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Exhibit 99.2
AGREEMENT AND PLAN
OF MERGER
BY AND BETWEEN
BROOKLINE BANCORP, INC.
AND
MYSTIC FINANCIAL, INC.
JULY 7, 2004
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TABLE OF CONTENTS
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ARTICLE I CERTAIN DEFINITIONS.................................................................................1
1.1. Certain Definitions.............................................................................1
ARTICLE II THE MERGER.........................................................................................8
2.1. Merger..........................................................................................8
2.2. Closing; Effective Time.........................................................................8
2.3. Certificate of Incorporation and Bylaws.........................................................8
2.4. Directors and Officers of Surviving Corporation.................................................8
2.5. Additional Director of Brookline Bancorp and Brookline Bank.....................................8
2.6. Effects of the Merger...........................................................................8
2.7. Tax Consequences................................................................................9
2.8. Possible Alternative Structures.................................................................9
2.9. Additional Actions..............................................................................9
ARTICLE III CONVERSION OF SHARES.............................................................................10
3.1. Conversion of MFI Common Stock; Merger Consideration...........................................10
3.2. Election Procedures............................................................................11
3.3. Procedures for Exchange of MFI Common Stock....................................................14
3.4. Treatment of MFI Options.......................................................................16
3.5. Bank Merger....................................................................................17
3.6. Reservation of Shares..........................................................................17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MFI.............................................................17
4.1. Standard.......................................................................................17
4.2. Organization...................................................................................18
4.3. Capitalization.................................................................................18
4.4. Authority; No Violation........................................................................19
4.5. Consents.......................................................................................20
4.6. Financial Statements...........................................................................21
4.7. Taxes..........................................................................................21
4.8. No Material Adverse Effect.....................................................................22
4.9. Material Contracts; Leases; Defaults...........................................................22
4.10. Ownership of Property; Insurance Coverage......................................................23
4.11. Legal Proceedings..............................................................................24
4.12. Compliance With Applicable Law.................................................................24
4.13. Employee Benefit Plans.........................................................................25
4.14. Brokers, Finders and Financial Advisors........................................................29
4.15. Environmental Matters..........................................................................29
4.16. Loan Portfolio.................................................................................31
4.17. Securities Documents...........................................................................32
4.18. Related Party Transactions.....................................................................32
4.19. Deposits.......................................................................................33
4.20. Antitakeover Provisions Inapplicable; Required Vote............................................33
4.21. Registration Obligations.......................................................................33
4.22. Risk Management Instruments....................................................................33
4.23. Fairness Opinion...............................................................................33
4.24. Intellectual Property..........................................................................34
4.25. Trust Accounts.................................................................................34
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4.26. Labor Matters..................................................................................34
4.27. MFI Information Supplied.......................................................................34
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BROOKLINE BANCORP................................................34
5.1. Standard.......................................................................................35
5.2. Organization...................................................................................35
5.3. Capitalization.................................................................................36
5.4. Authority; No Violation........................................................................36
5.5. Consents.......................................................................................37
5.6. Financial Statements...........................................................................38
5.7. Taxes..........................................................................................38
5.8. No Material Adverse Effect.....................................................................39
5.9. Ownership of Property; Insurance Coverage......................................................39
5.10. Legal Proceedings..............................................................................40
5.11. Compliance With Applicable Law.................................................................40
5.12. Employee Benefit Plans.........................................................................41
5.13. Environmental Matters..........................................................................43
5.14. Loan Portfolio.................................................................................44
5.15. Securities Documents...........................................................................44
5.16. Deposits.......................................................................................45
5.17. Antitakeover Provisions Inapplicable...........................................................45
5.18. Brokers, Finders and Financial Advisors........................................................45
5.19. Brookline Bancorp Common Stock.................................................................45
5.20. Material Contracts; Leases, Defaults...........................................................45
5.21. Brookline Bancorp Information Supplied.........................................................45
ARTICLE VI COVENANTS OF MFI..................................................................................46
6.1. Conduct of Business............................................................................46
6.2. Current Information............................................................................50
6.3. Access to Properties and Records...............................................................51
6.4. Financial and Other Statements.................................................................52
6.5. Maintenance of Insurance.......................................................................52
6.6. Disclosure Supplements.........................................................................53
6.7. Consents and Approvals of Third Parties........................................................53
6.8. All Reasonable Efforts.........................................................................53
6.9. Failure to Fulfill Conditions..................................................................53
6.10. No Solicitation................................................................................53
6.11. Reserves and Merger-Related Costs..............................................................54
6.12. Board of Directors and Committee Meetings......................................................55
ARTICLE VII COVENANTS OF BROOKLINE BANCORP...................................................................55
7.1. Conduct of Business............................................................................55
7.2. Current Information and Consultation...........................................................55
7.3. Financial and Other Statements.................................................................56
7.4. Disclosure Supplements.........................................................................56
7.5. Consents and Approvals of Third Parties........................................................56
7.6. All Reasonable Efforts.........................................................................57
7.7. Failure to Fulfill Conditions..................................................................57
7.8. Employee Benefits..............................................................................57
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7.9. Directors and Officers Indemnification and Insurance...........................................60
7.10. Stock Listing..................................................................................61
7.11. Stock and Cash Reserve.........................................................................61
7.12. Section 16(b) Exemption........................................................................61
7.13. Communications to MFI Employees; Training......................................................62
ARTICLE VIII REGULATORY AND OTHER MATTERS....................................................................62
8.1. Meeting of Stockholders........................................................................62
8.2. Proxy Statement-Prospectus; Merger Registration Statement......................................63
8.3. Regulatory Approvals...........................................................................64
8.4. Affiliates.....................................................................................64
ARTICLE IX CLOSING CONDITIONS................................................................................64
9.1. Conditions to Each Party's Obligations under this Agreement....................................64
9.2. Conditions to the Obligations of Brookline Bancorp under this Agreement........................66
9.3. Conditions to the Obligations of MFI under this Agreement......................................67
ARTICLE X THE CLOSING........................................................................................67
10.1. Time and Place.................................................................................67
10.2. Deliveries at the Pre-Closing and the Closing..................................................68
ARTICLE XI TERMINATION, AMENDMENT AND WAIVER.................................................................68
11.1. Termination....................................................................................68
11.2. Effect of Termination..........................................................................72
11.3. Amendment, Extension and Waiver................................................................73
ARTICLE XII MISCELLANEOUS....................................................................................73
12.1. Confidentiality................................................................................73
12.2. Public Announcements...........................................................................74
12.3. Survival.......................................................................................74
12.4. Notices........................................................................................74
12.5. Parties in Interest............................................................................75
12.6. Complete Agreement.............................................................................75
12.7. Counterparts...................................................................................75
12.8. Severability...................................................................................75
12.9. Governing Law..................................................................................76
12.10. Interpretation.................................................................................76
12.11. Specific Performance...........................................................................76
12.12. Waiver of Trial by Jury........................................................................76
Exhibit A Form of Voting Agreement
Exhibit B Form of Agreement and Plan of Bank Merger
Exhibit C Affiliates Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of July 7,
2004, by and between Brookline Bancorp, Inc., a Delaware corporation ("Brookline
Bancorp"), and Mystic Financial, Inc., a Delaware corporation ("MFI").
