Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
By and Among
CITIZENS BANK OF MASSACHUSETTS
CITIZENS FINANCIAL GROUP, INC.
and
COMMUNITY BANCORP, INC.
Dated as of July 30, 2003
TABLE OF CONTENTS
ARTICLE I - THE MERGER............................................................................................1
1.1 The Merger......................................................................................1
1.2 Effective Time..................................................................................2
1.3 Effects of the Merger...........................................................................2
1.4 Conversion of Seller Common Stock...............................................................2
1.5 Merger Sub Common Stock.........................................................................3
1.6 Employee Stock Options..........................................................................3
1.7 Articles of Organization........................................................................4
1.8 By-Laws.........................................................................................4
1.9 Directors and Officers..........................................................................4
ARTICLE II - EXCHANGE OF SHARES...................................................................................4
2.1 Buyer to Deposit Aggregate Merger Consideration.................................................4
2.2 Exchange of Shares..............................................................................4
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE BUYER.........................................................6
3.1 Corporate Organization..........................................................................6
3.2 Authority; No Violation.........................................................................6
3.3 Consents and Approvals..........................................................................7
3.4 Financial Statements............................................................................7
3.5 Broker's Fees...................................................................................7
3.6 Legal Proceedings...............................................................................7
3.7 Capital; Availability of Funds..................................................................8
3.8 Buyer Information...............................................................................8
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE SELLER.........................................................8
4.1 Corporate Organization..........................................................................8
4.2 Capitalization..................................................................................9
4.3 Authority; No Violation........................................................................11
4.4 Consents and Approvals.........................................................................12
4.5 Financial Statements...........................................................................13
4.6 Broker's Fees..................................................................................13
4.7 Absence of Certain Changes or Events...........................................................14
4.8 Legal Proceedings..............................................................................14
4.9 Reports........................................................................................15
4.10 Agreements with Banking Authorities............................................................16
4.11 Absence of Undisclosed Liabilities.............................................................16
4.12 Compliance with Applicable Law.................................................................16
4.13 Taxes and Tax Returns..........................................................................17
4.14 Labor..........................................................................................18
4.15 Employees......................................................................................18
(i)
4.16 Capitalization.................................................................................20
4.17 CRA, Anti-Money Laundering and Customer Information Security..................................20
4.18 Material Agreements............................................................................20
4.19 Property and Leases............................................................................22
4.20 Loan Portfolio.................................................................................23
4.21 Investment Securities..........................................................................24
4.22 Derivative Transactions........................................................................24
4.23 Insurance......................................................................................24
4.24 Environmental Matters..........................................................................24
4.25 Recent Acquisitions............................................................................25
4.26 State Takeover Laws; Shareholder Rights Agreement..............................................25
4.27 Proxy Statement; Seller Information............................................................26
4.28 Deposit/Loan Agreements........................................................................26
4.29 Administration of Accounts.....................................................................26
4.30 Credit Card Accounts...........................................................................26
4.31 Merchant Processing............................................................................27
4.32 Intellectual Property..........................................................................27
4.33 Benefits Consulting, Inc.......................................................................27
4.34 Disclosure.....................................................................................27
ARTICLE V - COVENANTS RELATING TO CONDUCT OF BUSINESS............................................................27
5.1 Conduct of Businesses Prior to the Effective Time..............................................27
5.2 Seller Forbearances............................................................................28
5.3 Buyer Forbearances.............................................................................31
5.4 System Conversions; Timing.....................................................................32
5.5 Certain Changes and Adjustments................................................................32
5.6 Branches.......................................................................................33
5.7 Purchaser Products and Services................................................................33
5.8 ALCO Management................................................................................33
5.9 Deposit Incentive Plan.........................................................................33
5.10 Communications and Notices.....................................................................34
5.11 Charitable Contribution........................................................................34
ARTICLE VI - ADDITIONAL AGREEMENTS...............................................................................34
6.1 Regulatory Matters; Consents...................................................................34
6.2 No Solicitation................................................................................35
6.3 Access to Information..........................................................................37
6.4 Legal Conditions to Merger.....................................................................38
6.5 Employment and Benefit Matters.................................................................39
6.6 Directors' and Officers' Indemnification and Insurance.........................................40
6.7 Additional Agreements..........................................................................42
6.8 Advice of Changes..............................................................................42
6.9 Update of Disclosure Schedules.................................................................42
6.10 Current Information............................................................................43
(ii)
6.11 Transition Committee...........................................................................43
6.12 Bank Merger....................................................................................44
6.13 Organization of the Merger Sub.................................................................44
6.14 Community Commitments..........................................................................45
6.15 Citizens Financial Group, Inc..................................................................45
6.16 Loan Loss Reserves.............................................................................45
6.17 Consolidation of Corporate Structure...........................................................45
ARTICLE VII - CONDITIONS PRECEDENT...............................................................................45
7.1 Conditions to Each Party's Obligations To Effect the Merger....................................45
7.2 Conditions to the Obligations of the Buyer.....................................................46
7.3 Conditions to the Obligations of the Seller....................................................47
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER.................................................................47
8.1 Termination....................................................................................47
8.2 Effect of Termination..........................................................................48
8.3 Amendment......................................................................................49
8.4 Extension; Waiver..............................................................................49
ARTICLE IX - MISCELLANEOUS.......................................................................................49
9.1 Closing........................................................................................49
9.2 Nonsurvival of Representations, Warranties and Agreements......................................50
9.3 Expenses.......................................................................................50
9.4 Notices........................................................................................50
9.5 Interpretation.................................................................................51
9.6 Counterparts...................................................................................52
9.7 Entire Agreement...............................................................................52
9.8 Governing Law..................................................................................52
9.9 Severability...................................................................................52
9.10 Publicity......................................................................................52
9.11 Assignment; Reliance of Other Parties..........................................................52
9.12 Specific Performance...........................................................................52
9.13 Alternative Structure..........................................................................52
9.14 Definitions....................................................................................53
(iii)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of July 30, 2003,
by and among, CITIZENS BANK OF MASSACHUSETTS, a Massachusetts trust company (the
"BUYER"), COMMUNITY BANCORP, INC., a Massachusetts corporation (the "SELLER"),
and for the purpose of Article III and Section 6.15, CITIZENS FINANCIAL GROUP,
INC., a Delaware corporation and the parent company of the Buyer (the "PARENT").
The capitalized terms used in this Agreement are defined in Section 9.14 hereof.
WHEREAS, the Boards of Directors of the Buyer and the Seller have
determined that it is in the best interests of their respective stockholders and
other constituencies, as well as the communities they serve, to consummate, and
have approved, the business combination transactions provided for herein, in
which the Buyer will, subject to the terms and conditions set forth herein,
acquire the Seller;
WHEREAS, following the execution and delivery of this Agreement, the Buyer
shall take such action as is appropriate to form a subsidiary to be organized as
a corporation (the "MERGER SUB") under the MBCL, and to cause the Merger Sub to
become a party to this Agreement, pursuant to which the Merger Sub shall merge
(the "MERGER") with and into the Seller, upon the terms and subject to the
conditions set forth herein (the Seller and the Merger Sub being the constituent
corporations of the Merger);
WHEREAS, following the execution and delivery of this Agreement, Buyer
(sometimes referred to herein as the "SURVIVING BANK"), shall enter into an
Agreement and Plan of Merger (the "BANK MERGER AGREEMENT") with COMMUNITY
NATIONAL BANK, a national bank and subsidiary of the Seller (the "SELLER BANK"),
in a form mutually agreed upon by the parties hereto, providing for the merger
of the Seller Bank with and into the Buyer (the "BANK MERGER") under the MGL,
promptly following the consummation of the Merger; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and to prescribe certain conditions to
the Merger;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I - THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, in
accordance with the MBCL, at the Effective Time, the Merger Sub shall merge with
and into the Seller. The Seller shall be the surviving corporation (hereinafter
sometimes called the "SURVIVING CORPORATION") in the Merger, and shall continue
its corporate existence under the laws
of the Commonwealth of Massachusetts as a subsidiary of the Buyer. The name of
the Surviving Corporation shall be "COMMUNITY BANCORP, INC." and the purpose of
the Surviving Corporation shall be solely to engage in bank permissible
activities under applicable provisions of MGL and relating to the transactions
contemplated hereby.
1.2 EFFECTIVE TIME. The Merger shall become effective when Articles of
Merger (the "ARTICLES OF MERGER"), executed in accordance with the relevant
provisions of the MBCL, are filed with the Massachusetts Secretary; PROVIDED,
HOWEVER, that upon the mutual written consent of each of the Buyer and the
Seller, the Articles of Merger may provide for a later time or date of
effectiveness of the Merger not more than thirty (30) days after the date the
Articles of Merger are filed with the Massachusetts Secretary. When used in this
Agreement, the term "EFFECTIVE TIME" shall mean the date and time at which the
Articles of Merger are filed with the Massachusetts Secretary or such later date
and time established in the Articles of Merger in accordance with the terms of
this Agreement. The filing of the Articles of Merger with the Massachusetts
Secretary shall be made on the Closing Date.
1.3 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in this Agreement and in Section 80 of the
MBCL.
1.4 CONVERSION OF SELLER COMMON STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of the Merger Sub, the Seller, or
the holder of any of the shares of the Seller Common Stock:
(a) Each share of the common stock, par value $2.50 per share, of the
Seller ("SELLER COMMON STOCK") issued and outstanding immediately prior to the
Effective Time (collectively, "SHARES") (other than Shares held (i) in the
Seller's treasury or (ii) directly or indirectly by the Buyer or the Seller or
any of their respective subsidiaries (except for Trust Account Shares, DPC
Shares or Dissenting Shares) shall become and be converted automatically into
the right to receive in cash from the Buyer an amount equal to $19.75 (the
"MERGER CONSIDERATION").
(b) All of the Shares converted into the Merger Consideration pursuant
to this Article I shall no longer be outstanding and shall automatically be
canceled and shall cease to exist as of the Effective Time, and each certificate
(each, a "CERTIFICATE") previously representing any such Shares shall thereafter
represent only the right to receive the Merger Consideration. Certificates
previously representing Shares shall be exchanged for the Merger Consideration
upon the surrender of such Certificates in accordance with Section 2.2 hereof,
without any interest thereon.
(c) At the Effective Time, all Shares that are owned by the Seller as
treasury stock and all Shares that are owned directly or indirectly by the Buyer
or the Seller or any of their respective subsidiaries (other than Shares held
directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially owned by third
parties, including Shares held in the Seller 401(k) Savings Plan (including the
Employee Profit Sharing Component) (any such Shares, whether held directly or
indirectly by the Buyer or the Seller, as the case may be, being referred to
herein as "TRUST ACCOUNT SHARES") and other than any Shares held by the Buyer or
the Seller or any of their respective subsidiaries
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in respect of a debt previously contracted (any such Shares which are similarly
held, whether held directly or indirectly by the Buyer or the Seller or any of
their respective subsidiaries, being referred to herein as "DPC SHARES")) shall
be canceled and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(d) Notwithstanding anything in this Agreement to the contrary, Shares,
the holders of which shall have delivered to the Seller a written demand for the
appraisal of such Shares in the manner provided in the applicable provisions of
the MBCL ("DISSENTING SHARES"), shall not be converted into the right to
receive, or be exchangeable for, the Merger Consideration otherwise payable in
exchange for such Shares pursuant to this Section 1.4 but, instead, the holders
thereof shall be entitled to payment of the appraised value of such Dissenting
Shares in accordance with the provisions of the MBCL; PROVIDED, HOWEVER, that if
any holder of Dissenting Shares (i) shall subsequently deliver a written
withdrawal of his demand for appraisal of such Dissenting Shares or (ii) fails
to establish his entitlement to appraisal rights as provided in Sections 86
through 98, inclusive, of the MBCL, such holder or holders (as the case may be)
shall forfeit the right to appraisal of such Dissenting Shares and each of such
shares shall thereupon be deemed to have been converted into the right to
receive, and to have become exchangeable for, as of the Effective Time, the
Merger Consideration otherwise payable in exchange for such Dissenting Shares
pursuant to this Section 1.4, without any interest thereon.
(e) The Seller shall give the Buyer (i) prompt notice of any demands
filed pursuant to Sections 86 through 98, inclusive, of the MBCL received by the
Seller, withdrawals of such demands, and any other instruments served in
connection with such demands pursuant to the MBCL and received by the Seller,
and (ii) the opportunity to participate in all negotiations and proceedings with
respect to demands under the MBCL consistent with the obligations of the Seller
thereunder. The Seller shall not, except with the prior written consent of the
Buyer, (x) make any payment with respect to, or to any person making, any such
demand, (y) offer to settle or settle any such demand or (z) waive any failure
to timely deliver a written demand in accordance with the MBCL.
1.5 MERGER SUB COMMON STOCK. At and after the Effective Time, each share of
common stock, par value $0.01 per share, of the Merger Sub issued and
outstanding immediately prior to the Effective Time shall become and be
converted automatically into one share of common stock of the Surviving
Corporation.
1.6 EMPLOYEE STOCK OPTIONS. Prior to the Effective Time, the Seller shall
take all such action as is necessary to terminate all outstanding stock options
to purchase shares of Seller Common Stock (each a "STOCK OPTION") including,
without limitation, Stock Options issued pursuant to the 2001 Directors' Plan
dated February 22, 2001 and the 2001 Incentive Stock Option Plan for Key
Employees dated April 10, 2001 (collectively, the "SELLER STOCK OPTION PLANS"),
as of the Effective Time. In connection therewith, Seller shall provide written
notice to each holder of a then outstanding Stock Option (whether or not such
Stock Option is then vested or exercisable), (i) that such Stock Option shall
be, as at the date of such notice, exercisable in full; (ii) that such Stock
Option shall terminate at the Effective Time; and (iii) that, if such Stock
Option is not exercised or otherwise terminated on or before the fifth (5th) day
prior to the Effective Time, such holder shall be entitled to receive in
cancellation of such Stock Option a cash payment from the Seller at the Closing
in an amount equal to the excess of the Merger
3
Consideration over the per share exercise price of such Stock Option, multiplied
by the number of shares of Seller Common Stock covered by such Stock Option,
subject to any required withholding of taxes (such payment, the "STOCK OPTION
CASH SETTLEMENT") provided that such Stock Option Cash Settlement shall be
conditioned on such optionholders executing an acknowledgement that the Stock
Option Cash Settlement represents the full amount due for all Stock Options held
by Seller. The Seller Stock Option Plans and all Stock Options shall terminate
at the Effective Time. The Seller hereby represents and warrants to the Buyer
that the maximum number of shares of Seller Common Stock subject to issuance
pursuant to the exercise of Stock Options is not and shall not be at or prior to
the Effective Time more than Two Hundred Ninety Five Thousand One Hundred Twelve
(295,112) shares.
1.7 ARTICLES OF ORGANIZATION. Unless otherwise provided by the Buyer, at
the Effective Time, the Articles of Organization of the Seller, as in effect
immediately prior to the Effective Time, shall be amended to a form mutually
agreed upon by the parties, and as so amended, shall be the Articles of
Organization of the Surviving Corporation until thereafter amended as provided
therein and in accordance with applicable law. The total authorized capital
stock of the Surviving Corporation shall be One Thousand (1,000) shares of
common stock, $0.01 par value.
1.8 BY-LAWS. At the Effective Time, the By-Laws of the Seller, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with applicable law, the
Articles of Organization of the Surviving Corporation and such By-Laws.
1.9 DIRECTORS AND OFFICERS. The directors of Merger Sub immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles of Organization
and By-Laws of the Surviving Corporation, and the officers of the Merger Sub
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
ARTICLE II - EXCHANGE OF SHARES
2.1 BUYER TO DEPOSIT AGGREGATE MERGER CONSIDERATION. At or prior to the
Effective Time, the Buyer shall set aside and hold in trust, for the benefit of
the holders of Certificates, for exchange in accordance with this Article II,
such amount of cash as is sufficient to pay the aggregate Merger Consideration
which holders of Shares are entitled to receive pursuant to Section 1.4 hereof.
2.2 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, and in no event
later than three (3) business days thereafter, the Buyer shall mail to each
holder of record of a Certificate or Certificates a form letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to Buyer)
and other appropriate materials required to complete the exchange of the
Certificates for the Merger Consideration into which each Share represented by
such Certificate or Certificates shall
4
have been converted pursuant to this Agreement and instructions to effect such
exchange. Upon proper surrender of a Certificate for exchange and cancellation
to the Buyer, together with such letter of transmittal and related materials, in
each case as duly executed and properly completed, the holder of such
Certificate shall be entitled to receive in exchange for each Share represented
thereby, the Merger Consideration, and the Certificate so surrendered shall
forthwith be canceled. No interest shall accrue or be paid on the Merger
Consideration payable upon the surrender of any Certificate for the benefit of
the holder of such Certificate. If payment of the Merger Consideration is to be
made to a person other than the person in whose name the surrendered Certificate
is registered on the stock transfer books of the Seller, it shall be a condition
of payment that the Certificate so surrendered shall be endorsed properly or
otherwise be in proper form for transfer and that the person requesting such
payment shall have paid all transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such taxes either have been paid or are not
applicable.
(b) At any time following the expiration of the sixth (6th) month after
the Effective Time, the Buyer or the Surviving Corporation shall be entitled to
any funds which have not been disbursed to holders of Shares (including, without
limitation, all interest and other income in respect of the Merger
Consideration), and thereafter such holders shall be entitled to look to the
Buyer and the Surviving Corporation (subject to applicable abandoned property,
escheat or similar laws) only as general creditors thereof with respect to any
Merger Consideration that may be payable upon due surrender of the Certificates
held by them.
(c) After the Effective Time, there shall be no transfers on the stock
transfer books of the Seller of the Shares which were issued and outstanding
immediately prior to the Effective Time. From and after the Effective Time, the
holders of Shares shall cease to have any rights with respect to such Shares
except as otherwise provided herein or by applicable law. If, after the
Effective Time, Certificates representing such Shares are presented for transfer
to the Exchange Agent, they shall be canceled and exchanged for the Merger
Consideration as provided in this Article II.
(d) Neither the Buyer nor the Seller nor any other Person shall be
liable to any former holder of Shares for any shares or any dividends or
distributions with respect thereto or any Merger Consideration delivered in
respect of any such Shares properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(e) In the event any Certificate shall have been lost, stolen or
destroyed, upon receipt of appropriate evidence as to such loss, theft or
destruction and to the ownership of such Certificate by the Person claiming such
Certificate to be lost, stolen or destroyed, and the receipt by the Buyer of
appropriate and customary indemnification, the Buyer will issue in exchange for
each Share represented by such lost, stolen or destroyed Certificate, the Merger
Consideration, as determined in accordance with this Article II.
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ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller as follows:
3.1 CORPORATE ORGANIZATION.
(a) The Buyer is a trust company duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts. The Parent
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.
(b) Each of the Parent and the Buyer has all requisite 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. Each of the Parent and the
Buyer is duly licensed or qualified to do business and is in corporate good
standing 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 and in good standing would not result in
a Material Adverse Effect.
