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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
MARCH 23, 1995
BAYBANKS, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 0-959 04-2008039
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
175 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(617) 482-1040
CONFORMED COPY
Exhibit Index appears on page 5
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ITEM 5. OTHER EVENTS.
On March 23, 1995, BayBanks, Inc., a Massachusetts corporation
("BayBanks") and Cornerstone Financial Corporation ("CFC") entered into an
Agreement and Plan of Merger (the "Acquisition Agreement") pursuant to which
BayBanks will acquire CFC (the "Acquisition") in exchange for cash. CFC is the
New Hampshire-based parent company of Cornerstone Bank, Derry, New Hampshire, a
commercial bank. The Acquisition will be effected through a merger of a wholly
owned subsidiary of BayBanks (BayBanks, Inc., a New Hampshire corporation) with
and into CFC, as a result of which CFC will become a wholly owned subsidiary of
BayBanks and will operate under the BayBanks name. In accordance with the terms
of the Acquisition Agreement, each issued and outstanding share of CFC common
stock, no par value per share ("CFC Stock"), other than shares as to which
dissenters' appraisal rights have been exercised, will be converted into the
right to receive an amount equal to $8.80 in cash.
Immediately upon the execution of the Acquisition Agreement, BayBanks
and CFC entered into a Stock Option Agreement (the "Option Agreement") pursuant
to which CFC granted to BayBanks an option (the "Option") to purchase at a price
of $6.625 per share up to 295,000 shares of newly issued CFC Stock, which would
represent approximately 12% of the outstanding shares of CFC Stock, assuming
exercise of the Option. The purchase price is subject to adjustment in the event
of certain issuances of CFC Stock. The Option is exercisable upon the occurrence
of certain events that create the potential for a third party to acquire CFC. If
the Option becomes exercisable, BayBanks or any permitted transferee of BayBanks
may under certain circumstances require CFC to repurchase the Option (in lieu of
its exercise).
Completion of the Acquisition is subject to certain conditions,
including (a) approval by the shareholders of CFC, (b) approval by all requisite
regulatory authorities, and (c) other closing conditions customary in a
transaction of this type. The Acquisition Agreement is subject to termination
under certain circumstances, including if the Acquisition is not consummated on
or before February 28, 1996. Under certain circumstances related to termination
of the Acquisition Agreement, CFC is required to pay BayBanks a termination fee
of $500,000.
Prior to the consummation of the Acquisition, holders of options to
purchase CFC Stock pursuant to CFC employee stock option plans shall be entitled
to exercise such options. If such options are not exercised prior to the
consummation of the Acquisition, such holders shall be entitled to receive from
the Company in cancellation of such options cash payments calculated in
accordance with the terms of the Agreement. Subject to the foregoing, all
options issued under the Company's employee stock option plans shall terminate
upon consummation of the Acquisition.
Directors and executive officers of CFC having the right to vote in the
aggregate 192,778 shares of CFC Stock, or approximately 9% of the presently
outstanding CFC Stock, have agreed to vote their shares in favor of approval of
the Acquisition and against any other acquisition proposal.
CFC has agreed to send notice of redemption to the holders of its
outstanding convertible debentures if so requested by BayBanks. Although
circumstances could cause this decision to change, BayBanks has informed CFC
that it currently expects to redeem the outstanding debentures in full.
BayBanks anticipates that redemption notices will be sent to bondholders after
receipt of all regulatory approvals for the Acquisition, and that the
redemption would become effective simultaneously with the Acquisition.
The Acquisition Agreement and Option Agreement are attached hereto as
exhibits and incorporated herein by reference. The foregoing summary of such
exhibits is qualified in its entirety by reference to the complete text of such
exhibits.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits:
Exhibit
No. Description
2(a) Agreement and Plan of Merger among Cornerstone Financial
Corporation and BayBanks, Inc. (a Massachusetts corporation)
and BayBanks, Inc. (a New Hampshire corporation) dated March
23, 1995.
2(b) Stock Option Agreement by and between Cornerstone Financial
Corporation, a New Hampshire corporation and BayBanks, Inc.,
a Massachusetts corporation dated March 23, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BAYBANKS, INC.
Date: March 30, 1995 By: /s/ Michael W. Vasily
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Michael W. Vasily
Executive Vice President and Treasurer
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
2(a) Agreement and Plan of Merger among Cornerstone Financial
Corporation and BayBanks, Inc. (a Massachusetts corporation)
and BayBanks, Inc. (a New Hampshire corporation) dated March
23, 1995.
2(b) Stock Option Agreement by and between Cornerstone Financial
Corporation, a New Hampshire corporation and BayBanks, Inc.,
a Massachusetts corporation dated March 23, 1995.
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