Trust Company pursuant to the Agreement and Plan of Reorganization described
in the accompanying Joint Proxy Statement--Prospectus have been satisfied or
waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
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Common Stock, Par Value
$0.01 per share....... 1,354,141 shares -- (1) $45,748,000(1) $13,863.03
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(1) Pursuant to Rule 457(f), the maximum aggregate offering price has been
determined as the value of the shares of Glastonbury Bank & Trust Company
acquired by SIS Bancorp, Inc. in the merger.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
WILL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT WILL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
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[COMPANY LOGOS TO BE INSERTED]
JOINT PROXY STATEMENT--PROSPECTUS
1,354,141 SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE
The SIS and GBT Boards of Directors have agreed that SIS will acquire GBT in
a merger transaction. GBT will become a subsidiary of SIS, but will remain a
separate corporation and will stay headquartered in Glastonbury, Connecticut.
The merger will enable GBT to offer more products and services to customers
and will enable SIS to extend its operations into the Connecticut market, and
we believe it will benefit both companies and our shareholders.
If you are a GBT shareholder, you will receive 0.74 of a share of SIS common
stock for each share of GBT stock you own on the date of the merger. To
calculate the exact dollar value of what you receive, we will multiply 0.74 by
the average closing bid price of SIS common stock for the 20 trading days that
end five days before the date of the merger. If that price is too low to
guarantee that you will receive at least $18.50 worth of SIS stock per GBT
share, GBT can terminate the merger agreement. At that point, SIS can agree to
issue more SIS common stock so that you will receive the $18.50 minimum value,
but it is not obliged to do so.
YOUR VOTE IS VERY IMPORTANT. The merger cannot be completed unless the
shareholders of both companies approve it. We have scheduled special meetings
for our shareholders to vote on the merger. The special shareholders meetings
to vote on the merger will take place as follows:
FOR GBT SHAREHOLDERS FOR SIS SHAREHOLDERS
Thursday, December 4, 1997 Thursday, December 4, 1997
4:30 p.m. 10.00 a.m.
Glastonbury Bank & Trust Company SIS Bancorp, Inc.
2461 Main Street 1441 Main Street, 12th floor
Glastonbury, Connecticut Springfield, Massachusetts
Whether or not you plan to attend your meeting, please take the time to vote
by completing and mailing the enclosed proxy card to us. If you complete and
return your card but don't indicate how you want to vote, your proxy will be
counted as a vote in favor of the merger. If you don't return your card or
abstain from voting, the effect in most cases will be a vote against the
merger. If you decide to attend your meeting, you may vote in person even
though you have already submitted a proxy.
This Proxy Statement--Prospectus provides you with detailed information
about the merger, and we urge you to read it carefully. In addition, you may
obtain information about our companies from documents we have filed with the
Securities and Exchange Commission or the Federal Deposit Insurance
Corporation. If you have questions, you may call us on business days between
9:00 a.m. and 4:00 p.m. for further information. Please ask for Wayne
Patenaude, GBT's Senior Vice President, at 860-652-6589, or Ting Chang, SIS's
Vice President- Investor Relations, at 413-748-8271.
[signature of Mr. Naughton here] [signature of Mr. Soucie here]
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John M. Naughton J. Gilbert Soucie
Chairman of the Board President and Chief Executive
SIS Bancorp, Inc. Officer
Glastonbury Bank & Trust Company
SHARES OF SIS COMMON STOCK ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.
NEITHER THE SEC NOR ANY STATE SECURITIES REGULATORS HAVE APPROVED OR
DISAPPROVED THE SIS COMMON STOCK TO BE ISSUED IN THE MERGER OR DETERMINED IF
THIS PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF YOUR ENTIRE INVESTMENT.
Joint Proxy Statement--Prospectus dated October 28, 1997 and first mailed to
shareholders on or about October 31, 1997.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 4, 1997
TO THE SHAREHOLDERS OF GLASTONBURY BANK & TRUST COMPANY:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Glastonbury
Bank & Trust Company will be held on December 4, 1997 at 4:30 p.m., local
time, at GBT's main office at 2461 Main Street, Glastonbury, Connecticut, for
the purpose of considering and voting upon the following matter:
. A proposal to approve and adopt the Agreement and Plan of
Reorganization, dated as of August 18, 1997 (the "Merger Agreement"), by
and between GBT and SIS Bancorp, Inc. and the related Agreement and Plan
of Merger, dated as of September 12, 1997 (the "Plan of Merger"), by and
among GBT, SIS and SIS Interim Bank, an "interim" bank that has been
organized as a wholly owned subsidiary of SIS, and each of the
transactions contemplated thereby, including the merger of SIS Interim
Bank with and into GBT, upon the terms and subject to the conditions set
forth in the Merger Agreement and the Plan of Merger, as more fully
described in the accompanying Joint Proxy Statement--Prospectus. A copy
of the Merger Agreement is attached as Appendix A to the accompanying
Joint Proxy Statement--Prospectus and certain related documents are
attached as exhibits thereto. A copy of the Plan of Merger is attached
as Appendix B to the accompanying Joint Proxy Statement--Prospectus.
The GBT Board of Directors has fixed the close of business on October 10,
1997 as the record date for the determination of shareholders entitled to
notice of and to vote at the Special Meeting and any adjournments or
postponements thereof. Only shareholders of record at the close of business on
such date are entitled to notice of and to vote at the Special Meeting.
Your vote is important regardless of the number of shares you own. Approval
of the merger requires the affirmative vote of the holders of not less than
two-thirds of all issued and outstanding shares of GBT Common Stock, whether
or not such shares are present at the Special Meeting. Each shareholder, even
though he or she now plans to attend the Special Meeting, is requested to
sign, date and return the enclosed Proxy without delay in the enclosed
postage-paid return envelope. You may revoke your Proxy at any time prior to
its exercise. Any shareholder present at the Special Meeting or at any
adjournments or postponements thereof may revoke his or her Proxy and vote
personally on each matter brought before the Special Meeting. Because of the
required two-thirds vote, it is particularly important that all shareholders
vote at the Special Meeting. An abstention or non-vote will have the effect of
a vote against the Merger Agreement and Plan of Merger.
By Order of the Board of Directors,
Camille S. Bushnell, Secretary
October 28, 1997
Glastonbury, Connecticut
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL
TO APPROVE AND ADOPT THE MERGER AGREEMENT AND PLAN OF MERGER AND EACH OF THE
TRANSACTIONS COMPLETED THEREBY.
PLEASE DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED
POSTAGE-PAID RETURN ENVELOPE.
IF THE MERGER IS APPROVED BY THE SHAREHOLDERS AT THE SPECIAL MEETING AND
EFFECTED BY GBT, SHAREHOLDERS OF GBT WHO FOLLOW THE PROCEDURES SET FORTH IN
SECTIONS 33-855 THROUGH 33-872, INCLUSIVE, OF THE CONNECTICUT BUSINESS
CORPORATIONS ACT WILL HAVE DISSENTERS' RIGHTS OF APPRAISAL AS THEREIN
PROVIDED. A COPY OF THOSE SECTIONS IS ATTACHED AS APPENDIX E TO THE JOINT
PROXY STATEMENT-PROSPECTUS ACCOMPANYING THIS NOTICE.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 4, 1997
TO THE SHAREHOLDERS OF SIS BANCORP, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of SIS
Bancorp, Inc. will be held on December 4, 1997 at 10:00 a.m., local time, at
SIS's corporate headquarters, 1441 Main Street, 12th floor, Springfield,
Massachusetts, for the purpose of considering and voting upon the following
matter:
. A proposal to approve and adopt the Agreement and Plan of
Reorganization, dated as of August 18, 1997, by and between SIS and
Glastonbury Bank and Trust Company, and each of the transactions
contemplated thereby, including the issuance by SIS of shares of its
common stock to the shareholders of GBT, upon the terms and subject to
the conditions set forth in the Agreement, as more fully described in
the accompanying Joint Proxy Statement--Prospectus. A copy of the
Agreement is attached as Appendix A to the accompanying Joint Proxy
Statement--Prospectus and certain related documents are attached as
exhibits thereto.
The SIS Board of Directors has fixed the close of business on October 10,
1997 as the record date for the determination of shareholders entitled to
notice of and to vote at the Special Meeting and any adjournments or
postponements thereof. Only shareholders of record at the close of business on
such date are entitled to notice of and to vote at the Special Meeting.
Your vote is important regardless of the number of shares you own. Approval
of the issuance of shares of SIS common stock to the shareholders of GBT
requires the affirmative vote of the holders of not less than a majority of
the shares of SIS Common Stock present and voting at the Special Meeting. Each
shareholder, even though he or she now plans to attend the Special Meeting, is
requested to sign, date and return the enclosed Proxy without delay in the
enclosed postage-paid return envelope. You may revoke your Proxy at any time
prior to its exercise. Any shareholder present at the Special Meeting or at
any adjournments or postponements thereof may revoke his or her Proxy and vote
personally on each matter brought before the Special Meeting.
By Order of the Board of Directors,
Michael E. Tucker, Clerk
October 28, 1997
Springfield, Massachusetts
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL
TO APPROVE AND ADOPT THE AGREEMENT AND EACH OF THE TRANSACTIONS COMPLETED
THEREBY.
PLEASE DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED
POSTAGE-PAID RETURN ENVELOPE.
TABLE OF CONTENTS
PAGE
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SUMMARY.................................................................... 1
The Companies............................................................ 1
What GBT Shareholders Will Receive....................................... 1
Our Reasons for the Merger............................................... 2
Our Recommendations to Shareholders...................................... 2
Required Vote; Stockholders Agreements .................................. 3
Ownership of SIS Following the Merger.................................... 3
Management and Operations after the Merger............................... 3
Opinions of Financial Advisers........................................... 3
Conditions to the Merger................................................. 3
Termination of the Merger Agreement...................................... 4
Amendment, Waiver and Extension of the Merger Agreement.................. 4
Regulatory Approvals..................................................... 4
Certain Federal Income Tax Consequences.................................. 4
Stock Option Agreement................................................... 4
Appraisal Rights and Dissenting Shareholders............................. 5
Certain Differences in the Rights of Shareholders........................ 5
Market Prices and Dividend Data.......................................... 5
Future SIS Acquisition Activity.......................................... 6
Cautionary Statement Concerning Forward-Looking Statements............... 6
Summary Pro Forma Financial Data......................................... 7
Comparative Per Share Financial Information.............................. 8
SELECTED FINANCIAL DATA.................................................... 10
THE MEETINGS............................................................... 14
Matters to Be Discussed at the Meetings.................................. 14
Record Dates; Stock Entitled to Vote; Quorum............................. 14
Solicitation of Proxies.................................................. 15
Required Votes........................................................... 16
Solicitation Expenses.................................................... 17
Beneficial Ownership of GBT Common Stock................................. 17
Appraisal Rights and Dissenting Shareholders............................. 18
THE MERGER................................................................. 20
General.................................................................. 20
Background of the Merger................................................. 20
Recommendation of the GBT Board and Reasons for the Merger............... 23
Recommendation of the SIS Board and Reasons for the Merger............... 24
Opinions of Financial Advisers........................................... 24
Effective Time of the Merger; Closing Date............................... 32
Conversion of Shares of GBT Common Stock Pursuant to the Merger.......... 32
Certificate Exchange Procedures.......................................... 33
Conduct of Business Pending the Merger................................... 33
Conditions to Consummation of the Merger................................. 35
Termination.............................................................. 36
Amendment, Extension and Waiver.......................................... 37
Requisite Regulatory Approvals........................................... 37
Expenses................................................................. 38
Stock Option Agreement................................................... 38
Stockholders Agreements.................................................. 39
No Solicitation.......................................................... 40
Management and Operations after the Merger............................... 40
i
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Interests of Certain Persons in the Merger.............................. 40
Employment Obligations.................................................. 41
Resale of SIS Common Stock.............................................. 41
Certain Federal Income Tax Consequences................................. 41
Accounting Treatment.................................................... 43
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS............... 44
INFORMATION REGARDING GBT................................................. 52
INFORMATION REGARDING SIS................................................. 52
DESCRIPTION OF SIS CAPITAL STOCK.......................................... 52
Common Stock............................................................ 52
Preferred Stock......................................................... 54
MARKET FOR SIS COMMON STOCK............................................... 55
COMPARISON OF RIGHTS OF HOLDERS OF SIS COMMON STOCK AND GBT COMMON STOCK.. 56
Special Meetings of Shareholders........................................ 56
Inspection Rights....................................................... 57
Action by Consent of Shareholders....................................... 57
Preemptive Rights....................................................... 57
Dividends and Repurchases of Stock...................................... 57
Classification of the Board of Directors................................ 58
Removal of Directors.................................................... 58
Vacancies on the Board of Directors..................................... 58
Exculpation of Directors and Officers................................... 59
Indemnification of Directors, Officers and Others....................... 59
Transactions with Interested Persons.................................... 60
Mergers, Share Exchanges or Asset Sales; Anti-Takeover Provisions of
State Law.............................................................. 60
Amendments to Charter................................................... 62
Amendments to Bylaws.................................................... 62
Dissenters' Appraisal Rights............................................ 63
Shareholders Rights Plan................................................ 63
LEGAL MATTERS............................................................. 63
EXPERTS................................................................... 63
WHERE YOU CAN FIND MORE INFORMATION....................................... 64
INFORMATION INCORPORATED BY REFERENCE..................................... 64
APPENDICES
Appendix A Agreement and Plan of Reorganization dated as of August 18,
1997
Appendix B Agreement and Plan of Merger dated as of September 12, 1997
Appendix C Opinion of McConnell, Budd & Downes, Inc.
Appendix D Opinion of Oppenheimer & Co., Inc.
Appendix E Text of Sections 33-855 through 33-872 of the Connecticut
Business Corporations Act (Appraisal Rights)
INFORMATION NOT REQUIRED IN PROSPECTUS.................................... II-1
ii
SUMMARY
The following summary of the material aspects of the merger is not intended
to be complete and is qualified by the more detailed discussion elsewhere in
this Proxy Statement-Prospectus. The Agreement and Plan of Reorganization
between SIS and GBT, which we refer to throughout this Proxy Statement-
Prospectus as the "merger agreement," is attached as Appendix A, and the
Agreement and Plan of Merger that is part of the merger agreement, which we
refer to throughout this Proxy Statement-Prospectus as the "plan of merger," is
attached as Appendix B. To understand the merger fully, you should read
carefully this entire Proxy Statement-Prospectus, including the merger
agreement, the plan of merger and the other documents we have referred you to.
See "Where You Can Find More Information." (Page 64)
THE COMPANIES
SIS Bancorp, Inc.
1441 Main Street
Springfield, Massachusetts 01102
(413) 748-8000
SIS is a bank holding company. It conducts business through its subsidiary
bank, Springfield Institution for Savings, and offers a wide variety of
financial services, including retail and commercial banking, residential
mortgage origination and servicing, commercial and industrial lending,
commercial real estate lending and consumer lending. The bank operates a
network of 25 retail branches located in Hampden County and Hampshire County,
Massachusetts. SIS and the bank are subject to regulation by the Federal
Reserve Board, the FDIC and the Massachusetts Division of Banks. As of June 30,
1997, SIS had total assets of $1.4 billion, total deposits of $1.0 billion, net
loans of $645.9 million, and shareholders' equity of $103.3 million.
Glastonbury Bank & Trust Company
2461 Main Street
Glastonbury, Connecticut 06033
(860) 633-4695
GBT is a Connecticut commercial bank that provides a variety of deposit, loan
and investment products and services to small and medium-sized businesses and
consumers. It conducts business from nine branches located in Glastonbury and
neighboring towns and cities in central Connecticut. In addition to its banking
activities, GBT offers insurance products through a subsidiary insurance
agency, GBT Insurance Group, Inc. GBT is subject to regulation by the FDIC and
the Commissioner of Banking of the State of Connecticut. As of June 30, 1997,
GBT had total assets of $261.3 million, total deposits of $216.6 million, net
loans of $152.9 million and shareholders' equity of $18.0 million.
WHAT GBT SHAREHOLDERS WILL RECEIVE (SEE PAGE 32)
If you are a GBT shareholder, you will receive 0.74 of a share of SIS common
stock for each share of GBT common stock you own on the date of the merger. To
calculate the exact dollar value of what you will receive, we will multiply
0.74 by the average closing bid price of SIS common stock for the 20 trading
days that end five days before the date of the merger.
For example, assume that the merger had occurred on October 10, 1997. The
average closing bid price of SIS common stock for the 20 days ending on October
3, 1997, five trading days prior to October 10, was $33.638. In this example,
you would have received $24.89 worth of SIS common stock for each share of GBT
common stock that you owned on October 10 ($33.638 x 0.74 = $24.89).
1
In addition to SIS stock, you will also receive a check for a small amount of
cash instead of any fractional shares you might otherwise receive. For
instance, if you own 10 shares of GBT stock, they would be converted into 7.4
shares of SIS stock in the merger (0.74 X 10). If the average closing price was
$33.638, instead of receiving four-tenths of a share of SIS stock, you would be
paid $13.46 ($33.638 X 0.4).
GBT can terminate the merger agreement if the actual average closing bid
price of SIS common stock is too low to guarantee that you will receive at
least $18.50 worth of SIS common stock per GBT share. At that point, SIS can
agree to issue more SIS common stock so that you will receive the $18.50
minimum value per share. However, SIS is not required to issue more shares, and
it is possible under these circumstances that the GBT Board could conclude that
proceeding with the merger at the lower price would still be in your best
interest and consistent with the Board's fiduciary duties.
You should not send in your GBT stock certificates until we notify you to do
so after the merger takes place.
OUR REASONS FOR THE MERGER
In July 1997, after considering various alternatives that would allow it to
improve its overall performance and earnings potential, GBT approached SIS to
discuss a combination of the two companies that could expand the resources of
each and give both the opportunity to enhance shareholder value and to offer a
greater variety of products and services. The ensuing negotiations resulted in
our signing the merger agreement.
Both SIS and GBT recognize that the banking industry, nationally and in New
England, is undergoing substantial consolidation. Banking laws and regulations
now permit banks to offer new types of financial services to businesses and
consumers and have eliminated barriers to interstate operations. Both SIS and
GBT offer various products and services not currently provided by the other. By
combining, we expect to become more efficient and to be better positioned to
expand beyond our current market areas. Combining the companies will enable us
to increase revenues, reduce costs and improve services. We believe that our
combined company will not only enable GBT to maximize long-term shareholder
value while serving the interests of its customers, suppliers, employees and
community, but will also further the interests of SIS and its shareholders.
In deciding to approve and recommend the merger agreement, our Boards
considered a number of factors, including the financial strength, enhanced
prospects and opportunities for growth of the combined organization; the
potential benefits to our shareholders; the effects on our customers,
suppliers, employees and communities; the value of the stock SIS offered and
how it compared with other preliminary, informal proposals made at the time;
and the opinions of our financial advisers that the stock being offered by SIS
was fair from a financial point of view.
You can find a more detailed discussion of the background to the merger
agreement and our reasons for the merger in this Proxy Statement-Prospectus
under the heading entitled "THE MERGER," at pages 20 through 24.
OUR RECOMMENDATIONS TO SHAREHOLDERS
To GBT Shareholders:
The GBT Board believes that the merger is in your best interest and
unanimously recommends that you vote FOR the proposal to approve the merger
agreement and the plan of merger.
To SIS Shareholders:
The SIS Board believes that the merger is in your best interest and
unanimously recommends that you vote FOR the proposal to approve the merger
agreement and the issuance of shares of SIS common stock to the shareholders of
GBT.
2
REQUIRED VOTE; STOCKHOLDERS AGREEMENTS (SEE PAGES 16-17)
The merger agreement must be approved by the holders of two-thirds of all
outstanding shares of the stock of GBT, and must also be approved by the
holders of a majority of the stock present and voting at the SIS shareholders'
meeting.
The directors and executive officers of GBT have agreed that they will vote a
total of 419,622 shares of GBT stock owned by them in favor of the merger
agreement. This represents about 22.93% of the outstanding shares of GBT.
Similarly, SIS directors who own a total of 188,019 shares of SIS stock,
including shares they could acquire by exercising stock options, have agreed to
vote in favor of the merger agreement. This represents about 3.36% of the
outstanding shares of SIS stock.
OWNERSHIP OF SIS FOLLOWING THE MERGER
SIS will issue approximately 1.35 million shares of its stock to GBT
shareholders in connection with the merger, which will constitute slightly less
than 20% of the outstanding stock of SIS after the merger. The shares will be
listed for trading on the Nasdaq National Market.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
After the merger takes place, the management and board of directors of SIS
and GBT will remain unchanged, except that F. William Marshall, Jr., the
President and Chief Executive Officer and a director of SIS, will join the GBT
Board, and Ronald E. Bourbeau, a director of GBT, will join the SIS Board.
OPINIONS OF FINANCIAL ADVISERS (SEE PAGES 24-32)
We asked our financial advisers, McConnell, Budd & Downes, Inc. and
Oppenheimer & Co., Inc., for advice on the fairness of the amount that SIS is
offering to GBT shareholders in the merger. Our advisers performed a number of
analyses in which they compared the companies' historical stock prices and
other measures of financial performance, compared the financial terms of the
merger to those of other publicly announced transactions, and estimated the
relative values of SIS and GBT based on past and anticipated future performance
and the benefits that could be expected from the merger. MB&D delivered an
opinion to GBT and Oppenheimer delivered an opinion to SIS that the exchange
ratio of SIS stock for GBT stock in the merger is fair to that company's
shareholders from a financial point of view. These opinions are attached as
Appendix C and Appendix D to this Joint Proxy Statement-Prospectus.
CONDITIONS TO THE MERGER (SEE PAGES 35-36)
To complete the merger, we must meet a number of conditions in addition to
obtaining the votes of our shareholders, including the following:
. no law or injunction may effectively prohibit the merger;
. we must receive all necessary approvals of governmental authorities;
. we must receive legal opinions that the merger will be treated as a tax-
free reorganization under the Internal Revenue Code; and
. SIS's independent accountants must concur in management's determination
that SIS may account for the merger as a pooling of interests.
Certain conditions to the merger may be waived by the company entitled to
assert the condition. In some instances, if we wish to waive a condition, we
may be required to resolicit the approval of the shareholders of GBT and/or
SIS.
3
TERMINATION OF THE MERGER AGREEMENT (SEE PAGES 36-37)
In addition to terminating the merger agreement if SIS's stock price falls
below the agreed minimum, we can agree jointly to terminate the merger
agreement without completing the merger, and either of us can terminate the
merger agreement if any of the following occurs:
. the merger is not completed by June 30, 1998;
. the merger is not approved by either the SIS shareholders or the GBT
shareholders;
. a court or other governmental authority permanently prohibits the merger;
or
. the other party breaches or materially fails to comply with any of its
representations or warranties or obligations under the merger agreement.
In addition, SIS may terminate the merger agreement if the GBT Board does not
recommend to its shareholders that the merger be approved, or subsequently
withdraws or modifies in any adverse manner its recommendation.
AMENDMENT, WAIVER AND EXTENSION OF THE MERGER AGREEMENT (SEE PAGE 37)
We may amend the merger agreement at any time before the merger actually
takes place, and may agree to extend the time within which any action required
by the merger agreement is to take place. However, if an amendment would change
the amount or form of what GBT's shareholders would receive in the merger, the
amendment will have to be approved by our shareholders.
REGULATORY APPROVALS (SEE PAGE 37)
The Federal Reserve Board approved the merger on October 22, 1997. The merger
must also be approved by the FDIC, the Connecticut Department of Banking and
the Massachusetts Board of Bank Incorporation, and SIS has filed applications
with those agencies seeking the necessary approvals, which are still pending.
If the Federal Reserve Board and FDIC approve the merger, the United States
Department of Justice has 15 days in which to challenge such approvals on
antitrust grounds. It is possible that some of these governmental authorities
may impose conditions for granting approval. We cannot predict whether we will
obtain the required regulatory approvals within the time frame contemplated by
the merger agreement or on conditions that would not be detrimental to either
of us or the combined company.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES (SEE PAGES 41-43)
We have structured the merger so that SIS, GBT and GBT's shareholders will
not recognize any gain or loss for federal income tax purposes in the merger,
except for taxes payable because of cash received by GBT shareholders instead
of fractional SIS shares or pursuant to the exercise of dissenters' rights as
described below.
STOCK OPTION AGREEMENT (SEE PAGES 38-39)
In connection with the merger agreement, GBT granted SIS an option to
purchase up to 170,080 shares of GBT Common Stock at an exercise price of
$18.00 per share. SIS may exercise this option only if certain events
ordinarily associated with another party attempting to "break up" the merger
and acquire GBT occur; as of this date, none of those events has occurred.
Under the option agreement, if any such event did occur and SIS were entitled
to exercise the option, it would also be entitled to receive a fee of $1.5
million from GBT. The option and the fee are an incentive to GBT to proceed
with the merger, and may discourage other persons who might be interested in
acquiring GBT.
4
APPRAISAL RIGHTS AND DISSENTING SHAREHOLDERS (SEE PAGES 18-19)
Holders of GBT Common Stock who do not vote in favor of the merger and who
follow certain procedures set forth in Connecticut law will be entitled to
dissenters' rights under Connecticut law. The text of the pertinent statutory
provisions is attached as Appendix E. Because the merger involves a subsidiary
of SIS rather than SIS itself, holders of SIS Common Stock do not have
dissenters' rights in connection with the merger.
CERTAIN DIFFERENCES IN THE RIGHTS OF SHAREHOLDERS
Once the merger occurs, GBT's shareholders will automatically become
shareholders of SIS, and their rights will be governed by Massachusetts rather
than Connecticut law and by SIS's corporate governing documents, including its
articles of organization and bylaws. Perhaps the most significant difference
between the rights of GBT shareholders and the rights of SIS shareholders is
that GBT shareholders have a preemptive right to subscribe for additional
shares of stock offered by GBT, a right that SIS shareholders do not have with
respect to SIS stock. You can find a detailed discussion of the differences
between the rights of GBT and SIS shareholders further on in this Proxy
Statement--Prospectus under the heading entitled "COMPARISON OF RIGHTS OF
HOLDERS OF GBT COMMON STOCK AND SIS COMMON STOCK" at pages 56 through 63.
MARKET PRICES AND DIVIDEND DATA
SIS common stock is listed for trading on the Nasdaq National Market, and GBT
common stock is listed for trading on the Nasdaq Small Capitalization Market.
The following table shows the range of high and low closing prices for SIS
common stock and GBT common stock during each quarter since January 1, 1995. It
also shows the quarterly cash dividends paid by SIS and GBT on their shares.
CASH DIVIDENDS
SIS GBT PER SHARE OF
COMMON STOCK COMMON STOCK COMMON STOCK
------------- ------------- ---------------
QUARTER ENDED HIGH LOW HIGH LOW SIS GBT
- ------------- ------ ------ ------ ------ ------- -------
1995
March 31........................... $11.06 $ 9.63 $ 7.75 $ 7.70 -- --
June 30............................ 13.06 10.88 7.63 7.25 -- --
September 30....................... 16.00 12.88 10.50 7.25 -- --
December 31........................ 17.13 14.63 9.88 7.50 -- --
1996
March 31........................... 18.75 16.25 9.25 8.50 -- --
June 30............................ 18.63 16.75 10.25 9.13 -- $ .07
September 30....................... 23.63 17.50 10.88 10.00 -- .07
December 31........................ 24.50 22.13 13.25 10.13 -- .14*
1997
March 31........................... 27.33 22.33 19.00 12.75 $ .12 .07
June 30............................ 29.63 23.33 18.75 14.25 .12 .09
September 30....................... 34.75 27.63 25.00 17.00 .14 .09
through October 22................. 37.00 34.50 26.38 24.50
- --------
* GBT paid an additional special dividend of $0.07 per share.
On October 22, 1997, SIS announced a quarterly dividend of $0.14 per share
payable on November 21, 1997 to holders of record as of the close of business
on November 4, 1997. On October 8, 1997, GBT announced a quarterly dividend of
$0.09 per share payable on November 15, 1997 to holders of record as of October
24, 1997.
5
On August 15, 1997, the last business day before the merger was announced,
the closing price for a share of SIS stock was $30.00 and for a share of GBT
stock was $20.00. If $30.00 had been the average of the closing bid prices
under the merger agreement, a GBT shareholder receiving SIS stock in exchange
for a share of GBT stock on that day under the terms of the merger agreement
would have received stock with a value of $22.20 ($30.00 X 0.74). On October
22, 1997, the last day before this Proxy Statement-Prospectus was printed for
which we had information, the closing price was $35.50. If that had been the
average, a GBT shareholder would have received stock with a value of $26.24
($35.50 X 0.74).
FUTURE SIS ACQUISITION ACTIVITY
Both nationally and in New England, the banking industry is undergoing a
period of consolidation marked by numerous mergers and acquisitions. SIS has no
formal program to acquire other banking or thrift institutions, but it may
occasionally be presented with opportunities before or after the merger to
acquire existing institutions that could expand and strengthen SIS's market
position. If such an opportunity arises, SIS may engage in discussions or
negotiations about the target company, and may also conduct a business
investigation of the target. If the purchase price for any such acquisition
were to include a premium over the target's book or market value, which is not
unusual, SIS's book value might be diluted, at least in the short term.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this document that are subject to
risks and uncertainties. Forward-looking statements include the information
concerning possible or assumed future results of operations of our companies
set forth under "--Recommendation of the GBT Board and Reasons for the Merger,"
"--Recommendation of the SIS Board and Reasons for the Merger" and "Opinions of
Financial Advisers" and statements preceded by, followed by or including words
such as "believes," "anticipates," "plans," "expects" and similar expressions.
For those statements, we claim the protection of the safe harbor for forward-
looking statements contained in the Private Securities Litigation Reform Act of
1995. You should understand that the following important factors, in addition
to those discussed elsewhere in this document and the documents we incorporate
by reference, could affect the future results of the companies and could cause
those results to differ materially from those expressed in our forward-looking
statements: we may not fully realize anticipated operating efficiencies; we may
lose deposits, customers or revenue after the merger; competitive pressure in
the banking industry, negative changes in general economic conditions or
changes in banking regulation could affect our operations; and changes in
interest rates could reduce our operating margins.
6
SUMMARY PRO FORMA FINANCIAL DATA
The unaudited pro forma financial data set forth below have been prepared to
reflect the Merger using the pooling of interests method of accounting,
assuming the Merger had been consummated as of June 30, 1997 for the balance
sheet data and as of January 1, 1994 for results of operations data. Under the
pooling of interests method of accounting, the recorded assets and liabilities
of the separate companies are added together at the amounts shown in their
preceding separate financial statements and generally become the recorded
assets and liabilities of the combined corporation. The assets of the
constituent entities are recorded on the resulting corporation's books at their
historical cost. The combined shareholders' equity accounts are adjusted to
reflect the fact that SIS shares will be issued in exchange for GBT shares. The
results of operations of the separate companies are added together for each
period shown, and pro forma adjustments are made only to reflect SIS's income
statement classifications. For a description of the effect of the pooling of
interests method of accounting on the Merger and the historical financial
statements of SIS, see "The Merger--Accounting Treatment."
The unaudited pro forma financial data are presented for illustrative
purposes only and, therefore, are not necessarily indicative of the operating
results and financial position that might have been achieved had the Merger
occurred as of an earlier date, nor are they necessarily indicative of
operating results and financial position which may occur in the future. The pro
forma amounts do not include any adjustments for estimated operating
efficiencies or revenue enhancements resulting from the Merger.
The unaudited pro forma financial data presented are based on and derived
from, and should be read in conjunction with, the historical and pro forma
consolidated financial statements and notes thereto for SIS and GBT either
incorporated by reference or included herein. See "UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS."
AT OR FOR THE YEAR ENDED
AT OR FOR THE DECEMBER 31,
SIX MONTHS ENDED -----------------------------------
JUNE 30, 1997 1996 1995 1994
----------------------------- ---------- ----------
(DOLLAR IN THOUSANDS, EXCEPT PER SHARE DATA)
BALANCE SHEET DATA:
Total assets............ $ 1,696,233 -- -- --
Loans receivable........ 798,819 -- -- --
Investment securities... 759,888 -- -- --
Foreclosed property..... 1,183 -- -- --
Deposits................ 1,231,998 -- -- --
Borrowed funds.......... 304,462 -- -- --
Shareholders' equity.... 120,251 -- -- --
RESULTS OF OPERATIONS:
Interest and dividend
income................. $ 58,588 $ 101,738 $ 86,434 $ 73,366
Interest expense........ 28,554 48,915 39,448 29,729
Net interest and
dividend income........ 30,034 52,823 46,986 43,637
Provision for loan
losses................. 921 3,625 6,191 27,531
Net interest and
dividend income after
provision for
loan losses............ 29,113 49,198 40,795 16,106
Noninterest income...... 7,208 14,667 11,669 11,002
Noninterest expense..... 24,786 48,210 45,622 54,840
Income tax provision
(benefit).............. 4,540 (5,030) (6,259) 35
Net income (loss)....... 6,995 20,685 13,101 (27,767)
COMMON SHARE DATA:
Primary net income
(loss) per share....... $ 1.00 $ 3.01 $ 2.12 $ (4.53)
Fully diluted net income
(loss) per share....... $ 1.00 $ 2.99 $ 2.11 $ (4.50)
CAPITAL RATIOS:
Equity to total assets.. 7.09% -- -- --
Core (leverage) capital
ratio at period end.... 6.96% -- -- --
Total risk-based capital
ratio at period end.... 13.01% -- -- --
7
COMPARATIVE PER SHARE FINANCIAL INFORMATION
The following table sets forth selected comparative per share data for each
of SIS and GBT on a historical basis and selected unaudited pro forma
comparative per share data assuming the Merger had been consummated as of the
beginning of the earliest period presented for earnings per share and dividends
per share and as of the end of the period presented for book value per share.
The unaudited pro forma financial data have been prepared giving effect to the
Merger as a pooling of interests. For a description of the effect of pooling of
interests method of accounting on the Merger and the historical financial
statements of SIS, see "THE MERGER--Accounting Treatment."
The comparative per share data presented are based on and derived from, and
should be read in conjunction with, the historical consolidated financial
statements and notes thereto for SIS and GBT incorporated herein by reference.
The selected historical unaudited financial data for SIS and GBT for the six
months ended June 30, 1997 have been prepared in accordance with generally
accepted accounting principles ("GAAP") applicable to interim financial
information and, in the opinion of the respective managements of SIS and GBT,
include all adjustments, consisting of only normal recurring adjustments,
necessary for a fair statement of financial information for such periods.
The unaudited pro forma comparative data are presented for comparative
purposes only and, therefore, are not necessarily indicative of the operating
results and financial position that might have been achieved had the Merger
occurred as of an earlier date, nor are they necessarily indicative of
operating results and financial position that may occur in the future. The pro
forma amounts do not include any adjustments for estimated operating
efficiencies or revenue enhancements resulting from the Merger.
The unaudited pro forma financial data presented are based on and derived
from, and should be read in conjunction with, the historical and pro forma
consolidated financial statements and notes thereto for SIS and GBT either
incorporated by reference or included herein. See "UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS."
AT OR FOR THE YEAR ENDED
AT OR FOR THE DECEMBER 31,
SIX MONTHS ENDED ------------------------
JUNE 30, 1997 1996 1995 1994
---------------- ------------------------
SIS
Income (loss) per common and common
equivalent share:
Historical--Primary EPS.......... $1.03 $ 3.29 $ 2.21 $ (5.21)
Historical--Fully Diluted EPS.... $1.02 $ 3.26 $ 2.19 $ (5.21)
Pro forma combined--Primary
EPS(1).......................... $1.00 $ 3.01 $ 2.12 $ (4.53)
Pro forma combined--Fully Diluted
EPS(1).......................... $1.00 $ 2.99 $ 2.11 $ (4.50)
Dividends per common share:
Historical....................... $0.24 -- -- --
GBT
Income (loss) per common and common
equivalent share:
Historical--Primary EPS.......... $0.68 $ 1.38 $ 1.22 $ (0.67)
Historical--Fully Diluted EPS.... $0.68 $ 1.38 $ 1.22 $ (0.67)
Pro forma equivalent--Primary
EPS(2).......................... $0.74 $ 2.23 $ 1.57 $ (3.35)
Pro forma equivalent--Fully
Diluted EPS(2).................. $0.74 $ 2.21 $ 1.56 $ (3.33)
Dividends per common share:
Historical....................... $0.16 $ 0.28 -- --
Pro forma equivalent(3).......... $0.18 -- -- --
8
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
SIS
Book value per common share at period end:
Historical.............................................. $18.52 $17.81
Pro forma combined(4)................................... $17.35 $16.59
GBT
Book value per common share at period end:
Historical.............................................. $ 9.82 $ 9.22
Pro forma equivalent(2)................................. $12.84 $12.28
- --------
(1) SIS pro forma combined income per common share is determined by dividing
the pro forma combined net income by SIS's and GBT's combined historical
weighted average shares, after adjustment of GBT's historical number of
shares by the Exchange Ratio of 0.74.
(2) GBT pro forma equivalent income per common share and book value per common
share are calculated by multiplying the pro forma combined amounts by the
ratio of 0.74 of a share of SIS Common Stock for each share of GBT Common
Stock.
(3) GBT pro forma equivalent dividends per common share are calculated by
multiplying the SIS historical dividends per common share by the ratio of
0.74 of a share of SIS Common Stock for each share of GBT Common Stock.
(4) SIS pro forma combined book value per common share is determined by
dividing the pro forma combined shareholders' equity by SIS's and GBT's
combined historical shares outstanding as of the period end, after
adjustment of GBT's historical number of shares by the Exchange Ratio of
0.74.
9
SELECTED FINANCIAL DATA
The following tables set forth consolidated historical summary financial data
for the periods and as of the dates indicated for SIS and its consolidated
subsidiaries and for GBT and its consolidated subsidiaries. The summary
selected financial data are based on and derived from, and should be read in
conjunction with, the historical consolidated financial statements and notes
thereto for SIS and GBT incorporated herein by reference. The historical
unaudited financial statements as of or for the six months ended June 30, 1997
and 1996 have been prepared in accordance with GAAP applicable to interim
financial information and, in the opinion of the respective managements of SIS
and GBT, include all adjustments, consisting of only normal recurring
adjustments, necessary for a fair statement of financial information for such
periods.
10
SELECTED HISTORICAL FINANCIAL DATA OF SIS
AT OR FOR THE
SIX MONTHS ENDED AT OR FOR THE
JUNE 30, YEARS ENDED DECEMBER 31,
---------------------- ------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
RESULTS OF OPERATIONS:
Interest and dividend
income................. $ 49,452 $ 39,244 $ 84,277 $ 69,916 $ 57,913 $ 63,174 $ 72,187
Interest expense........ 24,403 19,216 41,173 32,556 23,792 27,175 36,537
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest and
dividend income....... 25,049 20,028 43,104 37,360 34,121 35,999 35,650
Provision for loan
losses................. 801 1,450 2,950 4,359 25,742 15,740 13,219
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest and
dividend income after
provision for loan
losses................ 24,248 18,578 40,154 33,001 8,379 20,259 22,431
Noninterest income...... 5,579 5,318 11,470 8,124 8,329 11,671 10,426
Noninterest expense..... 20,282 17,957 37,737 35,425 43,615 49,589 45,054
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before
income taxes and
cumulative effect of
change in accounting
principle............. 9,545 5,939 13,887 5,700 (26,907) (17,659) (12,197)
Income tax expense
(benefit).............. 3,785 490 (4,273) (5,759) -- (3,384) (3,228)
Cumulative effect of
change in accounting
principle.............. -- -- -- -- -- -- 1,295
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............ $ 5,760 $ 5,449 $ 18,160 $ 11,459 $ (26,907) $ (14,275) $ (10,264)
========== ========== ========== ========== ========== ========== ==========
BALANCE SHEET DATA:
Total assets............ $1,434,545 $1,209,843 $1,348,612 $1,070,978 $ 920,689 $ 969,904 $1,002,513
Loans receivable,
gross.................. 660,430 592,720 624,998 573,083 513,486 640,574 717,301
Allowance for possible
loan losses............ 16,392 14,913 15,597 14,986 15,844 18,367 12,176
Investment securities... 678,855 530,641 641,497 419,777 319,564 231,565 156,279
Investments in real
estate and real estate
partnerships........... 2,703 5,494 2,757 6,092 6,699 9,939 13,219
Deposits................ 1,015,404 927,298 969,517 885,386 853,633 874,906 898,050
Borrowings.............. 280,357 168,919 247,896 78,071 2,392 6,063 6,240
Total shareholders'
equity................. 103,273 86,996 101,917 81,469 28,503 58,531 72,762
PER SHARE DATA:
Net income(1):
Primary................ $ 1.03 $ 1.00 $ 3.29 $ 2.21 $ (5.21) $ (2.77) $ (1.98)
Fully diluted(2)....... $ 1.02 $ 1.00 $ 3.26 $ 2.19 $ (5.21) $ (2.77) $ (1.98)
Total cash dividends
paid................... $ 0.24 -- -- -- -- -- --
Book value per
share(3)............... $ 18.52 $ 15.20 $ 17.81 $ 14.27 $ 4.99 $ 10.25 $ 12.74
Weighted average fully
diluted shares
outstanding(1)......... 5,640,349 5,445,968 5,573,390 5,220,778 5,220,778 5,220,778 5,220,778
SELECTED FINANCIAL
RATIOS:
Return on average
assets(4).............. 0.83% 0.97% 1.52% 1.16% (2.88)% (1.46)% (1.01)%
Return on average
shareholders'
equity(4).............. 11.45% 13.43% 20.91% 17.25% (63.55)% (20.85)% (13.24)%
Net interest
margin(4)(5)........... 3.84% 3.80% 3.85% 4.00% 3.90% 4.13% 3.97%
Cash dividends per share
as a percentage of
earnings per share..... 23.53% -- -- -- -- -- --
Equity to total assets.. 7.20% 7.19% 7.56% 7.61% 3.10% 6.03% 7.26%
Core (leverage) capital
ratio at period end.... 6.99% 7.40% 7.41% 7.57% 3.43% 6.02% 7.28%
Total risk-based capital
ratio at period end.... 13.13% 13.51% 14.05% 13.77% 7.32% 9.72% 11.38%
Allowance for loan
losses to total gross
loans.................. 2.48% 2.51% 2.50% 2.61% 3.09% 2.87% 1.70%
Nonperforming assets to
total assets........... 0.47% 0.87% 0.56% 1.30% 2.81% 9.94% 12.35%
Footnotes on following page
11
Footnotes to preceding page
- --------
(1) Net income per share for the six months ended June 30, 1997 and 1996 and
for the year ended December 31, 1996 is computed on weighted average shares
outstanding for periods presented. Net income (loss) per share for the
years ended December 31, 1995, 1994, 1993 and 1992 is computed on a pro
forma basis as if the conversion of the Bank from mutual to stock form had
been completed as of the beginning of the earliest period presented.
(2) For the years ended December 31, 1994, 1993 and 1992 the fully diluted
earnings per share calculation is anti-dilutive.
(3) Calculated on the basis of 5,576,842, 5,722,600, 5,723,600 shares
outstanding at June 30, 1997 and 1996, and December 31, 1996, respectively.
At December 31, 1995, 1994, 1993 and 1992 the calculation is based on
5,710,700 shares outstanding on a fully diluted basis.
(4) June 30, 1997 and 1996 figures are annualized.
(5) On a fully taxable equivalent basis.
12
SELECTED HISTORICAL FINANCIAL DATA OF GBT
AT OR FOR THE
SIX MONTHS ENDED AT OR FOR THE
JUNE 30, YEARS ENDED DECEMBER 31,
---------------------- ------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
RESULTS OF OPERATIONS:
Interest income......... $ 9,136 $ 8,550 $ 17,461 $ 16,518 $ 15,453 $ 16,136 $ 17,580
Interest expense........ 4,151 3,702 7,742 6,892 5,937 6,392 7,488
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income.... 4,985 4,848 9,719 9,626 9,516 9,744 10,092
Provision (benefit) for
loan losses............ 120 375 675 (213) 1,789 3,847 3,587
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income
after provision
(benefit) for loan
losses................ 4,865 4,473 9,044 9,839 7,727 5,897 6,505
Other operating income.. 1,629 1,546 3,197 3,135 4,043 4,045 3,670
Other operating
expense................ 4,504 4,940 10,473 10,197 11,225 12,606 10,898
(Recovery) loss on
National Premium CD
Program................ -- -- -- (410) 1,370 -- --
Loss on bulk sale of
loans.................. -- -- -- 2,045 -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before
income tax expense
(benefit) and
cumulative effect of
change in accounting
principle............. 1,990 1,079 1,768 1,142 (825) (2,664) (723)
Income tax expense
(benefit).............. 755 -- (757) (500) 35 65 76
Cumulative effect of
change in accounting
principle.............. -- -- -- -- -- 52 --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)..... $ 1,235 $ 1,079 $ 2,525 $ 1,642 $ (860) $ (2,677) $ (799)
========== ========== ========== ========== ========== ========== ==========
BALANCE SHEET DATA:
Total assets............ $ 261,298 $ 236,902 $ 248,598 $ 229,774 $ 218,292 $ 228,981 $ 238,499
Loans receivable(1)..... 156,390 145,080 148,733 141,965 130,790 147,736 164,742
Allowance for possible
loan losses............ 3,448 3,407 3,352 3,029 4,517 4,742 4,601
Investment
securities(2).......... 83,144 70,633 62,763 65,071 67,329 54,832 40,032
Deposits................ 216,594 194,542 208,420 190,315 194,384 202,392 218,382
Borrowings.............. 24,105 25,000 21,350 23,000 13,000 14,000 5,000
Total shareholders'
equity................. 17,963 15,659 16,869 14,974 8,040 11,054 13,796
PER SHARE DATA:
Net income (loss) per
share.................. $ 0.68 $ 0.59 $ 1.38 $ 1.22 $ (0.67) $ (2.08) $ (0.62)
Total cash dividends
paid per share......... $ 0.16 $ 0.07 $ 0.28 -- -- $ 0.05 $ 0.20
Book value per share.... $ 9.82 $ 8.56 $ 9.22 $ 8.18 $ 6.23 $ 8.57 $ 10.70
Weighted average shares
outstanding............ 1,829,920 1,829,920 1,829,920 1,352,057 1,289,920 1,289,920 1,289,920
SELECTED FINANCIAL
RATIOS:
Return (loss) on average
assets(3).............. 0.99% 0.94% 1.08% 0.75% (0.39)% (1.15)% (0.35)%
Return (loss) on average
shareholders'
equity(3).............. 14.59% 14.24% 16.29% 16.04% (8.05)% (18.68)% (5.10)%
Net interest
margin(3)(4)........... 4.33% 4.56% 4.46% 4.74% 4.69% 4.66% 5.00%
Cash dividends per share
as a percentage of
earnings (loss) per
share.................. 23.53% 11.86% 20.29% -- -- (2.40)% (32.26)%
Equity to total assets.. 6.87% 6.61% 6.79% 6.52% 3.68% 4.83% 5.78%
Core (leverage) capital
ratio at period end.... 7.22% 7.01% 7.07% 6.77% 4.64% 4.76% 5.86%
Total risk-based capital
ratio at period end.... 13.05% 13.43% 13.42% 12.83% 9.08% 8.62% 9.28%
Allowance for loan
losses to loans
receivable(1).......... 2.20% 2.35% 2.25% 2.13% 3.45% 3.21% 2.79%
Nonperforming assets to
total assets........... 1.04% 1.02% 1.06% 0.46% 2.61% 4.26% 4.14%
- --------
(1) Net of unearned income.
(2) Includes investment securities available-for-sale, investment securities
held-to-maturity and Federal Home Loan Bank stock.
(3) June 30, 1997 and 1996 figures are annualized.
(4) On a fully taxable equivalent basis.
13
THE MEETINGS
MATTERS TO BE DISCUSSED AT THE MEETINGS
General. This Proxy Statement--Prospectus is being furnished by SIS to
holders of shares of SIS Common Stock and by GBT to holders of shares of GBT
Common Stock in connection with the solicitation of proxies from such
shareholders for use at the SIS Meeting and the GBT Meeting, respectively.
SIS. At the SIS Meeting or any adjournments or postponements thereof,
holders of shares of SIS Common Stock will be asked to approve and adopt the
Merger Agreement and the consummation of the transactions contemplated
thereby, including the Merger and the related issuance by SIS of shares of SIS
Common Stock to the shareholders of GBT, and such other matters as may
properly be brought before the meeting.
THE BOARD OF DIRECTORS OF SIS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
MERGER AND THE RELATED ISSUANCE BY SIS OF SHARES OF SIS COMMON STOCK TO THE
STOCKHOLDERS OF GBT.
GBT. At the GBT Meeting or any adjournments or postponements thereof,
holders of shares of GBT Common Stock will be asked to approve and adopt the
Merger Agreement and Plan of Merger and the consummation of the transactions
contemplated thereby, including the Merger.
THE BOARD OF DIRECTORS OF GBT HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND PLAN OF MERGER AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND PLAN OF MERGER AND THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER.
RECORD DATES; STOCK ENTITLED TO VOTE; QUORUM
SIS. The SIS Record Date for the determination of shares of those holders of
SIS Common Stock entitled to notice of, and to vote at, the SIS Meeting is
October 10, 1997. Only holders of record of shares of SIS Common Stock at the
close of business on the SIS Record Date will be entitled to notice of and to
vote at the SIS Meeting or any adjournments or postponements thereof. As of
the SIS Record Date, there were 5,580,842 shares of SIS Common Stock
outstanding and entitled to vote.
The presence in person or by proxy of shares representing a majority of
votes (2,790,422 votes) entitled to be cast by holders of SIS Common Stock
issued and outstanding and entitled to vote as of the SIS Record Date is
required to constitute a quorum for the transaction of business at any meeting
of shareholders. Abstentions and broker non-votes are included in the
determination of the number of shares of SIS Common Stock present and voting.
"Broker non-votes" are proxies with respect to shares held in record name by
brokers or nominees, as to which (i) instructions have not been received from
the beneficial owners or persons entitled to vote, (ii) the broker or nominee
does not have discretionary voting power under applicable national securities
exchange rules or the instrument under which it serves in such capacity, and
(iii) the record holder has indicated on the proxy card or otherwise notified
the corporation that it does not have authority to vote such shares on that
matter.
GBT. The GBT Board has fixed the close of business on October 10, 1997 as
the GBT Record Date. Only the holders of record of shares of GBT Common Stock
at the close of business on the GBT Record Date will be entitled to notice of
and to vote at the GBT Meeting and any adjournments or postponements thereof.
At the GBT Record Date, 1,829,920 shares of GBT Common Stock were outstanding
and entitled to vote. The presence in person or by proxy of the holders of a
majority of the issued and outstanding shares of GBT Common Stock entitled to
vote is required to constitute a quorum at the GBT Meeting. Shares of GBT
Common Stock for
14
which proxies or ballots have been received but with respect to which holders
of shares have abstained with respect to the approval and adoption of the
Merger Agreement and Plan of Merger (whether as a broker non-vote or
otherwise) will be counted as present for purposes of determining the presence
or absence of a quorum for the transaction of business at the GBT Meeting.
SOLICITATION OF PROXIES
SIS. Shareholders of record on the SIS Record Date are entitled to cast
their votes, in person or by properly executed proxy, at the SIS Meeting.
Shareholders are requested to complete, date, sign and promptly return the
accompanying proxy card in the enclosed envelope. All shares represented at
the SIS Meeting by properly executed proxies received prior to or at the SIS
Meeting and not properly revoked will be voted at the SIS Meeting in
accordance with the instructions indicated in such proxies. IF NO INSTRUCTIONS
ARE INDICATED, SUCH PROXIES WILL BE VOTED FOR APPROVAL OF THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY.
If a quorum is not present at the time the SIS Meeting is convened, or if
for any other reason SIS believes that additional time should be allowed for
the solicitation of proxies or for the satisfaction of conditions to the
Merger or the transactions contemplated thereby, SIS may adjourn the SIS
Meeting with a vote of the holders of a majority of the voting power
represented by the SIS Common Stock present at such meeting. If SIS proposes
to adjourn the SIS Meeting, the persons named in the enclosed proxy card will
vote all shares for which they have voting authority in favor of such
adjournment. A proxy that withholds discretionary authority or that is voted
against the Merger Agreement will not be voted in favor of any adjournment or
postponement of the SIS Meeting.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Clerk of SIS, at or before the SIS Meeting, a written notice of
revocation bearing a date later than the date of the proxy, (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Clerk of SIS at or before the SIS Meeting or (iii) attending the SIS
Meeting and voting in person (although attendance at the SIS Meeting will not
in and of itself constitute revocation of a proxy). Any written notice
revoking a proxy should be sent to Michael E. Tucker, Clerk of SIS, 1441 Main
Street, Springfield, Massachusetts 01102.
Proxies are being solicited by and on behalf of the SIS Board. In addition
to solicitation by use of the mails, SIS has retained Morrow & Co. to solicit
proxies at an anticipated cost of $5,500 plus reimbursement for out-of-pocket
expenses. Morrow & Co. may solicit proxies in person, by telephone, telegram
or other means of communications. Further, proxies may be solicited by
directors, officers and employees of SIS in person or by telephone, telegram
or other means of communication. Such directors, officers and employees will
not be additionally compensated, but may be reimbursed for out-of-pocket
expenses in connection with such solicitation. Arrangements will be made with
custodians, nominees and fiduciaries for forwarding of proxy solicitation
materials to beneficial owners of SIS Common Stock held of record by such
persons, and SIS may reimburse such custodians, nominees and fiduciaries for
reasonable expenses incurred in connection therewith.
GBT. Proxies in the form enclosed are being solicited by and on behalf of
the GBT Board. Shareholders are requested to complete, date, sign and promptly
return the accompanying proxy card in the enclosed envelope. Shares
represented by a properly executed proxy received prior to the vote at the GBT
Meeting and not revoked will be voted at the GBT Meeting as directed in the
proxy. IF A PROXY IS SUBMITTED AND NO DIRECTIONS ARE GIVEN, THE PROXY WILL BE
VOTED FOR THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND PLAN OF MERGER
AND THE TRANSACTIONS CONTEMPLATED THEREBY.
In addition to solicitation by use of the mails, GBT has retained Morrow &
Co. to solicit proxies at an anticipated cost of $6,000 plus reimbursement for
out-of-pocket expenses. Morrow & Co. may solicit proxies in person, by
telephone, telegram or other means of communications. Further, proxies may be
solicited by directors,
15
officers and employees of GBT in person or by telephone, telegram or other
means of communication. Such directors, officers and employees will not be
additionally compensated, but may be reimbursed for out-of-pocket expenses in
connection with such solicitation. Arrangements will be made with custodians,
nominees and fiduciaries for forwarding of proxy solicitation materials to
beneficial owners of GBT Common Stock held of record by such persons, and GBT
may reimburse such custodians, nominees and fiduciaries for reasonable
expenses incurred in connection therewith.
The persons named as proxies by a GBT shareholder may propose and vote for
one or more adjournments or postponements of the GBT Meeting to permit further
solicitation of proxies in favor of the proposals to be considered at the GBT
Meeting. A proxy voted against the Merger Agreement and Plan of Merger will
not be voted in favor of any adjournment or postponement of the GBT Meeting.