3.2 AUTHORITY; NO VIOLATION.
(a) Each of the Parent and the Buyer has all requisite corporate power
and authority to execute and deliver this Agreement and the other Transaction
Documents to which it is a party and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the other
Transaction Documents to which the Buyer or the Parent, as applicable, is a
party and the consummation of the transactions contemplated hereby and thereby
have been duly and validly approved by the Board of Directors of each of the
Buyer and the Parent, as applicable. Except for the adoption of the Bank Merger
Agreement by the Buyer's stockholder, no other corporate proceedings on the part
of the Parent or the Buyer are necessary to consummate the Merger. This
Agreement and the other Transaction Documents to which the Buyer or the Parent,
as applicable, is a party have been duly and validly executed and delivered by
each of the Parent and the Buyer, as applicable, and (assuming due
authorization, execution and delivery by the Seller and the Seller Bank),
constitute the valid and binding obligations of the Parent and the Buyer, as
applicable, enforceable against each of them in accordance with their respective
terms.
(b) Neither the execution and delivery of this Agreement or the other
Transaction Documents to which the Buyer or the Parent, as applicable, is a
party by the Parent and the Buyer, as applicable, nor the consummation by the
Parent and the Buyer of the transactions contemplated hereby or thereby; nor
compliance by the Parent and the Buyer with any of the terms or provisions
hereof or thereof, will (i) assuming that the consents, waivers and approvals
referred to in Section 3.3 hereof are duly obtained, violate in any respect any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to the Parent or the Buyer, or (ii) violate, conflict
with, or 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 properties or
assets of the Parent or the Buyer under any of the
6
terms, conditions or provisions of (y) the Articles of Organization or other
charter document of like nature or By-Laws of the Parent or the Buyer, or (z)
any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Parent or the Buyer is a party as
issuer, guarantor or obligor, or by which it or any of its properties or assets
may be bound or affected, except, in the case of clause (ii)(z) above, for such
violations, conflicts, breaches or defaults which either individually or in the
aggregate will not have a Material Adverse Effect on the Parent or the Buyer.
3.3 CONSENTS AND APPROVALS. Except for consents, waivers, or approvals of,
or filings or registrations with, or notifications to the OCC, the FDIC, the
Federal Reserve Board, the Massachusetts Commissioner, the MBBI, applicable
state insurance authorities, the MHPF, the Massachusetts Secretary, the DOJ, The
London Stock Exchange Limited and the Financial Services Authority, no consents,
waivers or approvals of, or filings or registrations with, or notifications to,
any public body or authority are necessary, and no consents or approvals of any
third parties are necessary, in connection with (a) the execution and delivery
by the Parent and the Buyer of this Agreement and by the Buyer of the Bank
Merger Agreement or (b) the consummation by the Parent and the Buyer of the
Merger or by the Buyer of the Bank Merger. Neither the Parent nor the Buyer has
any knowledge of any fact or circumstance relating to the Buyer or its
subsidiaries or other Affiliates that is reasonably likely to materially impede
or delay receipt of any consents of Governmental Authorities.
3.4 FINANCIAL STATEMENTS. The Buyer has made available to the Seller copies
of (i) the consolidated balance sheets of the Parent and its subsidiaries as of
December 31, 2001 and December 31, 2002, and the related consolidated statements
of income, changes in stockholders' equity and cash flows for the fiscal years
2000 through 2002, inclusive, accompanied by the audit report of Deloitte &
Touche LLP, independent public accountants for the Parent, and (ii) the results
of operations of the Parent and its subsidiaries as of March 31, 2003. The
December 31, 2002 consolidated balance sheet of the Parent and its subsidiaries
(including the related notes, where applicable) and the other financial
statements referred to herein (including the related notes, where applicable)
fairly present the consolidated financial position and results of the
consolidated operations and cash flows and changes in stockholders' equity of
the Parent 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 prepared in accordance with GAAP,
except as otherwise set forth in the notes thereto (subject, in the case of
unaudited interim statements, to normal year-end adjustments).
3.5 BROKER'S FEES. Neither the Buyer nor any of its officers, directors,
employees, Affiliates or agents has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection with
any of the transactions contemplated by this Agreement, except for legal,
accounting and other professional fees payable in connection with the Merger and
the other transactions contemplated hereby. The Buyer will be responsible for
the payment of all such fees.
3.6 LEGAL PROCEEDINGS. There is no claim, suit, action, proceeding or
investigation of any nature pending or, to the best knowledge of the Buyer,
threatened, against the Buyer or any subsidiary or other Affiliate of the Buyer
or challenging the validity or propriety of the transactions contemplated by
this Agreement, and which, if adversely determined, would,
7
individually or in the aggregate, materially adversely affect the Buyer's
ability to perform its respective obligations under this Agreement or the Bank
Merger Agreement, 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 or other Affiliate of the Buyer having, or which insofar as
reasonably can be foreseen, in the future could have, any such effect.
3.7 CAPITAL; AVAILABILITY OF FUNDS. On the date hereof, the Buyer is, and
on the Closing Date, the Buyer will be, at least "adequately capitalized," as
such term is defined in the rules and regulations promulgated by the FDIC. Buyer
will have available to it at the Effective Time sources of capital and financing
sufficient to pay the aggregate Merger Consideration and to pay any other
amounts payable pursuant to this Agreement and to effect the transactions
contemplated hereby.
3.8 BUYER INFORMATION. The information relating to the Parent, Buyer, their
respective subsidiaries and other Affiliates to be contained in the proxy
statement to be mailed to Seller's stockholders (the "SELLER PROXY STATEMENT"),
as described in Section 6.1 hereof, to the extent such information is provided
in writing by the Buyer specifically for inclusion in the Seller Proxy
Statement, will not, on the date the Seller Proxy Statement (or any supplement
or amendment thereto) is first mailed to stockholders of the Seller or on the
date of the Seller Stockholders Meeting, contain any untrue statement of a
material fact or omit to state a material fact necessary to make such
information not misleading at the time and in light of the circumstances under
which such statement is made.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer as follows:
4.1 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 Seller
has all requisite 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. The Seller is duly licensed or qualified to do business and is in
corporate good standing 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 and in corporate good standing
would not, individually or in the aggregate, result in any Material Adverse
Effect on the Seller. The Seller is a bank holding company registered with the
Federal Reserve Board under the BHCA. The Articles of Organization and By-Laws
of the Seller, copies of which have previously been made available to the Buyer,
are true, complete and correct copies of such documents in effect as of the date
of this Agreement. The Seller is not in violation of any provision of its
Articles of Organization or By-Laws. The minute books of the Seller contain in
all material respects true and complete records of all meetings held and
corporate actions taken since January 1, 2000 of the Seller's stockholders and
Board of Directors (including committees of the Seller's Board of Directors)
other than minutes which have not been prepared as of the date hereof.
8
(b) Each of Seller's subsidiaries is duly organized, validly existing
and in corporate good standing under the laws of the jurisdiction of its
organization. Each of Seller's subsidiaries has all requisite 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. Each of Seller's
subsidiaries 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 and in good standing would not, individually or in the aggregate,
result in any Material Adverse Effect on the Seller.
(c) Except as set forth on Section 4.1(c) of the Seller Disclosure
Schedule, the Seller has no subsidiaries and no Joint Ventures (other than
investments in such subsidiaries).
(d) The Articles of Organization and By-Laws or equivalent
organizational documents of each of Seller's subsidiaries, copies of which have
previously been made available to the Buyer, are true, correct and complete
copies of such documents in effect as of the date of this Agreement. Neither the
Seller nor any of its subsidiaries is in violation of any provision of its
Articles of Organization, By-Laws or equivalent organizational documents. The
minute books of each of Seller's subsidiaries contain in all material respects
true and complete records of all meetings held and corporate actions taken since
January 1, 2000 of its stockholders and board of directors (including committees
of its board of directors) other than minutes which have not been prepared as of
the date hereof.
4.2 CAPITALIZATION.
(a) The authorized capital stock of the Seller consists of Twelve
Million (12,000,000) shares of Seller Common Stock and One Hundred Thousand
(100,000) shares of preferred stock, par value $2.50 per share ("SELLER
PREFERRED STOCK"). Three Thousand Two Hundred (3,200) shares of the Preferred
Stock are designated the Series A Participating Cumulative Preferred Stock (the
"SERIES A PREFERRED STOCK") and the remaining authorized shares of Seller
Preferred Stock are undesignated. As of the date hereof, there are Five Million
Eight Hundred Sixty Three Thousand Three Hundred Fourteen (5,863,314) shares of
Seller Common Stock and no shares of Seller Preferred Stock issued and
outstanding. As of the date hereof, there are Five Hundred Thirty Five Thousand
One Hundred Twenty Two (535,122) shares of Seller Common Stock and no shares of
Seller Preferred Stock held in the treasury of the Seller. Except for Trust
Account Shares and DPC Shares, no shares of Seller Common Stock are held by the
Seller's subsidiaries. In addition, as of the date hereof, there are Two Hundred
Ninety Five Thousand One Hundred Twelve (295,112) shares of Seller Common Stock
reserved for issuance upon exercise of outstanding Stock Options. All issued and
outstanding shares of 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 (i) for the Seller
Stock Option Plans (which includes director and employee stock options) or (ii)
as reflected on Section 4.2(a) of the Seller Disclosure Schedule, the Seller
does not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments, rights agreements 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 Seller Common Stock or Seller Preferred Stock or
any other equity security of the Seller or any subsidiary of the Seller or
9
any securities convertible into, exchangeable for or representing the right to
subscribe for, purchase or otherwise receive any shares of Seller Common Stock
or Seller Preferred Stock or any other equity security of the Seller or any
subsidiary of the Seller or obligating the Seller or any such subsidiary to
grant, extend or enter into any such subscriptions, options, warrants, calls,
commitments, rights agreements or other similar agreements. Except as set forth
on Section 4.2(a) of the Seller Disclosure Schedule, there are no outstanding
contractual obligations of the Seller to repurchase, redeem or otherwise acquire
any shares of capital stock of, or other equity interests in, the Seller or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any subsidiary of the Seller. Section 4.2(a) of
the Seller Disclosure Schedule sets forth as of the date hereof (i) the name of
each holder of a Stock Option, (ii) the date each Stock Option was granted,
(iii) the number of shares subject to each such Stock Option, (iv) the
expiration date of each such Stock Option, and (v) the price at which each such
Stock Option may be exercised. There are no Shares outstanding which are subject
to vesting over time or upon the satisfaction of any condition precedent, or
which are otherwise subject to any right or obligation of repurchase or
redemption on the part of the Seller.
(b) The authorized capital stock of the Seller Bank consists of One
Hundred Thousand (100,000) shares of common stock, par value $10.00 per share
("BANK COMMON STOCK"). As of the date hereof, (i) Fifty Five Thousand (55,000)
shares of Bank Common Stock are issued and outstanding, all of which are owned
directly or indirectly by the Seller, all of which are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof, (ii) no shares of Bank
Common Stock are held in the treasury of the Seller Bank, and (iii) no shares of
Bank Common Stock are held by any of Seller's subsidiaries. Each share of Bank
Common Stock owned by the Seller or any of its subsidiaries is free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on the Seller's or any of its subsidiaries'
voting rights, charges and other encumbrances of any nature whatsoever.
(c) Section 4.2(c) of the Seller Disclosure Schedule lists each of the
subsidiaries of the Seller and each Joint Venture on the date of this Agreement
and indicates for each such subsidiary and Joint Venture as of such date: (i)
the percentage and type of equity securities owned or controlled by the Seller;
(ii) the jurisdiction of incorporation; and (iii) the federal and/or state bank
regulatory or other authority (including, without limitation, the specific
regulatory provision) under which its shares are held by Seller or by which the
Joint Venture operates. The Seller has (x) made available to the Buyer all of
the organizational or similar documents regarding the control, governance or
voting power in respect of each Joint Venture, (y) has no obligation to make any
capital contributions, or otherwise provide assets or cash, to any Joint Venture
and (z) does not, directly or indirectly, control any Joint Venture. Seller Bank
has its deposits insured by the Bank Insurance Fund of the FDIC in accordance
with the FDIA to the fullest extent permitted by law. It is not obligated to
make any payments for premiums and assessments and it has filed all reports
required by the FDIA. Seller Bank does not have any deposits insured by the
Savings Association Insurance Fund of the FDIC. As of the date hereof, no
proceedings for the revocation or termination of such deposit insurance are
pending or, to the best knowledge of the Seller, threatened. Except as set forth
on Section 4.2(c) of the Seller Disclosure Schedule, no subsidiary of the Seller
has or is bound by any outstanding subscriptions, options, warrants, calls,
commitments, rights agreements or agreements of any
10
character calling for a subsidiary of the Seller to issue, deliver or sell, or
cause to be issued, delivered or sold any equity security of the Seller or of
any subsidiary of the Seller 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 subsidiary of the Seller to grant,
extend or enter into any such subscriptions, options, warrants, calls,
commitments, rights agreements or other similar agreements. There are no
outstanding contractual obligations of any subsidiary of the Seller to
repurchase, redeem or otherwise acquire any shares of capital stock of, or other
equity interests in, the Seller or any such subsidiary or to provide funds to,
or make any investment (in the form of a loan, capital contribution or
otherwise) in, any such subsidiary of the Seller. All of the shares of capital
stock of each of the subsidiaries of the Seller held by the Seller are fully
paid and nonassessable and, except for directors' qualifying shares, are owned
by the Seller free and clear of any claim, lien, encumbrance or agreement with
respect thereto.
4.3 AUTHORITY; NO VIOLATION.
(a) The Seller has all requisite corporate power and authority to
execute and deliver this Agreement and the other Transaction Documents and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the other Transaction Documents, and the
consummation of the transactions contemplated hereby and thereby have been
declared advisable by, and are duly and validly approved by the unanimous vote
of, the Board of Directors of the Seller. The Board of Directors of the Seller
has directed that this Agreement and the transactions contemplated hereby,
including the Merger, be submitted to the stockholders of the Seller for
approval at a meeting of such stockholders and, except for the adoption of this
Agreement by the Seller's stockholders, no other corporate action and no other
corporate proceedings on the part of the Seller are necessary to authorize this
Agreement and the other Transaction Documents or to consummate the Merger. This
Agreement and the other Transaction Documents have been duly and validly
executed and delivered by the Seller and (assuming due authorization, execution
and delivery by the Buyer and the Parent, as applicable) constitute the valid
and binding obligations of the Seller, enforceable against the Seller in
accordance with their respective terms.
(b) The Seller Bank has full corporate power and authority to execute
and deliver the Bank Merger Agreement, to perform its obligations thereunder and
to consummate the transactions contemplated thereby. The execution and delivery
of the Bank Merger Agreement, the performance of its obligations thereunder and
the consummation of the transactions contemplated thereby have been duly and
validly approved by the unanimous action of the Board of Directors of the Seller
Bank. Except for adoption of the Bank Merger Agreement by the Seller Bank's
stockholders, no other corporate action and no other corporate proceedings on
the part of the Seller Bank are necessary to authorize the Bank Merger Agreement
or the performance of the Seller Bank's obligations thereunder or to consummate
the transactions contemplated thereby. The Bank Merger Agreement, upon execution
and delivery by the Seller Bank, will be duly and validly executed and delivered
by the Seller Bank and will constitute a legal, valid and binding obligation of
the Seller Bank, enforceable against the Seller Bank in accordance with its
terms.
(c) Neither the execution and delivery of this Agreement or the other
Transaction Documents by the Seller nor the consummation by the Seller of the
transactions
11
contemplated hereby or thereby; nor the execution and delivery of the Bank
Merger Agreement by the Seller Bank, nor the consummation by the Seller Bank of
the transactions contemplated thereby; nor compliance by the Seller or the
Seller Bank with any of the terms or provisions hereof or thereof, will (i)
assuming that the consents, waivers and approvals referred to in Section 4.3 or
Section 4.4 hereof are duly obtained, violate any statute, law, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to the
Seller or any of its subsidiaries or by which any property or asset of the
Seller or any of its subsidiaries is bound or affected, 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
properties or assets of the Seller or any of its subsidiaries under any of the
terms, conditions or provisions of (y) the Articles of Organization or other
charter document of like nature or By-Laws of the Seller or any of its
subsidiaries, or (z) any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the Seller
is a party as issuer, guarantor or obligor, or by which they or any of their
respective properties or assets may be bound or affected.
4.4 CONSENTS AND APPROVALS.
(a) Except for consents, waivers or approvals of, or filings or
registrations with, or notifications to, the Federal Reserve Board, the OCC, the
FDIC, the Massachusetts Commissioner, the MBBI, the MHPF, applicable state
insurance authorities, the Massachusetts Secretary, and the DOJ, no consents,
waivers or approvals of, or filings or registrations with, or notifications to
any public body or authority are necessary in connection with (i) the execution
and delivery by the Seller of this Agreement and the execution and delivery of
the Bank Merger Agreement by the Seller or the Seller Bank, or (ii) the
consummation by the Seller of the Merger or by the Seller or the Seller Bank of
the Bank Merger. The affirmative vote of holders of two-thirds of the
outstanding shares of Seller Common Stock is the only vote of the holders of any
shares or series of capital stock or other securities of the Seller necessary to
approve this Agreement and the Merger. The affirmative vote of two thirds of the
outstanding shares of Bank Common Stock is the only vote of the holders of any
shares or series of capital stock or other securities of the Seller Bank
necessary to approve the Bank Merger Agreement and the Bank Merger. The Seller
has no knowledge of any fact or circumstance relating to the Seller or its
subsidiaries or other Affiliates, that is reasonably likely to materially impede
or delay receipt of any consents of Governmental Authorities.
(b) Except as set forth in Section 4.4(a), the execution and delivery
of this Agreement by the Seller, and the execution and delivery of the Bank
Merger Agreement by the Seller and Seller Bank, does not require any consent,
approval, authorization or permit of, or filing with or notification to, any
third party (which term does not include the Board of Directors or the
stockholders of the Seller or the stockholder of the Seller Bank), except where
the failure to obtain any such consent, approval, authorization or permit, or to
make any such filing or notification, would not have a Material Adverse Effect
on the Seller or prevent or significantly delay consummation of the Merger or
the Bank Merger.
12
4.5 FINANCIAL STATEMENTS. The Seller has made available to the Buyer copies
of (a) the consolidated balance sheets of the Seller and its subsidiaries as of
December 31 for the fiscal years 2001 and 2002, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
fiscal years 2000 through 2002, inclusive, as reported in the Annual Report of
the Seller on Form 10-K for the fiscal year ended December 31, 2002 filed with
the SEC under the Exchange Act, accompanied by the audit report of Wolf &
Company, P.C., independent public accountants for the Seller for the fiscal year
ended December 31, 2002, and by the audit report of Arthur Andersen LLP,
independent public accountants for the Seller for the fiscal years ended
December 31, 2001 and December 31, 2000; and (b) the unaudited consolidated
balance sheet of the Seller and its subsidiaries as of March 31, 2003 and
December 31, 2002, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the fiscal periods ended March 31, 2003
and March 31, 2002 as reported in the Quarterly Report of the Seller on Form
10-Q for the fiscal period ended March 31, 2003. The December 31, 2002
consolidated balance sheet ("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) 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 stockholders'
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, except as otherwise set forth in the notes thereto
(subject, in the case of unaudited interim statements, to normal year-end
adjustments). Each of the consolidated financial statements of the Seller and
its subsidiaries, including, in each case, the notes thereto, made available to
the Buyer comply, and the financial statements to be filed with the SEC by the
Seller after the date hereof will comply, with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto. 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.
