AGREEMENT AND PLAN OF REORGANIZATION
By and Between
BANK OF BOSTON CORPORATION
and
THE BOSTON BANCORP
October 10, 1995
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
ARTICLE II
THE ACQUISITION MERGER
2.01 Surviving Corporation.......................................... 10
2.02 Purposes and Authorized Capital Stock
of Surviving Corporation...................................... 10
2.03 Effect of the Acquisition Merger............................... 10
2.04 Additional Actions............................................. 11
2.05 Articles of Organization and By-laws........................... 11
2.06 Directors and Officers......................................... 11
2.07 Effective Time; Conditions..................................... 11
2.08 Dissenters' Appraisal Rights................................... 11
2.09 Effect on Outstanding Shares................................... 12
2.10 Anti-Dilution.................................................. 13
2.11 Procedures..................................................... 13
2.12 Treatment of Seller Stock Options.............................. 15
2.13 Exchange Agent................................................. 16
2.14 Delivery of Measurement Date Documents......................... 16
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
3.01 Corporate Organization......................................... 17
3.02 Capitalization................................................. 18
3.03 Authority; No Violation........................................ 18
3.04 Consents and Approval.......................................... 20
3.05 Financial Statements........................................... 20
3.06 Absence of Undisclosed Liabilities............................. 21
3.07 Broker's Fees.................................................. 21
3.08 Absence of Certain Changes or Events........................... 21
3.09 Legal Proceedings.............................................. 21
3.10 Agreements with Banking Authorities ........................... 22
3.11 Reports........................................................ 22
3.12 Compliance with Applicable Law................................. 22
3.13 Buyer Common Stock............................................. 22
3.14 Ownership of Seller Common Stock............................... 23
3.15 Buyer Information.............................................. 23
3.16 Disclosure..................................................... 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.01 Corporate Organization......................................... 23
4.02 Capitalization................................................. 24
4.03 Authority; No Violation........................................ 25
4.04 Consents and Approvals......................................... 27
4.05 Financial Statements........................................... 27
4.06 Absence of Undisclosed Liabilities............................. 28
4.07 Broker's Fee................................................... 28
4.08 Absence of Certain Changes or Events........................... 28
4.09 Legal Proceedings.............................................. 28
4.10 Taxes and Tax Returns.......................................... 29
4.11 Employees...................................................... 31
4.12 Agreements with Banking Authorities............................ 32
4.13 Material Agreements............................................ 32
4.14 Ownership of Property.......................................... 33
4.15 Reports........................................................ 33
4.16 Compliance with Applicable Law................................. 34
4.17 Environmental Matters.......................................... 34
4.18 Antitakeover Statutes Not Applicable........................... 34
4.19 Ownership of Buyer Common Stock................................ 34
4.20 Insurance...................................................... 35
4.21 Labor.......................................................... 35
4.22 Material Interests of Certain Persons.......................... 35
4.23 Absence of Registration Obligations............................ 35
4.24 Loans.......................................................... 35
4.25 Seller Information............................................. 36
4.26 Disclosure..................................................... 36
ARTICLE V
COVENANTS OF THE PARTIES
5.01 Conduct of the Business of Seller.............................. 36
5.02 Access to Properties and Records; Confidentiality.............. 40
5.03 No Solicitation................................................ 42
5.04 Regulatory Matters; Consents................................... 43
5.05 Approval of Seller's Stockholders.............................. 43
5.06 Agreements of Seller's Affiliates.............................. 44
5.07 Further Assurances............................................. 44
5.08 Disclosure Supplements......................................... 44
5.09 Public Announcements........................................... 45
5.10 Organization of Merger Subsidiary.............................. 45
5.11 Tax-Free Reorganization Treatment.............................. 45
5.12 Stock Exchange Listing......................................... 45
5.13 Employment and Benefit Matters................................. 45
5.14 Directors' and Officers' Indemnification....................... 46
5.15 Accountants' Letters........................................... 47
5.16 Maintenance of Records......................................... 47
5.17 Leases......................................................... 47
5.18 Pre-Closing Transactions....................................... 47
5.19 Bank Merger.................................................... 48
5.20 Resignations................................................... 48
5.21 Disposition of Commercial Real Estate Loan Portfolio........... 48
ARTICLE VI
CLOSING CONDITIONS
6.01 Conditions to Each Party's
Obligations Under This Agreement............................. 48
6.02 Conditions to the Obligations of
Buyer Under This Agreement................................... 49
6.03 Conditions to the Obligations of
Seller Under This Agreement.................................. 50
ARTICLE VII
CLOSING
7.01 Time and Place................................................. 52
7.02 Deliveries at the Closing...................................... 52
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination.................................................... 52
8.02 Effect of Termination.......................................... 53
8.03 Amendment, Extension and Waiver................................ 53
ARTICLE IX
MISCELLANEOUS
9.01 Expenses....................................................... 54
9.02 Non-Survival................................................... 54
9.03 Notice......................................................... 54
9.04 Parties in Interest............................................ 55
9.05 Entire Agreement............................................... 55
9.06 Counterparts................................................... 56
9.07 Governing Law.................................................. 56
9.08 Captions....................................................... 56
9.09 Effect of Investigations....................................... 56
9.10 Severability................................................... 56
9.11 Specific Enforceability........................................ 56
9.12 Waiver of Jury Trial........................................... 56
LIST OF SCHEDULES AND EXHIBITS
Schedule 1. Pre-Closing Transactions
Exhibit A. Form of Seller Option Agreement
Exhibit B. Form of Seller Stockholder's Agreement
Exhibit C. Form of Seller Affiliates Agreement
Exhibit D. Form of Bank Merger Agreement
Exhibit E. Buyer's Reduction in Force Policy
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated as of
October 10, 1995, by and between Bank of Boston Corporation, a Massachusetts
corporation (the "Buyer"), and The Boston Bancorp, a Massachusetts corporation
(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 Principal Stockholder of the Seller
Stockholder's 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.
Acquisition Transaction" shall have the meaning ascribed thereto in
Section 5.03 hereof.
"Adjusted Net Worth" shall mean, as determined with respect to any
given date, the consolidated stockholders' equity of Seller determined in
accordance with GAAP as of such date, adjusted as follows:
(a) decreased by:
(i) all contracted severance costs related to the termination of
the employment of the persons listed on Schedule 5.13, to the
extent such costs have not previously been accrued;
(ii) all costs associated with the transactions contemplated by
this Agreement, including without limitation accounting,
legal, investment banking, brokerage and any other service
fees and related expenses, to the extent such fees and
expenses have not previously been accrued;
(iii) any prepayment penalties associated with the prepayment of
Federal Home Loan Bank borrowings, to the extent such
penalties have not previously been accrued;
(iv) any remaining book value and deferred tax attributes related
to partnership interests in Harbor Point and Parmalee or
related to advances previously made to the Central Fund;
(v) any costs associated with the defeasement of the Seller's
medium-term notes, to the extent that such costs have not
previously been accrued; and
(b) increased by:
(i) the excess of (A) the deferred tax liability associated with
the recapture of the tax bad debt reserve, over (B) the
present value of that tax liability using an annual discount
rate of 14% and assuming that such deferred tax liability will
be paid ratably on the last day of each of the 24 calendar
quarters ending after the Closing Date;
(ii) the tax benefit realized or to be realized by the Seller or
the Buyer with respect to (a) nonqualified options as to which
the option holders have committed on or prior to the
Measurement Date to exercise such options after the
Measurement Date and on or prior to the Effective Time, (b)
incentive stock options as to which the option holders have on
or prior to the Measurement Date (i) exercised such options or
committed to exercise and have exercised such options on or
prior to the Effective Time and (ii) committed to consummate
and have consummated on or prior to the Effective Time a
disqualifying disposition of the shares acquired upon
exercise, or (c) any cash payments which option holders have
committed on or prior to the Measurement Date to accept in
lieu of their rights under their options; and
(iii) (a) the amount of Seller's consolidated accrued pension cost,
calculated under Statement of Financial Accounting Standards
No. 87 as of the Measurement Date minus (b) the amount of any
deferred tax asset corresponding to such accrued pension cost,
minus (c) the amount, if any, of the consolidated cash
contributions required to be made to Seller's pension plan to
ensure that as of the Measurement Date the current value of
the assets of Seller's Pension Plan is not more than $500,000
less than the plan's "Benefit Liabilities" as that term is
defined inss.4001(a)(16) of ERISA, when determined under
actuarial factors that would apply if that plan terminated in
accordance with all applicable legal requirements (whether or
not such amount could lawfully be added to the plan at the
Measurement Date), plus (d) the amount of any tax benefit that
would be realizable by Buyer or by Seller after the
Measurement Date when and if it contributes to the plan the
amount determined in clause (c) above attributable to the
deductibility of such amount.