WHEREAS, the Board of Directors of each of Brookline Bancorp and MFI (i)
has determined that this Agreement and the business combination and related
transactions contemplated hereby are in the best interests of their respective
companies and stockholders and (ii) has determined that this Agreement and the
transactions contemplated hereby are consistent with and in furtherance of their
respective business strategies, and (iii) has approved this Agreement at
meetings of each of such Boards of Directors; and
WHEREAS, in accordance with the terms of this Agreement, MFI will merge
with and into Brookline Bancorp (the "Merger"), and immediately thereafter
Medford Co-operative Bank, which is a wholly owned subsidiary of MFI, will be
merged with and into Brookline Bank, a wholly owned subsidiary of Brookline
Bancorp; and
WHEREAS, as a condition to the willingness of Brookline Bancorp to enter
into this Agreement, each of the directors of MFI have entered into a Voting
Agreement, substantially in the form of Exhibit A hereto, dated as of the date
hereof, with Brookline Bancorp (the "Voting Agreement"), pursuant to which each
such director has agreed, among other things, to vote all shares of common stock
of MFI owned by such person in favor of the approval of this Agreement and the
transactions contemplated hereby, upon the terms and subject to the conditions
set forth in such Voting Agreements; and
WHEREAS, the parties intend the Merger to qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that this Agreement be and is hereby adopted as a
"plan of reorganization" within the meaning of Sections 354 and 361 of the Code;
and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the business transactions described in this
Agreement and to prescribe certain conditions thereto.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms have the following meanings
(unless the context otherwise requires, references to Articles and Sections
refer to Articles and Sections of this Agreement).
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"Affiliate" means any Person who directly, or indirectly, through one or
more intermediaries, controls, or is controlled by, or is under common control
with, such Person and, without limiting the generality of the foregoing,
includes any executive officer or director of such Person and any Affiliate of
such executive officer or director.
"Agreement" means this agreement, and any amendment hereto.
"Bank Merger" shall mean the merger of Medford Co-operative Bank with and
into Brookline Bank, with Brookline Bank as the surviving institution, which
mergers shall occur immediately following the Merger.
"Bank Regulator" shall mean any Federal or state banking regulator,
including but not limited to the OTS, FDIC, the Commissioner and the FRB, which
regulates Brookline Bank, Medford Co-operative Bank, and their respective
holding companies or subsidiaries, as the case may be.
"Brookline Bancorp" shall mean Brookline Bancorp, Inc., a Delaware
corporation, with its principal executive offices located at 160 Washington
Street, Brookline, Massachusetts 02445.
"Brookline Bancorp Common Stock" shall mean the common stock, par value
$.01 per share, of Brookline Bancorp.
"BROOKLINE BANCORP DISCLOSURE SCHEDULE" shall mean a written disclosure
schedule delivered by Brookline Bancorp to MFI specifically referring to the
appropriate section of this Agreement.
"Brookline Bancorp Stock Benefit Plans" shall mean 1999 and 2003 Stock
Option Plans and 1999 and 2003 Recognition and Retention Plans.
"Brookline Bancorp Financial Statements" shall mean the (i) the audited
consolidated statements of financial condition (including related notes and
schedules) of Brookline Bancorp as of December 31, 2003 and 2002 and the
consolidated statements of income, comprehensive income, changes in
stockholders' equity and cash flows (including related notes and schedules, if
any) of Brookline Bancorp for each of the three years ended December 31, 2003,
2002 and 2001, as set forth in Brookline Bancorp's annual report on Form 10-K
for the year ended December 31, 2003, and (ii) the unaudited interim
consolidated financial statements of Brookline Bancorp as of the end of each
calendar quarter following December 31, 2003, and for the periods then ended, as
filed by Brookline Bancorp in its Securities Documents.
"Brookline Bancorp Subsidiary" means any corporation, 50% or more of the
capital stock of which is owned, either directly or indirectly, by Brookline
Bancorp or Brookline Bank, except any corporation the stock of which is held in
the ordinary course of the lending activities of Brookline Bank.
"Brookline Bank" shall mean Brookline Bank, a federally chartered stock
savings association, with its principal offices located at 160 Washington
Street, Brookline, Massachusetts 02445, which is a wholly owned subsidiary of
Brookline Bancorp.
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"Cash Consideration" shall have the meaning set forth in Section 3.1.3.
"Cash Election" shall have the meaning set forth in Section 3.2.2.
"Cash/Stock Consideration" shall have the meaning set forth in Section
3.1.3.
"Cash Election Shares" shall have the meaning set forth in Section 3.2.1.
"Certificate" shall mean a certificate evidencing shares of MFI Common
Stock.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commissioner" shall mean the Commissioner of the Massachusetts Division of
Banks, and shall include the Massachusetts Board of Bank Incorporation (as
appropriate).
"Confidentiality Agreement" shall mean the confidentiality agreement
referred to in Section 12.1 of this Agreement.
"DGCL" shall mean the Delaware General Corporation Law.
"Dissenting Shares" shall have the meaning set forth in Section 3.1.4.
"Dissenting Stockholder" shall have the meaning set forth in Section 3.1.4.
"Effective Time" shall mean the date and time specified pursuant to Section
2.2 as the effective time of the Merger.
"Election Deadline" shall have the meaning set forth in Section 3.2.3.
"Election Form" shall have the meaning set forth in Section 3.2.2.
"Election Form Record Date" shall have the meaning set forth in Section
3.2.2.
"Environmental Laws" shall mean any applicable Federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
governmental entity relating to (1) the protection, preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (2) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environmental Concern.
The term Environmental Law includes without limitation (a) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 6901, et seq; the Clean Air Act, as amended, 42 U.S.C. Section
7401, et seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251, et seq; the Toxic Substances Control Act, as amended, 15 U.S.C.
Section 2601, et seq; the Emergency Planning and Community Right to
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Know Act, 42 U.S.C. Section 11001, et seq; the Safe Drinking Water Act, 42
U.S.C. Section 300f, et seq; and all comparable state and local laws, and (b)
any common law (including without limitation common law that may impose strict
liability) that may impose liability or obligations for injuries or damages due
to the presence of or exposure to any Materials of Environmental Concern.
"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.
"Exchange Agent" shall mean American Stock Transfer & Trust Company, or
such other bank or trust company or other agent designated by Brookline Bancorp,
and reasonably acceptable to MFI, which shall act as agent for Brookline Bancorp
in connection with the exchange procedures for exchanging Certificates for the
Merger Consideration.
"Exchange Fund" shall have the meaning set forth in Section 3.3.1.
"Exchange Ratio" shall have the meaning set forth in Section 3.1.3.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FHLB" shall mean the Federal Home Loan Bank of Boston.