4.6 BROKER'S FEES. Neither the Seller nor any of its officers, directors,
employees, Affiliates or agents has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection with
any of the transactions contemplated by this Agreement, except for fees and
commissions incurred in connection with the engagement of Keefe, Bruyette &
Woods, Inc. ("SELLER'S ADVISOR") and for legal, accounting and other
professional fees payable in connection with the Merger and the other
transactions contemplated hereby. The Seller will be responsible for the payment
of all such fees. The fee payable to Seller's Advisor in connection with the
transactions contemplated by this Agreement is as described in an engagement
letter between the Seller and Seller's Advisor a true and complete copy of which
has heretofore been furnished to the Buyer. The Seller has previously received
the opinion of Seller's Advisor to the effect that, as of the date of such
opinion, the Merger Consideration to be received by the stockholders of the
Seller pursuant to the Merger is fair from a financial point of view to such
stockholders, and such opinion has not been amended or rescinded and remains in
full force and effect as of the date of this Agreement.
13
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed on Section
4.7 of the Seller Disclosure Schedule, in any Current Reports of the Seller on
Form 8-K filed prior to the date of this Agreement, in the Seller's proxy
statement filed with respect to its 2003 Annual Meeting of stockholders, in the
Seller's Annual Report on Form 10-K for the year ended December 31, 2002, in the
Seller's Quarterly Report on Form 10-Q for the period ended March 31, 2003, or
as otherwise expressly permitted or expressly contemplated by this Agreement,
since March 31, 2003, the Seller and its subsidiaries have not incurred any
material liability or obligation of any nature (whether accrued, absolute,
contingent or otherwise and whether due or to become due), except in the
ordinary course of their business consistent with their past practices or in
connection with this Agreement and the transactions contemplated hereby, nor has
there been (a) any change in the business, assets, financial condition or
results of operations of the Seller or any of its subsidiaries which has had, or
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Seller or any of its subsidiaries, and, to the best
knowledge of the Seller, no fact or condition exists which is reasonably likely
to cause such a Material Adverse Effect in the future, (b) any change by the
Seller or any of its subsidiaries in its accounting methods, principles or
practices, other than changes required by applicable law or GAAP or regulatory
accounting as concurred in by the Seller's independent accountants, (c) any
entry by the Seller or any of its subsidiaries into any contract or commitment
of more than $75,000 or with a term of more than one (1) year other than loans
and loan commitments, (d) any declaration, setting aside or payment of any
dividend or distribution in respect of any capital stock of the Seller or any of
its subsidiaries or any redemption, purchase or other acquisition of any of its
securities, other than in the ordinary course of business consistent with past
practice, (e) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any directors, officers or
employees of the Seller or any of its subsidiaries, or any grant of severance or
termination pay, or any contract or arrangement entered into to make or grant
any severance or termination pay, any payment of any bonus, or the taking of any
action not in the ordinary course of business with respect to the compensation
or employment of directors, officers or employees of the Seller or any of its
subsidiaries, (f) any material election made by the Seller or any of its
subsidiaries for federal or state income tax purposes, (g) any material change
in the credit policies or procedures of the Seller or any of its subsidiaries,
the effect of which was or is to make any such policy or procedure less
restrictive in any material respect, (h) any material acquisition or disposition
of any assets or properties, or any contract for any such acquisition or
disposition entered into other than loans and loan commitments, or (i) any
material lease of real or personal property entered into, other than in
connection with foreclosed property or in the ordinary course of business
consistent with past practice.
4.8 LEGAL PROCEEDINGS. There is no claim, suit, action, proceeding or
investigation of any nature 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,
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 Seller Bank's ability to perform its obligations under this
Agreement or the Bank Merger
14
Agreement, nor is there any judgment, decree, injunction, rule, award or order
of any legal or administrative body or arbitrator outstanding against the Seller
or any subsidiary of the Seller having, or which insofar as reasonably can be
foreseen, in the future could have, any such effect or restricting, or which
could restrict its ability to conduct business in any material respect in any
area. Section 4.8 of the Seller Disclosure Schedule sets forth as of the date
hereof all claims, suits, actions, proceedings or investigations pending or, to
the best knowledge of the Seller, threatened against the Seller or any of its
subsidiaries.
4.9 REPORTS.
(a) Since January 1, 2000, the Seller and its subsidiaries have timely
filed, and subsequent to the date hereof will timely 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 (i) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q and Forms 8-K
(collectively, "SEC REPORTS") (and copies of all such SEC Reports have been or
will be delivered or otherwise made available by the Seller to the Buyer); (ii)
the Federal Reserve Board; (iii) the OCC; and (iv) 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, registrations and statements, together with any
amendments thereto, are collectively referred to herein as the "SELLER REPORTS")
and have paid all fees and assessments due and payable in connection with any of
the foregoing. 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 and 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. None of the Seller's
subsidiaries is required to file any form, report or other document with the
SEC. The Seller has made available to the Buyer true and complete copies of all
amendments and modifications that have not been filed by the Seller with the SEC
to all agreements, documents and other instruments that previously had been
filed by the Seller with the SEC and are currently in effect. Except for normal
periodic examinations conducted by a Bank Regulator in the regular course of the
business of the Seller and its subsidiaries, since January 1, 2000, no Bank
Regulator has initiated any proceeding or, to the best knowledge of the Seller,
investigation into the business or operations of the Seller or any of its
subsidiaries. Except as set forth on Section 4.9 of the Seller Disclosure
Schedule, the Seller and its subsidiaries have resolved all material violations,
criticisms or exceptions by any Bank Regulator with respect to any such normal
periodic examination.
(b) The Seller has established and maintains disclosure controls and
procedures as required by Rule 15d-14 under the Exchange Act. Within ninety (90)
days preceding the date of each applicable SEC Report, the Seller has conducted
an evaluation under the supervision and with the participation of its
management, including the Seller's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of its disclosure
controls and procedures, and has concluded that its disclosure controls and
procedures are effective to ensure that information required to be disclosed in
the SEC Reports is
15
recorded, processed, summarized and reported, within the periods specified in,
and in accordance with the requirements of, the SEC's rules, regulations and
forms. Based on such evaluations, (i) there were no significant deficiencies in
the design or operation of internal controls which could adversely affect the
Seller's ability to record, process, summarize and report financial data or
material weaknesses in internal controls and (ii) there was no fraud, whether or
not material, that involved management or other employees of the Seller or any
of its subsidiaries who have a significant role in the Seller's internal
controls.
4.10 AGREEMENTS WITH BANKING AUTHORITIES. Neither the Seller nor any of its
subsidiaries is a party to any commitment letter (other than letters addressed
to regulated depository institutions generally), written agreement, memorandum
of understanding, order to cease and desist with, is subject to any order or
directive specifically naming or referring to Seller or any of its subsidiaries
by, has been required to adopt any board resolution by, any Governmental
Authority which is currently in effect and restricts materially the conduct of
its business, or in any manner relates to its capital adequacy, loan loss
allowances or reserves, credit policies, management or overall safety and
soundness or such entity's ability to perform its obligations hereunder, and
neither the Seller nor any of its subsidiaries has received written notification
from any such Governmental Authority that any such Person may be requested to
enter into, or otherwise be subject to, any such commitment letter, written
agreement, memorandum of understanding, cease and desist order or any other
similar order or directive. Neither the Seller nor any of its subsidiaries has
been informed by any such Governmental Authority that it is contemplating
issuing or requesting any such order, directive, agreement, memorandum of
understanding, commitment letter, written agreement or similar submission.
Except as set forth on Section 4.10 of the Seller Disclosure Schedule, neither
the Seller nor any of its subsidiaries is a party to any agreement or
arrangement entered into in connection with the consummation of a federally
assisted acquisition of a depository institution pursuant to which the Seller or
any of its subsidiaries is entitled to receive financial assistance or
indemnification from any Governmental Authority.
4.11 ABSENCE OF UNDISCLOSED LIABILITIES. Except for those liabilities that
are fully reflected or reserved against on the Seller Balance Sheet and for
liabilities incurred in the ordinary course of business consistent with past
practice or in connection with this Agreement or the transactions contemplated
hereby, since December 31, 2002, neither the Seller nor any of its subsidiaries
has incurred any obligation or liability (contingent or otherwise) that, either
alone or when combined with all similar liabilities, has had, or could
reasonably be expected to have, a Material Adverse Effect on the Seller.
4.12 COMPLIANCE WITH APPLICABLE LAW. The Seller and each of its
subsidiaries holds all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of its business, and the Seller and each of its
subsidiaries has complied with and is not in violation of or default in any
material 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 or any of its subsidiaries, other than where
such default or noncompliance will not result in, or create the possibility of
resulting in, any Material Adverse Effect on the Seller or any of its
subsidiaries, and neither the Seller nor any of its subsidiaries has received
any notice of any violation of any such law, statute, order, rule, regulation,
policy or agreement, or
16
commencement of any proceeding in connection with any such violation, and does
not know of any violation of, any such law, statute, order, rule, regulation,
policy or agreement which would have such a result.
4.13 TAXES AND TAX RETURNS. Except as set forth on Section 4.13 of the
Seller Disclosure Schedule:
(a) The Seller and each of its subsidiaries, taken as a whole (referred
to for purposes of this Section 4.13, collectively, as the "SELLER COMPANIES")
have, since December 31, 1996, timely filed in correct form all Tax Returns that
were required to be filed by any of them on or prior to the date hereof (the
"FILED TAX Returns"), and have paid all Taxes shown as being due thereon, except
where the failure to do so would not have a Material Adverse Effect on the
Seller Companies.
(b) No assessment that has not been settled or otherwise resolved has
been made with respect to Taxes not shown on the Filed Tax Returns, other than
such additional Taxes (i) as are being contested in good faith, (ii) which, if
determined adversely to the Seller Companies, would not have a Material Adverse
Effect on the Seller Companies as a whole, or (iii) for which adequate provision
has been made on the Seller Balance Sheet. The income Tax Returns of the Seller
Companies have not been audited by the IRS or other taxing authority, as
applicable, for any year through 1998. There are no material disputes pending or
written claims asserted for Taxes or assessments upon any Seller Company, nor
has any Seller Company been requested to give, or has given, any currently
effective waivers extending the statutory period of limitation applicable to any
federal, state, county or local income Tax Return for any period. No deficiency
in Taxes or other proposed adjustment that has not been settled or otherwise
resolved has been asserted in writing by any taxing authority against any of the
Seller Companies, which, if determined adversely to the Seller Companies, would
have a Material Adverse Effect on the Seller Companies as a whole. To the best
knowledge of the Seller, no material Tax Return of any of the Seller Companies
is now under examination by any applicable taxing authority. There are no
material liens for Taxes (other than current Taxes not yet due and payable) on
any of the assets of any Seller Company, except for such liens for Taxes that
would not have a Material Adverse Effect on the Seller Companies as a whole.
(c) Adequate provision has been made on the Seller Balance Sheet for
all Taxes of the Seller Companies in respect of all periods through the date
hereof. In addition, (i) proper and accurate amounts have been withheld by each
Seller Company from their respective employees for all prior periods in
compliance in all material respects with the tax withholding provisions of
applicable federal, state, county and local laws; (ii) federal, state, county
and local returns which are accurate and complete in all material respects have
been filed by the Seller Companies for all periods for which returns were due
with respect to income tax withholding, Social Security and unemployment taxes;
and (iii) the amounts shown on such returns to be due and payable have been paid
in full or adequate provision therefor has been included by the Seller in its
consolidated financial statements included in its Annual Report on Form 10-K for
the period ended December 31, 2002, or, with respect to returns filed after the
date hereof, will be so paid or provided for in the consolidated financial
statements of the Seller for the period covered by such returns.
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(d) Except with respect to intra-Seller Company agreements made or
required under the federal consolidated tax return regulations, none of the
Seller Companies is a party to or bound by any Tax indemnification, Tax
allocation or Tax sharing agreement with any person or entity or has any current
or potential contractual obligation to indemnify any other person or entity with
respect to Taxes.
(e) None of the Seller Companies has filed or been included in a
combined, consolidated or unitary income Tax Return (including any consolidated
federal income Tax Return) other than one of which one of the Seller Companies
was the parent.
(f) None of the Seller Companies has made any payment, is obligated to
make any payment, or is a party to any agreement that could obligate it to make
any payment that will not be deductible under Code Section 162(m) or Code
Section 280G.
(g) No property of any Seller Company is property that is or will be
required to be treated as being owned by another person pursuant to the
provisions of Code Section 168(f)(8) (as in effect prior to its amendment by the
Tax Reform Act of 1986) or is "tax exempt use property" within the meaning of
Code Section 168(h). None of the Seller Companies has been required to include
in income any adjustment pursuant to Code Section 481 by reason of a voluntary
change in accounting method initiated by any Seller Company, and the IRS has not
initiated or proposed any such adjustment or change in accounting method.
4.14 LABOR. No work stoppage involving the Seller or any of its
subsidiaries is pending or, to the best knowledge of the Seller's management,
threatened. Neither the Seller nor any of its subsidiaries is involved in, or,
to the best knowledge of the Seller's management, threatened with or affected
by, any dispute, arbitration, lawsuit or administrative proceeding relating to
labor or employment matters which might reasonably be expected to interfere in
any material respect with the respective business activities of the Seller or
any of its subsidiaries. No employees of the Seller or any of its subsidiaries
are represented by any labor union, and, to the best knowledge of the Seller's
management, no labor union is attempting to organize employees of the Seller or
any of its subsidiaries.
4.15 EMPLOYEES.
(a) Except as set forth on Section 4.15(a) of the Seller Disclosure
Schedule, 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(2) of ERISA, "employee welfare benefit
plan" (the "SELLER BENEFIT PLANS"), as such term is defined in Section 3(1) of
ERISA, stock option plan, restricted stock plan, stock purchase plan, deferred
compensation plan, other employee benefit plan for employees of the Seller or
any of its subsidiaries, 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 of its subsidiaries (collectively, the "SELLER OTHER PLANS").
(b) The Seller shall have made available to the Buyer complete and
accurate copies 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 and any amendment thereto;
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(ii) trust agreement or insurance contract (including any fiduciary liability
policy or fidelity bond), if any; (iii) most recent IRS determination letter, if
any; (iv) most recent actuarial report, if any; (v) most recent annual report on
Form 5500; and (vi) summary plan description.
(c) Except as set forth on Section 4.15(c) of the Seller Disclosure
Schedule, 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) Except as set forth on Section 4.15(d) of the Seller Disclosure
Schedule, to the best knowledge of the Seller, each of the Seller Pension Plans,
each of the Seller Other Plans and each of the Seller Benefit Plans, which are
maintained or contributed to by the Seller, 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 all
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 Code
Section 412(d)(3) (or any predecessor section) with respect to any Seller
Pension Plan.
(f) Each of the Seller Pension Plans which is intended to be a
qualified plan within the meaning of Code Section 401(a) has received a
favorable determination letter from the IRS that such Plan meets the
requirements of Code Section 401(a) and that the trust associated with such
Seller Pension Plan is tax exempt under Code Section 501(a), and, to the best
knowledge of the Seller, each of such plans is so qualified and the Seller is
not aware of any fact or circumstance which would adversely affect the qualified
status of any such plan.
(g) The Seller has made or provided for all contributions to the Seller
Pension Plans required thereunder.
(h) Except as set forth on Section 4.15(h) of the Seller Disclosure
Schedule, neither the 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.
(i) Except as set forth on Section 4.15(i) of the Seller Disclosure
Schedule, neither the Seller nor any of its subsidiaries has ever (i) maintained
any "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA, or
(ii) provided healthcare or any other non-pension benefits to any employees
after their employment is terminated (other than as required by Part 6 of
Subtitle B of Title I of ERISA or state health continuation laws) or has ever
promised to provide such post-termination benefits.
(j) No lawsuits, governmental administrative proceedings, claims (other
than routine claims for benefits) or complaints to, or by, any person or
governmental entity have been
19
filed, are pending, or to the best knowledge of the Seller, threatened with
respect to any Seller Pension Plan, Seller Benefit Plan or Seller Other Plan.
There is no material correspondence between the Seller and any Governmental
Authority related to any other Seller Pension Plan, Seller Benefit Plan or
Seller Other Plan.
4.16 CAPITALIZATION. The Seller is qualified to elect "financial holding
company" status under the Gramm-Leach-Bliley Act of 1999 if it chooses to do so.
The Seller Bank is "well capitalized," as such term is defined in the rules and
regulations promulgated by the OCC. The Seller would be "well capitalized," as
such term is defined in the rules and regulations promulgated by the Federal
Reserve Board if the Seller were a state-chartered, member bank.
4.17 CRA, ANTI-MONEY LAUNDERING AND CUSTOMER INFORMATION SECURITY. Neither
the Seller nor the Seller Bank is aware of, has been advised of, or has reason
to believe that any facts or circumstances exist, which would cause the Seller
Bank: (i) to be deemed not to be in satisfactory compliance in any material
respect with the CRA, and the regulations promulgated thereunder, or to be
assigned a rating for CRA purposes by federal or state bank regulators of lower
than "satisfactory;" or (ii) to be deemed to be operating in violation in any
material respect of the federal Bank Secrecy Act, as amended, and its
implementing regulations (31 C.F.R. Part 103), the USA PATRIOT Act of 2001,
Public Law 107-56 (the "USA PATRIOT ACT"), and the regulations promulgated
thereunder, any order issued with respect to anti-money laundering by the U.S.
Department of the Treasury's Office of Foreign Assets Control, or any other
applicable anti-money laundering statute, rule or regulation; or (iii) to be
deemed not to be in satisfactory compliance in any material respect with the
applicable privacy of customer information requirements contained in any federal
and state privacy laws and regulations, including without limitation, in Title V
of the Gramm-Leach-Bliley Act of 1999 and regulations promulgated thereunder, as
well as the provisions of the information security program adopted by the Seller
Bank pursuant to 12 C.F.R. Part 364. Furthermore, the Board of Directors of the
Seller Bank has adopted and the Seller Bank has implemented an anti-money
laundering program that contains adequate and appropriate customer
identification verification procedures and that meets the requirements in all
material respects of Section 352 of the USA PATRIOT Act and the regulations
thereunder.