A holder of record of GBT Common Stock may revoke a proxy by filing an
instrument of revocation with Camille S. Bushnell, Secretary of GBT, 2461 Main
Street, Glastonbury, Connecticut 06033. Such shareholder may also revoke a
proxy by filing a duly executed proxy bearing a later date, or by appearing at
the GBT Meeting in person and notifying the Secretary at the GBT Meeting. Any
shareholder of record attending the GBT Meeting may vote in person whether or
not a proxy has been previously given, but the mere presence (without
notifying the Secretary) of a shareholder at the GBT Meeting will not
constitute revocation of a previously given proxy.
REQUIRED VOTES
SIS. The affirmative vote of a majority of the votes cast at the SIS Meeting
is required for approval of the Merger Agreement and the transactions
contemplated thereby, including the issuance of shares of SIS Common Stock to
the shareholders of GBT. Abstentions and broker non-votes will have the same
effect as votes against the Merger Agreement. Shareholders of SIS are entitled
to one vote at the SIS Meeting for each share of SIS Common Stock held of
record at the close of business on the SIS Record Date. Because SIS Interim
Bank rather than SIS will be a party to the Merger, the vote of the
shareholders of SIS is not required by either Massachusetts law or the SIS
articles of organization (the "SIS Articles") to approve the Merger Agreement
or the Merger. However, SIS has agreed with GBT that SIS will seek approval of
the Merger Agreement by the SIS shareholders, and the Bylaws of the National
Association of Securities Dealers require shareholder approval of the issuance
of shares of SIS Common Stock in connection with the Merger.
At the close of business on the SIS Record Date, 5,580,842 shares of SIS
Common Stock were outstanding and entitled to vote, of which approximately
341,000 shares (including approximately 166,000 shares subject to vested stock
options), or approximately 6.11%, were held by directors and executive
officers of SIS. The directors of SIS, who beneficially own a total of 188,019
shares of SIS Common Stock (including 76,560 shares subject to vested stock
options), representing approximately 3.36% of the shares of SIS Common Stock
issued and outstanding on the SIS Record Date, have entered into an agreement
(the "SIS Stockholders Agreement"), pursuant to which they have agreed to vote
all of their shares of SIS Common Stock in favor of the Merger.
GBT. The affirmative vote of two-thirds of the votes (1,219,947 votes) of
holders of the outstanding shares of GBT Common Stock is required for approval
of the Merger Agreement and Plan of Merger and the transactions contemplated
thereby. Abstentions and broker non-votes will have the same effect as votes
against the Merger Agreement and Plan of Merger. Shareholders of GBT are
entitled to one vote at the GBT Meeting for each share of GBT Common Stock
held of record at the close of business on the GBT Record Date.
At the close of business on the GBT Record Date, 1,829,920 shares of GBT
Common Stock were outstanding and entitled to vote. GBT directors and
executive officers who beneficially own a total of 419,622 shares of GBT
Common Stock, representing approximately 22.93% of the shares of GBT Common
Stock issued and outstanding on the GBT Record Date, have entered into an
agreement (the "GBT Stockholders Agreement"), pursuant to which such
shareholders have agreed to certain restrictions on their respective shares of
GBT Common Stock. Specifically, such shareholders have agreed, with respect to
all presently owned or after-acquired stock, (a) to vote such stock in favor
of the Merger and against any other acquisition transaction with a
16
party other than SIS or its affiliates, and (b) generally not to sell, assign,
transfer, encumber or otherwise dispose of such stock. The GBT Stockholders
Agreement will remain in effect until the earlier of the consummation of the
Merger or the termination of the Merger Agreement in accordance with its
terms. Assuming that all of the shares subject to the GBT Stockholders
Agreement are in fact voted in favor of the Merger Agreement and Plan of
Merger, the vote of holders of approximately 800,325 additional shares of GBT
Common Stock, representing approximately 43.74% of the shares of GBT Common
Stock issued and outstanding on the GBT Record Date, will be required to
approve and adopt the Merger Agreement and Plan of Merger and the transactions
contemplated thereby.
SOLICITATION EXPENSES
SIS and GBT will pay their respective expenses in connection with the
solicitation of proxies.
BENEFICIAL OWNERSHIP OF GBT COMMON STOCK
The following table sets forth certain information regarding beneficial
ownership of GBT Common Stock as of October 10, 1997 by (i) each person known
by GBT to own beneficially more than 5% of GBT Common Stock, (ii) each
director of GBT, and (iii) all directors and executive officers of GBT as a
group. The number of shares beneficially owned by such persons is determined
according to rules of the Commission, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares as to which the individual or entity
has sole or shared voting power or investment power, and also any shares that
the individual or entity has the right to acquire within 60 days of October
10, 1997 through the exercise of an option, conversion feature or similar
right. Except as noted below, each holder has sole voting and investment power
with respect to shares of GBT Common Stock listed as beneficially owned by
such person or entity.
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING
OF GBT GBT COMMON
NAME COMMON STOCK STOCK
---- ---------------- -------------
DIRECTORS AND EXECUTIVE OFFICERS
Loren J. Andreo............................. 78,591 4.29%
Ronald E. Bourbeau.......................... 179,823 9.83%
Camille S. Bushnell......................... 1,190 *
John J. Carson.............................. 185 *
Alden A. Ives............................... 11,944(1) *
Harvey A. Katz.............................. 80,084(2) 4.38%
Grace C. Nome............................... 691 *
Mark A. Sheptoff............................ 5,456(3) *
J. Gilbert Soucie........................... 54,310(4) 2.98%
James Uccello............................... 2,059 *
All Directors and Executive Officers as a
group (13 persons)......................... 419,622 22.93%
5% BENEFICIAL OWNERS
Ronald E. Bourbeau(5)....................... 179,823 9.83%
Thomas J. Carroll(6)........................ 96,000 5.25%
- --------
* Less than 1%
(1) Includes 5,192 shares owned by spouse and 1,588 shares owned jointly with
spouse.
(2) Includes 1,991 shares owned by spouse and 16,697 shares as trustee for
Harvey A. Katz, Profit Sharing Plan.
(3) Includes 5,000 shares as Trustee for Mark A. Sheptoff, Voluntary
Retirement Plan.
(4) Includes 15,500 shares owned jointly with spouse, 12,272 shares owned by
spouse and 5,500 shares owned by son. Mr. Soucie disclaims beneficial
ownership of the 5,500 shares owned by his son.
(5) Mr. Bourbeau's address is Reb Realty, 54 Riverview Street, Portland,
Connecticut 06480.
(6) Mr. Carroll's address is P.O. Box 488, Middleburg, Virginia 22117.
17
APPRAISAL RIGHTS AND DISSENTING SHAREHOLDERS
Shareholders of GBT who do not vote to approve and adopt the Merger
Agreement and Plan of Merger and who comply with the requirements of Sections
33-855 through 33-872 (the "Dissenters' Rights Statute") of the Connecticut
Business Corporations Act (the "CBCA"), a copy of which is attached to this
Proxy Statement--Prospectus as Appendix E, will be entitled to dissenters'
rights. Because the Merger involves the merger of a subsidiary of SIS, SIS
Interim Bank ("Interim Bank"), into GBT rather than a merger between SIS
itself and GBT, shareholders of SIS have no dissenters' rights in connection
with the Merger.
If the Merger is consummated, a shareholder of GBT who does not vote in
favor of the approval and adoption of the Merger Agreement and Plan of Merger,
and who follows the statutory provisions of the Dissenters' Rights Statute
summarized herein may require GBT to pay the fair value of his or her shares
of GBT Common Stock, determined as provided in the Dissenters' Rights Statute.
A shareholder of GBT who desires to pursue his or her dissenters' rights
must deliver to GBT, before the taking of the vote on the Merger Agreement and
Plan of Merger, a written notice of intent to demand payment for his or her
shares if the proposed action is effectuated. Notice of an intention to demand
payment should be addressed to Camille S. Bushnell, Secretary, Glastonbury
Bank & Trust Company, 2461 Main Street, Glastonbury, Connecticut 06033. The
shareholder must then not vote any shares in favor of the approval and
adoption of the Merger Agreement and Plan of Merger. A vote against the
approval and adoption of the Merger Agreement and Plan of Merger, whether by
proxy or in person at the GBT Meeting, is not required to perfect a
shareholder's dissenters rights, nor will a negative vote be considered a
demand for payment in and of itself without the prior delivery of the demand.
If the Merger Agreement and Plan of Merger are approved and adopted by the
required vote at the GBT Meeting, and all conditions to consummation of the
Merger are satisfied or waived, GBT will, within 10 days after the date on
which the Merger has become effective pursuant to the laws of the State of
Connecticut, deliver a written dissenters' notice to all shareholders who
complied with the statutory requirements, which notice shall (i) state where
the payment demand shall be sent and when certificates for certificated shares
must be deposited; (ii) inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment demand is
received; (iii) supply a form for demanding payment that includes the date of
the first announcement to news media or to shareholders of the terms of the
Merger Agreement and Plan of Merger and requires that the person asserting
dissenters' rights certify whether or not beneficial ownership of such shares
was acquired before that date; (iv) set a date by which GBT must receive the
payment demand, which date shall not be fewer than 30 nor more than 60 days
after the date the notice is delivered; and (v) be accompanied by a copy of
the appropriate statutory provisions.
Within the time period set forth in the written dissenters' notice, the
dissenting shareholder must demand payment, certify whether beneficial
ownership of the shares was acquired before the date set forth pursuant to
clause (iii) above, and deposit his or her certificates in accordance with the
terms of the notice. The right of dissent must be exercised with respect to
all shares owned by the same person. With respect to the shares acquired by
the shareholder prior to the date set forth pursuant to clause (iii) above,
GBT will then pay each dissenter who has complied with the provisions set
forth above the amount GBT estimates to be the fair value of the shares, plus
accrued interest. This payment will be accompanied by certain required
financial information relating to GBT, a statement of its estimate of the fair
value of the shares, an explanation of how the interest was calculated, a
statement of the dissenter's right to demand payment in a different amount if
the shareholder is dissatisfied with the payment tendered by GBT and a copy of
the relevant statutory provisions. With respect to shares acquired on or after
the date set forth pursuant to clause (iii) above, GBT may withhold payment
and merely send to the dissenter its offer of payment, together with a
statement of its estimate of fair value, an explanation of how the interest
was calculated and a statement of the dissenter's right to demand payment in a
different amount.
If the shareholder is dissatisfied with the payment or offer tendered by GBT
or if GBT fails to make payment within 60 days after the date set for
demanding payment, he or she may notify GBT in writing of his
or her own estimate of the fair value of the shares, and the amount of
interest due, and demand payment in that
18
amount less any payment received through the procedure set forth above. This
notice must be delivered within 30 days after GBT makes or offers payment for
the shareholder's shares as provided above.
If the parties have not agreed to a payment which is acceptable to both of
them, GBT will commence a proceeding within 60 days after receiving the
dissatisfied shareholder's payment demand, by a petition in Superior Court for
the judicial district of Hartford-New Britain, Connecticut to determine the
fair value of the shares and accrued interest, making all dissenters whose
demands remain unsettled at the time parties to the proceeding, whereupon the
court will determine the appropriate amount of payment. The cost and expenses
of any court proceeding to determine the fair value of the shares of GBT
Common Stock will be determined by the court and will be assessed against GBT,
provided that the Court may assess costs against some or all of the
shareholders to the extent it finds the dissenters acted arbitrarily,
vexatiously or not in good faith. The Court may include in any such assessment
the fees and expenses of counsel and experts to the extent the Court finds
such assessment equitable.
A GBT shareholder who exercises dissenters' rights and receives cash will
recognize gain for federal income tax purposes, the tax rate on which will
depend upon the holding period for his or her GBT Common Stock. The exchange
of shares for cash upon the exercise of dissenters' rights could be treated as
substantially equivalent to a dividend and, therefore, taxed as ordinary
income if the recipient of cash owns or constructively owns other shares of
SIS Common Stock. See "THE MERGER--Certain Federal Income Tax Consequences."
19
THE MERGER
GENERAL
This section of the Proxy Statement-Prospectus describes the material terms
and provisions of the proposed Merger, including the principal provisions of
the Merger Agreement and Plan of Merger, and related transactions. Copies of
the Merger Agreement and Plan of Merger are attached to this Proxy Statement--
Prospectus as Appendix A and Appendix B, respectively. All shareholders are
urged to read the Merger Agreement (including the Plan of Merger) in its
entirety.
The Merger Agreement provides that, subject to the satisfaction or waiver
(where permissible) of certain conditions, which are described more fully
herein and therein, Interim Bank will be merged with and into GBT. In
connection with the Merger, each outstanding share of GBT Common Stock will be
converted into and become exchangeable for 0.74 (the "Exchange Ratio") of one
share of SIS Common Stock plus cash in lieu of any fractional share of SIS
Common Stock.
BACKGROUND OF THE MERGER
Like many Connecticut financial institutions, GBT experienced financial
difficulties as a result of the national and regional recession which began in
1989. These difficulties resulted in GBT's stipulation to a Cease and Desist
Order issued by the FDIC and agreed to by the Connecticut Department of
Banking in 1993 (the "Order"). GBT responded by focusing on improving its
financial condition and earnings potential. As a result of its efforts, the
Order was lifted in 1996.
Following issuance of the Order, GBT received several acquisition proposals
and considered seriously two of them. However, after much deliberation, GBT
announced in October 1994 that it had decided not to pursue any proposals that
would involve its acquisition by another company, and would instead
concentrate on a financial recovery as an independent institution. GBT
furthered its independence strategy and improved its financial condition by
completing a $3.5 million rights offering of its common stock and a bulk sale
of approximately $7.7 million of non-performing assets and certain loans in
the fourth quarter of 1995.
During 1996 and the first half of 1997, GBT continued to focus on improving
shareholder value as an independent institution. However, in considering long-
term objectives, the GBT Board noted that increasing industry consolidation
and changes in government regulation of interstate banking had significantly
increased competition within GBT's market area. In order to compete
effectively in this environment, the GBT Board determined that it would be
beneficial to expand the range of products and services offered to GBT's
customers and to obtain the capital resources that would enable it to do so.
During this period, GBT engaged in preliminary dicussions concerning a
possible affiliation with an out-of-state organization, but the discussions
terminated because the parties were unable to agree on pricing.
GBT engaged MB&D in April 1997 for professional advice on the relative
merits of attempting to expand its business either by internal growth or by a
strategic alliance with another organization. GBT and MB&D analyzed these
alternatives and determined that an affiliation with a larger institution
without a Connecticut presence could further GBT's business objectives. On
July 3, 1997, MB&D approached SIS on behalf of GBT and inquired whether SIS
would be interested in discussing an affiliation between the two companies.
The GBT Board believed that such an affiliation, if properly structured, would
not only enhance long-term shareholder value by increasing the resources
available to GBT for expansion of its franchise, but would also allow GBT to
continue a form of independent operation that would benefit its customers,
suppliers, employees and community.
As part of SIS's ongoing review and consideration of strategic alternatives,
the SIS Board regularly reviews the operational and structural options
available to SIS to expand and strengthen its community banking franchise and
enhance long-term shareholder value, including opportunities that may arise
from time to time to acquire other banking and thrift institutions. In
response to MB&D's preliminary inquiry on July 3, 1997, SIS indicated that it
would be interested in discussing further with GBT the prospects for a
business combination involving the
20
two companies. Later that same day, J. Gilbert Soucie, President and Chief
Executive Officer of GBT, contacted F. William Marshall, Jr., President and
Chief Executive Officer of SIS, and indicated that the GBT Board had made the
decision to explore strategic merger possibilities and was seeking an
acceptable partner. During this discussion, Mr. Soucie indicated that the GBT
Board sought to affiliate with a company that would enable GBT to continue its
present success in the local market through retaining its corporate identity
and enable its shareholders to participate in the growth of a continuing
company. From the discussion, Mr. Soucie and Mr. Marshall established a future
meeting. On July 14, 1997, Mr. Marshall and Mr. Soucie held a meeting in
Springfield, Massachusetts, during which each described his respective
company's organization and its prospects for the future. The majority of the
meeting focused on aspects of a potential merger, specifically the
compatibility of the two organizations, how the combined company would
operate, and the roles of the SIS Board, the GBT Board and key management. On
July 22, 1997, Mr. Marshall and John F. Treanor, Executive Vice President and
Chief Financial Officer of SIS, met with the Executive Committee of the GBT
Board. At the meeting, Messrs. Marshall and Treanor provided information as to
SIS's background, operating environment and future growth opportunities, and
addressed the GBT Board's concerns in regards to SIS's qualifications as a
merger partner. In turn, the GBT executive committee approved the execution of
a confidentiality agreement between SIS and GBT in order to facilitate further
discussions. The parties signed a confidentiality agreement on July 24, 1997,
pursuant to which SIS undertook a preliminary due diligence investigation of
the business, operations and personnel of GBT. On July 30, following the
completion of such initial due diligence and further discussion between the
parties and their financial advisers, SIS's senior management, together with
Oppenheimer, presented to the SIS Board a proposal to submit a formal
indication of interest to GBT, in which SIS would outline the general terms
and conditions on which it would be willing to discuss further the prospects
for acquiring GBT in a strategic merger. The SIS Board authorized management
to submit such an indication of interest, and it was delivered to the GBT
Board and MB&D following the close of business on July 30. On August 4, the
GBT Board met in a special meeting and authorized management and GBT's
advisers to proceed to develop further SIS's proposal and make appropriate
investigations and analyses.
The parties, together with their counsel and financial advisers,
subsequently met on August 6, 1997, to discuss various aspects of the proposed
transaction, including the structure and accounting treatment of the Merger,
the role of GBT's Board and its senior management and employees if GBT were to
become a wholly owned subsidiary of SIS, the price, in the form of SIS Common
Stock, that SIS would be willing to pay to acquire GBT and various other
business issues. Following this meeting, SIS submitted a revised indication of
interest to GBT on August 7, in which it increased the price it would be
willing to pay in shares of SIS Common Stock, subject to confirmatory due
diligence, and further clarified the role that GBT's Board and its senior
management and employees would play following any combination of GBT with SIS.
On August 8, the GBT Board held a special meeting at which it considered the
status of the SIS discussions, and reviewed with MB&D two unsolicited,
preliminary indications of interest, one written and one oral, which had been
received by GBT from other financial institutions while the parties were in
the process of reviewing and refining SIS's proposal. Both the written and
oral expressions expressed interest in a tax-free, stock-for-stock merger.
Both indicated preliminary interest in offering consideration with a nominal
value at the time of approximately $22 to $23 per share, which did not appear
to be significantly higher than the firm offer made by SIS. In addition,
neither expression represented a formal offer and both were subject to due
diligence and further negotiation. The GBT Board believed that it was unlikely
that SIS would continue to negotiate with GBT if GBT were to enter into
negotiations with a third party, but acknowledged after consulting with
counsel and MB&D that each alternative expression was substantial enough to
warrant attention. The GBT Board requested that MB&D prepare analyses of the
unsolicited expressions of interest, but also authorized management and GBT's
advisers to continue negotiations with SIS.
During the period from August 8 through August 11, SIS and its advisers
undertook further detailed due diligence investigations of GBT, while GBT and
its advisers likewise undertook due diligence investigations of SIS. In
addition, during this period, SIS's counsel distributed proposed forms of the
Merger Agreement and related documents, including the Plan of Merger and the
Stock Option Agreement between GBT and SIS (the "Stock Option Agreement"), to
GBT and its advisers, and engaged in extensive discussions regarding the terms
and provisions contained in such documentation with GBT's counsel.
21
On August 12, the parties, with their counsel and financial advisers, met
again to negotiate further a variety of issues pertaining to the proposed
transaction, including various representations, warranties and covenants
contained in the Merger Agreement, the terms of the Stock Option Agreement and
the amount of the fee payable by GBT to SIS in the event that the Option were
to become exercisable, the amount of the "breakup" fee payable under the
Merger Agreement and the events that would cause such fee to become payable by
either party, and whether SIS should agree to issue a fixed or variable number
of shares to acquire GBT and the level at which such a fixed exchange ratio
should be set. Following the parties' August 12 meeting, SIS's counsel revised
further the Merger Agreement and related documents, including the Plan of
Merger and the Stock Option Agreement, and the revised documents were
presented to the GBT Board at a special meeting held on August 13. The
following day, the parties and their financial advisers continued to negotiate
a wide range of issues, including various representations and warranties
contained in the Merger Agreement, the terms of the Stock Option Agreement,
the fees payable by GBT under both the Merger Agreement and the Stock Option
Agreement and the amount of the fixed exchange ratio that SIS would be willing
to pay in the Merger, which had increased from 0.71 to 0.74 share of SIS
Common Stock. The Board continued to discuss the other expressions of interest
and asked MB&D to prepare an additional analysis of the oral expression.
On the morning of August 15, SIS, its counsel and Oppenheimer met with GBT's
counsel and MB&D and resolved to their satisfaction all open issues. Later
that day, the GBT Board met to consider the proposed terms of the Merger, as
negotiated to that point by GBT's advisers, and to again compare it, with the
assistance and advice of MB&D and GBT's counsel, to the two other unsolicited
preliminary indications of interest that GBT had received during the course of
the negotiations with SIS (the second of which prospective acquirors had,
during the course of such negotiations, documented its earlier oral
preliminary indication of interest with one in writing). It was noted that the
present nominal value of SIS's offer had risen to $22.39 per share, which
represented an aggregate increase of $1.7 million and was an amount
approximately the same as the two informal expressions of interest. At this
meeting, the GBT Board considered numerous aspects of the fully negotiated SIS
offer and the other two expressions, including their nominal value, the
likelihood of closing, the degree of certainty that the actual value received
by GBT shareholders would be approximately the nominal value fixed by
negotiations with SIS and the uncertainty that the nominal value of the other
expressions would result in an equivalent actual value, various financial
analyses and performance measures of each acquiror and the long-term prospects
of each potential acquiror and the relative marketability and long-term
prospects of its stock. In determining that the SIS proposal was, in its
judgment, superior to both of the unsolicited preliminary indications of
interest, the GBT Board considered each proposal in its entirety and did not
find it practicable, nor did it attempt, to determine the relative superiority
of each aspect of each such proposal. Following these determinations, the GBT
Board authorized GBT's advisers to obtain for the Board's review a final,
definitive agreement with SIS on the basis of the terms discussed that morning
between SIS and GBT's advisers. The GBT Board directed management to
communicate this view to SIS. The parties and their counsel then undertook to
finalize the Merger Agreement and related documents.
Separate special meetings of the SIS Board and the GBT Board were held on
August 17, 1997 to consider the proposed definitive form of the Merger
Agreement and related documents. At the GBT Board meeting, the GBT Board
reviewed the final terms of the Merger with counsel, and was advised orally by
MB&D that, in its opinion, and based on facts known to MB&D at that time, the
consideration to be paid by SIS in the Merger was fair, from a financial point
of view, to GBT's shareholders as of that date and confirmed its readiness, in
the absence of any intervening significant change, to render a written opinion
to that effect immediately prior to the circulation of proxy materials for the
GBT shareholders' meeting. After considering the best interests of GBT's
shareholders and other constituencies, the GBT Board then unanimously approved
the Merger Agreement and related agreements, including the Stock Option
Agreement and Plan of Merger, and authorized Mr. Soucie to sign the Merger
Agreement, the Stock Option Agreement and the SIS Stockholders Agreement on
behalf of GBT.
At the SIS Board meeting, presentations were delivered by SIS senior
management concerning the strategic rationale for the proposed transaction and
the results of SIS's detailed due diligence investigation of GBT, as well as
the course of the parties' negotiations on various matters addressed by the
Merger Agreement and related
22
documents. In addition, counsel reviewed in detail with the SIS Board the
terms of the Merger Agreement, Stock Option Agreement and related
documentation. The SIS Board was also advised by Oppenheimer in writing that
the consideration to be paid by SIS in the Merger was fair, from a financial
point of view, to SIS and its shareholders. After discussion and consideration
by the SIS Board of the potential financial and strategic benefits and risks
of the proposed transaction and other factors described below under
"Recommendation of the SIS Board and Reasons for the Merger," the SIS Board
unanimously approved the Merger Agreement and related agreements, including
the Stock Option Agreement and Plan of Merger, and authorized Mr. Marshall to
sign the Merger Agreement, the Stock Option Agreement, the Plan of Merger and
the GBT Stockholders Agreement on behalf of SIS.
On the morning of August 18, 1997, Messrs. Marshall and Soucie executed and
delivered the Merger Agreement and the Stock Option Agreement on behalf of SIS
and GBT, respectively, the executive officers and directors of GBT executed
and delivered the GBT Stockholders Agreement, and the SIS directors executed
and delivered the SIS Stockholders Agreement. Following SIS's subsequent
organization of Interim Bank, the parties executed and delivered the Plan of
Merger on September 12, 1997.
RECOMMENDATION OF THE GBT BOARD AND REASONS FOR THE MERGER
THE BOARD OF DIRECTORS OF GBT BELIEVES THAT THE MERGER IS FAIR TO AND IN THE
BEST INTERESTS OF GBT AND ITS STOCKHOLDERS. THE BOARD OF DIRECTORS OF GBT
UNANIMOUSLY RECOMMENDS THAT THE GBT STOCKHOLDERS VOTE FOR THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND PLAN OF MERGER AND THE TRANSACTIONS
CONTEMPLATED THEREBY.
In reaching its determination that the Merger is in the best interests of
the GBT shareholders, and recommending that the GBT shareholders approve the
Merger, the GBT Board consulted with GBT management, as well as its financial
and legal advisers, and considered a number of factors. Without assigning any
relative or specific weights thereto, the following is a discussion of the
material factors considered by the GBT Board in reaching its determination:
(a) the amount and form of the consideration offered by SIS in relation
to the estimated value of GBT Common Stock, the GBT Board's belief that of
the alternatives available, the Merger offered the greatest opportunity for
long-term value to the GBT shareholders, and the expectation that the
Merger will be a tax-free transaction to GBT and its shareholders to the
extent they receive SIS Common Stock in exchange for their shares;
(b) SIS's business, results of operations, prospects and financial
condition and the historical and potential future value of the SIS Common
Stock and dividends paid thereon;
(c) the potential operating efficiencies and financial strength the
Merger would provide to the combined GBT-SIS organization, its customers
and the communities it serves, and the immediate and long-term effect that
it would have on such organization's ability to compete for new business;
(d) the possible impact of the Merger on GBT's customers and that,
following the Merger, the combined organization would be well situated to
offer GBT's customers an expanded range of financial services;
(e) the conditions to the Merger and the risks to GBT if the Merger were
not consummated, including that the termination of the Merger Agreement
might result in a decline in the market price of GBT Common Stock and might
have other adverse operational consequences for GBT;
(f) the fact that approval of the Merger Agreement and Plan of Merger
requires the affirmative vote of the holders of two-thirds of the shares of
GBT Common Stock outstanding and entitled to vote and that the GBT Board's
decision to approve the Merger Agreement and Plan of Merger would empower
the shareholders as a group to decide whether or not to accept SIS's
proposal to acquire GBT;
(g) MB&D's opinion that, subject to certain assumptions, the
consideration to be paid to the GBT shareholders in connection with the
Merger is fair, from a financial point of view, to GBT shareholders, and
23
that MB&D expected to be able to reconfirm in writing its opinion, absent
intervening material changes, to such effect to accompany the Proxy
Statement--Prospectus; and
(h) the long- and short-term interests of GBT and its shareholders and,
in accordance with the requirements of Connecticut law, the interests of
GBT's customers, suppliers, employees and communities.
RECOMMENDATION OF THE SIS BOARD AND REASONS FOR THE MERGER
THE BOARD OF DIRECTORS OF SIS BELIEVES THAT THE MERGER IS FAIR TO AND IN THE
BEST INTERESTS OF SIS AND ITS STOCKHOLDERS. THE BOARD OF DIRECTORS OF SIS
UNANIMOUSLY RECOMMENDS THAT THE SIS STOCKHOLDERS VOTE FOR THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
In reaching its determination that the Merger is in the best interests of
the SIS shareholders, and recommending that the SIS shareholders approve the
Merger, the SIS Board considered a number of factors. The following is a
discussion of the material factors considered by the SIS Board in reaching its
determination:
(a) The Merger will enable SIS to expand and strengthen its franchise by
generating new business and facilitating its entry into the Connecticut
banking market, which is contiguous to SIS's core markets;
(b) GBT's operations in Connecticut complement SIS's historical emphasis
on a community banking strategy;
(c) The acquisition of GBT offers an opportunity for additional operating
efficiencies;
(d) GBT's merchant processing and insurance activities will enable SIS to
diversify its services and to offer new business lines; and
(e) Oppenheimer's opinion that, subject to certain assumptions, the
consideration to be paid by SIS to GBT's shareholders was fair to SIS and
its shareholders, from a financial point of view.
OPINIONS OF FINANCIAL ADVISERS
Opinion of McConnell, Budd & Downes, Inc.
On August 17, 1997, MB&D delivered to the GBT Board its oral opinion, that
as of that date, the number of shares of SIS Common Stock to be received in
exchange for each outstanding share of GBT Common Stock (the "Exchange Ratio")
was fair, from a financial point of view, to GBT's shareholders. MB&D has
subsequently delivered to the GBT Board its written opinion, as of the date of
this Proxy Statement--Prospectus, that the Exchange Ratio is fair from a
financial point of view, to GBT's shareholders.
The mechanism for determination of the Exchange Ratio is described in detail
elsewhere in this Proxy Statement-Prospectus and shareholders should read this
document with care.
MB&D has acted as financial adviser to GBT on a non-exclusive contractual
basis since April 1997 in connection with GBT's evaluation of its strategic
alternatives, including the evaluation of hypothetical affiliation
opportunities.
With respect to the pending transaction with SIS, MB&D advised GBT during
the negotiation process leading up to the execution of the Merger Agreement
and provided GBT with various analyses as to the range of financially feasible
exchange ratios and cash acquisition prices that might be received in a
hypothetical transaction. Representatives of MB&D met with the executive
management and GBT Board on numerous occasions in connection with the analysis
of GBT's options. The Exchange Ratio was arrived at in arm's-length
negotiation between SIS and GBT in a process in which MB&D advised GBT.
MB&D was retained based on its qualifications and experience in the
financial analysis of banking and thrift institutions, knowledge of the
Massachusetts and Connecticut banking markets in particular and New England
24
banking markets in general, and its extensive experience with merger and
acquisition transactions involving banking institutions. Members of the
Corporate Financial Department of MB&D have advised financial institution
clients on more than 54 successfully completed mergers or acquisitions of
financial institutions, many of those in the New England marketplace.
The full text of the opinion of MB&D, which sets forth assumptions made,
matters considered and limits on the review undertaken by MB&D, is attached
hereto as a part of Appendix C. GBT's shareholders are urged to read the
opinion in its entirety. MB&D's opinion is directed only to the Exchange Ratio
and does not constitute a recommendation to any holder of GBT Common Stock as
to how such holder should vote at the GBT Meeting. The summary of the opinion
of MB&D set forth in this Proxy Statement--Prospectus was provided to GBT by
MB&D and is qualified in its entirety by reference to the full text of the
opinion itself. MB&D's opinion was necessarily based upon conditions as they
existed and should be evaluated as of the date of the written opinion and the
information made available to MB&D through such date.
In arriving at its opinion, MB&D (i) reviewed the Merger Agreement and this
Proxy Statement--Prospectus in substantially the form to be sent to GBT
shareholders; (ii) reviewed publicly available business and financial
information with respect to both GBT and SIS and certain internal financial
information and financial projections prepared by the managements of GBT and
SIS; (iii) held discussions with members of the senior management of GBT and
the GBT Board concerning the past and current results of operations of GBT,
its current financial condition and management's opinion of its future
prospects; (iv) reviewed the historical reported price and record of trading
volume for both GBT and SIS Common Stock; (v) held discussions with the senior
management of SIS concerning the current and past results of operations of
SIS, its current financial condition and management's opinion of its future
prospects; (vi) considered the current state of and future prospects for the
economies of Connecticut and Massachusetts generally and the relevant market
areas for GBT and SIS in particular; (vii) reviewed the specific acquisition
analysis models employed by MB&D to evaluate potential business combinations
of banking companies; (viii) reviewed the reported financial terms of certain
recent business combinations in the banking industry; and (ix) performed such
other studies and analyses as MB&D considered appropriate under the
circumstances associated with this particular transaction.
In rendering its opinion, no limitations were imposed by GBT or SIS upon
MB&D with respect to the investigations made or procedures followed by MB&D.
As part of its ongoing financial advisory business, MB&D had previously
entered into in 1996, and maintained a non-exclusive financial advisory
relationship with SIS. In the context of this transaction, MB&D rendered
financial advisory services exclusively to GBT and disclosed to the GBT Board
and management the relationship with SIS. SIS retained and relied upon an
independent third party firm as financial adviser for purposes of this
transaction.
MB&D's opinion takes into account its assessment of general economic, market
and financial conditions and its experience in other transactions, as well as
its experience in bank securities valuation and its knowledge of the banking
industry generally. For purposes of reaching its opinion, MB&D has assumed and
relied upon the accuracy and completeness of the information provided to it by
GBT and SIS, including the adequacy of the reserve for loan losses established
by each company, and does not assume any responsibility for the independent
verification of such information. In the course of rendering its opinion, MB&D
has not completed any independent valuation or appraisal of any of the assets
or liabilities of GBT or SIS and has not been provided with any such
valuations or appraisals from any other source. With respect to the financial
projections reviewed by MB&D in the course of rendering its opinion, MB&D has
assumed that such projections have been reasonably prepared to reflect the
best currently available estimates and judgment of the management of each of
GBT and SIS as to the most likely future performance of their respective
companies.
The following is a summary of material analyses employed by MB&D in
connection with rendering its August17, 1997 oral opinion. Given that it is a
summary, it does not purport to be a complete and comprehensive description of
all the analyses performed, or an enumeration of all matters considered by
MB&D in arriving at its opinion. The preparation of a fairness opinion is a
complicated process, involving a determination as to the most appropriate and
relevant methods of financial analysis and the application of those methods to
the particular
25
circumstances. Therefore, such an opinion is not readily susceptible to a
summary description. In arriving at its fairness opinion, MB&D did not
attribute any particular weight to any one specific analysis or factor
considered by it and made qualitative as well as quantitative judgments as to
the significance of each analysis and factor. Therefore, MB&D believes that
its analyses must be considered as a whole and feels that attributing undue
weight to any single analysis or factor considered could create a misleading
or incomplete view of the process leading to the formation of its opinion. In
its analyses, MB&D has made certain assumptions with respect to banking
industry performance, general business and economic conditions and other
factors, many of which are beyond the control of management of either GBT or
SIS. Estimates which are referred to in MB&D's analyses are not necessarily
indicative of actual values or predictive of future results or values, which
may vary significantly from those set forth.
In connection with its opinion dated as of the date of this Proxy Statement-
Prospectus, MB&D confirmed the appropriateness of its reliance on the analyses
used to render its August 17, 1997 oral opinion by performing procedures to
update certain of such analyses and by reviewing the assumptions on which such
analyses were based and the factors considered in connection therewith.
Analysis of the Anticipated Merger and the Exchange Ratio in Relation to
SIS. The anticipated consideration to be paid in the Merger for each
outstanding share of GBT Common Stock is 0.74 of a share of SIS Common Stock.
However, if the Average Closing Price is less than $25.00, GBT shall have the
right to terminate the Merger Agreement unless SIS elects, in its sole
discretion, to adopt an Exchange Ratio equal to $18.50 divided by the Average
Closing Price.
When valued at the closing price of SIS Common Stock, $30.00, on August 15,
1997, the consideration represents the following transaction multiples:
Transaction Value: $22.20 per GBT Common Share based upon the single-day SIS
closing price on August 15, 1997.
. Multiple of Earnings based upon the August 15, 1997 SIS single-day
closing price: 15.10 times GBT's reported earnings per share for the
twelve months ended June 30, 1997, and 15.86 times GBT's internally
forecast earnings per share for the fiscal year 1997 ending December 31,
1997.
. Multiple of Tangible Book Value based upon the August 15, 1997 SIS
single-day closing price: 2.26 times GBT's tangible book value per share
as of June 30, 1997.
. Multiple of Accounting Book Value based upon the August 15, 1997 SIS
single-day closing price: 2.26 times GBT's book value per share as of
June 30, 1997.
. Multiple of GBT's Market Value based upon the August 15, 1997 SIS single-
day closing price: The approximate $22.20 in market value of the
consideration for each share of GBT Common Stock, based upon the SIS
closing price on August 15, 1997, represents an 11.0% premium over the
closing price of GBT's Common Stock reported on the NASDAQ National
Market as of the close of business on the last business day before the
transaction was announced, Friday, August 15, 1997.
Specific Acquisition Analysis. MB&D employs a number of proprietary analysis
models to examine hypothetical transactions involving banking and/or thrift
companies. The models involve the use of forecast earnings data, selected
current period balance sheet, fully diluted common share information and
income statement data, current and historic market and trading information and
a number of assumptions as to interest rates for borrowed funds, opportunity
costs of funds, discount rates, dividend streams, effective tax rates and
transaction structures (the alternative or combined uses of common equity,
cash, debt or other securities, to fund a transaction) to evaluate a
hypothetical transaction. The models distinguish between purchase and pooling
accounting treatments and inquire into the likely economic feasibility of a
given hypothetical transaction at a given price level or specified exchange
rate while employing a specified transaction structure. The models also permit
evaluation of various levels of potential non-interest expense savings which
might be achieved and potential implementation timetables for such savings as
well as the possibility of revenue enhancement opportunities which may arise
in a hypothetical transaction. The models also permit an examination of pro
forma capital adequacy.
26
In this transaction, MB&D evaluated an exchange ratio of 0.74 of a share of
SIS Common Stock for each share of GBT Common Stock in a common stock merger
transaction which is to be accounted for as a pooling transaction. MB&D
believes that the proposed transaction is financially feasible from an
earnings per share dilution perspective, generating prospective earnings per
share dilution which can be eliminated by a reduction of less than 20% of the
annualized run rate for non-interest expenses for GBT. MB&D believes this is
an achievable objective for the combined SIS and GBT and that the transaction
can become accretive to the prospective earnings per share of SIS. MB&D is
satisfied that the pro forma capitalization of SIS will be adequate after the
consummation of the Merger.
Discounted Cash Flow Analysis. MB&D reviewed a discounted cash flow analysis
to permit the conceptual examination of the present discounted values of
potential future results employing selected assumptions and discount rates.
In the baseline discounted cash flow analysis, MB&D reviewed a cash flow
model with GBT management and the GBT Board that used a projection of
hypothetical earnings for the five twelve-month periods subsequent to June of
1997. A hypothetical dividend payout ratio assumption which depicted average
annual payouts as a percentage of earnings increasing gradually from a level
of 25% to 35% over the same five year period was also used. A long-term growth
rate of 7.00% was also used. MB&D then assumed that the control sale
price/earnings ratio at the end of a five-year period would approximate 14.5
times earnings, and in a separate exercise, a price to tangible book value
ratio of 200%. Given the baseline model five-year time horizon and a discount
rate of 12.5%, these cash flow calculations resulted in a range of present
discounted values of cash flows of as little as $19.10 to $20.14. By testing
the impact on cash flow calculations of alternative long term growth rates of
5.95% to 8.05%, discount rate ranges of 10.625% to 14.375% and return on asset
ranges of 0.94% to 1.27%, cash flow calculations resulted in values of $14.90
to $29.76. All of these cash flow calculations can be compared to the nominal
value of the proposed exchange ratio of approximately $22.20 based upon the
closing price of SIS on August 15, 1997 as described above.
It is important to note that the cash flow calculations and discount factors
employed embody both the concept of a riskless time value of money and risk
factors that reflect the uncertainty of the forecast cash flows, terminal
price/earnings and price/book multiples, growth assumptions and other economic
and financial variables. Conversely, use of lower discount rates result in
higher discounted present values. MB&D advised the GBT Board that although
discounted cash flow analysis is a widely used valuation methodology, it
relies on numerous assumptions, including discount rates, terminal values,
earnings and asset growth, as well as dividend payout ratios. Any or all of
these assumptions may vary from actual future performance and results.
Analysis of Other Comparable Transactions. MB&D is reluctant to place much
emphasis on "comparables analysis" as a valuation methodology due to what it
considers to be inherent limitations of the process which renders application
of the results to specific cases questionable. It has observed that such
analyses as performed by some industry observers and financial advisers often
fail to adequately take into consideration such factors as material
differences in the underlying capitalization of the comparable institutions
which are being acquired; differences in the historic earnings (or loss)
patterns recorded by the compared institutions which can depict a very
different trend than might be implied by examining only recent financial
results; failure to exclude non-recurring profit or loss items from the last
twelve months earnings streams of target companies which can distort apparent
earnings multiples; differences in the form or forms of consideration used to
complete the transaction; differences between the planned method of accounting
for the completed transaction; and such less accessible factors as the
relative population, business and economic demographics of the acquired
entities markets as compared or contrasted to such factors for the markets in
which comparables are doing business. Comparable analysis also rarely seems to
take into consideration the degree or absence of facilities overlap between
the acquiror's market and that of the target or the absence of such overlap
and the resulting cost savings differentials between otherwise apparently
comparable transactions. MB&D consequently believes that comparables analysis
has serious limitations and should not be relied upon to any material extent
by members of GBT's management, the GBT Board or GBT's shareholders in
considering the presumed merits of a pending transaction.
27
Nevertheless, in the course of its analysis of the proposed transaction,
MB&D reviewed a universe of 23 publicly announced transactions in the
financial institutions industry in which either a bank or thrift (or their
respective holding companies) were acquired by another financial institution.
These transactions were announced after January 1, 1996, and prior to August
15, 1997. All of the examined transactions involved entities doing business in
New England.
The 8 transactions announced in 1997 and reviewed by MB&D are as follows:
North Fork Bancorp's acquisition of Branford Savings Bank, Peoples Heritage's
acquisition of Atlantic Bank, Granite State Bancshares' acquisition of Primary
Bank, CFX Corporation's acquisition of Community Bankshares, MASSBANK Corp.'s
acquisition of Glendale Co-op Bank, New England Community's acquisition of
First Bank of West Hartford, CFX Corporation's acquisition of Portsmouth
Bankshares and Eagle Financial Corp's acquisition of MidConn Bank. The 15
transactions announced in 1996 and reviewed by MB&D are as follows: Vermont
Financial Service's acquisition of Eastern Bancorp, Citizens Financial Group's
acquisition of Grove Bank, Webster Financial Corp.'s acquisition of DS
Bancorp, BostonFed Bancorp's acquisition of Broadway Capital Corporation, UST
Corporation's acquisition of Walden Bancorp, Grove Bank's acquisition of
Greater Boston Bank, First Essex Bancorp's acquisition of Finest Financial
Corp., NH Thrift Bancshares' acquisition of Landmark Bank, Hubco, Inc.'s
acquisition of Westport Bancorp, First Union's acquisition of Center Financial
Corp., Peoples Heritage's acquisition of Family Bancorp, Hubco, Inc.'s
acquisition of Hometown Bancorp, CFX Corporation's acquisition of Milford Co-
op Bank, Hubco, Inc.'s acquisition of Lafayette American and CFX Corporation's
acquisition of Safety Fund Corp.
Within the group of 8 transactions announced in 1997, the median multiple of
tangible book value paid by the acquiror was 177.0%, the maximum multiple paid
was 227.8% and the minimum multiple was 115.5%. Within the group of 15
transactions announced in 1996, the median multiple of tangible book value
paid by the acquiror was 166.1%, the maximum multiple paid was 255.5% and the
minimum multiple was 138.0%. These statistics can be compared to multiples
derived using the indicated value as of August 15, 1997, which can be derived
for the proposed acquisition of GBT by SIS as 211% based upon the nominal
present value of the proposed exchange ratio of approximately $22.20 based
upon the closing price of SIS on August 15, 1997.
With respect to the trailing 12 months earnings multiples for this same data
sample of 8 transactions announced in 1997, the median price/earnings multiple
paid was 17.3 and the maximum multiple was 24.6, while the minimum multiple
was 13.0. With respect to trailing 12 months earnings multiples for this same
data sample of 15 transactions announced in 1996, the median price/earnings
multiple paid was 13.9 and the maximum multiple was 17.4, while the minimum
multiple was 7.2. These statistics can be compared to multiples derived using
the indicated values on August 15, 1997, which can be derived for the proposed
acquisition of GBT by SIS as 15.10 based upon the nominal present value of the
proposed exchange ratio of approximately $22.20 based upon the closing price
of SIS on August 15, 1997 as described above.
For the reasons detailed above, MB&D does not believe that the comparable
data presented should be viewed as the most meaningful analytic tool with
respect to a thorough review and understanding of the proposed transaction.
Pursuant to a letter agreement with GBT entered into in April 1997, MB&D
will receive a fee equal to 0.75% of the fair market value of all
consideration received by GBT shareholders for services rendered to GBT in
connection with the proposed transaction, if the transaction is consummated.
The fee represents compensation for services rendered in connection with the
analysis of the hypothetical transaction, support of the negotiations and for
the rendering of its opinion. GBT paid MB&D $10,000 upon signing the agreement
and $50,000 following the execution of the Merger Agreement. An additional
$50,000 became payable at the mailing of this proxy statement and the
remainder will become payable at the closing of the transaction. Based upon a
hypothetical transaction value at closing of $40.6 million, MB&D would receive
total compensation of $304,500. In addition, GBT has agreed to reimburse MB&D
for its reasonable out-of-pocket expenses incurred in connection with the
services provided by MB&D and to indemnify and hold harmless MB&D and certain
related parties to the fullest extent lawfully permitted from and against
certain liabilities and expenses, including certain liabilities under federal
securities law, incurred in connection with MB&D's engagement.
28
Opinion of Oppenheimer & Co., Inc.
Pursuant to an engagement letter dated August 1, 1997, SIS retained
Oppenheimer as its financial adviser in connection with the Merger.
Oppenheimer has rendered its written opinions to the SIS Board dated August
17, 1997 and dated the date of this Proxy Statement-Prospectus that, based
upon and subject to the various considerations set forth therein, the proposed
Merger Consideration is fair to SIS from a financial point of view. No
limitations were imposed by SIS upon Oppenheimer with respect to
investigations made or procedures followed by Oppenheimer in rendering its
opinions.
THE FULL TEXT OF OPPENHEIMER'S OPINION AS OF THE DATE OF THIS PROXY
STATEMENT--PROSPECTUS, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED
AND LIMITS ON THE REVIEW UNDERTAKEN BY OPPENHEIMER, IS ATTACHED HERETO AS
APPENDIX D. SIS SHAREHOLDERS ARE URGED TO READ THE OPINION IN ITS ENTIRETY.
OPPENHEIMER'S OPINION IS DIRECTED ONLY TO THE MERGER CONSIDERATION AND DOES
NOT CONSTITUTE A RECOMMENDATION TO ANY SIS SHAREHOLDER AS TO HOW SUCH
SHAREHOLDER SHOULD VOTE AT THE SIS MEETING. THE SUMMARY SET FORTH IN THIS
PROXY STATEMENT--PROSPECTUS OF THE OPPENHEIMER OPINION IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION ATTACHED HERETO AS
APPENDIX D.
In connection with rendering its opinion, Oppenheimer reviewed among other
things: (a) the Merger Agreement (including the Plan of Merger); (b) the GBT
and SIS Stockholders Agreements and the Stock Option Agreement; (c) audited
consolidated financial statements and management's discussion and analysis of
the financial condition and results of operation for each of SIS and GBT for
the three fiscal years ended December 31, 1996 (as available); (d) unaudited
consolidated financial statements for each of SIS and GBT for the six months
ended June 30, 1997; (e) certain other publicly available business and
financial information relating to SIS and GBT; (f) certain interim financial
analyses, budgets, projections and forecasts for SIS and GBT, including
estimates as to the future cost savings relating to the Merger, prepared by
and reviewed with the management of SIS; (g) certain other summary materials
and analyses with respect to GBT's loan portfolio and deposits prepared by
SIS; (h) the views of senior management of SIS and GBT of the past and current
business operations, results thereof, financial condition and future
prospects; (i) a comparison of certain financial information for SIS and GBT,
in each case with similar information for certain other companies considered
comparable to SIS and GBT; (j) the financial terms of certain recent business
combinations in the banking industry; (k) the pro forma effect of the
transaction on SIS based on certain assumptions provided by SIS; (l) the
current market environment generally and the banking environment in
particular; and (m) such other information, financial studies, analyses and
investigations and financial, economic and market criteria as Oppenheimer
considered appropriate in the circumstances.
Oppenheimer assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by it for the purposes
of its opinion. With respect to the financial projections, including the
estimates of cost savings expected to result from the Merger, Oppenheimer
assumed that they were reasonably prepared and reflected the best currently
available estimates and judgments of the future financial performance of SIS
and GBT. Oppenheimer did not make any independent valuation or appraisal of
the assets or liabilities of SIS or GBT, nor was it furnished with any such
appraisal. In addition, Oppenheimer did not examine any individual loan credit
files of SIS or GBT. Oppenheimer's opinion was based on economic, market and
other conditions as in effect on, and the information made available to it as
of, the date of the opinion.
The projections furnished to Oppenheimer for each of SIS and GBT were
prepared by the respective management of each company. As a matter of policy,
neither SIS nor GBT publicly discloses internal management projections of the
type provided to Oppenheimer in connection with its analysis of the Merger,
and such projections were not prepared with a view toward public disclosure.
These projections were based on numerous variables and assumptions which are
inherently uncertain and which may not be within the control of management,
including, without limitation, factors relating to general economic and
competitive conditions and prevailing interest rates. Accordingly, actual
results could vary significantly from those set forth in such projections.
29
The following is a summary of the analyses presented by Oppenheimer to the
SIS Board at its meeting on August 17, 1997 in connection with Oppenheimer's
opinion dated such date:
Pro Forma Analysis. Oppenheimer analyzed the pro forma effects of the Merger
on the capital ratios, earnings per share and book value per share of SIS.
This analysis indicated that the Merger would result in earnings per share
accretion of $0.07 per share (equal to approximately 3%) in 1998.
Comparable Companies Analysis. Using publicly available information,
Oppenheimer compared selected financial information for GBT with similar
information for the following five selected public Connecticut banks with
assets between $125 million and $450 million that Oppenheimer deemed
comparable: BNH Bancshares Inc., Bank of Southington, New England Community
Bancorp, New Milford Bank and Trust Co., and Village Bancorp Inc.
(collectively the "Comparable Companies"). For each of the Comparable
Companies, Oppenheimer calculated certain financial ratios and percentages and
compared the results of these calculations to calculations made by Oppenheimer
for GBT.
This analysis showed that GBT had a ratio of loans/deposits at June 30, 1997
of 72.20%, compared to the average for the Comparable Companies of 75.37%, and
that GBT had a return on average assets and a return on average equity for the
six months ended June 30, 1997 (annualized on a fully taxed basis) of 0.99%
and 14.59%, respectively, compared to 0.81% and 9.67%, respectively, for the
Comparable Companies. GBT's net interest margin, general and administrative
expenses/average assets and efficiency ratios for the period were 4.33%,
3.66%, and 68.1%, respectively, as compared to the Comparable Companies'
averages of 4.97%, 3.51%, and 67.96%, respectively.
This analysis also showed that GBT's ratio of non-performing assets to total
assets at June 30, 1997 was 1.04%, compared to an average ratio for the
Comparable Companies of 1.33%. GBT's ratios of loan loss reserves to non-
performing loans and to total gross loans at such date were 197% and 2.20%,
respectively, compared to averages for the Comparable Companies of 91% and
1.63%, respectively. GBT's equity/assets ratio at such date was 6.87% as
compared to the Comparable Companies average of 8.21%.
Discounted Cash Flow Analysis. Using a discounted cash flow analysis,
Oppenheimer estimated the present value of the future streams of after-tax
cash flows that GBT could produce through December 31, 2001 based on
projections furnished by management of both SIS and GBT. In this analysis,
Oppenheimer assumed that GBT's net income was adjusted in each year to reflect
an assumed net charge-off ratio of 0.25% of total loans and a level of
provision for loan losses for each year based on an assumed ratio of loan loss
reserves to total loans which was maintained in each projected year at
approximately 2.00%. No dividend payments were assumed, nor did Oppenheimer's
analysis reflect any cost savings anticipated to result from the Merger.
Oppenheimer calculated a range of terminal values by applying earnings
multiples of 15 and 16 (based upon its observation of price to earnings
multiples in the comparable transactions referred to below) to GBT's estimated
after-tax cash flows for the twelve months ended December 31, 2001. The cash
flows were discounted to present values using different rates (ranging from
11% to 12%) chosen to reflect different assumptions regarding the required
rates of return to prospective buyers of GBT. This analysis indicated an
implied range of values for GBT ranging from $37.5 million to $44.1 million.
Comparable Transactions Analysis. Oppenheimer compared the financial terms
of the Merger to the financial terms, to the extent publicly available, of the
seven New England bank transactions with announced transaction values in
excess of $25 million announced or completed from January 1, 1996 through
August 15, 1997 (the "Recent New England Bank Acquisitions"). Oppenheimer
believed these seven transactions to be most comparable for purpose of
determining the imputed values of GBT. Included in the Recent New England Bank
Acquisitions are four Connecticut bank transactions.
30
The Recent New England Bank Acquisitions included the following: Peoples
Heritage Financial Group / Atlantic Bancorp, Citizens Financial Group / BNH
Bancshares Inc., First Essex Bancorp, Inc. / Finest Financial Corp., Hubco,
Inc. / Westport Bancorp, Hubco, Inc. / Hometown Bancorp, Hubco,
Inc. / Lafayette American Bank, CFX Corporation / Safety Fund Corp.
Connecticut bank acquisitions included in the Recent New England Bank
Acquisitions included the following: Citizens Financial Group / BNH
Bancshares, Inc., Hubco, Inc. / Westport Bancorp, Hubco Inc. / Hometown
Bancorp, Hubco, Inc. / Lafayette American Bank.
For each of these transactions, Oppenheimer calculated, among other things,
the high, mean, median and low price to book value, price to last twelve
months ("LTM"), net income and core deposit premium (defined as the
transaction value minus book value divided by core deposits, excluding
certificates of deposit with balances equal to or greater than $100,000), and
compared the results of these calculations to calculations made by Oppenheimer
for the proposed Merger as follows.
Oppenheimer's analysis indicated that the Recent New England Bank
Acquisitions had a mean price/book multiple of 2.04x, price/LTM earnings
multiple of 16.4x, and a core deposit premium of 12.11%. The Recent New
England Bank Acquisitions had a median price/book multiple of 2.17x, price/LTM
earnings multiple of 18.14x and a core deposit premium of 11.44%.
From August 15, 1997 through September 15, 1997, there was one New England
bank acquisition with an announced transaction value in excess of $25 million:
Hubco, Inc. / Bank of Southington. The recent New England Bank Acquisitions,
adjusted to include this acquisition, had a mean price/book multiple of 2.08x,
price/LTM earnings multiple of 18.6x and a core deposit premium of 12.39% and
an adjusted median price/book multiple of 2.20x, price/LTM earnings multiple
of 20.0x and a core deposit premium of 11.47%. Oppenheimer then calculated the
comparable multiples implied by the Merger Consideration. This analysis
indicated, among other things, that the Merger Consideration represented a
multiple to June 30, 1997 book value of 2.26x, a multiple of latest twelve
months ended June 30, 1997 stated net income of 15.1x (16.3x annualized last
six months ended June 31, 1997 net income), and a core deposit premium of 11%.
The implied values for GBT derived from this analysis were a mean of $42.2
million and a median of $42.7 million based on the Recent New England Bank
Acquisitions, adjusted to include acquisitions announced through September 15,
1997 with announced transaction values in excess of $25 million.