"Agreement" shall mean this Agreement and Plan of Reorganization by and
among the Buyer, the Seller and the Savings Bank.
"Articles of Merger" shall have the meaning ascribed thereto in Section
2.07 hereof.
"Average Closing Price" shall have the meaning ascribed thereto in
Section 2.09(a) hereof.
"Bank" shall mean The First National Bank of Boston.
"Bank Merger" shall mean the merger of the Savings Bank with and into
the Bank in accordance with the terms and conditions of the Bank Merger
Agreement.
"Bank Merger Agreement" shall mean the Agreement of Merger to be
entered into by and between the Bank and the Savings Bank in substantially the
form attached hereto as Exhibit D.
"Bank Merger Effective Time" shall mean the specific time at which the
Bank Merger has become effective in accordance with the terms and conditions
contained in the Bank Merger Agreement and applicable law.
"Bank Premises" shall mean the main office and all of the branch
offices of the Savings Bank and all other facilities used in the ordinary course
of the business of the Savings Bank, including all of the real estate and
improvements located thereon which compose such offices and other banking
premises.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"BSE" shall mean the Boston Stock Exchange, Inc.
"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 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 3.11
hereof.
"Buyer Rights Agreement" shall mean that Rights Agreement dated as of
June 28, 1990, as amended, between the Buyer and the Bank as Rights Agent.
"Central Fund" shall mean the Mutual Savings Central Fund, Inc.
"Closing Date " shall mean the date on which the Effective Time occurs.
"CMPs" shall have the meaning ascribed thereto in Section 3.12 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Companies" shall have the meaning ascribed thereto in Section 4.10(a)
hereof.
"Confidentiality Agreement" shall mean that certain letter agreement
between the Buyer and the Seller dated April 24, 1995.
"Confidential Information" shall have the meaning ascribed thereto in
Section 5.02(b) hereof.
"Constituent Corporations" shall have the meaning ascribed thereto in
Section 2.01 hereof.
"Conversion Number" shall have the meaning ascribed thereto in Section
2.09(a) hereof.
"CRE Loans" shall have the meaning ascribed thereto in Section 5.21
hereof.
"Deposits" shall mean the deposits (as such term is defined under
Section 3(1) of the FDIA) reflected in the Records of the Savings Bank as of the
close of business on the Measurement Date, and shall include, but shall not be
limited to, deposits which are maintained in the following types of accounts:
(i) passbook/statement savings accounts; (ii) 90-day accounts (i.e., special
notice accounts); (iii) NOW and SuperNOW Accounts (i.e., negotiable order of
withdrawal accounts); (iv) money-market accounts; (v) demand deposit accounts;
(vi) certificates of deposit; (vii) escrow accounts; (viii) time deposit
accounts; and (ix) individual retirement accounts ("IRAs"). Deposits shall also
include all uncollected items included in the depositors' balances and credited
on the books of the Savings Bank as of the close of business on the Measurement
Date.
"Deposit Liabilities" shall mean the obligation of the Savings Bank, as
of the close of business on the Measurement Date, to pay the principal balances
of, and interest or dividends on, all accounts relating to the Deposits in
accordance with the terms of the contracts by which such accounts were created
or otherwise as required by law.
"Disagreement" shall have the meaning ascribed thereto in Section
2.14(b) hereof.
"Dissenting Holder" shall have the meaning ascribed thereto in section
2.09(c) hereof.
"Dissenting Shares" shall have the meaning ascribed thereto in Section
2.09(c) hereof.
"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
Commonwealth of Massachusetts.
"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.
"Exchange Agent" shall have the meaning ascribed thereto in Section
2.13 hereof.
"Excluded Employees" shall have the meaning ascribed thereto in Section
5.13 hereof.
"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.
"HOLA" shall mean the Home Owners Loan Act of 1933, as amended.
"Independent Accounting Firm" shall mean any "Big Six" accounting firm
or its successor (other than the respective independent public accountants of
each of Buyer and Seller.
"Injunction" shall have the meaning ascribed thereto in Section 6.01(d)
hereof.
"IRS" shall mean the United States Internal Revenue Service.
"Loans" shall have the meaning set forth in Section 4.25 hereof.
"Massachusetts Board" shall have the meaning ascribed thereto in
Section 3.04 hereof.
"Massachusetts Commissioner" 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 (including without limitation any material reduction in Deposit
Liabilities), business, operations, results of operations or financial condition
of Buyer or Seller or such other entity, as the case may be, and its
subsidiaries, taken as a whole; provided, however, that any material adverse
effect on the assets, properties, liabilities, business, operations, results of
operations or financial condition of Seller and its subsidiaries, taken as a
whole, resulting from activities permitted or required by Section 5.18 hereof
shall not be taken into account in determining whether a Material Adverse Effect
has occurred for purposes of this Agreement.
"MBCL" shall mean the Massachusetts Business Corporation Law, as
amended.
"Measurement Date" shall mean that day which (i) is the last day of a
calendar month and (ii) precedes the Closing Date by not less than ten (10) nor
more than twenty-three (23) business days.
"Measurement Date Documents" shall have the meaning ascribed thereto in
Section 2.14(a) hereof.
"Merger Subsidiary" shall mean that certain business corporation, which
shall be organized as a wholly-owned direct or indirect subsidiary of Buyer
under the laws of the Commonwealth of Massachusetts for the purpose of merging
with the Seller pursuant to the terms of this Agreement.
"Merger Subsidiary Common Stock" shall have the meaning ascribed
thereto in Section 5.10 hereof.
"MHPF" shall mean the Massachusetts Housing Partnership Fund.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Notice of Disagreement" shall have the meaning ascribed thereto in
Section 2.14(b) hereof.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OCC" shall mean the Office of the Comptroller of the Currency of the
United States Department of the Treasury.
"OTS" shall mean the Office of Thrift Supervision of the United States
Department of the Treasury.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pre-Closing Transactions" shall mean all of those transactions that
are further described in Schedule 1 to this Agreement, which shall or may be
completed by the Seller and its subsidiaries, as applicable, on or prior to the
close of business on the Measurement Date in accordance with the terms of this
Agreement.
"Principal Stockholder" shall mean Chieftain Capital Management, Inc.
"Proxy Statement" shall have the meaning ascribed thereto in Section
5.04(a) hereof.
"Records" means all records 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.
"Savings Bank" shall mean Seller's wholly owned subsidiary, South
Boston Savings Bank.
"SEC" shall have the meaning ascribed thereto in Section 3.04 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended (15
U.S.C. ss.77a et seq.).
"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 C.
"Seller Balance Sheet" shall have the meaning ascribed thereto in
Section 4.05 hereof.
"Seller Benefit Plans" shall have the meaning ascribed thereto in
Section 4.11(a) 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 ESOP" shall mean Seller's Employee Stock Ownership Plan.
"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 A.
"Seller Other Plans" shall have the meaning ascribed thereto in Section
4.11(a) hereof.
"Seller Pension Plans" shall have the meaning ascribed thereto in
Section 4.11(a) hereof.
"Seller Preferred Stock" shall have the meaning ascribed thereto in
Section 4.02(a) hereof.
"Seller Reports" shall have the meaning ascribed thereto in Section
4.15 hereof.
"Seller Stock Option Plan" means the Seller's 1983, 1986 and 1989 Stock
Option Plans, considered collectively, each as may be amended and currently in
effect.
"Seller Stockholders' Agreement" means that certain letter agreement or
agreements of even date herewith executed and delivered to the Buyer by each of
the Principal Stockholders in the form attached hereto as Exhibit B.
"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
Section 2.01 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
2.09(a) hereof.
ARTICLE II
THE ACQUISITION MERGER
2.01 Surviving Corporation. In accordance with the provisions of this
Article II and Section 78 of the MBCL, at the Effective Time, Merger Subsidiary
shall be merged with and into Seller (the two merging corporations being
sometimes collectively referred to herein as the "Constituent Corporations") and
the separate corporate existence of Merger Subsidiary shall cease. Seller shall
be the surviving corporation in the Acquisition Merger (hereinafter sometimes
referred to as the "Surviving Corporation") and shall continue its corporate
existence under the laws of the Commonwealth of Massachusetts. The name of the
Surviving Corporation shall be "The Boston Bancorp".
2.02 Purposes and Authorized Capital Stock of Surviving Corporation. As
of the Effective Time, the purposes and authorized capital stock of the
Surviving Corporation shall be as stated in the Articles of Organization of
Seller immediately prior to the Effective Time.