4.18 MATERIAL AGREEMENTS.
(a) Except as set forth on Section 4.18 of the Seller Disclosure
Schedule, neither the Seller nor any of its subsidiaries is a party to or is
bound by:
(i) any agreement, arrangement, or commitment, in each case
whether written or oral (for purposes of this Section 4.18, an
"AGREEMENT"), that is material to the financial condition, results of
operations or business of the Seller, except those entered into in the
ordinary course of business;
(ii) any Agreement relating to the employment, including without
limitation, employment as a consultant, of any person, or the election
or retention in office, or severance of any present or former director
or officer of the Seller or any of its subsidiaries;
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(iii) any Agreement with any labor union;
(iv) any Agreement by and among the Seller, any subsidiary of the
Seller and/or any Affiliate thereof;
(v) any Agreement that would be required to be filed as an
Exhibit to a Form 10-K filed by the Seller as of the date hereof that
has not been filed as an Exhibit to the Form 10-K filed by it for the
fiscal year ended December 31, 2002;
(vi) any Agreement which, upon the consummation of the
transactions contemplated by this Agreement or the Bank Merger
Agreement, will result in any payment (whether of severance pay or
otherwise) becoming due from the Seller or any of its subsidiaries to
any officer or employee thereof;
(vii) any Agreement which is a consulting or other agreement
(including agreements entered into in the ordinary course and data
processing, software programming and licensing contracts) not
terminable on sixty (60) days or less notice involving the payment of
more than $50,000 per annum;
(viii) any Agreement which materially restricts or prohibits the
alteration of the conduct of any line of business by the Seller or any
of its subsidiaries, or which otherwise requires that a particular
line of business be maintained;
(ix) except for the Seller Stock Option Plans, any Agreement
(including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan) any of the benefits of
which will be increased, or the vesting of the benefits of which will
be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the Bank Merger Agreement, or the
value of any of the benefits of which will be calculated on the basis
of any of the transactions contemplated by this Agreement or the Bank
Merger Agreement;
(x) any non-competition agreement or any other Agreement which
purports to limit in any respect, the ability of the Seller or its
businesses to solicit customers or the manner in which, or the
localities in which, all or any substantial portion of the business of
the Seller and its subsidiaries, taken as a whole, or, following
consummation of the transactions contemplated by this Agreement or the
Bank Merger Agreement, the Buyer and its subsidiaries, is or would be
conducted;
(xi) any Agreement providing for the indemnification by the
Seller or a subsidiary of the Seller of any person, other than
customary agreements relating to the indemnity of directors, officers
and employees of the Seller or its subsidiaries;
(xii) any Agreement that grants any right of first refusal or
right of first offer or similar right or that limits (or purports to
limit) the ability of the Seller or
21
any of its subsidiaries to own, operate, sell, transfer, pledge or
otherwise dispose of any material amount of assets or business;
(xiii) any Agreement providing for any material future payments
that are conditioned, in whole or in part, on a change of control of
the Seller or any of its subsidiaries;
(xiv) any material Agreement pertaining to the use of or granting
any right to use or practice any rights under any Seller Intellectual
Property Assets, whether the Seller or any of its subsidiaries is the
licensee or licensor thereunder; or
(xv) any investment management or investment advisory or
sub-advisory or any other contract for the provision of financial
planning, brokerage (including, without limitation, insurance
brokerage) or similar services not terminable on sixty (60) days or
less notice.
Each Agreement described in this Section 4.18, whether or not set forth
on Section 4.18 of the Seller Disclosure Schedule, is referred to herein as a
"SELLER CONTRACT." The Seller has previously delivered to the Buyer true and
complete copies of all employment, consulting and deferred compensation
agreements which are in writing and to which the Seller or any of its
subsidiaries is a party, and has made available to the Buyer true and complete
copies of all other Seller Contracts. Except as set forth on Section 4.18 of the
Seller Disclosure Schedule, there are no provisions in any Seller Contract that
provide any restrictions on, or that require that any financial payment (other
than payment of any outstanding principal and accrued interest) be made in the
event of, the repayment of the outstanding indebtedness thereunder prior to its
term.
(b) Each Seller Contract listed on such Seller Disclosure Schedule is
legal, valid and binding upon the Seller or Seller subsidiary, as the case may
be, and is in full force and effect. The Seller and each Seller subsidiary has
in all material respects performed all obligations required to be performed by
it to date under each such Seller Contract. Except as set forth on Section
4.18(b) of the Seller Disclosure Schedule, no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
material default on the part of the Seller or any Seller subsidiary under any
such Seller Contract.
4.19 PROPERTY AND LEASES
(a) Each of the Seller and each Seller subsidiary has good and
marketable title to all the real property and all other property owned by it and
included in the Seller Balance Sheet, free and clear of all mortgages, pledges,
liens, security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any kind
(collectively, "LIENS"), other than (i) Liens that secure liabilities that are
reflected in the Seller Balance Sheet or incurred in the ordinary course of
business after the date of the Seller Balance Sheet, (ii) Liens for current
taxes and assessments not yet past due or which are being contested in good
faith, (iii) inchoate mechanics' and materialmen's Liens for construction in
progress, (iv) workmen's, repairmen's, warehousemen's and carriers' Liens
arising in the ordinary course of business of the Seller or any of its
subsidiaries consistent with past practice, (v) all matters of
22
record, Liens and other imperfections of title and encumbrances which, either
individually or in the aggregate, would not be material, and (vi) those items
that secure public or statutory obligations or any discount with, borrowing
from, or obligations to any Federal Reserve Bank or Federal Home Loan Bank,
interbank credit facilities, or any transaction by any Seller subsidiary acting
in a fiduciary capacity.
(b) Each lease of real property leased for the use or benefit of the
Seller or any of its subsidiaries to which any of the foregoing is a party, and
all amendments and modifications thereto, is in full force and effect, and there
exists no material default under any such lease by the Seller or any of its
subsidiaries nor, to the best knowledge of the Seller and except as set forth on
Section 4.19(b) of the Seller Disclosure Schedule, any event which with notice
or lapse of time or both would constitute a material default thereunder by the
Seller or any other Seller subsidiaries, except for such defaults which,
individually, or in the aggregate, would not result in the forfeiture of the use
or occupancy of the property covered by such lease or in a material liability to
the Seller. The consent of the landlord under the real estate leases listed on
Section 4.19(b) of the Seller Disclosure Schedule may be required in order to
consummate the transactions contemplated by this Agreement.
4.20 LOAN PORTFOLIO.
(a) To the best knowledge of the Seller, all of the written or oral
loan agreements, notes or borrowing arrangements (including without limitation,
leases, credit enhancements, commitments, guarantees and interest-bearing
assets) with respect to loans in excess of $150,000 in original principal amount
(collectively, "LOANS") originated and held currently and at the Effective Time
by the Seller or any of its subsidiaries, and any other Loans purchased and held
currently and at the Effective Time by the Seller or any of its subsidiaries,
were solicited, originated and exist, and will exist at the Effective Time, in
material compliance with all applicable loan policies and procedures of the
Seller or such subsidiary. The information (including electronic information and
information contained on tapes and computer disks) with respect to all loans of
the Seller and its subsidiaries furnished to the Buyer by the Seller is, as of
the respective dates indicated therein, true and complete in all material
respects. To the best knowledge of the Seller, all loans originated, directly or
through third party mortgage brokers, have been originated in compliance with
all federal, state and local laws, including without limitation, the Real Estate
Settlement Procedures Act of 1974, as amended.
(b) Section 4.20(b) of the Seller Disclosure Schedule sets forth (i)
the aggregate net outstanding principal amount, as of the date hereof, of all
Loans, other than non-accrual Loans, and (ii) the aggregate net outstanding
principal amount, as of June 30, 2003, of all non-accrual Loans. As of June 30,
2003, the Seller and its subsidiaries, taken as a whole, did not have
outstanding Loans and assets classified as OREO with an aggregate then
outstanding, fully committed principal amount in excess of $4,148,399 net of
specific reserves with respect to such Loans and assets, that were designated by
the Seller as "special mention," "substandard," "doubtful," "loss" or words of
similar import ("CRITICIZED ASSETS"). Section 4.20(b) of the Seller Disclosure
Schedule sets forth (y) a summary of Criticized Assets as of June 30, 2003, by
category of Loan (E.G., commercial and consumer), together with the aggregate
principal amount of such Loans by category and (z) each asset of the Seller
that, as of June 30, 2003, is classified.
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4.21 INVESTMENT SECURITIES. Except for pledges to secure public and trust
deposits, Federal Reserve borrowings, repurchase agreements and reverse
repurchase agreements entered into in arms'-length transactions pursuant to
normal commercial terms and conditions and other pledges required by law, none
of the investments reflected in the Seller Balance Sheet, and none of the
material investments made by the Seller or any of its subsidiaries since
December 31, 2002, is subject to any restriction (contractual, statutory or
otherwise) that would materially impair the ability of the entity holding such
investment freely to dispose of such investment at any time.
4.22 DERIVATIVE TRANSACTIONS. Neither the Seller nor any or its
subsidiaries is engaged in transactions in or involving forwards, futures,
options on futures, swaps or similar derivative instruments except as agent on
the order and for the account of others other than Federal Home Loan Bank
advances or in connection with mortgage loan secondary market activities in the
ordinary course of business consistent with the Seller Bank's past practices.
4.23 INSURANCE. Section 4.23(a) of the Seller Disclosure Schedule sets
forth a summary of all material policies of insurance of the Seller and its
subsidiaries currently in effect, which summary is accurate and complete in all
material respects. All of the policies relating to insurance maintained by the
Seller or any of its subsidiaries with respect to its material properties and
the conduct of its business in any material respect (or any comparable policies
entered into as a replacement therefor) are in full force and effect and,
neither the Seller nor any of its subsidiaries has received any notice of
cancellation with respect thereto. Except as set forth on Section 4.23(b) of the
Seller Disclosure Schedule, all life insurance policies on the lives of any of
the current and former officers and directors of the Seller or any of its
subsidiaries which are maintained by the Seller or any such subsidiary which are
otherwise included as assets on the books of the Seller or such subsidiary (i)
are, or will at the Effective Time be, owned by the Seller or such subsidiary,
as the case may be, free and clear of any claims thereon by the officers or
members of their families, except with respect to the death benefits thereunder,
as to which the Seller or such subsidiary agree that there will not be an
amendment prior to the Effective Time without the consent of the Buyer, and (ii)
are accounted for properly as assets on the books of the Seller or such
subsidiary in accordance with GAAP. The insurance policies maintained by Seller
cover the acts and/or omissions of Benefits Consulting.
4.24 ENVIRONMENTAL MATTERS.
(a) Except as set forth in the Environmental Reports, each of the
Seller and its subsidiaries, and each property currently or previously owned by
any of them (the "OWNED PROPERTY") is, and during the period of ownership was,
and, to the best knowledge of the Seller, each Loan Property is in material
compliance with all applicable Environmental Laws, including without limitation,
with any Environmental Permits necessary for the current and anticipated future
use of the Owned Property and the Loan Property, each of which Environmental
Permits is in full force and effect.
(b) To the best knowledge of the Seller, there are no material pending
or threatened Environmental Claims implicating the Seller, any of its
subsidiaries, the Owned Property or the Loan Property, and neither the Seller
nor its subsidiaries has knowledge of any
24
facts, circumstances or conditions that any such Environmental Claims with
respect to the Seller, any of its subsidiaries, the Owned Property or the Loan
Property is reasonably likely to occur.
(c) During the period of (i) the Seller's or any of its subsidiaries'
ownership or operation of any of the Owned Property, or (ii) the Seller's or any
of its subsidiaries' holding of a security interest in a Loan Property, to the
best knowledge of Seller, there is and has been no presence or Release of
Hazardous Materials in, on, under or affecting any such properties, except where
such presence or Release of Hazardous Materials is not or would not, either
individually or in the aggregate, be material, or where such Release has been
Remediated in compliance with Environmental Laws. To the best knowledge of the
Seller, prior to the period of (y) the Seller's or any of its subsidiaries'
ownership or operation of the Owned Property, or (z) the Seller's or any of its
subsidiaries' holding of a security interest in a Loan Property, there was no
presence or Release of Hazardous Materials in, on, under or affecting any such
property, except where such presence or Release is not or would not, either
individually or in the aggregate, be material, or where such Release has been
Remediated in compliance with Environmental Laws.
(d) Neither Seller nor any of its subsidiaries is an owner or operator
of any Loan Property, and there are no facilities associated with any such Loan
Property in which the Seller or any of its subsidiaries participates or has
participated in the management of such property in any manner that contradicts
settled exceptions, safe havens or other available protections for lenders under
Environmental Laws.
(e) Except as set forth in Schedule 4.24(e) of the Seller Disclosure
Schedule, neither the Owned Property nor any structures located thereon,
contains or ever has contained any underground or aboveground storage tanks,
asbestos or asbestos-containing material, polychlorinated biphenyls or equipment
containing the foregoing, lead or lead-based paint, or urea formaldehyde foam
insulation.
4.25 RECENT ACQUISITIONS. Neither the Seller nor any of its subsidiaries
has any liability or obligation of any nature (whether accrued, absolute,
contingent, or otherwise and whether due or to become due) arising out of or
relating to any acquisition which has not been adequately provided for,
reflected or disclosed in the Seller Reports or the Seller Balance Sheet.
4.26 STATE TAKEOVER LAWS; SHAREHOLDER RIGHTS AGREEMENT. The Board of
Directors of the Seller has approved this Agreement and the Bank Merger
Agreement and taken all other requisite action such that the provisions of any
antitakeover laws and regulations of any Governmental Authority, including
without limitation, MGL Chapter 110F and the provisions of the Seller's Articles
of Organization relating to special voting requirements for certain business
combinations, will not apply to this Agreement or any of the other Transaction
Documents or any of the other transactions contemplated hereby or thereby. The
amendment to the Company Rights Agreement previously furnished by the Seller to
the Parent has been duly authorized and adopted by the Seller and the Seller
Board and the Seller has otherwise taken all action necessary so that the
entering into this Agreement, the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby do not and will
not enable or require the Company Rights to be exercised, distributed or
triggered by any person. Without limiting the generality of the foregoing, no
person, including without limitation, the Parent, the Buyer or the Merger Sub,
shall become an Acquiring Person, and no Stock Acquisition Date, Distribution
25
Date, Section 11(a)(ii) Event or Section 13 Event (as such terms are defined in
the Company Rights Agreement) shall occur or be deemed to have occurred (in each
case either immediately upon execution of this Agreement or any of the other
Transaction Documents or upon the passage of time), under the Company Rights
Agreement as a result of the execution, delivery or performance by the parties
hereto of this Agreement, the other Transaction Documents and the consummation
of the transactions contemplated hereby and thereby.
4.27 PROXY STATEMENT; SELLER INFORMATION. The information relating to the
Seller and its subsidiaries to be contained in the Seller Proxy Statement as
described in Section 6.1 hereof, will not, on the date the Seller Proxy
Statement is first mailed to stockholders of the Seller or at the time of the
Seller Stockholders Meeting, contain any untrue statement of any material fact,
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not false or misleading at the time and in
light of the circumstances under which such statement is made.
4.28 DEPOSIT/LOAN AGREEMENTS. The deposit and loan agreements of the Seller
Bank comply in all material respects with all applicable laws, rules and
regulations.
4.29 ADMINISTRATION OF ACCOUNTS. Each of the Seller and any of its
subsidiaries has properly administered in all material respects all accounts for
which it acts as a fiduciary or similar capacity, including, but not limited to,
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment adviser, in accordance with
the terms of the governing documents and applicable law. The accountings for
each such fiduciary account are true and correct in all material respects and
accurately reflect the assets of each such fiduciary account.
4.30 CREDIT CARD ACCOUNTS. (i) The credit card accounts originated by
Seller (the "ACCOUNTS") have been created, maintained and serviced in all
material respects in compliance with all applicable state and federal laws and
regulations, and the bylaws, rules and regulations issued by VISA and
MasterCard, as in effect from time to time (the "OPERATING REGULATIONS"); (ii)
the interest rates, fees and charges in connection with the Accounts comply in
all material respects with all applicable state and federal laws and
regulations, and the Operating Regulations; (iii) each cardholder agreement is
the legal, valid and binding obligation of the cardholder and any guarantor
named therein and is enforceable in accordance with its terms except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors' rights generally and by
general equity principles and except for the rights of cardholders under 12 CFR
Section 226.12(c), 12 CFR Section 226.13(d) and the Soldiers and Sailors Civil
Relief Act; (iv) except for Accounts on which there are billing disputes, each
of the credit card receivables arises from a bona fide sale or loan transaction;
(v) except for the fact that payment on certain credit card receivables is
overdue, Seller has no reason to believe that any specific credit card
receivable is not collectible in the ordinary course of business; (vi) all
applications for Accounts have been conducted and evaluated and applicants
notified in a manner which is in material compliance with all provisions of the
federal Equal Credit Opportunity Act and its implementing regulations, as
amended; and (vii) all disclosures made in connection with the Accounts are and
have been in material compliance with the provisions of the federal Consumer
Credit Protection Act and its implementing regulations, as amended.
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4.31 MERCHANT PROCESSING. Seller Bank currently provides merchant credit
card processing to the merchants identified on Section 4.31 of the Seller
Disclosure Schedule. Seller Bank's customer relationships with such merchants
and the agreements in effect with such merchants are assignable and transferable
to Buyer and any assignment or transfer to Buyer will not have a Material
Adverse Effect on Buyer. Seller Bank has at all times provided such merchant
card processing services in accordance with all applicable law, including the
National Automated Clearing House Association Rules and Guidelines ("NACHA
RULES") and the Operating Regulations. Furthermore, each agreement in place
between Seller Bank and each merchant is in writing and requires the merchant to
comply with all applicable law, including the NACHA Rules and the Operating
Regulations. Except as disclosed on the Seller Balance Sheet, or as incurred in
the ordinary course of business consistent with past practice since the date of
the Seller Balance Sheet, there is no outstanding liability relating to any
merchant account. No material dispute exists, or to the Seller Bank's knowledge,
is threatened, between the Seller Bank and any of its merchant credit card
customers.
4.32 INTELLECTUAL PROPERTY. Except as set forth on Section 4.32 of the
Seller Disclosure Schedule, the Seller and each subsidiary of the Seller owns or
possesses valid and binding licenses and other rights to use without payment of
any material amount all material patents, copyrights, trade secrets, trade
names, service marks and trademarks used in its businesses ("SELLER INTELLECTUAL
PROPERTY ASSETS"), and none of the Seller or any of its subsidiaries has
received any notice of conflict with respect thereto.
4.33 BENEFITS CONSULTING, INC. Benefits Consulting has not acted as a
"fiduciary" within the meaning of Section 3(21) of ERISA or Section 4975(e)(3)
of the Code nor is Benefits Consulting a "party in interest" within the meaning
of Section 3(14) of ERISA or a "disqualified person" within the meaning of
Section 4975(e)(2) of the Code.
4.34 DISCLOSURE. No representation or warranty contained in this Agreement,
and no statement contained in any certificate, list or other writing, including
but not necessarily limited to the Seller Disclosure Schedule, specifically
required to be furnished to the Buyer pursuant to the provisions hereof,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
herein or therein not misleading.
ARTICLE V - COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME. During the period
from the date of this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement or the Bank Merger Agreement, the
Seller shall, and shall cause each of its subsidiaries to: (a) conduct its
business in the usual, regular and ordinary course consistent with past
practice, (b) use reasonable best efforts to maintain and preserve intact its
business organization, employees and advantageous business relationships and
retain the services of its officers and key employees, including without
limitation, implementing a retention program in the aggregate amount of up to
$150,000 in furtherance thereof, which program shall be developed and finalized
by the Buyer after consultation with the Seller; PROVIDED, THAT if the Merger
shall not be consummated, the Buyer shall reimburse the Seller for the cost of
any retention bonuses paid to or earned by the employees prior thereto pursuant
to such program, and
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(c) take no action which would materially adversely affect or materially delay
the ability of the Seller to obtain any necessary approvals of any Governmental
Authority required for the transactions contemplated hereby or to perform its
covenants and agreements under this Agreement or the Bank Merger Agreement.