In connection with its opinion dated as of the date of this Proxy
Statement--Prospectus, Oppenheimer confirmed the appropriateness of its
reliance on the analyses used to render its August 17, 1997 opinion by
performing procedures to update certain of such analyses and by reviewing the
assumptions on which such analyses were based and the factors considered in
connection therewith.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description.
Oppenheimer believes that its analyses must be considered as a whole and that
selecting portions of its analyses, without considering the analyses taken as
a whole, would create an incomplete view of the process underlying the
analyses set forth in its opinions. In addition, Oppenheimer considered the
results of all such analyses and did not assign relative weights to any of the
analyses, so that the ranges of valuations resulting from any particular
analysis described above should not be taken to be Oppenheimer's view of the
actual value of GBT or the combined entity.
In performing its analyses, Oppenheimer made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of SIS or GBT. The
analyses performed by Oppenheimer are not necessarily indicative of actual
values, which may be significantly more or less favorable than suggested by
such analyses. Such analyses were prepared solely as a part of Oppenheimer's
August 17, 1997 opinion. The analyses do not purport to be appraisals or to
reflect the prices at which a company might actually be sold.
31
The SIS Board retained Oppenheimer based upon its experience and expertise.
Oppenheimer is a nationally recognized investment banking and advisory firm.
Oppenheimer, as part of its investment banking business, is continuously
engaged in the valuation of business and securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. In the course of its market
making and other trading activities, Oppenheimer may, from time to time, have
a long or short position in, and may buy or sell, securities of SIS both for
its own account and for the accounts of customers.
As compensation for Oppenheimer's services as financial advisor, SIS has
agreed to pay Oppenheimer a fee equal to 1.00% of the fair market value of all
consideration received by GBT and its shareholders, $250,000 of which amount
became payable upon the delivery of Oppenheimer's fairness opinion and the
remainder of which will become payable at the closing of the transaction.
Based upon a hypothetical transaction value at closing of $40.6 million,
Oppenheimer would receive total compensation of $406,000.
EFFECTIVE TIME OF THE MERGER; CLOSING DATE
If the Merger Agreement is approved and adopted by the requisite vote of SIS
and GBT shareholders, and the other conditions to the Merger are satisfied or
(where permissible) waived, the Merger will be consummated and become
effective upon the close of business on the date on which a copy of the Plan
of Merger is filed with the Secretary of State of Connecticut (the "Effective
Time"). Under the terms of the Merger Agreement, the "Closing Date" shall be
the date on which the Effective Time occurs.
CONVERSION OF SHARES OF GBT COMMON STOCK PURSUANT TO THE MERGER
At the Effective Time, automatically and without any action on the part of
the holder thereof, each share of GBT Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares held by dissenting
shareholders ("Dissenting Shares"), shares held directly or indirectly by SIS,
other than shares in trust accounts, merged accounts and the like which are
beneficially owned by third parties ("Trust Account Shares") and other shares
held in respect of a debt previously contracted ("DPC Shares"), and any shares
held as treasury stock by GBT) will become and be converted into 0.74 of one
share of SIS Common Stock (together with the number of preferred stock
purchase rights ("SIS Rights") granted pursuant to a Rights Agreement dated as
of January 22, 1997 between SIS and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent (the "Rights Agreement") or fraction thereof associated
therewith) plus cash in lieu of any fractional share of SIS Common Stock. If
the Average Closing Price (as such term is defined below) is less than $25.00
per share (the "Minimum Price"), GBT will have the right to terminate the
Merger Agreement, unless SIS elects, in its sole discretion, to adopt as the
Exchange Ratio the Adjusted Exchange Ratio (as such term is defined below).
Assuming the Merger is approved by the holders of GBT Common Stock, the GBT
Board could elect to consummate the Merger without resoliciting GBT
shareholders if the Average Closing Price were less than $25.00 and SIS did
not elect to adopt the Adjusted Exchange Ratio, even though the calculated
value of the shares of SIS Common Stock (based on the Average Closing Price)
to be exchanged for each share of GBT Common Stock would be less than $18.50.
In such a situation, in considering whether to consummate the Merger without
the resolicitation of GBT shareholders, the GBT Board would take into account,
consistent with its fiduciary duties, all relevant facts and circumstances
that exist at such time, including, without limitation, the advice of its
financial advisers and legal counsel. The MB&D fairness opinion included with
this Proxy Statement--Prospectus has been delivered and speaks as of the date
of this Proxy Statement--Prospectus. Consequently, if a decline of such
magnitude in the Average Closing Price were to occur and SIS did not elect to
adopt the Adjusted Exchange Ratio, the GBT Board could not under such
circumstances rely on MB&D's opinion unless it sought and received MB&D's
agreement that it could do so. Shareholder approval of the Merger Agreement
and each of the transactions contemplated thereby confers upon the GBT Board
the power, consistent with its fiduciary duties, to elect to consummate the
Merger notwithstanding that the Average Closing Price is less than $25.00 and
SIS has not elected to adopt the Adjusted Exchange Ratio. Under such
circumstances, GBT's shareholders would assume 100% of the market risk
associated with the price of SIS Common Stock. See "--Conditions to the
Merger" below.
As of the Effective Time, each share of GBT Common Stock held directly or
indirectly by SIS, other than Trust Account Shares and DPC Shares, and held by
GBT as treasury stock will be canceled, retired and cease to exist, and no
payment shall be made with respect thereto.
32
The "Average Closing Price" is defined as the average of the closing bid
prices of shares of SIS Common Stock as reported on the Nasdaq National Market
for the twenty consecutive trading days ending on the fifth business day prior
to the Closing Date. "Merger Consideration" is defined as the shares of SIS
Common Stock that holders of GBT Common Stock are entitled to receive under
the Merger Agreement. "Adjusted Exchange Ratio" is defined as that number,
rounded to the nearest thousandth, determined by dividing $18.50 by the
Average Closing Price. Each certificate which immediately prior to the
Effective Time represented outstanding shares of GBT Common Stock shall on and
after the Effective Time be deemed for all purposes to represent the Merger
Consideration into which the shares of GBT Common Stock represented by such
certificate shall have been converted.
CERTIFICATE EXCHANGE PROCEDURES
Certificates which represent shares of GBT Common Stock that are outstanding
immediately prior to the Effective Time and are converted into the Merger
Consideration (the "Certificates"), shall, after the Effective Time, be deemed
to represent the Merger Consideration into which such shares have been
converted and shall be exchangeable by the holders thereof for new
certificates representing the shares of SIS Common Stock into which such
shares have been converted.
In lieu of the issuance of fractional shares of SIS Common Stock, a payment
in cash, without interest, will be made to the holders of GBT Common Stock in
respect of any fractional share that would otherwise be issuable equal to an
amount in cash determined by multiplying such holder's fractional interest by
the Average Closing Price (rounded up to the nearest cent).
Upon surrender of a Certificate, together with a duly executed letter of
transmittal and any other required documents, the holder of such Certificate
shall be entitled to receive, in exchange therefor, as soon as practicable, a
certificate for the number of shares of SIS Common Stock and/or a check for
the cash amount to which such holder is entitled, and such Certificate shall
forthwith be canceled.
In the event any Certificate shall have been lost, stolen or destroyed, upon
receipt of appropriate evidence as to such loss, theft or destruction and to
the ownership of such Certificate by the person claiming such Certificate to
be lost, stolen or destroyed, and the receipt by SIS of appropriate and
customary indemnification, SIS will deliver in exchange for such lost, stolen
or destroyed Certificate the Merger Consideration and any fractional share
payment.
If any Merger Consideration 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 ChaseMellon Shareholder Services, L.L.C.
(the "Exchange Agent") in advance any transfer or other taxes required by
reason of the delivery of the Merger Consideration.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, GBT has agreed that, except as
specifically required or permitted pursuant to the Merger Agreement or as
otherwise specifically disclosed therein, prior to the Effective Time, it will
conduct its business in the ordinary course consistent with past practice.
In addition, GBT has agreed that, except as contemplated by the Merger
Agreement, prior to the Effective Time, it will not, directly or indirectly,
do any of the following without the prior written consent of SIS:
(a) engage or participate in any material transaction or incur or sustain
any material obligation or liability except in the ordinary, regular and
usual course of its business consistent with past practices;
(b) accept, renew or roll over any "brokered deposit" or offer an
interest rate with respect to any deposit that would either constitute an
impermissible interest rate with respect to deposits of an
33
undercapitalized insured depository institution or otherwise generally set
interest rates on deposits that depart from past practices of GBT;
(c) except in the ordinary, regular and usual course of business
consistent with past practices and in an immaterial aggregate amount, sell,
lease, transfer, assign, encumber or otherwise dispose of or enter into any
contract, agreement or understanding to lease, transfer, assign, encumber
or dispose of any of its assets;
(d) open or relocate, or file any application to open or relocate, any
branch office;
(e) terminate, or give any notice (written or verbal) to customers or
governmental authorities or agencies to terminate the operations of any
branch office;
(f) waive any material right, whether in equity or at law, that it has
with respect to any asset except in the ordinary, regular and usual course
of business consistent with past practices;
(g) declare or pay any dividends on or make any other distributions in
respect of the GBT Common Stock, except that GBT may declare and pay its
regular quarterly dividend to its shareholders of $0.09 per share and may,
if SIS increases its regular quarterly dividend of $0.14 per share,
increase its quarterly dividend by an amount proportionate to the increase
in the SIS dividend:
(h) adopt or amend in any material respect any pension plan or benefit
plan or enter into any employment, severance or similar contract with any
person or amend any such existing agreements, plans or contracts to
increase any amounts payable thereunder or benefits provided thereunder, or
grant or permit any increase in compensation to or pay any bonus to its
employees, except in the ordinary course of business consistent with past
practices or as disclosed in the Merger Agreement, or hire any new employee
at an annual salary rate of $40,000 or more or promote any existing
employee to the level of vice president or above;
(i) subject to its directors' fiduciary duties and obligations,
authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into an agreement with respect to, any
merger, consolidation, purchase and assumption transaction or business
combination (other than the Merger), any acquisition of a material amount
of assets or securities or assumption of liabilities, any disposition of a
material amount of assets or securities, or any release or relinquishment
of any material contract rights not in the ordinary course of business and
inconsistent with past practices;
(j) propose or adopt amendments to its certificate of incorporation or
bylaws;
(k) issue, deliver or sell any shares of its capital stock except upon
exercise of the Seller Option, or effect any stock split, reverse stock
split, recapitalization, reclassification or similar transaction or
otherwise change its equity capitalization;
(l) grant, confer or award any options, warrants, conversion rights or
other rights, not existing on the date of the Merger Agreement, to acquire
any shares of its capital stock;
(m) purchase, redeem or otherwise acquire any shares of its capital stock
or any securities convertible into or exercisable for any shares of its
capital stock, except in a fiduciary capacity;
(n) impose, or suffer the imposition, on any share of capital stock held
by it or by any of its subsidiaries of any material lien, charge or
encumbrance, or permit any such lien, charge or encumbrance to exist;
(o) incur, or permit any of its subsidiaries to incur, any additional
debt obligation or other obligation for borrowed money, or guaranty any
additional debt obligation or other obligation for borrowed money, except
in the ordinary course of business consistent with past practices;
(p) incur or commit to any capital expenditures or any obligations or
liabilities in connection therewith, other than capital expenditures and
such related obligations or liabilities incurred or committed to in the
ordinary and usual course of business consistent with past practices,
which, in all cases, do not individually exceed $25,000 or cumulatively
exceed $75,000;
(q) change its methods of accounting in effect at December 31, 1996,
except as may be required by changes in GAAP, or change its fiscal year; or
34
(r) agree, in writing or otherwise, to take any actions prohibited under
the Merger Agreement or any action which would make any of its
representations or warranties contained in the Merger Agreement untrue or
incorrect or would otherwise violate any of its other agreements or
commitments contained in the Merger Agreement in any material respect.
GBT has also agreed that, except as may be specifically required or
permitted pursuant to the Merger Agreement or specifically described therein
or in the accompanying disclosure schedule, it shall:
(a) use all reasonable efforts, and cause each of its subsidiaries to use
all reasonable efforts, to preserve intact its business organization and
goodwill in all material respects, keep available the services of its
officers and employees as a group and maintain satisfactory relationships
with borrowers, depositors, other customers and others having business
relationships with it; and
(b) at SIS's request, use all reasonable efforts to cooperate with SIS
with respect to preparation for the combination and integration of the
businesses, systems and operations of GBT and SIS, including the conversion
of GBT's data processing and related electronic information systems to
appropriate systems used by SIS, and confer on a regular and frequent basis
with one or more representatives of SIS to report on operational and
related matters.
GBT and SIS have each also agreed that, except as may be specifically
required or permitted pursuant to the Merger Agreement or specifically
described therein or in the accompanying disclosure schedule, each will:
(a) subject to any restrictions under applicable law or regulation,
promptly notify the other of any emergency or other change in the normal
course of its or its subsidiaries' businesses or in the operation of its or
its subsidiaries' properties and of any governmental complaints,
investigations or hearings (or communications indicating that the same may
be contemplated) if such emergency, change, complaint, investigation or
hearing would be material to its or its subsidiaries' assets, properties,
liabilities, business, results of operations, condition (financial or
otherwise) or prospects; and
(b) file all reports, applications and other documents required to be
filed by it with the Federal Reserve Board, the FDIC, the MBBI, the
Connecticut Banking Commissioner and any other applicable governmental
agency or authority between the date of the Merger Agreement and the
Effective Time and shall furnish to the other copies of all such reports
promptly after the same are filed.
CONDITIONS TO CONSUMMATION OF THE MERGER
Mutual Conditions. The respective obligations of SIS and GBT to consummate
the Merger are subject to satisfaction at or prior to the Effective Time of
the following conditions:
(a) The Merger Agreement and the transactions contemplated thereby shall
have been approved and adopted by the requisite vote of GBT and SIS
shareholders;
(b) Other than the filing of the Plan of Merger, all necessary approvals,
authorizations and consents of any court, administrative agency or
commission or other governmental authority or instrumentality (each a
"Governmental Entity") required to consummate the transactions contemplated
by the Merger Agreement shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof shall
have expired or been terminated (all such approvals and the expiration of
all such waiting periods being referred to herein as the "Requisite
Regulatory Approvals");
(c) 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 the Merger Agreement shall be in effect; and
(d) No stop order suspending the effectiveness of the Registration
Statement registering the shares of SIS Common Stock to be issued in the
Merger shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the SEC.
35
Conditions to SIS's Obligations. The obligation of SIS to effect the Merger
and the transactions contemplated thereby is also subject to the following
conditions, any or all of which may be waived in whole or in part by SIS in
its sole discretion:
(a) No material adverse changes shall have occurred in the business,
operations, results of operations, assets, liabilities or condition of GBT;
(b) SIS shall have received assurance that GBT's representations and
warranties are true at the Closing Date and all of GBT's pre-closing
obligations have been complied with;
(c) All required approvals of non-governmental third parties that are the
responsibility of GBT to obtain shall have been obtained;
(d) SIS shall have received a legal opinion from Sullivan & Worcester
LLP, SIS's outside counsel, that the Merger and resultant acquisition by
SIS of GBT will constitute a tax-free reorganization within the meaning of
Section 368(a) of the Code;
(e) SIS shall have received a legal opinion from Tyler Cooper & Alcorn,
LLP, GBT's outside counsel, regarding certain corporate and other matters
as are customary in transactions of this type;
(f) SIS shall have received from Price Waterhouse LLP, its independent
accountants, a letter to the effect that, based on a review of the Merger
Agreement and the transactions contemplated thereby and certain additional
information provided by SIS and GBT's independent certified public
accountants, Shatswell, MacLeod & Company, P.C., Price Waterhouse LLP
concurs in SIS's determination that no conditions exist that would preclude
SIS's accounting for the Merger as a pooling of interests in accordance
with Accounting Principles Board Opinion No. 16; and
(g) GBT shall have delivered a letter identifying persons deemed to be
its affiliates and, to the extent received by GBT, letters from such
persons agreeing to comply with certain limitations applicable to their
sales of GBT Common Stock prior to the Effective Time and to their sales of
SIS Common Stock received in the Merger after the Effective Time.
Conditions to GBT's Obligations. The obligation of GBT to effect the Merger
and the other transactions contemplated in the Merger Agreement is also
subject to the satisfaction of the following conditions, any or all of which
may be waived by GBT in its sole discretion:
(a) No material adverse change shall have occurred in the business,
operations, results of operations, assets, liabilities, or condition of
SIS;
(b) GBT shall have received assurance that SIS's representations and
warranties are true at the Effective Time and all of SIS's pre-closing
obligations have been complied with;
(c) All required approvals of non-governmental third parties that are the
responsibility of SIS to obtain shall have been obtained;
(d) GBT shall have received a legal opinion from Tyler Cooper & Alcorn,
LLP, GBT's outside counsel, that the Merger and resultant acquisition by
SIS of GBT will constitute a tax-free reorganization within the meaning of
Section 368(a) of the Code;
(e) The shares of SIS Common Stock issuable at the Effective Time shall
have been authorized for listing on Nasdaq National Market upon official
notice of issuance; and
(f) GBT shall have received a legal opinion from Sullivan & Worcester
LLP, SIS's outside counsel, regarding certain corporate and other matters
as are customary in transactions of this type.
TERMINATION
The Merger Agreement is subject to termination (i) by mutual agreement of
the parties, (ii) if the Merger has not been consummated on or before June 30,
1998, (iii) by either party if any Requisite Regulatory Approval or the
approval of the shareholders of GBT or the shareholders of SIS is not obtained
or if consummation of the transactions contemplated by the Merger Agreement is
enjoined or otherwise prohibited, (iv) by either party for
36
a material breach of any representation, warranty or covenant or other
agreement contained in the Merger Agreement by the other party, which breach
is not cured after 30 days written notice thereof is given to the party
committing such breach, (v) by GBT if the Average Closing Price is less than
$25.00 per share, subject to SIS's right to elect to increase the number of
shares of SIS Common Stock issuable in the Merger by using the Adjusted
Exchange Ratio, and (vi) by SIS if GBT's Board does not recommend to GBT's
shareholders the approval of the proposals to be submitted to such
shareholders in accordance with the Merger Agreement or if such recommendation
is subsequently withdrawn, modified or amended in any way that is materially
adverse to SIS.
If either party terminates the Merger Agreement for any of the foregoing
reasons, neither party shall have any further liability under the Merger
Agreement; provided, however, in the event of a party's gross negligence or
willful breach, the breaching party will remain liable for any and all
damages, costs and expenses sustained or incurred by the non-breaching party
or, alternatively, will be liable to the non-breaching party for $1.0 million
in liquidated damages. GBT may also be liable (but not in addition to the
liquidated damages described in the preceding sentence or the cash payment
that may be payable under the Stock Option Agreement as described below) for a
cash payment of $1.0 million if (i) SIS has terminated the Merger Agreement
due to the failure of GBT's Board to make or maintain the required
recommendations to GBT's shareholders or due to GBT's gross negligence or
willful breach of the Merger Agreement and (ii) either within 12 months of
such termination GBT has become involved in an Alternative Transaction (as
defined in the Merger Agreement) or, in the case of a termination by SIS due
to the failure of GBT's Board to make or maintain the required recommendations
to GBT's shareholders, any person other than SIS or its affiliates has made a
publicly disclosed, bona fide proposal to GBT or its shareholders to engage in
an Alternative Transaction (as defined in the Merger Agreement).
AMENDMENT, EXTENSION AND WAIVER
At any time prior to the consummation of the transactions contemplated by
the Merger Agreement or termination of the Merger Agreement, whether before or
after the approvals of the parties' respective shareholders, the parties may
amend the Merger Agreement, extend the time for the performance of any of the
obligations or other acts of any other party hereto, waive any inaccuracies in
the representations and warranties contained therein or in any document
delivered pursuant thereto, or waive compliance with any of the agreements or
conditions with respect to covenants of the parties or closing conditions of
the Merger (other than the mutual conditions described above); provided,
however, that there may not be, without further approval of the parties'
shareholders, to the extent required by law, any amendment, extension or
waiver of the Merger Agreement which changes the amount or form of the
consideration to be delivered to the GBT shareholders other than as may be
expressly contemplated by the Merger Agreement. The Merger Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties thereto. Any agreement on the part of any party to any extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party, but such waiver or failure to insist on strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
REQUISITE REGULATORY APPROVALS
The Merger and resultant acquisition by SIS of GBT are subject to the prior
approval of the Federal Reserve Bank of Boston (the "Reserve Bank"), acting on
delegated authority from the Federal Reserve Board, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), and applicable Federal Reserve
Board regulations. The required notice of the proposed acquisition of GBT by
SIS to the Reserve Bank has been filed by SIS. In reviewing the application,
the Reserve Bank must take into consideration, among other factors, the
financial and managerial resources and future prospects of the institutions
and the convenience and needs of the communities to be served. In addition,
under the BHCA, the Merger may not be consummated until the 15th day following
the date of Reserve Bank approval of the Merger, during which time the
Department of Justice may challenge the Merger on antitrust grounds. The
commencement of an antitrust action during the waiting period would stay the
effectiveness of such approval unless a court specifically orders otherwise.
The Reserve Bank approved the Merger on October 22, 1997.
37
The acquisition of GBT by SIS is also subject to the prior approval of the
Massachusetts Board of Bank Incorporation, which must determine in connection
with the application that has been filed by SIS that the Merger does not
unreasonably affect competition and that it promotes public convenience and
advantage.
SIS and, with respect to certain matters, GBT are also required to obtain,
and have filed applications for, the prior approval of the Connecticut
Department of Banking for the organization of Interim Bank, the completion of
the Merger and SIS's acquisition of 100% of the voting stock of GBT, which
will occur upon consummation of the Merger. In addition, GBT and Interim Bank
are required to obtain, and have filed an application for, the approval of the
FDIC for the completion of the Merger.
Although there can be no assurances given that all Requisite Regulatory
Approvals will be received for the Merger and resultant acquisition by SIS of
ownership and control of GBT, the parties believe that all required regulatory
approvals will be obtained.
The parties are not aware of any other regulatory approvals or filings that
are required for consummation of the Merger, except as described above. Should
any other approvals or filings be required, it is presently contemplated that
such approvals or filings will be sought or made, as appropriate. There can be
no assurances given, however, that any other approvals, if required, will be
obtained.
The Merger will not be consummated unless all of the requisite regulatory
approvals or other filings pertaining to the transactions contemplated by the
Merger Agreement, are obtained or made, as appropriate. See "--Conditions to
Consummation of the Merger" above.
EXPENSES
Each party will pay its own expenses in connection with the Merger, subject
to certain provisions to the contrary contained in the Merger Agreement.
STOCK OPTION AGREEMENT
Simultaneously with the execution of the Merger Agreement, SIS and GBT
entered into the Stock Option Agreement. Pursuant to the Stock Option
Agreement, GBT granted to SIS an option to purchase, subject to adjustment in
certain events, up to 170,080 shares of GBT Common Stock at an exercise price
of $18.00 per share, subject to adjustment if additional shares of GBT Common
Stock are issued or become outstanding after August 18, 1997. The Option
becomes exercisable in whole or in part, after the occurrence of both an
Initial Triggering Event and a Subsequent Triggering Event (each as defined
below). In the event that the Option becomes exercisable in accordance with
its terms, GBT is further obligated to pay to SIS the cash sum of $1.5
million.
The term "Initial Triggering Event" means the occurrence at any time after
August 18, 1997 of: (i) the agreement by GBT or any subsidiary thereof to
enter into, or the approval or acceptance by the GBT Board of or
recommendation by the GBT Board to GBT's shareholders of, any transaction
involving a merger or consolidation, a purchase, lease or other acquisition of
all or substantially all of the assets of GBT or any significant subsidiary of
GBT (except as contemplated by the Merger Agreement), or a purchase or other
acquisition of securities representing 10% or more of the voting power of GBT
or any significant subsidiary of GBT (each of the foregoing an "Acquisition
Transaction") without SIS's prior written consent; (ii) the acquisition by any
person (other than SIS, its subsidiaries and GBT acting in a fiduciary
capacity) owning beneficially less than 10% of the outstanding shares of GBT
Common Stock on August 18, 1997 of beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares of GBT
Common Stock, or the acquisition by any person owning beneficially more than
10% of the outstanding shares of GBT Common Stock on August 18, 1997 of
beneficial ownership of an additional 3% of the outstanding shares of GBT
Common Stock; (iii) the making by any person, other than SIS or any subsidiary
of SIS, of a bona-fide proposal to GBT or its shareholders to engage in an
Acquisition Transaction by public announcement
38
or written communication that shall be or become the subject of public
disclosure; (iv) the breach by GBT after a proposal as described in the
preceding clause (iii) of certain covenants in the Merger Agreement, unless
remedied within an applicable notice period; or (v) the filing by any person
other than SIS or any subsidiary of SIS, other than in connection with a
transaction to which SIS has given its prior written consent, of an
application or notice with the FDIC or Federal Reserve Board or other federal
or state bank regulatory authority, which application or notice has been
accepted for processing, for approval to engage in an Acquisition Transaction.
The term "Subsequent Triggering Event" means either (i) the acquisition
after August 18, 1997 by any person of beneficial ownership of 20% or more of
the then outstanding GBT Common Stock; or (ii) the occurrence of the Initial
Triggering Event described in subparagraph (i) of the foregoing paragraph,
except that, in respect of the purchase or other acquisition of securities of
GBT or any significant subsidiary of GBT, the percentage of voting power
represented by such securities shall be 20% rather than 10%.
The Option will expire upon the earliest of:
(i) the Effective Time of the Merger;
(ii) any termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event; or
(iii) twelve months after the termination of the Merger Agreement in
accordance with the provisions thereof after the occurrence of an Initial
Triggering Event.
Notwithstanding the termination of the Option, SIS will be entitled to
purchase those Option Shares with respect to which it has exercised the Option
in whole or in part prior to the termination of the Option.
Within 30 days (subject to extension as provided in the Option Agreement)
after the Option becomes exercisable, SIS may also by written notice require
GBT to repurchase the unexercised Option in whole or in part (to the extent
not otherwise prohibited by applicable law or regulations), at a purchase
price intended to provide SIS with the same economic benefit as it would
realize if it exercised the Option and subsequently sold the Option Shares.
SIS may also by written notice require GBT to repurchase any Option Shares
that it has acquired upon exercise of the Option (to the extent not otherwise
prohibited by applicable law or regulations). The potential liability of such
a repurchase to GBT would be the excess of the aggregate value of the Option
Shares over the $18.00 per share exercise price. GBT anticipates that it would
fund any such repurchase of the unexercised Option or Option Shares out of
working capital.
The Stock Option Agreement was required by SIS as a condition to its
entering into the Merger Agreement, and is intended to increase the likelihood
that the Merger will be consummated in accordance with the terms of the Merger
Agreement. The Stock Option Agreement may have the effect of discouraging
persons who might now or prior to the Effective Time be interested in
acquiring all of or a significant interest in GBT from considering or
proposing such an acquisition.
STOCKHOLDERS AGREEMENTS
GBT directors and executive officers, who own a total of 419,622 shares of
GBT Common Stock, representing approximately 22.93% of the shares of GBT
Common Stock issued and outstanding on the GBT Record Date, have executed the
GBT Stockholders Agreement, pursuant to which such shareholders have agreed to
certain restrictions on their respective shares of GBT Common Stock.
Specifically, such shareholders agreed, with respect to all presently owned or
after-acquired stock, (a) to vote such stock in favor of the Merger and
against any other merger or acquisition transaction with a party other than
SIS or its affiliates, and (b) generally not to sell, assign, transfer,
encumber or otherwise dispose of such stock.
SIS directors, who beneficially own a total of 188,019 shares of SIS Common
Stock (including 76,560 shares subject to vested stock options), representing
approximately 3.36% of the shares of SIS Common Stock issued and outstanding
on the SIS Record Date, also have executed the SIS Stockholders Agreement,
pursuant to which they have agreed to vote all of their shares of SIS Common
Stock in favor of the Merger.
39
Both the GBT Stockholders Agreement and the SIS Stockholders Agreement and
resultant acquisition by SIS of GBT shall remain in effect until the earlier
of the consummation of the Merger or the termination of the Merger Agreement
in accordance with its terms.
NO SOLICITATION
GBT will not (and will use all reasonable efforts to cause its officers,
directors, employees, representatives and agents, not to), directly or
indirectly, encourage, solicit, initiate or, subject to the fiduciary
obligations of the GBT Board (as advised in writing by outside counsel),
participate in any discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than SIS and its affiliates or representatives) concerning any merger,
tender offer, sale of substantial assets, sale of shares of capital stock or
debt securities or similar transaction involving GBT. Notwithstanding the
foregoing, GBT or the GBT Board is not prohibited from taking and disclosing
to GBT's shareholders a position with respect to a tender offer by a third
party pursuant to certain rules promulgated under the Exchange Act or from
making such disclosure to GBT's shareholders which, in the judgment of the GBT
Board with the written advice of outside counsel, may be required under
applicable law. GBT will immediately communicate to SIS the terms of any
proposal, discussion, negotiation or inquiry and the identity of the party
making such proposal or inquiry. Any such communication shall be delivered no
less promptly than by telephone within twenty-four hours of GBT's receipt of
any such proposal or inquiry or its receipt of any request for information
from the Federal Reserve Board, Department of Justice or any other
governmental agency or authority with respect to any transaction described in
the first sentence above.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Following the consummation of the Merger, GBT will maintain its separate
corporate existence, but will become a wholly owned subsidiary of SIS. GBT's
corporate headquarters will continue to be located in Glastonbury,
Connecticut. The management and boards of directors of both SIS and GBT will
not change, except that F. William Marshall, Jr., the President and Chief
Executive Officer and a director of SIS, will join the GBT Board, and Ronald
E. Bourbeau, a director of GBT, will join the SIS Board.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Merger Agreement provides that the provisions with respect to
indemnification existing in favor of, and all limitations on the personal
liability of, any director, officer or other employee of GBT or any of its
subsidiaries contained in the GBT Certificate and GBT Bylaws on the date of
the Merger Agreement with respect to matters occurring prior to the Effective
Time shall survive the Merger. SIS has also agreed to use all reasonable
efforts to cause to be maintained in effect for a period of not less than six
years from the Effective Time the current policies of the directors' and
officers' liability insurance of GBT (or substitute policies of at least the
same coverage with terms and conditions that are not less favorable than those
presently maintained by GBT), with respect to matters occurring at or prior to
the Effective Time. SIS has also agreed that it will not interfere with GBT's
continuing to advance payment after the Effective Time for litigation costs
incurred by certain GBT directors in connection with certain pending
shareholder derivative proceedings, so long as the statutory requirements that
would permit such directors to be indemnified by GBT in connection with such
proceedings under applicable Connecticut law continue to be satisfied.
Each of GBT's four senior officers has certain severance protections under
existing employment agreements in the form of salary and benefits
continuation, which would be triggered in the event of the officer's
termination of employment within two years following the consummation of the
Merger. The maximum cash amounts payable to GBT's senior officers, assuming
that the employment of each was terminated on the Closing Date (which is not
anticipated), would be as follows: Mr. Soucie: $410,038; Mr. Balocca:
$257,576; Mr. Rowley: $217,407; and Mr. Patenaude: $212,756.
40
EMPLOYMENT OBLIGATIONS
SIS will provide the employees of GBT and its affiliates who are so employed
at the Effective Time with the employee benefits disclosed in the Merger
Agreement as maintained for their benefit immediately prior to the Effective
Time through March 31, 1998, or such other date as SIS in its sole discretion
may determine. Following the Effective Time, SIS will, or will cause GBT to,
honor in accordance with their terms all employment, severance and other
compensation contracts disclosed to SIS under the Merger Agreement between GBT
and any director, officer or employee thereof, and all provisions for benefits
or other amounts earned or accrued through the Effective Time under GBT
pension plans or benefit plans. SIS will cause each plan, program or
arrangement included among the benefits of SIS to be provided to such
employees after the Effective Time, to treat the prior service of each such
employee with GBT, to the extent such prior service is recognized under the
comparable plan, program or arrangement of GBT, as service rendered to SIS or
its affiliate, as the case may be, for purposes of the eligibility to
participate, vesting, and eligibility for special benefits under each such
plan, program or arrangement of SIS, but not in any case for benefit accrual
attributable to any period before the Effective Time.
RESALE OF SIS COMMON STOCK
The shares of SIS Common Stock to be issued pursuant to the Merger Agreement
have been registered under the Securities Act by means of the registration
statement of which this Proxy Statement--Prospectus forms a part. Accordingly,
such shares should be freely transferable under the Securities Act, except for
shares issued to persons who are affiliates of GBT at the time of the GBT
Meeting and persons who are affiliates of SIS at the time of such proposed
transfer. Such persons will generally be able to resell such shares only
pursuant to an effective registration statement under the Securities Act or
pursuant to a statutory or regulatory exemption or "safe harbor" from the
registration requirements of the Securities Act. Affiliates of a person are
other persons who control, are controlled by, or are under common control with
the person. The affiliates of a corporation are generally thought to include
its executive officers, directors and significant (i.e., 10% or more)
shareholders.
Affiliates of SIS who wish to dispose of shares of SIS Common Stock acquired
in the Merger may utilize the "safe harbor" provided by Rule 144 promulgated
under the Securities Act ("Rule 144"). Rule 144 permits, among other things,
the resale of such shares if certain conditions are met. These conditions
include the requirement that SIS have filed all reports required of it under
the Exchange Act for the past 12 months, a limitation on the number of shares
sold by the affiliate in any three-month period, and a restriction on the
manner in which the sale is made. In most cases, a notice of proposed sale
must also be filed with the SEC.
Persons who are affiliates of GBT at the time of the GBT Meeting and are not
affiliates of SIS at the time of a proposed resale may utilize the resale
provisions of Rule 145 promulgated under the Securities Act ("Rule 145").
During the year following the Effective Time, such resale would be subject to
the satisfaction of the conditions imposed under Rule 144 which are described
above, other than the notice of proposed sale. After such one-year period,
only the condition relating to SIS's Exchange Act reports is applied and,
after two years, Rule 145 would impose no restriction on dispositions by
persons who were not affiliates of SIS for at least three months preceding the
proposed disposition.
This Proxy Statement-Prospectus does not cover the resale of any shares of
SIS Common Stock to be issued in the Merger. SIS is not obligated to file a
registration statement under the Securities Act to facilitate resale of any
such shares.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material U.S. federal income tax
consequences of the Merger, including certain consequences to shareholders of
GBT who are citizens or residents of the United States and who hold their
shares as capital assets. It does not discuss all aspects of federal income
taxation that may be relevant to a particular GBT shareholder in light of his
or her personal circumstances (for example, a GBT shareholder who acquired his
or her shares of GBT Common Stock pursuant to the exercise of employee stock
41
options or otherwise as compensation), or to GBT shareholders subject to
special federal income tax treatment (such as insurance companies, regulated
investment companies, dealers in securities, certain retirement plans,
financial institutions, tax exempt organizations, persons subject to the
alternative minimum tax, persons who hold GBT common stock as part of a
hedging or conversion transaction or foreign persons). In addition, this
summary does not address any aspects of state, local, foreign or other tax
laws that may be relevant to holders of GBT Common Stock.
It is the policy of the Internal Revenue Service ("IRS") not to rule
directly on the tax status of transactions such as the Merger, and no such
ruling will be sought. Each of SIS's and GBT's respective obligations to
effect the Merger is conditioned upon its receipt from its counsel of an
opinion dated as of the Closing Date, in form and substance reasonably
satisfactory to it, substantially to the effect that for federal income tax
purposes the Merger constitutes a reorganization within the meaning of Section
368 of the Code (noting, however, that the nontaxability of the shareholders
of GBT resulting from such reorganization does not extend to cash received in
lieu of a fractional share interest in SIS Common Stock or cash received by
dissenting shareholders, if any). Such opinions are not binding on the IRS and
would not, in any event, prevent the IRS from challenging the tax-free nature
of the Merger under the Code.
Tax Consequences to Holders of GBT Common Stock
As noted above, GBT's obligation to effect the Merger is conditional on
delivery of an opinion from Tyler Cooper & Alcorn, LLP, its counsel, dated as
of the Closing Date, based upon certain customary representations and
warranties set forth therein, substantially to the effect that for federal
income tax purposes the Merger constitutes a reorganization within the meaning
of Section 368(a) of the Code. If the receipt of such opinion were waived and
if the material federal income tax consequences to GBT shareholders were
materially different from those set forth below, GBT would resolicit the
approval of its shareholders before it proceeded with the Merger. Based on
such opinion, and subject to the foregoing, the material federal income tax
consequences to holders of GBT Common Stock would be as set forth below.
No gain or loss will be recognized by GBT shareholders upon receipt of SIS
Common Stock in exchange for their GBT Common Stock, except that a holder of
GBT Common Stock who receives cash in lieu of a fractional share of SIS Common
Stock will recognize gain or loss equal to the difference between the amount
of such cash and the tax basis allocated to such shareholder's fractional
share of SIS Common Stock.
The tax basis of the SIS Common Stock received by a GBT shareholder will be
the same as the aggregate tax basis of such shareholder's GBT Common Stock
exchanged therefor, decreased by any cash received in lieu of fractional
shares.
The holding period of the SIS Common Stock in the hands of a GBT shareholder
will include the holding period of such shareholder's GBT Common Stock
exchanged therefor, provided that such GBT Common Stock is held as a capital
asset at the Effective Time.
A GBT shareholder who exercises dissenters' rights and receives cash will
recognize gain for federal income tax purposes, the tax rate on which will
depend upon the holding period for his or her GBT Common Stock. The exchange
of shares for cash upon the exercise of dissenters' rights could be treated as
substantially equivalent to a dividend and, therefore, taxed as ordinary
income if the recipient of cash owns or constructively owns other shares of
SIS Common Stock. Shares owned by spouses, children, grandchildren, parents
and other relatives and by entities that are 50% owned by a shareholder are
generally treated as constructively owned by that shareholder.
Tax Consequences to Holders of SIS Common Stock
SIS has been advised by its counsel, Sullivan & Worcester LLP, that the
holders of SIS Common Stock, as such, will not recognize gain or loss as a
result of the Merger.
42
THE FOREGOING DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE
INTERNAL REVENUE CODE, EXISTING AND PROPOSED U.S. TREASURY REGULATIONS
THEREUNDER AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE
FOREGOING ARE SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE
CONTINUING VALIDITY OF THIS DISCUSSION. GBT SHAREHOLDERS SHOULD CONSULT THEIR
OWN TAX ADVISERS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER
TO THEM, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN TAX
LAWS.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a "pooling of
interests" transaction under GAAP. Under the pooling of interests method of
accounting, the recorded assets and liabilities of the separate companies
generally become the recorded assets and liabilities of the combined
corporation. The assets of the constituent entities are recorded on the
resulting corporation's books at their historical cost.
In order to qualify for this accounting treatment, SIS intends to issue and
sell at market value certain shares of SIS Common Stock presently held in
treasury prior to the consummation of the Merger. SIS filed a separate
Registration Statement on Form S-3 with the SEC on September 12, 1997 to
register the issuance of such shares. The shares sold will reduce SIS's
treasury shares to a level that will qualify the Merger for pooling treatment
under applicable accounting rules. The exact number of shares of SIS Common
Stock to be sold will depend upon the extent to which GBT stockholders
dissenting from the Merger choose to assert appraisal rights-if appraisal
rights are asserted in respect of more shares, a greater number of shares will
be sold. If no dissenters' rights are asserted, approximately 13,000 shares
will be sold, but if sufficient GBT stockholders assert dissenters' rights,
the number of shares sold could be as high as 146,400.
43
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
give effect to the Merger of SIS and GBT under the pooling of interests method
of accounting. For a description of the effect of the pooling of interests
accounting on the Merger and the historical financial statements of SIS, See
"THE MERGER--Accounting Treatment." These pro forma financial statements are
presented for illustrative purposes only and, therefore, are not necessarily
indicative of the operating results and financial position that might have
been achieved had the Merger occurred as of an earlier date, nor are they
necessarily indicative of operating results and financial position that may
occur in the future. The pro forma amounts do not include any adjustments for
estimated operating efficiencies or revenue enhancements resulting from the
Merger.
A pro forma condensed combined balance sheet is provided as of June 30,
1997, giving effect to the Merger as though it had been consummated on that
date. Pro forma condensed combined income statements are provided for the six-
month periods ended June 1997 and 1996, and the years ended December 31, 1996,
1995, and 1994, giving effect to the Merger as though it had occurred at the
beginning of the earliest period presented.
The condensed historical statements of income for annual periods are derived
from the historical consolidated financial statements of SIS and GBT and
should be read in conjunction with the historical consolidated financial
statements and notes thereto for SIS and GBT incorporated herein by reference.
The historical unaudited financial statements as of or for the six months
ended June 30, 1997 and 1996 have been prepared in accordance with GAAP
applicable to interim financial information and, in the opinion of the
respective managements of SIS and GBT, include all adjustments, consisting of
only normal recurring adjustments, necessary for a fair statement of financial
information for such periods.
44
SIS BANCORP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1997
(IN THOUSANDS)
HISTORICAL PRO FORMA
-------------------- ------------------------
SIS GBT ADJUSTMENTS COMBINED
---------- -------- ----------- ----------
ASSETS
Cash and due from banks....... $ 42,807 $ 11,251 $ 390 (a) $ 54,448
Investment securities
available for sale........... 493,862 54,291 548,153
Investment securities held to
maturity..................... 184,993 26,742 211,735
Loans, net of allowance for
possible loan losses......... 645,877 152,942 798,819
Other assets.................. 67,006 16,072 83,078
---------- -------- ------- ----------
Total assets................ $1,434,545 $261,298 $ 390 $1,696,233
========== ======== ======= ==========
LIABILITIES
Deposits...................... $1,015,404 $216,594 $ $1,231,998
Securities sold under
agreements to repurchase..... 158,809 4,805 163,614
Other liabilities............. 157,059 21,936 1,375 (b) 180,370
---------- -------- ------- ----------
Total liabilities........... 1,331,272 243,335 1,375 1,575,982
---------- -------- ------- ----------
SHAREHOLDERS' EQUITY
Common Stock.................. 57 4,575 (4,561)(c) 71
Additional paid-in capital.... 43,039 6,609 4,613 (d) 54,261
Unearned compensation......... (3,306) -- (3,306)
Retained earnings............. 65,472 7,069 (1,375)(e) 71,166
Net unrealized gain (loss) on
investment securities
available for sale........... 1,976 (290) 1,686
Treasury stock................ (3,965) -- 338 (f) (3,627)
---------- -------- ------- ----------
Total shareholders' equity.. 103,273 17,963 (985) 120,251
---------- -------- ------- ----------
Total liabilities and
shareholders' equity....... $1,434,545 $261,298 $ 390 $1,696,233
========== ======== ======= ==========
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
45
SIS BANCORP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL PRO FORMA
-------------------- ---------------------
SIS GBT ADJUSTMENTS COMBINED
--------- --------- ----------- ---------
Interest and dividend income:
Loans....................... $ 26,327 $ 6,672 $ 32,999
Investment securities....... 22,766 2,394 25,160
Other....................... 359 70 429
--------- --------- ---------
Total interest and
dividend income.......... 49,452 9,136 58,588
--------- --------- ---------
Interest expense:
Deposits.................... 16,879 3,471 20,350
Borrowings.................. 7,524 680 8,204
--------- --------- ---------
Total interest expense.... 24,403 4,151 28,554
--------- --------- ---------
Net interest and dividend
income....................... 25,049 4,985 30,034
Less: Provision for loan
losses....................... 801 120 921
--------- --------- ---------
Net interest and dividend
income after provision for
loan losses................ 24,248 4,865 29,113
--------- --------- ---------
Noninterest income:
Merchant income............. -- 909 909
Fees and other income....... 5,579 720 6,299
--------- --------- ---------
Total noninterest income.. 5,579 1,629 7,208
--------- --------- ---------
Noninterest expense:
Operating expenses:
Salaries and employee
benefits................... 9,660 1,907 11,567
Occupancy expense of bank
premises, net.............. 1,903 456 2,359
Furniture and equipment
expense.................... 1,031 532 1,563
Other operating expense..... 7,241 1,662 8,903
--------- --------- ---------
Total operating expenses.. 19,835 4,557 24,392
Foreclosed real estate
income, net................ (32) (53) (85)
Net expense of real estate
operations................. 479 -- 479
--------- --------- ---------
Total noninterest
expense.................. 20,282 4,504 24,786
--------- --------- ---------
Income before income tax
provision.................... 9,545 1,990 11,535
Income tax provision.......... 3,785 755 4,540
--------- --------- ---------
Net income.................. $ 5,760 $ 1,235 $ 6,995
========= ========= ========= ===
Earnings per share(g)
Primary..................... $ 1.03 $ 0.68 $ 1.00
Fully diluted............... $ 1.02 $ 0.68 $ 1.00
Weighted average shares(g)
Primary..................... 5,608,141 1,829,920 6,962,282
Fully diluted............... 5,640,349 1,829,920 6,994,490
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
46
SIS BANCORP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL PRO FORMA
-------------------- ---------------------
SIS GBT ADJUSTMENTS COMBINED
--------- --------- ----------- ---------
Interest and dividend income:
Loans........................... $ 23,474 $ 6,351 $ 29,825
Investment securities........... 15,511 2,151 17,662
Other........................... 259 48 307
--------- --------- ---------
Total interest and dividend
income....................... 39,244 8,550 47,794
--------- --------- ---------
Interest expense:
Deposits........................ 16,068 3,065 19,133
Borrowings...................... 3,148 637 3,785
--------- --------- ---------
Total interest expense........ 19,216 3,702 22,918
--------- --------- ---------
Net interest and dividend income.. 20,028 4,848 24,876
Less: Provision for loan losses... 1,450 375 1,825
--------- --------- ---------
Net interest and dividend income
after provision for loan
losses......................... 18,578 4,473 23,051
--------- --------- ---------
Noninterest income:
Merchant income................. -- 881 881
Fees and other income........... 5,318 665 5,983
--------- --------- ---------
Total noninterest income...... 5,318 1,546 6,864
--------- --------- ---------
Noninterest expense:
Operating expenses:
Salaries and employee benefits.. 8,492 1,885 10,377
Occupancy expense of bank
premises, net.................. 1,577 508 2,085
Furniture and equipment
expense........................ 1,056 562 1,618
Other operating expense......... 6,771 2,014 8,785
--------- --------- ---------
Total operating expenses...... 17,896 4,969 22,865
Foreclosed real estate expense
(income), net.................. 223 (29) 194
Net income of real estate
operations..................... (162) -- (162)
--------- --------- ---------
Total noninterest expense..... 17,957 4,940 22,897
--------- --------- ---------
Income before income tax
provision........................ 5,939 1,079 7,018
Income tax provision.............. 490 -- 490
--------- --------- ---------
Net income...................... $ 5,449 $ 1,079 $ 6,528
========= ========= =========
Earnings per share(g)
Primary......................... $ 1.00 $ 0.59 $ 0.96
Fully diluted................... $ 1.00 $ 0.59 $ 0.96
Weighted average shares(g)
Primary......................... 5,432,265 1,829,920 6,786,406
Fully diluted................... 5,445,968 1,829,920 6,800,109
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
47
SIS BANCORP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL PRO FORMA
-------------------- ---------------------
SIS GBT ADJUSTMENTS COMBINED
--------- --------- ----------- ---------
Interest and dividend income:
Loans........................... $ 48,657 $ 12,884 $ 61,541
Investment securities........... 35,051 4,275 39,326
Other........................... 569 302 871
--------- --------- ---------
Total interest and dividend
income....................... 84,277 17,461 101,738
--------- --------- ---------
Interest expense:
Deposits........................ 32,638 6,435 39,073
Borrowings...................... 8,535 1,307 9,842
--------- --------- ---------
Total interest expense........ 41,173 7,742 48,915
--------- --------- ---------
Net interest and dividend income.. 43,104 9,719 52,823
Less: Provision for loan losses... 2,950 675 3,625
--------- --------- ---------
Net interest and dividend income
after
provision for loan losses...... 40,154 9,044 49,198
--------- --------- ---------
Noninterest income:
Merchant income................. -- 1,894 1,894
Fees and other income........... 11,470 1,303 12,773
--------- --------- ---------
Total noninterest income...... 11,470 3,197 14,667
--------- --------- ---------
Noninterest expense:
Operating expenses:
Salaries and employee benefits.. 17,839 3,933 21,772
Occupancy expense of bank
premises, net.................. 3,291 1,017 4,308
Furniture and equipment
expense........................ 2,240 1,193 3,433
Other operating expense......... 14,199 4,321 18,520
--------- --------- ---------
Total operating expenses...... 37,569 10,464 48,033
Foreclosed real estate expense,
net............................ 440 9 449
Net income of real estate
operations..................... (272) -- (272)
--------- --------- ---------
Total noninterest expense..... 37,737 10,473 48,210
--------- --------- ---------
Income before income tax benefit.. 13,887 1,768 15,655
Income tax benefit................ (4,273) (757) (5,030)
--------- --------- ---------
Net income...................... $ 18,160 $ 2,525 $ 20,685
========= ========= =========
Earnings per share(g)
Primary......................... $ 3.29 $ 1.38 $ 3.01
Fully diluted................... $ 3.26 $ 1.38 $ 2.99
Weighted average shares(g)
Primary......................... 5,522,594 1,829,920 6,876,735
Fully diluted................... 5,573,390 1,829,920 6,927,531
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
48
SIS BANCORP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL PRO FORMA
-------------------- -----------------------
SIS GBT ADJUSTMENTS COMBINED
--------- --------- ----------- ---------
Interest and dividend income:
Loans......................... $ 45,536 $ 12,270 $ $ 57,806
Investment securities......... 23,064 4,179 27,243
Other......................... 1,316 69 1,385
--------- --------- ------- ---------
Total interest and dividend
income..................... 69,916 16,518 86,434
--------- --------- ---------
Interest expense:
Deposits...................... 30,424 5,900 36,324
Borrowings.................... 2,132 992 3,124
--------- --------- ------- ---------
Total interest expense...... 32,556 6,892 39,448
--------- --------- ---------
Net interest and dividend
income......................... 37,360 9,626 46,986
Less: Provision (benefit) for
loan losses.................... 4,359 (213) 2,045 (h) 6,191
--------- --------- ------- ---------
Net interest and dividend
income after provision
(benefit) for loan losses.... 33,001 9,839 (2,045) 40,795
--------- --------- ------- ---------
Noninterest income:
Merchant income............... -- 1,690 1,690
Fees and other income......... 8,124 1,445 410 (h) 9,979
--------- --------- ------- ---------
Total noninterest income.... 8,124 3,135 410 11,669
--------- --------- ------- ---------
Noninterest expense:
Operating expenses:
Salaries and employee
benefits..................... 15,961 3,588 19,549
Occupancy expense of bank
premises, net................ 3,459 851 4,310
Furniture and equipment
expense...................... 1,943 1,285 3,228
Other operating expense....... 13,768 3,636 17,404
--------- --------- ------- ---------
Total operating expenses.... 35,131 9,360 44,491
Foreclosed real estate
expense, net................. 521 837 1,358
Net income of real estate
operations................... (227) -- (227)
--------- --------- ------- ---------
Total noninterest expense... 35,425 10,197 45,622
--------- --------- ---------
Loss on bulk sale of loans...... -- 2,045 (2,045)(h) --
Recovery on National Premium CD
Program........................ -- (410) 410 (h) --
--------- --------- ------- ---------
Income before income tax
benefit........................ 5,700 1,142 6,842
Income tax benefit.............. (5,759) (500) (6,259)
--------- --------- ------- ---------
Net income.................... $ 11,459 $ 1,642 $ $ 13,101
========= ========= ======= =========
Earnings per share(g)
Primary....................... $ 2.21 $ 1.22 $ 2.12
Fully diluted................. $ 2.19 $ 1.22 $ 2.11
Weighted average shares(g)
Primary....................... 5,174,037 1,352,057 6,174,559
Fully diluted................. 5,220,778 1,352,057 6,221,300
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
49
SIS BANCORP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL PRO FORMA
-------------------- -----------------------
SIS GBT ADJUSTMENTS COMBINED
--------- --------- ----------- ---------
Interest and dividend income:
Loans......................... $ 42,637 $ 11,688 $ $ 54,325
Investment securities......... 14,749 3,646 18,395
Other......................... 527 119 646
--------- --------- ------- ---------
Total interest and dividend
income..................... 57,913 15,453 73,366
--------- --------- ---------
Interest expense:
Deposits...................... 23,792 5,195 28,987
Borrowings.................... -- 742 742
--------- --------- ------- ---------
Total interest expense...... 23,792 5,937 29,729
--------- --------- ---------
Net interest and dividend in-
come........................... 34,121 9,516 43,637
Less: Provision for loan loss-
es............................. 25,742 1,789 27,531
--------- --------- ------- ---------
Net interest and dividend
income after provision for
loan losses.................. 8,379 7,727 16,106
--------- --------- ---------
Noninterest income:
Merchant income............... -- 1,549 1,549
Fees and other income......... 8,329 2,494 (1,370)(h) 9,453
--------- --------- ------- ---------
Total noninterest income.... 8,329 4,043 (1,370) 11,002
--------- --------- ------- ---------
Noninterest expense:
Operating expenses:
Salaries and employee
benefits..................... 16,808 3,684 20,492
Occupancy expense of bank
premises, net................ 3,410 883 4,293
Furniture and equipment
expense...................... 1,830 1,326 3,156
Other operating expense....... 15,109 4,043 19,152
--------- --------- ------- ---------
Total operating expenses.... 37,157 9,936 47,093
Foreclosed real estate
expense, net................. 5,470 1,289 6,759
Net expense of real estate
operations................... 988 -- 988
--------- --------- ------- ---------
Total noninterest expense... 43,615 11,225 54,840
--------- --------- ---------
Loss on National Premium CD Pro-
gram........................... -- 1,370 (1,370)(h) --
--------- --------- ------- ---------
Loss before income tax
provision...................... (26,907) (825) (27,732)
Income tax provision............ -- 35 35
--------- --------- ------- ---------
Net loss...................... $ (26,907) $ (860) $ $ (27,767)
========= ========= ======= =========
Loss per share(g)
Primary....................... $ (5.21) $ (0.67) $ (4.53)
Fully diluted................. $ (5.21) $ (0.67) $ (4.50)
Weighted average shares(g)
Primary....................... 5,174,037 1,289,920 6,128,578
Fully diluted................. 5,220,778 1,289,920 6,175,319
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
50
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated financial statements are
presented for illustrative purposes only, giving effect to the Merger as
accounted for by the pooling of interests method. The pro forma condensed
consolidated balance sheet is as of June 30, 1997. Pro forma condensed
consolidated statements of operations are presented for the six months ended
June 30, 1997 and 1996, and the years ended December 31, 1996, 1995, and 1994.
Because the transaction has not been completed, costs of the Merger
transaction can only be estimated at this time. The pro forma condensed
combined statement of income for the six months ended June 30, 1997 excludes
(i) the positive effects of potential cost savings which may be achieved upon
combining the resources of the companies, and (ii) transaction costs of
approximately $1.4 million, including investment banking, legal and accounting
and other related fees.
The pro forma condensed combined balance sheet as of June 30, 1997 includes,
in accordance with SEC reporting rules, the impact of all transactions,
whether of a recurring or nonrecurring nature, that can be reasonably
estimated and should be reflected as of that date.
2. PRO FORMA ADJUSTMENTS
Intercompany Transactions--There were no intercompany transactions which
required elimination from the pro forma consolidated operating results or
balance sheet.
(a) Cash and Due from Banks--Cash has been adjusted to reflect the sale
of 13,000 shares of SIS Common Stock out of treasury shares to one or more
independent third parties prior to the Effective Time.