2.03 Effect of the Acquisition 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 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 Acquisition Merger, but shall be
vested in the Surviving Corporation.
(b) From and after the Effective Time, the rights of creditors 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 Acquisition 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 Acquisition Merger. No action or proceeding then
pending before any court or tribunal of the Commonwealth of
Massachusetts 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 Acquisition
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.
2.04 Additional Actions. If, at any time after the Effective Time,
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 either of the Constituent Corporations acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Acquisition Merger or to otherwise carry out this Agreement, 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 the purposes and intent of this Agreement.
2.05 Articles of Organization and By-laws. The Articles of Organization
and the By-Laws of Seller, as in effect immediately prior to the Effective Time,
shall be the Articles of Organization and the By-laws of the Surviving
Corporation and, subject to the rights of Buyer as the sole stockholder, shall
thereafter continue to be the Surviving Corporation's Articles of Organization
and By-Laws until amended as provided therein or by applicable law.
2.06 Directors and Officers. The directors and officers of Merger
Subsidiary immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation, subject to the rights of Buyer as the
sole stockholder, each to hold office in accordance with the Articles of
Organization and By-Laws of the Surviving Corporation.
2.07 Effective Time; Conditions. If all of the conditions precedent set
forth in Article VI hereof have been satisfied or waived (to the extent
permitted by law), and this Agreement has not otherwise been properly terminated
under Article VIII hereof, the appropriate form of articles of merger with
respect to the Acquisition Merger shall be prepared by Merger Subsidiary and
Seller and filed and recorded pursuant to Section 78(d) of the MBCL with the
Massachusetts Secretary of State (as so filed and recorded, the "Articles of
Merger"). The Acquisition Merger shall become effective at, and the Effective
Time shall be, the time specified in the Articles of Merger.
2.08 Dissenters' Appraisal Rights. Any Dissenting Holder (i) who files
with Seller an objection to the Acquisition Merger in writing before the
approval of this Agreement by the stockholders of Seller and who states in such
objection that he intends to demand payment for his shares of Seller Common
Stock if the Acquisition Merger is concluded and (ii) whose shares of Seller
Common Stock are not voted in favor of the Acquisition Merger shall be entitled
to demand payment for his shares of Seller Common Stock and an appraisal of the
value thereof, in accordance with the provisions of Sections 86 through 98 of
the MBCL.
2.09 Effect on Outstanding Shares.
(a) Seller Common Stock. By virtue of the Acquisition Merger,
automatically and without any action on the part of the holder thereof,
each share of Seller Common Stock issued and outstanding immediately
prior to the Effective Time (other than Dissenting Shares and any such
shares held directly or indirectly by Buyer, other than Trust Account
Shares and DPC Shares, and any such shares held as treasury stock by
Seller) shall become and be converted into the number of shares or
fraction of a share of Buyer Common Stock (together with the number of
Buyer Rights associated therewith), rounded to the nearest thousandth of
a share, equal to the Conversion Number. The "Conversion Number" shall
be equal to the quotient of dividing
(i) the sum of (A) the Adjusted Net Worth as of the close of
business on the Measurement Date, (B) $40,640,806.00, (C) the
product of $40,000.00 and the number of days after the
Measurement Date to and including the Closing Date, and (D) the
aggregate exercise price of all options to purchase Seller
Common Stock outstanding at the close of business on the
Measurement Date, by
(ii) the product of (A) Average Closing Price, and (B) the sum of
the number of shares of Seller Common Stock and options to
purchase Seller Common Stock outstanding at the close of
business on the Measurement Date.
As of the Effective Time, each share of Seller Common Stock held
directly or indirectly by Buyer, other than Trust Account Shares and DPC
Shares, and held by Seller as treasury stock shall be canceled, retired
and cease to exist, and no payment shall be made with respect thereof.
For purposes of this Agreement, "Average Closing Price" shall mean the
average of the closing prices of shares of Buyer Common Stock as
reported on the NYSE composite transactions reporting system for the
twenty consecutive trading days ending on the third business day prior
to the Closing Date (such period being the "Valuation Period").
(b) Merger Subsidiary Common Stock. By virtue of the Acquisition
Merger, automatically and without any action on the part of the holder
thereof, each share of Merger Subsidiary Common Stock issued and
outstanding immediately prior to the Effective Time shall become and be
converted into 1.00 share of common stock of the Surviving Corporation,
par value $1.00 per share ("Surviving Corporation Common Stock"). Each
certificate which immediately prior to the Effective Time represented
outstanding shares of 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 pursuant to this Section 2.09(b).
(c) Dissenting Shares. No conversion under Section 2.09(a) hereof
shall be made with respect to the shares of Seller Common Stock held by
a Dissenting Holder (such shares being referred to herein as "Dissenting
Shares"); provided, however, each Dissenting Share outstanding
immediately prior to the Effective Time and held by a Dissenting Holder
who shall, after the Effective Time, withdraw his demand for appraisal
or lose his right of appraisal, in either case pursuant to the
applicable provisions of the MBCL, shall be deemed to be converted, as
of the Effective Time, into shares of Buyer Common Stock as specified in
Section 2.09(a) hereof. For purposes of this Agreement, the term
"Dissenting Holder" shall mean a holder of shares of Seller Common Stock
who has demanded appraisal rights in compliance with the applicable
provisions of the MBCL concerning the right of such holder to dissent
from the Acquisition Merger and demand appraisal of such holder's shares
of Seller Common Stock. Any payments made by Buyer to Dissenting Holders
after the Effective Time shall be funded by Buyer's utilizing assets
that were either in its possession on a consolidated basis prior to the
Effective Time or otherwise not acquired by Buyer on a consolidated
basis as a result of the consummation of the Acquisition Merger.
2.10 Anti-Dilution. In the event that during the period beginning on the
first day of the Valuation Period and ending on the Closing Date the outstanding
shares of Buyer Common Stock (or the number of Buyer Rights) shall have been
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities through reorganization, recapitalization,
reclassification, stock (or other non-cash) dividend, stock split, reverse stock
split, or other like changes in Buyer's capitalization (a "Recapitalization"),
then to the extent necessary or appropriate an appropriate and proportionate
adjustment shall be made to the number and/or kind of securities to be delivered
to the holders of Seller Common Stock so that each holder of Seller Common Stock
shall receive under Section 2.09(a) hereof the number of shares of Buyer Common
Stock (or the number of Buyer Rights) and/or other securities that such holder
would have received if the Recapitalization had occurred immediately after the
Effective Time.
2.11 Procedures.
(a) Certificates which represent shares of Seller Common Stock that
are outstanding immediately prior to the Effective Time (each, in each
case, a "Certificate") and are converted into shares of Buyer Common
Stock pursuant to this Article II shall, after the Effective Time, be
deemed to represent shares of the Buyer Common Stock 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 Buyer Common Stock
into which such shares have been converted.
(b) Buyer shall use all reasonable efforts to cause the Exchange
Agent to send to each holder of record of shares of Seller Common Stock
outstanding at the Effective Time as promptly as practicable, and in any
event within three days after the Effective Time, transmittal materials
(which shall be reviewed with and be reasonably acceptable to Seller)
for use in exchanging the Certificates for such shares for certificates
for shares of Buyer Common Stock into which such shares of 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 Buyer Common Stock to which such holder is entitled, and
such Certificate shall forthwith be canceled. No dividend or other
distribution payable after the Effective Time with respect to Buyer
Common Stock shall be paid to the holder of any unsurrendered
Certificate until the holder thereof surrenders such Certificate in
accordance with the provisions of this Article II and the transmittal
materials, at which time 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 Seller of shares of
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
Seller, they shall be canceled and exchanged for the shares of Buyer
Common Stock 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 Buyer Common
Stock pursuant to Section 2.09(a) hereof, cash adjustments, without
interest, will be paid to the holders of 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, and in what amounts, a particular holder of Seller Common Stock
would be entitled to receive cash adjustments under this Section
2.11(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 Seller Common Stock shall
have no rights as stockholders of Seller, other than (i) to receive
shares of Buyer Common Stock into which such shares of Seller Common
Stock have been converted and fractional share payments, if any,
pursuant to the provisions of Section 2.11(c) above and (ii) the rights
afforded to any Dissenting Holder under applicable provisions of the
MBCL.
(e) Notwithstanding the foregoing, neither Buyer nor Seller nor any
other person shall be liable to any former holder of shares of Seller
Common Stock for any shares or any dividends or distributions with
respect thereto 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 Buyer of appropriate and customary indemnification, Buyer
will issue in exchange for such lost, stolen or destroyed Certificate
shares of Buyer Common Stock and the fractional share payment, if any,
deliverable in respect thereof as determined in accordance with this
Article II.