"FRB" shall mean the Board of Governors of the Federal Reserve System or
any successor thereto.
"GAAP" shall mean accounting principles generally accepted in the United
States of America.
"Governmental Entity" shall mean any Federal or state court, administrative
agency or commission or other governmental authority or instrumentality.
"HOLA" shall mean the Home Owners' Loan Act, as amended.
"IRS" shall mean the United States Internal Revenue Service.
"Knowledge" as used with respect to a Person (including references to such
Person being aware of a particular matter) means those facts that are known or
should have been known by the executive officers and directors of such Person,
and includes any facts, matters or circumstances set forth in any written notice
from any Bank Regulator or any other material written notice received by an
executive officer or director of that Person.
"Material Adverse Effect" shall mean, with respect to Brookline Bancorp or
MFI, respectively, any effect that (i) is material and adverse to the financial
condition, results of operations or business of Brookline Bancorp and its
Subsidiaries taken as a whole, or MFI and its Subsidiaries taken as a whole,
respectively, or (ii) materially impairs the ability of either MFI, on the one
hand, or Brookline Bancorp, on the other hand, to perform its obligations under
this Agreement or otherwise materially impedes the consummation of the
transactions contemplated
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by this Agreement; provided that "Material Adverse Effect" shall not be deemed
to include the impact of (a) changes in laws and regulations affecting banks or
thrift institutions and their holding companies generally, or interpretations
thereof by courts or governmental agencies, (b) changes in GAAP or regulatory
accounting principles generally applicable to financial institutions and their
holding companies, (c) actions and omissions of a party hereto (or any of its
Subsidiaries) taken with the prior written consent of the other party, (d)
compliance with this Agreement on the business, financial condition or results
of operations of the parties and their respective Subsidiaries, including the
expenses incurred by the parties hereto in consummating the transactions
contemplated by this Agreement (consistent with the information included in the
Brookline Bancorp Disclosure Schedules and the MFI Disclosure Schedules), and
(e) any change in the value of the securities or loan portfolio of Brookline
Bancorp or MFI, respectively, whether held as available for sale or held to
maturity, resulting from a change in interest rates generally.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products, and any other
materials regulated under Environmental Laws.
"Merger" shall mean the merger of MFI with and into Brookline Bancorp
pursuant to the terms hereof.
"Merger Consideration" shall mean the cash or Brookline Bancorp Common
Stock, or combination thereof, in an aggregate per share amount to be paid by
Brookline Bancorp for each share of MFI Common Stock, as set forth in Section
3.1.
"Merger Registration Statement" shall mean the registration statement,
together with all amendments, filed with the SEC under the Securities Act for
the purpose of registering shares of Brookline Bancorp Common Stock to be
offered to holders of MFI Common Stock in connection with the Merger.
"Medford Co-operative" shall mean The Medford Co-operative Bank, a
Massachusetts chartered co-operative bank, with its principal offices located at
60 High Street, Medford, Massachusetts 02155, which is a wholly owned subsidiary
of MFI.
"MFI" shall mean Mystic Financial, Inc., a Delaware corporation, with its
principal offices located at 60 High Street, Medford, Massachusetts 02155.
"MFI Common Stock" shall mean the common stock, par value $0.01 per share,
of MFI.
"MFI DISCLOSURE SCHEDULE" shall mean a written disclosure schedule
delivered by MFI to Brookline Bancorp specifically referring to the appropriate
section of this Agreement.
"MFI Financial Statements" shall mean (i) the audited consolidated balance
sheets (including related notes and schedules, if any) of MFI as of June 30,
2003 and 2002 and the consolidated statements of income, changes in
stockholders' equity and cash flows (including related notes and schedules, if
any) of MFI for each of the three years ended June 30, 2003, 2002 and 2001, as
set forth in MFI's annual report on Form 10-K for the year ended June 30, 2003
and (ii) the unaudited interim consolidated financial statements of MFI as of
the end of each calendar
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quarter following June 30, 2003 and for the periods then ended, as filed by MFI
in its Securities Documents.
"MFI Option" shall mean an option to purchase shares of MFI Common Stock
granted pursuant to the MFI 1999 Stock Option Plan and outstanding as of the
date hereof, as set forth in MFI DISCLOSURE SCHEDULE 4.3.1.
"MFI Regulatory Reports" means the Call Reports of Medford Co-operative,
and accompanying schedules (other than such schedules as are required to be kept
confidential pursuant to applicable law or regulatory requirements), as filed
with the FDIC with respect to each calendar quarter beginning with the quarter
ended September 30, 2003, through the Closing Date, and all Annual Reports on
Form FR Y-6, any Current Report on Form FR Y-6A filed with the FRB by MFI from
December 31, 2002 through the Closing Date.
"MFI Stockholders Meeting" shall have the meaning set forth in Section
8.1.1.
"MFI Stock Benefit Plans" shall mean the MFI 1999 Stock Option Plan and the
MFI 1999 Recognition and Retention Plan, and any and all amendments thereto.
"MFI Subsidiary" means any corporation, 50% or more of the capital stock of
which is owned, either directly or indirectly, by MFI or Medford Co-operative,
except any corporation the stock of which is held in the ordinary course of the
lending activities of Medford Co-operative.
"Mixed Election" shall have the meaning set forth in Section 3.2.2.
"Mystic ESOP" shall mean Mystic Financial, Inc. Employee Stock Ownership
Plan.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Nasdaq" shall mean the Nasdaq National Market.
"Non-Election" shall have the meaning set forth in Section 3.2.2.
"Non-Election Shares" shall have the meaning set forth in Section 3.2.1.
"Option Payment" shall have the meaning set forth in Section 3.4.
"OTS" shall mean the Office of Thrift Supervision or any successor thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under the
Exchange Act).
"Proxy Statement-Prospectus" shall have the meaning set forth in Section
8.2.1.
"Regulatory Agreement" shall have the meaning set forth in Section 4.12.3.
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"Regulatory Approvals" means the approval of any Bank Regulator that is
necessary in connection with the consummation of the Merger, the Bank Merger and
the related transactions contemplated by this Agreement.
"Representative" shall have the meaning set forth in Section 3.2.2.
"Rights" shall mean warrants, options, rights, convertible securities,
stock appreciation rights and other arrangements or commitments which obligate
an entity to issue or dispose of any of its capital stock or other ownership
interests or which provide for compensation based on the equity appreciation of
its capital stock.
"SBA" shall mean the Small Business Administration or any successor
thereto.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars, proxy
statements, registration statements and all similar documents filed pursuant to
the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the SEC promulgated thereunder.
"Shortfall Number" shall have the meaning set forth in Section 3.2.5.
"Significant Subsidiary" shall have the meaning set forth in Rule 1-02 of
Regulation S-X of the SEC.
"Stock Consideration" shall have the meaning set forth in Section 3.1.3.
"Stock Conversion Number" shall have the meaning set forth in Section
3.2.1.
"Stock Election Shares" shall have the meaning set forth in Section 3.2.1.