(b) Other Liabilities--Other liabilities has been adjusted to reflect
transaction costs associated with the Merger of approximately $1.4 million.
(c) Common Stock--Common stock has been adjusted to reflect the assumed
issuance of 1,354,141 shares of SIS Common Stock in exchange for 1,829,920
shares of GBT Common Stock outstanding as of June 30, 1997, using the
Exchange Ratio of 0.74.
(d) Additional Paid-In Capital--Additional paid-in capital is adjusted
for the effects of: (i) the issuance of 1,354,141 shares of SIS Common
Stock with a par value of $.01 per share in exchange for GBT Common Stock
having a par value of $2.50 per share; and (ii) the sale of 13,000 shares
of SIS Common Stock out of treasury shares to one or more independent third
parties prior to the Effective Time.
(e) Retained Earnings--Retained earnings has been adjusted to include the
Merger transaction costs of approximately $1.4 million.
(f) Treasury Stock--Treasury stock is adjusted for the sale of 13,000
shares of SIS Common Stock out of treasury shares to one or more
independent third parties prior to the Effective Time.
(g) Earnings Per Share and Weighted Shares Outstanding--Pro forma
earnings per share and weighted shares outstanding for all periods
presented are based upon SIS's and GBT's combined historical weighted
average shares, after adjustment of GBT's historical number of shares by
the Exchange Ratio of 0.74.
(h) Pro Forma Combined Statements of Income--Amounts have been
reclassified to conform GBT's classification to that of SIS.
51
INFORMATION REGARDING GBT
GBT is a state-chartered Connecticut commercial bank founded in 1919. GBT
provides banking and banking-related services in central Connecticut. The
principal executive offices of GBT are located at 2461 Main Street,
Glastonbury, Connecticut 06033. Its telephone number is (860) 633-4695. For
more information about GBT, reference is made to GBT's 1996 annual report to
shareholders, a copy of which accompanies this Proxy Statement--Prospectus,
and to GBT's most recent annual report on Form F-2 and subsequent quarterly
reports on Form F-4, which are incorporated herein by reference. See "WHERE
YOU CAN FIND MORE INFORMATION" and "INFORMATION INCORPORATED BY REFERENCE."
INFORMATION REGARDING SIS
SIS is a bank holding company established as a Massachusetts corporation in
1996 and is registered under the Bank Holding Company Act of 1956, as amended,
with its principal asset being the stock of the Bank. Through its banking
subsidiary, SIS provides banking and banking-related services in western
Massachusetts. The principal executive offices of SIS are located at 1441 Main
Street, Springfield, Massachusetts 01102. Its telephone number is (413) 748-
8000. For more information about SIS, reference is made to SIS's most recent
annual report on Form 10-K and subsequent quarterly reports on Form 10-Q,
which are incorporated herein by reference. See "WHERE YOU CAN FIND MORE
INFORMATION" and "INFORMATION INCORPORATED BY REFERENCE."
DESCRIPTION OF SIS CAPITAL STOCK
COMMON STOCK
General. As of the SIS Record Date, the capital stock of SIS consisted of
30,000,000 authorized shares, par value $.01 per share, 25,000,000 of which
are shares of SIS Common Stock, of which 5,580,842 were issued and outstanding
(exclusive of treasury shares), and 5,000,000 of which are shares of SIS
Preferred Stock, none of which are outstanding. SIS Common Stock is traded on
the Nasdaq National Market under the trading symbol "SISB."
Shares of SIS Common Stock may be issued from time to time, in such amount
and proportions and for such consideration as may be fixed by the SIS Board.
No holder of SIS Common Stock has any preemptive or preferential rights to
purchase or to subscribe for any shares of capital stock or other securities
which may be issued by SIS. SIS Common Stock has no redemption or sinking fund
provisions applicable thereto and has no conversion rights.
The outstanding shares of SIS Common Stock are fully paid and nonassessable.
Liquidation. In the event of any liquidation, dissolution or winding up of
SIS, whether voluntary or involuntary, the holders of SIS Common Stock are
entitled to receive, on a share-for-share basis, any assets or funds of SIS
which are distributable to the holders of SIS Common Stock upon such events,
subject to the prior rights of creditors of SIS and the holders of outstanding
shares of SIS Preferred Stock, if any.
Voting. The holders of SIS Common Stock are entitled to one vote for each
share in all matters voted upon by the shareholders of SIS. The shares of SIS
Common Stock have noncumulative voting rights; consequently, the holders of a
majority in interest of SIS Common Stock can conceivably elect all of the
directors of SIS and, in such event, the holders of the remaining shares
voting for election of directors would not be able to elect any person or
persons to the SIS Board.
Dividends. When and if dividends, payable as cash, stock or other property,
are declared by the SIS Board out of funds legally available therefor, the
holders of SIS Common Stock are entitled to share equally, share for share, in
such dividends. The payment of dividends on SIS Common Stock is subject to
applicable bank regulatory approval.
52
Preferred Share Purchase Rights. On January 22, 1997, the SIS Board
authorized the issuance of one Preferred Share Purchase Right (a "Right") for
each outstanding share of SIS Common Stock pursuant to a Rights Agreement,
dated as of January 22, 1997, between the SIS Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agreement"). The
issuance was made to shareholders of record as of the close of business on
February 3, 1997. Holders of SIS Common Stock issued subsequent to that date
automatically receive the Rights with their shares. Each Right entitles the
holder thereof to purchase under certain circumstances one one-hundredth of a
share of Series A Junior Participating Preferred Stock, par value $.01 per
share, or, in certain circumstances, to receive cash, property, shares of SIS
Common Stock or other securities of SIS at a purchase price of $100.00 per
one-hundredth of a preferred share (the "Purchase Price").
The Rights automatically attach to all certificates representing shares of
SIS Common Stock and no separate Rights certificates have been distributed.
The Rights would separate from the shares of SIS Common Stock and a
"Distribution Date" would occur upon the earlier of (i) 10 business days (or
such later date as the SIS Board may determine before a Distribution Date
occurs) following a public announcement by SIS that a person or group of
affiliated or associated persons, with certain exceptions (an "Acquiring
Person"), has acquired, or has obtained the right to acquire, beneficial
ownership of 10% or more of the outstanding shares of SIS Common Stock (the
date of such announcement being the "Stock Acquisition Date") or (ii) 10
business days (or such later date as the SIS Board may determine before a
Distribution Date occurs) following the commencement of a tender offer or
exchange offer that would result in a person becoming an Acquiring Person.
Until a Distribution Date occurs, the Rights are evidenced by the
certificates for shares of SIS Common Stock and are transferred with and only
with such SIS Common Stock certificates, and the surrender for transfer of any
such certificates also constitutes the transfer of the Rights associated with
the shares represented by such certificates. As soon as practicable after a
Distribution Date, Rights certificates would be mailed to holders of record of
shares of SIS Common Stock as of the close of business on the Distribution
Date and, from and after the Distribution Date, the separate Rights
Certificates alone would represent the Rights.
The Rights are not exercisable until a Distribution Date and will expire at
the close of business on January 22, 2007, unless earlier redeemed or
exchanged by SIS as described below.
In the event (a "Flip-In Event") that a person becomes an Acquiring Person
(except pursuant to a tender or exchange offer for all outstanding shares of
SIS Common Stock at a price and on terms which a majority of SIS's Outside
Directors (as defined in the Rights Agreement) determines to be fair to and
otherwise in the best interests of SIS and its shareholders (a "fair offer")),
each holder of a Right thereafter has the right to receive, upon exercise of
such Right, shares of SIS Common Stock (or, in certain circumstances, cash,
property or other securities of SIS) having a Current Market Price (as defined
in the Rights Agreement) equal to two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of any Flip-In Event,
all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person (or by certain
related parties) become null and void in the circumstances set forth in the
Rights Agreement. However, Rights are not exercisable following the occurrence
of any Flip-In Event until such time as the Rights are no longer redeemable by
SIS as described below.
In the event (a "Flip-Over Event") that, at any time on or after the Stock
Acquisition Date, (i) SIS shall take part in a merger or other business
combination transaction (other than certain mergers that follow a fair offer)
and SIS shall not be the surviving entity or (ii) SIS shall take part in a
merger or other business combination transaction in which the shares of SIS
Common Stock are changed or exchanged (other than certain mergers that follow
a fair offer) or (iii) 50% or more of SIS's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been
voided, as described above) thereafter has the right to receive, upon
exercise, a number of shares of common stock of the acquiring company having a
Current Market Price equal to two times the exercise price of the Right.
The Purchase Price payable and the number of shares of Series A Junior
Participating Preferred Stock (or the amount of cash, property or other
securities) issuable upon exercise of the Rights are subject to adjustment
53
from time to time to prevent dilution (i) in the event of a share dividend on,
or a subdivision, combination or reclassification of, the shares of Series A
Junior Participating Preferred Stock, (ii) if holders of the shares of Series
A Junior Participating Preferred Stock are granted certain rights or warrants
to subscribe for shares of Series A Junior Participating Preferred Stock or
convertible securities at less than the Current Market Price of the Series A
Junior Participating Preferred Stock or (iii) upon the distribution to holders
of shares of the Series A Junior Participating Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
At any time until 10 business days following a Stock Acquisition Date, SIS
may redeem the Rights in whole, but not in part, at a price of $.01 per Right,
payable, at the option of SIS, in cash, shares of SIS Common Stock or other
consideration as the SIS Board may determine. Immediately upon the
effectiveness of the action of the SIS Board ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the $.01 per Right redemption price.
The terms of the Rights, other than key financial terms and the date on
which the Rights expire, may be amended by the SIS Board prior to a
Distribution Date. Thereafter, the provisions of the Rights Agreement may be
amended by the SIS Board only in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person and certain
other related parties) or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to lengthen the time
period governing redemption shall be made at such time as the Rights are not
redeemable.
The foregoing description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement as included
as Exhibit 4.1 to SIS's Registration Statement on Form 8-A dated January 23,
1997.
PREFERRED STOCK
Under the SIS Articles, the SIS Board is authorized, without further
shareholder action, to provide for the issuance of the SIS Preferred Stock, in
one or more series, with such designations or titles, dividend rates, special
or relative rights in the event of liquidation, distribution or sale of assets
or dissolution or winding up of SIS, sinking fund provisions, redemption or
purchase account provisions, conversion provisions, and voting rights as shall
be set forth as and when established by the SIS Board.
54
MARKET FOR SIS COMMON STOCK
SIS Common Stock is traded over-the-counter on the Nasdaq National Market
under the symbol "SISB."
At October 10, 1997, there were 5,580,842 shares of SIS Common Stock
outstanding and approximately 1,200 shareholders of record. This does not
reflect the number of persons or entities who hold their stock in nominee or
street name through various brokerage firms.
The price information regarding SIS common stock in the following table is
based on high and low closing prices on the Nasdaq National Market.
CASH DIVIDENDS
PER SHARE OF
QUARTER ENDED HIGH LOW COMMON STOCK
------------- ------ ------ --------------
1995
March 31........................................ $11.06 $ 9.63 --
June 30......................................... 13.06 10.88 --
September 30.................................... 16.00 12.88 --
December 31..................................... 17.13 14.63 --
1996
March 31........................................ 18.75 16.25 --
June 30......................................... 18.63 16.75 --
September 30.................................... 23.63 17.50 --
December 31..................................... 24.50 22.13 --
1997
March 31........................................ 27.33 22.33 $0.12
June 30......................................... 29.63 23.33 0.12
September 30.................................... 34.75 27.63 0.14
through October 22.............................. 37.00 34.50
On October 22, 1997, SIS announced a quarterly dividend of $0.14 per share
payable on November 21, 1997 to holders of record as of the close of business
on November 4, 1997.
On August 15, 1997, the last business day prior to the public announcement of
the Merger, the closing price of SIS Common Stock on the Nasdaq National Market
was $30.00 per share. On October 22, 1997, the last practicable trading day
prior to the printing of this Proxy Statement-Prospectus, the closing price was
$35.50.
Dividends
The Federal Reserve Board has authority to prohibit bank holding companies
from paying dividends if such payment would constitute an unsafe or unsound
practice. The Federal Reserve Board has indicated generally that it may be an
unsound practice for bank holding companies to pay dividends unless the bank
holding company's net income over the preceding year is sufficient to fund the
dividends and the expected rate of earnings retention is consistent with the
organization's capital needs, asset quality, and overall financial condition.
SIS's ability to pay dividends is dependent upon the flow of dividend income to
it from its subsidiaries, which may be affected or limited by regulatory
restrictions imposed by federal or state bank regulatory agencies. At June 30,
1997, the Bank had available approximately $26.9 million for payment of
dividends to SIS under applicable Massachusetts statutory limitations.
55
COMPARISON OF RIGHTS OF HOLDERS OF SIS COMMON STOCK AND GBT COMMON STOCK
At the Effective Time, the shareholders of GBT, except those shareholders
exercising dissenters' rights, will become shareholders of SIS. As
shareholders of GBT, their rights are presently governed by Connecticut law
and by the GBT certificate of incorporation (the "GBT Certificate") and the
GBT bylaws (the "GBT Bylaws"). As shareholders of SIS, their rights will be
governed by Massachusetts law, the SIS Articles and the SIS bylaws (the "SIS
Bylaws"). The following discussion summarizes the material differences between
the rights of holders of GBT Common Stock and holders of SIS Common Stock and
differences between the charters and by-laws of GBT and SIS. This summary does
not purport to be complete and is qualified in its entirety by reference to
the GBT Certificate, the GBT Bylaws, the SIS Articles and the SIS Bylaws and
the relevant provisions of Connecticut and Massachusetts law.
SPECIAL MEETINGS OF SHAREHOLDERS
GBT. Connecticut law provides that special meetings of shareholders may be
called by the board of directors, the person or persons authorized to do so by
the certificate of incorporation or bylaws or upon written application to the
secretary of the corporation by the holders of at least 10% of all shares
entitled to vote at the meeting, provided that a corporation need not hold
such meeting except upon the demand of holders of not less than 35% of such
shares if the corporation has a class of voting stock registered pursuant to
Section 12 of the Exchange Act and if no person held 10% or more of such votes
on February 1, 1988. The GBT Bylaws provide that, unless otherwise prescribed
by statute, a special meeting may be called only by the Chairman of the Board,
the President, or the board of directors, or upon written application therefor
by the holders of not less than 35% of the shares entitled to vote at the
meeting.
SIS. Massachusetts law provides that special meetings of shareholders may be
called by the president or the directors or upon written application to the
clerk of the corporation by the holders of at least 10% of all shares entitled
to vote at the meeting, provided that, unless otherwise provided in its
articles of organization or bylaws, a corporation with a class of voting stock
registered pursuant to the Exchange Act need not hold such meeting except upon
the demand of holders of not less than 40% of such shares. The SIS Bylaws
provide that a special meeting may be called at any time only by the President
or by the affirmative vote of a majority of the directors then in office. The
time, date and place of the special meeting may be changed at any time by vote
of the SIS Board. If at the time a special meeting is called, there is an
Interested Shareholder (as defined below), such call shall also require the
affirmative vote of a majority of the Continuing Directors (as defined below)
then in office. Only those matters set forth in the notice of the special
meeting may be considered or acted upon at such special meeting, unless
otherwise provided by law. "Interested Shareholder" means any person (other
than SIS, any subsidiary of SIS or any employee stock ownership plan formed by
SIS and/or any subsidiary) who or which: (i) is the beneficial owner, directly
or indirectly, of more than 10% of the voting power of the then outstanding
voting stock of SIS; (ii) is an affiliate of SIS and at any time within the
two-year period immediately prior to and including the date in question was
the beneficial owner, directly or indirectly, of 10% or more of the voting
power of the then outstanding voting stock of SIS; or (iii) is an assignee of
or has otherwise succeeded to the beneficial ownership of any shares of voting
stock which were at any time within the two-year period immediately prior to
and including the date in question beneficially owned by any Interested
Shareholder, if such assignment or succession shall have occurred in the
course of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act and such assignment or
succession was not approved by the affirmative vote of a majority of the
Continuing Directors. "Continuing Director" means (i) any member of the SIS
Board who is not an Interested Shareholder or an affiliate or associate of an
Interested Shareholder and was a member of the SIS Board prior to the time
that the Interested Shareholder became an Interested Shareholder, and (ii) any
successor of a Continuing Director who is not an affiliate or associate of the
Interested Shareholder and is recommended to succeed a Continuing Director by
the affirmative vote of a majority of the Continuing Directors. If at any
relevant time there is no Interested Shareholder, the term "Continuing
Director" means any member of the SIS Board.
56
INSPECTION RIGHTS
GBT. Under Connecticut law, a shareholder may inspect and copy, among other
things, a corporation's certificate of incorporation and any amendments
thereto, its bylaws and any amendments thereto, resolutions adopted by its
board of directors creating one or more series or classes of shares and fixing
their relative rights, privileges and preferences, if shares issued pursuant
to those resolutions are outstanding, records of all minutes of all
shareholder meetings and records of all actions taken by shareholders without
a meeting for the past three years and all written communications to
shareholders within the past three years (including certain financial
statements), a list of the names and business addresses of its current
directors and officers, and its most recent annual report delivered to the
Connecticut Secretary of State, if the shareholder's demand is in writing and
delivered to the corporation at least five business days before the date on
which the shareholder wishes to so inspect and copy. Further, shareholders may
inspect and copy excerpts from minutes of any meeting of the Board of
Directors or records of any action of a committee of the Board of Directors
acting in lieu thereof, records of action taken by the Board of Directors
without a meeting, accounting records of the corporation, and the record of
shareholders, provided that the shareholders' demand is in writing, is made in
good faith, states a proper purpose, describes with reasonable particularity
the purpose and the records desired to be inspected, and the records are
directly connected with such purpose. In addition, shareholders have the right
to inspect the shareholder list during the period such list is available for
inspection beginning two business days after the notice of the meeting is
given for which the list was prepared and continuing through the meeting.
SIS. Under Massachusetts law, shareholders have the right to inspect a
corporation's articles of organization, bylaws, records of incorporators' and
shareholders' meetings and, upon demonstration of a proper purpose, a
corporation's stock ledger and shareholder list.
ACTION BY CONSENT OF SHAREHOLDERS
GBT. Under Connecticut law, any action to be taken by shareholders may be
taken without a meeting if the action is taken with the written consent of all
shareholders entitled to vote on the action or, if the certificate of
incorporation so provides, by a written consent signed by persons holding the
proportion, but not less than a majority, of voting shares designated in the
certificate of incorporation. The GBT Certificate contains no provision
authorizing a less-than-unanimous written consent on any matter.
SIS. Under Massachusetts law, unless the articles of organization provide
otherwise, any action to be taken by shareholders may be taken without a
meeting, without prior notice, and without a vote, if the shareholders consent
unanimously in writing to the action. However, under the SIS Articles, any
action required or permitted to be taken by shareholders must be effected at a
duly called annual or special meeting and may not be effected by any consent
in writing.
PREEMPTIVE RIGHTS
GBT. Under Connecticut law, shareholders do not generally have a preemptive
right to acquire the corporation's unissued shares except to the extent
provided in its certificate of incorporation. However, under a "grandfather"
clause of the CBCA, GBT shareholders do have preemptive rights because the GBT
Certificate as adopted in 1919 does not expressly prohibit such rights.
SIS. Unless otherwise provided in the corporation's articles, Massachusetts
law does not grant any preemptive rights. The SIS Articles provide that
shareholders do not have preemptive rights.
DIVIDENDS AND REPURCHASES OF STOCK
GBT. Under Connecticut law, the payment of dividends and the repurchase of a
corporation's stock are generally permissible, if such actions do not violate
the corporation's certificate of incorporation and, if after giving effect to
such actions, the corporation is able to pay its debts as they become due in
the usual course of business and the corporation's total assets exceed the sum
of its total liabilities plus the amount needed to satisfy the rights of those
shareholders whose rights are superior to those receiving any dividend. The
Connecticut
57
Banking Law prohibits Connecticut-chartered banks such as GBT from paying
dividends except out of its "net profits" for the current year and any
retained net profits from the preceding two years. In addition, the
Connecticut Banking Law and the Federal Deposit Insurance Act prohibit banks
such as GBT from repurchasing their capital stock except with the prior
approval of the Connecticut Banking Commissioner and the FDIC, respectively.
SIS. Under Massachusetts law, the payment of dividends and the redemption or
repurchase of a corporation's stock are generally permissible, if such actions
do not violate the corporation's articles of organization, provided that the
corporation is not insolvent or rendered insolvent by the action.
CLASSIFICATION OF THE BOARD OF DIRECTORS
GBT. Under Connecticut law, a corporation's certificate of incorporation may
provide for staggering the terms of directors by dividing the total number of
directors into up to five groups, with each group containing approximately the
same percentage of the total, as near as may be. The GBT Certificate does not
provide for such staggering.
SIS. Massachusetts law requires classification of the board of directors of
any Massachusetts corporation having a class of voting stock registered under
the Exchange Act, as does SIS, into three classes, unless the corporation has
affirmatively elected in accordance with the applicable statutory requirements
to be exempt from such statutory director classification requirement. SIS has
made no such election, and, to the contrary, the SIS Articles provide that the
SIS Board is to be divided into three classes, with the directors in each
class being elected for staggered three-year terms.
REMOVAL OF DIRECTORS
GBT. Under Connecticut law, shareholders may vote to remove directors with
or without cause, at a meeting expressly called for that purpose, unless the
corporation's certificate of incorporation provide that directors may be
removed only for cause. The GBT Certificate does not require that cause be
shown to remove a director. Neither the Connecticut Banking Law nor the CBCA
expressly provides for the removal of directors by other directors, and
neither the GBT Certificate nor GBT Bylaws provide for such removal.
SIS. Under Massachusetts law, unless the articles of organization or bylaws
provide otherwise, shareholders may by a majority vote generally remove
directors with or without cause and directors may by a majority vote generally
remove directors for cause. The SIS Bylaws provide that, subject to the rights
of holders of any series of preferred stock or any class of stock entitled to
elect additional directors, any director may be removed from office only for
cause and only by an affirmative vote of at least 80% of the voting power of
the then outstanding voting stock, voting as a single class.
VACANCIES ON THE BOARD OF DIRECTORS
GBT. Under Connecticut law, unless the certificate of incorporation provides
otherwise, vacancies on the board or directors, including a vacancy resulting
from an increase in the number of directors, may be filled by shareholders or
directors. If the directors remaining in office constitute less than a quorum
of the board of directors, they may fill the vacancy by the affirmative vote
of a majority of the remaining directors. The GBT Bylaws provides that
vacancies created by an increase in the number of directors shall be filled by
action of the shareholders and that any other vacancy shall be filled by the
GBT Board.
SIS. Under Massachusetts law, unless otherwise provided in the articles of
organization or bylaws, vacancies on the board of directors and newly created
directorships resulting from any increase in the authorized number of
directors may be filled in the manner prescribed in the bylaws or, in the
absence of such a bylaw, by the directors. The SIS Bylaws permit vacancies to
be filled in accordance with Massachusetts law, unless there is an Interested
Shareholder, in which case the filling of such vacancy shall also require the
affirmative vote of a
58
majority of the Continuing Directors then in office. Any director so chosen
shall hold office for the remainder of the term to which the director has been
selected and until such director's successor shall have been elected and
qualified.
EXCULPATION OF DIRECTORS AND OFFICERS
GBT. Connecticut law provides that a director is not liable for any action
taken as a director or any failure to take any action if he performed the
duties of his office in good faith, with the care an ordinarily prudent person
in a like position would exercise under similar circumstances and in a manner
he reasonably believes to be in the best interests of the corporation. Both
the GBT Certificate and Connecticut law provide, that the personal liability
of a director to GBT or its shareholders for monetary damages for breaches of
fiduciary duty shall be limited to the amount of the director's compensation
during the year of the violation if such breach did not (i) involve a knowing
and culpable violation of law by the director, (ii) enable the director or an
associate to receive an improper personal economic gain, (iii) show a lack of
good faith and a conscious disregard for the duty of the director to the
institution under circumstances in which the director was aware that his
conduct or omission created an unjustifiable risk of serious injury to the
institution, (iv) constitute a sustained and unexcused pattern of inattention
that amounted to an abdication of the director's duty to the institution or
(v) create liability under Section 36-9 of the Connecticut General Statutes.
SIS. Massachusetts law permits, and the SIS Articles provide, that no
director shall be personally liable to SIS or its shareholders for monetary
damages for breaches of fiduciary duty except where such exculpation is
expressly prohibited. In Massachusetts, a director is not exculpated from
liability under provisions of Massachusetts law relating to unlawful payments
of dividends and unlawful stock purchases or redemptions. In addition, the SIS
Articles provide that the this limitation cannot apply to liability of a
director (i) for breach of the director's duty of loyalty to the corporation
or its shareholders, (ii) for acts and omissions not in good faith or which
involve intentional misconduct or knowing violation of law; or (iii) for any
transaction from which the director derived an improper personal benefit.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of SIS, SIS
has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by SIS in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, SIS
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
GBT. Under Connecticut law, a corporation may indemnify a director, officer,
employee or agent against liability if that person conducted himself in good
faith and with the reasonable belief that his conduct in his official capacity
with the corporation was in the best interests of the corporation or that his
conduct in any other case was not opposed to its best interests. In addition,
Connecticut law provides that, unless limited by the corporation's certificate
of incorporation, indemnification is mandatory if a director was wholly
successful in defense of a claim, and a court may impose an order to enforce
mandatory indemnification or to grant indemnification in an instance where the
director or officer is fairly and reasonably entitled to indemnification in
view of all relevant circumstances. Indemnification is not permissible in
connection with proceedings by or in the right of a corporation or those
charging improper personal benefit in which the director is adjudged liable.
The GBT Bylaws provide for indemnification of directors and officers and
employees of the corporation.
SIS. Massachusetts law generally permits indemnification of directors and
officers for expenses incurred by them by reason of their position with the
corporation, if the director or officer has acted in good faith and with the
reasonable belief that his conduct was in the best interests of the
corporation. The SIS Bylaws provide
59
that each person made or threatened to be made a party in any proceeding by
reason of the fact that he or she was a director, officer, employee or agent of
SIS shall be indemnified and held harmless by SIS against all expense,
liability and loss reasonably incurred by such indemnitee in connection with
such proceeding, provided that such indemnitee shall have acted in good faith
in the reasonable belief that such action was in, or not opposed to, the best
interests of SIS.
TRANSACTIONS WITH INTERESTED PERSONS
GBT. Connecticut law provides that a transaction may not be enjoined, set
aside or give rise to an award of damages or other sanctions, in a proceeding
by a shareholder or by or in the right of the corporation, because a director
has a conflicting interest in the transaction, if (i) the transaction received
the affirmative vote of a majority, but no fewer than two, of those directors
who do not have a conflicting interest or a familial, financial, professional
or employment relationship with a director who does have a conflicting interest
after required disclosure to them, (ii) the transaction received the
affirmative vote of a majority of the shares cast at a duly called meeting
after required notice and disclosure, but not including shares beneficially
owned by a director who has a conflicting interest or a related person of the
director, or (iii) the transaction is established to have been fair to the
corporation.
SIS. The SIS Articles provide that, unless entered into in bad faith or in
violation of the SIS Articles, no contract or transaction by SIS shall be void,
voidable or in any way affected by reason of the fact that it is with an
Interested Shareholder. The SIS Articles also provide that, unless entered into
in bad faith or in violation of the SIS Articles, no person, whether a
director, officer, stockholder, employee or otherwise interested in SIS (or any
entity in which any such person is in any way interested), shall be liable to
SIS or to any other person or organization for any loss or expense incurred by
reason of such a contract or transaction or shall be accountable for any gain
or profit realized from such a contract or transaction.
MERGERS, SHARE EXCHANGES OR ASSET SALES; ANTI-TAKEOVER PROVISIONS OF STATE LAW
GBT. Connecticut law requires that the board of directors shall adopt and
recommend a plan of merger or share exchange or a sale of all or substantially
all of the corporation's assets other than in the regular course of business to
the shareholders, unless the board of directors determines that because of a
conflict of interest or otherwise it should make no recommendation and
communicates the basis for its determination to the shareholders. The
Connecticut Banking Law requires the affirmative vote of the holders of at
least two-thirds of the shares of each voting group entitled to vote on the
plan or transaction unless the certificate of incorporation or a board
resolution requires otherwise.
SIS. Massachusetts law requires the approval of the directors and the vote of
the holders of a majority of the outstanding stock entitled to vote thereon for
the merger of the corporation into any other corporation, although the
certificate of incorporation may require a higher shareholder vote.
The SIS Articles provide that any Business Combination (as defined below)
involving SIS and an Interested Shareholder must be approved by the holders of
at least 80% of the outstanding shares of SIS's voting stock (the "Voting
Requirement") voting together as a single class at a duly constituted meeting
of shareholders called expressly for such purpose. Such affirmative vote shall
be in addition to and not in lieu of any other vote required under applicable
law and is required notwithstanding the fact that no vote may be required or
that a lesser percentage may be specified by law. The Voting Requirement does
not apply and the affirmative vote of only a majority of SIS's voting stock is
required, if (i) the Business Combination is approved by an affirmative vote of
a majority of both the Continuing Directors then in office or (ii) certain
"fair price" (defined generally to mean, among other things, that the
consideration to be received by shareholders in such Business Combination shall
be in the same form and kind as the consideration paid by the Interested
Shareholder for SIS's capital stock owned by such person and shall be at least
equal to the highest of the following: (A) the highest per share price paid by
such Interested Shareholder in acquiring any of its holdings of SIS Common
Stock within the two year period immediately prior to the first public
announcement of the proposal of the Business Combination (the
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"Announcement Date") or in the transaction through which such person became an
Interested Shareholder; (B) the highest Fair Market Value (as defined in the
SIS Articles) per share of SIS Common Stock on any date during the one-year
period prior to and including the Announcement Date; and (C) the price per
share equal to (1) the Fair Market Value per share of common stock on the
Announcement Date or on the date on which the Interested Shareholder became an
Interested Shareholder, whichever is higher, multiplied by (2) a fraction (x)
the numerator of which is the highest per share price paid by the Interested
Shareholder for any share of SIS Common Stock acquired by it within the two-
year period immediately prior to and including the Announcement Date and (y)
the denominator of which is the Fair Market Value per share of SIS Common Stock
on the first day in such two-year period on which the Interested Shareholder
acquired any shares of SIS Common Stock) and other criteria are met.
As defined in the SIS Articles, a "Business Combination" includes, among
other things (i) any merger or consolidation of SIS or any subsidiary with an
Interested Shareholder or affiliate thereof, (ii) the sale, lease, exchange,
mortgage, pledge, transfer or other disposition by SIS of assets having a fair
market value of $1,000,000 or more to or with an Interested Shareholder or an
affiliate thereof, (iii) the issuance or transfer by SIS or any subsidiary (in
one transaction or a series of transactions) of any securities of SIS or any
subsidiary to an Interested Shareholder or any affiliate thereof in exchange
for cash, securities or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, (iv) the adoption of a plan
or proposal for the liquidation or dissolution of SIS proposed by or on behalf
of an Interested Shareholder or an affiliate thereof and (v) any transaction
that has the effect, directly or indirectly, of increasing the proportionate
share of any class of equity or convertible security of SIS or any subsidiary
that is beneficially owned by an Interested Shareholder or any affiliate
thereof. The CBCA, which is applicable to GBT in these circumstances, contains
similar provisions.
Connecticut Anti-Takeover Law. Sections 33-840 through 33-845 of the CBCA
cover business combinations involving Connecticut corporations, and under the
Connecticut Banking Laws are also applicable to business combinations involving
Connecticut banks such as GBT. Section 33-841 provides that no Connecticut
corporation shall engage in any business combination with any interested
shareholder unless the business combination is approved by the Board of
Directors of the corporation and by the affirmative vote of at least 80% of the
outstanding voting stock of the corporation and at least 66 2/3% of the
outstanding voting stock which is not held by the interested shareholder. For
purposes of this provision, an "interested shareholder" is defined as any
person that (i) is the owner of 10% or more of the outstanding voting stock of
the corporation, or (ii) is an affiliate or associate of the corporation and
was the owner of 10% or more of the outstanding voting stock of the corporation
at any time within two years immediately prior to the relevant date. In
addition, Section 33-844 provides generally that no corporation incorporated in
Connecticut and possessing certain statutory indicia reflecting substantial
ties to Connecticut shall engage in any business combination with any
interested shareholder for a five-year period following the date that such
shareholder becomes an interested shareholder unless, prior to such date, the
Board of Directors of the corporation (including a majority of the nonemployee
directors, of which there shall be at least two) have approved either the
business combination or the transaction that resulted in the shareholder
becoming an interested shareholder. For purposes of this provision, an
"interested shareholder" is defined as any person that (i) is the owner of 10%
or more of the outstanding voting stock of the corporation, or (ii) is an
affiliate or associate of the corporation and was the owner of 10% or more of
the outstanding voting stock of the corporation at any time within five years
immediately prior to the relevant date. Under certain circumstances, these
provisions of the CBCA make it more difficult for an interested shareholder to
effect various business combinations with a corporation for the specified
period, although the shareholders may, by adopting an amendment to the
corporation's certificate of incorporation or by-laws, elect not to be governed
by these sections. The GBT Certificate and the GBT Bylaws do not exclude GBT
from the restrictions imposed by Sections 33-840 through 33-845 of the CBCA.
Massachusetts Anti-Takeover Laws. Chapter 110D of the Massachusetts General
Laws covers "control share acquisitions" affecting corporations incorporated in
Massachusetts that have at least 200 shareholders and possess certain statutory
indicia reflecting additional substantial ties to Massachusetts (as is the case
with SIS).
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Chapter 110D limits the voting rights of shares held by persons who have
acquired 20% or more of the voting power of the target corporation. Under this
statute, shares acquired in a control share acquisition retain the same voting
rights as all other shares of the same class or series only to the extent
authorized by a vote of the majority of all shares entitled to vote for the
election of directors, excluding such acquired shares. A corporation that is
otherwise subject to Chapter 110D may expressly provide in its articles of
organization or bylaws that the statute does not apply. SIS has not included
any such "opt out" provision in either the SIS Articles or SIS Bylaws.
Chapter 110F of the Massachusetts General Laws provides that if any acquiror
buys 5% or more of a target company's stock, where the target company has at
least 200 shareholders and possesses certain statutory indicia reflecting
substantial ties or nexus to Massachusetts (as is the case with SIS), without
the prior approval of the target company's board of directors, such acquirer
generally may not, for a period of three years, (i) complete the acquisition of
the target company through a merger, (ii) pledge or sell any assets of the
target company or (iii) engage in other self-dealing transactions with the
target company. The prior board of directors approval requirement does not
apply if the acquirer buys at least 90% of the target company's outstanding
stock in the transaction in which it crosses the 5% threshold or if the
acquirer, after crossing the threshold, obtains the approval of the target
company's board of directors and two-thirds of the target company's stock held
by persons other than the acquirer. A corporation that would otherwise be
covered by Chapter 110F may expressly provide in its articles of organization
that the statute does not apply. The SIS Articles do not contain any such "opt
out" provision.
AMENDMENTS TO CHARTER
GBT. Under Connecticut law, unless the certificate of incorporation provides
otherwise, a corporation's board of directors may amend the certificate of
incorporation without shareholder action for certain limited purposes including
extending the corporation's duration (if it was incorporated at a time when
limited duration was required by law). All material charter amendments require
recommendation of the amendment by the corporation's board of directors to its
shareholders (unless because of a conflict of interest or other special
circumstances the board of directors communicates to shareholders that it will
make no recommendation), and approval of the amendment by the holders of a
majority of the shares of each voting group entitled to vote on the amendment
(two-thirds in the event of a proposed change of name), unless a higher
percentage is required by the certificate of incorporation or by board
resolution. The GBT Certificate requires no such higher vote requirement.
SIS. Under Massachusetts law, charter amendments require the approval of the
directors and the vote of the holders of a majority of the outstanding stock
and a majority of each class of stock outstanding and entitled to vote thereon
as a class, unless the certificate of incorporation require a greater
proportion. In addition, Massachusetts law requires a class vote when, among
other things, an amendment will adversely affect the powers, preferences or
special rights of a class of stock. Pursuant to the SIS Articles, no amendment,
addition, alteration, change or repeal of the SIS Articles shall be made,
unless the same is first adopted by the affirmative vote of a majority of the
board of directors of SIS then in office, and thereafter approved by the
shareholders by not less than two-thirds of the total votes eligible to be cast
at a duly constituted meeting, or, in the case of Articles 1, 2, 3 and the
first sentence of Article 4 of the SIS Articles, by not less than a majority of
the total votes eligible to be cast at a duly constituted meeting provided,
however, that if, at any time within the sixty day period immediately preceding
the meeting at which the shareholder vote is to be taken, there is an
Interested Shareholder, such amendment, addition, alteration, change or repeal
shall also require the approval of a majority of the Continuing Directors then
in office, prior to approval by the shareholders.
AMENDMENTS TO BYLAWS
GBT. Connecticut law provides that both shareholders and directors may amend
a corporation's bylaws unless the certificate of incorporation or certain
sections of the CBCA reserve that power to the shareholders in whole or part.
The GBT Bylaws permits the directors to amend or repeal the GBT Bylaws.
62
SIS. Under Massachusetts law, the power to adopt, amend or repeal bylaws lies
in shareholders entitled to vote; provided, however, that if authorized by the
corporation's articles of organization, the bylaws may confer the power to
adopt, amend or repeal bylaws upon the directors. The SIS Articles provide that
the SIS Bylaws may be amended by the affirmative vote of a majority of the
directors (unless at the time of such action there shall be an Interested
Shareholder, in which case such action shall also require the affirmative vote
of a majority of the Continuing Directors then in office) or by vote of the
holders of at least 80% of the voting stock, voting together as a single class.
DISSENTERS' APPRAISAL RIGHTS
GBT. Connecticut law permits a shareholder to obtain fair value for his
shares in the event of, among others, consummation of a plan of merger to which
the corporation is a party, provided that the shareholder follows the
requirements of the Dissenters' Rights Statute. A shareholder wishing to assert
dissenters' rights must deliver to the corporation, before the vote at the
shareholders' meeting pursuant to which corporate action creating dissenters'
rights takes place, written notice of his intent to demand payment for his
shares if the proposed action is taken and such shareholder must not vote his
shares in favor of the proposed action. Failure to follow both these steps
prevents a shareholder from asserting dissenters' rights. GBT shareholders may
exercise dissenters' rights in connection with the Merger. See "THE MERGER--
Appraisal Rights and Dissenting Shareholders."
SIS. Under Massachusetts law, appraisal rights are available in connection
with certain statutory mergers or consolidations, but are not available to
holders of shares of stock of a corporation which is to be the surviving
corporation if no vote of its shareholders is required to approve the merger.
Because the Merger involves a subsidiary of SIS rather than SIS itself, holders
of SIS Common Stock do not have appraisal rights with respect to the Merger.
SHAREHOLDERS RIGHTS PLAN
GBT. GBT has no shareholders rights plan.
SIS. SIS has distributed to each holder of SIS Common Stock one Right for
each outstanding share of SIS Common Stock. The Rights entitle the shareholder
to certain rights in the event of certain transactions involving SIS. See
"DESCRIPTION OF SIS CAPITAL STOCK--Common Stock--Preferred Share Purchase
Rights."
LEGAL MATTERS
The validity of the shares of SIS Common Stock to be issued in the Merger
will be passed upon by Sullivan & Worcester LLP, Boston, Massachusetts. Certain
legal matters relating to the Merger, including the tax-free nature of the
Merger, will be passed upon, for SIS, by Sullivan & Worcester LLP, and, for
GBT, by Tyler Cooper & Alcorn, LLP, Hartford, Connecticut.
EXPERTS
The consolidated financial statements incorporated in this Proxy Statement--
Prospectus by reference to SIS's Annual Report on Form 10-K for the year ended
December 31, 1996 have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
The consolidated financial statements of GBT included in the GBT annual
report delivered with this Proxy Statement--Prospectus and incorporated herein
by reference have been certified by Shatswell, MacLeod & Company, P.C.,
independent certified public accountants, given on the authority of that firm
as experts in accounting and auditing, as set forth in their report included
with such consolidated financial statements.
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WHERE YOU CAN FIND MORE INFORMATION
SIS files annual, quarterly and special reports, proxy statements and other
information with the SEC, and GBT files such reports, statements and other
information with the FDIC. You may read and copy any reports, statements or
other information filed by SIS at the SEC's public reference rooms in
Washington, D.C., New York, New York or Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. You
may read and copy any reports, statements or other information filed by GBT at
the FDIC's public reference facilities located in Washington, D.C. You may
also obtain reports and documents filed by GBT by writing the FDIC's
Registration, Disclosure and Securities Operations Unit at 550 17th Street,
N.W., Room F-6043, Washington, D.C. 20429, or calling 202-898-8913. Requests
may also be faxed to the FDIC at 202-898-3909. SIS's SEC filings are also
available to the public from commercial document retrieval services and at the
web site maintained by the SEC at "http://www.sec.gov."
SIS filed a Registration Statement on Form S-4 to register with the SEC the
SIS common stock to be issued to GBT shareholders in the Merger. This Proxy
Statement-Prospectus is a part of that Registration Statement and constitutes
a prospectus of SIS in addition to being a proxy statement of SIS and GBT for
the special meetings. As allowed by SEC rules, this Proxy Statement-Prospectus
does not contain all the information you can find in the Registration
Statement or the exhibits to the Registration Statement.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" information into this Proxy
Statement-Prospectus, which means that we can disclose important information
to you by referring you to another document filed separately with the SEC by
SIS or with the FDIC by GBT. The information incorporated by reference is
deemed to be part of this Proxy Statement-Prospectus, except for any
information superseded by information in this Proxy Statement-Prospectus. This
Proxy Statement-Prospectus incorporates by reference the documents set forth
below that we have previously filed with the SEC or the FDIC. These documents
contain important information about our companies and their finances.
SIS SEC FILINGS (FILE NO. 000-20809) PERIOD
- ------------------------------------ ------
Annual Report on Form 10-K Year ended December 31, 1996
Quarterly Reports on Form 10-Q Quarters ended March 31, 1997 and June 30, 1997
Current Report on Form 8-K Filed on August 18, 1997
The description of SIS's common stock Filed on June 4, 1996
contained in its Registration Statement on
Form 8-A
The Rights Agreement governing the terms of Filed on January 23, 1997
SIS's shareholders rights plan filed as
Exhibit 4.1 to its Registration Statement
on Form 8-A
GBT FDIC FILINGS PERIOD
- ---------------- ------
Annual Report on Form F-2 Year ended December 31, 1996
Quarterly Reports on Form F-4 Quarters ended March 31, 1997 and June 30, 1997
GBT is also incorporating by reference certain portions of its annual report
to shareholders for the year ended December 31, 1996, relating to its
business, the market for its common stock, its selected financial data, the
GBT management's discussion and analysis of GBT's condition and operations and
GBT's consolidated financial statements, including the notes to the financial
statements. A copy of the annual report is being delivered to shareholders
with this Proxy Statement-Prospectus.
We are also incorporating by reference additional documents that SIS files
with the SEC or GBT files with the FDIC between the date of this Proxy
Statement-Prospectus and the dates of the Special Meetings of our
shareholders.
64
SIS has supplied all information contained or incorporated by reference in
this Proxy Statement-Prospectus relating to SIS and GBT has supplied all such
information relating to GBT.
If you are a shareholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the
SEC or the FDIC. Documents incorporated by reference are available from us
without charge, excluding all exhibits unless we have specifically
incorporated by reference an exhibit in this Proxy Statement-Prospectus.
Shareholders may obtain documents incorporated by reference in this Joint
Proxy Statement-Prospectus by requesting them in writing or by telephone from
the appropriate party at the following addresses:
Michael E. Tucker, Clerk Camille S. Bushnell, Secretary
SIS Bancorp, Inc. Glastonbury Bank & Trust Company
1441 Main Street 2461 Main Street
Springfield, Massachusetts 01102 Glastonbury, Connecticut 06033
Telephone: 413-748-8000 Telephone: 860-633-4695
If you would like to request documents from us, please do so by November 26,
1997 to receive them before the Special Meetings.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT-PROSPECTUS TO VOTE ON THE MERGER. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM
WHAT IS CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS. THIS PROXY STATEMENT-
PROSPECTUS IS DATED OCTOBER 28, 1997. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS IS ACCURATE AS OF ANY
DATE OTHER THAN SUCH DATE, AND NEITHER THE MAILING OF THIS PROXY STATEMENT-
PROSPECTUS TO SHAREHOLDERS NOR THE ISSUANCE OF SIS COMMON STOCK IN THE MERGER
SHALL CREATE ANY IMPLICATION TO THE CONTRARY.
65
Appendix A to Joint
Proxy Statement--Prospectus
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated as of August
18, 1997, by and between SIS Bancorp, Inc., a Massachusetts corporation (the
"Buyer"), and Glastonbury Bank and Trust Company, a Connecticut bank and trust
company (the "Seller").
The Buyer and the Seller deem it advisable and in the best interests of
their respective stockholders to consummate the business combination provided
for herein.
In consideration of the mutual covenants, representations, warranties and
agreements contained herein and in consideration of (a) the execution and
delivery of the Seller Option Agreement (as hereinafter defined in Article I
hereof) between the Seller and the Buyer pursuant to which the Seller has on
this day granted the Seller Option (as defined in Article I hereof) to the
Buyer and (b) the execution and delivery by the Insider Stockholders of the
Seller Stockholders' Agreement (as such terms are defined in Article I
hereof), each as a condition and inducement to the Buyer to enter into this
Agreement, the parties agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein or as otherwise clearly required by the
context, the following terms shall have the respective meanings indicated when
used in this Agreement:
"Acquisition Merger" shall mean the merger of Merger Subsidiary with and
into Seller in accordance with the terms and conditions of this Agreement and
the Bank Merger Agreement.
"Acquisition Transaction" shall have the meaning ascribed thereto in Section
5.03 hereof.
"Adjusted Exchange Ratio" shall have the meaning ascribed thereto in Section
2.01(b) of the Bank Merger Agreement.
"Agreement" shall mean this Agreement and Plan of Reorganization by and
among the Buyer and the Seller.
"Alternative Transaction" shall have the meaning ascribed thereto in Section
8.02(b) hereof.
"Average Closing Price" shall have the meaning ascribed thereto in Section
2.01(b) of the Bank Merger Agreement.
"Bank Merger Agreement" shall mean that certain Agreement and Plan of Merger
to be entered into by and among the Buyer, the Seller and Merger Subsidiary at
or prior to the Effective Time, substantially in the form attached hereto as
Exhibit A.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"BLC" shall mean the Banking Laws of the State of Connecticut as set forth
in Title 36A of the Connecticut General Statutes.
"Buyer" shall have the meaning ascribed thereto in the preamble to this
Agreement.
"Buyer Bank" shall mean Buyer's banking subsidiary, Springfield Institution
for Savings, a Massachusetts savings bank in stock form.
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"Buyer Balance Sheet" shall have the meaning ascribed thereto in Section
3.05 hereof.
"Buyer Common Stock" shall have the meaning ascribed thereto in Section
3.02(a) hereof.
"Buyer Disclosure Schedule" shall mean the disclosure schedule prepared by
Buyer and delivered to Seller on the date hereof in conjunction with the
parties' execution and delivery of this Agreement.
"Buyer Employee Plans" shall have the meaning ascribed thereto in Section
3.11 hereof.
"Buyer Preferred Stock" shall have the meaning ascribed thereto in Section
3.02(a) hereof.
"Buyer Registration Statement" shall have the meaning ascribed thereto in
Section 5.04 hereof.
"Buyer Reports" shall have the meaning ascribed thereto in Section 3. l 1
hereof.
"Buyer Rights" shall have the meaning ascribed thereto in Section 3.02
hereof.
"Buyer Rights Agreement" shall mean that Rights Agreement dated as of
January 22, 1997, between the Buyer and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent.
"Buyer Stockholders' Agreement" means that certain letter agreement or
agreements of even date herewith executed and delivered to Seller by each
member of the Buyer's Board of Directors in the form attached hereto as
Exhibit C-1.
"Closing Date" shall mean the date on which the Effective Time occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Companies" shall have the meaning ascribed thereto in Section 4.10(a)
hereof.
"Connecticut Commissioner" shall have the meaning ascribed thereto in
Section 3.04 hereof.
"Connecticut Transfer Act" shall mean the Connecticut Transfer Act
(Connecticut General Statutes (S)22a-134).
"Confidentiality Agreement" shall mean that certain confidentiality
agreement between the Buyer and the Seller dated July 24, 1997.
"Confidential Information" shall have the meaning ascribed thereto in
Section 5.02(b) hereof.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended, or any
substantially similar state statute.
"DOJ" shall mean the United States Department of Justice.
"DPC Shares" shall have the meaning ascribed thereto in Section 3.14 hereof.
"Effective Time" shall mean the specific time on the Closing Date at which
the Acquisition Merger has become effective pursuant to the laws of the State
of Connecticut.
"EPA" shall mean the United States Environmental Protection Agency.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall have the meaning ascribed thereto in Section 3.05
hereof.
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"Exchange Ratio" shall have the meaning ascribed thereto in Section 2.01(b)
of the Bank Merger Agreement.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System or the Federal Reserve Bank of Boston, as applicable.
"GAAP" shall mean generally accepted accounting principles and practices in
effect from time to time within the United States applied consistently
throughout the period involved.
"Injunction" shall have the meaning ascribed thereto in Section 6.01(d)
hereof.
"Insider Stockholders" shall mean those persons identified in Section 1.00
of the Seller Disclosure Schedule.
"IRS" shall mean the United States Internal Revenue Service.
"Loans" shall have the meaning set forth in Section 4.24 hereof.
"Massachusetts Board" shall have the meaning ascribed thereto in Section
3.04 hereof.
"Material Adverse Effect" shall mean with respect to Buyer or Seller, or any
other entity, a material adverse effect on the assets, properties,
liabilities, business, operations, results of operations, condition (financial
or otherwise) or prospects of Buyer or Seller or such other entity, as the
case may be, and its subsidiaries, taken as a whole.
"Merger Subsidiary" shall mean that certain interim bank, which shall be
organized as a wholly-owned direct subsidiary of Buyer under the laws of the
State of Connecticut for the purpose of merging with the Seller pursuant to
the terms of this Agreement and the Bank Merger Agreement.
"Minimum Price" shall have the meaning ascribed thereto in Section 2.01(b)
of the Bank Merger Agreement.
"NASD" shall mean the NASD, Inc.
"NASDAQ" shall mean the Nasdaq Stock Market, including both the National
Market and the SmallCap Market systems.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Proxy Statement" shall have the meaning ascribed thereto in Section 5.04(a)
hereof.
"Records" means all records, agreements and original documents in the
Seller's possession which pertain to and are utilized by the Seller and its
subsidiaries to administer, reflect, monitor, evidence or record information
respecting Seller's consolidated business and operations, including but not
limited to all records and documents relating to (a) corporate, regulatory,
supervisory and litigation matters, (b) tax planning and payment of taxes, (c)
personnel and employment matters, and (d) the business or conduct of the
consolidated business of the Seller.
"Requisite Regulatory Approvals" shall have the meaning ascribed thereto in
Section 6.01(b) hereof.
"SEC" shall have the meaning ascribed thereto in Section 3.04 hereof.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning ascribed thereto in the preamble to this
Agreement.
"Seller Affiliates" shall have the meaning ascribed thereto in Section 5.06
hereof.
"Seller Affiliates Agreement" shall mean the form of written agreement to be
executed and delivered to the Buyer prior to the Effective Time by the Seller
Affiliates, substantially in the form attached hereto as Exhibit D.
"Seller Balance Sheet" shall have the meaning ascribed thereto in Section
4.05 hereof.
"Seller Common Stock" shall have the meaning ascribed thereto in Section
4.02(a) hereof.
"Seller Disclosure Schedule" shall have the meaning ascribed thereto in
Section 4.02(b) hereof.
"Seller Employee Plans" shall have the meaning ascribed thereto in Section
4.11(a) hereof.
"Seller Option" shall mean the option granted to the Buyer pursuant to the
Seller Option Agreement.
"Seller Option Agreement" shall mean that certain stock option agreement of
even date herewith by and between the Buyer and the Seller in the form
attached hereto as Exhibit B.
"Seller Reports" shall have the meaning ascribed thereto in Section 4.15
hereof.
"Seller Stockholders' Agreement" means that certain letter agreement or
agreements of even date herewith executed and delivered to the Buyer by each
of the Insider Stockholders in the form attached hereto as Exhibit C-2.
"Significant Subsidiary" shall have the meaning ascribed thereto in Section
3.01(b) hereof.
"subsidiaries" shall mean, when used with reference to a party, any
corporation or other organization, whether incorporated or unincorporated, of
which such party or any other subsidiary of such party is a general partner
(excluding partnerships the general partnership interests of which held by
such party or any subsidiary of such party do not have a majority of the
voting interests in such partnership) or, with respect to such corporation or
other organization, at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the board
of directors or others performing similar functions is directly or indirectly
owned or controlled by such party or by any one or more of its subsidiaries,
or by such party and one or more of its subsidiaries.
"Surviving Corporation" shall have the meaning ascribed thereto in Article
II hereof.
"Tax" shall have the meaning ascribed thereto in Section 4.10(r)(A) hereof.
"Tax Return" shall have the meaning ascribed thereto in Section 4.10(r)(B)
hereof.
"Termination Date" shall have the meaning ascribed thereto in Section
8.01(b) hereof.
"Trust Account Shares" shall have the meaning ascribed thereto in Section
3.12 hereof.
"Valuation Period" shall have the meaning ascribed thereto in Section
2.01(b) of the Bank Merger Agreement.
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ARTICLE II
THE ACQUISITION MERGER
Subject to the terms and conditions of this Agreement and the Bank Merger
Agreement, the Merger Subsidiary will merge with and into Seller (the
"Acquisition Merger"), with Seller being the surviving corporation (the
"Surviving Corporation"), pursuant to the provisions of, and with the effect
provided in, the BLC. The Bank Merger Agreement provides for the terms and
conditions of the Acquisition Merger, including but not limited to the
conversion and exchange of the Seller Common Stock for the Buyer Common Stock,
all of which are incorporated herein and made a part of this Agreement by
reference.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
3.01 Corporate Organization.
(a) The Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts. The
Buyer has the corporate power and authority to own, lease or operate 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, leased or
operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would not result in, with
respect to the Buyer, a Material Adverse Effect. The Buyer is a bank
holding company registered with the Federal Reserve Board under the BHCA.
(b) Each subsidiary of the Buyer that is a "significant subsidiary" as
such term is defined in Regulation S-X of the SEC (each a "Significant
Subsidiary") is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. Each Significant
Subsidiary of the Buyer has the corporate power and authority to own, lease
or operate 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, leased, or
operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would neither individually
nor in the aggregate, result in, with respect to the Buyer, a Material
Adverse Effect.
(c) The minute books of the Buyer and its subsidiaries contain complete
and accurate records of all meetings and other corporate actions authorized
at such meetings held or taken since January 1, 1992 by its stockholders
and Board of Directors or, in the case of Buyer Bank prior to February 7,
1995, its corporators and Board of Trustees.