5.2 SELLER FORBEARANCES. During the period from the date of this Agreement
to the Effective Time, except as set forth on Section 5.2 of the Seller
Disclosure Schedule and, except as expressly contemplated or permitted by this
Agreement or the Bank Merger Agreement (and the Buyer acknowledges that any
action taken by the Seller or any of its subsidiaries prior to the Effective
Time which is expressly permitted or required by this Agreement shall not be
deemed a breach of any representation, warranty, agreement or covenant herein),
the Seller shall not, and the Seller shall not permit any of its subsidiaries
to, without the prior written consent of the Buyer, which, except for Section
5.2(b) hereof, consent shall not be unreasonably withheld or delayed:
(a) other than in the ordinary course of business consistent with past
practice, issue any debt securities or otherwise incur any indebtedness for
borrowed money (other than short-term indebtedness incurred to refinance
short-term indebtedness and indebtedness of the Seller or any of its
subsidiaries to the Seller or any of its subsidiaries; it being understood and
agreed that incurrence of indebtedness in the ordinary course of business shall
include, without limitation, the creation of deposit liabilities, Federal Home
Loan Bank borrowings, purchases of federal funds, sales of certificates of
deposit and entering into repurchase agreements), assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other individual, corporation or other entity, or make any loans, advances or
renewals thereof in excess of $500,000;
(b) adjust, split, combine or reclassify any shares of its capital
stock or issue any other securities in respect of, in lieu of, or in
substitution for shares of its capital stock, make, declare or pay any dividend
or make any other distribution on, whether payable in cash, stock, property or
otherwise, or directly or indirectly redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or grant any stock
appreciation rights, restricted stock, bonus stock or grant any individual,
corporation or other entity any right to acquire any shares or its capital stock
(except (i) Seller shall be entitled to pay a cash dividend of not more than
$0.05 per share of Seller Common Stock to be declared on September 16, 2003 for
the fiscal quarter ended September 30, 2003 to be paid on October 15, 2003; (ii)
in the event that the Closing has not occurred on or prior to January 1, 2004,
the Seller shall be entitled to declare one additional dividend prior to the
Effective Time to holders of record of Seller Common Stock in an amount equal to
$0.085 per share for the calendar quarter ended December 31, 2003; and (iii)
dividends paid by any of the wholly owned subsidiaries of the Seller to the
Seller or any of its wholly-owned subsidiaries); or issue, sell pledge or
encumber any additional shares of capital stock or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest, except up to a maximum of Two
Hundred Ninety Five Thousand One Hundred Twelve (295,112) shares of Seller
Common Stock pursuant to the exercise of stock options or warrants outstanding
as of the date of this Agreement;
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(c) sell, transfer, mortgage, encumber or otherwise dispose of any of
its properties or assets to any individual, corporation or other entity other
than a direct or indirect wholly-owned subsidiary, or cancel, release or assign
any indebtedness to any such person or any claims held by any such person,
except in each case contemplated by this clause (c) in the ordinary course of
business consistent with past practice or pursuant to contracts or agreements in
force at the date of this Agreement;
(d) except for transactions in the ordinary course of business
consistent with past practice, make any material investment either by purchase
of stock or securities, contributions to capital, property transfers, or
purchase of any property or assets of any other individual, corporation or other
entity other than a wholly owned subsidiary thereof, or commitment to make such
an investment, and, in any event regardless of whether consistent with past
practice, make any such investment or commitment to make such an investment
which is in excess of $150,000; PROVIDED, HOWEVER, that the terms of this
Section 5.2(d) shall not apply to the Seller's investment securities portfolio
or gap position, each of which is expressly covered by Section 5.2(j) hereof;
(e) increase or decrease its equity ownership position in any
corporation or other entity in which Seller holds, as of the date of this
Agreement, five percent (5%) or greater of any class of voting securities as
defined under the BHCA;
(f) except for transactions in the ordinary course of business
consistent with past practice, enter into, terminate or renew any material
contract or agreement, or make any change in any Seller Contract or in its other
material contracts;
(g) (i) adopt, amend, renew or terminate any plan or any agreement,
arrangement or plan between the Seller or any of its subsidiaries and one or
more of its current or former directors, officers or employees; (ii) enter into,
modify or renew any employment, severance or other agreement with any director,
officer or employee of the Seller or any of its subsidiaries; (iii) establish,
adopt, enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund policy or arrangement providing for any benefit to any
director, officer or employee; (iv) pay any bonus to any of its officers or
employees other than a pro rata portion of any bonus earned through the Closing
Date which has been fully accrued on the Seller's balance sheet, and up to
$65,000 in other bonuses payable in Seller's discretion upon consultation with
Buyer; or (v) increase in any manner the compensation or fringe benefits of any
of its employees or pay any pension or retirement allowance not required by any
existing plan or agreement to any such employees or become a party to, amend or
commit itself to any pension, retirement, profit-sharing or welfare benefit plan
or agreement or employment agreement with or for the benefit of any employee, in
all cases contemplated by clauses (i), (ii), (iii), (iv) or (v), other than in
the ordinary course of business consistent with past practice; PROVIDED,
however, that the Seller shall be permitted to make the retention payments
contemplated by Section 5.1 and the payments set forth on Section 6.5(d) of the
Seller Disclosure Schedule.
(h) settle any claim, action or proceeding, except in the ordinary
course of business consistent with past practice;
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(i) amend its Articles of Organization or its By-Laws;
(j) other than in the ordinary course of business, restructure or
materially change its investment securities portfolio or its gap position,
through purchases, sales or otherwise, or the manner in which the portfolio is
classified or reported;
(k) enter into any new line of business or file any application to
relocate or terminate the operations of any banking office of the Seller or any
of its subsidiaries or, other than after prior consultation with Buyer,
materially expand the business currently conducted by the Seller and its
subsidiaries; (l) acquire or agree to acquire, by merging or consolidating with,
or by purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, Joint Venture, other
business organization or any division thereof or any material amount of assets
other than OREO;
(m) incur or commit to any capital expenditures or any obligations or
liabilities in connection therewith other than in the ordinary course of
business consistent with past practice, and in all cases the Seller agrees to
obtain the consent of the Buyer with respect to any capital expenditures that
individually exceed $50,000 or cumulatively exceed $150,000;
(n) other than with the cooperation of and in consultation with the
Buyer, make or change any material Tax election, file any material amended Tax
Return, enter into any material closing agreement, settle or compromise any
material liability with respect to Taxes, agree to any material adjustment of
any Tax attribute, file any claim for a material refund of Taxes, or consent to
any extension or waiver of the limitation period applicable to any material Tax
claim or assessment; PROVIDED, THAT, for purposes of this subparagraph (n),
"material" shall mean affecting or relating to $25,000 of taxable income;
(o) take any action with respect to accounting methods, principles or
practices, other than changes required by applicable law or GAAP or regulatory
accounting as concurred in by the Seller's independent accountants;
(p) make any new or additional equity investment in real estate or
commitment to make any such an investment or in any real estate development
project, other than: (i) in connection with foreclosures, settlements in lieu of
foreclosure or troubled loan or debt restructurings in the ordinary course of
business consistent with past practice or (ii) as required by agreements or
instruments in effect as of the date hereof;
(q) change in any material respect its loan or investment policies and
procedures, except as required by regulatory authorities;
(r) enter into or renew, amend or terminate, or give notice of a
proposed renewal, amendment or termination of or make any commitment with
respect to, (i) any lease, contract, agreement or commitment for office space,
operations space or branch space, regardless of where located or to be located,
to which the Seller or any of its subsidiaries is, or may be, a party or by
which the Seller or any of its subsidiaries or their respective properties is
bound,
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other than in the ordinary course and consistent with past practices; or (ii)
regardless of whether in the ordinary course or consistent with past practices,
any lease, contract, agreement or commitment involving an aggregate payment by
or to the Seller or any of its subsidiaries of more than $75,000 or having a
term of one year or more from the date of execution;
(s) commit any act or omission which constitutes a material breach or
default by the Seller or any of its subsidiaries under any agreement with any
Governmental Authority or under any material contract or material license to
which any of them is a party or by which any of them or their respective
properties is bound;
(t) engage in any activity that would result in the disqualification of
Community Securities Corporation as a security corporation, as described in
Section 38B(b) of Chapter 63 of the MGL;
(u) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect at any time prior to the
Effective Time, or in any of the conditions to the Merger set forth in Article
VII not being satisfied or in a violation of any provision of this Agreement,
except, in every case, as may be required by applicable law;
(v) foreclose on or take a deed or title to any commercial real estate
without first conducting a Phase I environmental assessment of the property or
foreclose on any commercial real estate if such environmental assessment
indicates the presence of Hazardous Materials in amounts which, if such
foreclosure were to occur, would be material;
(w) renew, amend or permit to expire, lapse or terminate or knowingly
take any action reasonably likely to result in the creation, renewal, amendment,
expiration, lapse or termination of any insurance policies referred to in
Section 4.23 hereof; or
(x) authorize or agree to, or make any commitment to, take any of the
actions prohibited by this Section 5.2.
5.3 BUYER FORBEARANCES. During the period from the date of this Agreement
to the Effective Time, except as expressly contemplated or permitted by this
Agreement, the Buyer and its Affiliates shall not, and the Buyer shall not
permit any of its subsidiaries to, without the prior written consent of the
Seller, which consent shall not be unreasonably withheld or delayed:
(a) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect at any time prior to the
Effective Time, or in any of the conditions of the Merger set forth in Article
VII of this Agreement not being satisfied or in a violation of any provision of
this Agreement;
(b) take any action that is intended or may reasonably be expected to
materially adversely affect or materially delay its ability to obtain any
necessary approvals of any Governmental Authority required for the transactions
contemplated hereby or to perform its covenants and agreements under this
Agreement; or
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(c) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.3.
5.4 SYSTEM CONVERSIONS; TIMING. From and after the date hereof, the Buyer
and the Seller shall meet on a regular basis to discuss how to cooperate and
plan for the conversion of the Seller's and its subsidiaries' data processing
and related electronic informational systems to those used by the Buyer and its
subsidiaries. This planning shall include, but not be limited to, discussion of
(a) Seller's third-party service provider arrangements, (b) non-renewal of
personal property leases and software licenses used by the Seller or any of its
subsidiaries in connection with its systems operations, (c) retention of outside
consultants and additional employees to assist with the conversion, (d)
outsourcing, as appropriate, of proprietary or self-provided system services and
(e) actions necessary and appropriate to facilitate the conversion on the first
(1st) day following the Effective Time or such other later date as determined by
the Buyer in its sole discretion. Promptly following the Buyer's request, the
Seller shall take, and shall cause its subsidiaries to take, all action which is
necessary and appropriate to facilitate the conversion either on the first (1st)
day following the Effective Time or such other later date as determined by the
Buyer in its sole discretion; PROVIDED, HOWEVER, that neither the Seller nor any
of its subsidiaries shall be obligated to take any action pursuant to this
Section 5.4 which is inconsistent with applicable banking laws and regulations.
Buyer may place one or more Buyer employees on site at the Seller and/or the
Seller Bank to observe and facilitate actions to be taken pursuant to this
Section 5.4. In the event that the Seller or any of its subsidiaries takes, at
the request of the Buyer, any action relative to third parties to facilitate the
conversion that results in the imposition of any reasonable out-of-pocket
termination fees, expenses or charges, and the merger is not consummated for any
reason, the Buyer shall indemnify the Seller and its subsidiaries for any such
fees, expenses and charges, and the costs of reversing the conversion process.
5.5 CERTAIN CHANGES AND ADJUSTMENTS. Prior to the Closing, the Buyer and
the Seller shall consult with each other concerning the Seller Bank's loan,
litigation and real estate valuation policies and practices (including loan
classifications and levels of reserves) and the Buyer's plans with respect to
the foregoing after the Effective Time; PROVIDED, HOWEVER, that neither the
Seller nor the Seller Bank shall be obligated to take any action pursuant to
this Section 5.5 which is inconsistent with GAAP or to which the Seller's
independent auditors object. Prior to the Closing, the Buyer and Seller shall
also consult with each other concerning the matters set forth in Section 5.5 of
the Seller Disclosure Schedule; PROVIDED, HOWEVER, that neither the Seller nor
the Seller Bank shall be obligated to take any action pursuant to this Section
5.5 which is inconsistent with GAAP or to which the Seller's independent
auditors object. Moreover, the Seller and the Buyer shall consult with each
other concerning the potential sale of the Seller's credit card business to a
third party concurrently with, or promptly after, the Closing. Prior to Closing,
at the request of Buyer, Seller shall cause the Seller Bank to take such actions
as are necessary to dissolve Benefits Consulting and terminate all of the
agreements of Benefits Consulting. No action taken by the Seller or the Seller
Bank pursuant to this Section 5.5 or the consequences resulting there from shall
be deemed to be a breach of any representation, warranty, agreement or covenant
herein or constitute a Material Adverse Effect. In the event that the Seller or
any of its subsidiaries takes, at the request of the Buyer, any action pursuant
to this Section 5.5, the Buyer shall indemnify the Seller and its subsidiaries
for any out-
32
of-pocket fees, expenses and charges, and the costs of reversing the action
taken, if for any reason the Merger is not consummated.
5.6 BRANCHES. The Buyer and the Seller shall consult and cooperate with
each other concerning the alignment of the Buyer's and the Seller Bank's
branches following the Effective Time, and the Seller shall, if requested by the
Buyer, cooperate with the Buyer to cause the Seller Bank to prepare and file, or
to assist with the preparation and filing, of applications and other notices
with all appropriate Governmental Authorities that may be necessary to close or
consolidate any one of the Seller's branches concurrently with or after the
Merger; it being understood that any such application or notice may be filed at
any time before the Effective Time as determined by the Buyer in its sole
discretion. If for any reason the Merger is not consummated in accordance with
the terms of this Agreement, the Buyer shall reimburse the Seller and its
subsidiaries for any fees or expenses incurred in connection with the
preparation and filing of such applications at the request of the Buyer.
5.7 PURCHASER PRODUCTS AND SERVICES. From and after the date of this
Agreement, the Buyer and the Seller shall consult on a reasonable basis with
each other on the introduction of products and services not currently offered by
the Seller Bank which the Buyer would expect to make available to customers
following the Effective Time; PROVIDED, HOWEVER, that nothing herein shall
obligate the Seller to offer any such products or services prior to the
Effective Time.
5.8 ALCO MANAGEMENT. The Seller and the Seller Bank agree to manage their
assets and liabilities in accordance with Seller's asset and liability
management policy as in effect on the date hereof, unless otherwise agreed by
the parties. Neither the Seller nor the Seller Bank shall amend or modify such
policy without the express written consent of the Buyer. The Seller and the
Buyer agree to consult on investment programs to be administered by the Seller
Bank.
5.9 DEPOSIT INCENTIVE PLAN. The Seller agrees that it will consult and
cooperate with the Buyer in the development and implementation of policies and
programs to retain and grow deposits and, following the execution and delivery
of this Agreement, the Seller and the Buyer shall adopt and implement a deposit
incentive plan for management and branch staff of the Seller and the Seller Bank
("DEPOSIT INCENTIVE PLAN") on such terms and conditions as may be mutually
agreed upon by the Seller and the Buyer and set forth in the Deposit Incentive
Plan. The Seller further agrees that the Deposit Incentive Plan shall include,
among other things, deposit pricing, product structure and other initiatives
designed to incentivize management and branch staff to increase the deposits
held by the Seller and the Seller Bank through the period of the system
conversion.
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5.10 COMMUNICATIONS AND NOTICES. The Seller shall, and shall cause its
subsidiaries to, consult and cooperate with the Buyer regarding communications
relating to the Merger, the Bank Merger or any of the other transactions
contemplated hereby or by the Bank Merger Agreement and to be distributed to
customers or employees of the Seller or any of its subsidiaries prior to the
Effective Time and, the Seller, if requested by and at the sole expense of the
Buyer, shall assist, and cause its subsidiaries to assist, with the preparation
and distribution of such communications; it being understood that the Buyer may
distribute any such communication at any time before the Effective Time as
determined by the Buyer in its sole discretion.
5.11 CHARITABLE CONTRIBUTION. At least two days prior to the Effective
Time, the Seller shall contribute to a newly-established subaccount of Buyer's
existing charitable foundation established for the benefit of the markets served
by Seller, an amount equal to $250,000. The Buyer agrees that if the Merger is
not consummated for any reason, the Buyer shall reimburse the Seller for such
amounts previously contributed by Seller to such charitable foundation.
ARTICLE VI - ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS; CONSENTS.
(a) The Seller will as promptly as practicable, take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
stockholders (the "SELLER STOCKHOLDERS MEETING") to be held no later than 30
calendar days following completion of the Seller Proxy Statement, for the
purpose of approving this Agreement and the Merger.
(b) The Seller's Board of Directors has declared this Agreement
advisable and has adopted a resolution recommending approval and adoption of
this Agreement and the Merger by the Seller's stockholders, and except as
provided in Section 6.2 hereof, the Board of Directors of the Seller shall at
all times recommend approval and adoption of this Agreement and the Merger by
the Seller's stockholders.
(c) As soon as practicable after the date hereof, and (assuming
commercially reasonable efforts by the Buyer and the Parent to cooperate) in any
event within four (4) weeks after the date of this Agreement, the Seller shall
mail the Seller Proxy Statement to its stockholders. The Buyer and the Seller
shall cooperate with each other in the preparation of the Seller Proxy
Statement. The Seller shall give the Buyer and its counsel the opportunity to
review and discuss the Seller Proxy Statement prior to its being mailed to
Seller's stockholders and shall give the Buyer and its counsel the opportunity
to review and discuss all amendments and supplements to the Seller Proxy
Statement. The Seller Proxy Statement and all amendments and supplements thereto
shall be in a form reasonably satisfactory to Buyer and its counsel. Each of the
Buyer and the Seller agrees to use its reasonable best efforts, after
consultation with the other party hereto, to cause the Seller Proxy Statement
and all required amendments and supplements thereto to be mailed to the holders
of Seller Common Stock entitled to vote at the Seller Stockholders Meeting
referred to in Section 6.1(a) hereof at the earliest practicable time.
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(d) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Authorities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger and the Bank Merger), and
to comply with the terms and conditions of all such permits, consents, approvals
and authorizations of all such Governmental Authorities. The Buyer and the
Seller shall have the right to review in advance, and, to the extent
practicable, each will consult the other on, in each case subject to applicable
laws relating to the exchange of information, all the information relating to
the Buyer or the Seller, as the case may be, and any of their respective
subsidiaries, which appear in any filing made with, or written materials
submitted to, any third party or any Governmental Authority in connection with
the transactions contemplated by this Agreement. In exercising the foregoing
right, each of the parties hereto shall act reasonably and as promptly as
practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(e) The Buyer and the Seller shall, upon request, furnish each other
with all information concerning themselves, their subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the preparation of the Seller Proxy Statement or
any other statement, filing, notice or application made by or on behalf of any
Affiliate of the Buyer, the Buyer or the Seller or any of their respective
subsidiaries to any Governmental Authority in connection with the Merger, the
Bank Merger and the other transactions contemplated by this Agreement.
(f) The Buyer and the Seller shall promptly advise each other upon
receiving (and the Buyer shall so advise with respect to communications received
by any Affiliate of the Buyer) any communication from any Governmental Authority
or third party whose consent or approval is required for consummation of the
transactions contemplated by this Agreement that causes such party to believe
that there is a reasonable likelihood that any Requisite Regulatory Approval or
third party consent will not be obtained or that the receipt of any such
approval will be materially delayed.
(g) The Parent, acting in its capacity as the sole stockholder of the
Buyer, and the Seller, acting in its capacity as the sole stockholder of the
Seller Bank, shall approve the Bank Merger Agreement prior to the Effective
Time.