"Stock Election Number" shall have the meaning set forth in Section 3.2.1.
"Stock Election" shall have the meaning set forth in Section 3.2.2.
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
"Termination Date" shall mean March 31, 2005.
"Treasury Stock" shall have the meaning set forth in Section 3.1.2.
Other terms used herein are defined in the preamble and elsewhere in this
Agreement.
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ARTICLE II
THE MERGER
2.1. MERGER.
Subject to the terms and conditions of this Agreement, at the Effective
Time: (a) MFI shall merge with and into Brookline Bancorp, with Brookline
Bancorp as the resulting or surviving corporation (the "Surviving Corporation");
and (b) the separate existence of MFI shall cease and all of the rights,
privileges, powers, franchises, properties, assets, liabilities and obligations
of MFI shall be vested in and assumed by Brookline Bancorp. As part of the
Merger, each share of MFI Common Stock will be converted into the right to
receive the Merger Consideration pursuant to the terms of Article III.
2.2. CLOSING; EFFECTIVE TIME.
The Merger shall be effected by the filing of a certificate of merger with
the Delaware Office of the Secretary of State on the day of the Closing (the
"Closing Date"), in accordance with the DGCL. The "Effective Time" means the
date and time upon which the certificate of merger is filed with the Delaware
Office of the Secretary of State, or as otherwise stated in the certificate of
merger, in accordance with the DGCL.
2.3. CERTIFICATE OF INCORPORATION AND BYLAWS.
The Certificate of Incorporation and Bylaws of Brookline Bancorp as in
effect immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation, until thereafter amended
as provided therein and by applicable law.
2.4. DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.
Except as provided in Section 2.5, the directors of Brookline Bancorp
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation. Until changed in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation, the officers of Brookline Bancorp immediately prior to the
Effective Time shall be the initial officers of Surviving Corporation, in each
case until their respective successors are duly elected or appointed and
qualified.
2.5. ADDITIONAL DIRECTOR OF BROOKLINE BANCORP AND BROOKLINE BANK.
Effective as of the Effective Time, one person presently serving as
director of MFI, as designated by Brookline Bancorp in consultation with the MFI
board, shall be appointed to the Board of Directors of Brookline Bancorp and
Brookline Bank.
2.6. EFFECTS OF THE MERGER.
At and after the Effective Time, the Merger shall have the effects as set
forth in the DGCL.
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2.7. TAX CONSEQUENCES.
It is intended that the Merger shall constitute a reorganization within the
meaning of Section 368(a) of the Code, and that this Agreement shall constitute
a "plan of reorganization" as that term is used in Sections 354 and 361 of the
Code. From and after the date of this Agreement and until the Closing, each
party hereto shall use its reasonable best efforts to cause the Merger to
qualify, and will not knowingly take any action, cause any action to be taken,
fail to take any action or cause any action to fail to be taken which action or
failure to act would reasonably be expected to prevent the Merger from
qualifying as a reorganization under Section 368(a) of the Code. Following the
Closing, neither Brookline Bancorp nor any of its affiliates shall knowingly
take any action, cause any action to be taken, fail to take any action or cause
any action to fail to be taken, which action or failure to act would reasonably
be expected to cause the Merger to fail to qualify as a reorganization under
Section 368(a) of the Code. Brookline Bancorp and MFI each hereby agrees to
deliver certificates substantially in compliance with IRS published advance
ruling guidelines, with customary exceptions and modifications thereto, to
enable counsel to deliver the legal opinions contemplated by Section 9.1.6,
which certificates shall be dated as of the date of such opinions.
2.8. POSSIBLE ALTERNATIVE STRUCTURES.
Notwithstanding anything to the contrary contained in this Agreement and
subject to the satisfaction of the conditions set forth in Article IX, prior to
the Effective Time Brookline Bancorp shall be entitled to revise the structure
for effecting the Merger described in Section 2.1 or the Bank Merger including,
without limitation, by substituting a wholly owned subsidiary for Brookline
Bancorp or Brookline Bank, as applicable, provided that (i) any such subsidiary
shall become a party to, and shall agree to be bound by, the terms of this
Agreement (ii) there are no adverse Federal or state income tax consequences to
MFI stockholders, and nothing would prevent the rendering of the opinions in
Section 9.1.6, as a result of the modification; (iii) the consideration to be
paid to the holders of MFI Common Stock under this Agreement is not thereby
changed in kind, value or reduced in amount; and (iv) such modification will not
delay materially or jeopardize receipt of any required regulatory approvals or
other consents and approvals relating to the consummation of the Merger or
otherwise cause any condition to Closing set forth in Article IX not to be
capable of being fulfilled. The parties hereto agree to appropriately amend this
Agreement and any related documents in order to reflect any such revised
structure.
2.9. ADDITIONAL ACTIONS.
If, at any time after the Effective Time, Brookline Bancorp shall consider
or be advised that any further deeds, assignments or assurances in law or any
other acts are necessary or desirable to (i) vest, perfect or confirm, of record
or otherwise, in Brookline Bancorp its right, title or interest in, to or under
any of the rights, properties or assets of MFI or Medford Co-operative, or (ii)
otherwise carry out the purposes of this Agreement, MFI and its officers and
directors shall be deemed to have granted to Brookline Bancorp an irrevocable
power of attorney to execute and deliver, in such official corporate capacities,
all such deeds, assignments or assurances in law or any other acts as are
necessary or desirable to (a) vest, perfect or confirm, of record or otherwise,
in Brookline Bancorp its right, title or interest in, to or under any of the
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rights, properties or assets of MFI or (b) otherwise carry out the purposes of
this Agreement, and the officers and directors of the Brookline Bancorp are
authorized in the name of MFI or otherwise to take any and all such action.
ARTICLE III
CONVERSION OF SHARES
3.1. CONVERSION OF MFI COMMON STOCK; MERGER CONSIDERATION.
At the Effective Time, by virtue of the Merger and without any action on
the part of Brookline Bancorp, MFI or the holders of any of the shares of MFI
Common Stock, the Merger shall be effected in accordance with the following
terms:
3.1.1. Each share of Brookline Bancorp Common Stock that is
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding following the Effective Time and shall be unchanged by
the Merger.
3.1.2. All shares of MFI Common Stock held in the treasury of
MFI (including any unawarded shares held in the MFI 1999 Recognition and
Retention Plan Trust) and each share of MFI Common Stock owned by Brookline
Bancorp prior to the Effective Time (other than shares held in a fiduciary
capacity or in connection with debts previously contracted) ("Treasury Stock"),
shall, at the Effective Time, cease to exist, and the certificates for such
shares shall be canceled as promptly as practicable thereafter, and no payment
or distribution shall be made in consideration therefor.