3.02 Capitalization.
(a) The authorized capital stock of the Buyer consists of 25,000,000
shares of common stock, par value $0.01 per share (the "Buyer Common
Stock"), and 5,000,000 shares of preferred stock, par value $0.01 per share
(the "Buyer Preferred Stock"). As of the close of business on June 30, 1997
there were 5,576,842 shares of the Buyer Common Stock issued and
outstanding and no shares of the Buyer Preferred Stock issued and
outstanding. As of the close of business on June 30, 1997, the Buyer had
5,576,842 preferred stock purchase rights issued and outstanding pursuant
to the Buyer Rights Agreement, which entitle the holders thereof to
purchase shares of Series A Junior Participating Preferred Stock under
certain circumstances (the "Buyer Rights"). As of the close of business on
June 30, 1997, there were 250,000 shares of Series A Junior Participating
Preferred Stock reserved for issuance upon exercise of such preferred stock
purchase rights, none of which shares were issued and outstanding. There
were also 150,400 shares of the Buyer Common Stock held in the Buyer's
treasury as of the close of business on June 30, 1997. In
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addition, as of the close of business on June 30, 1997, there were 104,350
shares of the Buyer Common Stock reserved for issuance upon exercise of
outstanding stock options. All issued and outstanding shares of the Buyer
Common 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. Except for awards of shares
of Buyer Common Stock and grants of options to purchase shares of Buyer
Common Stock, such awards and grants made pursuant to certain of the Buyer
Employee Plans, the Buyer does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the Buyer to issue, deliver or sell, or cause to be
issued, delivered or sold any shares of the Buyer Common Stock or any other
equity security of the Buyer or any Buyer subsidiary or any securities
convertible into, exchangeable for or representing the right to subscribe
for, purchase or otherwise receive any shares of the Buyer Common Stock or
any other equity security of the Buyer or any Buyer subsidiary or
obligating the Buyer to grant, extend or enter into any such subscriptions,
options, warrants, calls, commitments or agreements. As of the date hereof,
there are no outstanding contractual obligations of the Buyer to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Buyer or any Buyer subsidiary.
(b) Buyer's Annual Report on Form 10-K, as filed with the SEC for the
year ended December 31, 1996, lists each of the subsidiaries of the Buyer
as of December 31, 1996 and indicates for each such subsidiary as of such
date the percentage and type of equity securities owned or controlled by
the Buyer and the jurisdiction of incorporation. No other Significant
Subsidiary has been organized or acquired by Buyer since December 31, 1996.
No subsidiary of the Buyer has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for such Buyer subsidiary to issue, deliver or sell, or
cause to be issued, delivered or sold, any equity security of the Buyer or
of any Buyer subsidiary or any securities convertible into, exchangeable
for or representing the right to subscribe for, purchase or otherwise
receive any such equity security or obligating a Buyer subsidiary to grant,
extend or enter into any such subscriptions, options, warrants, calls,
commitments or agreements. As of the date hereof, there are no outstanding
contractual obligations of any Buyer subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock of the Buyer or any Buyer
subsidiary. All of the shares of capital stock of each of the Buyer's
subsidiaries held by the Buyer are fully paid and nonassessable and are
owned by the Buyer free and clear of any claim, lien, encumbrance or
agreement with respect thereto.
3.03 Authority; No Violation.
(a) The Buyer has full corporate power and authority to execute and
deliver this Agreement, the Bank Merger Agreement and the Seller Option
Agreement and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement, the Bank Merger
Agreement and the Seller Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
approved by the Board of Directors of the Buyer. The Board of Directors of
the Buyer has directed that this Agreement and the transactions
contemplated hereby be submitted to the stockholders of the Buyer for
approval at a meeting of such stockholders and no other corporate
proceedings on the part of the Buyer are necessary to consummate any of the
transactions contemplated by this Agreement, the Bank Merger Agreement or
the Seller Option Agreement. This Agreement and the Seller Option Agreement
have been, and the Bank Merger Agreement will be, duly and validly executed
and delivered by the Buyer and (assuming due authorization, execution and
delivery by the Seller) constitute the valid and binding obligations of the
Buyer, enforceable against the Buyer in accordance with their respective
terms, except that enforcement thereof may be limited by the receivership,
conservatorship and supervisory powers of bank regulatory agencies
generally as well as bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting enforcement of creditors' rights generally and
except that enforcement thereof may be subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) and the availability of equitable remedies.
(b) The Merger Subsidiary will have full corporate power and authority to
execute and deliver the Bank Merger Agreement and to consummate the
transactions contemplated thereby. The execution and
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delivery of the Bank Merger Agreement and the consummation of the
transactions contemplated thereby will be duly and validly approved by the
Board of Directors of the Merger Subsidiary and by the Buyer as the sole
stockholder of the Merger Subsidiary. No other corporate proceedings on the
part of the Merger Subsidiary are necessary to consummate the Acquisition
Merger. The Bank Merger Agreement will be duly and validly executed by the
Merger Subsidiary and (assuming due authorization, execution and delivery
by the Seller) will constitute the valid and binding obligation of the
Merger Subsidiary, enforceable against the Merger Subsidiary in accordance
with its terms, except that enforcement thereof may be limited by
receivership, conservatorship and supervisory powers of bank regulatory
agencies generally as well as bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and except that enforcement thereof may be subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the availability of equitable remedies.
(c) Neither the execution and delivery of this Agreement, the Bank Merger
Agreement and the Seller Option Agreement by the Buyer, nor the execution
and delivery of the Bank Merger Agreement by the Merger Subsidiary, nor the
consummation by the Buyer and the Merger Subsidiary, as applicable, of the
transactions contemplated by this Agreement, the Bank Merger Agreement and
the Seller Option Agreement, nor compliance by the Buyer and the Merger
Subsidiary, as applicable, with any of the terms or provisions of this
Agreement, the Bank Merger Agreement and the Seller Option Agreement, will
(i) assuming that the consents and approvals referred to in Section 3.04
hereof are duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to the
Buyer or any of its subsidiaries or any of their respective properties or
assets, or, (ii) violate, conflict with, result in a breach of any
provisions of, 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, accelerate the performance required by, or result in a
right of termination or acceleration or the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties
or assets of the Buyer or any of its subsidiaries under, any of the terms,
conditions or provisions of (A) the articles of organization or other
charter document of like nature or by-laws of the Buyer, or such Buyer
subsidiary, as the case may be, or (B) any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation
to which the Buyer or any of its subsidiaries is a party thereto as issuer,
guarantor or obligor, or by which they or any of their respective
properties or assets may be bound or affected, except, in the case of
clause (ii)(B) above, for such violations, conflicts, breaches or defaults
which either individually or in the aggregate will not result, with respect
to the Buyer, in a Material Adverse Effect.
3.04 Consents and Approvals. Except for consents, waivers or approvals of,
notice to, or filings or registrations with, the Federal Reserve Board, the
Massachusetts Board of Bank Incorporation (the "Massachusetts Board"), the
FDIC, the Banking Commissioner of the State of Connecticut (the "Connecticut
Commissioner"), the Securities and Exchange Commission (the "SEC"), the NASD
and/or NASDAQ, the DOJ, the Connecticut Secretary of State and certain state
"Blue Sky" or securities commissioners, no consents, waivers or approvals of,
notices to, or filings or registrations with, any public body or authority are
necessary, and no consents or approvals of or notices to any third parties
(which term does not include the Board of Directors or stockholders of the
Buyer or of the Merger Subsidiary) are necessary, in connection with (i) the
execution and delivery by the Buyer of this Agreement, the Bank Merger
Agreement or the Seller Option Agreement, (ii) the execution and delivery by
the Merger Subsidiary of the Bank Merger Agreement or (iii) the consummation
by the Buyer and the Merger Subsidiary, as applicable, of the transactions
contemplated by this Agreement, the Bank Merger Agreement and the Seller
Option Agreement. The affirmative vote of the holders of a majority of the
Buyer Common Stock present and voting at the meeting of stockholders to be
called to consider and vote upon this Agreement and the transactions
contemplated hereby is the only vote of the holders of any class or series of
the Buyer's capital stock or other securities necessary to approve this
Agreement and the transactions contemplated hereby.
3.05 Financial Statements. The Buyer has made available to the Seller copies
of (a) the consolidated balance sheets of the Buyer and its subsidiaries as of
December 31 for the fiscal years 1994 through 1996,
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inclusive, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the fiscal years 1994 through 1996,
inclusive, as reported in the Buyer's Annual Reports on Form 10-K (or F-2 as
previously applicable to Buyer Bank) for each of the three fiscal years ended
December 31, 1994 through December 31, 1996 filed with the SEC (or FDIC as
previously applicable to Buyer Bank) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), in each case accompanied by the audit
report of Price Waterhouse LLP, independent accountants for the Buyer, and (b)
the unaudited consolidated balance sheets of Buyer and its subsidiaries as of
June 30, 1997 and June 30, 1996, and the related unaudited consolidated
statements of income, changes in stockholders' equity and cash flows for the
six months ended June 30, 1997 and June 30, 1996, all as reported in Buyer's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 filed with
the SEC under the Exchange Act. The December 31, 1996 consolidated balance
sheet (the "Buyer Balance Sheet") of the Buyer (including the related notes,
where applicable) and the other financial statements referred to herein
(including the related notes, where applicable) fairly present, and the
financial statements to be included in any reports or statements (including
reports on Forms 10-Q, 10-K and 8-K) to be filed by the Buyer with the SEC
after the date hereof will fairly present, the consolidated financial position
and results of the consolidated operations and cash flows and changes in
stockholders' equity of the Buyer and its subsidiaries for the respective
fiscal periods or as of the respective dates therein set forth; and each of
such statements (including the related notes, where applicable) has been and
will be prepared in accordance with GAAP consistently applied during the
periods involved, except as otherwise set forth in the notes thereto (subject,
in the case of unaudited interim statements, to normal year-end adjustments).
The books and records of the Buyer and its subsidiaries have been, and are
being, maintained in accordance with GAAP and applicable legal and regulatory
requirements and reflect only actual transactions.
3.06 Absence of Undisclosed Liabilities. As of December 31, 1996, none of
the Buyer or any of its subsidiaries had any obligation or liability
(contingent or otherwise) that is material on a consolidated basis to the
Buyer, or that when combined with all similar obligations or liabilities would
be material on a consolidated basis to the Buyer, except as disclosed or
reflected in the Buyer Balance Sheet.
3.07 Broker's Fees. Neither the Buyer nor any of its officers or directors
has employed any broker or finder or incurred any liability for any broker's
fees, commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement and the Bank Merger Agreement, except that
Buyer has engaged, and will pay a fee or commission to, Oppenheimer & Co.,
Inc.
3.08 Absence of Certain Changes or Events. Since December 31, 1996, the
Buyer and its subsidiaries have not incurred any material liability, except in
the ordinary course of their business consistent with their past practices,
nor has there been any change in the business, assets, condition (financial or
otherwise) or results of operations of the Buyer or any of its subsidiaries
which has had or could be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on the Buyer.
3.09 Legal Proceedings. Except as disclosed in Section 3.09 of the Buyer
Disclosure Schedule, there is no suit, action or proceeding pending or, to the
best knowledge of the Buyer, threatened, against the Buyer or any subsidiary
of the Buyer or challenging the validity or propriety of the transactions
contemplated by this Agreement or the Bank Merger Agreement, as to which there
is a reasonable probability of an adverse determination and which, if
adversely determined, would have or could be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Buyer or
otherwise materially adversely affect the Buyer's ability to perform its
obligations under this Agreement and the Bank Merger Agreement, as applicable,
nor is there any judgment, decree, injunction, rule or order of any legal or
administrative body or arbitrator outstanding against the Buyer or any
subsidiary of the Buyer having any such effect.
3.10 Taxes and Tax Returns. Except as disclosed in Section 3.10 of the Buyer
Disclosure Schedule:
(a) The Buyer has timely filed all Tax Returns (as such term is defined
in Section 4.10 hereof) required to be filed by it, each such Tax Return
has been prepared in compliance with all applicable laws and regulations,
and all such Tax Returns are true and accurate in all respects material to
the financial condition
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of the Buyer and its subsidiaries, taken as a whole. All Taxes (as such
term is defined in Section 4.10 hereof) shown on such Tax Returns as due
and payable by Buyer have been paid and Buyer will not be liable for any
additional Taxes for any taxable period ending on or before the Closing
Date in excess of the amounts set up as reserves for taxes on the Buyer
Balance Sheet. Buyer has made available to Buyer correct and complete
copies of all federal and state income and excise Tax Returns filed with
respect to Buyer for taxable periods ended on or after December 31, 1990,
and all examination reports, and statements of deficiencies assessed
against or agreed to by Buyer with respect to such taxable periods;
(b) Buyer has neither requested nor been granted an extension of the time
for filing any Tax Return to a date later than the Closing Date;
(c) With respect to each taxable period of Buyer, either such taxable
period has been audited by the relevant taxing authority or the time for
assessing or collecting income Tax with respect to each such taxable period
has closed and such taxable period is not subject to review by any relevant
taxing authority;
(d) Buyer has not consented to extend the time in which any Tax may be
assessed or collected by any tax authority;
(e) No deficiency or proposed adjustment which has not been settled or
otherwise resolved for any amount of Tax has been asserted or assessed by
any taxing authority against Buyer;
(f) There is no action, suit, taxing authority proceeding or audit now in
progress, pending or, to the knowledge of Buyer, threatened against or with
respect to Buyer with respect to any Tax;
(g) No claim has been made by a taxing authority in a jurisdiction for
taxable periods ended on or after December 31, 1990 where Buyer does not
pay Tax or file Tax Returns that Buyer is or may be subject to Taxes
assessed by that jurisdiction;
(h) There are no liens for Taxes (other than current Taxes not yet due
and payable) on the assets of Buyer;
(i) Buyer has not filed or been included in a combined, consolidated or
unitary income Tax Return (other than consolidated Tax Returns in which it
is the parent corporation);
(j) Buyer has neither made nor is affected by any elections under Code
Sections 108(b)(5), 338(g), or 565, or Treasury Regulation Sections 1.1502-
20(g) or 1.1502-32(f)(2);
(k) Buyer is not a party to or bound by any Tax allocation or Tax sharing
agreement nor does Buyer have any current or potential contractual
obligation to indemnify any other person or entity with respect to Taxes
(other than the tax sharing agreement among Buyer and its subsidiaries);
(l) Buyer has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party;
(m) Buyer has no permanent establishment in any foreign country, as
defined in the relevant tax treaty between the United States of America and
such foreign country, nor otherwise operates or conducts business through
any branch in any foreign country;
(n) Buyer will not be required, as a result of a change in method of
accounting for any period ending on or before the Closing Date, to include
any adjustment under Section 481(c) of the Code (or any similar or
corresponding provision or requirement of federal, state, local or foreign
income Tax law) in taxable income for any period ending after the Closing
Date;
(o) None of the assets of Buyer directly or indirectly secures any
indebtedness the interest on which is tax-exempt under Section 103(a) of
the Code, and Buyer is not directly or indirectly an obligor or a guarantor
with respect to any such indebtedness;
(p) Buyer has not filed a consent under Section 341(f) of the Code
concerning collapsible corporations; and
(q) Buyer has not made any payments, nor is obligated to make any
payments, nor is it a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Section 280G of the Code.
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3.11 Employees.
(a) Section 3.11(a) of the Buyer Disclosure Schedule contains a complete
list of all "employee benefit plans" (as defined in Section 3(3) of ERISA),
and all other plans, policies and practices (whether or not subject to
ERISA) applicable to employees or former employees of the Buyer or any of
its subsidiaries, including, without limitation, plans, funds, or programs
providing medical, surgical, or hospital care or benefits, benefits in the
event of sickness, accident, disability, death, or unemployment; vacation
benefits, apprenticeship or other training programs; day care centers or
dependent care; credit union, scholarship funds; prepaid legal services;
benefits described in Section 302(c) of the Labor Management Relations Act;
retirement income; income deferral for periods extending to the termination
of covered employment or beyond; bonus or incentive compensation pay
arrangements, stock purchase plans, severance pay arrangements; and
supplemental retirement income payments including, but not limited to, any
individual benefit arrangement, policy or practice with respect to any
current or former officer, employee or director of the Buyer or any of its
subsidiaries (the "Buyer Employee Plans").
(b) The Buyer and its subsidiaries have made available to Seller correct
and complete copies of all Buyer Employee Plans, and, where applicable,
each of the following documents with respect to such plans; (i) any
amendments, (ii) any related trust documents, (iii) the two most recently
filed IRS Forms 5500 with all attachments thereto, (iv) the last IRS
determination letter, (v) the last actuarial report, (vi) the most recent
summary plan descriptions and summaries of material modifications, and
(vii) written communications to employees to the extent the substance of
the Buyer Employee Plans described therein differs materially from the
other documentation furnished under this Section 3.11.
(c) None of the Buyer Employee Plans is subject to Title IV of ERISA or
Section 412 of the Code, and the Buyer and its subsidiaries from time to
time have not within the preceding six years had any obligation to make any
contribution to a retirement plan subject to Title IV of ERISA or incurred
any liability (contingent or otherwise) under Title IV or ERISA and neither
the Buyer nor any of its subsidiaries has any actual or potential
obligation or liability to any multiemployer plan (as defined in Section
4001(a)(3) of ERISA).
(d) Each Buyer Employee Plan, including any associated trust, intended to
qualify under Section 401 of the Code does so qualify.
(e) The Buyer Employee Plans have been maintained and administered in
accordance with their terms and with the provisions of ERISA, the Code and
other applicable laws.
(f) There are no pending or, to the Buyer's knowledge, threatened
actions, claims or lawsuits that have been asserted or instituted against
any of the Buyer Employee Plans, the assets of any of the trusts under such
plans or the plan sponsor, plan administrator or fiduciary of any of the
Buyer Employee Plans with respect to the operation of such plans (other
than routine benefit claims) that individually or in the aggregate could
have a Material Adverse Effect with respect to the Buyer.
(g) Except as disclosed in Section 3.11(g) of the Buyer Disclosure
Schedule, the Buyer and its subsidiaries do not provide, and are not
obligated to provide, retiree life insurance or retiree health benefits to
any current or former employee after his or her termination of employment
with the Buyer or any subsidiary, except as may be required under Section
4980B of the Code and Part 6 of Subtitle B of Title I or ERISA.
(h) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any employee (current or former) of the Buyer or
any subsidiary, (ii) increase any benefits otherwise payable under any
Buyer Employee Plan or (iii) result in the acceleration of the time of
payment or the vesting of any benefits under any Buyer Employee Plan.
(i) Except as disclosed on Section 3.11(i) of the Buyer Disclosure
Schedule, (i) no employee of the Buyer or any subsidiary will be entitled
to any severance payments upon the sale or change of control of the Buyer
or any subsidiary, or any divisions or business units thereof, absent an
employee's actual loss of employment and (ii) none of the employees of the
Buyer or any subsidiary are eligible to receive any
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payment under any severance pay, stay bonus or other retention plan,
program or arrangement of the Buyer or any of its subsidiaries.
(j) There have been no acts or omissions by the Buyer or any subsidiary
which have given rise to or may give rise to any material fines, penalties,
taxes or related charges under Sections 502(c), 502(i) or 4071 of ERISA or
Chapter 43 of the Code for which the Buyer or any subsidiary may be liable.
(k) There are no claims (other than routine claims for benefits) pending
or, to the best knowledge of Buyer, threatened involving any of the Buyer
Employee Plans or the assets of any of such plans, and no facts exist which
could give rise to any such claims (other than routine claims for
benefits);
(l) With respect to every Buyer Employee Plan that provides group medical
benefits, the Buyer has fully complied with the notice and continuation
coverage requirements of Section 4980B of the Code and Sections 601 through
608 of ERISA and the proposed regulations thereunder.
(m) With respect to any of the Buyer Employee Plans, neither the Buyer
nor any of the subsidiaries nor any administrator nor any fiduciary or
trustee of any of the Buyer Employee Plans or of the related trusts
thereof, has engaged in any prohibited transaction as described in Section
406 of ERISA or Section 4975 of the Code.
3.12 Agreements with Banking Authorities. Neither Buyer nor any of its
subsidiaries is a party to any commitment letter, written agreement,
memorandum of understanding or order to cease and desist with, or has adopted
any resolutions at the request of, any federal or state governmental entity
charged with the supervision or regulation of banks or bank holding companies
or engaged in the insurance of bank deposits which restricts the conduct of
its business, or in any manner relates to its capital adequacy, credit
policies, management or overall safety and soundness or such entity's ability
to perform its obligations hereunder.
3.13 Material Agreements. Except as set forth in the index of exhibits in
the Buyer's Annual Report on Form 10-K for the year ended December 31, 1996 or
as otherwise disclosed in Section 3.13 of the Buyer Disclosure Schedule and
except for this Agreement and the agreements specifically referred to herein,
neither the Buyer nor any of its subsidiaries is a party to or is bound by (a)
any written (or oral, if material) agreement, arrangement or commitment
relating to the employment (including severance) of any person; (b) any
contract, agreement or understanding with any labor union; or (c) any other
contract or agreement or amendment thereto that is material to the business,
operations, results of operations or condition (financial or otherwise) of the
Buyer on a consolidated basis.
3.14 Ownership of Property. The Buyer and its subsidiaries have good and
marketable title to all assets and properties, whether real or personal,
tangible or intangible (including, without limitation, the capital stock of
its subsidiaries and all other assets and properties), reflected on the Buyer
Balance Sheet, or acquired subsequent thereto subject to no encumbrances,
liens, mortgages, security interests or pledges, except (a) those items that
secure liabilities that are reflected in the Buyer Balance Sheet or the notes
thereto or incurred in the ordinary course of business after the date of such
balance sheet, (b) statutory liens for amounts not yet delinquent or which are
being contested in good faith, (c) those items that secure public or statutory
obligations or any discount with, borrowing from, or other obligations to any
Federal Reserve Bank, Federal Home Loan Bank, inter-bank credit facilities, or
any transaction by the Buyer or any subsidiary acting in a fiduciary capacity,
and (d) such encumbrances, liens, mortgages, security interests, and pledges
that are not in the aggregate material to the Buyer on a consolidated basis.
The Buyer and its subsidiaries as lessees have the right under valid and
existing leases to use, possess and control all of the personal property and
real estate leased by Buyer and its subsidiaries as presently used, possessed
and controlled by the Buyer and its subsidiaries.
3.15 Reports. Since January 1, 1994, the Buyer and its subsidiaries have
filed, and subsequent to the date hereof will file, all reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that were and are required to be filed with (a) the SEC, including,
but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K and proxy statements
(and all such reports, registrations and statements have been or will be made
available by the Buyer to the Seller), (b) the Federal Reserve Board, (c) the
Massachusetts
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Division of Banks, (d) the FDIC and (e) any applicable state securities
authorities (except, in the case of state securities authorities, no such
representation is made as to filings which are not material) (all such reports
and statements are collectively referred to herein as the "Buyer Reports"). As
of their respective dates, the Buyer Reports complied and, with respect to
filings made after the date of this Agreement, will at the date of filing
comply, in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the regulatory authority with which
they were filed. As of their respective dates, the Buyer Reports did not
contain and, with respect to filings made after the date of this Agreement,
will not at the date of filing contain, any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.16 Compliance with Applicable Law. Buyer and its subsidiaries hold all
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of Buyer's consolidated business, and Buyer and its
subsidiaries have complied with, and are not in default in any respect under
any, applicable law, statute, order, rule, regulation or policy of, or
agreement with, any federal, state or local governmental agency or authority
relating to Buyer on a consolidated basis, other than where such default or
noncompliance does not have and could not reasonably be expected to have a
Material Adverse Effect on Buyer or otherwise materially adversely affect
Buyer's ability to perform its obligations under this Agreement or the Bank
Merger Agreement, as applicable, and the Buyer has not received notice of any
violation of, or commencement of any proceeding in connection with any
violation of any such law, statute, order, rule, regulation, policy or
agreement, as to which there is a reasonable probability of an adverse
determination and which, if adversely determined, would, individually or in
the aggregate, result in the imposition of civil money penalties under Section
8(i) of the FDIA or otherwise expose Buyer or any of its subsidiaries to any
financial liability. Each of the ratings assigned to Buyer Bank in the three
most recent CRA examinations of Buyer Bank completed by the FDIC and the
Massachusetts Commissioner of Banks has been "Outstanding".
3.17 Environmental Matters. Buyer and its subsidiaries are in compliance and
have always been in compliance with all environmental laws, rules, regulations
and standards promulgated, adopted or enforced by the EPA and of similar
agencies in states in which they conduct their respective business, except for
any noncompliance that singly or in the aggregate would not have a Material
Adverse Effect on Buyer. There is no suit, claim, action or proceeding now
pending before any court, governmental agency or board or other forum or, to
the knowledge of Buyer, threatened by any person, as to which there is a
reasonable probability of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have a Material Adverse
Effect on Buyer (i) for alleged noncompliance with any environmental law, rule
or regulation or (ii) relating to the discharge or release into the
environment of any hazardous material or waste at or on a site presently or
formerly owned, leased or operated by Buyer or any subsidiary of Buyer or in
which Buyer or any Buyer subsidiary has a lien or other security interest.
3.18 Buyer Common Stock. The Buyer Common Stock (and the associated Buyer
Rights) to be issued in connection with the Acquisition Merger is duly
authorized and, when issued in accordance with Article II hereof, will be
validly issued, fully paid and nonassessable and not subject to preemptive
rights, with no personal liability attaching thereto.
3.19 Ownership of Seller Common Stock. Neither the Buyer nor, to its best
knowledge, any of its affiliates or associates (as such terms are defined
under the Exchange Act), (a) beneficially own, directly or indirectly, or (b)
are parties to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, shares of capital
stock of the Seller, which in the aggregate represent five percent (5%) or
more of the outstanding shares of capital stock of the Seller entitled to vote
generally in the election of directors (other than shares in trust accounts,
managed accounts and the like that are beneficially owned by third parties
(any such shares, "Trust Account Shares") and any other shares held in respect
of a debt previously contracted (any such shares, "DPC Shares")).
3.20 Insurance. The Buyer and each of its subsidiaries is presently insured,
and since January 1, 1994 has been insured, for reasonable amounts against
such risks as companies engaged in a similar business in a similar location
would, in accordance with good business practice, customarily be insured.
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3.21 Labor. No work stoppage involving the Buyer or any of its subsidiaries
is pending or, to the best knowledge of Buyer, threatened. Neither the Buyer
nor any of its subsidiaries is involved in, or, to the best knowledge of the
Buyer, threatened with or affected by, any dispute, arbitration, lawsuit or
administrative proceeding relating to labor or employment matters which might
reasonably be expected to result in a Material Adverse Effect with respect to
the Buyer. No employees of the Buyer or any of its subsidiaries are
represented by any labor union, and no labor union is attempting to organize
employees of the Buyer or any of its subsidiaries.
3.22 Loans. All currently outstanding loans of, or current extensions of
credit by, Buyer (individually, a "Loan," and collectively, the "Loans") were
solicited, originated and currently exist in material compliance with all
applicable requirements of federal and state statutory and common law and
regulations and regulatory policies promulgated thereunder. The Loans are
adequately documented and each note evidencing a Loan or loan or credit
agreement or security instrument related to the Loans constitutes a valid,
legal and binding obligation of the obligor thereunder, enforceable in
accordance with the terms thereof, except where the failure thereof,
individually or in the aggregate, would not have a Material Adverse Effect
with respect to Buyer. There are no oral modifications or amendments or
additional agreements related to the Loans that are not reflected in Buyer's
records, no claims of defense as to the enforcement of any Loan has been
asserted and Buyer is aware of no acts or omissions which would give rise to
any claim or right of rescission, set-off, counterclaim or defense, except
where any of the foregoing would not have, either individually or in the
aggregate, a Material Adverse Effect with respect to Buyer. Buyer currently
maintains, and shall continue to maintain, an allowance for loan losses
allocable to the Loans which is adequate to provide for all known and
estimable losses, net of any recoveries relating to such extensions of credit
previously charged off, on the Loans, such allowance for loan losses complying
in all material respects with all applicable loan loss reserve requirements
established in accordance with GAAP and by any governmental authorities having
jurisdiction with respect to Buyer or any of its subsidiaries.
3.23 Investment Securities. None of the investments reflected in the Buyer
Balance Sheet and none of the investments made by the Buyer since December 31,
1996, is subject to any restriction (contractual, statutory or otherwise) that
would materially impair the ability of the entity holding such investment
freely to dispose of such investment at any time, except to the extent that
any such restriction would not have, either individually or in the aggregate,
a Material Adverse Effect with respect to Buyer. Buyer has (a) properly
reported as such any investment securities which are required under GAAP to be
classified as "available for sale" at fair value, and (b) accounted for any
decline in the market value of its securities portfolio in accordance with
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 115, including without limitation the recognition through the
Buyer's consolidated statement of income of any unrealized loss with respect
to any individual security as a realized loss in the accounting period in
which a decline in the market value of such securities is determined to be
"other than temporary" except to the extent that any such failure to so
properly report or to so properly account would not have, either individually
or in the aggregate, a Material Adverse Effect with respect to Buyer.
3.24 Derivative Transactions. Except as disclosed in Section 3.24 of the
Buyer Disclosure Schedule, neither Buyer nor any Buyer subsidiary has engaged
in transactions in or involving forwards, futures, options on futures, swaps
or other derivative instruments.
3.25 Intellectual Property. Buyer, together with its subsidiaries
collectively, owns or, to Buyer's knowledge, possesses valid and binding
licenses and other rights to use all material patents, copyrights, trade
secrets, trade names, servicemarks and trademarks used in its businesses, each
without payment, and Buyer has not received any notice of conflict with
respect thereto that asserts the rights of others. Buyer, together with its
subsidiaries collectively, has performed in all material respects all the
obligations required to be performed by it and is not in default in any
material respect under any contract, agreement, arrangement or commitment
relating to any of the foregoing.
3.26 Administration of Fiduciary Accounts. The Buyer and each of its
subsidiaries has properly administered in all material respects all accounts
for which it acts as a fiduciary, including but not limited to
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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 law. Neither the
Buyer nor its officers, directors or employees has committed any breach of
trust with respect to any fiduciary account which, either individually or in
the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect on Buyer. The accountings for each such fiduciary account are
true and correct in all material respects and accurately reflect the assets of
such fiduciary account.
3.27 Continued Independence. Buyer's expectation is to maintain Seller as a
viable, operating, independent banking subsidiary for a period of not less
than two (2) years after the Closing Date, and to retain its current Board of
Directors (subject to normal retirement and currently unexpected resignations
and as expanded in accordance with Section 5.19 hereof) for at least two (2)
years after the Closing Date. Buyer's intends to consult with and consider the
views of the Seller's Board of Directors with regard to the opportunities for
expansion of Seller's business, the treatment of Seller's employees, the
Seller's role in and contributions to the communities it serves, and such
other business matters as would ordinarily be determined by the Seller's Board
of Directors alone were the Seller to remain an independent, publicly owned
institution.
3.28 Accounting Treatment. To the best of Buyer's knowledge, there are no
facts or set of circumstances existing as of the date of this Agreement which
are reasonably likely to prevent the Acquisition Merger from being accounted
for as a pooling of interests in accordance with Accounting Principles Board
Opinion No. 16.
3.29 Buyer Information. The information relating to the Buyer and its
subsidiaries to be contained or incorporated by reference in the Buyer
Registration Statement and the Proxy Statement, as described in Section 5.04
hereof, and any other documents filed with the SEC, the FDIC or any regulatory
agency in connection herewith, to the extent such information is provided in
writing by the Buyer, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make such information not
misleading.
3.30 Disclosure. No representation or warranty contained in this Agreement,
and no statement contained in any certificate, list or other writing furnished
to the Seller pursuant to the provisions hereof, to the best knowledge of the
Buyer, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading. No information believed by Buyer to be material to Seller's
interests in the transactions contemplated by this Agreement, which has not
otherwise been disclosed to Seller in connection with this Agreement, has been
intentionally withheld from Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
4.01 Corporate Organization.
(a) The Seller is a bank and trust company duly organized, validly
existing and in good standing under the laws of the State of Connecticut.
The Seller has the corporate power and authority to own, lease or operate
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, leased or
operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would not result in, with
respect to the Seller, any Material Adverse Effect. The deposits of the
Seller are insured by the FDIC in accordance with the FDIA, and the Seller
has paid all assessments that have become due and payable to the FDIC.
(b) Each subsidiary of the Seller is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation.
Each subsidiary of the Seller has the corporate power and
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authority to own, lease or operate 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, leased or operated by it makes such licensing or
qualification necessary, except where the failure to be so licensed or
qualified would, neither individually nor in the aggregate, result in, with
respect to the Seller, a Material Adverse Effect.
(c) The minute books of the Seller and its subsidiaries contain complete
and accurate records of all meetings and other corporate actions authorized
at such meetings held or taken since January 1, 1992 by its stockholders
and Board of Directors.
4.02 Capitalization.
(a) The authorized capital stock of the Seller consists of 2,000,000
shares of common stock, par value $2.50 per share (the "Seller Common
Stock"), and no shares of preferred stock. As of the close of business on
June 30, 1997, there were 1,829,920 shares of the Seller Common Stock
issued and outstanding and no shares of the Seller Common Stock held in the
Seller's treasury. All issued and outstanding shares of the Seller Common
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. Except for the Seller Option Agreement,
the Seller does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character
calling for the Seller to issue, deliver or sell, or cause to be issued,
delivered or sold any shares of the Seller Common Stock or any other equity
security of the Seller or any Seller subsidiary or any securities
convertible into, exchangeable for or representing the right to subscribe
for, purchase or otherwise receive any shares of the Seller Common Stock or
any other equity security of the Seller or any Seller subsidiary or
obligating the Seller to grant, extend or enter into any such
subscriptions, options, warrants, calls, commitments or agreements. As of
the date hereof, except for the Seller Option Agreement, there are no
outstanding contractual obligations of the Seller to repurchase, redeem or
otherwise acquire any shares of capital stock of the Seller or any Seller
subsidiary.
(b) Section 4.02(b) to the disclosure schedule prepared by the Seller and
delivered to the Buyer on the date hereof in conjunction with the parties'
execution and delivery of this Agreement (the "Seller Disclosure Schedule")
lists each of the subsidiaries of the Seller as of the date of this
Agreement and indicates for each such subsidiary as of such date the
number, percentage and type of equity securities owned or controlled by the
Seller and the jurisdiction of incorporation. No subsidiary of the Seller
has or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for such Seller
subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, any equity security of the Seller or of any Seller subsidiary or any
securities convertible into, exchangeable for or representing the right to
subscribe for, purchase or otherwise receive any such equity security or
obligating a Seller subsidiary to grant, extend or enter into any such
subscriptions, options, warrants, calls, commitments or agreements. As of
the date hereof, there are no outstanding contractual obligations of any
Seller subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock of the Seller or any Seller subsidiary. All of the shares of
capital stock of each of the Seller's subsidiaries held by the Seller are
fully paid and nonassessable and are owned by the Seller free and clear of
any claim, lien, encumbrance or agreement with respect thereto.
4.03 Authority; No Violation.
(a) The Seller has full corporate power and authority to execute and
deliver this Agreement, the Bank Merger Agreement and the Seller Option
Agreement and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement, the Bank Merger
Agreement and the Seller Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
approved by the Board of Directors of the Seller. The Board of Directors of
Seller has directed that this Agreement, the Bank Merger Agreement and the
transactions contemplated hereby and thereby be submitted to the
stockholders of the Seller for approval at a meeting of such stockholders
and no other corporate proceedings on the part of Seller are necessary to
consummate any of the transactions
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so contemplated by this Agreement, the Bank Merger Agreement or the Seller
Option Agreement. This Agreement and the Seller Option Agreement have been
duly and validly executed and delivered by the Seller and (assuming due
authorization, execution and delivery of this Agreement and the Seller
Option Agreement by the Buyer) constitute the valid and binding obligations
of the Seller, enforceable against it in accordance with their respective
terms, except that enforcement thereof may be limited by the receivership,
conservatorship and supervisory powers of bank regulatory agencies
generally as well as bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting enforcement of creditors' rights generally and
except that enforcement thereof may be subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) and the availability of equitable remedies.
(b) The Bank Merger Agreement will be duly and validly executed by the
Seller and (assuming due authorization, execution and delivery by the Buyer
and the Merger Subsidiary) will constitute the valid and binding obligation
of the Seller, enforceable against the Seller in accordance with its terms,
except that enforcement thereof may be limited by receivership,
conservatorship and supervisory powers of bank regulatory agencies
generally as well as bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting enforcement of creditors' rights generally and
except that enforcement thereof may be subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) and the availability of equitable remedies.
(c) Neither the execution and delivery of this Agreement, the Seller
Option Agreement and the Bank Merger Agreement by the Seller, nor the
consummation by the Seller of the transactions contemplated hereby and
thereby, nor compliance by the Seller with any of the terms or provisions
hereof or thereof, will, except as disclosed in Section 4.03(c) of the
Seller Disclosure Schedule, (i) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to the
Seller or any of its subsidiaries or any of their respective properties or
assets, or (ii) violate, conflict with, result in a breach of any
provisions of, 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, accelerate the performance required by, or result in a
right of termination or acceleration or the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties
or assets of the Seller or any of its subsidiaries under, any of the terms,
conditions or provisions of (A) the certificate of incorporation or other
charter documents of like nature or By-laws of the Seller or such Seller
subsidiary, as the case may be, or (B) any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation
to which the Seller or any of its subsidiaries is a party thereto as
issuer, guarantor or obligor, or by which they or any of their respective
properties or assets may be bound or affected, except, in the case of
clause (ii)(B) above, for such violations, conflicts, breaches or defaults
which either individually or in the aggregate will not result, with respect
to the Seller, in a Material Adverse Effect.
4.04 Consents and Approvals. Except for consents, waivers or approvals of,
notices to, or filings or registrations with, the Federal Reserve Board, the
Massachusetts Board, the FDIC, the Connecticut Commissioner, the SEC, the NASD
and/or NASDAQ, the DOJ, the Connecticut Secretary of State or as may be set
forth in Section 4.04 of the Seller Disclosure Schedule, no consents, waivers
or approvals of, notices to, or filings or registrations with, any public body
or authority are necessary, and no consents or approvals of or notices to any
third parties (which term does not include the Board of Directors or
stockholders of the Seller) are necessary, in connection with the execution
and delivery by the Seller of this Agreement, the Seller Option Agreement and
the Bank Merger Agreement or the consummation by the Seller of the
transactions contemplated by this Agreement, the Seller Option Agreement and
the Bank Merger Agreement. The affirmative vote of holders of two-thirds of
the outstanding shares of the Seller Common Stock is the only vote of the
holders of any class or series of the Seller's capital stock or other
securities necessary to approve this Agreement, the Bank Merger Agreement and
the transactions contemplated hereby and thereby.
4.05 Financial Statements. The Seller has made available to the Buyer copies
of (a) the consolidated balance sheets of the Seller and its subsidiaries as
of December 31 for the fiscal years 1994 through 1996, inclusive, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for
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the fiscal years 1994 through 1996, inclusive, as reported in the Seller's
Annual Report on Form F-2 for each of the three fiscal years ended December
31, 1994 through 1996 filed with the FDIC under the Exchange Act, in each case
accompanied by the audit report of Shatswell, MacLeod & Company, P.C.,
independent accountants for the Seller, and (b) the unaudited consolidated
balance sheets of the Seller and its subsidiaries as of June 30, 1997 and June
30, 1996 and the related unaudited consolidated statements of income, changes
in stockholders' equity and cash flows for the six months ended June 30, 1997
and June 30, 1996, all as reported in Seller's Quarterly Report on Form F-4
for the quarter ended June 30, 1997 filed with the FDIC under the Exchange
Act. The December 31, 1996 consolidated balance sheet (the "Seller Balance
Sheet") of the Seller (including the related notes, where applicable) and the
other financial statements referred to herein (including the related notes,
where applicable) fairly present, and the financial statements to be included
in any reports or statements to be filed by the Seller with the FDIC after the
date hereof will fairly present, the consolidated financial position and
results of the consolidated operations and cash flows and changes in
shareholders' equity of the Seller and its subsidiaries for the respective
fiscal periods or as of the respective dates therein set forth; and each of
such statements (including the related notes, where applicable) has been and
will be prepared in accordance with GAAP consistently applied during the
periods involved, except as otherwise set forth in the notes thereto (subject,
in the case of unaudited interim statements, to normal year-end adjustments).
The books and records of the Seller and its subsidiaries have been, and are
being, maintained in accordance with GAAP and applicable legal and regulatory
requirements and reflect only actual transactions.
4.06 Absence of Undisclosed Liabilities. As of December 31, 1996, none of
the Seller or any of its subsidiaries had any obligation or liability
(contingent or otherwise) that is material on a consolidated basis to the
Seller, or that when combined with all similar obligations or liabilities
would be material on a consolidated basis to the Seller, except as disclosed
or reflected in the Seller Balance Sheet.
4.07 Broker's Fees. Neither the Seller or any of its subsidiaries 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 and the
Bank Merger Agreement, except that Seller has engaged, and will pay a fee or
commission to, McConnell, Budd & Downes, Inc.
4.08 Absence of Certain Changes or Events. Since December 31, 1996, the
Seller and its subsidiaries have not incurred any material liability, except
in the ordinary course of their business consistent with their past practices,
nor has there been any change in the business, assets, condition (financial or
otherwise) or results of operations of the Seller or any of its subsidiaries
which has had or could be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on the Seller.
4.09 Legal Proceedings. Except as disclosed in Section 4.09 of the Seller
Disclosure Schedule, there is no suit, action or proceeding pending or, to the
best knowledge of the Seller, threatened, against the Seller or any subsidiary
of the Seller or challenging the validity or propriety of the transactions
contemplated by this Agreement or the Bank Merger Agreement, as to which there
is a reasonable probability of an adverse determination and which, if
adversely determined, would have or could be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Seller or
otherwise materially adversely affect the Seller's ability to perform its
obligations under this Agreement, the Seller Option Agreement or the Bank
Merger Agreement, as applicable, nor is there any judgment, decree,
injunction, rule or order of any legal or administrative body or arbitrator
outstanding against the Seller or any subsidiary of the Seller having any such
effect.
4.10 Taxes and Tax Returns. Except as disclosed in Section 4.10 of the
Seller Disclosure Schedule:
(a) The Seller has timely filed all Tax Returns required to be filed by
it, each such Tax Return has been prepared in compliance with all
applicable laws and regulations, and all such Tax Returns are true and
accurate in all respects material to the financial condition of the Seller
and its subsidiaries, taken as a whole. All Taxes shown on such Tax Returns
as due and payable by Seller have been paid and Seller will not be
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liable for any additional Taxes for any taxable period ending on or before
the Closing Date in excess of the amounts set up as reserves for taxes on
the Seller Balance Sheet. Seller has made available to Buyer correct and
complete copies of all federal and state income and excise Tax Returns
filed with respect to Seller for taxable periods ended on or after December
31, 1990, and all examination reports, and statements of deficiencies
assessed against or agreed to by Seller with respect to such taxable
periods;
(b) Seller has neither requested nor been granted an extension of the
time for filing any Tax Return to a date later than the Closing Date;
(c) With respect to each taxable period of Seller, either such taxable
period has been audited by the relevant taxing authority or the time for
assessing or collecting income Tax with respect to each such taxable period
has closed and such taxable period is not subject to review by any relevant
taxing authority;
(d) Seller has not consented to extend the time in which any Tax may be
assessed or collected by any tax authority;
(e) No deficiency or proposed adjustment which has not been settled or
otherwise resolved for any amount of Tax has been asserted or assessed by
any taxing authority against Seller;
(f) There is no action, suit, taxing authority proceeding or audit now in
progress, pending or, to the knowledge of Seller, threatened against or
with respect to Seller with respect to any Tax;
(g) No claim has been made by a taxing authority in a jurisdiction for
taxable periods ended on or after December 31, 1990 where Seller does not
pay Tax or file Tax Returns that Seller is or may be subject to Taxes
assessed by that jurisdiction;
(h) There are no liens for Taxes (other than current Taxes not yet due
and payable) on the assets of Seller;
(i) Seller has not filed or been included in a combined, consolidated or
unitary income Tax Return (other than consolidated Tax Returns in which it
is the parent corporation);
(j) Seller has neither made nor is affected by any elections under Code
Sections 108(b)(5), 338(g), or 565, or Treasury Regulation Sections 1.1502-
20(g) or 1.1502-32(f)(2);
(k) Seller is not a party to or bound by any Tax allocation or Tax
sharing agreement nor does Seller have any current or potential contractual
obligation to indemnify any other person or entity with respect to Taxes
(other than the tax sharing agreement among Seller and its subsidiaries);
(l) Seller has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party;
(m) Seller has no permanent establishment in any foreign country, as
defined in the relevant tax treaty between the United States of America and
such foreign country, nor otherwise operates or conducts business through
any branch in any foreign country;
(n) Seller will not be required, as a result of a change in method of
accounting for any period ending on or before the Closing Date, to include
any adjustment under Section 481(c) of the Code (or any similar or
corresponding provision or requirement of federal, state, local or foreign
income Tax law) in taxable income for any period ending after the Closing
Date;
(o) None of the assets of Seller directly or indirectly secures any
indebtedness the interest on which is tax-exempt under Section 103(a) of
the Code, and Seller is not directly or indirectly an obligor or a
guarantor with respect to any such indebtedness;
(p) Seller has not filed a consent under Section 341(f) of the Code
concerning collapsible corporations;
(q) Seller has not made any payments, nor is obligated to make any
payments, nor is it a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Section 280G of the Code; and
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(r) For purposes of this Agreement:
(A) "Tax" means any federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall profit,
environmental, customs, duties, real property, personal property,
capital stock, intangibles, social security, unemployment, disability,
payroll, license, employee or other tax or levy, of any kind
whatsoever, including any interest, penalties or additions to tax in
respect of the foregoing.
(B) "Tax Return" means any return, declaration, report, claim for
refund, information return or other document (including any related or
supporting estimates, elections, schedules, statements or information)
filed or required to be filed in connection with the determination,
assessment or collection of any Tax or the administration of any laws,
regulations or administrative requirements relating to any Tax.
4.11 Employees.
(a) Section 4.11(a) of the Seller Disclosure Schedule contains a complete
list of all "employee benefit plans" (as defined in Section 3(3) of ERISA),
and all other plans, policies and practices (whether or not subject to
ERISA) applicable to employees or former employees of the Seller or any of
its subsidiaries, including, without limitation, plans, funds, or programs
providing medical, surgical, or hospital care or benefits, benefits in the
event of sickness, accident, disability, death, or unemployment; vacation
benefits, apprenticeship or other training programs; day care centers or
dependent care; credit union, scholarship funds; prepaid legal services;
benefits described in Section 302(c) of the Labor Management Relations Act;
retirement income; income deferral for periods extending to the termination
of covered employment or beyond; bonus or incentive compensation pay
arrangements, stock purchase plans, severance pay arrangements; and
supplemental retirement income payments including, but not limited to, any
individual benefit arrangement, policy or practice with respect to any
current or former officer, employee or director of the Seller or any of its
subsidiaries (the "Seller Employee Plans").
(b) The Seller and its subsidiaries have made available to Buyer correct
and complete copies of all Seller Employee Plans, and, where applicable,
each of the following documents with respect to such plans; (i) any
amendments, (ii) any related trust documents, (iii) the two most recently
filed IRS Forms 5500 with all attachments thereto, (iv) the last IRS
determination letter, (v) the last actuarial report, (vi) the most recent
summary plan descriptions and summaries of material modifications, and
(vii) written communications to employees to the extent the substance of
the Seller Employee Plans described therein differs materially from the
other documentation furnished under this Section 4.11.
(c) Except as disclosed in Section 4.11(c) of the Seller Disclosure
Schedule, none of the Seller Employee Plans is subject to Title IV of ERISA
or Section 412 of the Code, and the Seller and its subsidiaries from time
to time have not within the preceding six years had any obligation to make
any contribution to a retirement plan subject to Title IV of ERISA or
incurred any liability (contingent or otherwise) under Title IV or ERISA
and neither the Seller nor any of its subsidiaries has any actual or
potential obligation or liability to any multiemployer plan (as defined in
Section 4001(a)(3) of ERISA).
(d) Each Seller Employee Plan, including any associated trust, intended
to qualify under Section 401 of the Code does so qualify.
(e) The Seller Employee Plans have been maintained and administered in
accordance with their terms and with the provisions of ERISA, the Code and
other applicable laws.
(f) There are no pending or, to the Seller's knowledge, threatened
actions, claims or lawsuits that have been asserted or instituted against
any of the Seller Employee Plans, the assets of any of the trusts under
such plans or the plan sponsor, plan administrator or fiduciary of any of
the Seller Employee Plans with respect to the operation of such plans
(other than routine benefit claims) that individually or in the aggregate
could have a Material Adverse Effect with respect to the Seller.
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(g) The Seller and its subsidiaries do not provide, and are not obligated
to provide, retiree life insurance or retiree health benefits to any
current or former employee after his or her termination of employment with
the Seller or any subsidiary, except as may be required under Section 4980B
of the Code and Part 6 of Subtitle B of Title I or ERISA.
(h) Except as disclosed on Section 4.11(h) of the Seller Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any employee (current or former) of the Seller or
any subsidiary, (ii) increase any benefits otherwise payable under any
Seller Employee Plan or (iii) result in the acceleration of the time of
payment or the vesting of any benefits under any Seller Employee Plan.
(i) Except as disclosed on Section 4.11(i) of the Seller Disclosure
Schedule, (i) no employee of the Seller or any subsidiary will be entitled
to any severance payments upon the sale or change of control of the Seller
or any subsidiary, or any divisions or business units thereof, absent an
employee's actual loss of employment and (ii) none of the employees of the
Seller or any subsidiary are eligible to receive any payment under any
severance pay, stay bonus or other retention plan, program or arrangement
of the Seller or any of its subsidiaries.
(j) There have been no acts or omissions by the Seller or any subsidiary
which have given rise to or may give rise to any material fines, penalties,
taxes or related charges under Sections 502(c), 502(i) or 4071 of ERISA or
Chapter 43 of the Code for which the Seller or any subsidiary may be
liable.
(k) There are no claims (other than routine claims for benefits) pending
or, to the best knowledge of Seller, threatened involving any of the Seller
Employee Plans or the assets of any of such plans, and no facts exist which
could give rise to any such claims (other than routine claims for
benefits);
(l) With respect to every Seller Employee Plan that provides group
medical benefits, the Seller has fully complied with the notice and
continuation coverage requirements of Section 4980B of the Code and
Sections 601 through 608 of ERISA and the proposed regulations thereunder.
(m) With respect to any of the Seller Employee Plans, neither the Seller
nor any of the subsidiaries nor any administrator nor any fiduciary or
trustee of any of the Seller Employee Plans or of the related trusts
thereof, has engaged in any prohibited transaction as described in Section
406 of ERISA or Section 4975 of the Code.
4.12 Agreements with Banking Authorities. Neither the Seller nor any of its
subsidiaries is a party to any commitment letter, written agreement,
memorandum of understanding or order to cease and desist with, or has adopted
any resolutions at the request of, any federal or state governmental entity
charged with the supervision or regulation of banks or bank holding companies
or engaged in the insurance of bank deposits which restricts the conduct of
its business, or in any manner relates to its capital adequacy, credit
policies, management or overall safety and soundness or such entity's ability
to perform its obligations hereunder.
4.13 Material Agreements. Except as set forth in the index of exhibits in
the Seller's Annual Report on Form F-2 for the year ended December 31, 1996 or
as otherwise disclosed in Section 4.13 of the Seller Disclosure Schedule and
except for this Agreement and the agreements specifically referred to herein,
neither the Seller nor any of its subsidiaries is a party to or is bound by
(a) any agreement, arrangement, or commitment other than contracts entered
into in the ordinary course of the Bank's banking business that are consistent
with past practice and have terms of not more than one year and require
payments by the Seller or any subsidiary of not more than $50,000 annually;
(b) any written (or oral, if material) agreement, arrangement or commitment
relating to the employment (including severance) of any person; (c) any
contract, agreement or understanding with any labor union; or (d) any other
contract or agreement or amendment thereto that is material to the business,
operations, results of operations or condition (financial or otherwise) of the
Seller on a consolidated basis.
4.14 Ownership of Property. The Seller and its subsidiaries have good and
marketable title to all assets and properties, whether real or personal,
tangible or intangible (including, without limitation, the capital stock of
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its subsidiaries and all other assets and properties), reflected on the Seller
Balance Sheet, or acquired subsequent thereto subject to no encumbrances,
liens, mortgages, security interests or pledges, except (a) those items that
secure liabilities that are reflected in the Seller Balance Sheet or the notes
thereto or incurred in the ordinary course of business after the date of such
balance sheet, (b) statutory liens for amounts not yet delinquent or which are
being contested in good faith, (c) those items that secure public or statutory
obligations or any discount with, borrowing from, or other obligations to any
Federal Reserve Bank, Federal Home Loan Bank, inter-bank credit facilities, or
any transaction by the Seller or any subsidiary acting in a fiduciary
capacity, and (d) such encumbrances, liens, mortgages, security interests, and
pledges that are not in the aggregate material to the Seller on a consolidated
basis. The Seller and its subsidiaries as lessees have the right under valid
and existing leases to use, possess and control all of the personal property
and real estate leased by Seller and its subsidiaries as presently used,
possessed and controlled by the Seller and its subsidiaries.
4.15 Reports. Since January 1, 1994, the Seller and its subsidiaries have
filed, and subsequent to the date hereof will file, all reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that were and are required to be filed with (a) the FDIC, (b) the
Connecticut Department of Banking (including without limitation the
Connecticut Commissioner), (c) the Connecticut Department of Insurance and (d)
any applicable state securities authorities (except, in the case of state
securities authorities, no such representation is made as to filings which are
not material) (all such reports, registrations and statements have been or
will be, as applicable, made available by Seller to Buyer and are collectively
referred to herein as the "Seller Reports"). As of their respective dates, the
Seller Reports complied and, with respect to filings made after the date of
this Agreement, will at the date of filing comply, in all material respects
with all of the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed. As of their respective dates,
the Seller Reports did not contain and, with respect to filings made after the
date of this Agreement, will not at the date of filing contain, any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
4.16 Compliance with Applicable Law. Seller and its subsidiary hold all
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of Seller's consolidated business, and the Seller and its
subsidiaries have complied with and are not in default in any respect under
any, applicable law, statute, order, rule, regulation or policy of, or
agreement with, any federal, state or local governmental agency or authority
relating to the Seller on a consolidating basis, other than where such default
or noncompliance does not have and could not reasonably be expected to have a
Material Adverse Effect on Seller or otherwise materially adversely affect
Seller's ability to perform its obligations under this Agreement, the Seller
Option Agreement or the Bank Merger Agreement, as applicable, and the Seller
has not received notice of any violation of, or commencement of any proceeding
in connection with any violation of any such law, statute, order, rule,
regulation, policy or agreement, as to which there is a reasonable probability
of an adverse determination and which, if adversely determined, would,
individually or in the aggregate, result in the imposition of civil money
penalties under Section 8(i) of the FDIA or otherwise expose Seller or any of
its subsidiaries to any financial liability. None of the ratings assigned to
Seller in any of the three most recent CRA examinations of Seller completed by
the FDIC or the Connecticut Commissioner has been less than "Satisfactory".
4.17 Environmental Matters. Except as disclosed in Section 4.17 of the
Seller Disclosure Schedule, Seller and its subsidiaries are in compliance and
have always been in compliance with all environmental laws, rules, regulations
and standards promulgated, adopted or enforced by the EPA and of similar
agencies in states in which they conduct their respective business, except for
any noncompliance that singly or in the aggregate would not have a Material
Adverse Effect on Seller. Except as disclosed in Section 4.17 of the
Disclosure Schedule, there is no suit, claim, action or proceeding now pending
before any court, governmental agency or board or other forum or, to the
knowledge of Seller, threatened by any person, as to which there is a
reasonable probability of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have a Material Adverse
Effect on Seller (i) for alleged noncompliance with any environmental law,
rule or regulation or (ii) relating to the discharge or release into the
environment of any hazardous material or
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waste at or on a site presently or formerly owned, leased or operated by
Seller or any subsidiary of Seller or in which Seller or any Seller subsidiary
has a lien or other security interest.