6.2 NO SOLICITATION. The Seller agrees that, during the term of this
Agreement, it shall not, and shall not authorize or permit any of its
subsidiaries or any of its or its subsidiaries' directors, officers, employees,
agents or representatives (collectively, its "AGENTS") to, directly or
indirectly, solicit, initiate, knowingly encourage, take any action to
facilitate, or furnish or disclose nonpublic information in furtherance of, any
inquiries or the making of any offer or proposal regarding any Acquisition
Transaction, or participate in any discussions or negotiations with, or provide
any information to, any Person (other than the Buyer and its Affiliates or
representatives) concerning any Acquisition Transaction or enter into any
definitive agreement,
35
arrangement or understanding for any Acquisition Transaction or requiring it to
abandon, terminate or fail to consummate the Merger or any other transactions
contemplated by this Agreement; PROVIDED, THAT the Seller or its Agents may
furnish or cause to be furnished information to, and negotiate or otherwise
engage in discussions with, any individual or entity that delivers a bona fide
written proposal for an Acquisition Transaction that was not solicited,
encouraged or facilitated by the Seller or any of its Agents after the date of
this Agreement and prior to the Seller Stockholders Meeting if and so long as
(a) the Board of Directors of the Seller determines (i) in good faith by a
majority vote, after consultation with its outside legal counsel, that failing
to take such action would be a breach of its fiduciary duties under applicable
laws and (ii) that such a proposal is or would be reasonably likely to result in
a Superior Proposal and (b) prior to furnishing any information to such
individual or entity, Seller shall enter into a confidentiality agreement with
such individual or entity that is no less restrictive, in any material respect,
than the Confidentiality Agreement dated as of June 20, 2003 by and between
Parent and Seller ("CONFIDENTIALITY AGREEMENT"), and Seller shall enforce, and
shall not waive any of the provisions of any such confidentiality agreement. The
Board of Directors of the Seller shall be permitted to withdraw, modify or
change in a manner adverse to the Buyer its recommendation to the Seller's
stockholders required under Section 6.1(b) hereof with respect to an unsolicited
bona fide written Acquisition Proposal if, but only if, (aa) after consultation
with the Seller's outside legal counsel, the Board of Directors of the Seller
determines in good faith by a majority vote that failing to take such action
would be a breach of its fiduciary duties under applicable law; (bb) the Board
of Directors of the Seller has determined in good faith by a majority vote that
the Acquisition Proposal is a Superior Proposal; (cc) the Board of Directors of
the Seller has given the Buyer five (5) business days' prior written notice of
its intention to withdraw, modify or change in a manner adverse to the Buyer its
recommendation to the Seller's stockholders required under Section 6.1(b)
hereof; (dd) the Seller's Board of Directors has considered any changes to the
Merger Consideration and to this Agreement (if any) proposed by the Buyer; (ee)
the Seller's Board of Directors has determined in good faith by a majority vote,
after consultation with the Seller's outside legal counsel and after
consultation with a financial advisor of nationally recognized reputation, that
such unsolicited proposal remains a Superior Proposal even after the changes
proposed by Buyer; and (ff) the Seller has complied in all material respects
with this Section 6.2 (PROVIDED, THAT the foregoing shall in no way limit or
otherwise affect Buyer's right to terminate this Agreement pursuant to Section
8.1(f) hereof). Any such withdrawal, modification or change of the
recommendation of the Board of Directors of the Seller shall not change the
approval of the Board of Directors of the Seller for purposes of causing any
state takeover statute or other state law to be inapplicable to the transactions
contemplated by this Agreement, including the Merger or the transactions
contemplated by this Agreement.
Seller immediately will cease, and shall cause its Agents and subsidiaries and
its subsidiaries' Agents to cease, all existing activities, discussions and
negotiations with any individual or entity conducted heretofore with respect to
any proposal for an Acquisition Transaction and request the return or
destruction of all confidential information regarding Seller or its subsidiaries
provided to any such individual or entity prior to the date of this Agreement
pursuant to the terms of any confidentiality agreements and the Seller shall
enforce, and shall not waive, any of the provisions of any such confidentiality
agreement.
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From and after the execution of this Agreement, Seller shall advise Buyer within
the Notice Period of the receipt, directly or indirectly, of any inquiries,
discussions, negotiations, or proposals relating to an Acquisition Transaction
(including a summary of material and significant terms and conditions thereof
and the identity of the other individual or entity or individuals or entities
involved), or its receipt of any request for information from the Federal
Reserve Board, the DOJ, or any other Governmental Authority with respect to an
Acquisition Transaction, and promptly furnish to Buyer a copy of any such
request for information or written proposal in addition to a copy of any
information provided to or by any third party relating thereto. In addition,
Seller shall immediately advise Buyer, in writing, if the Board of Directors of
the Seller shall make any determination as to any Acquisition Transaction as
contemplated by the proviso to the first sentence of this Section 6.2. For the
purposes of this Agreement, "SUPERIOR PROPOSAL" shall mean any bona fide
Acquisition Transaction on terms the Board of Directors of the Seller determines
in its good faith judgment taking into account the factors listed in Article 6,
paragraph 6 of Seller's Articles of Organization and taking into account the
advice of a financial advisor of nationally recognized reputation (taking into
account all the terms and conditions of the Acquisition Transaction, including
any break-up fees, expense reimbursement provisions and conditions to
consummation (including, without limitation, any financing conditions), the
likelihood and anticipated timing of consummation and all legal, financial,
regulatory and other aspects of the proposal and the individual or entity making
the proposal) are in the aggregate more favorable from a financial point of view
and provide greater value to all the Seller's stockholders than the Merger
Consideration, this Agreement and the Merger taken as a whole. For purposes of
this Agreement, "ACQUISITION TRANSACTION" means any offer or proposal for, or
any indication of interest in (a) a merger, tender offer, recapitalization, or
consolidation, or any similar transaction, involving the Seller or any of its
subsidiaries, (b) a purchase, lease or other acquisition or assumption of all or
a substantial portion of the assets or deposits of the Seller or all or
substantially all of the assets or deposits of any of its subsidiaries, (c) a
purchase or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of beneficial ownership (the term "beneficial ownership"
for purposes of this Agreement having the meaning assigned thereto in Section
13(d) of the Exchange Act, and the rules and regulations thereunder) of
securities representing ten percent (10%) or more of the voting power of the
Seller or any of its subsidiaries, or (d) any substantially similar transaction.
For purposes of this Agreement, the term "NOTICE PERIOD" shall mean (i) with
respect to written inquiries or proposals or other written materials, written
notice as promptly as practicable and in no event later than twenty-four (24)
hours after receipt thereof and (ii) with respect to oral inquires, discussions,
negotiations, or proposals, oral notice as promptly as practicable and in no
event later than twenty-four (24) hours after receipt thereof, followed by
written notice in no event later than one (1) business day after receipt of such
oral inquires, discussions, negotiations, or proposals. Nothing in this Section
6.2 shall affect Seller's obligation to hold the Seller Stockholders Meeting in
accordance with Section 6.1 hereof.
6.3 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable laws relating to
the exchange of information, each of the Buyer and the Seller, for the purposes
of verifying the representations and warranties of the other and relating to the
Merger and the other matters contemplated by this Agreement, shall, and shall
cause each of their respective subsidiaries to,
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afford to the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal business hours during
the period prior to the Effective Time, to all of its properties, books,
contracts, commitments and records, and, during such period, each of the Buyer
and the Seller shall, and shall cause their respective subsidiaries to, make
available to the other party (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of federal securities laws or federal or state banking laws
(other than reports or documents which the Buyer or the Seller, as the case may
be, is not permitted to disclose under applicable law) and (ii) all other
information concerning its business, properties and personnel as such party may
reasonably request. The Seller also shall provide the Buyer with reasonable
access to the Seller's officers, employees and agents and with copies of all
periodic reports to the Seller's senior management. 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 the Buyer's customers or the Seller's
customers, as the case may be, jeopardize the attorney-client privilege of the
institution in possession or control of such information or contravene any law,
rule, regulation, order, judgment, decree, fiduciary duty or binding agreement
entered into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements, as permitted under applicable
law, under circumstances in which the restrictions of the preceding sentence
apply.
(b) All information furnished by any party hereto to the other or its
representatives pursuant hereto shall be treated as the sole property of the
party providing the information and, if the Merger shall not occur, the party
being furnished such information shall not use any such information and shall
return to the other party all of such written information and all documents,
notes, summaries or other materials containing, reflecting or referring to, or
derived from, such information. The parties hereto shall, and shall use their
reasonable best efforts to cause their representatives to, keep confidential all
such information, and shall not directly or indirectly use such information for
any competitive or other commercial purpose. The obligation to keep such
information confidential and not use any such information shall continue for
five years from the date the proposed Merger is abandoned and shall not apply to
(i) any information which (x) was already in the possession of the party being
furnished such information prior to the disclosure thereof by the other party,
(y) was then generally known to the public, or (z) was disclosed to the party
being furnished such information by a third party not bound by an obligation of
confidentiality; or (ii) disclosures made as required by law.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
6.4 LEGAL CONDITIONS TO MERGER. Each of the Buyer and its Affiliates, and
the Seller shall, and the Seller shall cause its subsidiaries to, use their
reasonable best efforts (a) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal requirements
that may be imposed on such party or its subsidiaries with respect to the Merger
and, subject to the conditions set forth in Article VII hereof, to consummate
the transactions contemplated by this Agreement, and (b) to obtain (and to
cooperate with the other party to obtain) any material consent, authorization,
order or approval of, or any exemption by, any Governmental Authority and any
other third party that is required to be obtained by the Buyer or
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the Seller or any of their respective subsidiaries in connection with the
Merger, the Bank Merger and the other transactions contemplated by this
Agreement.
6.5 EMPLOYMENT AND BENEFIT MATTERS.
(a) PROVISION OF BENEFITS. As soon as practicable after the Effective
Time, the Buyer agrees to provide the employees of the Seller and its
subsidiaries who remain employed after the Effective Time (the "SELLER
EMPLOYEES") with at least the types and levels of employee benefits (including
employee contribution levels) maintained from time to time by the Buyer or any
Affiliate of the Buyer for similarly-situated employees of the Buyer. The Buyer
will treat, and cause the applicable benefit plans to treat, the service of
Seller Employees with Seller or any subsidiary of Seller attributable to any
period before the Effective Time as service rendered to the Buyer or any
Affiliate of Buyer for purposes of eligibility to participate, vesting and for
other appropriate benefits including, but not limited to, applicability of
minimum waiting periods for participation, but not for benefit accrual
(including minimum pension amount), eligibility for early retirement and
eligibility for retiree welfare benefit plans, attributable to any period before
the Effective Time. Without limiting the foregoing, the Buyer shall not treat
any Seller Employee as a "new" employee for purposes of any exclusions under any
health or similar plan of the Buyer or any Affiliate of the Buyer for a
pre-existing medical condition, and any deductibles paid under any of Seller's
or its subsidiaries health plans shall be credited towards deductibles under the
health plans of the Buyer or any Affiliate of the Buyer upon delivery to the
Buyer of appropriate documentation. The Buyer will make appropriate arrangements
with its insurance carrier(s) to ensure such result.
(b) CONTINUATION OF PLANS. Notwithstanding anything to the contrary
contained herein, and except as set forth in Section 6.5(b) of the Seller
Disclosure Schedule, the Buyer shall have sole discretion with respect to the
determination as to whether or when to terminate, merge or continue any employee
benefit plans and programs of the Seller; PROVIDED, HOWEVER, that the Buyer
shall continue to maintain the Seller plans (other than stock-based or incentive
plans or stock funds in retirement plans) until the Seller Employees are
permitted to participate in the plans of the Buyer or any Affiliate of the
Buyer. Nothing in this Agreement shall alter or limit the Buyer's obligations,
if any, under ERISA, as amended by the Consolidated Omnibus Budget
Reconciliation Act of 1985 and/or the Health Insurance Portability and
Accountability Act of 1996 with respect to the rights of Seller Employees and
their qualified beneficiaries in connection with the group health plan
maintained by the Seller as of the Effective Time.
(c) SEVERANCE PAY PLAN. The Buyer shall provide the severance benefits
set forth in Section 6.5(c) of the Seller Disclosure Schedule to any Seller
Employee who is not otherwise covered by a specific termination, severance or
change in control agreement and who is terminated by the Buyer or its Affiliates
for reasons other than cause (which shall mean gross negligence or dereliction
in the performance of such employee's duties, dishonesty or commission of a
crime) in the six (6) month period immediately following the Closing Date.
Payment of severance pay is conditioned on the execution by Seller Employee of a
release in a form satisfactory to the Buyer and the expiration of any statutory
expiration period.
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(d) COMPENSATION AGREEMENTS. As soon as practicable, following the
Effective Time, subject to the provisions of Section 6.5(e) hereof, the Buyer
shall pay to each of the individuals listed in Section 6.5(d) of the Seller
Disclosure Schedule, the amounts such individuals are entitled to receive in
connection with the Merger. Section 6.5(d) of the Seller Disclosure Schedule
lists such individuals, the amounts such individuals are entitled to receive as
a result of the Merger, and the agreements, plans and arrangements giving rise
to such payments. In exchange for the payments due the individuals, each
individual shall deliver to the Buyer a Settlement Agreement ("SETTLEMENT
AGREEMENT") and a Release of Claims ("RELEASE AGREEMENT") in the forms attached
to Section 6.5(d) of the Seller Disclosure Schedule. As to, and only as to, each
individual who enters into a Settlement Agreement, Buyer acknowledges and agrees
that (i) the Merger constitutes a "Change of Control" or "Change in Control" for
all purposes pursuant to such agreements, plans and arrangements and (ii) in
light of Buyer's plans relating to management assignments and responsibilities
with respect to the business of Buyer from and after the Effective Time, each
director and officer or employee which is a party to, or is otherwise subject
to, any such agreement will, upon consummation of the Merger, be considered to
have terminated employment thereunder and receive the severance and other
similar benefits as if there were a termination of employment for "Good Reason,"
involuntary termination," constructive discharge, (including, but not limited
to, demotion or reduction in compensation) or other similar events, regardless
of whether such termination of employment has occurred or subsequently occurs.
No payments under this Section 6.5(d) shall be made to any individual unless
such individual has executed and delivered to the Buyer the Settlement Agreement
and Release Agreement.
(e) PARACHUTE PAYOUTS. Notwithstanding anything to the contrary
contained in this Agreement, in no event shall the Seller, the Buyer, the
Surviving Corporation or the Surviving Bank, or any of their respective
subsidiaries, take any action or make any payments that would result, either
individually or in the aggregate, in the payment of a "parachute payment" within
the meaning of Code Section 280G or that would result, either individually or in
the aggregate, in payments that would be nondeductible pursuant to Code Section
162(m). The Seller and the Buyer shall use commercially reasonable efforts to
resolve matters relating to any of the foregoing.
(f) CONTINUATION OF EMPLOYMENT. No provision of this Section 6.5 shall
create any third party beneficiary rights in any employee or former employee
(including any beneficiary or dependent thereof) of the Seller in respect of
continued employment (or resumed employment) with the Buyer or any of its
Affiliates and no provision of this Section 6.5 shall create such rights in any
such persons in respect of any benefits that may be provided, directly or
indirectly, under any employee program or any plan or arrangement which may be
established by the Buyer or any of its Affiliates. No provision of this
Agreement shall constitute a limitation on the rights to amend, modify or
terminate after the Effective Time any such plans or arrangements of the Buyer
or any of its Affiliates.
6.6 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at
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any time prior to the date of this Agreement, or who becomes prior to the
Effective Time, a director or officer or employee of Seller or any of its
subsidiaries (the "INDEMNIFIED PARTIES") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was a director, officer or employee of
the Seller, any of the Seller's subsidiaries or any of their respective
predecessors or (ii) this Agreement or any of the transactions contemplated
hereby, whether in any case asserted or arising before or after the Effective
Time, the parties hereto agree to cooperate and use their best efforts to defend
against and respond thereto. It is understood and agreed that after the
Effective Time, the Buyer shall indemnify and hold harmless, as and to the
fullest extent permitted by law, each such Indemnified Party against any losses,
claims, damages, liabilities, costs, expenses (including reasonable attorneys'
fees and expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the fullest extent
permitted by law upon receipt of any undertaking required by applicable law),
judgments, fines and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding or investigation, and in
the event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted of arising before or after the Effective Time),
the Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with the Buyer; PROVIDED, HOWEVER, that (w) the Buyer shall have
the right to assume the defense thereof and upon such assumption the Buyer or
the Surviving Bank shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof, except that if the
Buyer elects not to assume such defense or counsel for the Indemnified Parties
and reasonably advises the Indemnified Parties that there are issues which raise
conflicts of interest between the Buyer and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with the Buyer, and the Buyer shall pay the reasonable fees and
expenses of such counsel for the Indemnified Parties, (x) the Buyer shall be
obligated pursuant to this paragraph to pay for only one firm of counsel for all
Indemnified Parties, unless the proposed counsel for the Indemnified Parties
reasonably advises the Indemnified Parties that there are issues which raise
conflicts of interest among such parties, in which case the Buyer shall pay the
reasonable fees and expenses of one additional counsel to the extent necessary
to avoid such conflict, (y) the Buyer shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld) and (z) the Buyer shall have no obligation hereunder to
any Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim Indemnification under this Section 6.6, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify the Buyer
thereof, PROVIDED, THAT the failure to so notify shall not affect the
obligations of the Buyer under this Section 6.6 except to the extent such
failure to notify materially prejudices the Buyer. The Buyer's obligations under
this Section 6.6 shall continue in full force and effect for a period of six (6)
years from the Effective Time; PROVIDED, HOWEVER, that all rights to
indemnification in respect of any claim asserted or made within such period
shall continue until the final disposition of such claim.
(b) The Buyer shall maintain the Seller's (including its subsidiaries')
existing directors' and officers' liability insurance (the "D&O INSURANCE")
covering persons who are
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currently covered by the Seller's D&O Insurance for a period of six (6) years
after the Effective Time on terms no less favorable than those in effect on the
date hereof and shall at the Effective Time provide evidence of such extension
of coverage to the Seller; PROVIDED, HOWEVER, that the Buyer may substitute
therefor policies providing substantially comparable coverage and containing
terms and conditions no less favorable than those in effect on the date hereof.
In connection with the foregoing, the Seller agrees to provide such insurer or
substitute insurer with such representations as such insurer may request with
respect to the reporting of any prior claims.
(c) In the event the Buyer 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 the Buyer
assume the obligations set forth in this section.
(d) The provisions of this Section 6.6 are intended to be for the
benefit of, and enforceable by, each Indemnified Party and his or her heirs and
representatives, and nothing herein shall affect any indemnification rights that
any Indemnified Party and his or her heirs and representatives may have under
the Articles of Organization or By-Laws of the Seller or the equivalent
documents of any of the Seller's subsidiaries, any contract or applicable law.
6.7 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation or the Surviving Bank with full
title to all properties, assets, rights, approvals, immunities and franchises of
any of the parties to the Merger or the Bank Merger, the proper officers and
directors of each party to this Agreement and their respective subsidiaries
shall take all such necessary action as may be reasonably requested by, and at
the sole expense of, the Buyer.