3.1.3. Each share of MFI Common Stock issued and outstanding
immediately prior to the Effective Time (other than Treasury Stock and
Dissenting Shares) shall become and be converted into, as provided in and
subject to the limitations set forth in this Agreement, the right to receive at
the election of the holder thereof as provided in Section 3.2 either (i) $39.00
in cash (the "Cash Consideration"); (ii) 2.6786 shares (the "Exchange Ratio") of
Brookline Bancorp Common Stock (the "Stock Consideration"); or (iii) a
combination of the Cash Consideration and the Stock Consideration, as provided
in Section 3.2 (the "Cash/Stock Consideration"). The Cash Consideration, the
Stock Consideration and the Cash/Stock Consideration are sometimes referred to
herein collectively as the "Merger Consideration."
3.1.4. Each outstanding share of MFI Common Stock, the holder
of which has perfected his right to dissent under Section 262 of the DGCL and
has not effectively withdrawn or lost such right as of the Effective Time (the
"Dissenting Shares"), shall not be converted into or represent a right to
receive the Merger Consideration hereunder, and the holder thereof shall be
entitled only to such rights as are granted by Section 262 of the DGCL. MFI
shall give Brookline Bancorp prompt notice upon receipt by MFI of any such
demands for payment of the fair value of such shares of MFI Common Stock and of
withdrawals of such notice and any other instruments provided pursuant to
applicable law (any stockholder duly making such demand being hereinafter called
a "Dissenting Stockholder"), and Brookline Bancorp shall have the right to
participate in all negotiations and proceedings with respect to any such
demands. MFI shall not, except with the prior written consent of Brookline
Bancorp, voluntarily make any payment with respect to, or settle or offer to
settle, any such demand for payment, or waive any failure to
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timely deliver a written demand for appraisal or the taking of any other action
by such Dissenting Stockholder as may be necessary to perfect appraisal rights
under the DGCL. Any payments made in respect of Dissenting Shares shall be made
by the Surviving Company.
3.1.5. If any Dissenting Stockholder shall effectively
withdraw or lose (through failure to perfect or otherwise) his right to such
payment at or prior to the Effective Time, such holder's shares of MFI Common
Stock shall be converted into a right to receive the Merger Consideration in
accordance with the applicable provisions of this Agreement. If such holder
shall effectively withdraw or lose (through failure to perfect or otherwise) his
right to such payment after the Effective Time (or the Election Deadline, as
defined below), each share of MFI Common Stock of such holder shall be treated
as a Non-Election Share.
3.1.6. After the Effective Time, shares of MFI Common Stock
shall no longer be outstanding and shall automatically be canceled and shall
cease to exist, and shall thereafter by operation of this Section 3.1 represent
only the right to receive the Merger Consideration and any dividends or
distributions with respect thereto or any dividends or distributions with a
record date prior to the Effective Time that were declared or made by MFI on
such shares of MFI Common Stock in accordance with the terms of this Agreement
on or prior to the Effective Time and which remain unpaid at the Effective Time.
3.1.7. In the event Brookline Bancorp changes (or establishes
a record date for changing) the number of, or provides for the exchange of,
shares of Brookline Bancorp Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, recapitalization,
reclassification, or similar transaction with respect to the outstanding
Brookline Bancorp Common Stock and the record date therefor shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately and
appropriately adjusted; PROVIDED, THAT for the avoidance of doubt the parties
acknowledge that the foregoing is not intended to result in any such adjustment
as a result of share issuances of Brookline Bancorp Common Stock by Brookline
Bancorp under Brookline Bancorp Compensation and Benefit Plans or where such
issuance is pursuant to a widely distributed stock offering for fair market
value consideration.
3.2. ELECTION PROCEDURES.
3.2.1. Holders of MFI Common Stock may elect to receive shares
of Brookline Bancorp Common Stock or cash (in either case without interest) in
exchange for their shares of MFI Common Stock in accordance with the following
procedures, provided that, in the aggregate, and subject to the provisions of
Section 3.2.6, 60% of the total number of shares of MFI Common Stock issued and
outstanding at the Effective Time, including any Dissenting Shares but excluding
any Treasury Stock and any shares of MFI Common Stock issued after the date
hereof pursuant to the exercise of an MFI Option (the "Stock Conversion
Number"), shall be converted into the Stock Consideration and the remaining
outstanding shares of MFI Common Stock shall be converted into the Cash
Consideration. Shares of MFI Common Stock as to which a Cash Election
(including, pursuant to a Mixed Election) has been made are referred to herein
as "Cash Election Shares." Shares of MFI Common Stock as to which a Stock
Election has been made (including, pursuant to a Mixed Election) are referred to
as "Stock Election Shares." Shares of MFI Common Stock as to which no election
has been made (or as to which an Election Form is not returned properly
completed) are referred to herein as "Non-Election
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Shares." The aggregate number of shares of MFI Common Stock with respect to
which a Stock Election has been made is referred to herein as the "Stock
Election Number."
3.2.2. An election form and other appropriate and customary
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of such Certificates to the Exchange Agent), in such form as MFI and Brookline
Bancorp shall mutually agree ("Election Form"), shall be mailed no more than 40
business days and no less than 20 business days prior to the anticipated
Effective Time or on such earlier date as Brookline Bancorp and MFI shall
mutually agree (the "Mailing Date") to each holder of record of MFI Common Stock
as of five business days prior to the Mailing Date (the "Election Form Record
Date"). Each Election Form shall permit such holder, subject to the allocation
and election procedures set forth in this Section 3.2, (i) to elect to receive
the Cash Consideration for all of the shares of MFI Common Stock held by such
holder (a "Cash Election"), in accordance with Section 3.1.3, (ii) to elect to
receive the Stock Consideration for all of such shares (a "Stock Election"), in
accordance with Section 3.1.3, (iii) to elect to receive the Stock Consideration
for a part of such holder's MFI Common Stock and the Cash Consideration for the
remaining part of such holder's MFI Common Stock (a "Mixed Election"), or (iv)
to indicate that such record holder has no preference as to the receipt of cash
or Brookline Bancorp Common Stock for such shares (a "Non-Election"). A holder
of record of shares of MFI Common Stock who holds such shares as nominee,
trustee or in another representative capacity (a "Representative") may submit
multiple Election Forms, provided that each such Election Form covers all the
shares of MFI Common Stock held by such Representative for a particular
beneficial owner. Any shares of MFI Common Stock with respect to which the
holder thereof shall not, as of the Election Deadline, have made an election by
submission to the Exchange Agent of an effective, properly completed Election
Form shall be deemed Non-Election Shares. All Dissenting Shares shall be deemed
Cash Election shares, and with respect to such shares the holders thereof shall
in no event receive consideration comprised of Brookline Bancorp Common Stock,
subject to Section 3.1.5; provided, however, that for purposes of making the
proration calculations provided for in this Section 3.2, only Dissenting Shares
as existing at the Effective Time shall be deemed Cash Election Shares.