(g) If any certificate representing shares of Buyer Common Stock is
to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition
of the issuance thereof that the Certificate so surrendered shall be
properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer (including, but not
limited to, that the signature of the transferor shall be properly
guaranteed by a commercial bank, trust company or member firm of the
NYSE, and that the person requesting such exchange shall pay to the
Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of Buyer Common
Stock in any name other than that of the registered holder of the
Certificate surrendered, or required for any other reason, or shall
establish to the reasonable satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
2.12 Treatment of Seller Stock Options. Each stock option granted by
Seller pursuant to the Seller Stock Option Plan outstanding and unexercised
immediately prior to the Effective Time shall be converted into an option to
purchase shares of Buyer Common Stock with the following terms:
(a) The number of shares of Buyer Common Stock shall be equal to the
product of the number of shares of Seller Common Stock previously
subject thereto and the Conversion Number, rounded up to the nearest
whole share for non-statutory options and rounded down to the nearest
whole share for incentive stock options; and
(b) The exercise price per share of Buyer Common Stock shall be
equal to the exercise price per share of Seller Common Stock previously
subject thereto divided by the Conversion Number, rounded up to the
nearest cent; and
(c) The duration and other terms of the option shall be unchanged
except that all references to Seller shall be deemed to be references to
Buyer; and
(d) Buyer shall assume the option as contemplated by Section 424(a)
of the Code.
2.13 Exchange Agent. Prior to the Effective Time, Buyer shall appoint an
exchange agent for the purpose of exchanging certificates representing shares of
Buyer Common Stock for Certificates (the "Exchange Agent"). Buyer shall issue
and deliver to the Exchange Agent certificates representing the shares of Buyer
Common Stock to be issued and shall pay to the Exchange Agent the aggregate cash
amount to be paid in lieu of fractional share interests, all in accordance with
the terms of this Article II.
2.14 Delivery of Measurement Date Documents.
(a) Within five (5) days following the Measurement Date, and prior
to the Effective Time, Seller shall prepare and deliver to Buyer (i) an
unaudited consolidated balance sheet of Seller, prepared in accordance
with GAAP as of the close of business on the Measurement Date and (ii) a
schedule calculating the Adjusted Net Worth as of the close of business
on the Measurement Date (collectively, the Measurement Date Documents").
(b) Within five (5) days after Seller's delivery of the Measurement
Date Documents to Buyer, and in any event prior to the Effective Time,
Buyer may dispute the amount of the Adjusted Net Worth contained in the
Measurement Date Documents by giving written notice (a "Notice of
Disagreement") to Seller setting forth in reasonable detail the basis
for such dispute (such dispute being referred to herein as a
"Disagreement"). The parties shall promptly commence good faith
negotiations with a view to resolving such Disagreement. If Buyer does
not give a Notice of Disagreement in accordance with the provisions of
the first sentence of this Section 2.14(b) within the five (5) day
period set forth therein, Buyer shall be deemed to have irrecoverably
accepted the amount of the Adjusted Net Worth as set forth in the
Measurement Date Documents delivered to Buyer by Seller.
(c) If Buyer shall deliver a Notice of Disagreement to Seller in
accordance with Section 2.14(b) above, and within five (5) days
following Buyer's delivery to Seller of such Notice of Disagreement
Buyer and Seller do not resolve the Disagreement, such Disagreement
shall be referred to an Independent Accounting Firm mutually selected by
Buyer and Seller for a resolution of such Disagreement in accordance
with the terms of this Agreement. Any failure by Seller to respond to a
Notice of Disagreement within the five (5) day period set forth in the
preceding sentence shall be deemed to be a conclusive indication by
Seller that it is in agreement with the changes to the Measurement Date
Documents proposed by Buyer in such Notice of Disagreement. If Seller
and Buyer do not immediately agree on the selection for an Independent
Accounting Firm, their respective independent public accountants shall
immediately select such firm. Such firm shall resolve the Disagreement
as soon as possible and, in any event, within seven (7) days after its
selection. The determinations of such firm with respect to any
Disagreement shall be final and binding upon the parties and the
amount(s) so determined shall be used to complete the final Measurement
Date Documents, which shall serve as the basis for determining the
Conversion Number under Section 2.09(a) above and/or Seller's
satisfaction of the condition set forth in Section 6.02(f) below. All of
the fees and expenses of any Independent Accounting Firm retained
pursuant to this Section 2.14(c) shall be paid by the Buyer, if the
Independent Accounting Firm agrees with the position asserted by the
Seller; shall be paid by the Seller, if the Independent Accounting Firm
agrees with the position asserted by the Buyer; or shall be split evenly
by the Buyer and the Seller if the Independent Account Firm does not
agree with either the Buyer or the Seller.
(d) Following the final completion of the Measurement Date Documents
and related final determination of the amount of the Adjusted Net Worth
as of the close of business on the Measurement Date, all in accordance
with the provisions of Sections 2.14(a) through 2.14(c) above, and
subject to the satisfaction or waiver (to the extent legally permitted)
of the conditions set forth in Article VI of this Agreement, the parties
shall promptly consummate the Acquisition Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer hereby represents and warrants to Seller and the Savings Bank 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" and together the "Significant Subsidiaries") is
duly organized, validly existing and in corporate 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.
3.02 Capitalization. The authorized capital stock of the Buyer consists
of 200,000,000 shares of common stock, par value $2.25 per share (the "Buyer
Common Stock"), and 10,000,000 shares of preferred stock, no par value (the
"Buyer Preferred Stock"). As of the close of business on September 30, 1995
there were 112,161,218 shares of the Buyer Common Stock issued and outstanding
and a total of 4,593,941 shares of the Buyer Preferred Stock issued and
outstanding (in the form of 1,044,843 shares of Adjustable Rate Cumulative
Preferred Stock, Series A, 1,574,783 shares of Adjustable Rate Cumulative
Preferred Stock, Series B, 774,783 shares of Adjustable Rate Cumulative
Preferred Stock, Series C, 920,000 shares of 8.60% Cumulative Preferred Stock,
Series E (represented by 92,000 depositary shares) and 280,000 shares of 7.875%
Cumulative Preferred Stock, Series F (represented by 28,000 depositary shares)).
As of the close of business on September 30, 1995, the Buyer had 112,161,218
preferred stock purchase rights issued and outstanding pursuant to the Buyer
Rights Agreement, which entitle the holders thereof to purchase shares of Junior
Participating Preferred Stock, Series D, under certain circumstances. As of the
close of business on September 30, 1995, there were 200,000 shares of Junior
Participating Preferred Stock, Series D, reserved for issuance upon exercise of
such preferred stock purchase rights, none of which shares were issued and
outstanding. There were also no shares of the Buyer Common Stock held in the
Buyer's treasury as of the close of business on September 30, 1995. In addition,
as of the close of business on September 30, 1995, there were 3,732,000 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 and
the Buyer Preferred Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof.
3.03 Authority; No Violation.
(a) The Buyer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of the Buyer. No other
corporate proceedings on the part of the Buyer are necessary to
consummate any of the transactions so contemplated by this Agreement.
This Agreement has been duly and validly executed and delivered by the
Buyer and (assuming due authorization, execution and delivery by the
Seller) constitutes the valid and binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms, except that
enforcement hereof 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 has full corporate power and authority to execute and
deliver the Bank Merger Agreement and to consummate the Bank Merger.
When the Bank Merger Agreement is duly and validly executed by the Bank,
as contemplated under Section 5.19 below, and assuming that the Bank
Merger Agreement is duly authorized, executed and delivered by the
Savings Bank, the Bank Merger Agreement shall constitute a valid and
binding obligation of the Bank, enforceable against the Bank 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. Except for the due authorization,
execution and delivery of the Bank Merger Agreement by the Bank and the
adoption of the Bank Merger Agreement by the Buyer and one or more
wholly owned subsidiaries of the Buyer in their capacity as the
stockholders of the Bank, all as contemplated under Section 5.19 below,
no other corporate proceedings on the part of the Bank are necessary to
consummate the Bank Merger.