6.8 ADVICE OF CHANGES. The Buyer and the Seller shall each promptly notify
the other party of any change or event having a Material Adverse Effect on it or
which it believes would or would be reasonably likely to cause or constitute a
material breach of any of its representations, warranties or covenants contained
herein; PROVIDED, HOWEVER, that the delivery of any notice pursuant to this
Section 6.8 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
6.9 UPDATE OF DISCLOSURE SCHEDULES. From time to time prior to the
Effective Time, the Seller will promptly supplement or amend the Seller
Disclosure Schedule in writing to reflect any matter which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in the Seller Disclosure Schedule or which is necessary
to correct any information in the Seller Disclosure Schedule which has been
rendered inaccurate thereby. In addition, at or prior to the Effective Time, the
Seller shall provide the Buyer with a written copy of the complete Seller
Disclosure Schedule, marked to show any and all such supplements and amendments,
and/or, if no such supplements or amendments were made to a particular Section
of the Seller Disclosure Schedule, the Seller shall provide the Buyer with a
certificate signed on behalf of the Seller by a duly authorized officer of the
Seller to such effect.
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No supplement or amendment to the Seller Disclosure Schedule shall have any
effect for the purpose of determining satisfaction of the conditions set forth
in Section 7.2(b) hereof or compliance by the Seller with the covenants set
forth in Article V hereof.
6.10 CURRENT INFORMATION.
(a) As soon as practicable, the Seller will furnish to the Buyer copies
of all such financial statements and reports as it or any of its subsidiaries
shall send to its stockholders, the SEC or any other Governmental Authority, to
the extent any such reports furnished to any such Governmental Authority are not
confidential and except as legally prohibited thereby, and will furnish to the
Buyer such additional financial data as the Buyer may reasonably request.
(b) Promptly upon receipt thereof, the Seller will furnish to the Buyer
copies of all internal control reports submitted to the Seller and its
subsidiaries by independent auditors in connection with each annual, interim or
special audit of the books of the Seller and its subsidiaries made by such
auditors.
(c) The Seller will promptly notify the Buyer of any material change in
the normal course of business or in the operation of the properties of the
Seller or any of its subsidiaries and of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of material litigation involving
the Seller or any of its subsidiaries, and will keep the Buyer reasonably
informed of such events.
6.11 TRANSITION COMMITTEE. Immediately upon the execution of this
Agreement, the Seller shall designate certain of its respective employees as
"LIAISONS." During the period from the date of this Agreement to the Effective
Time, the Seller's Liaisons will (a) confer on a regular and continued basis
with representatives of the Buyer to report on (i) the general status of the
ongoing operations of the Seller and its subsidiaries, (ii) the status of, and
the action proposed to be taken with respect to, those loans held by the Seller
or any of its subsidiaries which, either individually or in combination with one
or more other loans to the same borrower thereunder, have an aggregate
outstanding principal amount of $500,000 or more and are classified or
non-performing assets, (iii) the status of, and the action proposed to be taken
with respect to, foreclosed property and OREO and (iv) the status of the
development and implementation of a system conversion plan, which shall begin
promptly after the date hereof, and (b) communicate with respect to the manner
in which the business of the Seller and its subsidiaries are conducted and the
disposition of certain assets after the Effective Time, the type and mix of
products and services, personnel matters, branch alignment, branch closings, the
granting of credit, and problem loan management, reserve adequacy and
accounting. In order to facilitate the foregoing, the Seller and the Buyer shall
promptly establish a transition committee which will be led by a representative
of the Buyer and which will meet on a regular basis to discuss these matters and
may establish sub-committees from time-to-time to pursue various issues. In
addition, during the period from the date of this Agreement to the Effective
Time, within two (2) business days after the Seller Bank delivers to the members
of any of its credit committees applicable information and reports for the next
upcoming meeting of such committee, the Seller shall provide to a representative
designated by the Buyer located in Boston, Massachusetts access to the same
information and reports as are provided to the Seller Bank's credit committee
members with
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respect to new loans or renewals thereof and extensions of credit proposed to be
made by the Seller Bank in excess of $150,000. The representative designated by
the Buyer shall also be allowed to attend any of the Seller Bank's credit
committee meetings for all loans or loan renewals and be a non-voting observer
thereof. The Seller, if requested by the Buyer, will assist the Buyer to prepare
to sell a portion of its single family residential mortgage loans and mortgage
loan servicing rights following the Effective Time; PROVIDED, THAT Buyer shall
indemnify the Seller and its subsidiaries for any fees, expenses and charges
incurred by Seller in connection therewith if the Merger is not consummated.
Moreover, to facilitate the transactions contemplated herein, immediately upon
execution of this Agreement, the Seller will designate a Senior Vice President
to assist Buyer with interim operating and conversion matters.
6.12 BANK MERGER. Unless otherwise determined by the Buyer prior to the
Closing, at the effective time of the Bank Merger the Articles of Organization
and By-Laws of the Buyer, as in effect immediately prior thereto, shall be the
Articles of Organization and By-Laws of the Surviving Bank until thereafter
amended as provided by law and such Articles of Organization and By-Laws. The
directors and officers of the Buyer immediately prior to the effective time of
the Bank Merger shall be the directors and officers of the Surviving Bank, each
to hold office in accordance with the Articles of Organization and By-Laws of
the Surviving Bank and until their respective successors are duly elected or
appointed and qualified.
6.13 ORGANIZATION OF THE MERGER SUB.
(a) Prior to the Effective Time, the Buyer will take any and all
necessary action to cause (i) the Merger Sub to be organized, (ii) the Merger
Sub to become a direct wholly-owned subsidiary of the Buyer, (iii) the directors
and stockholders of the Merger Sub to approve the transactions contemplated by
this Agreement, (iv) the Merger Sub to execute one or more counterparts to this
Agreement and to deliver at least one such counterpart so executed to the
Seller, whereupon the Merger Sub shall become a party to and be bound by this
Agreement, and (v) the Merger Sub to take all necessary action to complete the
transactions contemplated hereby subject to the terms and conditions hereof.
(b) On and as of the date the Merger Sub becomes a party to this
Agreement, the Buyer and the Merger Sub shall, jointly and severally, represent
and warrant to the Seller as follows:
(i) The Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts and all of its outstanding capital stock is owned,
directly, by the Buyer. Since the date of its organization, the Merger
Sub has not engaged in any activities other than in connection with or
as contemplated by this Agreement;
(ii) The Merger Sub has all necessary corporate power and
authority to enter into this Agreement and to carry on its obligations
hereunder. The execution and delivery of this Agreement by the Merger
Sub and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
the Merger Sub and will not (y) conflict with or violate the Articles
of Organization or By-Laws of the Merger
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Sub or (z) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Merger Sub or by which any of its
properties or assets is bound or affected; and
(iii) The Merger Sub has executed and delivered this Agreement
and this Agreement constitutes the legal, valid and binding obligation
of the Merger Sub enforceable against the Merger Sub in accordance
with its terms.
6.14 COMMUNITY COMMITMENTS. From and after the Effective Time, Buyer shall
use its reasonable efforts to continue the community commitments undertaken by
the Seller Bank prior to the date hereof in the communities currently served by
the Seller Bank.
6.15 CITIZENS FINANCIAL GROUP, INC.. The Parent agrees to cause the Buyer,
its subsidiary, to perform its obligations hereunder, and the Parent and the
Buyer shall be jointly and severally liable for all of the obligations of the
Buyer hereunder.
6.16 LOAN LOSS RESERVES. Prior to the Closing Date, Seller shall increase
Loan Loss Reserve by no less than $500,000; PROVIDED, HOWEVER, that the Seller
shall not be required to make any such increases to its reserves as would be
expressly inconsistent with GAAP and all other applicable laws, rules and
regulations. During the period from the date of this Agreement to the Effective
Time, the Seller also shall provide the Buyer, upon the Buyer's reasonable
request, with any information regarding the Loan Loss Reserve.
6.17 CONSOLIDATION OF CORPORATE STRUCTURE. On or before ten (10) days prior
to the Closing Date, the Seller shall, at the Buyer's request and subject to
prior receipt of all required regulatory approvals and compliance with
applicable law, cause each subsidiary of the Seller and Joint Venture designated
by the Buyer prior to the Closing Date to be liquidated, merged or divested. In
the event that the Merger is not consummated, the Buyer shall indemnify the
Seller for any and all costs and expenses incurred by the Seller with respect to
the actions taken pursuant to this Section 6.17.
ARTICLE VII - CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions:
(a) STOCKHOLDERS' APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved by the requisite affirmative vote
of the holders of shares of Seller Common Stock present and voting at the Seller
Stockholders Meeting in accordance with applicable law.
(b) OTHER APPROVALS. All regulatory approvals required to consummate
the transactions contemplated hereby shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect thereof
shall have expired (all such approvals
45
and the expiration of all such waiting periods being referred to herein as
"REQUISITE REGULATORY APPROVALS").
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger, the Bank
Merger or any of the other transactions contemplated by this Agreement shall be
in effect. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Authority
which prohibits, materially restricts or makes illegal consummation of the
Merger or the Bank Merger.
7.2 CONDITIONS TO THE OBLIGATIONS OF THE BUYER. The obligation of the
Buyer to effect the Merger is also 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, assets, financial condition or results of operations
of the Seller or any of its subsidiaries which has had, or is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on the
Seller and its subsidiaries taken as a whole.
(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller contained in this Agreement that are qualified as to materiality shall
be true and correct and any such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case, as
of the date of this Agreement and as of the Effective Time as though made 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. The Buyer shall have received a certificate to the
foregoing effect signed by the Chairman or President and the Chief Financial
Officer of the Seller.
(c) PERFORMANCE OF OBLIGATIONS OF THE SELLER. The Seller shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Buyer shall
have received a certificate signed on behalf of the Seller by the Chairman or
President and the Chief Financial Officer to such effect.
(d) CONSENTS UNDER AGREEMENTS. The consent, approval or waiver of each
person (other than Requisite Regulatory Approvals contemplated in Section
7.1(b)) whose consent or approval shall be required in order to permit the
lawful consummation of the Merger and the Bank Merger shall have been obtained,
and none of such permits, consents, waivers, clearances, approvals and
authorizations shall contain any term or condition which would materially impair
the value of the Seller or the Seller Bank to the Buyer.
(e) STOCKHOLDER AGREEMENTS. On the date hereof, agreements,
substantially in the form attached as EXHIBIT I hereto, shall have been executed
and delivered by each member of the Seller's Board of Directors. Such agreements
shall remain in full force and effect at the Effective Time.
46
7.3 CONDITIONS TO THE OBLIGATIONS OF THE SELLER. The obligation of the
Seller to effect the Merger is also subject to the satisfaction or waiver by the
Seller, at or prior to the Effective Time, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Buyer contained in this Agreement that are qualified as to materiality
shall be true and correct, and any such representations and warranties that are
not so qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement and as of the Effective Time (or, if made
as of a specified date, only as of such date). The Seller shall have received a
certificate to the foregoing effect signed by the Chairman or President and the
Chief Financial Officer of the Buyer.
(b) PERFORMANCE OF OBLIGATIONS OF THE BUYER. The Buyer shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Seller shall
have received a certificate signed on behalf of the Buyer by the Chairman or
President and the Chief Financial Officer to such effect.
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER
8.1 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 stockholders of the Seller:
(a) by mutual consent of the Seller and the Buyer in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either the Board of Directors of the Buyer or the Board of
Directors of the Seller if any Governmental Authority that must grant a
Requisite Regulatory Approval has denied approval of the Merger and such denial
has become final and nonappealable or any Governmental Authority of competent
jurisdiction shall have issued a final nonappealable order permanently enjoining
or otherwise prohibiting the consummation of the transactions contemplated by
this Agreement;
(c) by either the Board of Directors of the Buyer or the Board of
Directors of the Seller if the Merger shall not have been consummated on or
before March 15, 2004, unless the failure of the Closing to occur by such date
shall be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth herein;
(d) by either the Board of Directors of the Buyer or the Board of
Directors of the Seller (PROVIDED, THAT the terminating party is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein), in the event of a material breach by the other party of any
representation, warranty, covenant or other agreement contained herein which
breach is not cured after thirty (30) days written notice thereof is given to
the party committing such breach;
47
(e) by either the Buyer or the Seller if the approval of the Seller's
stockholders required for the consummation of the Merger shall not have been
obtained by reason of the failure to obtain the required vote at a duly held
meeting of such party's stockholders or at any adjournment thereof; or
(f) by the Buyer, if the Board of Directors of the Seller shall not
have publicly recommended to the stockholders of the Seller that such
stockholders vote in favor of the approval of this Agreement, the Merger and the
other transactions contemplated hereby; shall have withdrawn, modified or
amended such recommendation in a manner materially adverse to the Buyer; or
shall have breached Section 6.2 of this Agreement.
8.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either the Buyer
or the Seller as provided in Section 8.1, this Agreement shall forthwith become
void and have no effect, and none of the Buyer, the Seller, any of their
respective subsidiaries or any of the officers or directors of any of them shall
have any liability of any nature whatsoever hereunder, or in connection with the
transactions contemplated hereby, except that (i) Sections 6.3(b) (Access to
Information), 8.2 (Effects of Termination), 9.2 (Nonsurvival of Representations,
Warranties and Agreements) and 9.3 (Expenses) and all obligations of the Buyer
to indemnify or reimburse the Seller under Article V hereof and all other
obligations of the parties intended to be performed after the termination of
this Agreement shall survive any termination of this Agreement; PROVIDED,
HOWEVER, that, notwithstanding anything to the contrary herein, all obligations
of the Buyer to indemnify or reimburse the Seller under Article V hereof shall
terminate in the event that this Agreement is terminated by the Buyer pursuant
to Section 8.1(f) hereof; and (ii) notwithstanding anything to the contrary
contained in this Agreement, neither the Buyer nor the Seller shall be relieved
or released from any liabilities or damages arising out of its willful breach of
any provision of this Agreement.
(b) If this Agreement is terminated as a result of any breach of a
representation, warranty, covenant or other agreement which is caused by the
willful breach of a party hereto, such party shall be liable to the other party
for all out-of-pocket costs and expenses, including, without limitation, the
reasonable fees and expenses of lawyers, accountants and investment bankers,
incurred by such other party in connection with the entering into of this
Agreement and the carrying out of any and all acts contemplated hereunder
("EXPENSES"). The payment of Expenses is not an exclusive remedy, but is in
addition to any other rights or remedies available to the parties hereto at law
or in equity.
(c) In the event this Agreement is terminated by:
(i) the Buyer pursuant to Section 8.1(f);
(ii) either the Buyer or Seller pursuant to Section 8.1(e) in
circumstances where the Board of Directors of the Seller shall not
have publicly recommended to the stockholders of the Seller that such
stockholders vote in favor of the approval of this Agreement, the
Merger and the other transactions
48
contemplated hereby or shall have withdrawn, modified or amended such
recommendation in a manner adverse to Buyer; or
(iii) either the Buyer or Seller pursuant to Section 8.1(e) in
circumstances where both (y) within twelve (12) months of such
termination, the Seller shall have entered into an agreement to engage
in or there has otherwise occurred an Acquisition Transaction with any
person other than the Buyer or any Affiliate of the Buyer and (z) at
the time of such termination or event giving rise to such termination,
it shall have been publicly announced that any Person (other than the
Buyer or any Affiliate of the Buyer) shall have (A) made, or disclosed
an intention to make, a bona fide offer to engage in an Acquisition
Transaction, or (B) filed an application (or given a notice), whether
in draft or final form, under the BHCA or the Change in Bank Control
Act of 1978, for approval to engage in an Acquisition Transaction,
then Seller shall make a single cash payment to the Buyer in the amount of
$5,250,000 upon such termination. Any payment required under this Section 8.2(c)
shall be payable by the Seller to the Buyer (by wire transfer of immediately
available funds to an account designated by the Buyer) within two (2) business
days after demand by the Buyer.
8.3 AMENDMENT. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with Merger by the stockholders of the Buyer and
the Seller; PROVIDED, HOWEVER, that after any approval of the transactions
contemplated by this Agreement by the stockholders of the Seller, no amendment
of this Agreement shall be made which by law requires further approval by the
stockholders of the Seller without obtaining such approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
8.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein; PROVIDED, HOWEVER, that after any
approval of the transactions contemplated by this Agreement by the stockholders
of the Seller, no extension or waiver of this Agreement or any portion thereof
shall be made which by law requires further approval by the stockholders of the
Seller without obtaining such approval. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE IX - MISCELLANEOUS
9.1 CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "CLOSING") will take place at 10:00 a.m. on a date
and at a place to be specified by
49
the parties, which shall be no later than five (5) business days after the
satisfaction or waiver (subject to applicable law) of the latest to occur of the
conditions set forth in Article VII hereof (other than those conditions that
relate to actions to be taken at Closing), unless extended by mutual agreement
of the parties (the "CLOSING DATE").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement (other than the Bank Merger
Agreement, which shall terminate in accordance with its terms) shall survive the
Effective Time, except for Sections 6.5 (Employment and Benefits Matters) and
6.6 (Directors' and Officers' Indemnification and Insurance) and any other
section which by its terms specifically applies in whole or in part after the
Effective Time.
9.3 EXPENSES. Except as may otherwise be agreed to hereunder or in other
writing by the parties, all legal and other costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
9.4 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 Buyer, to: Citizens Bank of Massachusetts
28 State Street
Boston, MA 01209
Attention: Thomas J. Hollister
President and Chief
Executive Officer
(b) If to Parent, to: Citizens Financial Group, Inc.
One Citizens Plaza
Providence, RI 02903-1339
Attention: Lawrence K. Fish
Chairman, President and
Chief Executive Officer
and to: Citizens Financial Group, Inc.
28 State Street
Boston, MA 02109
Attention: Joel J. Brickman, Esq.
Senior Vice President,
General Counsel and
Secretary
Tel: (617) 725-5928
Fax: (617) 725-5620
50
with required copies to: Goodwin Procter LLP
One Exchange Place
Boston, MA 02109
Attention: Regina M. Pisa, P.C.
Tel: (617) 570-1525
Fax: (617) 523-1231
Gregory J. Lyons, P.C.
Tel: (617) 570-1329
Fax: (617) 523-1231
(c) If to Seller, to: Community Bancorp, Inc.
17 Pope Street
Hudson, MA 01749
Attention: James A. Langway
President and Chief
Executive Officer
Tel: (978) 568-2630
Fax: (978) 562-7129
(d) with required Craig and MacCauley Professional
copies to: Corporation
Federal Reserve Plaza
600 Atlantic Avenue
Boston, MA 02210
Attention: David F. Hannon, Esq.
Peter I. Dunn, Esq.
Tel: (617) 367-9500
Fax: (617) 248-0886
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
so mailed or otherwise sent as provided above.
9.5 INTERPRETATION. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." No provision
of this Agreement shall be construed to require the Seller or the Buyer or any
their respective subsidiaries or Affiliates to take any action which would
violate applicable law, rule or regulation. The phrases "the date of this
Agreement," "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to be July 30, 2003.
51
9.6 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
9.7 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties hereto with respect to the subject matter hereof.
9.8 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without regard
to any applicable conflicts of laws principles.
9.9 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 reasonable best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the original
purposes and intents of this Agreement.
9.10 PUBLICITY. Except as otherwise required by applicable law, neither the
Buyer nor the Seller shall, or shall permit any of its subsidiaries to, issue or
cause the publication of any press release or other public announcement with
respect to, or otherwise make any public statement concerning, the transactions
contemplated by this Agreement without the consent of the party, which consent
shall not be unreasonably withheld.