3.2.3. To be effective, a properly completed Election Form
shall be submitted to the Exchange Agent on or before 5:00 p.m., Massachusetts
time, on the 25th day following the Mailing Date (or such other time and date as
Brookline Bancorp and MFI may mutually agree) (the "Election Deadline");
provided, however, that the Election Deadline may not occur on or after the
Closing Date. MFI shall make available up to two separate Election Forms, or
such additional Election Forms as Brookline Bancorp may permit, to all persons
who become holders (or beneficial owners) of MFI Common Stock between the
Election Form Record Date and the close of business on the business day prior to
the Election Deadline. MFI shall provide to the Exchange Agent all information
reasonably necessary for it to perform as specified herein. An election shall
have been properly made only if the Exchange Agent shall have actually received
a properly completed Election Form by the Election Deadline. An Election Form
shall be deemed properly completed only if accompanied by one or more
Certificates (or customary affidavits and indemnification regarding the loss or
destruction of such Certificates or the guaranteed delivery of such
Certificates) representing all shares of MFI Common Stock covered by such
Election Form, together with duly executed transmittal materials included with
the Election Form. If an MFI stockholder either (i) does not submit a properly
completed Election Form in a timely
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fashion or (ii) revokes its Election Form prior to the Election Deadline
(without later submitting a properly completed Election Form prior to the
Election Deadline), the shares of MFI Common Stock held by such stockholder
shall be designated as Non-Election Shares. Any Election Form may be revoked or
changed by the person submitting such Election Form to the Exchange Agent by
written notice to the Exchange Agent only if such notice of revocation or change
is actually received by the Exchange Agent at or prior to the Election Deadline.
Brookline Bancorp shall cause the Certificate or Certificates relating to any
revoked Election Form to be promptly returned without charge to the person
submitting the Election Form to the Exchange Agent. Subject to the terms of this
Agreement and of the Election Form, the Exchange Agent shall have discretion to
determine when any election, modification or revocation is received and whether
any such election, modification or revocation has been properly made.
3.2.4. If the Stock Election Number exceeds the Stock
Conversion Number, then all Cash Election Shares and all Non-Election Shares
shall be converted into the right to receive the Cash Consideration, and,
subject to Section 3.2.7, each holder of Stock Election Shares will be entitled
to receive the Stock Consideration only with respect to that number of Stock
Election Shares held by such holder (rounded to the nearest whole share) equal
to the product obtained by multiplying (x) the number of Stock Election Shares
held by such holder by (y) a fraction, the numerator of which is the Stock
Conversion Number and the denominator of which is the Stock Election Number,
with the remaining number of such holder's Stock Election Shares being converted
into the right to receive the Cash Consideration.
3.2.5. If the Stock Election Number is less than the Stock
Conversion Number (the amount by which the Stock Conversion Number exceeds the
Stock Election Number being referred to herein as the "Shortfall Number"), then
all Stock Election Shares shall be converted into the right to receive the Stock
Consideration and the Non-Election Shares and Cash Election Shares shall be
treated in the following manner:
(A) if the Shortfall Number is less than or equal to the
number of Non-Election Shares, then all Cash Election Shares shall be
converted into the right to receive the Cash Consideration and, subject to
Section 3.2.7 hereof, each holder of Non-Election Shares shall receive the
Stock Consideration in respect of that number of Non-Election Shares held
by such holder (rounded to the nearest whole share) equal to the product
obtained by multiplying (x) the number of Non-Election Shares held by such
holder by (y) a fraction, the numerator of which is the Shortfall Number
and the denominator of which is the total number of Non-Election Shares,
with the remaining number of such holder's Non-Election Shares being
converted into the right to receive the Cash Consideration; or
(B) if the Shortfall Number exceeds the number of
Non-Election Shares, then all Non-Election Shares shall be converted into
the right to receive the Stock Consideration, and, subject to Section
3.2.7, each holder of Cash Election Shares shall receive the Stock
Consideration in respect of that number of Cash Election Shares held by
such holder (rounded to the nearest whole share) equal to the product
obtained by multiplying (x) the number of Cash Election Shares held by such
holder by (y) a fraction, the numerator of which is the amount by which (1)
the Shortfall Number exceeds (2) the total number of Non-Election Shares
and the denominator of which is the total number of
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Cash Election Shares, with the remaining number of such holder's Cash
Election Shares being converted into the right to receive the Cash
Consideration.
3.2.6. Notwithstanding anything in this Article III to the
contrary, the number of shares of MFI Common Stock to be converted into the
right to receive the Stock Consideration in the Merger shall not be less than
that number which would cause the ratio of (i) the average of the high and low
prices of Brookline Bancorp Common Stock on the Closing Date times the aggregate
number of shares of Brookline Bancorp Common Stock to be issued as Stock
Consideration pursuant to Section 3.1.3, to (ii) the sum of (A) the amount set
forth in the preceding clause (i), (B) the Aggregate Cash Consideration to be
issued pursuant to Section 3.1.3, (C) the number of Dissenting Shares times the
per share Cash Consideration and (D) any other amounts received by a holder of
MFI stock prior to the Merger, either in a redemption of MFI stock or in a
distribution with respect to MFI stock (but only to the extent such amount is
treated as other property or money received in the exchange for purposes of Code
Section 356, or would be so treated if the MFI shareholder also had received
stock of Brookline Bancorp in exchange for stock owned by the shareholder in
MFI) to be 42.5% (if the number of Dissenting Shares is less than 5% of the
outstanding shares of MFI), 43.5% (if the number of Dissenting Shares is 5% or
greater, but less than 10% of the outstanding shares of MFI), or 45% (if the
number of Dissenting Shares is 10% or more of the outstanding shares of MFI). To
the extent the application of this Section 3.2.6 results in the number of shares
of MFI Common Stock to be converted into the right to receive the Stock
Consideration in the Merger being increased, the number of such shares to be
converted into the right to receive the Cash Consideration will be decreased by
an equal number of shares.
3.2.7. NO FRACTIONAL SHARES. Notwithstanding anything to the
contrary contained herein, no certificates or scrip representing fractional
shares of Brookline Bancorp Common Stock shall be issued upon the surrender for
exchange of Certificates, no dividend or distribution with respect to Brookline
Bancorp Common Stock shall be payable on or with respect to any fractional share
interest, and such fractional share interests shall not entitle the owner
thereof to vote or to any other rights of a stockholder of Brookline Bancorp. In
lieu of the issuance of any such fractional share, Brookline Bancorp shall pay
to each former holder of MFI Common Stock who otherwise would be entitled to
receive a fractional share of Brookline Bancorp Common Stock, an amount in cash,
rounded to the nearest cent and without interest, equal to the product of (i)
the fraction of a share to which such holder would otherwise have been entitled
and (ii) the average of the daily closing sales prices of a share of Brookline
Bancorp Common Stock as reported on the Nasdaq for the five consecutive trading
days immediately preceding the Closing Date. For purposes of determining any
fractional share interest, all shares of MFI Common Stock owned by a MFI
stockholder shall be combined so as to calculate the maximum number of whole
shares of Brookline Bancorp Common Stock issuable to such MFI stockholder.