4.18 Antitakeover Statutes Not Applicable. Assuming the accuracy of Buyer's
representation in Section 3.19 above, no "fair price," "moratorium," "control
share acquisition" or other form of antitakeover statute or regulation is
applicable to the transactions contemplated by this Agreement.
4.19 Ownership of Buyer Common Stock. As of the date hereof, neither the
Seller nor, to its best knowledge, any of its affiliates or associates (as
such terms are defined under the Exchange Act), (a) beneficially own, directly
or indirectly, or (b) are parties to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of,
in each case, shares of capital stock of the Buyer, which in the aggregate
represent five percent (5%) or more of the outstanding shares of capital stock
of the Buyer entitled to vote generally in the election of directors (other
than Trust Account Shares or DPC Shares).
4.20 Insurance. The Seller and each of its subsidiaries is presently
insured, and since January 1, 1994 has been insured, for reasonable amounts
against such risks as companies engaged in a similar business in a similar
location would, in accordance with good business practice, customarily be
insured. Section 4.20 of the Seller Disclosure Schedule lists each of the
Seller's insurance policies, all of which are in full force and effect, and
contains a summary of the coverages and deductibles under each such policy.
4.21 Labor. No work stoppage involving the Seller or any of its subsidiaries
is pending or, to the best knowledge of the Seller, threatened. Neither the
Seller nor any of its subsidiaries is involved in, or, to the best knowledge
of the Seller, threatened with or affected by, any dispute, arbitration,
lawsuit or administrative proceeding relating to labor or employment matters
which might reasonably be expected to result in a Material Adverse Effect with
respect to the Seller. No employees of the Seller or any of its subsidiaries
are represented by any labor union, and no labor union is attempting to
organize employees of the Seller or any of its subsidiaries.
4.22 Material Interests of Certain Persons. Except as disclosed in Section
4.22 of the Seller Disclosure Schedule, no officer or director of the Seller,
or any "associate" (as such term is defined in Rule 14a-1 under the Exchange
Act) of any such officer or director, has any material interest in any
material contract or property (real or personal), tangible or intangible, used
in or pertaining to the business of the Seller or any of its subsidiaries.
4.23 Absence of Registration Obligations. Neither the Seller nor any of its
subsidiaries is under any obligation, contingent or otherwise, by reason of
any agreement to register or otherwise issue any of its securities which will
continue after the Effective Time.
4.24 Loans. All currently outstanding loans of, or current extensions of
credit by, Seller (individually, a "Loan," and collectively, the "Loans") were
solicited, originated and currently exist in material compliance with all
applicable requirements of federal and state statutory and common law and
regulations and regulatory policies promulgated thereunder. The Loans are
adequately documented and each note evidencing a Loan or loan or credit
agreement or security instrument related to the Loans constitutes a valid,
legal and binding obligation of the obligor thereunder, enforceable in
accordance with the terms thereof, except where the failure thereof,
individually or in the aggregate, would not have a Material Adverse Effect
with respect to Seller. There are no oral modifications or amendments or
additional agreements related to the Loans that are not reflected in Seller's
records, no claims of defense as to the enforcement of any Loan has been
asserted and Seller is aware of no acts or omissions which would give rise to
any claim or right of rescission, set-off, counterclaim or defense, except
where any of the foregoing would not have, either individually or in the
aggregate, a Material Adverse Effect with respect to Seller. Seller currently
maintains, and shall continue to maintain, an allowance for loan losses
allocable to the Loans which is adequate to provide for all known and
estimable losses, net of any recoveries relating to such extensions of credit
previously charged off, on the Loans, such allowance for loan losses complying
in all material respects with all applicable loan loss reserve requirements
established in accordance
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with GAAP and by any governmental authorities having jurisdiction with respect
to Seller or any of its subsidiaries. Except as disclosed in Section 4.24 of
the Seller Disclosure Schedule, (i) none of the Loans are presently serviced
by third parties and there is no obligation which could result in any Loan
becoming subject to any third party servicing and (ii) no Loan has been sold
with continuing recourse liability on the part of Seller or any of its
subsidiaries.
4.25 Investment Securities. Except as disclosed in Section 4.25 of the
Seller Disclosure Schedule, none of the investments reflected in the Seller
Balance Sheet and none of the investments made by the Seller since December
31, 1996, is subject to any restriction (contractual, statutory or otherwise)
that would materially impair the ability of the entity holding such investment
freely to dispose of such investment at any time, except to the extent that
any such restriction would not have, either individually or in the aggregate,
a Material Adverse Effect with respect to Seller. Seller has (a) properly
reported as such any investment securities which are required under GAAP to be
classified as "available for sale" at fair value, and (b) accounted for any
decline in the market value of its securities portfolio in accordance with
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 115, including without limitation the recognition through the
Seller's consolidated statement of income of any unrealized loss with respect
to any individual security as a realized loss in the accounting period in
which a decline in the market value of such security is determined to be
"other than temporary" except to the extent that any such failure to so
properly report or to so properly account would not have, either individually
or in the aggregate, a Material Adverse Effect with respect to Seller.
4.26 Derivative Transactions. Except as disclosed in Section 4.26 of the
Seller Disclosure Schedule, neither Seller nor any Seller subsidiary has
engaged in transactions in or involving forwards, futures, options on futures,
swaps or other derivative instruments.
4.27 Intellectual Property. Seller, together with its subsidiaries
collectively, owns or, to Seller's knowledge, possesses valid and binding
licenses and other rights to use all material patents, copyrights, trade
secrets, trade names, servicemarks and trademarks used in its businesses, each
without payment, and Seller has not received any notice of conflict with
respect thereto that asserts the rights of others. Seller, together with its
subsidiaries collectively, has performed in all material respects all the
obligations required to be performed by it and is not in default in any
material respect under any contract, agreement, arrangement or commitment
relating to any of the foregoing.
4.28 Administration of Fiduciary Accounts. The Seller and each of its
subsidiaries 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 law. Neither the Seller nor its
officers, directors or employees has committed any breach of trust with
respect to any fiduciary account which, either individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect on Seller. The accountings for each such fiduciary account are true and
correct in all material respects and accurately reflect the assets of such
fiduciary account.
4.29 Accounting Treatment. To the best of Seller's knowledge, there are no
facts or set of circumstances existing as of the date of this Agreement which
are reasonably likely to prevent the Acquisition Merger from being accounted
for as a pooling of interests in accordance with Accounting Principles Board
Opinion No. 16.
4.30 Seller Information. The information relating to the Seller and its
subsidiaries to be contained or incorporated by reference in the Buyer
Registration Statement and the Proxy Statement as described in Section 5.04
hereof, and any other documents filed with the SEC, the FDIC or any regulatory
agency in connection herewith, to the extent such information is provided in
writing by the Seller, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make such information not
misleading.
4.31 Disclosure. No representation or warranty contained in this Agreement,
and no statement contained in any certificate, list or other writing,
including but not necessarily limited to the Seller Disclosure Schedules,
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furnished to the Buyer pursuant to the provisions hereof, to the best
knowledge of the Seller, contains or will contain any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements herein or therein not misleading. No information believed by Seller
to be material to Buyer's interests in the transactions contemplated by this
Agreement, which has not otherwise been disclosed to Buyer in connection with
this Agreement, has been intentionally withheld from Buyer.
ARTICLE V
COVENANTS OF THE PARTIES
5.01 Conduct of the Business of Seller. During the period from the date of
this Agreement to the Effective Time, and except as may be specifically
required or permitted pursuant to this Agreement or as specifically described
in Section 5.01 of the Seller Disclosure Schedule, the parties shall comply,
as applicable, with the following requirements:
(a) Seller shall, and shall cause each of its subsidiaries to, conduct
its business and engage in transactions only in the ordinary and usual
course of business consistent with past practices, which shall include,
without limitation, conducting its banking, trust, insurance and other
businesses in the ordinary and usual course consistent with past practices,
and refraining from any of the activities described in Section 5.01(b)
below;
(b) Seller shall not and shall not permit any of its subsidiaries to,
without the prior written consent of the Buyer:
(i) engage or participate in any material transaction or incur or
sustain any material obligation or liability except in the ordinary,
regular and usual course of its businesses consistent with past
practices;
(ii) accept, renew or roll over any "brokered deposit" as defined
under 12 C.F.R. 337.6(a)(3) or offer an interest rate with respect to
any deposit that would either constitute an impermissible interest rate
with respect to deposits of an undercapitalized insured depository
institution pursuant to the limitations contained under 12 C.F.R.
337.6(b)(3)(ii) or otherwise set interest rates on deposits that depart
from past practices of the Seller with respect to the setting of
interest rates on deposits;
(iii) except in the ordinary, regular and usual course of business
consistent with past practices and in an immaterial aggregate amount,
sell, lease, transfer, assign, encumber or otherwise dispose of or
enter into any contract, agreement or understanding to lease, transfer,
assign, encumber or dispose of any of its assets;
(iv) open or relocate, or file any application to open or relocate,
any branch office;
(v) terminate, or give any notice (written or verbal) to customers or
governmental authorities or agencies to terminate the operations of any
branch office; or
(vi) waive any material right, whether in equity or at law, that it
has with respect to any asset except in the ordinary, regular and usual
course of business consistent with past practice;
(c) Seller shall use all reasonable efforts, and cause each of its
subsidiaries to use all reasonable efforts, to preserve intact its business
organization and goodwill in all material respects, keep available the
services of its officers and employees as a group and maintain satisfactory
relationships with borrowers, depositors, other customers and others having
business relationships with it;
(d) Seller shall, at the Buyer's request and expense, use its best
efforts to plan for, and cooperate with the Buyer with respect to, the
preparation for the combination and integration of the businesses, systems
and operations of the Seller and the Buyer, including the conversion of the
Seller's data processing and related electronic informational systems to
those used by the Buyer and its subsidiaries, and shall confer on a regular
and frequent basis with one or more representatives of the Buyer to report
on operational and related matters;
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(e) each of Buyer and Seller shall, subject to any restrictions under
applicable law or regulation, promptly notify the other of any emergency or
other change in the normal course of its or its subsidiaries' businesses or
in the operation of its or its subsidiaries' properties and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated) if such emergency, change,
complaint, investigation or hearing would be material to the assets,
properties, liabilities, business, results of operations, condition
(financial or otherwise) or prospects of the Buyer or any of its
subsidiaries or the Seller or any of its subsidiaries, as the case may be;
(f) Seller shall not declare or pay any dividends on or make any other
distributions in respect of the Seller Common Stock, except that the Seller
may declare and pay its regular $0.09 per share quarterly dividend and may
increase such per share quarterly dividend if Buyer increases its regular
$0.14 per share quarterly dividend (any such increased per share quarterly
dividend of Seller not to exceed the product of Seller's then current
regular per share quarterly dividend and a fraction, the numerator of which
is equal to the per share amount of such increased per share quarterly
dividend of Buyer which gives rise to the authorization for such increased
per share quarterly dividend of Seller hereunder and the denominator of
which is the per share amount of Buyer's regular per share quarterly
dividend in effect immediately prior to such increase by Buyer of such
dividend), and the parties agree to consult with respect to the amount of
the last Seller quarterly cash dividend payable prior to the Effective Time
with the objective of ensuring that the stockholders of Seller do not
receive a shortfall or a premium based on the record and payment dates of
their last dividend prior to the Effective Time and the record and payment
dates of the first dividend of Buyer following the Effective Time;
(g) Seller shall not adopt or amend (other than amendments required by
applicable law or amendments that reduce amounts payable by it or its
subsidiaries) in any material respect any Seller Employee Plan or enter (or
permit any of its subsidiaries to enter) into any employment, severance or
similar contract with any person (including, without limitation, contracts
with management which might require that payments be made upon the
consummation of the transactions contemplated hereby) or amend any such
existing agreements, plans or contracts to increase any amounts payable
thereunder or benefits provided thereunder, or grant or permit any increase
in compensation to any of its or its subsidiaries' employees or pay any
bonus to any such employees, except in the ordinary course of business
consistent with past practices or as disclosed in Section 5.01(g) of the
Seller Disclosure Schedule, or hire any new employee at an annual rate of
salary of $40,000 or more or promote any existing employee to the level of
vice president or above;
(h) subject to its directors' fiduciary duties, Seller shall not, with
respect to itself or any of its subsidiaries, authorize, recommend, propose
or announce an intention to authorize, recommend or propose, or enter into
an agreement with respect to, any merger, consolidation, purchase and
assumption transaction or business combination (other than the Acquisition
Merger), any acquisition of a material amount of assets or securities or
assumption of liabilities (including deposit liabilities), any disposition
of a material amount of assets or securities, or any release or
relinquishment of any material contract rights not in the ordinary course
of business and consistent with past practices;
(i) Seller shall not propose or adopt amendments to its certificate of
incorporation or by-laws;
(j) Seller shall not authorize, issue, deliver or sell any shares
(whether original issuance or from treasury shares) of its capital stock or
securities convertible into or exercisable for shares of its capital stock
(or permit any of its subsidiaries to issue, deliver or sell any shares of
such subsidiaries' capital stock or securities convertible into or
exercisable for shares of such subsidiaries' capital stock), except upon
exercise of the Seller Option, or effect any stock split, reverse stock
split, recapitalization, reclassification or similar transaction or
otherwise change its equity capitalization as it exists on the date hereof;
(k) Seller shall not grant, confer or award any options, warrants,
conversion rights or other rights, not existing on the date hereof, to
acquire any shares of its capital stock;
(l) Seller shall not purchase, redeem or otherwise acquire, or permit any
of its subsidiaries to purchase, redeem or otherwise acquire, any shares of
its capital stock or any securities convertible into or exercisable for any
shares of its capital stock, except in a fiduciary capacity;
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(m) Seller shall not impose, or suffer the imposition, on any share of
capital stock held by it or by any of its subsidiaries of any material
lien, charge, or encumbrance, or permit any such lien, charge, or
encumbrance to exist;
(n) Seller shall not incur, or permit any of its subsidiaries to incur,
any additional debt obligation or other obligation for borrowed money, or
to guaranty any additional debt obligation or other obligation for borrowed
money, except in the ordinary course of business consistent with past
practices, which shall include but not necessarily be limited to creation
of deposit liabilities, purchases of federal funds and entry into
repurchase agreements or other similar arrangements commonly employed by
banks;
(o) Seller shall not incur or commit to any capital expenditures or any
obligations or liabilities in connection therewith, other than capital
expenditures and such related obligations or liabilities incurred or
committed to in the ordinary and usual course of business consistent with
past practices, which, in all cases, do not individually exceed $25,000 or
cumulatively exceed $75,000;
(p) Seller shall not change its methods of accounting in effect at
December 31, 1996, except as may be required by changes in GAAP as
concurred in by the Seller's independent auditors, and the Seller shall not
change its fiscal year;
(q) each of the Buyer and Seller shall file all reports, applications and
other documents required to be filed by it with the SEC, the Federal
Reserve Board, the Massachusetts Board, the FDIC, the Connecticut
Commissioner and any other governmental agency or authority applicable to
Buyer or Seller, as the case may be, between the date of this Agreement and
the Effective Time and shall furnish to the other party copies of all such
reports promptly after the same are filed; and
(r) neither Seller nor Buyer, to the extent applicable, shall agree, in
writing or otherwise, to take any of the actions prohibited under this
Section 5.01 or any action which would make any of its representations or
warranties contained in this Agreement untrue or incorrect or would
otherwise violate any of its other agreements or commitments contained in
this Agreement in any material respect.
5.02 Access to Properties and Records; Confidentiality.
(a) The Seller shall permit the Buyer reasonable access to its properties
and those of its subsidiaries, and shall disclose and make available to the
Buyer all Records, including all books, papers and records relating to the
assets, stock ownership, properties, operations, obligations and
liabilities of the Seller and its subsidiaries, including, but not limited
to, all books of account (including the general ledger), tax records,
minute books of directors and stockholders meetings, organizational
documents, by-laws, material contracts and agreements, filings with any
regulatory authority, accountants' work papers, litigation files, plans
affecting employees, and any other business activities or prospects in
which the Buyer may reasonably have an interest in light of the
transactions contemplated hereby. Each of the parties shall make
arrangements with each third party provider of services to such party to
permit the other party reasonable access to all of the disclosing party's
Records (to the extent that such Records are otherwise required to be
disclosed hereunder) held by each such third party. The Buyer shall permit
the Seller reasonable access to such properties and records of the Buyer
and/or its subsidiaries in which the Seller may reasonably have an interest
in light of the transactions contemplated hereby. Neither the Buyer nor the
Seller nor any of their respective subsidiaries shall be required to
provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of any customer, would
jeopardize the attorney-client privilege of the institution in possession
or control of such information, or would contravene any law, rule,
regulation, order, judgment, decree or binding agreement. The parties will
use all reasonable efforts to make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(b) All Confidential Information, as such term is defined below,
furnished by each party hereto to the other, or to any of its affiliates or
to any of its affiliates' directors, officers, employees, or
representatives or agents (such persons being referred to collectively
herein as "Representatives") shall be treated as the sole property of the
party furnishing the information until consummation of the transactions
contemplated hereby, and, if such transactions shall not occur, the party
receiving the information, or any of its affiliates
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or Representatives, as the case may be, shall, upon request, return to the
party which furnished such information all documents or other materials
containing, reflecting or referring to such information, shall keep
confidential all such information for the period hereinafter referred to,
and shall not directly or indirectly at any time use such information for
any competitive or other commercial purpose; provided, however, that each
of the parties and its affiliates shall be permitted to retain and share
with their regulators, examiners and auditors (who need to know such
information and are informed of the confidential nature thereof and
directed to treat such information confidentially), and with no other
persons, such materials, files and information relating to or constituting
such party's or any of its affiliates' or Representatives' work product,
presentations or evaluation materials as such party deems reasonably
necessary or advisable in connection with auditing or examination purposes,
and neither party shall make use of any such materials, files or
information for any other purpose. The obligation to keep such information
confidential shall continue for two years from the date this Agreement is
terminated or as long as may be required by law. In the event that either
party or its affiliates or Representatives are requested or required in the
context of a litigation, governmental, judicial or regulatory investigation
or other similar proceeding (by oral questions, interrogatories, requests
for information or documents, subpoenas, civil investigative demands or
similar process) to disclose any Confidential Information, the party or its
affiliate or its Representative so requested or required will directly or
through the party or such affiliate or Representative, if practicable and
legally permitted, prior to providing such information, and as promptly as
practicable after receiving such request, provide the other party with
notice of each such request or requirement so that the other party may seek
an appropriate protective order or other remedy or, if appropriate, waive
compliance with the provisions of this Agreement. If, in the absence of a
protective order or the receipt of a waiver hereunder, the party or
affiliate or Representative so requested or required is, in the written
opinion of its counsel, legally required to disclose Confidential
Information to any tribunal, governmental or regulatory authority, or
similar body, the party or affiliate or Representative so required may
disclose that portion of the Confidential Information which it is advised
in writing by such counsel it is legally required to so disclose to such
tribunal or authority or similar body without liability to the other party
hereto for such disclosure. The parties and their affiliates and
Representatives will exercise reasonable efforts, at the expense of the
party who disclosed Confidential Information to the other party, to obtain
assurance that confidential treatment will be accorded the information so
disclosed.
As used in this Section 5.02(b), "Confidential Information" means all
data, reports, interpretations, forecasts and Records (whether in written
form, electronically stored or otherwise) containing or otherwise
reflecting information concerning the disclosing party or its affiliates
which is not available to the general public and which the disclosing party
or any affiliate or any of their respective Representatives provides or has
previously provided to the receiving party or to the receiving party's
affiliates or Representatives at any time in connection with the
transactions contemplated by this Agreement, including but not limited to
any information obtained by meeting with Representatives of the disclosing
party or its affiliates, together with summaries, analyses, extracts,
compilations, studies, personal notes or other documents or records,
whether prepared by the receiving party or others, which contain or
otherwise reflect such information. Notwithstanding the foregoing, the
following information will not constitute "Confidential Information": (i)
information that is or becomes generally available to the public other than
as a result of a disclosure by the receiving party or any affiliate or
Representative of the receiving party, (ii) information that was previously
known to the receiving party or its affiliates or Representatives on a
nonconfidential basis prior to its disclosure by the disclosing party, its
affiliates or Representatives, (iii) information that became or becomes
available to the receiving party or any affiliate or Representative thereof
on a nonconfidential basis from a source other than the disclosing party or
any affiliate or Representatives of the disclosing party, provided that
such source is not known by the disclosing party or its affiliates or
Representatives to be subject to any confidentiality agreement or other
legal restriction on disclosing such information and (iv) information that
has been independently acquired or developed by the receiving party or its
affiliates or Representatives without violating the obligations of this
Section 5.02(b).
5.03 No Solicitation. Unless and until this Agreement shall have been
properly terminated by either party pursuant to Section 8.01 hereof, neither
the Seller nor any of its subsidiaries shall (and the Seller and each of its
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subsidiaries shall use all reasonable efforts to cause its officers,
directors, employees, representatives and agents, including, but not limited
to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, initiate or, subject to the fiduciary
obligations of the Seller's Board of Directors (as advised in writing by
outside counsel), participate in any discussions or negotiations with, or
provide any information to, any corporation, partnership, person or other
entity or group (other than the Buyer and its affiliates or representatives)
concerning any merger, tender offer, sale of substantial assets, sale of
shares of capital stock or debt securities or similar transaction involving
the Seller or any of its subsidiaries (any of the foregoing being referred to
herein as an "Acquisition Transaction"). Notwithstanding the foregoing,
nothing contained in this Section 5.03 shall prohibit the Seller or its Board
of Directors from taking and disclosing to the Seller's stockholders a
position with respect to a tender offer by a third party pursuant to Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act or from making such
disclosure to the Seller's stockholders which, in the judgment of the Board of
Directors, with the written advice of outside counsel, may be required under
applicable law. The Seller will immediately communicate to the Buyer the terms
of any proposal, discussion, negotiation or inquiry relating to an Acquisition
Transaction and the identity of the party making such proposal or inquiry
which it may receive in respect of any such transaction (which shall mean that
any such communication shall be delivered no less promptly than by telephone
within twenty-four (24) hours of the Seller's receipt of any such proposal or
inquiry) or its receipt of any request for information from the Federal
Reserve Board, DOJ or any other governmental agency or authority with respect
to a proposed Acquisition Transaction.
5.04 Regulatory Matters; Consents.
(a) The parties will cooperate in connection with (i) the preparation and
filing by the Buyer with the SEC under the Securities Act of a registration
statement on Form S-4 and/or such other form as may be necessary or
appropriate relating to the shares of the Buyer Common Stock to be issued
in connection with the Acquisition Merger (the "Buyer Registration
Statement"), and (ii) the preparation by the Buyer and the Seller of a
joint proxy statement (the "Proxy Statement") as shall be necessary or
desirable in order to consummate the transactions contemplated by this
Agreement, each to be undertaken as promptly as practicable, and the Buyer
and the Seller will use their respective best efforts to have the Buyer
Registration Statement declared effective by the SEC and to mail the Proxy
Statement to the Buyer's and the Seller's stockholders as promptly as
practicable. The parties shall also take any reasonable action required to
be taken under any state "Blue Sky" laws in connection with the
consummation of the transactions contemplated by this Agreement. In
addition to the foregoing, neither party shall take or permit any of its
subsidiaries to take any action that materially adversely affects its
ability to consummate the transactions contemplated under this Agreement or
the Bank Merger Agreement in a timely manner.
(b) Each of the Seller and the Buyer will cooperate with the other and
use all reasonable efforts to prepare all documentation, to effect all
filings and to obtain all permits, consents, approvals and authorizations
of all third parties and governmental bodies necessary or appropriate to
consummate the transactions contemplated by this Agreement and the Bank
Merger Agreement. Each party hereto shall have the right to review and
approve in advance all descriptions of it and its subsidiaries which appear
in any filing made in connection with the transactions contemplated by this
Agreement, including without limitation all filings contemplated by Section
5.04(a) above, with any governmental body. In exercising the foregoing
right, the parties hereto shall act reasonably and as promptly as
practicable.
5.05 Approval of Stockholders. Each of the Buyer and the Seller will (a) as
promptly as practicable, take all steps necessary to duly call, give notice
of, convene and hold a meeting of its stockholders for the purpose of
approving this Agreement and the transactions contemplated hereby, and for
such other purposes as may be necessary or desirable, (b) subject to the
fiduciary duties of its board of directors as advised in writing by outside
counsel, recommend to its stockholders the approval of such foregoing matters
to be submitted by it to its stockholders, and (c) cooperate and consult with
each other with respect to each of the foregoing matters. Subject to the
fiduciary duties of its board of directors as advised in writing by outside
counsel, each of the Buyer and the Seller will use its respective best efforts
to obtain the necessary approvals of its stockholders of the proposals
described above to be submitted by it in connection with this Agreement,
including without limitation retaining nationally recognized proxy
solicitation firms to provide such services as are customary in transactions
of the
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nature contemplated hereby. If the board of directors of either party is
required by applicable law to review or restate the recommendation to its
stockholders contemplated in clause (b) of the preceding sentence, this
Section 5.05 shall not prohibit accurate disclosure by such party that is
required in any release or regulatory filing (including the Proxy Statement
and the Buyer Registration Statement) or otherwise under applicable law in the
opinion of such party's board of directors, upon the written advice of outside
counsel, as of the date of such release or regulatory filing or such other
required disclosure as to the transactions contemplated hereby or as to any
Acquisition Transaction.
5.06 Agreements of Seller's Affiliates. The Seller shall identify in a
letter to the Buyer, after consultation with its counsel and outside
accountants, all persons who, at the time of the meeting of its stockholders
referred to in Section 5.05 hereof, it believes may be deemed to be
"affiliates" of the Seller, as that term is defined for purposes of paragraphs
(c) and (d) of Rule 145 under the Securities Act and/or used in and for
purposes of Accounting Series, Releases 130 and 135, as amended, of the SEC
(the "Seller Affiliates"). The Seller shall use all reasonable efforts to
cause each person who is identified as a Seller Affiliate in the letter
referred to above to deliver to the Buyer at least forty (40) days prior to
the Closing Date an executed copy of the Seller Affiliates Agreement. Prior to
the Closing Date, the Seller shall amend and supplement such letter and use
all reasonable efforts to cause each additional person who is identified as a
Seller Affiliate as of the Closing Date to execute a copy of the Seller
Affiliates Agreement. Within thirty (30) days after the end of the first
complete calendar month ending at least thirty (30) days after the Closing
Date, Buyer will publish results including at least thirty (30) days of
combined operations of Buyer and Seller as referred to in the Seller
Affiliates Agreement.
5.07 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its respective best efforts
to take, as promptly as practicable, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and the Bank Merger Agreement. 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 the Bank Merger
Agreement, the proper officers and directors of each party to this Agreement
and the Bank Merger Agreement, as applicable, shall take all such necessary
action.
5.08 Disclosure Supplements. From time to time prior to the Effective Time,
and in any event immediately prior to the Effective Time, Seller will promptly
supplement or amend the Seller Disclosure Schedule with respect to any matter
hereafter arising which, if existing, occurring or known at the date of this
Agreement, would have been required to be set forth or described in the Seller
Disclosure Schedule or which is necessary to correct any information in the
Seller Disclosure Schedule which has become inaccurate. No such supplement or
amendment to the Seller Disclosure Schedules pursuant to this Section 5.08
shall have any effect for the purpose of determining satisfaction of any of
the conditions set forth in Article VI hereof.
5.09 Public Announcements. Except as otherwise required by law or the rules
of the NASD or NASDAQ, the Seller and the Buyer will cooperate with each other
in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby, and Seller shall not issue or otherwise
distribute any such news releases or other public disclosures without the
prior approval of Buyer (which shall not be unreasonably withheld).
5.10 Organization of Merger Subsidiary. Prior to the Effective Time, Buyer
shall cause Merger Subsidiary to be organized under the laws of the State of
Connecticut. All of the authorized and issued shares of the capital stock of
Merger Subsidiary shall be held directly by Buyer. Prior to the Effective
Time, Merger Subsidiary shall not conduct any business or otherwise engage in
any material activities or incur any material liabilities, except as
specifically contemplated by this Agreement or as the parties hereto may
otherwise agree. Following the organization of Merger Subsidiary, Buyer shall
cause Merger Subsidiary to execute and deliver the Bank Merger Agreement.
5.11 Tax-Free Reorganization Treatment. None of the parties hereto or any of
their respective subsidiaries or affiliates has taken, shall take or will
cause to be taken any action, whether before or after the
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Effective Time, which would disqualify the Acquisition Merger and the
transactions contemplated by this Agreement and the Bank Merger Agreement as a
"reorganization" within the meaning of Section 368(a) of the Code; provided,
however, that nothing herein shall limit the ability of the Buyer to exercise
its rights under the Seller Option Agreement.
5.12 Stock Exchange Listing. The Buyer shall use all reasonable efforts to
cause the shares of the Buyer Common Stock to be issued in connection with the
Acquisition Merger to be approved for listing on the Nasdaq Stock Market-
National Market system, subject to official notice of issuance, as of or prior
to the Effective Time.
5.13 Employee Benefit Matters.
(a) Maintenance of Plans; Benefits Service Credit. Through March 31,
1998, or such other date as Buyer in its sole discretion may determine (the
"Transition Date"), Buyer agrees to provide the employees of Seller and its
affiliates who are so employed at the Effective Time with the employee
benefits set forth in Section 4.11 of the Seller Disclosure Schedule as
maintained for their benefit immediately prior to the Effective Time. After
the Transition Date, Buyer agrees to provide employees of Seller and its
affiliates with the group benefits maintained by Buyer and its affiliates
from time to time for the benefit of their employees similarly situated to
such Seller employees. Buyer shall cause each such plan, program or
arrangement to treat the prior service of each such employee with the
Seller or its affiliates, to the extent such prior service is recognized
under the comparable plan, program or arrangement of the Seller, as service
rendered to Buyer or its affiliate, as the case may be, for purposes of
eligibility to participate, vesting, and eligibility for special benefits
under each such plan, program or arrangement of Buyer, but not for benefit
accrual attributable to any period before the Effective Time. Without
limiting the foregoing, Buyer and its affiliates shall not treat any
employee of Seller or any of its affiliates as a "new" employee for
purposes of any exclusion under any health or similar plan of Buyer or any
of its affiliates for a preexisting medical condition, and will make
appropriate arrangements with its insurance carrier(s) to ensure such
result.
(b) Additional Obligations. Following the Effective Time, Buyer shall, or
shall cause the Surviving Corporation to, honor in accordance with their
terms all employment, severance, and other compensation contracts between
Seller or any subsidiary thereof and any director, officer or employee
thereof, as all such contracts are disclosed in Section 4.13 of the Seller
Disclosure Schedule, and all provisions for benefits or other amounts
earned or accrued through the Effective Time under the Seller Employee
Plans.
5.14 Directors' and Officers' Indemnification and 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 the Seller or any of Seller's
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 (i) the fact that he or she is or was a director, officer
or employee of the Seller or any of Seller's subsidiaries or (ii) this
Agreement or any of the transactions contemplated hereby, whether in any
case asserted or arising before or after the Effective Time, the parties
hereto agree to cooperate and use all reasonable efforts to defend against
and respond thereto. It is understood and agreed that Seller (with the
prior consent of Buyer, which shall not be unreasonably withheld) shall
indemnify and hold harmless, and that after the Effective Time Buyer shall
indemnify and hold harmless, as and to the fullest extent permitted by
applicable law, each such Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including reasonable attorney's fees
and expenses), 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), (i) Seller (with the prior
consent of Buyer, which shall not be unreasonably withheld), and Buyer
after the Effective Time, shall promptly pay expenses in advance of the
final disposition of any claim, action, suit, proceeding or investigation
to each Indemnified Party to the fullest extent permitted by law, (ii) the
Indemnified Parties may retain counsel mutually satisfactory to them and
Seller and, after the Effective Time, Buyer, and Seller
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(with the prior consent of Buyer, which shall not be unreasonably
withheld), and Buyer after the Effective Time, shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties within thirty
days after statements therefor are received, and (iii) Seller, and Buyer
after the Effective Time, will use all reasonable efforts to assist in the
vigorous defense of any such matter; provided, however, that neither Seller
nor Buyer shall be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld); and
provided further, however, that the Buyer shall have no obligation
hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim indemnification,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify Seller and, after the Effective Time, Buyer thereof, provided
that the failure to so notify shall not affect the obligations of Seller or
Buyer, except to the extent such failure to notify materially prejudices
such party.
(b) Buyer agrees that all rights to indemnification existing in favor,
and all limitations on the personal liability, of any director, officer or
other employee of Seller or any of its subsidiaries provided for in
Seller's certificate of incorporation or by-laws as in effect as of the
date hereof with respect to matters occurring prior to the Effective Time
shall survive the Acquisition Merger. In the event Buyer or the Surviving
Corporation 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 Buyer or the
Surviving Corporation, as the case may be, assume the obligations set forth
in this Section 5.14.
(c) Buyer shall use all reasonable efforts to cause the persons serving
as officers and directors of the Seller and any subsidiary of Seller
immediately prior to the Effective Time to be covered for a period of six
(6) years from the Closing Date by the directors' and officers' liability
insurance policy maintained as of the date hereof by the Seller (provided
that Buyer may substitute therefor policies of at least the same coverage
and amounts containing terms and conditions which are not less advantageous
than such policy) with respect to acts or omissions occurring at or prior
to the Effective Time, which were committed by such officers and directors
in their capacity as such.
(d) Buyer shall not take any actions after the Effective Time to prevent
Seller's payment for or reimbursement of reasonable expenses incurred by
any current or former director of Seller who is a party to any proceeding
as of the date hereof in advance of the final disposition of any such
proceeding, so long as all of the requirements contained in Section 33-773
of the Connecticut General Statutes have been satisfied with respect to
each such current or former director as of the date hereof and continue to
be satisfied at all times after the Effective Time, including without
limitation that Seller's determination that indemnification to each such
current or former director is not precluded under Sections 33-770 through
33-778, inclusive, of the Connecticut General Statutes, continues to be a
reasonable determination, properly supported by the facts then known or
ascertainable by Seller, at all such times following the Effective Time.
5.15 Accountants' Letters. Each of the parties shall cause to be delivered
to the other "comfort" letters from its independent public accountants, dated
the date on which the Buyer Registration Statement (or last amendment thereto)
shall become effective and dated the Closing Date, relating to the information
about such party included in the Buyer Registration Statement, including the
Proxy Statement, and addressed to the other party, in form and substance which
is reasonably satisfactory to the receiving party and customary in
transactions of the nature contemplated hereby.
5.16 Maintenance of Records. Through the Effective Time, the Seller will
maintain the Records in the same manner and with the same care that the
Records have been maintained prior to the execution of this Agreement. The
Buyer may, at its own expense, make such copies of and excerpts from the
Records as it may deem desirable. All Records, whether held by the Buyer or
the Seller, shall be maintained for such periods as are required by law,
unless the parties shall, applicable law permitting, agree in writing to a
different period.
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5.17 Leases. Seller shall consult with Buyer before renewing or extending
any lease of Seller or any subsidiary of real property or any material lease
of Seller or any subsidiary relating to furniture, fixtures or equipment
(i.e., any such lease having a term of more than one year or requiring a total
payment by Seller or any such subsidiary of more than $25,000 during the term
thereof), in each case that is currently in effect but that would otherwise
expire on or prior to the Effective Time. Seller shall not cancel, terminate
or take other action that is likely to result in any cancellation or
termination of any such lease without first consulting with Buyer.
5.18 Certain Policies of Seller. At the request of Buyer, after the time at
which all Requisite Regulatory Approvals have been received for the
Acquisition Merger, all other conditions precedent to Seller's obligations
under this Agreement have been satisfied or waived and Buyer has confirmed in
writing that all other conditions precedent to Buyer's obligations under this
Agreement have been satisfied or waived, and prior to the Effective Time,
Seller shall cooperate with Buyer with the objective of modifying and changing
its receivables, loan accrual, charge-off, real estate valuation, loan loss
reserve and investment policies and practices and such other accounting and/or
financial policies and practices as may be requested by Buyer to reflect
Buyer's plans with respect to the conduct of Seller's business following the
Acquisition Merger and to make adequate provision for the cost and expenses
relating thereto. The Seller's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or breached in
any respect for any purpose as a consequence of any modifications or changes
undertaken solely on account of this Section 5.18.
5.19 Post-Closing Governance. As of the Effective Time, Seller shall have
taken all necessary action to increase the size of its Board of Directors by
one and shall have elected to its Board of Directors such person as shall be
designated by the Buyer. Immediately after the Effective Time, the Board of
Directors of the Surviving Corporation shall consist of those persons
comprising the Board of Directors of the Seller immediately prior to the
Effective Time plus such additional person designated by the Buyer, each to
hold office in accordance with the certificate of incorporation and by-laws of
the Surviving Corporation. As of the Effective Time, the Buyer shall have
taken all necessary action to increase the size of its Board of Directors by
one and shall have elected to its Board of Directors (into the class the term
of which shall expire at the annual meeting of Buyer's stockholders to be held
in 2000) such person as shall be designated by the Seller. Immediately after
the Effective Time, the Board of Directors of Buyer shall consist of those
persons comprising the Board of Directors of Buyer immediately prior to the
Effective Time plus such additional person designated by the Seller, each to
hold office in accordance with the articles of organization and by-laws of
Buyer.
5.20 Compliance with Connecticut Transfer Act. The Seller shall take all
necessary actions to ensure its full compliance under the Connecticut Transfer
Act, Sections 22a-134 through 22a-134d, inclusive, of the Connecticut General
Statutes, including but not necessarily limited to undertaking and completing
the necessary environmental assessments on each parcel of real estate owned by
the Seller immediately prior to the Effective Time.
5.21 Buyer and Seller Consultation as to Other Transactions. During the
period from the date hereof until the Closing Date, Buyer shall advise Seller
of any proposed material transaction involving Buyer's acquisition of or by,
or merger with, another banking or financial services organization. Such
advice shall be communicated to Seller's chief executive officer, who shall be
required to keep such information confidential unless he determines, upon
advice of counsel, that he has a fiduciary duty to inform the Seller's Board
of Directors. If the Seller's chief executive officer does so determine, he
will inform the Buyer's chief executive officer and Buyer shall, subject to
receipt of confidentiality commitments (including without limitation
commitments from individual officers, directors and outside advisers of
Seller) that are satisfactory to Buyer and its counsel in their reasonable
determination, provide to the Seller such relevant information about the
proposed transaction as may be reasonably requested by Seller.
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ARTICLE VI
CLOSING CONDITIONS
6.01 Conditions to Each Party's Obligations Under This Agreement. The
respective obligations of each party under this Agreement shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions,
none of which may be waived:
(a) Stockholders' Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the affirmative votes
required of the stockholders of each of the Buyer and the Seller in
accordance with applicable law.
(b) Governmental Consents. All authorizations, consents, orders or
approvals of, or declarations or filings with, and all expirations of
waiting periods imposed by, any governmental or regulatory authority or
agency which are necessary for the consummation of the transactions
contemplated by this Agreement and the Bank Merger Agreement, including
without limitation the Acquisition Merger, shall have been filed, occurred
or been obtained (all such authorizations, orders, declarations, approvals,
filings and consents and the lapse of all such waiting periods being
referred to as the "Requisite Regulatory Approvals") and all such Requisite
Regulatory Approvals shall be in full force and effect. In addition, the
Buyer shall have received all state securities or blue sky permits and
other authorizations necessary to issue the Buyer Common Stock in
connection with the Acquisition Merger in accordance with all applicable
state securities or blue sky laws.
(c) Buyer Registration Statement. The Buyer Registration Statement shall
have become effective under the Securities Act and shall not be subject to
a stop order or a threatened stop order.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the transactions contemplated
by this Agreement shall be in effect.
6.02 Conditions to the Obligations of Buyer Under This Agreement. The
obligations of the Buyer under this Agreement shall be further subject to the
satisfaction or waiver by the Buyer, at or prior to the Effective Time, of the
following conditions:
(a) Absence of Material Adverse Changes. There shall not have occurred
any change in the business, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of the Seller or any of
its subsidiaries which has had, individually or in the aggregate, a
Material Adverse Effect on the Seller.
(b) Representations and Warranties; Performance of Obligations. The
obligations of the Seller required to be performed by it at or prior to the
Effective Time pursuant to the terms of this Agreement shall have been duly
performed and complied with and the representations and warranties of the
Seller contained in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Effective
Time as though made at and as of the Effective Time (except as otherwise
specifically contemplated by this Agreement and except as to any
representation or warranty which specifically relates to an earlier date)
and the Buyer shall have received a certificate to that effect signed by
the president and chief executive officer and by the chief financial
officer of the Seller.
(c) Third-Party Approvals. Any and all permits, consents, waivers,
clearances, approvals and authorizations of all non-governmental and non-
regulatory third parties which are necessary in connection with the
consummation of the transactions contemplated by this Agreement and are
required to be received or obtained by the Seller, shall have been obtained
by the Seller, other than permits, consents, waivers, clearances, approvals
and authorizations the failure of which to obtain would neither make it
impossible to consummate the transactions contemplated by this Agreement
and the Bank Merger Agreement nor result in any Material Adverse Effect on
the Seller after the Effective Time.
(d) Tax Opinion. The Buyer shall have received an opinion dated the
Closing Date from its counsel, Sullivan & Worcester LLP, or other counsel
selected by the Buyer and reasonably acceptable to the Seller,
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substantially to the effect that (A) the Acquisition Merger should be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, (B) each of the Buyer and the Seller
should be a party to a reorganization within the meaning of Section 368(b)
of the Code, and (C) no gain or loss should be recognized by the Buyer or
the Seller as a result of the Acquisition Merger. In rendering such
opinion, Sullivan & Worcester LLP shall be entitled to require delivery of,
and to refer to and rely upon, such facts and representations set forth in
certificates received from the Buyer, the Seller and their respective
officers, directors and affiliates, as Sullivan & Worcester LLP shall deem
necessary or appropriate to enable it to render such opinion, and the
parties hereto agree to use their respective best efforts to obtain such
representations and certificates.
(e) Seller Affiliates Agreements. Seller shall have delivered to Buyer
the letter pertaining to the Seller Affiliates, as contemplated under
Section 5.06 above, and each of the executed Seller Affiliates Agreements
that have been received by Seller as of the Effective Time.
(f) Accounting Treatment. Buyer shall have received a letter from its
independent public accountants, Price Waterhouse LLP, dated the Closing
Date, substantially to the effect that on the basis of a review of this
Agreement and the transactions contemplated hereby and certain additional
information provided in writing to Price Waterhouse LLP by Buyer and by
Seller's independent public accountants, Shatswell, MacLeod & Company,
P.C., Price Waterhouse LLP concurs that, as of the Closing Date, no
conditions exist that would preclude Buyer's accounting for the Acquisition
Merger as a pooling of interests in accordance with Accounting Principles
Board Opinion No. 16.
(g) Legal Opinion. The Buyer shall have received the opinion of Tyler
Cooper & Alcorn LLP, or such other counsel as may be acceptable to Buyer
and Seller, dated the Closing Date, such opinion to be substantially in the
form attached hereto as Exhibit E. As to any matter in such opinion which
involves matters of fact, such counsel may rely upon certificates of
officers and directors of Seller or any of its subsidiaries and of public
officials.
In addition to the foregoing, the Seller will furnish the Buyer with such
additional certificates, instruments or other documents in the name or on
behalf of the Seller or any of its subsidiaries, as the case may be, executed
by appropriate officers or others, including without limitation certificates
or correspondence of governmental agencies or authorities or nongovernmental
third parties, to evidence fulfillment of the conditions set forth in this
Section 6.02 as the Buyer may reasonably request.
6.03 Conditions to the Obligations of Seller Under This Agreement. The
obligations of the Seller under this Agreement shall be further subject to the
satisfaction or waiver by the Seller, at or prior to the Effective Time, of
the following conditions:
(a) Absence of Material Adverse Changes. There shall not have occurred
any change in the business, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of the Buyer or any of
its subsidiaries which has had, individually or in the aggregate, a
Material Adverse Effect on the Buyer.
(b) Representations and Warranties; Performance of Obligations. The
obligations of the Buyer required to be performed by it at or prior to the
Effective Time pursuant to the terms of this Agreement shall have been duly
performed and complied with and the representations and warranties of the
Buyer contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time as
though made at and as of the Effective Time (except as otherwise
specifically contemplated by this Agreement and except as to any
representation or warranty which specifically relates to an earlier date)
and the Seller shall have received a certificate to that effect signed by
the president and chief executive officer and by the chief financial
officer of the Buyer.
(c) Third-Party Approvals. Any and all permits, consents, waivers,
clearances, approvals and authorizations of all non-governmental and non-
regulatory third parties which are necessary in connection with the
consummation of the transactions contemplated by this Agreement and are
required to be received or obtained by the Buyer, shall have been obtained
by the Buyer, other than permits, consents, waivers,
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clearances, approvals and authorizations the failure of which to obtain
would neither make it impossible to consummate the transactions
contemplated by this Agreement nor result in a Material Adverse Effect on
the Buyer after the Effective Time.
(d) Tax Opinion. The Seller shall have received an opinion dated the
Closing Date from its counsel, Tyler Cooper & Alcorn LLP, or other counsel
selected by the Seller and reasonably acceptable to the Buyer,
substantially to the effect that (A) the Acquisition Merger should be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, (B) each of the Buyer and the Seller
should be a party to a reorganization within the meaning of Section 368(b)
of the Code, and (C) no gain or loss will be recognized by the stockholders
of the Seller upon the receipt, pursuant to this Agreement and the Bank
Merger Agreement, of Buyer Common Stock solely in exchange for Seller
Common Stock (it being understood that such opinion will not extend to cash
received in lieu of fractional share interests or cash received by
dissenters, if any). In rendering such opinion, Tyler Cooper & Alcorn LLP
shall be entitled to require delivery of, and to refer to and rely upon,
such facts and representations set forth in certificates received from the
Buyer, the Seller and their respective officers, directors and affiliates,
as Tyler Cooper & Alcorn LLP shall deem necessary or appropriate to enable
it to render such opinion, and the parties hereto agree to use their
respective best efforts to obtain such representations and certificates.
(e) NASDAQ Listing. The shares of the Buyer Common Stock issuable upon
the Effective Time shall have been authorized for listing on the Nasdaq
Stock Market-National Market system upon official notice of issuance.
(f) Legal Opinion. The Seller shall have received the Opinion of Sullivan
& Worcester LLP, or such other counsel as may be acceptable to Buyer and
Seller, dated the Closing Date, such opinion to be substantially in the
form attached hereto as Exhibit F. As to any matter in such opinion which
involves matters of fact, such counsel may rely upon the certificates of
officers and directors of the Buyer or any of its subsidiaries and of
public officials.
In addition to the foregoing, the Buyer will furnish the Seller with such
additional certificates, instruments or other documents in the name or on
behalf of the Buyer, executed by appropriate officers or others, including
without limitation certificates or correspondence of governmental agencies or
authorities or nongovernmental third parties, to evidence fulfillment of the
conditions set forth in this Section 6.03 as the Seller may reasonably
request.
ARTICLE VII
CLOSING
7.01 Time and Place. Subject to the provisions of Articles VI and VIII
hereof, the closing of the transactions contemplated by this Agreement shall
take place at the Boston, Massachusetts offices of Sullivan & Worcester LLP at
10:00 A.M., local time, on such date that is not later than the fifth business
day after the date on which all of the conditions contained in Article VI
hereof are satisfied or waived; or at such other place, at such other time, or
on such other date as Seller and Buyer may mutually agree upon for such
closing to take place.
7.02 Deliveries at the Closing. Subject to the provisions of Articles VI and
VIII hereof, at the closing contemplated by Section 7.01 above there shall be
delivered to Seller and Buyer, the opinions, certificates and other documents
and instruments required to be delivered under Article VI hereof.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of this Agreement and the
transactions contemplated hereby by the Seller's stockholders:
(a) by mutual written consent of the Seller and the Buyer authorized by
their respective Boards of Directors;
(b) by the Seller or the Buyer if the Effective Time shall not have
occurred on or prior to June 30, 1998 (the "Termination Date") or such
later date as shall have been agreed to in writing by the Buyer and the
Seller;
(c) by the Buyer or the Seller (i) thirty days after the date on which
any request or application for a Requisite Regulatory Approval shall have
been denied, unless within the thirty-day period following such denial a
petition for rehearing or an amended application has been filed with such
governmental regulatory authority or agency, except that no party shall
have the right to terminate this Agreement pursuant to this clause (i) if
such denial shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe in any material respects the covenants
and agreements of such party set forth herein, or (ii) if any governmental
or regulatory authority or agency, or court of competent jurisdiction,
shall have issued a final permanent order or Injunction enjoining or
otherwise prohibiting the consummation of the transactions contemplated by
this Agreement and the time for appeal or petition for reconsideration of
such order or Injunction shall have expired without such appeal or petition
being granted or such order or Injunction shall otherwise have become final
and non-appealable;
(d) by the Buyer or the Seller (provided that the terminating party is
not then in material breach of any representation, warranty, covenant or
other agreement contained herein or in the Seller Option Agreement), in the
event of a material breach by the other party of any representation,
warranty, covenant or other agreement contained herein (which, in the case
of Seller, shall be deemed to include any intentional breach by any Insider
Stockholder under the Seller Stockholders' Agreement and, in the case of
Buyer, shall be deemed to include any intentional breach by a director of
Buyer under the Buyer Stockholders' Agreement), in the Seller Option
Agreement or in the Bank Merger Agreement, which breach is not cured after
thirty (30) days written notice thereof is given to the party committing
such breach;
(e) by Buyer or Seller (provided that the terminating party is not then
in material breach of any representation, warranty or covenant or other
agreement contained herein or in the Seller Option Agreement), if the
approval of either party's stockholders specified in Section 5.05 above
shall not have been obtained by reason of such party's failure to have
obtained the requisite stockholder vote at a duly held meeting of such
party's stockholders or at any adjournment thereof;
(f) by Buyer if Seller's Board of Directors does not publicly recommend
in the Proxy Statement that Seller's stockholders approve the proposals
submitted to them in accordance with this Agreement, or if after
recommending in the Proxy Statement that Seller's shareholders approve such
proposals, Seller's Board of Directors shall have withdrawn, modified or
amended such recommendation in any respect materially adverse to Buyer; or
(g) by Seller, by action of its Board of Directors, by giving written
notice of such election to Buyer within two business days after the
Valuation Period, in the event the Average Closing Price is less than the
Minimum Price; provided, however, that no right of termination shall arise
under this Section 8.01(g) if Buyer elects within two business days of
receipt of such written notice to increase the Exchange Ratio by notifying
Seller in writing that it has elected to utilize the Adjusted Exchange
Ratio in lieu of the Exchange Ratio that would otherwise be required under
Section 2.01(b) of the Bank Merger Agreement.
8.02 Effect of Termination.
(a) In the event of termination of this Agreement by either the Seller or
the Buyer as provided above, this Agreement shall forthwith become null and
void (other than Sections 5.02(b), 8.02(b) (if applicable),
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8.02(c) (if applicable) and 9.01 hereof, which shall remain in full force
and effect) and there shall be no further liability on the part of any of
the parties hereto or their respective officers or directors to the others,
except (a) any liability of any party under said Sections 5.02(b), 8.02(b)
(if applicable), 8.02(c) (if applicable) and 9.01, (b) that the Seller
Option Agreement shall be governed by its own terms as to termination, and
(c) in the event of a party's gross negligence or willful breach of any
representation, warranty, covenant or agreement contained in this Agreement
(which, in the case of Seller, shall be deemed to include any gross
negligence of or willful breach by any of the Insider Stockholders with
respect to the terms of the Seller Stockholders' Agreement and, in the case
of Buyer, shall be deemed to include any gross negligence of or willful
breach by any of Buyer's directors with respect to the terms of the Buyer
Stockholders' Agreement), in which case, the breaching party shall remain
liable for any and all damages, costs and expenses, including all
reasonable attorneys' fees, sustained or incurred by the non-breaching
party as a result thereof or in connection therewith or with the
enforcement of its rights hereunder, unless the non-breaching party
otherwise invokes and seeks to enforce its rights under Section 8.02(b) or
8.02(c) hereof.
(b) As a condition of Buyer's willingness, and in order to induce Buyer,
to enter into this Agreement and to reimburse Buyer for incurring the costs
and expenses related to entering into this Agreement and consummating the
transactions contemplated by this Agreement, the Seller will make a cash
payment to Buyer of $1,000,000.00 if and only if:
(i) either (x) Buyer has terminated this Agreement because Seller's
Board of Directors does not publicly recommend in the Proxy Statement
that Seller's stockholders approve the proposals submitted to them in
accordance with this Agreement, or if after recommending in the Proxy
Statement that Seller's stockholders approve such proposals, Seller's
Board of Directors shall have withdrawn, modified or amended such
recommendation in any respect materially adverse to Buyer or (y) Buyer
has terminated this Agreement pursuant to Section 8.01(d) and the
breach of the representation, warranty, covenant or agreement was
caused by the willful conduct or gross negligence of Seller (including
the willful conduct of any Insider Stockholder in the event of a breach
of the Seller Stockholders' Agreement); and
(ii) either (x) within twelve months of any such termination, (A)
Seller shall have entered into an agreement to engage in an Alternative
Transaction (as hereinafter defined) with any person other than Buyer
or any subsidiary or other affiliate of Buyer or (B) the Board of
Directors of Seller shall have approved an Alternative Transaction or
recommended that shareholders of Seller approve or accept any
Alternative Transaction with any person other than Buyer or any
subsidiary or other affiliate of Buyer, or (y) in the case of Section
8.01(f), at the time of such termination any person other than Buyer or
any subsidiary or affiliate of Buyer shall have made a bona fide
proposal to Seller or its shareholders to engage in an Alternative
Transaction by public announcement or written communication that shall
be or become the subject of public disclosure.
Any payment required under this Section 8.02(b) will be (i) payable by
Seller to Buyer (by wire transfer of immediately available funds to an account
designated by Buyer) within five business days after demand by Buyer and (ii)
net of any other cash payments made by Seller to Buyer pursuant to the
provisions of Section 8.02(a) and 8.02(c) and the Seller Option Agreement (but
in no event shall the amount payable under this Section 8.02(b) be less than
zero).
For purposes of this Agreement, "Alternative Transaction" shall mean (i) a
merger, consolidation or other similar transaction involving Seller, (ii) any
sale, lease or other disposition of 20% or more of the assets of Seller and
its subsidiaries, taken as a whole, in a single transaction or series of
transactions, (iii) any tender or exchange offer for 20% or more of the
outstanding shares of Seller Common Stock, or (iv) any person having acquired
beneficial ownership or the right to acquire beneficial ownership of, or any
"group" (as such term is defined under Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder) having been formed which
beneficially owns or has the right to acquire beneficial ownership of 20% or
more of the then outstanding shares of capital stock of Seller.