9.11 ASSIGNMENT; RELIANCE OF OTHER PARTIES. Neither this Agreement nor any
of the rights, interests or obligations shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Except as otherwise specifically
provided in Sections 6.5(d) (Compensation Agreements) and 6.6 (Directors' and
Officers' Indemnification and Insurance) hereof, this Agreement (including the
documents and instruments referred to herein) is not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
9.12 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage
would occur in the event that the provisions contained in this Agreement were
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to seek an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
9.13 ALTERNATIVE STRUCTURE. Notwithstanding anything to the contrary
contained in this Agreement, at any time prior to the Effective Time, the Buyer
shall be entitled to revise the
52
structure of the Merger, the Bank Merger and the other transactions contemplated
hereby, PROVIDED, THAT, each of the transactions comprising such revised
structure shall not (a) subject the stockholders of Seller, Seller or any of its
subsidiaries to adverse tax consequences, (b) change the amount or form of
consideration to be received by the stockholders of Seller, (c) alter to the
detriment of the Seller or its stockholders the benefits to be received by the
Seller's stockholders hereunder, (d) jeopardize or materially delay or impede
the receipt of any required regulatory approvals relating to the consummation of
the Merger or the Bank Merger, or (e) reduce the obligations of any party
hereunder or under the Bank Merger Agreement. This Agreement and any related
documents shall be appropriately amended in order to reflect any such revised
structure.
9.14 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:
"ACCOUNTS" shall have the meaning ascribed thereto in Section 4.30 hereof.
"ACQUISITION TRANSACTION" shall have the meaning ascribed thereto in
Section 6.2 hereof.
"AFFILIATE" shall mean, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person. As used in
this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") means the possession, directly
or indirectly, of power to direct or cause the direction of the management and
policies of a Person whether through the ownership of voting securities, by
contract or otherwise.
"AGENTS" shall have the meaning ascribed thereto in Section 6.2 hereof.
"AGREEMENT" shall have the meaning ascribed thereto in the recitals, except
when this term is used in Section 4.18 hereof, and when so used has the meaning
ascribed to such term therein.
"ARTICLES OF MERGER" shall have the meaning ascribed thereto in Section 1.2
hereof.
"BANK COMMON STOCK" shall have the meaning ascribed thereto in Section
4.2(b) hereof.
"BANK MERGER" shall have the meaning ascribed thereto in the recitals.
"BANK MERGER AGREEMENT" shall have the meaning ascribed thereto in the
recitals.
"BANK PREFERRED STOCK" shall have the meaning ascribed thereto in Section
4.2(b) hereof.
"BANK REGULATOR" shall mean and include, any pertinent federal or state
Governmental Authority charged with the supervision of banks or bank or
financial holding companies or engaged in the insurance of bank deposits,
including without limitation, the OCC, the FRB, the FDIC, the Massachusetts
Commissioner, and the MBBI.
"BENEFIT LIABILITIES" shall have the meaning ascribed thereto in Section
4.15(c) hereof.
53
"BENEFITS CONSULTING" shall mean Community Benefits Consulting, Inc., a
wholly-owned subsidiary of Seller Bank.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"BUYER" shall have the meaning ascribed thereto in the recitals.
"CERTIFICATE" shall have the meaning ascribed thereto in Section 1.4(b)
hereof.
"C.F.R." shall mean the Code of Federal Regulations.
"CLOSING" shall have the meaning ascribed thereto in Section 9.1 hereof.
"CLOSING DATE" shall have the meaning ascribed thereto in Section 9.1
hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY RIGHTS" shall mean the rights provided for under the Company
Rights Agreement.
"COMPANY RIGHTS AGREEMENT" shall mean the Shareholder Rights Agreement
dated May 24, 1996 (as amended to date) between the Seller and Cambridge Trust
Company as rights agent
"CONFIDENTIALITY AGREEMENT" shall have the meaning ascribed thereto in
Section 6.2 hereof.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"CRITICIZED ASSETS" shall have the meaning ascribed thereto in Section
4.20(b) hereof.
"D&O INSURANCE" shall have the meaning ascribed thereto in Section 6.6(b)
hereof.
"DEPOSIT INCENTIVE PLAN" shall have the meaning ascribed thereto in Section
5.9 hereof.
"DISSENTING SHARES" shall have the meaning ascribed thereto in Section
1.4(d) hereof.
"DOJ" shall mean the United States Department of Justice.
"DPC SHARES" shall have the meaning ascribed thereto in Section 1.4(c)
hereof.
"EFFECTIVE TIME" shall have the meaning ascribed thereto in Section 1.2
hereof.
"ENVIRONMENT" shall mean soil, land surface or subsurface strata, real
property, surface waters (including navigable waters, ocean waters, streams,
ponds, drainage basins and wetlands), groundwater's, water body sediments,
drinking water supplies, sediments, ambient air (including indoor air), ambient
air, plant and animal life (including fish and all other aquatic life), and any
other environmental medium or natural resources.
54
"ENVIRONMENTAL CLAIMS" shall mean any and all pending or threatened
administrative or judicial actions, suits, orders, claims, liens, notices,
notices of violation, investigations, complaints, requests for information,
proceedings or other written communications, whether criminal or civil, pursuant
to or relating to any applicable Environmental Law by any person (including
without limitation, any Governmental Authority) based upon, alleging, asserting
or claiming any actual or potential (a) violation of, or liability under, any
Environmental Law, (b) violation of, or liability under, any Environmental
Permit, or (c) liability for the presence in or Release into the Environment of
any Hazardous Materials at any Owned Property, including without limitation, any
off-Site location to which Hazardous Materials or materials containing Hazardous
Materials were sent for handling, storage, treatment or disposal, or have
migrated, including without limitation, any investigatory costs, cleanup costs,
removal costs, remedial costs, response costs, natural resource damages,
property damage, personal injury, fines or penalties arising out of, based on,
resulting from or related to the foregoing.
"ENVIRONMENTAL LAWS" shall mean all applicable federal, state and local,
civil and criminal laws, regulations or legal requirements relating to pollution
or protection of the Environment, natural resources or public health and safety,
including without limitation, laws relating to Release of Hazardous Materials or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, Release, transport, disposal or handling of Hazardous Materials.
"Environmental Laws" shall include, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Sections 9601
ET SEQ.), the Hazardous Materials Transportation Act (49 U.S.C. Sections 180 ET
SEQ.), the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 ET
SEQ.), the Federal Water Pollution Control Act (33 U.S.C. Sections 1251 ET
SEQ.), the Clean Air Act (42 U.S.C. Sections 7401 ET SEQ.), the Toxic Substances
Control Act (15 U.S.C. Sections 2601 ET SEQ.), the Oil Pollution Act (33 U.S.C.
Sections 2701 ET SEQ.), the Emergency Planning and Community Right-to-Know Act
(42 U.S.C. Sections 11001 ET SEQ.), the Occupational Safety and Health Act (29
U.S.C. Sections 651 ET SEQ.), and all other state laws analogous to any of the
above.
"ENVIRONMENTAL PERMITS" shall mean any federal, state or local permit,
license, approval, consent or authorization required by any Governmental
Authority under or in connection with any Environmental Law, and includes
without limitation any and all orders, consent orders or binding agreements
issued or entered into by a Governmental Authority under any applicable
Environmental Law.
"ENVIRONMENTAL REPORTS" shall mean any environmental audit, environmental
risk assessment, environmental site assessment or other investigation, whether
prepared by or on behalf of the Seller or any of its subsidiaries, or otherwise
in any of their possession, custody or control.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXPENSES" shall have the meaning ascribed thereto in Section 8.2(b)
hereof.
55
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FEDERAL RESERVE BOARD" shall mean the Board of Governors of the Federal
Reserve System or the Federal Reserve Bank of Boston, as applicable, or any
successor thereto.
"FILED TAX RETURNS" shall have the meaning ascribed thereto in Section
4.13(a) hereof.
"FINANCIAL SERVICES AUTHORITY" shall mean the independent non-governmental
body that regulates the financial services industry in the United Kingdom.
"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.
"GOVERNMENTAL AUTHORITY" shall mean any United States or foreign, federal,
state or local governmental commission, board, body, bureau, or other regulatory
authority, agency, including courts and other judicial bodies, or any
self-regulatory body or authority, including any instrumentality or entity
designed to act for or on behalf of the foregoing.
"HAZARDOUS MATERIALS" shall mean (a) any petrochemical or petroleum
products, oil or coal ash, radon gas, asbestos or asbestos-containing material,
polychlorinated biphenyls or transformers or other equipment that contains
polychlorinated biphenyls, lead-based paint, urea formaldehyde foam insulation,
(b) any chemicals, materials, substances or wastes which are defined or
regulated as "hazardous substances," "hazardous materials," "hazardous
constituents," "restricted hazardous materials," "extremely hazardous
substances," "hazardous wastes," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "toxic air
pollutants," "pollutants," "contaminants" or words of similar meaning and
regulatory effect, including without limitation, as the foregoing may be defined
under any Environmental Laws, and (c) any other chemicals, material wastes or
substances, the exposure to or treatment, storage, transportation, disposal or
Release of which is prohibited, limited or regulated by any Environmental Laws.
"INDEMNIFIED PARTIES" shall have the meaning ascribed thereto in Section
6.6(a) hereof.
"IRS" shall mean the Internal Revenue Service.
"JOINT VENTURE" shall mean any corporation, limited liability company,
limited liability partnership, partnership, joint venture, trust, association or
other entity which is not a subsidiary of the Seller, as the case may be, and in
which (a) the Seller, directly or indirectly, owns or controls any shares of any
class of the outstanding voting securities or other equity interests, including
without limitation, an equity investment, as such term as of the date hereof is
defined in the FDIC's rules and regulations regarding activities and investments
of insured state banks at 12 C.F.R. Section 362.2(g), or (b) the Seller or one
of its subsidiaries is a general partner.
"KNOWLEDGE" shall mean with respect to a party, the actual knowledge of
such party's officers and directors, after due inquiry.
56
"LIAISONS" shall have the meaning ascribed thereto in Section 6.11 hereof.
"LIENS" shall have the meaning ascribed to such term in Section 4.19(a)
hereof.
"LOAN LOSS RESERVES" shall mean the reserves established by the Seller in
accordance with its customary practices with respect to Loans as of the Closing
Date.
"LOAN PROPERTY" shall mean any property in which the Seller or any of its
subsidiaries holds a security interest, and, where required by the context (as a
result of foreclosure), said term means the owner or operator of such property.
"LOANS" shall have the meaning ascribed to such term in Section 4.20(a)
hereof.
"MASSACHUSETTS COMMISSIONER" shall mean the Commissioner of Banks of the
Commonwealth of Massachusetts or any successor thereto.
"MASSACHUSETTS SECRETARY" shall mean the Secretary of the Commonwealth of
Massachusetts.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, a change
or effect that is or is reasonably likely to be materially adverse to the
business, results of operations or financial condition of such Person and its
subsidiaries taken as a whole; PROVIDED, HOWEVER, that "Material Adverse Effect"
shall not be deemed to include the impact of (a) changes in laws and regulations
or interpretations thereof by Governmental Authorities generally applicable to
depository institutions and their holding companies (including, without
limitation, changes in state and federal tax law, and changes in insurance
deposit assessment rates and special assessments with respect thereto), (b)
changes in GAAP or regulatory accounting principles generally applicable to
financial institutions and their holding companies, (c) actions and omissions of
the Seller or any of its subsidiaries taken with the prior written consent of
the Buyer, (d) the direct effects of compliance with this Agreement on the
operating performance of the parties including expenses incurred by the parties
hereto in consummating the transactions contemplated by this Agreement and (e)
changes in interest rates generally.
"MBBI" shall mean the Massachusetts Board of Bank Incorporation or any
successor thereto.
"MBCL" shall mean the Massachusetts Business Corporation Law, MGL chapter
156B, Sections 1 ET SEQ., as amended.
"MERGER" shall have the meaning ascribed thereto in the recitals.
"MERGER CONSIDERATION" shall have the meaning ascribed thereto in Section
1.4(a) hereof.
"MERGER SUB" shall have the meaning ascribed thereto in the recitals.
"MGL" shall mean the Massachusetts General Laws, as amended.
57
"MHPF" shall mean the Massachusetts Housing Partnership Fund or any
successor thereto.
"NACHA RULES" shall have the meaning ascribed to such term in Section 4.31
hereof.
"NOTICE PERIOD" shall have the meaning ascribed thereto in Section 6.2
hereof.
"OCC" shall mean the Office of the Comptroller of the Currency.
"OPERATING REGULATIONS" shall have the meaning ascribed thereto in Section
4.30 hereof.
"OREO" shall mean other real estate owned.
"OWNED PROPERTY" shall have the meaning ascribed thereto in Section 4.24(a)
hereof.
"PARENT" shall have the meaning ascribed thereto in the recitals.
"PERSON" shall mean any individual, corporation, partnership, Joint
Venture, association, trust, unincorporated organization or other legal entity,
or any governmental agency or political subdivision thereof.
"RELEASE" shall have the meaning set forth in Environmental Laws, but also
shall include without limitation, any threatened Release, spill, leak,
discharge, disposal, pump, pour, emit, empty, inject, leach, dump or allow to
escape into or through the Environment or the Site. The term "Released" shall
have a corresponding meaning.
"REMEDIATION" shall mean an action of any kind to address a Release of
Hazardous Materials or the presence of Hazardous Materials, including without
limitation, any or all of the following activities to the extent they relate to
or arise from the presence of a Hazardous Materials at the: (a) monitoring,
investigation, assessment, treatment, cleanup, containment, removal, mitigation,
response or restoration work; (b) obtaining any permits, consents, approvals or
authorizations of any Governmental Authority necessary to conduct any such
activity; (c) preparing and implementing any plans or studies for any such
activity; (d) obtaining a written notice from a Governmental Authority with
jurisdiction under Environmental Laws that no material additional work is
required by such Governmental Authority; (e) the use, implementation,
application, installation, operation or maintenance of removal actions, remedial
technologies applied to the surface or subsurface soils, excavation and
treatment or disposal of soils at an Off-Site Location, systems for long-term
treatment of surface water or ground water, engineering controls or
institutional controls; and (f) any other activities reasonably determined to be
necessary or appropriate under Environmental Laws to address the presence or
Release of Hazardous Materials.
"REQUISITE REGULATORY APPROVALS" shall have the meaning ascribed thereto in
Section 7.1(b) hereof.
"SEC" shall mean the Securities and Exchange Commission.
"SEC REPORTS" shall have the meaning ascribed thereto in Section 4.9
hereof.
58
"SELLER" shall have the meaning ascribed thereto in the recitals.
"SELLER BALANCE SHEET" shall have the meaning ascribed thereto in Section
4.5 hereof.
"SELLER BANK" shall have the meaning ascribed thereto in the recitals.
"SELLER BENEFIT PLANS" shall have the meaning ascribed thereto in Section
4.15(a) hereof.
"SELLER COMMON STOCK" shall have the meaning ascribed thereto in Section
1.4(a) hereof.
"SELLER COMPANIES" shall have the meaning ascribed thereto in Section
4.13(a) hereof. "SELLER CONTRACT" shall have the meaning ascribed to such term
in Section 4.18(a) hereof.
"SELLER DISCLOSURE SCHEDULE" shall mean the disclosure schedule relating to
the Seller and its subsidiaries, as applicable, delivered to Buyer together
herewith.
"SELLER EMPLOYEES" shall have the meaning ascribed thereto in Section
6.5(a) hereof.
"SELLER INTELLECTUAL PROPERTY ASSETS" shall have the meaning ascribed
thereto in Section 4.32 hereof.
"SELLER OTHER PLANS" shall have the meaning ascribed thereto in Section
4.15(a) hereof.
"SELLER PENSION PLANS" shall have the meaning ascribed thereto in Section
4.15(a) hereof.
"SELLER PREFERRED STOCK" shall have the meaning ascribed thereto in Section
4.2(a) hereof.
"SELLER PROXY STATEMENT" shall have the meaning ascribed thereto in Section
3.8 hereof.
"SELLER REPORTS" shall have the meaning ascribed thereto in Section 4.9
hereof.
"SELLER STOCK OPTION PLANS" shall have the meaning ascribed thereto in
Section 1.6 hereof.
"SELLER STOCKHOLDERS MEETING" shall have the meaning ascribed thereto in
Section 6.1(a) hereof.
"SELLER" shall have the meaning ascribed thereto in the recitals.
"SELLER'S ADVISOR" shall have the meaning ascribed thereto in Section 4.6
hereof.
"SERIES A PREFERRED STOCK" shall have the meaning ascribed thereto in
Section 4.2(a) hereof.
"SHARES" shall have the meaning ascribed thereto in Section 1.4(a) hereof.
59
"STOCKHOLDER AGREEMENTS" shall mean those certain Stockholder Agreements
dated as of the date hereof respectively between the Buyer and substantially in
the form attached hereto as EXHIBIT I.
"STOCK OPTION" shall have the meaning ascribed thereto in Section 1.6
hereof.
"STOCK OPTION CASH SETTLEMENT" shall have the meaning ascribed thereto in
Section 1.6 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 twenty percent (20%) 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.
"SUPERIOR PROPOSAL" shall have the meaning ascribed thereto in Section 6.2
hereof.
"SURVIVING BANK" shall have the meaning ascribed thereto in the recitals.
"SURVIVING CORPORATION" shall have the meaning ascribed thereto in Section
1.1 hereof.
"TAX" shall mean any federal, state, country, 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.
"TAX RETURN" shall mean 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.
"TRANSACTION DOCUMENTS" shall mean this Agreement, the Bank Merger
Agreement and the Stockholder Agreements.
"TRUST ACCOUNT SHARES" shall have the meaning ascribed thereto in Section
1.4(c) hereof.
"USA PATRIOT ACT" shall have the meaning ascribed thereto in Section 4.17
hereof.
"U.S.C." shall mean the United States Code.
[SIGNATURE PAGE FOLLOWS]
60
IN WITNESS WHEREOF, the Buyer, Parent and the Seller have caused this
Agreement to be executed as a sealed instrument by their duly authorized
officers as of the day and year first above written.
CITIZENS FINANCIAL GROUP, INC.
By: /s/ Lawrence K. Fish
------------------------------------------
Name: Lawrence K. Fish
Title: Chairman, President and Chief
Executive Officer
Attest:
By: /s/ Michael Edwards
--------------------------------------
Name: Michael Edwards
Title: Senior Vice President and Treasurer
/s/ Joel J. Brickman
- --------------------------
Name: Joel J. Brickman
Title: Secretary
CITIZENS BANK OF MASSACHUSETTS
By: /s/ Thomas J. Hollister
------------------------------------------
Name: Thomas J. Hollister
Title: President and Chief Executive Officer
Attest:
By: /s/ Michael Edwards
--------------------------------------
Name: Michael Edwards
Title: Executive Vice President and Treasurer
/s/ Joel J. Brickman
- --------------------------
Name: Joel J. Brickman
Title: Assistant Secretary
COMMUNITY BANCORP, INC.
By: /s/ James A. Langway
------------------------------------------
Attest: Name: James A. Langway
Title: President
/s/ Donald R. Hughes, Jr.
- ------------------------------
Name: Donald R. Hughes, Jr.
Title: Treasurer
By: /s/ Donald R. Hughes, Jr.
------------------------------------------
Attest: Name: Donald R. Hughes, Jr.
Title: Treasurer
/s/ James A. Langway
- ------------------------------
Name: James A. Langway
Title: President