(c) Neither the execution and delivery of this Agreement and the
Bank Merger Agreement by the Buyer and the Bank, respectively, nor the
consummation by the Buyer and the Bank, as applicable, of the
transactions contemplated by this Agreement and the Bank Merger
Agreement, nor compliance by the Buyer and the Bank, as applicable, with
any of the terms or provisions of this Agreement and the Bank Merger
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, certificate of incorporation 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 clauses (i) and (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 OTS,
the OCC, the Massachusetts Commissioner of Banks (the "Massachusetts
Commissioner"), the Securities and Exchange Commission (the "SEC"), the NYSE,
the BSE, the Central Fund, the MHPF, the DOJ, the Massachusetts 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
of the Buyer or of the Bank or the stockholders of the Bank) are necessary, in
connection with (i) the execution and delivery by the Buyer of this Agreement,
(ii) the execution and delivery by the Bank of the Bank Merger Agreement or
(iii) the consummation by the Buyer and the Bank of the transactions
contemplated by this Agreement and the Bank Merger Agreement. As of the date
hereof, Buyer is not aware of any reason why the approvals described in Section
6.03(c) could not be obtained without significant delay.
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 1992 through 1994, inclusive, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1992 through 1994, inclusive, as reported in the
Buyer Annual Reports on Form 10-K for each of the three fiscal years ended
December 31, 1992 through December 31, 1994 filed with the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each case
accompanied by the audit report of Coopers & Lybrand, independent accountants
for the Buyer and (b) the unaudited consolidated balance sheet of the Buyer and
its subsidiaries as of June 30, 1995, the related unaudited consolidated
statements of income for the three and six months ended June 30, 1995 and June
30, 1994, the related unaudited consolidated changes in stockholders' equity for
the six months ended June 30, 1995 and June 30, 1994 and the related unaudited
consolidated statements of cash flows for the six months ended June 30, 1995 and
June 30, 1994, all as reported in the Buyer's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995 filed with the SEC under the Exchange Act. The
December 31, 1994 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.
3.06 Absence of Undisclosed Liabilities. As of June 30, 1995, 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's
unaudited consolidated balance sheet as of such date.
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.
3.08 Absence of Certain Changes or Events. Since June 30, 1995, 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, financial condition or
results of operations of the Buyer or any of its subsidiaries which has had,
individually or in the aggregate, a Material Adverse Effect on the Buyer.
3.09 Legal Proceedings. 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, individually or in the aggregate, have a
Material Adverse Effect on the Buyer or otherwise materially adversely affect
the Buyer's or the Bank'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. 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, bank holding companies or savings
and loan holding companies or engaged in the insurance of bank deposits which
restricts materially 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.
3.11 Reports. Since January 1, 1995, 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 OCC, (d) the
FDIC and (e) any applicable state securities or banking 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 described in clause (a) above 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.
3.12 Compliance with Applicable Law. Buyer holds all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business, and Buyer has complied with, and is 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, other than where such default or noncompliance will not
result in or create a reasonable probability of resulting in a Material Adverse
Effect on Buyer or otherwise materially adversely affect Buyer's or the Bank's
ability to perform its obligations under this Agreement and the Bank Merger
Agreement, as applicable.
3.13 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 non-assessable and not subject to preemptive
rights, with no personal liability attaching thereto.
3.14 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")).
3.15 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 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.
3.16 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.
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 corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts.
The Savings Bank is a savings bank in stock form duly organized and
validly existing under the laws of the Commonwealth of Massachusetts.
Each of the Seller and the Savings Bank 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 Savings Bank are
insured by the FDIC in accordance with the FDIA, and the Savings Bank
has paid all assessments that have become due and payable to the FDIC.
The Seller is a unitary savings and loan holding company registered with
the OTS under the HOLA.
(b) Each subsidiary of the Seller, other than the Savings Bank, is
duly organized, validly existing and in corporate good standing under
the laws of the jurisdiction of its incorporation. Each subsidiary of
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, neither individually nor in the aggregate, result in,
with respect to the Seller, a Material Adverse Effect.
(c) Since January 1, 1995, the minute books of the Seller and the
Savings Bank contain complete and accurate records of all meetings and
other corporate actions authorized at such meetings held or taken since
the respective dates of the Seller's and the Savings Bank's
incorporations by its stockholders and Board of Directors and any
deficiencies in such minute books prior to January 1, 1995 shall not
result, either individually or in the aggregate, in a Material Adverse
Effect on Seller.
4.02 Capitalization.
(a) The authorized capital stock of the Seller consists of
20,000,000 shares of common stock, par value $1.00 per share (the
"Seller Common Stock"), and 3,000,000 shares of preferred stock, par
value $1.00 per share (the "Seller Preferred Stock"). As of the close of
business on September 30, 1995, there were 5,218,193 shares of the
Seller Common Stock and no shares of the Seller Preferred Stock issued
and outstanding, no shares of the Seller Common Stock held in the
Seller's treasury and no shares of the Seller Common Stock reserved and
available for future issuance under outstanding options under the Seller
Stock Option Plan. As of the date hereof, 1,038,420 shares of Seller
Common Stock are reserved for issuance upon exercise of the Option (the
"Seller Option") issued to Buyer pursuant to the Stock Option Agreement
with respect to Seller Common Stock of even date herewith between Seller
and Buyer (the "Seller Option Agreement"). 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 as
referred to in this Section 4.02 and 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
the Seller Preferred Stock or any other equity security of the Seller or
any the 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 the Seller
Preferred 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 the Seller subsidiary.
(b) Section 4.02(b) to the disclosure schedule prepared by the
Seller and delivered to the Buyer 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 such subsidiary as of such date: (i)
the percentage and type of equity securities owned or controlled by the
Seller; and (ii) 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 and the Seller Option Agreement and to consummate
the transactions contemplated hereby and thereby. The execution and
delivery of this 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 and
the transactions contemplated hereby 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 so contemplated by this 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 Savings Bank has full corporate power and authority to
execute and deliver the Bank Merger Agreement and to consummate the Bank
Merger. When the Bank Merger Agreement is duly and validly executed by
the Savings Bank, as contemplated under Section 5.19 below, and assuming
that the Bank Merger Agreement is duly authorized, executed and
delivered by the Bank, the Bank Merger Agreement shall constitute a
valid and binding obligation of the Savings Bank, enforceable against
the Savings Bank 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. Except for the due
authorization, execution and delivery of the Bank Merger Agreement by
the Savings Bank and the adoption of the Bank Merger Agreement by the
Seller or the Surviving Corporation, as the case may be, in its capacity
as the sole stockholder of the Savings Bank, all as contemplated under
Section 5.19 below, no other corporate proceedings on the part of the
Savings Bank are necessary to consummate the Bank Merger.
(c) Neither the execution and delivery of this Agreement, the Seller
Option Agreement and the Bank Merger Agreement by the Seller and the
Savings Bank, as applicable, nor the consummation by the Seller and the
Savings Bank, as applicable, of the transactions contemplated hereby and
thereby, nor compliance by the Seller and the Savings Bank, as
applicable, with any of the terms or provisions hereof or thereof, will
(i) assuming that the consents and approvals referred to in Section 4.04
are duly obtained, 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) except as set forth in Section 4.03(c) of
the Seller Disclosure Schedule, 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)
certificate of incorporation or other charter document 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 clauses (i) and (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 OTS, the OCC, the Massachusetts Commissioner, the SEC,
the Central Fund, the MHPF, the DOJ, the Massachusetts Secretary of State or as
may be set forth in Sections 4.03(b) or 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 and stockholders of the Seller and the Savings Bank) are necessary, in
connection with the execution and delivery by the Seller and the Savings Bank,
as applicable, of this Agreement, the Seller Option Agreement and the Bank
Merger Agreement or the consummation by the Seller and the Savings Bank, as
applicable, of the transactions contemplated by such agreements. 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
capital stock or other securities necessary to approve this Agreement and the
transactions contemplated hereby, including without limitation the Acquisition
Merger and the Bank Merger. As of the date hereof, Seller is not aware of any
reason why the approvals described in Section 6.02(c) could not be obtained
without significant delay.
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 October 31 for the fiscal years 1992 through 1994, inclusive, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1992 through 1994, inclusive, as reported in the
Seller' Annual Reports on Form 10-K for each of the three fiscal years ended
October 31, 1992 through October 31, 1994 filed with the SEC under the Exchange
Act, in each case accompanied by the audit report of T. C. Edwards & Co,.P.C.,
independent accountants for the Seller and (b) the unaudited consolidated
balance sheet of the Seller and its subsidiaries as of July 31, 1995, the
related unaudited consolidated statements of income for the three and nine
months ended July 31, 1995 and July 31, 1994, the related unaudited consolidated
changes in stockholders' equity for the nine months ended July 31, 1995 and July
31, 1994 and the related unaudited consolidated statements of cash flows for the
nine months ended July 31, 1995 and July 31, 1994, all as reported in the
Seller's Quarterly Report on Form 10-Q for the quarter ended July 31, 1995 filed
with the SEC under the Exchange Act. The October 31, 1994 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 (including
reports on Forms 10-Q and 10-K and 8-K) to be filed by the Seller 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
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.