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(c) If either Seller or Buyer fails to perform any material covenant or
agreement in this Agreement as a result of its willful conduct or gross
negligence, or if any representation or warranty by Seller or Buyer is
determined to be materially untrue due to Seller's or Buyer's, as the case
may be, willful misrepresentation or gross negligence (the party which so
fails to perform or which so makes such an untrue representation or
warranty being referred to as a "Breaching Party"), and if, at the time of
such failure to perform or such untrue representation or warranty by the
Breaching Party, the other party is not a Breaching Party (the "Non-
Breaching Party"), and if the Agreement is thereafter terminated by the
Non-Breaching Party prior to the Effective Time as a result of such failure
to perform or such untrue representation or warranty by the Breaching
Party, then the Breaching Party shall, within five (5) business days
following demand, pay to the Non-Breaching Party $1,000,000.00 as
liquidated damages (any such amount paid to Buyer shall be net of any cash
payments made by Seller to Buyer pursuant to the provisions of Section
8.02(a) and 8.02(b) hereof and the Seller Option Agreement). The parties
further acknowledge and agree that for purposes of this Section 8.02(c) any
intentional breach by an Insider Stockholder under the Seller Stockholders'
Agreement shall be deemed to be an intentional failure to perform a
material covenant of this Agreement by the Seller hereunder and any
intentional breach by a director of Buyer under the Buyer Stockholders'
Agreement shall be deemed to be an intentional failure to perform a
material covenant of this Agreement by the Buyer hereunder.
8.03 Amendment, Extension and Waiver. Subject to applicable law and as may
be authorized by their respective Boards of Directors, at any time prior to
the consummation of the transactions contemplated by this Agreement or
termination of this Agreement in accordance with the provisions of Section
8.01 hereof, whether before or after approval of this Agreement and the
transactions contemplated hereby by the stockholders of the Seller, the
parties may, (a) amend this Agreement, (b) extend the time for the performance
of any of the obligations or other acts of any other party hereto, (c) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto, or (d) waive compliance with any of
the agreements or conditions contained in Articles V and VI (other than
Section 6.01) hereof; provided, however, that there may not be, without
further approval of Seller's stockholders, any amendment, extension or waiver
of this Agreement which reduces the amount or changes the form of the
consideration to be delivered to such stockholders hereunder other than as may
be expressly 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. Any agreement on the part of a party hereto to any extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf
of such party, but such waiver or failure to insist on strict compliance with
such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
MISCELLANEOUS
9.01 Expenses. Except as may otherwise be agreed to hereunder or in other
writing by the parties, all legal and other costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses.
9.02 Non-Survival. None of the representations, warranties, covenants and
agreements of the parties shall survive after the Effective Time, except for
the agreements and covenants contained or referred to in Article II, Section
5.02(b), the last sentence of Section 5.07, Sections 5.11, 5.13, 5.14, 5.19,
8.02, 9.01 and 9.02 and the agreements of the Seller Affiliates delivered
pursuant to Section 5.06, which agreements and covenants shall survive the
Effective Time.
9.03 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by prepaid
registered or certified mail (return receipt requested) or by telecopy, cable,
telegram or telex addressed as follows:
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(a) If to the Seller, to:
Glastonbury Bank and Trust Company
2461 Main Street
Glastonbury, Connecticut 06033
Attention: J. Gilbert Soucie
President
Copy to:
Tyler Cooper & Alcorn, LLP
CityPlace--35th Floor
Hartford, Connecticut 06103
Attention: William W. Bouton III, Esq.
(b) If to the Buyer, to:
SIS Bancorp, Inc.
1441 Main Street
Springfield, Massachusetts 01102
Attention: F. William Marshall, Jr.
President
Copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Stephen J. Coukos, Esq.
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
delivered to the recipient party.
9.04 Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other parties, and that nothing in
this Agreement, except for Sections 5.13 and 5.14 above, is intended to
confer, expressly or by implication, upon any other person any rights or
remedies under or by reason of this Agreement.
9.05 Entire Agreement. This Agreement, including the documents and other
writing referred to herein or delivered pursuant hereto, including the Seller
Disclosure Schedule, the Seller Option Agreement, the Seller Stockholders'
Agreement and the Bank Merger Agreement, is complete, and all promises,
representations, understandings, warranties and agreements with reference to
the subject matter hereof, and all inducements to the making of this Agreement
relied upon by either party hereto, have been expressed herein. This Agreement
(including the aforementioned documents and writings) supersedes any prior or
contemporaneous agreement or understanding between the parties hereto, oral or
written, pertaining to any such matters, including without limitation the
Confidentiality Agreement, which agreements or understandings shall be of no
further force or effect for any persons.
9.06 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and each of which shall
be deemed to be an original and shall become effective when a counterpart has
been signed by each of the parties and delivered to each of the other parties.
9.07 Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts, without giving effect to the principles of
conflicts of laws thereof, and, to the extent applicable, by federal law.
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9.08 Captions. The Article and Section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.09 Effect of Investigations. No investigation by the parties hereto made
heretofore or hereafter, whether pursuant to this Agreement or otherwise shall
affect the representations and warranties of the parties which are contained
herein and each such representation and warranty shall survive such
investigation, subject, however, to Section 9.02 hereof.
9.10 Severability. In the event that any one or more provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable in
any respect, by any court of competent jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Agreement and the parties shall use their best efforts to substitute a valid,
legal and enforceable provision which, insofar as practicable, implements the
purposes and intents of this Agreement.
9.11 Specific Enforceability. The parties recognize and hereby acknowledge
that it is impossible to measure in money the damages that would result to a
party by reason of the failure of either of the parties to perform any of the
obligations imposed on it by this Agreement. Accordingly, if any party should
institute an action or proceeding seeking specific enforcement of the
provisions hereof, each party against which such action or proceeding is
brought hereby waives the claim or defense that the party instituting such
action or proceeding has an adequate remedy at law and hereby agrees not to
assert in any such action or proceeding the claim or defense that such a
remedy at law exists.
9.12 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY RIGHTS THAT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE RELATED
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS
OF ANY OF THEM RELATING THERETO.
9.13 Alternative Structure. Notwithstanding anything to the contrary
contained in this Agreement, at any time prior to the Effective Date, Buyer
shall be entitled, with the prior written consent of Seller (which consent
shall not be unreasonably withheld), to revise the structure of the
Acquisition Merger as contemplated by this Agreement and the Bank Merger
Agreement so long as the transactions comprising such revised structure shall
(i) be capable of consummation in as timely a manner as the structure
contemplated herein and (ii) not otherwise have a material adverse impact on
the Seller or its stockholders, including on the financial benefits reasonably
expected to be derived by such stockholders from the transactions provided for
herein. This Agreement, the Bank Merger Agreement and any related documents
shall be appropriately amended in order to reflect any such revised structure.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of
Reorganization to be executed as a sealed instrument by their duly authorized
officers as of the day and year first above written.,
SIS Bancorp, Inc.
/s/ F. William Marshall, Jr.
By: _________________________________
F. William Marshall, Jr.
President and Chief Executive
Officer
Glastonbury Bank and Trust Company
/s/ J. Gilbert Soucie
By: _________________________________
J. Gilbert Soucie
President and Chief Executive
Officer
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Exhibit A to Agreement and
Plan of Reorganization
AGREEMENT AND PLAN OF MERGER
[OMITTED--SEE APPENDIX B TO JOINT PROXY STATEMENT--PROSPECTUS]
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Exhibit B to Agreement and
Plan of Reorganization
FORM OF STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 18, 1997, between Glastonbury
Bank and Trust Company, a Connecticut bank and trust company (the "Issuer")
and SIS Bancorp, Inc., a Massachusetts corporation (the "Grantee").
WHEREAS, the Grantee and the Issuer are entering into an Agreement and Plan
of Reorganization of even date herewith (the "Acquisition Agreement"), which
agreement is being executed by the parties thereto simultaneously with this
Agreement; and
WHEREAS, as a condition to the Grantee's entry into the Acquisition
Agreement and in consideration for such entry, the Issuer has agreed to grant
the Grantee the Option and pay the related Option Fee (each as hereinafter
defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Acquisition Agreement, the parties
hereto agree as follows:
1. (a) The Issuer hereby grants to the Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 170,080
fully paid and nonassessable shares (the "Option Shares") of common stock,
$2.50 par value per share, of the Issuer ("Common Stock") at a price of $18.00
per share (the "Option Price"). The number of shares of Common Stock that may
be received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth provided that in no event shall the number
of shares for which this Option is exercisable exceed 19.99% of the Issuer's
issued and outstanding shares of Common Stock (without giving effect to any
shares of Common Stock issuable pursuant to the Option) less the number of
shares previously issued pursuant to exercise of the Option.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to exercise of the Option pursuant to this Agreement or as
contemplated by Section 5(a) of this Agreement), including, without
limitation, pursuant to stock option or other employee plans or as a result of
the exercise of conversion rights, the number of Option Shares shall be
increased so that, after such issuance, it equals not less than 9.29% of the
number of shares of Common Stock then issued and outstanding, without giving
effect to any shares subject or issued pursuant to the Option less the number
of shares previously issued pursuant to exercise of the Option. Nothing
contained in this Section 1(b) or elsewhere in this Agreement shall be deemed
to authorize the Issuer to breach any provision of the Acquisition Agreement.
2. (a) Provided that the Grantee is not in material breach of the
Acquisition Agreement, the Holder (as such term is defined in paragraph (c)
below) may exercise the Option, in whole or part, if, but only if, both an
Initial Triggering Event (as defined in paragraph (d) below) and a Subsequent
Triggering Event (as defined in paragraph (e) below) shall have occurred prior
to the occurrence of an Exercise Termination Event (as defined in paragraph
(b) below), provided that the Holder shall have sent the written notice of
such exercise (as provided in paragraph (g) of this Section 2) within thirty
(30) days following such Subsequent Triggering Event and prior to the Exercise
Termination Event.
(b) The term "Exercise Termination Event" shall mean the earliest of (i) the
Effective Time of the Acquisition Merger, (ii) any termination of the
Acquisition Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of an Initial Triggering Event, and
(iii) in the event of any termination of the Acquisition Agreement in
accordance with the provisions thereof after the occurrence of an Initial
Triggering Event, the passage of twelve (12) months after such termination.
Notwithstanding the termination of the Option, the Grantee shall be entitled
to purchase those Option Shares with respect to which it has exercised the
Option in whole or in part prior to the termination of the Option.
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(c) The term "Holder" shall mean the holder or holders of the Option.
(d) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The Issuer or any subsidiary of the Issuer, without having received
the Grantee's prior written consent, shall have entered into an agreement
to engage in an Acquisition Transaction with any Person (the term "person"
for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act and the rules and
regulations thereunder), other than the Grantee or any subsidiary of the
Grantee, or, without the consent of the Grantee, the Board of Directors of
the Issuer shall have approved an Acquisition Transaction or recommended
that the shareholders of the Issuer approve or accept any Acquisition
Transaction other than as contemplated by the Acquisition Agreement. For
purposes of this Agreement, the term "Acquisition Transaction" shall mean
(A) a merger or consolidation, or any similar transaction, with the Issuer
or any subsidiary of the Issuer that is a "significant subsidiary" as
defined in Regulation S-X promulgated by the SEC (a "Significant
Subsidiary"), or any subsidiary of the Issuer which, after such
transaction, would be a Significant Subsidiary of the Issuer, (B) a
purchase, lease or other acquisition of all or substantially all of the
assets of the Issuer or any Significant Subsidiary of the Issuer (except as
contemplated by the Acquisition Agreement), or (C) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing ten percent (10%) or more of the
voting power of the Issuer or any Significant Subsidiary of the Issuer;
(ii) Any Person, other than the Grantee or any subsidiary of the Grantee
or the Issuer in a fiduciary capacity, shall have acquired beneficial
ownership (as hereinafter defined) or the right to acquire beneficial
ownership of ten percent (10%) or more of the outstanding shares of Common
Stock if such Person owned beneficially less than ten percent (10%) of the
outstanding shares of Common Stock on the date of this Agreement, or any
Person shall have acquired beneficial ownership of an additional three
percent (3%) of the outstanding shares of Common Stock if such Person owned
beneficially ten percent (10%) or more of the outstanding shares of Common
Stock on the date of this Agreement (the term "beneficial ownership" for
purposes of this Agreement having the meaning assigned thereto in Section
13(d) of the Exchange Act, and in the rules and regulations thereunder);
(iii) Any Person, other than the Grantee or any subsidiary of the
Grantee, shall have made a bona-fide proposal to the Issuer or its
shareholders to engage in an Acquisition Transaction by public announcement
or written communication that shall be or become the subject of public
disclosure;
(iv) After any Person other than the Grantee or any subsidiary of the
Grantee has made a proposal to the Issuer or its shareholders to engage in
an Acquisition Transaction, the Issuer shall have breached any covenant or
obligation contained in Sections 5.01, 5.03, 5.04 or 5.05 of the
Acquisition Agreement and such breach (A) would entitle the Grantee to
terminate the Acquisition Agreement and (B) shall not have been remedied
prior to the Notice Date (as defined in paragraph (g) below); or
(v) Any Person other than the Grantee or any subsidiary of the Grantee,
other than in connection with a transaction to which the Grantee has given
its prior written consent, shall have filed an application or notice with
the FDIC or Federal Reserve Board, as applicable, or other federal or state
bank regulatory authority, which application or notice has been accepted
for processing, for approval to engage in an Acquisition Transaction.
(e) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any Person of beneficial ownership of 20% or more
of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
subparagraph (i) of paragraph (d) of this Section 2, except that the
percentage referenced in clause (C) shall be 20% in lieu of ten percent
(10%).
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(f) The Issuer shall notify the Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by the Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(g) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to the Issuer a written notice (the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares of Common Stock it will purchase pursuant to such exercise, and (ii) a
place and date not earlier than three (3) business days nor later than forty-
five (45) business days from the Notice Date for the closing of such purchase
(the "Closing"); provided that if prior notification to or approval of the
FDIC or Federal Reserve Board or any other regulatory agency is required in
connection with such purchase, the Holder shall promptly file the required
notice or application for approval and shall expeditiously process the same
and the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which any required notification periods
have expired or been terminated or such approvals have been obtained and any
requisite waiting period or periods shall have passed; provided, however, that
in no event shall the Closing be more than sixteen (16) months after the
Notice Date, and if the Closing shall not have occurred within sixteen (16)
months after the Notice Date due to the failure of the Holder to obtain any
such required approval, the exercise of the Option effected on the Notice Date
shall be deemed to have expired. The term "business day" for purposes of this
Agreement means any day, excluding Saturdays, Sundays and any other day that
is a legal holiday in the Commonwealth of Massachusetts or a day on which
banking institutions in the Commonwealth of Massachusetts are authorized by
law or executive order to close.
(h) At the Closing, the Holder shall pay to the Issuer the aggregate
purchase price for the shares of Common Stock purchased pursuant to the
exercise of the Option in immediately available funds by a wire transfer to a
bank account designated by the Issuer, provided that failure or refusal of the
Issuer to designate such a bank account shall not preclude the Holder from
exercising the Option.
(i) At such Closing, simultaneously with the delivery of immediately
available funds as provided in paragraph (h) above, the Issuer shall deliver
to the Holder a certificate or certificates representing the number of shares
of Common Stock purchased by the Holder and, if the Option should be exercised
in part only, a new Option evidencing the rights of the Holder thereof to
purchase the balance of the shares purchasable hereunder, and the Holder shall
deliver to the Issuer a copy of this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
(j) Certificates for the Common Stock delivered at a Closing hereunder may
(in the sole discretion of the Issuer) be endorsed with a restrictive legend
that shall read substantially as follows:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE
RULES OF THE FEDERAL DEPOSIT INSURANCE CORPORATION AND PURSUANT TO THE TERMS
OF A STOCK OPTION AGREEMENT DATED AS OF AUGUST 18, 1997, A COPY OF WHICH
AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY
THE ISSUER OF A WRITTEN REQUEST THEREFOR."
It is understood and agreed that (i) the reference to the resale
restrictions of the Securities Act and the rules of the FDIC in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to the Issuer copies of letters
from the staff of the SEC and the staff of the FDIC, or an opinion of counsel,
in form and substance reasonably satisfactory to the Issuer, to the effect
that such legend is not required for purposes of the Securities Act and the
rules of the FDIC; (ii) the reference to the provisions of this Agreement in
the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in
compliance with the provisions of this Agreement and under circumstances that
do not require the retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and
(ii) are both satisfied. In addition, such certificates shall bear any other
legend as may be required by law.
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(k) Upon the giving by the Holder to the Issuer of the written notice of
exercise of the Option provided for under paragraph (g) above, the tender of
the applicable purchase price in immediately available funds and the tender of
a copy of this Agreement to the Issuer, such Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Issuer shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. The Issuer shall pay all expenses,
and any and all United States federal, state and local taxes and other charges
that may be payable in connection with the preparation, issue and delivery of
stock certificates under this Section 2 in the name of the Holder or its
assignee, transferee or designee.
(l) At such time as the Option first becomes exercisable in accordance with
the terms of this Agreement, the Issuer shall be obligated to pay a fee in the
amount of $1,500,000.00 (the "Option Fee") to the Grantee. The Option Fee,
which is intended to compensate the Grantee for the Issuer's inability to
grant the Option for such amount of shares of Common Stock as is customary in
transactions of the type provided for in the Acquisition Agreement, shall be
payable by the Issuer to the Grantee by wire transfer of immediately available
funds to an account designated by the Grantee within five business days after
the Option becomes exercisable hereunder.
3. The Issuer agrees (a) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without requiring the
Issuer's stockholders to approve an increase in the number of authorized
shares of Common Stock after giving effect to all other options, warrants,
convertible securities and other rights to purchase Common Stock, (b) that it
will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by the
Issuer, and (c) promptly to take all action as may from time to time be
required (including without limitation (i) complying with all applicable
premerger notification, reporting and waiting period requirements specified in
15 U.S.C. (S) 18a and regulations promulgated thereunder and (ii) cooperating
fully with any Holders in preparing any applications or notices required under
the Bank Holding Company Act of 1956, as amended, or the Change in Bank
Control Act of 1978, as amended, or any state banking law), in order to permit
such Holders to exercise the Option and the Issuer duly and effectively to
issue shares of Common Stock pursuant hereto.
4. This Agreement and the Option granted hereby are exchangeable, without
expense, at the option of each Holder, upon presentation and surrender of this
Agreement at the principal office of the Issuer, for other Agreements
providing for Options of different denominations entitling the Holder thereof
to purchase, on the same terms and subject to the same conditions as are set
forth herein, in the aggregate the same number of shares of Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any Stock Option Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
the Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft
or destruction) of reasonably satisfactory indemnification, and upon surrender
and cancellation of this Agreement, if mutilated, the Issuer will execute and
deliver a new Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute for all purposes and under all
circumstances an additional contractual obligation on the part of the Issuer.
5. (a) In addition to the adjustment in the number of Option Shares pursuant
to Section 1 of this Agreement, the number of Option Shares shall be subject
to adjustment from time to time as provided in this Section 5.
(i) In the event of any change in the shares of Common Stock by reason of
stock dividend, split-up, merger, recapitalization, subdivision,
conversion, combination, exchange of shares or similar transaction, the
type and number of Option Shares, and the Option Price therefor, shall be
adjusted appropriately in accordance with subsection (b) of this Section 5,
and proper provision shall be made in the agreements governing such
transaction, so that Grantee shall receive upon exercise of the Option the
number and class of shares of Common Stock that Grantee would have held
immediately after such event if the Option had been exercised immediately
prior to such event, or the record date therefor, as applicable.
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(ii) Issuer may make such increases in the number of Option Shares, in
addition to those required under subsection (a)(i), as shall be determined
by its Board of Directors to be advisable in order to avoid taxation so far
as practicable, of any dividend of stock or stock rights or any event
treated as such for Federal income tax purposes to the recipients.
(b) Whenever the number of Option Shares is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the Option
Price by a fraction, the numerator of which is equal to the number of
Option Shares prior to the adjustment and the denominator of which is equal
to the number of Option Shares after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior to
an Exercise Termination Event, and provided that the Grantee is not precluded,
pursuant to subsection (a) of Section 2 hereof, from exercising the Option,
the Issuer shall, at the request of the Grantee delivered within thirty (30)
days following such Subsequent Triggering Event (whether on the Grantee's own
behalf or on the behalf of any subsequent Holder of this Option (or part
thereof) or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file and keep current, with respect to the Option and the
Option Shares, a "shelf " registration statement under Rule 415 of the
Securities Act or any successor provision, if registration of such is required
under the Securities Act, otherwise such registration or equivalent statement
as may be required under the rules of the FDIC, and in any event an offering
circular if no such registration is required in order to enable the Grantee to
comply with Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and
the Issuer shall use all reasonable efforts to qualify such shares under any
applicable state securities laws. The Issuer will use all reasonable efforts
to cause any such registration statement first to become effective and then to
remain effective for such period not in excess of 180 days from the day such
registration statement first becomes effective or such shorter time as may be
reasonably necessary to effect sales or other dispositions of Option Shares.
The Grantee shall have the right to demand two (2) such registrations or
offerings. The foregoing notwithstanding, if, at the time of any request by
the Grantee for registration or offering of the Option or Option Shares as
provided above, the Issuer is in registration or other pre-offering process
with respect to any underwritten public offering of shares of Common Stock,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering, the inclusion of the Option or Option Shares would interfere with
the successful marketing of the shares of Common Stock offered by the Issuer
in such underwritten public offering, the number of shares represented by the
Option and/or the number of Option Shares otherwise to be covered in the
registration statement or offering circular contemplated hereby may be
reduced; provided, however, that if such reduction occurs, then the Issuer
shall file a registration or equivalent statement if required or otherwise
prepare an appropriate offering circular for the balance as promptly as
practicable and no reduction shall thereafter occur. Each such Holder shall
provide all information reasonably requested by the Issuer for inclusion in
any such registration or equivalent statement or offering circular to be filed
or otherwise prepared hereunder. If requested by any such Holder in connection
with such registration or offering, the Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements for the Issuer.
7. (a) Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, and provided that the Grantee is not
precluded, pursuant to subsection (a) of Section 2 hereof, from exercising the
Option, (i) at the request of any Holder, delivered within thirty (30) days
following such occurrence (or such later period as provided in Section 10),
the Issuer or any successor shall repurchase the Option from the Holder at a
price (the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised, plus, to
the extent not previously reimbursed, the Grantee's reasonable out-of-pocket
expenses incurred in connection with the transactions contemplated by, and the
enforcement of the Grantee's rights under, the Acquisition Agreement,
including without limitation legal, accounting and investment banking fees
(the "Grantee's Out-of-Pocket Expenses"), and (ii) at the request of any owner
of Option Shares from time to time (the "Owner"), delivered within thirty (30)
days following such occurrence (or such later
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period as provided in Section 10), the Issuer shall repurchase such number of
the Option Shares from such Owner as the Owner shall designate at a price per
share ("Option Share Repurchase Price") equal to the greater of (A) the
market/offer price and (B) the average exercise price per share paid by the
Owner for the Option Shares so designated, plus, to the extent not previously
reimbursed, the Grantee's Out-of-Pocket Expenses. The term "market/offer
price" shall mean the highest of (w) the price per share of the Common Stock
at which a tender offer or exchange offer therefor has been made, (x) the
price per share of the Common Stock to be paid by any Person, other than the
Grantee or a subsidiary of the Grantee, pursuant to an agreement with the
Issuer of the kind described in Section 2(d)(i), (y) the highest closing price
for shares of Common Stock within the shorter of the period from the date of
this Agreement up to the date on which such required repurchase of Options or
Option Shares, as the case may be, occurs or the six (6) month period
immediately preceding the date of such required repurchase of Options or
Option Shares, as the case may be, or (z) in the event of a sale of all or
substantially all of the Issuer's assets, the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of
the Issuer as determined in good faith by a nationally recognized investment
banking firm selected by a majority in interest of the Holders or the Owners,
as the case may be, and reasonably acceptable to the Issuer, divided by the
number of shares of Common Stock of the Issuer outstanding at the time of such
sale. In determining the market/offer price, the value of consideration other
than cash shall be determined in good faith by a nationally recognized
investment banking firm selected by a majority in interest of the Holders or
the Owners, as the case may be, and reasonably acceptable to the Issuer.
(b) Each Holder and Owner, as the case may be, may exercise its right to
require the Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to the Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares,
as applicable, accompanied by a written notice or notices stating that such
Holder or Owner elects to require the Issuer to repurchase this Option and/or
Option Shares in accordance with the provisions of this Section 7. As promptly
as practicable, and in any event within ten (10) business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, the Issuer shall deliver
or cause to be delivered to each Holder the Option Repurchase Price and/or to
each Owner the Option Share Repurchase Price therefor or the portion thereof
that the Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that the Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, or as a result of a
written agreement or other binding obligation with a governmental or
regulatory body or agency, from repurchasing the Option and/or the Option
Shares in full, the Issuer shall immediately so notify each Holder and/or each
Owner and thereafter deliver or cause to be delivered, from time to time, to
such Holder and/or Owner, as appropriate, the portion of the Option Repurchase
Price and the Option Share Repurchase Price, respectively, that it is no
longer prohibited from delivering, within ten (10) business days after the
date on which the Issuer is no longer so prohibited; provided, however, that
if the Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to
any Holder and/or Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in part or in full (and the
Issuer hereby undertakes to use all reasonable efforts to receive all required
regulatory and legal approvals and to file any required notices as promptly as
practicable in order to accomplish such repurchase), such Holder or Owner may
revoke its notice of repurchase of the Option or the Option Shares either in
whole or to the extent of the prohibition, whereupon the Issuer shall promptly
(i) deliver to such Holder and/or Owner, as appropriate, that portion of the
Option Purchase Price or the Option Share Repurchase Price that the Issuer is
not prohibited from delivering with respect to Options or Option Shares as to
which the Holder or the Owner, as the case may be, has not revoked its
repurchase demand; and (ii) deliver, as appropriate, either (A) to such
Holder, a new Stock Option Agreement evidencing the right of such Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase
by a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of
which is the Option Repurchase Price, or (B) to such Owner, a certificate for
the Option Shares it is then so prohibited from repurchasing.
A-48
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any
person, other than Grantee or any subsidiary of Grantee, and Issuer shall not
be the continuing or surviving corporation of such consolidation or merger,
(ii) to permit any person, other than Grantee or a subsidiary of Grantee, to
merge into Issuer and Issuer shall be the continuing or surviving corporation,
but, in connection with such merger, the then outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities of any
other person or cash or any other property, or the then outstanding shares of
Common Stock shall, after such merger, represent less than 50% of the
outstanding shares and share equivalents of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
person, other than Grantee or a subsidiary of Grantee, then, and in each such
case, the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged
for, an option (the "Substitute Option"), at the election of the Holder, of
either (y) the Acquiring Corporation (as hereinafter defined) or (z) any
person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) The term "Acquiring Corporation" shall mean (A) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (B) Issuer in a merger in which Issuer is the continuing or
surviving person, and (C) the transferee of all or substantially all of
Issuer's assets.
(ii) The term "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(iii) The term "Assigned Value" shall mean the "market/offer price", as
defined in Section 7.
(iv) The term "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding
the consolidation, merger or sale in question, but in no event higher than
the closing price of the shares of the Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by the person merging into
Issuer or by any company which controls such person, as the Holder may
elect.
(c) The Substitute Option shall have the same terms as the Option, provided,
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall, to the extent legally permissible, be as
similar as possible to, and in no event less advantageous to the Holder than,
the terms of the Option. The issuer of the Substitute Option shall also enter
into an agreement with the then Holder or Holders of the Substitute Option in
substantially the same form as this Agreement, which shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
the Substitute Common Stock as is equal to the Assigned Value multiplied by
the number of shares of Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the Substitute Option per
share of the Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction in which the numerator is the number of Option Shares
and the denominator is the number of shares of the Substitute Common Stock for
which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.99% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to exercise of the
Substitute Option (without giving effect to any shares of Substitute Common
Stock issued pursuant to the Substitute Option) less the number of shares
previously issued pursuant to the Substitute Option. In the event that the
Substitute Option would be exercisable for more than 19.99% of the shares of
Substitute Common Stock outstanding prior to exercise but for this clause (e),
the issuer of the Substitute Option (the "Substitute Option Issuer") shall
make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). The difference in value shall be determined by
a nationally recognized investment banking firm selected by a majority in
interest of the Holders or the Owners, as the case may be.
A-49
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation shall have assumed in writing all the
obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied
by the number of shares of the Substitute Common Stock for which the
Substitute Option may then be exercised, plus the Grantee's Out-of-Pocket
Expenses, and at the request of each owner (the "Substitute Share Owner") of
shares of the Substitute Common Stock (the "Substitute Shares"), the
Substitute Option Issuer shall repurchase the Substitute Shares at a price per
share (the "Substitute Share Repurchase Price") equal to the greater of (y)
the Highest Closing Price and (z) the average exercise price per share paid by
the Substitute Share Owner for the Substitute Shares so designated, plus
Grantee's Out-of-Pocket Expenses. The term "Highest Closing Price" shall mean
the highest closing price for shares of the Substitute Common Stock within the
six-month period immediately preceding the date the Substitute Option Holder
gives notice of the required repurchase of the Substitute Option or the
Substitute Share Owner gives notice of the required repurchase of the
Substitute Shares, as applicable.
(b) Each Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective right to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute
Option (or, in the absence of such an agreement, a copy of this Agreement) and
certificates for Substitute Shares accompanied by a written notice or notices
stating that such Substitute Option Holder or Substitute Share Owner elects to
require the Substitute Option Issuer to repurchase the Substitute Option
and/or the Substitute Shares in accordance with the provisions of this Section
9. As promptly as practicable, and in any event within five business days
after the surrender of the Substitute Option and/or the certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase
Price and/or to the Substitute Share Owner the Substitute Share Repurchase
Price therefor, or the portion(s) thereof which the Substitute Option Issuer
is not then prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from repurchasing the Substitute
Option and/or the Substitute Shares in full, the Substitute Option Issuer
shall immediately so notify each Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered, from
time to time, to the Substitute Option Holder and/or Substitute Share Owner,
as appropriate, that portion of the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five business days after the date on which
the Substitute Option Issuer is no longer so prohibited; provided, however,
that if the Substitute Option Issuer is, at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable law or regulation, or as a consequence of administrative
policy, or as a result of a written agreement or other binding obligation with
a governmental or regulatory body or agency, from delivering to the Substitute
Option Holder and/or the Substitute Share Owner, as appropriate, the
Substitute Option Repurchase Price and the Substitute Share Repurchase Price,
respectively, in part or in full (and the Substitute Option Issuer shall use
its best efforts to receive all required regulatory and legal approvals as
promptly as practicable in order to accomplish such repurchase), the
Substitute Option Holder or Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares either in whole
or to the extent of the prohibition, whereupon the Substitute Option Issuer
shall promptly (i) deliver to the Substitute Option Holder or Substitute Share
Owner, as appropriate, that portion of the Substitute Option Repurchase Price
or the Substitute Share Repurchase Price that the Substitute Option Issuer is
not
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prohibited from delivering; and (ii) deliver, as appropriate, either (A) to
the Substitute Option Holder, a new Substitute Option evidencing the right of
the Substitute Option Holder to purchase that number of shares of the
Substitute Common Stock obtained by multiplying the number of shares of the
Substitute Common Stock for which the surrendered Substitute Option was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Substitute Option Repurchase Price less the
portion thereof theretofore delivered to the Substitute Option Holder and the
denominator of which is the Substitute Option Repurchase Price, or (B) to the
Substitute Share Owner, a certificate for the Substitute Option Shares it is
then so prohibited from repurchasing.
10. The thirty (30) day period for exercise of certain rights under Sections
2, 6, 7 and 12 hereof shall be extended in each such case: (i) to the extent
necessary to obtain all regulatory approvals for the exercise of such rights
and for the expiration of all statutory waiting periods; and (ii) to the
extent necessary to avoid liability under Section 16(b) of the Exchange Act by
reason of such exercise, provided that notice of intent to exercise such
rights shall be given to the Issuer within the requisite thirty (30) day
period and the Grantee and the Holders shall use all reasonable efforts to
promptly obtain all requisite approvals and cause the expiration of all
requisite waiting periods.
11. The Issuer hereby represents and warrants to the Grantee, as the Grantee
hereby represents and warrants to the Issuers, as applicable, as follows:
(a) The Issuer 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
authorized by the Board of Directors of the Issuer and no other corporate
proceedings on the part of the Issuer are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement
has been duly and validly executed and delivered by the Issuer. This
Agreement is the valid and legally binding obligation of the Issuer.
(b) The Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and clear of
all claims, liens, encumbrances and security interests and not subject to
any preemptive rights.
(c) The Grantee 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
authorized by the Board of Directors of the Grantee and no other corporate
proceedings on the part of the Grantee are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement
has been duly and validly executed and delivered by the Grantee. This
Agreement is the valid and legally binding obligation of the Grantee.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other Person, whether by operation of law or otherwise, without the express
written consent of the other party, except that in the event a Subsequent
Triggering Event shall have occurred prior to an Exercise Termination Event
and the Grantee is not precluded, pursuant to Section 2(a), from exercising
the Option, the Grantee may, subject to the right of first refusal set forth
in Section 13, assign, transfer or sell in whole or in part its rights and
obligations hereunder within thirty (30) days following such Subsequent
Triggering Event (or such later period as provided in Section 10).
13. If at any time after the occurrence of a Subsequent Triggering Event
and, with respect to shares of Common Stock or other securities acquired by
the Grantee pursuant to an exercise of the Option, prior to the expiration of
twenty-four (24) months after the expiration of the Option pursuant to Section
2(b), the Grantee
A-51
shall desire to sell, assign, transfer or otherwise dispose of the Option, in
whole or in part, or all or any of the shares of Common Stock or other
securities acquired by the Grantee pursuant to the Option, the Grantee shall
give the Issuer written notice of the proposed transaction (an "Offeror's
Notice"), identifying the proposed transferee, accompanied by a copy of a
binding offer to purchase the Option or such shares or other securities signed
by such transferee and setting forth the terms of the proposed transaction. An
Offeror's Notice shall be deemed an offer by the Grantee to the Issuer, which
may be accepted within ten (10) business days of the receipt of such Offeror's
Notice, on the same terms and conditions and at the same price at which the
Grantee is proposing to transfer the Option or such shares or other securities
to such transferee. The purchase of the Option or such shares or other
securities by the Issuer shall be settled within ten (10) business days of the
date of the acceptance of the offer and the purchase price shall be paid to
the Grantee in immediately available funds, provided that, if prior
notification to or approval, consent or waiver of the FDIC or Federal Reserve
Board or any other regulatory authority is required in connection with such
purchase, the Issuer shall promptly file the required notice or application
for approval, consent or waiver and shall expeditiously process the same (and
the Grantee shall cooperate with the Issuer in the filing of any such notice
or application and the obtaining of any such approval) and the period of time
that otherwise would run pursuant to this sentence shall run instead from the
date on which, as the case may be, (a) the required notification period has
expired or been terminated or (b) such approval has been obtained and, in
either event, any requisite waiting period shall have passed. In the event of
the failure or refusal of the Issuer to purchase the Option or the shares or
other securities, as the case may be, covered by an Offeror's Notice or if the
FDIC or Federal Reserve Board or any other regulatory authority disapproves
the Issuer's proposed purchase of the Option or such shares or other
securities, the Grantee may, within sixty (60) days following the date of the
Offeror's Notice (subject to any necessary extension for regulatory
notification, approval, or waiting periods), sell all, but not less than all,
of the portion of the Option (which may be one hundred percent (100%)) or such
shares or other securities, as the case may be, proposed to be transferred to
the proposed transferee identified in the Offeror's Notice at no less than the
price specified and on terms no more favorable to the proposed transferee than
those set forth in the Offeror's Notice. The requirements of this Section 13
shall not apply to (i) any disposition of the Option or any shares of Common
Stock or other securities by a Person to whom the Grantee has assigned its
rights under the Option with the prior written consent of the Issuer, (ii) any
sale by means of a public offering registered under the Securities Act in
which steps are taken to reasonably ensure that no purchaser will own
securities representing more than two percent (2%) of the outstanding shares
of Common Stock of the Issuer or (iii) any transfer to a direct or indirect
wholly-owned subsidiary of the Grantee which agrees in writing to be bound by
the terms hereof.
14. Notwithstanding anything to the contrary herein, in the event that the
Holder or Owner or any Related Person thereof (as hereinafter defined) is a
person making an offer or proposal to engage in an Acquisition Transaction
(other than the transaction contemplated by the Acquisition Agreement), then
(i) in the case of a Holder or any Related Person thereof, the Option held by
it shall immediately terminate and be of no further force or effect, and (ii)
in the case of an Owner or any Related Person thereof, the Option Shares held
by it shall, at the Issuer's election, be immediately repurchasable by Issuer
at the Option Price. For purposes of this Agreement, a Related Person of a
Holder or Owner means any Affiliate (as defined in Rule 12b-2 of the rules and
regulations under the Exchange Act) of the Holder or Owner and any person that
is required to file a Schedule 13D or Form F-11 or other analogous schedule or
form under the applicable rules of the FDIC with the Holder or Owner with
respect to shares of Common Stock or options to acquire the Common Stock.
15. Each of the Grantee and the Issuer will use all reasonable efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including without limitation applying to the
FDIC or the Federal Reserve Board, as applicable, for approval to acquire the
shares issuable hereunder.
16. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
A-52
17. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or the Issuer
is not permitted to repurchase pursuant to Section 7, the full number of
shares of Common Stock provided in Section l(a) hereof (as adjusted pursuant
to Sections l(b) or 5 hereof), it is the express intention of the Issuer to
allow the Holder to acquire or to require the Issuer to repurchase such lesser
number of shares as may be permissible, without any amendment or modification
hereof.
18. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail
(postage prepaid, return receipt requested) at the respective addresses of the
parties set forth in the Acquisition Agreement.
19. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
20. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
21. Except as otherwise expressly provided herein or in the Acquisition
Agreement, each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
22. Except as otherwise expressly provided herein, this Agreement contains
the entire agreement between the parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or understandings
with respect thereof, written or oral. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
23. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Acquisition Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed as a sealed instrument on its behalf by its officers
thereunder duly authorized, all as of the day and year first above written.
Glastonbury Bank and Trust Company
By: _________________________________
J. Gilbert Soucie
President and Chief Executive
Officer
SIS Bancorp, Inc.
By: _________________________________
F. William Marshall, Jr.
President and Chief Executive
Officer
A-53
Exhibit C-1 to Agreement and
Plan of Reorganization
August 18, 1997
Glastonbury Bank and Trust Company
2461 Main Street
Glastonbury, Connecticut 06033
Ladies and Gentlemen:
Each of the undersigned (each a "Stockholder" and collectively the
"Stockholders") beneficially owns and has sole or shared voting power with
respect to the number of shares of the common stock, par value $0.01 per share
(the "Shares"), of SIS Bancorp, Inc., a Massachusetts corporation (the
"Buyer"), indicated opposite each such Stockholder's name on Schedule 1
attached hereto.
Simultaneously with the execution of this letter agreement, the Buyer and
Glastonbury Bank and Trust Company (the "Seller") are entering into an
Agreement and Plan of Reorganization (the "Acquisition Agreement") providing,
among other things, for the acquisition of Seller by Buyer by means of the
merger of an interim bank, to be organized as a wholly owned subsidiary of the
Buyer, with and into Seller (the "Acquisition"). Each of the undersigned
understands that the Seller has undertaken and will continue to undertake
substantial expenses in connection with the negotiation and execution of the
Acquisition Agreement and the subsequent actions necessary to consummate the
transactions contemplated by the Acquisition Agreement.
In consideration of, and as a condition to, the Seller's entering into the
Acquisition Agreement, and in consideration of the expenses incurred and to be
incurred by the Seller in connection therewith, each of the Stockholders and
the Seller agree as follows:
1. Each Stockholder, while this letter agreement is in effect, shall vote or
cause to be voted all of the Shares that such Stockholder shall be entitled to
so vote, whether such Shares are beneficially owned by such Stockholder on the
date of this letter agreement or are subsequently acquired, at any meeting of
the Seller's stockholders that may be called and held following the date
hereof, for the approval of the Acquisition, as contemplated under the
Acquisition Agreement.
2. Each Stockholder represents that such Stockholder has the complete and
unrestricted power and the unqualified right to enter into and perform the
terms of this letter agreement. Each Stockholder further represents that this
letter agreement (assuming this letter agreement constitutes a valid and
binding agreement of the Seller) constitutes a valid and binding agreement
with respect to such Stockholder, enforceable against such Stockholder in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity
and by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally. Except as may be set forth in Schedule 1, each Stockholder
represents that such Stockholder beneficially owns the number of Shares
indicated opposite such Stockholder's name on said Schedule 1, free and clear
of any liens, claims, charges or other encumbrances or restrictions of any
kind whatsoever ("Liens"), and has sole or shared, and otherwise unrestricted,
voting power with respect to such Shares.
3. Notwithstanding anything herein to the contrary, the agreements contained
herein shall remain in full force and effect until the earlier of (a) the
consummation of the Acquisition or (b) the termination of the Acquisition
Agreement in accordance with Article VIII thereof.
4. Each Stockholder has signed this letter agreement intending to be bound
hereby. Each Stockholder expressly agrees that this letter agreement shall be
specifically enforceable in any court of competent jurisdiction in accordance
with its terms against such Stockholder. All of the covenants and agreements
contained in this
A-54
letter agreement shall be binding upon, and inure to the benefit of, the
respective parties and their permitted successors, assigns, heirs, executors,
administrators and other legal representatives, as the case may be.
5. This letter agreement may be executed in one or more counterparts, each
of which will be deemed an original but all of which together shall constitute
one and the same instrument.
6. No waivers of any breach of this letter agreement extended by the Seller
to any Stockholder shall be construed as a waiver of any rights or remedies of
the Seller with respect to any other Stockholder with respect to Shares held
by such other Stockholder or with respect to any subsequent breach of the
first referenced Stockholder or any other Stockholder hereunder.
7. This letter agreement is deemed to be signed as a sealed instrument and
is to be governed by the laws of the Commonwealth of Massachusetts, without
giving effect to the principles of conflicts of laws thereof. If any provision
hereof is deemed unenforceable, the enforceability of the other provisions
hereof shall not be affected.
If the foregoing accurately reflects your understanding of the subject
matter intended to be contained herein, please confirm our agreement by
signing this letter where indicated below.
Very truly yours,
_____________________________________ _____________________________________
Sr. Mary Caritas John M. Naughton
_____________________________________ _____________________________________
William B. Hart, Jr. Thomas O'Brien
_____________________________________ _____________________________________
Charles L. Johnson Stephen A. Shatz
_____________________________________
F. William Marshall, Jr.
AGREED TO AND ACCEPTED BY AS
OF THE DATE FIRST ABOVE WRITTEN
GLASTONBURY BANK AND TRUST COMPANY
By: _________________________________
J. Gilbert Soucie
President and Chief Executive Officer
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SCHEDULE I
NAME OF NUMBER OF SHARES SHARES
STOCKHOLDER BENEFICIALLY OWNED SUBJECT TO PLEDGE
----------- ------------------ -----------------
Sr. Mary Caritas.......................... 6,715 -0-
William B. Hart, Jr....................... 6,120 6,120
Charles L. Johnson........................ 9,840 -0-
F. William Marshall, Jr................... 115,034 20,772
John M. Naughton.......................... 19,000 -0-
Thomas O'Brien............................ 8,520 -0-
Stephen A. Shatz.......................... 20,790 -0-
-------
Total................................... 186,019*
- --------
* Includes 78,560 shares subject to vested stock options (Caritas: 2,640;
Hart: 1,320; Johnson: 2,640; Marshall: 64,000; Naughton: 4,000; O'Brien:
1,320; Shatz: 2,640)
A-56
Exhibit C-2 to Agreement and
Plan of Reorganization
August 18, 1997
SIS Bancorp, Inc.
1441 Main Street
Springfield, Massachusetts 01103
Ladies and Gentlemen:
Each of the undersigned (each a "Stockholder" and collectively the
"Stockholders") beneficially owns and has sole or shared voting power with
respect to the number of shares of the common stock, par value $2.50 per share
(the "Shares"), of Glastonbury Bank and Trust Company, a Connecticut bank and
trust company (the "Seller"), indicated opposite each such Stockholder's name
on Schedule 1 attached hereto.
Simultaneously with the execution of this letter agreement, SIS Bancorp,
Inc. (the "Buyer") and the Seller are entering into an Agreement and Plan of
Reorganization (the "Acquisition Agreement") providing, among other things,
for the acquisition of Seller by Buyer by means of the merger of an interim
bank, to be organized as a wholly owned subsidiary of the Buyer, with and into
Seller (the "Acquisition"). Each of the undersigned understands that the Buyer
has undertaken and will continue to undertake substantial expenses in
connection with the negotiation and execution of the Acquisition Agreement and
the subsequent actions necessary to consummate the transactions contemplated
by the Acquisition Agreement.
In consideration of, and as a condition to, the Buyer's entering into the
Acquisition Agreement, and in consideration of the expenses incurred and to be
incurred by the Buyer in connection therewith, each of the Stockholders and
the Buyer agree as follows:
8. Each Stockholder, while this letter agreement is in effect, shall vote or
cause to be voted all of the Shares that such Stockholder shall be entitled to
so vote, whether such Shares are beneficially owned by such Stockholder on the
date of this letter agreement or are subsequently acquired, at any meeting of
the Seller's stockholders that may be called and held following the date
hereof, for the approval of the Acquisition, as contemplated under the
Acquisition Agreement, and shall vote or cause to be voted all such Shares, at
any such meeting or any other meeting of the Seller's stockholders following
the date hereof, against the approval of any other agreement or proposal
providing for a merger, acquisition, consolidation, sale of all or
substantially all of the assets or other business combination of the Seller or
any of its subsidiaries with any person or entity other than the Buyer or any
subsidiary of the Buyer.
9. Each Stockholder will not sell, assign, transfer or otherwise dispose of
(including, without limitation, by the creation of a Lien (as defined in
paragraph 4 below)), or permit to be sold, assigned, transferred or otherwise
disposed of, any Shares owned by such Stockholder, whether such Shares are
held by such Stockholder on the date of this letter agreement or are
subsequently acquired, except (a) transfers by will or by operation of law (in
which case this letter agreement shall bind the transferee), (b) transfers
pursuant to any pledge agreement (subject to the pledgee agreeing in writing
to be bound by the terms of this letter agreement), (c) transfers, in
connection with estate planning purposes, to members of such Stockholder's
immediate family, trusts or charitable organizations, subject to the
transferee agreeing in writing to be bound by the terms of this letter
agreement, and (d) as the Buyer may otherwise agree in its sole discretion.
The Buyer shall have the option to elect to have any existing certificates
representing Shares subject to this letter agreement canceled and reissued
bearing the following legend:
"THIS CERTIFICATE, AND THE SHARES REPRESENTED HEREBY, ARE SUBJECT TO
CERTAIN VOTING AND TRANSFER RESTRICTIONS CONTAINED IN A VOTING AGREEMENT BY
AND BETWEEN SIS BANCORP, INC. AND THE BENEFICIAL OWNER OF THESE SHARES AND
MAY BE TRANSFERRED ONLY IN COMPLIANCE THEREWITH. COPIES OF THE ABOVE-
REFERENCED AGREEMENT ARE ON FILE AT THE OFFICES OF SIS BANCORP, INC."
A-57
10. The agreements contained herein are intended to relate to restrictions
on transferability and to continue only for such time as may reasonably be
necessary to obtain all necessary approvals, including all necessary
shareholder and governmental approvals, of the Acquisition and all other
transactions contemplated by the Acquisition Agreement, and, in any event,
will terminate coincident with termination of the Acquisition Agreement.
11. Each Stockholder represents that such Stockholder has the complete and
unrestricted power and the unqualified right to enter into and perform the
terms of this letter agreement. Each Stockholder further represents that this
letter agreement (assuming this letter agreement constitutes a valid and
binding agreement of the Buyer) constitutes a valid and binding agreement with
respect to such Stockholder, enforceable against such Stockholder in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity
and by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally. Except as may be set forth in Schedule 1, each Stockholder
represents that such Stockholder beneficially owns the number of Shares
indicated opposite such Stockholder's name on said Schedule 1, free and clear
of any liens, claims, charges or other encumbrances or restrictions of any
kind whatsoever ("Liens"), and has sole or shared, and otherwise unrestricted,
voting power with respect to such Shares.
12. Notwithstanding anything herein to the contrary, the agreements
contained herein shall remain in full force and effect until the earlier of
(a) the consummation of the Acquisition or (b) the termination of the
Acquisition Agreement in accordance with Article VIII thereof.
13. Each Stockholder has signed this letter agreement intending to be bound
hereby. Each Stockholder expressly agrees that this letter agreement shall be
specifically enforceable in any court of competent jurisdiction in accordance
with its terms against such Stockholder, subject to approval of this Agreement
by the Banking Commissioner of the State of Connecticut (the "Commissioner").
Each Stockholder shall cooperate with Buyer and take all necessary and
appropriate action, and otherwise use his or her best efforts, to obtain such
approval of the Commissioner; provided, however, that nothing herein shall
require the Stockholder to pay any fees or expenses, or expend any significant
time, or assume any significant obligation in connection with such
cooperation. Each Stockholder acknowledges and agrees that any breach by such
Stockholder of any of the terms of this Agreement prior to the Commissioner's
approval hereof shall be deemed to be a breach of this Agreement, and Buyer
shall be entitled to enforce its rights to the fullest extent provided
hereunder with respect to such breach at any time following the Commissioner's
approval of this Agreement. All of the covenants and agreements contained in
this letter agreement shall be binding upon, and inure to the benefit of, the
respective parties and their permitted successors, assigns, heirs, executors,
administrators and other legal representatives, as the case may be.
14. This letter agreement may be executed in one or more counterparts, each
of which will be deemed an original but all of which together shall constitute
one and the same instrument.
15. No waivers of any breach of this letter agreement extended by the Buyer
to any Stockholder shall be construed as a waiver of any rights or remedies of
the Buyer with respect to any other Stockholder with respect to Shares held by
such other Stockholder or with respect to any subsequent breach of the first
referenced Stockholder or any other Stockholder hereunder.
16. This letter agreement is deemed to be signed as a sealed instrument and
is to be governed by the laws of the State of Connecticut, without giving
effect to the principles of conflicts of laws thereof. If any provision hereof
is deemed unenforceable, the enforceability of the other provisions hereof
shall not be affected.
A-58
If the foregoing accurately reflects your understanding of the subject matter
intended to be contained herein, please confirm our agreement by signing this
letter where indicated below.
Very truly yours,
_____________________________________ _____________________________________
Loren J. Andreo Mark A. Sheptoff
_____________________________________ _____________________________________
Ronald E. Bourbeau J. Gilbert Soucie
_____________________________________ _____________________________________
Camille S. Bushnell James Uccello
_____________________________________ _____________________________________
John J. Carson Charles Balocca
_____________________________________ _____________________________________
Alden A. Ives Wayne F. Patenaude
_____________________________________ _____________________________________
Harvey A. Katz David B. Rowley
_____________________________________
Grace C. Nome
AGREED TO AND ACCEPTED BY AS
OF THE DATE FIRST ABOVE WRITTEN
SIS BANCORP, INC.
By: _________________________________
F. William Marshall, Jr.
President and Chief Executive
Officer
A-59
SCHEDULE I
NAME OF NUMBER OF SHARES SHARES
STOCKHOLDER BENEFICIALLY OWNED SUBJECT TO PLEDGE
----------- ------------------ -----------------
Loren J. Andreo........................... 78,591 -0-
Ronald E. Bourbeau........................ 179,823 128,000
Camille S. Bushnell....................... 1,190 -0-
John J. Carson............................ 185 -0-
Alden A. Ives............................. 11,944 -0-
Harvey A. Katz............................ 80,084 -0-
Grace C. Nome............................. 691 -0-
Mark A. Sheptoff.......................... 5,456 -0-
J. Gilbert Soucie......................... 54,310 -0-
James Uccello............................. 2,059 -0-
Charles Balocca........................... 2,000 -0-
Wayne F. Patenaude........................ 2,289 -0-
David B. Rowley........................... 1,000 -0-
-------
Total................................... 419,622
A-60
Exhibit D to Agreement and
Plan of Reorganization
FORM OF SELLER AFFILIATE'S AGREEMENT
, 1997
SIS Bancorp, Inc.
1441 Main Street
Springfield, Massachusetts 01103
Ladies and Gentlemen:
I have been advised that, as of the date hereof, I may be deemed to be an
"affiliate" of Glastonbury Bank and Trust Company ("Seller"), as the term
"affiliate" is (i) defined for purposes of paragraphs (c) and (d) of Rule 145
of the Rules and Regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933,
as amended (the "Act"), and/or (ii) used in and for purposes of Accounting
Series, Releases 130 and 135, as amended, of the Commission. In accordance
with the terms of that certain Agreement and Plan of Reorganization, dated as
of August 18, 1997 (the "Agreement"), by and between SIS Bancorp, Inc.
("Buyer") and Seller and pursuant to that certain Agreement and Plan of
Merger, dated as of , 1997, by and among Buyer, Seller and SIS Interim
Bank ("Merger Subsidiary"), a direct subsidiary of Buyer, Merger Subsidiary
will be merged with and into Seller (the "Merger").
As a result of the Merger, I may receive shares of the common stock of
Buyer, par value $0.01 per share ("Buyer Common Stock"). I would receive such
shares of Buyer Common Stock in exchange for shares of the common stock of
Seller, par value $2.50 per share ("Seller Common Stock"), held by me
immediately prior to the consummation of the Merger.
I represent, warrant and covenant to Buyer that, in the event I receive any
shares of Buyer Common Stock as a result of the Merger:
1. I shall not make any sale, transfer or other disposition of such shares
of Buyer Common Stock in violation of the Act or the Rules and Regulations.
2. I have carefully read this letter and the Agreement and discussed its
requirements and other applicable limitations upon my ability to sell,
transfer or otherwise dispose of shares of Buyer Common Stock to the extent I
felt necessary, with my counsel or counsel for Seller.
3. I have been advised that the issuance of shares of Buyer Common Stock to
me in accordance with the terms of the Agreement has been registered with the
Commission under the Act. However, I have also been advised that, since, at
the time the Merger was submitted for a vote of the stockholders of Seller, I
may be deemed to have been an affiliate of Seller, and that the distribution
by me of shares of Buyer Common Stock has not been registered under the Act,
that I may not sell, transfer or otherwise dispose of any shares of Buyer
Common Stock issued to me following the Merger unless (i) such sale, transfer
or other disposition has been registered under the Act, (ii) such sale,
transfer or other disposition is made in conformity with the volume and other
limitations of Rule 145 promulgated by the Commission under the Act, or (iii)
in the opinion of counsel reasonably acceptable to Buyer, such sale, transfer
or other disposition is otherwise exempt from registration under the Act.
4. I understand that Buyer is under no obligation to register the sale,
transfer or other disposition of shares of Buyer Common Stock by me or on my
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
A-61
5. I also understand that stop transfer instructions will be given to
Buyer's transfer agents with respect to the Buyer Common Stock and that there
will be placed on the certificates for the shares of Buyer Common Stock issued
to me, or any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a transaction
to which Rule 145 promulgated under the Securities Act of 1933 applied. The
shares represented by this certificate may only be transferred in
accordance with the terms of an agreement dated as of , 1997, between
the registered holder hereof and [BUYER], a copy of which agreement is on
file at the principal offices of [BUYER]."