3.3. PROCEDURES FOR EXCHANGE OF MFI COMMON STOCK.
3.3.1. BROOKLINE BANCORP TO MAKE MERGER CONSIDERATION
AVAILABLE. After the Election Deadline and no later than the Closing Date,
Brookline Bancorp shall deposit, or shall cause to be deposited, with the
Exchange Agent for the benefit of the holders of MFI Common Stock, for exchange
in accordance with this Section 3.3, certificates representing the shares of
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Brookline Bancorp Common Stock and an aggregate amount of cash sufficient to pay
the aggregate amount of cash payable pursuant to this Article III (including the
estimated amount of cash to be paid in lieu of fractional shares of MFI Common
Stock) (such cash and certificates for shares of Brookline Bancorp Common Stock,
together with any dividends or distributions with respect thereto (without any
interest thereon) being hereinafter referred to as the "Exchange Fund").
3.3.2. EXCHANGE OF CERTIFICATES. Brookline Bancorp shall take
all steps necessary to cause the Exchange Agent, within five (5) business days
after the Effective Time, to mail to each holder of a Certificate or
Certificates who has not previously surrendered such certificates with an
Election Form, a form letter of transmittal for return to the Exchange Agent and
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration and cash in lieu of fractional shares into which
the MFI Common Stock represented by such Certificates shall have been converted
as a result of the Merger, if any. The letter of transmittal (which shall be
subject to the reasonable approval of MFI) 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 the Exchange Agent. Upon proper surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with a
properly completed letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration to which such holder of MFI common stock shall have become
entitled pursuant to Section 3.1.3, and the Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on any Cash
Consideration or any cash payable in lieu of fractional shares or any unpaid
dividends and distributions, if any, payable to holders of Certificates.
3.3.3. RIGHTS OF CERTIFICATE HOLDERS AFTER THE EFFECTIVE TIME.
The holder of a Certificate that prior to the Merger represented issued and
outstanding MFI Common Stock shall have no rights, after the Effective Time,
with respect to such MFI Common Stock except to surrender the Certificate in
exchange for the Merger Consideration as provided in this Agreement. No
dividends or other distributions declared after the Effective Time with respect
to Brookline Bancorp Common Stock shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender such
Certificate in accordance with this Section 3.3. After the surrender of a
Certificate in accordance with this Section 3.3, the record holder thereof shall
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
Brookline Bancorp Common Stock represented by such Certificate.
3.3.4. SURRENDER BY PERSONS OTHER THAN RECORD HOLDERS. If the
Person surrendering a Certificate and signing the accompanying letter of
transmittal is not the record holder thereof, then it shall be a condition of
the payment of the Merger Consideration that: (i) such Certificate is properly
endorsed to such Person or is accompanied by appropriate stock powers, in either
case signed exactly as the name of the record holder appears on such
Certificate, and is otherwise in proper form for transfer, or is accompanied by
appropriate evidence of the authority of the Person surrendering such
Certificate and signing the letter of transmittal to do so on behalf of the
record holder; and (ii) the person requesting such exchange shall pay to the
Exchange Agent in advance any transfer or other similar taxes required by reason
of the payment to a Person other than the registered holder of the Certificate
surrendered, or
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required for any other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
3.3.5. CLOSING OF TRANSFER BOOKS. From and after the Effective
Time, there shall be no transfers on the stock transfer books of MFI of the MFI
Common Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be exchanged for the Merger
Consideration and canceled as provided in this Section 3.3.
3.3.6. RETURN OF EXCHANGE FUND. At any time following the six
(6) month period after the Effective Time, Brookline Bancorp shall be entitled
to require the Exchange Agent to deliver to it any portions of the Exchange Fund
which had been made available to the Exchange Agent and not disbursed to holders
of Certificates (including, without limitation, all interest and other income
received by the Exchange Agent in respect of all funds made available to it),
and thereafter such holders shall be entitled to look to Brookline Bancorp
(subject to abandoned property, escheat and other similar laws) with respect to
any Merger Consideration that may be payable upon due surrender of the
Certificates held by them. Notwithstanding the foregoing, neither Brookline
Bancorp nor the Exchange Agent shall be liable to any holder of a Certificate
for any Merger Consideration delivered in respect of such Certificate to a
public official pursuant to any abandoned property, escheat or other similar
law.
3.3.7. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event
any Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and the posting by such person of a bond in such amount as
Brookline Bancorp may reasonably direct as indemnity against any claim that may
be made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof.
3.3.8. WITHHOLDING. Brookline Bancorp or the Exchange Agent
will be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement or the transactions contemplated hereby to any holder
of MFI Common Stock such amounts as Brookline Bancorp (or any Affiliate thereof)
or the Exchange Agent are required to deduct and withhold with respect to the
making of such payment under the Code, or any applicable provision of U.S.
federal, state, local or non-U.S. tax law. To the extent that such amounts are
properly withheld by Brookline Bancorp or the Exchange Agent, such withheld
amounts will be treated for all purposes of this Agreement as having been paid
to the holder of the MFI Common Stock in respect of whom such deduction and
withholding were made by Brookline Bancorp or the Exchange Agent.
3.4. TREATMENT OF MFI OPTIONS.
MFI DISCLOSURE SCHEDULE 3.4 sets forth all of the outstanding MFI Options
as of the date hereof. At the Effective Time, and pursuant to the terms of the
MFI Option Plan, each MFI Option that is unexercised and outstanding, whether or
not then exercisable, immediately prior thereto shall, by reason of the Merger,
be cancelled and converted into the right to receive in cash an amount (subject
to required tax withholdings) equal to (i) the excess of (A) the Cash
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Consideration per share over (B) the exercise price per share of each such MFI
Option MULTIPLIED BY (ii) the number of shares of MFI Common Stock subject to
the MFI Option (the "Option Payment"). MFI shall make the Option Payment
immediately prior to the Effective Time and MFI shall, in accordance with
Section5.3 of the MFI Option Plan, give written notice to the each holder of a
then outstanding MFI Option that such holder will receive the payment described
herein in exchange for such holder's outstanding MFI Options and MFI shall use
its reasonable best efforts to obtain the written acknowledgment of each such
holder of the receipt of such notice. Prior to receipt of the Option Payment,
each holder of an MFI Option shall execute a cancellation agreement,
substantially in the form attached to BROOKLINE BANCORP DISCLOSURE SCHEDULE 3.4.
3.5. BANK MERGER.
MFI and Brookline Bancorp shall use their reasonable best efforts to cause
the merger of Medford Co-operative with and into Brookline Bank, with Brookline
Bank as the surviving institution. In addition, following the execution and
delivery of this Agreement, Brookline Bancorp will cause Brookline Bank, and MFI
will cause Medford Co-operative, to execute and deliver a Plan of Bank Merger
substantially in the form attached to this Agreement as Exhibit B.