4.06 Absence of Undisclosed Liabilities. As of July 31, 1995, 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's unaudited consolidated balance sheet as of such date
or Section 4.06 of the Seller Disclosure Schedule.
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, Tucker Anthony Incorporated.
4.08 Absence of Certain Changes or Events. Except as disclosed in
Schedule 4.08 of the Seller Disclosure Schedule, since July 31, 1995, 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, financial condition or results of
operations of the Seller or any of its subsidiaries which has had, individually
or in the aggregate, a Material Adverse Effect on the Seller.
4.09 Legal Proceedings. 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, individually or in the aggregate, have a
Material Adverse Effect on the Seller or otherwise materially adversely affect
the Seller's or the Savings Bank's ability to perform its obligations under this
Agreement, the Seller Option 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 Seller or any
subsidiary of the Seller having any such effect.
4.10 Taxes and Tax Returns. Except as may be set forth 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 liable for any additional Taxes for any taxable period ending on
or before the Effective Time 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 income 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 Effective
Time;
(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 ever been made by a taxing authority in a
jurisdiction 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 Effective Time, 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 Effective Time;
(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 Code Sec. 341(f) 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 Code Sec. 280G;
(r) For purposes of this Section 4.10:
(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. Except as set forth in Section 4.11 of the Seller
Disclosure Schedule:
(a) Neither the Seller nor any of its subsidiaries maintains or
contributes to any "employee pension benefit plan" (the "Seller Pension
Plans"), as such term is defined in Section 3 of ERISA, "employee
welfare benefit plan" (the "Seller Benefit Plans"), as such term is
defined in Section 3 of ERISA, stock option plan, stock purchase plan,
deferred compensation plan, other employee benefit plan for employees of
the Seller or any subsidiary thereof, or any other plan, program or
arrangement of the same or similar nature that provides benefits to
non-employee directors of the Seller or any subsidiary thereof
(collectively, the "Seller Other Plans").
(b) The Seller shall have delivered to the Buyer contemporaneous
with the delivery of the Seller Disclosure Schedule a complete and
accurate copy of each of the following with respect to each of the
Seller Pension Plans, the Seller Benefit Plans and the Seller Other
Plans: (i) plan document; (ii) trust agreement or insurance contract, if
any; (iii) most recent IRS determination letter, if any; (iv) most
recent actuarial report, if any; and (v) most recent annual report on
Form 5500.
(c) The current value of the assets of each of the Seller Pension
Plans subject to Title IV of ERISA exceeds that plan's "Benefit
Liabilities" as that term is defined in Section 4001(a)(16) of ERISA,
when determined under actuarial factors that would apply if that plan
terminated in accordance with all applicable legal requirements.
(d) Each of the Seller Pension Plans and each of the Seller Benefit
Plans has been administered in compliance with its terms in all material
respects and is in compliance in all material respects with the
applicable provisions of ERISA (including, but not limited to, the
funding and prohibited transactions provisions thereof), the Code and
other applicable laws.
(e) There has been no reportable event within the meaning of Section
4043(b) of ERISA or any waived funding deficiency within the meaning of
Section 412(d)(3) (or any predecessor section) of the Code with respect
to any the Seller Pension Plan.
(f) The Seller and its subsidiaries have made or provided for all
contributions to the Seller Pension Plans required thereunder as of the
date of this representation.
(g) Neither the Seller nor any of its subsidiaries has, since
September 2, 1974, contributed to any "Multiemployer Plan," as such term
is defined in Section 3(37) of ERISA.
(h) Each of the Seller Pension Plans which is intended to be a
qualified plan within the meaning of Section 401(a) of the Code is so
qualified, and Seller is not aware of any fact or circumstance which
would adversely affect the qualified status of any such plan.
(i) Neither Seller nor any of its subsidiaries is party to or
maintains any contract or other arrangement with any employee or group
of employees, providing severance payments, stock or stock-equivalent
payments or post-employment benefits of any kind or providing that any
otherwise disclosed plan, program or arrangement will irrevocably
continue, with respect to any or all of its participants, for any period
of time.
4.12 Agreements with Banking Authorities. Except as set forth in Section
4.12 of the Seller Disclosure Schedule, 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, bank holding companies or savings
and loan holding companies or engaged in the insurance of bank deposits which
restricts materially 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 10-K for the year ended October 31, 1994
or as otherwise disclosed in Section 4.13 of the Seller Disclosure Schedule,
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 Saving Bank's banking business and consistent with
past practice that has a term of more than one year or requires payment by the
Seller or any subsidiary of more than $150,000 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 would be required to be filed as an exhibit to Seller's
Annual Report on Form 10-K.
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 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 said 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 leased
by Seller and its subsidiaries as presently used, possessed and controlled by
the Seller and its subsidiaries except where not material to the Seller on a
consolidated basis. The Savings Bank owns in fee simple, directly or indirectly
through wholly owned subsidiaries, all of the Bank Premises.
4.15 Reports. Since November 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 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 Seller to the Buyer), (b) the OTS, (c) the FDIC, (d)
the Massachusetts Commissioner 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 "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 described in clause (a) above
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. Except as set forth in Section 4.16
of the Seller Disclosure Schedule or as otherwise previously disclosed in
writing by Seller to Buyer, the Seller holds all material licenses, franchises,
permits and authorizations necessary for the lawful conduct of its business, and
the Seller has complied with and is 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, other than where such default or noncompliance will not result in or
create a reasonable probability of resulting in a Material Adverse Effect on
Seller or otherwise materially adversely affect Seller's or the Savings Bank's
ability to perform its obligations under this Agreement and 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 CMPs in a material amount or otherwise expose Seller or any of its
subsidiaries to financial liability in a material amount.
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 United States
Environmental Protection Agency (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 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 3.14 above, no "fair price," "moratorium,"
"control share acquisition" or other form of antitakeover statute or regulation,
including without limitation Chapters 110D and 110F of the MBCL, 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, 1992 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.
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, to the best knowledge
of the Seller, 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 or in Seller's Annual Report on
Form 10-K for the year ended October 31, 1994, 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 outstanding loans of, or extensions of credit by, Seller
and/or the Savings Bank, other than loans or extensions of credit to be sold
prior to the Effective Time in accordance with Section 5.18 (individually, a
"Loan" and collectively the "Loans"), were solicited, originated and currently
exist in compliance with all requirements of federal and state statutory and
common law and any regulations promulgated thereunder and all Loans are
adequately documented, except where any failures with respect to any of the
foregoing would not have, either individually or in the aggregate, a Material
Adverse Effect on the Seller or otherwise materially adversely affect Seller's
or the Savings Bank's ability to perform its obligations under this Agreement
and the Bank Merger Agreement. 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 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 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.
4.26 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 Schedules, furnished to the Buyer
or the Bank 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.