6. I also understand that, unless the transfer by me of any shares of Buyer
Common Stock has been registered under the Act or is a sale made in conformity
with the provisions of Rule 145, Buyer reserves the right to put the following
legend on the certificates issued to my transferee:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and were acquired from a person who
received such shares in a transaction to which Rule 145 promulgated under
the Securities Act of 1933 applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with, any
distribution thereof within the meaning of Securities Act of 1933 and may
not be sold, pledged or otherwise transferred except in accordance with an
exemption from the registration requirements of the Securities Act of
1933."
It is understood and agreed that the legends set forth in paragraphs 5 and 6
above shall be removed by delivery of substitute certificates without such
legends if the undersigned shall have delivered to Buyer a copy of a letter
from the staff of the Commission, or an opinion of counsel in form and
substance reasonable satisfactory to Buyer, to the effect that such legend is
not required for purposes of the Act, or upon the expiration of the relevant
time periods under Rule 145 (the expiration thereof having been demonstrated
by the holder of the shares evidenced by such legended certificate(s) to the
reasonable satisfaction of Buyer).
I further represent to and covenant with Buyer that I will not, within the
thirty (30) days prior to the Closing Date (as defined in the Agreement),
sell, transfer or otherwise dispose of any shares of Seller Common Stock or
shares of the capital stock of Buyer held by me and that I will not sell,
transfer or otherwise dispose of any shares of Buyer Common Stock received by
me in the Merger or other shares of the capital stock of Buyer until after
such time as results covering at least 30 days of combined operations of
Seller and Buyer have been published by Buyer, in the form of a quarterly
earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q or 8-K, or any other
public filing or announcement which includes the combined results of
operations.
Very truly yours,
_____________________________________
Accepted this day of , 1997, by
SIS BANCORP. INC.
By: _________________________________
Name:
Title:
A-62
Exhibit E to Agreement and
Plan of Reorganization
FORM OF OPINION OF SELLER'S COUNSEL
[STANDARD PREFATORY LANGUAGE, INCLUDING AGREED-UPON QUALIFICATIONS
AND ASSUMPTIONS, TO BE ADDED]
1. Seller is a bank and trust company duly organized, validly existing and
in good standing under the laws of the State of Connecticut. Seller has the
corporate power and authority to own, lease or operate all of its properties
and assets and to conduct the business in which it is currently engaged. The
deposits of Seller are insured by the Bank Insurance Fund of the Federal
Deposit Insurance Corporation up to the maximum allowable limit, and, to the
best of our knowledge, there are no pending or threatened proceedings for the
termination of such insurance.
2. Seller has full power, capacity and authority to enter into the Agreement
and the Bank Merger Agreement and to perform its obligations thereunder.
3. The authorized capital stock of Seller consists of 2,000,000 shares of
common stock, par value $2.50 per share ("Seller Common Stock"), and no shares
of preferred stock. As of the date hereof, there are 1,829,920 shares of
Seller Common Stock issued and outstanding, all of which have been validly
issued and are fully paid and nonassessable.
4. The execution and delivery of the Agreement and the Bank Merger Agreement
by the Seller and the performance by the Seller of its obligations thereunder
have been duly authorized by all requisite corporate authorizations and
approvals, including stockholder approval, required on the part of the Seller.
5. Each of the Agreement and the Bank Merger Agreement has been duly
executed and delivered by the Seller and constitutes the valid and binding
obligation of the Seller and is enforceable against the Seller in accordance
with its terms.
6. The execution and delivery of the Agreement and the Bank Merger Agreement
by the Seller does not, and the consummation by the Seller of the transactions
contemplated thereby, including without limitation the Acquisition Merger, and
the performance by the Seller of its obligations thereunder will not violate
(a) any provision of the certificate of incorporation and bylaws of the
Seller, (b) any provision of the laws or regulations of the State of
Connecticut or of federal law or regulations applicable to the Seller or any
of its subsidiaries, or (c) any decree, judgment or order, or material
agreement or instrument known to us, to which the Seller is a party or by
which it or any of its properties or assets is bound or affected.
7. Except for consents, waivers or approvals of, notices to, or filings
with, governmental agencies or authorities required to be obtained, given or
filed by the Seller, as set forth in Section 4.04 of the Agreement, all of
which have been obtained or made, no approval or consent or other action by,
and no notice or filing with, any governmental agency or authority is required
under any provision of federal law or the laws of the State of Connecticut as
a condition to the valid execution and delivery by the Seller of the Agreement
and the Bank Merger Agreement and the performance by the Seller of its
obligations thereunder. Except as disclosed in Section 4.04 of the Seller
Disclosure Schedule, there are no consents or approvals of, or notices to, any
nongovernmental third parties known to us to be required of the Seller, the
absence of which would have a Material Adverse Effect on the Seller after the
Effective Time or would otherwise deprive the Buyer of any material benefit
under or contemplated by the Agreement.
8. We are not aware of any litigation pending or threatened against either
the Seller or any of its subsidiaries which questions the legality, validity
or propriety of the Agreement or the Bank Merger Agreement or of any action
taken or to be taken by the Seller pursuant to the terms thereof.
A-63
9. The Proxy Statement filed by the Seller with the FDIC pursuant to Section
5.04 of the Agreement complies as to form in all material respects with the
requirements of the Exchange Act (except as to any financial statements and
other financial, accounting and statistical data included or incorporated by
reference therein and the information included or incorporated by reference
therein which relates to the Buyer and its subsidiaries, as to which we
express no opinion).
In addition, we have participated in conferences with officers and other
representatives of the Seller and representatives of the Buyer, at which the
contents of the Proxy Statement and the Buyer Registration Statement and
related matters were discussed and, although we are not passing upon and do
not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Proxy Statement or the Buyer Registration
Statement and have not made any independent check or verification thereof, on
the basis of the foregoing, no facts have come to our attention that lead us
to believe that the Buyer Registration Statement, as of the time it became
effective, or the Proxy Statement, as of the date of the special meeting of
stockholders of the Seller to which it relates, contained an untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that we express no view with respect to
the financial statements, notes, schedules and other financial, accounting and
statistical data, and any information related to the Buyer and its
subsidiaries, included in the Buyer Registration Statement or the Proxy
Statement.
A-64
Exhibit F to Agreement and
Plan of Reorganization
FORM OF OPINION OF BUYER'S COUNSEL
[STANDARD PREFATORY LANGUAGE, INCLUDING AGREED-UPON QUALIFICATIONS
AND ASSUMPTIONS, TO BE ADDED]
1. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts. Buyer has the
corporate power and authority to own, lease or operate all of its properties
and assets and to conduct the business in which it is currently engaged.
Merger Subsidiary has been organized as an interim bank in accordance with
Section of the General Statutes of the State of Connecticut.
2. Buyer has full power, capacity and authority to enter into the Agreement
and the Bank Merger Agreement and to perform its obligations thereunder.
Merger Subsidiary has full power, capacity and authority to enter into the
Bank Merger Agreement and to perform its obligations thereunder.
3. The authorized capital stock of Buyer consists of 25,000,000 shares of
common stock, par value $0.01 per share ("Buyer Common Stock"), and 5,000,000
shares of preferred stock, par value $0.01 per share ("Buyer Preferred
Stock"). As of , 1997, there were shares of Buyer Common Stock
issued and outstanding and no shares of Buyer Preferred Stock issued or
outstanding. All of the shares of Buyer Common Stock to be issued upon the
Effective Time will be validly issued, fully paid and nonassessable. The
authorized capital stock of Merger Subsidiary immediately prior to the
Effective Time consisted of shares of common stock, par value $ per
share, and no shares of preferred stock, all of which shares of common stock
were held at such time by Buyer.
4. The execution and delivery of the Agreement and the Bank Merger Agreement
by the Buyer and Merger Subsidiary, as applicable, and the performance by the
Buyer and Merger Subsidiary of their respective obligations thereunder have
been duly authorized by all requisite corporate authorizations and approvals,
including stockholder approvals, required on the part of both the Buyer and
Merger Subsidiary.
5. Each of the Agreement and the Bank Merger Agreement has been duly
executed and delivered by the Buyer and constitutes the valid and binding
obligation of the Buyer and is enforceable against the Buyer in accordance
with its terms. The Bank Merger Agreement has been duly executed and delivered
by Merger Subsidiary and constitutes the valid and binding obligation of
Merger Subsidiary and is enforceable against Merger Subsidiary in accordance
with its terms.
6. The execution and delivery of the Agreement and the Bank Merger Agreement
by the Buyer and Merger Subsidiary, as applicable, does not, and the
consummation by the Buyer and Merger Subsidiary of the transactions
contemplated thereby, including without limitation the Acquisition Merger, and
the performance by the Buyer and Merger Subsidiary of their respective
obligations thereunder will not violate (a) any provision of the articles of
organization and bylaws of the Buyer, (b) any provision of the laws or
regulations of the Commonwealth of Massachusetts or of federal law or
regulations applicable to the Buyer or any of its subsidiaries, or (c) any
decree, judgment or order, or material agreement or instrument known to us, to
which the Buyer is a party or by which it or any of its properties or assets
is bound or affected.
7. Except for consents, waivers or approvals of, notices to, or filings
with, governmental agencies or authorities required to be obtained, given or
filed by the Buyer, as set forth in Section 3.04 of the Agreement, all of
which have been obtained or made, no approval or consent or other action by,
and no notice or filing with, any governmental agency or authority is required
under any provision of federal law or the laws of the Commonwealth of
Massachusetts as a condition to the valid execution and delivery by the Buyer
and Merger Subsidiary of the Agreement and the Bank Merger Agreement, as
applicable, and the performance by the Buyer and Merger Subsidiary of their
respective obligations thereunder. There are no consents or approvals of, or
A-65
notices to, any nongovernmental third parties known to us to be required of
the Buyer, the absence of which would have a Material Adverse Effect on Buyer
after the Effective Time.
8. We are not aware of any litigation pending or threatened against the
Buyer or any of its subsidiaries which questions the legality, validity or
propriety of the Agreement or the Bank Merger Agreement or of any action taken
or to be taken by the Buyer or Merger Subsidiary pursuant to the terms
thereof.
9. The Proxy Statement and Buyer Registration Statement filed by the Buyer
with the SEC pursuant to Section 5.04 of the Agreement complies as to form in
all material respects with the requirements of the Exchange Act (except as to
any financial statements and other financial, accounting and statistical data
included or incorporated by reference therein and the information included or
incorporated by reference therein which relates to the Seller and its
subsidiaries, as to which we express no opinion).
In addition, we have participated in conferences with officers and other
representatives of the Buyer and representatives of the Seller, at which the
contents of the Proxy Statement and the Buyer Registration Statement and
related matters were discussed and, although we are not passing upon and do
not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Proxy Statement or the Buyer Registration
Statement and have not made any independent check or verification thereof, on
the basis of the foregoing, no facts have come to our attention that lead us
to believe that the Buyer Registration Statement, as of the time it became
effective, or the Proxy Statement, as of the date of the special meeting of
stockholders of the Buyer to which it relates, contained an untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that we express no view with respect to
the financial statements, notes, schedules and other financial, accounting and
statistical data, and any information related to the Seller and its
subsidiaries, included in the Buyer Registration Statement or the Proxy
Statement.
A-66
Appendix B to Joint
Proxy Statement--Prospectus
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 12, 1997 (this "Plan of
Merger") by and among SIS Bancorp Inc., a Massachusetts corporation (the
"Buyer"), Glastonbury Bank and Trust Company, a Connecticut bank and trust
company (the "Seller"), and SIS Interim Bank, a Connecticut interim bank and a
direct subsidiary of the Buyer (the "Merger Subsidiary"). The Seller and the
Merger Subsidiary are hereinafter sometimes collectively referred to as the
"Constituent Corporations".
This Plan of Merger is being entered into pursuant to an Agreement and Plan
of Reorganization, dated as of August 18, 1997 (the "Agreement"), between the
Buyer and the Seller.
All capitalized terms used herein without definition are used with the
meanings ascribed thereto in the Agreement.
In consideration of the premises, and the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 Surviving Corporation. In accordance with the provisions of this Plan
of Merger and the Banking Laws of Connecticut, as set forth in Title 36A of
the Connecticut General Statutes (the "BLC"), at the Effective Time (as
hereinafter defined), the Merger Subsidiary shall be merged with and into the
Seller (the "Merger"), and the separate corporate existence of the Merger
Subsidiary shall cease. The Seller shall be the surviving corporation in the
Merger (hereinafter sometimes referred to as the "Surviving Corporation") and
shall continue its corporate existence under the laws of the State of
Connecticut. The name of the Surviving Corporation shall be "Glastonbury Bank
and Trust Company".
1.02 Purposes of Surviving Corporation. As of the Effective Time, the
purposes of the Surviving Corporation shall continue to be as stated in the
Certificate of Incorporation of the Seller immediately prior to the Effective
Time.
1.03 Authorized Capital Stock of Surviving Corporation. As of the Effective
Time, the Surviving Corporation shall be authorized to issue that number of
shares of capital stock that the Seller is authorized to issue immediately
prior to the Effective Time, which, in accordance with the terms of Seller's
Certificate of Incorporation, as amended and in effect on the date hereof,
shall be two million (2,000,000) shares of common stock, par value $2.50 per
share.
1.04 Description of Classes of Stock. As of the Effective Time, each class
or series of capital stock of the Surviving Corporation shall have the same
par value, preferences, voting powers, qualifications, special or relative
rights or privileges as such class or series of capital stock of the Seller
possessed immediately prior to the Effective Time.
1.05 Effect of the Merger.
(a) At the Effective Time, all of the estate, property, rights,
privileges, powers and franchises of the Constituent Corporations and all
of their property, real, personal and mixed, and all the debts due on
whatever account to any of them, as well as all stock subscriptions and
other choses in action belonging to any of them, shall be transferred to
and vested in the Surviving Corporation, without further act or deed, and
all claims, demands, property and other interest shall be the property of
the Surviving Corporation, and
B-1
the title to all real estate vested in any of the Constituent Corporations
shall not revert or be in any way impaired by reason of the Merger, but
shall be vested in the Surviving Corporation.
(b) From and after the Effective Time, the rights of creditors or any
liens upon property of any Constituent Corporation shall not in any manner
be impaired, nor shall any liability or obligation, including taxes due or
to become due, or any claim or demand in any cause existing against such
corporation, or any stockholder, director, or officer thereof, be released
or impaired by the Merger, but the Surviving Corporation shall be deemed to
have assumed, and shall be liable for, all liabilities and obligations of
each of the Constituent Corporations in the same manner and to the same
extent as if the Surviving Corporation had itself incurred such liabilities
or obligations. The stockholders, directors, and officers of the
Constituent Corporations shall continue to be subject to all liabilities,
claims and demands existing against them as such at or before the Merger.
No action or proceeding then pending before any court or tribunal of the
State of Connecticut or otherwise in which any Constituent Corporation is a
party, or in which any such stockholder, director, or officer is a party,
shall abate or be discontinued by reason of the Merger, but any such action
or proceeding may be prosecuted to final judgment as though no merger had
taken place, or the Surviving Corporation may be substituted as a party in
place of any Constituent Corporation by the court in which such action or
proceeding is pending. Any judgment rendered against any Constituent
Corporation may be enforced against the Surviving Corporation.
1.06 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Seller or the Merger Subsidiary acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with,
the Merger or to otherwise carry out this Plan of Merger, the officers and
directors of the Surviving Corporation shall and will be authorized to execute
and deliver, in the name and on behalf of the Constituent Corporations or
otherwise, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of the Constituent Corporations or
otherwise, all such other actions and things as may be necessary or desirable
to vest, perfect or confirm any and all right, title and interest in, to and
under such rights, properties or assets in the Surviving Corporation or to
otherwise carry out this Plan of Merger.
1.07 Certificate of Incorporation. The Certificate of Incorporation and By-
Laws of the Seller, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation and By-Laws of the Surviving
Corporation and, subject to the rights of the Buyer as the sole stockholder,
shall thereafter continue to be its Certificate of Incorporation and By-Laws
until amended as provided therein or by law. A copy of the proposed
Certificate of Incorporation of the Surviving Corporation, which shall be
Seller's Certificate of Incorporation, as amended and in effect on the date
hereof, is attached hereto as Exhibit A.
1.08 Directors and Officers. At the Effective Time, subject to the rights of
the Buyer as the sole stockholder, the Board of Directors of the Surviving
Corporation shall consist of those persons comprising the Board of Directors
of the Seller immediately prior to the Effective Time plus one additional
person as shall be designated by the Buyer prior to the Effective Time and the
officers of the Surviving Corporation shall consist of those persons serving
as officers of the Seller immediately prior to the Effective Time, each to
hold office in accordance with the Certificate of Incorporation and By-Laws of
the Surviving Corporation. In accordance with the Certificate of Incorporation
of the Surviving Corporation, the Board of Directors of the Surviving
Corporation shall consist of not less than nine nor more than fifteen
directors.
1.09 Main Office. At the Effective Time, the main office of the Surviving
Corporation shall be located at 2461 Main Street, Glastonbury, Connecticut.
1.10 Effective Time; Conditions. If all of the conditions precedent set
forth in Article VI of the Agreement have been satisfied or waived, and this
Plan of Merger is not terminated under Section 3.01 hereof, this Plan of
Merger shall be filed and recorded pursuant to the BLC. The Merger shall
become effective at, and the Effective
B-2
Time shall be, the close of business on the date of such filing (such date and
time is herein referred to as the "Effective Time").
1.11 Dissenters' Rights. Notwithstanding anything in this Plan of Merger to
the contrary and unless otherwise provided by applicable law, the shares of
common stock of the Seller which are issued and outstanding immediately prior
to the Effective Time and which are owned by stockholders who, pursuant to the
BLC and Sections 33-855 to 33-872 of the Connecticut Business Corporations Act
(the "CBCA"), (a) deliver to the Seller, before the taking of the vote of the
Seller's stockholders on the Merger, written demand for the appraisal of their
shares, if the Merger is effected, and (b) whose shares are not voted in favor
of the Merger (the "Dissenting Shares"), shall not be converted into and
become a right to receive the Merger Consideration (as such term is defined in
Section 2.01(b) below) in accordance with the terms of this Plan of Merger,
unless and until such holders shall have failed to perfect or shall have
effectively withdrawn or lost their right of appraisal and payment under
applicable laws. If any such holder shall have failed to perfect or shall have
effectively withdrawn or lost such right of appraisal, the shares of the
Seller's common stock held by such holder shall thereupon be deemed to have
been converted into the right to receive and become exchangeable for, at the
Effective Time, the Merger Consideration in accordance with the terms of this
Plan of Merger.
ARTICLE II
CONVERSION OF SHARES
2.01 Effect on Outstanding Shares.
(a) Merger Subsidiary Common Stock. By virtue of the Merger,
automatically and without any action on the part of the holder thereof,
each share of common stock of the Merger Subsidiary, par value $1.00 per
share ("Merger Subsidiary Common Stock"), issued and outstanding
immediately prior to the Effective Time (the number of which shares is
anticipated to be 1,000), shall become and be converted into one (1.00)
share of common stock of the Surviving Corporation, par value $2.50 per
share ("Surviving Corporation Common Stock"). Each certificate which
immediately prior to the Effective Time represented outstanding shares of
the Merger Subsidiary Common Stock shall on and after the Effective Time be
deemed for all purposes to represent the number of shares of Surviving
Corporation Common Stock into which the shares of Merger Subsidiary Common
Stock represented by such certificate shall have been converted in
accordance with this Section 2.01(a).
(b) Seller Common Stock. By virtue of the Merger, automatically and
without any action on the part of the holder thereof, each share of common
stock of Seller, par value $2.50 per share ("Seller Common Stock"), issued
and outstanding immediately prior to the Effective Time (other than
Dissenting Shares and any such shares held either directly or indirectly by
the Buyer (other than Trust Account Shares and DPC Shares) or held as
treasury stock by Seller, which in either case shall be canceled, retired
and cease to exist, and for which no payment hereunder shall be made, shall
become and be converted into and become exchangeable for 0.740 (the
"Exchange Ratio") of a share of the common stock, par value $0.01 per
share, of Buyer ("Buyer Common Stock") (together with the number of Buyer
Rights or fraction thereof associated therewith). Notwithstanding the
foregoing, however, if the Average Closing Price (as such term is defined
below) is less than $25.00 per share (the "Minimum Price"), then Seller
shall have the right to terminate the Agreement pursuant to Section 8.01(g)
of the Agreement, unless Buyer elects, in its sole discretion, to adopt as
the Exchange Ratio the Adjusted Exchange Ratio (as such term is defined
below). For purposes of this Plan of Merger, (i) "Average Closing Price"
shall mean the average of the closing bid prices of shares of Buyer Common
Stock as reported on the Nasdaq Stock Market-National Market system
composite transactions reporting system for the twenty consecutive trading
days (the "Valuation Period") ending on the fifth business day prior to the
Closing Date, (ii) "Merger Consideration" shall mean the shares of Buyer
Common Stock that holders of Seller Common Stock are entitled to receive
hereunder and (iii) "Adjusted Exchange Ratio" shall mean that number,
rounded to the nearest thousandth, determined by dividing $18.50 by the
Average Closing Price. Each certificate which immediately prior to the
Effective
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Time represented outstanding shares of Seller Common Stock shall on and
after the Effective Time be deemed for all purposes to represent the Merger
Consideration into which the shares of Seller Common Stock represented by
such certificate shall have been converted pursuant to this Section
2.01(b).
(c) Dissenting Shares. No conversion under Section 2.01(b) hereof shall
be made with respect to the Dissenting Shares (as such term is defined in
Section 1.10 above), if any; provided, however, that (i) each Dissenting
Share outstanding immediately prior to the Effective Time and held by a
Seller stockholder who shall, at any time, withdraw his demand for
appraisal or lose his right of appraisal, in either case pursuant to the
applicable provisions of the CBCA, shall be deemed to be converted into and
become a right to receive, as of the Effective Time, the Merger
Consideration in accordance with Section 2.01(b) hereof.
2.02 Anti-Dilution. In the event that, subsequent to the date of this Plan
of Merger but prior to the Effective Time, the outstanding shares of either
the Buyer Common Stock or the Seller Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or kind of shares
or securities through reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other like changes in the
Buyer's or Seller's capitalization, as the case may be, other than pursuant to
the Agreement (a "Recapitalization"), then an appropriate and proportionate
adjustment shall be made to the Exchange Ratio so that each holder of the
Seller Common Stock shall receive under Section 2.01(b) hereof the number of
shares of the Buyer Common Stock (except for fractional shares) that such
holder would have held immediately following the Recapitalization if the
Merger had occurred immediately prior to the Recapitalization or the record
date therefor, as applicable.
2.03 Exchange Procedures.
(a) Certificates which represent shares of the Seller Common Stock that
are outstanding immediately prior to the Effective Time (a "Certificate")
and are converted into the Merger Consideration pursuant to this Article II
shall, after the Effective Time, be deemed to represent the Merger
Consideration into which such shares have been converted and shall be
exchangeable by the holders thereof in the manner provided in the
transmittal materials described below for new certificates representing the
shares of the Buyer Common Stock into which such shares have been
converted.
(b) As promptly as practicable after the Effective Time, the Buyer shall
send to each holder of record of shares of the Seller Common Stock
outstanding at the Effective Time transmittal materials (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass only upon delivery of such Certificates to the
Exchange Agent) for use in exchanging the Certificates for such shares for
the Merger Consideration into which such shares of the Seller Common Stock
have been converted pursuant to this Article II. Upon surrender of a
Certificate, together with a duly executed letter of transmittal and any
other required documents, the holder of such Certificate shall be entitled
to receive, in exchange therefor, a certificate for the number of shares of
the Buyer Common Stock to which such holder is entitled pursuant to Section
2.01(b) hereof, and such Certificate shall forthwith be canceled. No
dividend or other distribution payable after the Effective Time with
respect to the Buyer Common Stock shall be paid to the holder of any
unsurrendered Certificate until the holder thereof surrenders such
Certificate, at which time, subject to Section 2.03(e) below, such holder
shall receive all dividends and distributions, without interest thereon,
previously payable but withheld from such holder pursuant hereto. After the
Effective Time, there shall be no transfers on the stock transfer books of
the Seller of shares of the Seller Common Stock which were issued and
outstanding at the Effective Time and converted pursuant to the provisions
of this Article II. If, after the Effective Time, Certificates are
presented for transfer to the Seller, they shall be canceled and exchanged
for the Merger Consideration deliverable in respect thereof as determined
in accordance with the provisions and procedures set forth in this Article
II.
(c) In lieu of the issuance of fractional shares of the Buyer Common
Stock pursuant to the applicable provisions of Section 2.01(b) above, cash
adjustments, without interest, will be paid to the holders of the Seller
Common Stock in respect of any fractional share that would otherwise be
issuable and the amount of such cash adjustment shall be equal to an amount
in cash determined by multiplying such holder's fractional interest by the
Average Closing Price (rounded up to the nearest cent). For purposes of
determining whether,
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and in what amounts, a particular holder of the Seller Common Stock would
be entitled to receive cash adjustments under this Section 2.03(c), shares
of record held by such holder and represented by two or more Certificates
shall be aggregated.
(d) After the Effective Time, holders of the Seller Common Stock shall
cease to be, and shall have no rights as, stockholders of the Seller, other
than (i) to receive the Merger Consideration into which such shares have
been converted or fractional share payments pursuant to the provisions
hereof and (ii) the rights afforded to any holder of Dissenting Shares
under applicable provisions of the CBCA.
(e) Notwithstanding any of the foregoing, neither the Buyer nor the
Seller nor any other person shall be liable to any former holder of shares
of the Seller Common Stock for any shares or any dividends or distributions
with respect thereto or any other cash amounts properly delivered to a
public official pursuant to applicable abandoned property, escheat or
similar laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon receipt of appropriate evidence as to such loss, theft or
destruction and to the ownership of such Certificate by the person claiming
such Certificate to be lost, stolen or destroyed, and the receipt by the
Buyer of appropriate and customary indemnification, the Buyer will deliver,
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration and any fractional share payment deliverable in respect of
such Certificate as determined in accordance with this Article II.
(g) If any Merger Consideration is to be delivered in a name other than
that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of the deliver 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 (including, but not limited to that the signature of the
transferor shall be properly guaranteed by a commercial bank, trust
company, member firm of the New York Stock Exchange or other eligible
guarantor institution), 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 delivery of the Merger Consideration 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.
ARTICLE III
Amendment and Termination
3.01 Termination. Notwithstanding the approval and adoption of this Plan of
Merger by the stockholders of the Seller and Merger Subsidiary, this Plan of
Merger shall terminate forthwith in the event that the Agreement shall be
terminated as therein provided. In the event of the termination of this Plan
of Merger as provided above, this Plan of Merger shall forthwith become null
and void and there shall be no liability on the part of any of the parties
hereto except as otherwise provided in the Agreement.
3.02 Amendment. This Plan of Merger shall not be amended except by an
instrument in writing signed on behalf of each of the parties hereto pursuant
to an amendment to the Agreement approved in the manner therein provided. If
any such amendment to the Agreement is so approved, any amendment to this Plan
of Merger required by such amendment to the Agreement shall be effected by the
parties hereto by action taken by their respective Boards of Directors.
ARTICLE IV
Miscellaneous
4.01 Exchange Agent. Prior to the Effective Time, the Buyer shall appoint
ChaseMellon Shareholder Services, L.L.C. or such other exchange agent as may
be designated by Buyer as exchange agent for the purpose
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of exchanging certificates representing shares of the Buyer Common Stock for
Certificates representing shares of the Seller Common Stock (the "Exchange
Agent"). The Buyer shall issue and deliver to the Exchange Agent certificates
representing the whole shares of Buyer Common Stock issuable pursuant to the
Merger and shall pay to the Exchange Agent such aggregate amount of cash as
shall be required to be delivered to holders of shares of the Seller Common
Stock in lieu of fractional shares of Buyer Common Stock pursuant to Article
II of this Plan of Merger.
4.02 Counterparts. This Plan of Merger may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to each of the other parties.
4.03 Governing Law. This Plan of Merger shall be governed by and construed
in accordance with the laws of the State of Connecticut, without giving effect
to the principles of conflicts of laws thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger to be
duly executed and delivered as a sealed instrument as of the date first above
written.
SIS BANCORP, INC.
/s/ F. William Marshall, Jr.
By: _________________________________
F. William Marshall, Jr.
President and Chief Executive
Officer
GLASTONBURY BANK AND TRUST COMPANY
/s/ Loren Andreo /s/ Mark A. Sheptoff
- ------------------------------------- -------------------------------------
Loren J. Andreo Mark A. Sheptoff
/s/ Ronald E. Bourbeau /s/ J. Gilbert Soucie
- ------------------------------------- -------------------------------------
Ronald E. Bourbeau J. Gilbert Soucie
/s/ Camille S. Bushnell /s/ James Uccello
- ------------------------------------- -------------------------------------
Camille S. Bushnell James Uccello
/s/ John J. Carson /s/ Alden A. Ives
- ------------------------------------- -------------------------------------
John J. Carson Alden A. Ives
/s/ Harvey A. Katz /s/ Grace C. Nome
- ------------------------------------- -------------------------------------
Harvey A. Katz Grace C. Nome
SIS INTERIM BANK
By: SIS BANCORP, Inc.
as sole organizer
/s/ F. William Marshall, Jr.
By: _________________________________
F. William Marshall, Jr.
President and Chief Executive
Officer
B-6
Appendix C to Joint
Proxy Statement--Prospectus
MCCONNELL, BUDD & DOWNES, INC.
365 SOUTH STREET
MORRISTOWN, NEW JERSEY 07960
201-538-7800
FAX: 201-538-0522
October 28, 1997
The Board of Directors
Glastonbury Bank & Trust Company
6241 Main Street
Glastonbury, Connecticut 06033
The Board of Directors:
You have requested our opinion as to the fairness from a financial point of
view to the shareholders of Glastonbury Bank & Trust Company ("Glastonbury")
of the consideration to be paid to the shareholders of Glastonbury in
connection with the proposed acquisition of Glastonbury by SIS Bancorp, Inc.
("SIS") pursuant to the Agreement and Plan of Reorganization (the "Merger
Agreement") dated as of August 18, 1997 by and between Glastonbury and SIS.
Pursuant to the Merger Agreement, SIS will form an Acquirer Subsidiary, which
will be merged with and into Glastonbury (the "Merger").
As is more specifically set forth in the Merger Agreement, upon consummation
of the Merger, each outstanding share of the common stock of Glastonbury, par
value $2.50 per share ("Glastonbury Common Stock"), except for any dissenting
shares and except for shares held by SIS and its subsidiaries or by
Glastonbury (in both cases, other than shares held in a fiduciary capacity or
as a result of debts previously contracted), will be converted into and
exchangeable for 0.74 of a share of the common stock, par value $0.01 per
share, of SIS. However, if the average closing bid prices of SIS common stock
on the Nasdaq National Market for the 20-trading-day period ending five
business days before the Merger is less than $25.00, Glastonbury may terminate
the Merger Agreement unless SIS increases the number of shares to be issued in
the Merger to ensure that GBT shareholders will receive a minimum value of
$18.50 in shares of SIS common stock.
The reader is urged to carefully read all the terms of the Merger Agreement,
which is reproduced in its entirety elsewhere in the Proxy Statement--
Prospectus.
McConnell, Budd & Downes, Inc., as part of its investment banking business,
is engaged exclusively in the valuation of bank holding companies and banks,
thrift holding companies and thrifts and their securities in connection with
mergers and acquisitions, negotiated underwritings, private placements,
competitive bidding processes, market making as a Nasdaq market maker,
secondary distributions of listed securities and valuations for corporate,
estate and other purposes. Our experience and familiarity with Glastonbury
includes having worked as a financial advisor to Glastonbury since April of
1997 on a contractual basis and specifically includes our participation in the
process and negotiations leading up to the proposed transaction with SIS. In
the course of our role as financial advisor to Glastonbury in connection with
the transaction we have received fees for our services and will receive
additional fees contingent on the occurrence of certain defined events. We
will receive a fee in connection with the rendering of this opinion. In the
ordinary course of our business, we may, from time to time, trade the equity
securities of Glastonbury in our capacity as a Nasdaq market maker, for our
own account, for the accounts of our customers and for the accounts of
individual employees of McConnell, Budd & Downes, Inc. Accordingly we may,
from time to time, hold a long or short position in the equity securities of
Glastonbury.
In arriving at our opinion, we have reviewed the Merger Agreement and Proxy
Statement--Prospectus in substantially the form to be mailed to Glastonbury
and SIS shareholders. We have also reviewed publicly available business,
financial and shareholder information relating to Glastonbury and its
subsidiaries, certain
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publicly available financial information relating to SIS and certain financial
information relating to SIS and its subsidiaries provided to Glastonbury by
SIS management. In addition, we have reviewed certain other information,
including internal reports and documents of Glastonbury and SIS and certain
management-prepared financial information provided to us by Glastonbury and
SIS. We have also met with and had discussions with members of the senior
management of Glastonbury and SIS to discuss their past and current business
operations, current financial condition and future prospects. In connection
with the foregoing, we have reviewed the annual report to shareholders and
annual report on Form 10K of SIS for the fiscal year ended December 31, 1996,
and the report to shareholders for SIS Bank for the fiscal year ended December
31, 1995. We have similarly reviewed the annual reports of Glastonbury for the
calendar years ended December 31, 1994, 1995 and 1996. We have reviewed and
studied the historical stock prices and trading volumes of the common stock of
Glastonbury and SIS as well as the terms and conditions of 23 recent
acquisition transactions involving publicly traded financial institutions
conducting business in the northeast which can be compared to the proposed
acquisition of Glastonbury by SIS. We also considered the current state of and
future prospects for the economies of Connecticut and Massachusetts generally
and the relevant market areas for SIS and Glastonbury in particular. We have
also conducted such other studies, analyses and investigations as we deemed
appropriate under the circumstances surrounding this proposed transaction.
In the course of our review and analysis we considered, among other things,
such topics as relative capitalization, capital adequacy, profitability,
availability of noninterest income, relative asset quality, adequacy of the
reserve for loan losses and the composition of the loan portfolio of each of
Glastonbury and SIS. We also considered management's estimates of cost savings
and revenue enhancements which might result from a consolidation of
Glastonbury and SIS. In the conduct of our review and analysis we have relied
upon and assumed, without independent verification, the accuracy and
completeness of the financial information provided to us by Glastonbury and
SIS and or otherwise publicly obtainable. In reaching our opinion we have not
assumed any responsibility for the independent verification of such
information or any independent valuation or appraisal of any of the assets or
the liabilities of either Glastonbury or SIS nor have we obtained from any
other source, any current appraisals of the assets or liabilities of either
Glastonbury or SIS. We have also relied on the management of Glastonbury as to
the reasonableness of various financial and operating forecasts and of the
assumptions on which they are based, which were provided to us for use in our
analyses.
In the course of rendering this opinion, which is being rendered prior to
the receipt of certain required regulatory approvals necessary before
consummation of the transaction, we have assumed that no conditions will be
imposed by any regulatory agency in connection with its approval of the
transaction that will have a material adverse effect on the results of
operations, the financial condition or the prospects of SIS following
consummation of the transaction.
Based upon and subject to the foregoing, it is our opinion, that as of the
date of this letter, the Exchange Ratio is fair to the shareholders of
Glastonbury from a financial point of view.
Very truly yours,
McConnell, Budd & Downes, Inc.
/s/ David A. Budd
By: _________________________________
David A. Budd
Managing Director
C-2
Appendix D to Joint
Proxy Statement--Prospectus
Oppenheimer Tower
OPPENHEIMER & CO., INC. World Financial
Center
New York, New York
10281
(212) 667-7000
INVESTMENT BANKING GROUP
October 28, 1997
Board of Directors
SIS Bancorp, Inc.
1441 Main Street
Springfield, Massachusetts 01102-3034
Directors:
You have requested our opinion as to the fairness, from a financial point of
view, to SIS Bancorp, Inc. (the "Company") of the aggregate consideration to be
paid by the Company (the "Consideration"), to the holders of the outstanding
shares of common stock (the "Glastonbury Shares"), of Glastonbury Bank and
Trust Company ("Glastonbury") pursuant to the Agreement and Plan of
Reorganization to be dated as of August 18, 1997 by and between the Company and
Glastonbury (the "Agreement").
Pursuant to the Agreement, Glastonbury will become a wholly-owned subsidiary
of SIS Bancorp, Inc. (the "Merger").
In connection with this opinion we have reviewed, among other things: (a) the
Agreement; (b) the Seller and Buyer Stockholders' Agreement and Seller Option
Agreement (as such terms are defined in the Agreement); (c) audited
consolidated financial statements and management's discussion and analysis of
the financial condition and results of operation for each of Glastonbury and
the Company for the three fiscal years ended December 31, 1996; (d) unaudited
consolidated financial statements for each of Glastonbury and the Company for
the six months ended June 30, 1997; (e) certain other publicly available
business and financial information relating to the Company and Glastonbury; (f)
certain internal financial analyses, budgets, projections and forecasts for
Glastonbury and the Company, including estimates as to the future cost savings
relating to the Merger; prepared by and reviewed with the management of the
Company; (g) certain other summary materials and analyses with respect to
Glastonbury's loan portfolio and deposits prepared by the Company; (h) the
views of senior management of Glastonbury and the Company of the past and
current business operations, results thereof, financial condition and future
prospects; (i) a comparison of certain financial information for Glastonbury,
with similar information for certain other companies we considered comparable
to Glastonbury; (j) the financial terms of certain recent business combinations
in the banking industry; (k) the pro forma effect of the transaction on the
Company based on certain assumptions provided by the Company; (l) the current
market environment generally and the banking environment in particular; and (m)
such other information, financial studies, analyses and investigations and
financial, economic and market criteria as we considered appropriate in the
circumstances.
We have relied, without independent verification or investigation, on all of
the financial information, analyses and other information furnished to us for
purposes of this opinion, including information relating to assets and
liabilities, contingent or otherwise, as being complete and accurate. We have
also relied upon the managements of Glastonbury and the Company as to the
reasonableness and achievability of the financial and operating forecasts and
projections, including estimates of future cost savings relating to the Merger
(and the assumptions and bases therefore) provided to us. In that regard, we
have assumed, with your consent, that such forecasts, projections and estimates
have been reasonably prepared and reflect the best currently available
estimates and judgements of the managements of Glastonbury and the Company as
to the future financial performance of the Company and Glastonbury and that,
for purposes of our opinion, such forecasts and projections will be realized in
the amounts and in the time periods currently estimated by the managements of
Glastonbury and the Company. We have not made an independent evaluation or
appraisal of the assets and
D-1
liabilities of Glastonbury or any of its respective subsidiaries and we have
not been furnished with any such evaluation or appraisal. Furthermore, this
opinion shall not constitute any such evaluation or appraisal. We are not
experts in the evaluation of allowances for loan losses or liabilities
(contingent or otherwise) and we have neither made an independent evaluation
of the adequacy of the allowance for loan losses of Glastonbury or reviewed
any individual loan credit files.
You have informed us and we have assumed that the Merger will be accounted
for as a pooling under generally accepted accounting principles.
We have acted as financial advisor to the Company in connection with the
Merger and will receive a fee for our services. In the ordinary course of our
business, we may actively trade the equity securities of the Company for our
own account and for the accounts of customers, and accordingly, may at any
time hold a long or short position in such securities.
It is understood that this opinion is for the information of the Board of
Directors in connection with its consideration of the Merger and may not be
quoted or referred to, in whole or in part, in any registration statement,
prospectus, or proxy statement, or in any other document used in connection
with the offering or sale of securities, nor shall this letter be used for any
other purposes, without our prior written consent or as otherwise agreed to in
our engagement letter.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that, as of the date hereof, the
Consideration to be paid by the Company in the Merger is fair, from a
financial point of view, to the Company and its shareholders.
Very truly yours,
/s/ Oppenheimer & Co., Inc.
Oppenheimer & Co., Inc.
D-2
Appendix E to Joint
Proxy Statement--Prospectus
TEXT OF CONNECTICUT BUSINESS CORPORATION LAW DISSENTERS' RIGHTS
PART XIII. DISSENTERS' RIGHTS
(A) RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
(S) 33-855. DEFINITIONS
As used in sections 33-855 to 33-872, inclusive:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 33-856 and who exercises that right when and
in the manner required by sections 33-860 to 33-868, inclusive.
(3) "Fair value", with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation
in anticipation of the corporate action.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
(S) 33-856. RIGHT TO DISSENT
(a) A shareholder is entitled to dissent from, and obtain payment of the
fair value of his shares in the event of, any of the following corporate
actions:
(1) Consummation of a plan of merger to which the corporation is a party
(A) if shareholder approval is required for the merger by section 33-817 or
the certificate of incorporation and the shareholder is entitled to vote on
the merger or (B) if the corporation is a subsidiary that is merged with
its parent under section 33-818;
(2) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to
the shareholders within one year after the date of sale;
(4) An amendment of the certificate of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it: (A)
Alters or abolishes a preferential right of the shares; (B) creates, alters
or abolishes a right in respect of redemption, including a provision
respecting a sinking fund for the redemption or repurchase, of the shares;
(C) alters or abolishes a preemptive right of the holder of
E-1
the shares to acquire shares or other securities; (D) excludes or limits
the right of the shares to vote on any matter, or to cumulate votes, other
than a limitation by dilution through issuance of shares or other
securities with similar voting rights; or (E) reduces the number of shares
owned by the shareholder to a fraction of a share if the fractional share
so created is to be acquired for cash under section 33-668; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the certificate of incorporation, bylaws or a resolution of the
board of directors provides that voting or nonvoting shareholders are
entitled to dissent and obtain payment for their shares.
(b) Where the right to be paid the value of shares is made available to a
shareholder by this section, such remedy shall be his exclusive remedy as
holder of such shares against the corporate transactions described in this
section, whether or not he proceeds as provided in sections 33-855 to 33-872,
inclusive.
(S) 33-857. DISSENT BY NOMINEES AND BENEFICIAL OWNERS
(a) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one person and notifies the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection
are determined as if the shares as to which he dissents and his other shares
were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares held
on his behalf only if: (1) He submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and (2) he does so with
respect to all shares of which he is the beneficial shareholder or over which
he has power to direct the vote.
(S)(S) 33-858, 33-859. RESERVED FOR FUTURE USE
(B) PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
(S) 33-860. NOTICE OF DISSENTERS' RIGHTS
(a) If proposed corporate action creating dissenters' rights under section
33-856 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights under sections 33-855 to 33-872, inclusive, and be accompanied by a
copy of said sections.
(b) If corporate action creating dissenters' rights under section 33-856 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was
taken and send them the dissenters' notice described in section 33-862.
(S) 33-861. NOTICE OF INTENT TO DEMAND PAYMENT
(a) If proposed corporate action creating dissenters' rights under section
33-856 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights (1) shall deliver to the corporation
before the vote is taken written notice of his intent to demand payment for
his shares if the proposed action is effectuated and (2) shall not vote his
shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a) of
this section is not entitled to payment for his shares under sections 33-855
to 33-872, inclusive.
(S) 33-862. DISSENTERS' NOTICE
(a) If proposed corporate action creating dissenters' rights under section
33-856 is authorized at a shareholders' meeting, the corporation shall deliver
a written dissenters' notice to all shareholders who satisfied the
requirements of section 33-861.
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(b) The dissenters' notice shall be sent no later than ten days after the
corporation action was taken and shall:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he acquired beneficial ownership
of the shares before that date;
(4) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than thirty nor more than sixty days after the
date the subsection (a) of this section notice is delivered; and
(5) Be accompanied by a copy of sections 33-855 to 33-872, inclusive.
(S) 33-863. DUTY TO DEMAND PAYMENT
(a) A shareholder sent a dissenters' notice described in section 33-862 must
demand payment, certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenters' notice pursuant to
subdivision (3) of subsection (b) of said section and deposit his certificates
in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) of this section retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the proposed
corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice,
is not entitled to payment for his shares under sections 33-855 to 33-872,
inclusive.
(S) 33-864. SHARE RESTRICTIONS
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under section 33-866.
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
cancelled or modified by the taking of the proposed corporate action.
(S) 33-865. PAYMENT
(a) Except as provided in section 33-867, as soon as the proposed corporate
action is taken, or upon receipt of a payment demand, the corporation shall
pay each dissenter who complied with section 33-863 the amount the corporation
estimates to be the fair value of his shares, plus accrued interest.
(b) The payment shall be accompanied by: (1) The corporation's balance sheet
as of the end of a fiscal year ending not more than sixteen months before the
date of payment, an income statement for that year, a statement of changes in
shareholders' equity for that year and the latest available interim financial
statements, if any; (2) a statement of the corporation's estimate of the fair
value of the shares; (3) an explanation of how the interest was calculated;
(4) a statement of the dissenter's right to demand payment under section 33-
860; and (5) a copy of sections 33-855 to 33-872, inclusive.
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(S) 33-866. FAILURE TO TAKE ACTION
(a) If the corporation does not take the proposed action within sixty days
after the date set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and release the
transfer restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under section 33-862 and repeat the payment demand
procedure.
(S) 33-867. AFTER-ACQUIRED SHARES
(a) A corporation may elect to withhold payment required by section 33-865
from a dissenter unless he was the beneficial owner of the shares before the
date set forth in the dissenters' notice as the date of the first announcement
to news media or to shareholders of the terms of the proposed corporate
action.
(b) To the extent the corporation elects to withhold payment under
subsection (a) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest
was calculated and a statement of the dissenter's right to demand payment
under section 33-868.
(S) 33-868. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER
(a) A dissenter may notify the corporation in writing of his own estimate of
the fair value of his shares and amount of interest due, and demand payment of
his estimate, less any payment under section 33-865, or reject the
corporation's offer under section 33-867 and demand payment of the fair value
of his shares and interest due, if:
(1) The dissenter believes that the amount paid under section 33-865 or
offered under section 33-867 is less than the fair value of his shares or
that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under section 33-865 within
sixty days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty days after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this section unless
he notifies the corporation of his demand in writing under subsection (a) of
this section within thirty days after the corporation made or offered payment
for his shares.
(C) JUDICIAL APPRAISAL OF SHARES
(S) 33-871. COURT ACTION
(a) If a demand for payment under section 33-868 remains unsettled, the
corporation shall commence a proceeding within sixty days after receiving the
payment demand and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the
proceeding within the sixty-day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the superior court for
the judicial district where a corporation's principal office or, if none in
this state, its registered office is located. If the corporation is a foreign
corporation without a registered office in this state, it shall commence the
proceeding in the superior court for the judicial district where the
registered office of the domestic corporation merged with or whose shares were
acquired by the foreign corporation was located.
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(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) of this section is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend decision
on the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The dissenters are entitled
to the same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment
(1) for the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation, or (2) for
the fair value, plus accrued interest, of his after-acquired shares for which
the corporation elected to withhold payment under section 33-867.
(S) 33-872. COURT COSTS AND COUNSEL FEES
(a) The court in an appraisal proceeding commenced under section 33-871
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court
shall assess the costs against the corporation, except that the court may
assess costs against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously or not in good faith in demanding payment under section 33-868.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable: (1) Against
the corporation and in favor of any or all dissenters if the court finds the
corporation did not substantially comply with the requirements of sections 33-
860 to 33-868, inclusive; or (2) against either the corporation or a
dissenter, in favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted arbitrarily, vexatiously
or not in good faith with respect to the rights provided by sections 33-855 to
33-872, inclusive.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 67 of Chapter 156B of the Massachusetts General Laws, the
Massachusetts Business Corporation Law (the "MBCL") provides, in effect, that
a corporation may indemnify any person made a party to any action by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation against, in the case of a nonderivative action, judgments, fines,
amounts paid in settlement and reasonable expenses (including attorney's fees)
incurred by him as a result of such action, and in the case of a derivative
action, against expenses (including attorney's fees), if in either type of
action he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation. This indemnification
does not apply, in a derivative action, to matters as to which it is adjudged
that the director, officer, employee or agent is liable to the corporation,
unless upon court order it is determined that, despite such adjudication of
liability, but in view of all the circumstances of the case, he is fairly and
reasonable entitled to indemnity for expenses, and, in a nonderivative action,
to any criminal proceeding in which such person had reasonable cause to
believe his conduct was unlawful.
Article 7 of SIS's Bylaws provides that SIS shall indemnify each person who
is or was an officer or director of SIS to the fullest extent permitted by
Section 67 of the MBCL.
Section 6.8 of Article 6 of SIS's Articles of Organization states that no
director of the Company shall be liable to the Company or its shareholders for
monetary damages for breach of fiduciary duty as a director, except to the
extent that exculpation from liability is not permitted under the MBCL as in
effect when such breach occurred.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
NUMBER DESCRIPTION
------ -----------
2.1 Agreement and Plan of Reorganization dated as of August 18, 1997;
included as Appendix A to Joint Proxy Statement--Prospectus.
2.2 Agreement and Plan of Merger dated as of September 12, 1997; included
as Appendix B to Joint Proxy Statement--Prospectus.
2.3 Stock Option Agreement dated as of August 18, 1997; form included as
Exhibit B to the Agreement and Plan of Reorganization (see Exhibit 2.1
above).
3.1 Articles of Organization of SIS (incorporated by reference to Exhibit
99.1 to SIS's Registration Statement on Form 8-A dated June 4, 1996).
3.2 Bylaws of SIS (incorporated by reference to Exhibit 99.2 to SIS's
Registration Statement on Form 8-A dated June 4, 1996).
5 Opinion of Sullivan & Worcester LLP as to legality.
8.1 Opinion of Sullivan & Worcester LLP as to tax matters.
8.2 Opinion of Tyler Cooper & Alcorn, LLP as to tax matters.
10.1 Amended and Restated Employment Agreement between the Bank and F.
William Marshall, Jr., dated June 30, 1997 (incorporated by reference
to Exhibit 10.2 to SIS's Report on Form 10-Q for the quarter ended June
30, 1997).
10.2 Form of Employment and Severance Agreements for Messrs. Frank W.
Barrett, B. John Dill and John F. Treanor (incorporated by reference to
Exhibit 10.2 to SIS's Report on Form 10-Q for the quarter ended June
30, 1996).
10.3 Form of Employment and Severance Agreements for Messrs. Henry J.
McWhinnie, Michael E. Tucker, Gilbert F. Ehmke and Christopher A.
Sinton and Ms. Jeanne Rinaldo (incorporated by reference to Exhibit B
to the FDIC Form F-2 filed as Exhibit 99.3 to SIS's Registration
Statement on Form 8-A dated June 4, 1996).
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NUMBER DESCRIPTION
------ -----------
10.4 Form of "Second Addendum to Form of Employment and Severance Agreement
for Senior Vice President and Executive Vice Presidents" of the Bank,
executed by Messrs. Barrett, Dill, Treanor, Ehmke, Sinton, Tucker and
McWhinnie and Ms. Rinaldo (incorporated by reference to Exhibit 10.1 to
SIS's Report on Form 10-Q for the quarter ended June 30, 1997).
10.5 Director and Management Stock Option Plan, as amended (incorporated by
reference to Exhibit 10.4 to SIS's Report on Form 10-Q for the quarter
ended June 30, 1996).
10.6 Director and Management Restricted Stock Plan, as amended (incorporated
by reference to Exhibit 10.5 to SIS's Report on Form 10-Q for the
quarter ended June 30, 1996).
10.7 Rights Agreement dated January 22, 1997 by and between SIS and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (incorporated
by reference to Exhibit 4.1 to SIS's Registration Statement on Form 8-A
dated January 23, 1997).
13.1 Report of Glastonbury Bank & Trust Company on Form F-2 for the year
ended December 31, 1996.
13.2 Report of Glastonbury Bank & Trust Company on Form F-4 for the quarter
ended March 31, 1997.
13.3 Report of Glastonbury Bank & Trust Company on Form F-4 for the quarter
ended June 30, 1997.
13.4 Glastonbury Bank & Trust Company 1996 Annual Report to Stockholders
21 Subsidiaries of SIS.
22.1 Form of Proxy for GBT Meeting.
22.2 Form of Proxy for SIS Meeting.
22.3 Opinion of McConnell, Budd & Downes, Inc.; included as Appendix C to
the Joint Proxy Statement--Prospectus.
22.4 Opinion of Oppenheimer & Co., Inc.; included as Appendix D to the Joint
Proxy Statement--Prospectus.
23.1 Consent of Price Waterhouse LLP with respect to SIS.
23.2 Consent of Shatswell, MacLeod & Company, P.C. with respect to GBT.
23.3 Consent of Sullivan & Worcester LLP (included in Exhibit 5).
23.4 Consent of Tyler Cooper & Alcorn, LLP (included in Exhibit 8.2).
23.5 Consent of McConnell, Budd & Downes, Inc.
23.6 Consent of Oppenheimer & Co., Inc.
24 Powers of Attorney of certain directors and officers of SIS (included
in page II-4).
99 Consent of Director Nominee
(b) Financial Statement Schedules--Not applicable.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i)To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii)To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement;
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement.
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the Securities offered
herein, and the offering of such Securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the Securities being registered which remain unsold at the
termination of the offering.
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Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the registrant, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (and where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d)
of the Exchange Act), that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, SIS
BANCORP, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
SPRINGFIELD, COMMONWEALTH OF MASSACHUSETTS, ON OCTOBER 24, 1997.
SIS BANCORP, INC.
/s/ F.William Marshall, Jr.
By: ________________________________
F. William Marshall, Jr.
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT ON FORM S-4 RELATING TO THE COMMON STOCK OF SIS
BANCORP, INC. HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES
AND ON THE DATES INDICATED; AND EACH OF THE UNDERSIGNED OFFICERS AND DIRECTORS
OF SIS BANCORP, INC. HEREBY SEVERALLY CONSTITUTES AND APPOINTS F. WILLIAM
MARSHALL, JR. AND JOHN F. TREANOR, AND EACH OF THEM, TO SIGN FOR HIM, AND IN
HIS NAME IN THE CAPACITY INDICATED BELOW, SUCH REGISTRATION STATEMENT FOR THE
PURPOSE OF REGISTERING SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND ANY AND ALL AMENDMENTS THERETO, INCLUDING WITHOUT LIMITATION ANY
REGISTRATION STATEMENT OR POST-EFFECTIVE AMENDMENT THEREOF FILED UNDER AND
MEETING THE REQUIREMENTS OF RULE 462(B) UNDER THE SECURITIES ACT, HEREBY
RATIFYING AND CONFIRMING OUR SIGNATURES AS THEY MAY BE SIGNED BY OUR ATTORNEYS
TO SUCH REGISTRATION STATEMENT AND ANY AND ALL AMENDMENTS THERETO.
SIGNATURE TITLE DATE
/s/ F. William Marshall, Jr. President, Director October 24,
- ------------------------------------- and Chief Executive 1997
F. William Marshall, Jr. Officer
/s/ John F. Treanor Executive Vice October 24,
- ------------------------------------- President, 1997
John F. Treanor Treasurer and Chief
Financial Officer
/s/ Laura Sotir Katz Vice President and October 24,
- ------------------------------------- Controller (Chief 1997
Laura Sotir Katz Accounting Officer)
/s/ John M. Naughton Director and October 24,
- ------------------------------------- Chairman of the 1997
John M. Naughton Board
/s/ Sister Mary Caritas-Geary, S.P. Director October 24,
- ------------------------------------- 1997
Sister Mary Caritas-Geary, S.P.
/s/ William B. Hart, Jr. Director October 24,
- ------------------------------------- 1997
William B. Hart, Jr.
/s/ Charles L. Johnson Director October 24,
- ------------------------------------- 1997
Charles L. Johnson
/s/ Thomas O'Brien Director October 24,
- ------------------------------------- 1997
Thomas O'Brien
/s/ Stephen A. Shatz Director October 24,
- ------------------------------------- 1997
Stephen A. Shatz
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