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 with respect to the
transactions required or permitted to be undertaken by Seller prior to the
Effective Time in accordance with Section 5.18 below and Seller's management
during such period of the assets, liabilities and operations that are the
subject of such transactions or except as specifically described in Section 5.01
of the Seller Disclosure Schedule, the Seller:
(a) 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 mean (i)
conducting its banking, trust and other businesses in the ordinary and
usual course, (ii) refraining from any of the activities described in
Section 5.01(b) below and (iii) not entering into any material
transactions except in the ordinary and usual course of business
consistent with past practices;
(b) 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. ss.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. ss. 337.6(b)(3)(ii) or
otherwise set interest rates on deposits that depart from past
practices of the Savings Bank with respect to the setting of
interest rates on deposits, unless such interest rates do not exceed
the rates then offered by the Bank on comparable deposit products;
(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) relocate, or file any application to 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) 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) shall, at the Buyer's request and expense, use its best efforts
to cooperate with the Buyer with respect to preparation for the
combination and integration of the businesses, systems and operations of
the Bank and the Savings Bank, and shall confer on a regular and
frequent basis with one or more representatives of the Buyer to report
on operational and related matters;
(e) shall, subject to any restrictions under applicable law or
regulation, promptly notify the Buyer 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, financial condition or
prospects of the Seller or any of its subsidiaries;
(f) shall not declare or pay any dividends on or make any other
distributions in respect of the Seller Common Stock after the
Measurement Date;
(g) Seller (with Buyer's cooperation) prior to the Effective Time,
and Buyer upon and following the Effective Time, shall take all
appropriate steps to (i) effectuate termination of the Seller ESOP
effective as of the Effective Time, (ii) cause the Seller ESOP, upon
termination, to repay promptly and in full any loan outstanding, and
(iii) cause any shares of Seller Common Stock or Buyer Common Stock held
unallocated in the Seller ESOP following such termination and repayment
to be allocated among the accounts of those participants in the Seller
ESOP who were participants immediately prior to the Effective Time in
proportion to their relative compensation for the period beginning with
the first day of the plan year of the Seller ESOP in which the Closing
Date occurs and ending on the Effective Time, subject only to such
limitations as are required to maintain qualification of the Seller ESOP
under the Code. Seller may repurchase from the Seller ESOP a sufficient
number of shares of Seller Common Stock for not less than "adequate
consideration" as defined in Section 3(18) of ERISA to permit the Seller
ESOP to repay in full any loan outstanding to the Seller ESOP. Seller
shall not otherwise 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 Pension Plan, any
Seller Benefit Plan or any Seller Other 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 its or its subsidiaries' employees as a
class or pay any bonus except in the ordinary course of business
consistent with past practices and as disclosed in Section 5.01(g) of
the Seller Disclosure Schedule;
(h) subject to its directors fiduciary duties, 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 and the Bank 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) shall not propose or adopt amendments to its certificate of
incorporation or by-laws;
(j) shall not 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 or fulfillment of options issued or existing on the date hereof
pursuant to the Seller Stock Option Plan and listed in Section 5.01(j)
of the Seller Disclosure Schedule, and except upon exercise of the
Seller Option, as applicable, 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) 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) 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;
(m) 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) 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, sales of
certificates of deposit and entry into repurchase agreements or other
similar arrangements commonly employed by banks;
(o) 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
$75,000 or cumulatively exceed $300,000;
(p) shall not change its methods of accounting in effect at October
31, 1994, 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) shall file all reports, applications and other documents
required to be filed by it with the SEC, OTS, FDIC, Massachusetts
Commissioner and any other governmental agency or authority between the
date of this Agreement and the Effective Time and shall furnish to the
Buyer copies of all such reports promptly after the same are filed; and
(r) shall not 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. In
connection with the foregoing and not in limitation thereof, Seller and
its subsidiaries shall provide Buyer or any party designated by Buyer
such access to all commercial real estate loan files and related
materials as is sufficient to enable Buyer or any such designee of Buyer
to participate in a timely manner on a fully informed basis in any
auction process with regard to Seller's disposition of its commercial
real estate loan portfolio as may be undertaken by Seller in accordance
with Section 5.21 below. The Seller shall make arrangements with each
third party provider of services to the Seller to permit the Buyer
reasonable access to all of the Seller's Records 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 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 the Buyer 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 the Buyer's or any of its affiliates' or Representatives'
work product, presentations or evaluation materials as the Buyer deems
reasonably necessary or advisable in connection with auditing or
examination purposes, and Buyer shall not 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 obligation's 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
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 (other than as otherwise permitted under this Agreement),
sale of shares of capital stock or debt securities or similar transaction
involving the Seller or any of its subsidiaries (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 OTS,
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 relating to the shares of
the Buyer Common Stock to be issued in connection with the Acquisition
Merger (the "Buyer Registration Statement"), (ii) the preparation and
filing by the Seller of a proxy statement (the "Proxy Statement") with
the SEC under the Exchange Act 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 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, except as may be required by its board of directors'
fiduciary duties as advised in writing by outside counsel, 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 Seller's Stockholders. 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 the Buyer 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, the Seller will use all
reasonable efforts to obtain the necessary approvals of its stockholders of the
proposals described above to be submitted by it in connection with this
Agreement. If the Seller's Board of Directors is required by applicable law to
review or restate the recommendation to the Seller's stockholders contemplated
in clause (b) of the preceding sentence, this Section 5.05 shall not prohibit
accurate disclosure by the Seller 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 the Seller'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 counsel, 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,
(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.
5.07 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to, as
promptly as practicable, take, 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 or to vest the Bank
upon and after the Bank Merger Effective Time with full title to all properties,
assets, rights, approvals, immunities and franchises of the Savings Bank. In
case at any time after the Effective Time or the Bank Merger Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or the Bank Merger Agreement or to vest the Bank with full title to
all properties, assets, rights, approvals, immunities and franchises of the
Savings Bank, 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 NYSE or the NASD, 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.
5.10 Organization of Merger Subsidiary. Prior to the Effective Time,
Buyer shall cause Merger Subsidiary to be organized under the laws of the
Commonwealth of Massachusetts. The authorized capital stock of Merger Subsidiary
shall consist of one hundred (100) shares of common stock, par value $.01 per
share ("Merger Subsidiary Common Stock"), all of which shall be issued directly
or indirectly to, and held directly or indirectly 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 an appropriate instrument of
accession to this Agreement, whereupon Merger Subsidiary shall become a party
to, and be bound by, this 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 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 NYSE and the BSE,
subject to official notice of issuance, as of or prior to the Effective Time.
5.13 Employment and Benefit Matters.
(a) Initial Employment. Upon the Effective Time all the employees of
Savings Bank will remain employees of Savings Bank, with the exception
of the eleven persons identified in Section 5.13 of the Seller
Disclosure Schedule (the "Excluded Employees"), and will be subject to
the employment arrangements and pay practices, including without
limitation severance benefits, generally made available by Buyer and the
Bank to employees of the Bank. The parties acknowledge that Buyer has
provided to Seller and/or its advisers copies of Buyer's Reduction in
Force (i.e., severance) policy ("RIF Policy"), the terms of which shall
apply to the employees of Savings Bank, other than the Excluded
Employees, after the Effective Time. A copy of Buyer's RIF Policy is
attached hereto as Exhibit E.
(b) Maintenance of Plans; Benefits Service Credit. Subject to
Section 5.13(a) above, as promptly as practicable after the Effective
Time, Buyer agrees to provide the employees of Seller and its affiliates
with benefits maintained by Buyer and its affiliates from time to time
for the benefit of their employees similarly situated. 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, rate of accrual under Buyer's cash balance
retirement plan 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.
(c) Employment Obligations. Following the Effective Time and/or the
Bank Merger Effective Time, as applicable, Buyer shall, or shall cause
the Bank to, honor in accordance with their terms all employment,
severance, split dollar life insurance and other compensation contracts
between Seller or any subsidiary thereof and any director, officer or
employee thereof, and all provisions for benefits or other amounts
earned or accrued through the Effective Time under the Seller Pension
Plans or the Seller Benefit Plans. Buyer shall not cause or permit
Seller's defined benefit pension plan to be terminated or combined with
another plan unless the amount, if any, by which the value of the assets
of the said plan at the date of termination or combination exceeds the
liabilities of the said plan at that date shall first have been
allocated among persons who were participants in the said plan before
the Effective Time.
5.14 Directors' and Officers' Indemnification. 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 articles of organization or by-laws or the
charter or by-laws or similar organizational documents of any of Seller's
subsidiaries as in effect as of the date hereof with respect to matters
occurring prior to the Effective Time shall survive the Acquisition Merger and
the Bank Merger and shall continue in full force and effect for a period of not
less than six (6) years from the Closing Date; provided, however, that all
rights to indemnification in respect of any claim asserted or made within such
period shall continue until the disposition of such claim. 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.
5.15 Accountants' Letters. The Seller shall cause to be delivered to the
Buyer "comfort" letters from the Seller's 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 Seller included in the Buyer Registration Statement and addressed to the
Buyer, in form and substance which is reasonably satisfactory to the Buyer 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. From and
after the Effective Time, the Buyer shall be solely responsible for continuing
maintenance of the Records.
5.17 Leases. Seller shall consult with Buyer before renewing or
extending any material lease of Seller or any subsidiary of real property or
relating to furniture, fixtures or equipment 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 Pre-Closing Transactions. The Seller shall use all reasonable
efforts to complete those Pre-Closing Transactions that are mandatory prior to
the close of business on the Measurement Date, which shall be completed in
accordance with all applicable laws and regulations. Seller's consummation of
the Pre-Closing Transactions and its management of the assets, liabilities and
operations that are the subject of the Pre-Closing Transactions (including but
not limited to the sale, lease, transfer, assignment, encumbrance or disposition
of any assets that are the subject of any Pre-Closing Transactions, the waiver
of any legal or equitable rights with respect to such assets, the investment and
reinvestment of proceeds from the sale of such assets, and any and all hedging
activities with respect to such assets or proceeds therefrom, including the
issuance or purchase of options) shall not be included within, or otherwise
affected by, the restrictions and limitations contained in Section 5.01 above.
5.19 Bank Merger. The parties shall take and cause the Bank and the
Savings Bank, as applicable, to take all necessary and appropriate actions to
effect the Bank Merger immediately after the Effective Time in accordance with
the requirements of all applicable laws and regulations and the terms of the
Bank Merger Agreement.
5.20 Resignations. Seller shall cause to be delivered at the Effective
Time, if requested by Buyer, written resignations of each of the persons who are
then serving as directors of Seller and the Savings Bank, respectively.
5.21 Disposition of Commercial Real Estate Loan Portfolio. In connection
with Seller's completion of the Pre-Closing Transactions in accordance with
Section 5.18 hereof, Seller shall seek to complete or cause the Savings Bank to
complete, as the case may be, the disposition of its entire portfolio of
commercial and multi-family real estate loans (the "CRE Loans") by the later of
the date on which the parties have received the last of the Requisite Regulatory
Approvals or June 1, 1996; provided, however, if all of the CRE Loans have not
been disposed of by Seller as of such later date, then Seller shall take all
necessary and appropriate actions to cause all of the then-remaining CRE Loans
to be disposed of by auction to the highest bidder by not later than July 1,
1996 and Buyer or a party to be designated by Buyer shall be permitted, at
Buyer's option, to participate in such auction proceeding and to purchase, if
Buyer or such designee is the highest bidder, the CRE Loans to be sold
thereunder.
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) Seller's Stockholders' Approval. This Agreement and the
transactions contemplated hereby shall have been approved by the
affirmative vote of the holders of at least two-thirds of the
outstanding shares of the Seller Common Stock 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 and the Bank 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 in all material respects 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 chairman or
president and the chief financial officer or chief accounting 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 or the Savings Bank,
shall have been obtained by the Seller or the Savings Bank, as
applicable, 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 Buyer after the Effective Time and the Bank Merger Effective
Time.
(d) Tax Opinion. The Buyer shall have received an opinion dated the
Closing Date from its counsel, Bingham, Dana & Gould, or other counsel
acceptable to the Buyer and the Seller, substantially to the effect
that, on the basis of facts and representations set forth therein, or
set forth in writing elsewhere and referred to therein, for federal
income tax purposes the transactions contemplated by this Agreement
constitute a reorganization as described in Section 368(a) of the Code
and addressing such other substantial federal income tax effects of such
transactions as the Buyer may reasonably require and which are customary
in transactions of a like character. In rendering any such opinion, such
counsel may rely, to the extent they deem necessary or appropriate, upon
opinions of other counsel, representations of an officer or officers of
the Seller and the Buyer or any of their affiliates and representations
of one or more shareholders of the Seller.
(e) Pre-Closing Transactions. All of the Pre-Closing Transactions
that Seller is required to have completed on or prior to the close of
business on the Measurement Date in accordance with the terms of Section
5.18 hereof shall have been so completed in their entirety.
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, 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 in all material respects 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 and the Savings
Bank shall have received a certificate to that effect signed by the vice
chairman and the chief financial officer (or other authorized
officer(s)) 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,
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, Ropes & Gray, or other counsel acceptable
to the Buyer and the Seller, substantially to the effect that, on the
basis of facts and representations set forth therein, or set forth in
writing elsewhere and referred to therein, for federal income tax
purposes the transactions contemplated by this Agreement constitute a
reorganization as described in Section 368(a) of the Code and that no
gain or loss will be recognized by the stockholders of the Seller upon
the receipt, pursuant to this Agreement, of the Buyer Common Stock in
connection with the Acquisition Merger (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) and addressing such
other substantial federal income tax effects of such transaction as the
Seller may reasonably require and which are customary in transactions of
a like character. In rendering any such opinion, such counsel may rely,
to the extent they deem necessary or appropriate, upon opinions of other
counsel and upon representations of an officer or officers of the Seller
and the Buyer or any of their affiliates.
(e) NYSE Listing. The shares of the Buyer Common Stock issuable upon
the Effective Time shall have been authorized for listing on the NYSE
upon official notice of issuance.
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 Bingham, Dana & Gould 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 and their respective subsidiaries as
applicable, the opinions, certificates, and other documents and instruments
required to be delivered under Article VI hereof.
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 December 31, 1996 (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
or in the Seller Option Agreement which breach is not cured after
forty-five (45) days written notice thereof is given to the party
committing such breach; or
(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 Seller's stockholders specified in Section 5.05 above
shall not have been obtained by reason of Seller's failure to have
obtained the requisite stockholder vote at a duly held meeting of
Seller's stockholders or at any adjournment thereof.
8.02 Effect of Termination. 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) 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) 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 willful
breach of any representation, warranty, covenant or agreement contained in this
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.
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. 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; provided, however, that, if
this Agreement is properly terminated under Section 8.01 above, and neither
party has any liability to the other under Section 8.02(c) (in which case the
breaching party shall be fully liable to the other in accordance with the
provisions thereof), all such costs and expenses incurred in connection with the
preparation, filing and distribution of the Buyer Registration Statement and the
Proxy Statement shall be borne equally by the Buyer and the Seller.
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 and Sections 5.11, 5.13, 5.14, 8.02,
9.01 and 9.02, 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:
(a) If to the Seller, to:
The Boston Bancorp
460 West Broadway
South Boston, Massachusetts 02127
Attention: Robert E. Lee
President and Chief Executive Officer
Copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attention: Alfred O. Rose, Esq.
(b) If to the Buyer, to:
Bank of Boston Corporation
100 Federal Street
Boston, Massachusetts
Attention: Peter J. Manning, Executive Director,
Mergers & Acquisitions
and
Gary A. Spiess, Esq., General Counsel
Copy to:
Bingham, Dana & Gould
150 Federal Street
Boston, Massachusetts 02110
Attention: Norman J. Shachoy, Esq.
and
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 (which are expressly intended
to provide rights to, and to be enforceable by, Seller's directors, officers and
other employees to the extent applicable thereto), 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.
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.
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.
BANK OF BOSTON CORPORATION
By: /s/ Peter J. Manning
-------------------------------------
Peter J. Manning
Executive Director
THE BOSTON BANCORP
By: /s/ Robert E. Lee
-------------------------------------
Robert E. Lee
President and Chief Executive Officer
By: /s/ David L. Smart
-------------------------------------
David L. Smart
Vice President and Treasurer
SCHEDULE I
PRE-CLOSING TRANSACTIONS
Seller shall complete the transactions listed below as of the close of
business on the Measurement Date and the determination of the Adjusted Net Worth
as of such time shall reflect the completion of all such transactions.
1. Liquidate the entire commercial and multi-family real estate loan
portfolio.
2. Mark to market the entire investment securities portfolio and, in
consultation with Buyer, liquidate as much of such portfolio as is consistent
with the parties' intent that Buyer acquire through the Acquisition Merger
assets having a value equal to one-third of the fair market value of the assets
of Seller and its subsidiaries as of the date of this Agreement, such
liquidation to include without limitation all equity securities, and, at Buyer's
request, enter into mutually satisfactory hedging transactions on the
Measurement Date to protect Buyer against the risk that the aggregate market
value of the securities remaining in the portfolio at the Effective Time is less
than the aggregate market value of such securities on the close of business on
the Measurement Date.
3. Liquidate all properties held as other real estate owned.
4. Repay all FHLB borrowings, including without limitation any and all
prepayment penalties.
5. Defease the outstanding Medium Term Notes in accordance with their
terms.
6. Timely apply for IRS approval to a change in the Savings Bank's
method of accounting for bad debts to the specific charge-off method for the
taxable year beginning November 1, 1995, pursuant to which approval any required
income inclusion would occur ratably over the six taxable year period including
the year of change and five following taxable years, but otherwise continue to
maintain the Savings Bank's eligibility to use the reserve method under Section
593 of the Code through the Closing Date.
7. Liquidate all non-commercial real estate loans classified as "held
for sale".
8. Maintain a loan loss reserve on all retained residential real estate
loans and consumer loans that is not less than the amount required in accordance
with GAAP.
9. Maintain an account for accrued and unpaid Taxes that is not less
than the amount required in accordance with GAAP.
10. Purchase in full directors and officers' liability insurance
coverage containing terms and conditions mutually satisfactory to the parties,
including a term of coverage to extend for a period of not less than five (5)
years from and after the Effective Time, for the benefit of the directors and
officers of Seller and its subsidiaries.
In addition to the preceding mandatory transactions to be completed
prior to the close of business on the Measurement Date, Seller shall be
permitted, at its sole discretion and expense (which expense shall be properly
reflected in the Adjusted Net Worth as of the close of business on the
Measurement Date), to complete the additional transactions listed below.
1. Liquidate the partnership interests in Harbor Point and Parmalee.
2. Liquidate all outstanding advances previously made to the Central
Fund.
3. Liquidate some or all of the residential real estate loan portfolio.
4. Redeem for cash outstanding Seller stock options or outstanding
shares of Seller Common Stock previously issued upon the exercise of Seller
stock options.