3.6. RESERVATION OF SHARES.
Brookline Bancorp shall reserve for issuance a sufficient number of shares
of the Brookline Bancorp Common Stock for the purpose of issuing shares of
Brookline Bancorp Common Stock to the MFI stockholders in accordance with this
Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MFI
MFI represents and warrants to Brookline Bancorp that the statements
contained in this Article IV are correct as of the date of this Agreement and
will be correct as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Article IV), subject to the standard set forth in Section 4.1 and except as set
forth in the MFI DISCLOSURE SCHEDULE delivered by MFI to Brookline Bancorp on
the date hereof, and except as to any representation or warranty which
specifically relates to an earlier date, which only need be so correct as of
such earlier date. MFI has made a good faith effort to ensure that the
disclosure on each schedule of the MFI DISCLOSURE SCHEDULE corresponds to the
section referenced herein. However, for purposes of the MFI DISCLOSURE SCHEDULE,
any item disclosed on any schedule therein is deemed to be fully disclosed with
respect to all schedules under which such item may be relevant as and to the
extent that it is reasonably clear on the face of such schedule that such item
applies to such other schedule. References to the Knowledge of MFI shall include
the Knowledge of Medford Co-operative.
4.1. STANDARD.
No representation or warranty of MFI contained in this Article IV shall be
deemed untrue or incorrect, and MFI shall not be deemed to have breached a
representation or warranty, as a consequence of the existence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events inconsistent
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with any paragraph of this Article IV, has had or is reasonably expected to have
a Material Adverse Effect, disregarding for these purposes (x) any qualification
or exception for, or reference to, materiality in any such representation or
warranty and (y) any use of the terms "material", "materially", "in all material
respects", "Material Adverse Effect" or similar terms or phrases in any such
representation or warranty. The foregoing standard shall not apply to
representations and warranties contained in Sections 4.2 (other than the last
sentence of Sections 4.2.1 and 4.2.2), 4.4, 4.13.4, 4.13.6, and 4.13.9, which
shall be deemed untrue, incorrect and breached if they are not true and correct
in all material respects.
4.2. ORGANIZATION.
4.2.1. MFI is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and is duly
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended (the "BHCA"). MFI has full corporate power and authority to carry on
its business as now conducted. MFI is duly licensed or qualified to do business
in the states of the United States and foreign jurisdictions where its ownership
or leasing of property or the conduct of its business requires such
qualification.
4.2.2. Medford Co-operative is a Massachusetts chartered
co-operative bank duly organized, validly existing and in good standing under
the laws of the Commonwealth of Massachusetts. The deposits of Medford
Co-operative are insured by the FDIC to the fullest extent permitted by law, and
all premiums and assessments required to be paid in connection therewith have
been paid by Medford Co-operative when due. Medford Co-operative is a member in
good standing of the FHLB and owns the requisite amount of stock therein.
4.2.3. MFI DISCLOSURE SCHEDULE 4.2.3 sets forth each MFI
Subsidiary. Each MFI Subsidiary is a corporation, limited liability company or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization.
4.2.4. The respective minute books of MFI, Medford
Co-operative and each other MFI Subsidiary accurately records, in all material
respects, all material corporate actions of their respective stockholders and
boards of directors (including committees).
4.2.5. Prior to the date of this Agreement, MFI has made
available to Brookline Bancorp true and correct copies of the certificate of
incorporation or charter and bylaws of MFI, Medford Co-operative and each other
MFI Subsidiary.
4.3. CAPITALIZATION.
4.3.1. The authorized capital stock of MFI consists of
5,000,000 shares of MFI Common Stock, of which 1,565,945 shares are outstanding,
validly issued, fully paid and nonassessable and free of preemptive rights, and
1,000,000 shares of preferred stock, $0.01 par value ("MFI Preferred Stock"),
none of which are outstanding. There are 1,180,556 shares of MFI Common Stock
held by MFI as treasury stock as of the date hereof. Neither MFI nor any MFI
Subsidiary has or is bound by any Rights of any character relating to the
purchase, sale or issuance or voting of, or right to receive dividends or other
distributions on any shares of MFI
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Common Stock, or any other security of MFI or a MFI Subsidiary or any securities
representing the right to vote, purchase or otherwise receive any shares of MFI
Common Stock or any other security of MFI or any MFI Subsidiary, other than (i)
shares issuable under the MFI Stock Benefit Plans, (ii) capital securities
issued by the Mystic Financial Capital Trust I and the Mystic Financial Capital
Trust II, (iii) debentures issued by MFI to Mystic Financial Capital Trust I and
Mystic Financial Capital Trust II, and (iv) the guarantee issued by MFI to the
holders of the capital securities issued by Mystic Financial Capital Trust and
Mystic Financial Capital Trust II. MFI DISCLOSURE SCHEDULE 4.3.1 sets forth: the
name of each holder of an award granted under any MFI Stock Benefit Plan,
identifying the nature of the award; as to options to purchase MFI Common Stock,
the number of shares each such individual may acquire pursuant to the exercise
of such options, the grant, vesting and expiration dates, and the exercise price
relating to the options held; and the names of each holder of an outstanding
restricted stock award, the number of shares subject to each award, and the
grant and vesting dates.
4.3.2. MFI owns all of the capital stock of Medford
Co-operative, free and clear of any lien or encumbrance. Except for the MFI
Subsidiaries and as set forth in MFI DISCLOSURE SCHEDULE 4.3.2, MFI does not
possess, directly or indirectly, any material equity interest in any corporate
entity, except for equity interests held in the investment portfolios of MFI or
any MFI Subsidiary (which as to any one issuer, do not exceed 5% of such
issuer's outstanding equity securities), equity interests held by MFI
Subsidiaries in a fiduciary capacity, and equity interests held in connection
with the lending activities of MFI Subsidiaries, including stock in the FHLB.
Either MFI or Medford Co-operative owns all of the outstanding shares of capital
stock of each MFI Subsidiary free and clear of all liens, security interests,
pledges, charges, encumbrances, agreements and restrictions of any kind or
nature, except that, in the case of the Mystic Financial Capital Trust I and the
Mystic Financial Capital Trust II, MFI owns 100% of the common securities and
less than 100% of the capital securities.
4.3.3. To MFI's Knowledge, other than the Mystic ESOP and
except as set forth on MFI DISCLOSURE SCHEDULE 4.3.3, as of the date hereof no
Person is the beneficial owner (as defined in Section 13(d) of the Exchange Act)
of 5% or more of the outstanding shares of MFI Common Stock.
4.3.4. No bonds, debentures, notes or other indebtedness
having the right to vote on any matters on which MFI's stockholders may vote
have been issued by MFI and are outstanding.
4.4. AUTHORITY; NO VIOLATION.
4.4.1. MFI has full corporate power and authority to execute
and deliver this Agreement and, subject to the receipt of the Regulatory
Approvals described in Section 8.3 and the approval of this Agreement by MFI's
stockholders, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by MFI and the completion by MFI of the
transactions contemplated hereby, up to and including the Merger, have been duly
and validly approved by the Board of Directors of MFI. This Agreement has been
duly and validly executed and delivered by MFI, and subject to approval by the
stockholders of MFI and receipt of the Regulatory Approvals and due and valid
execution and delivery of this Agreement by Brookline Bancorp, constitutes the
valid and binding obligation of MFI, enforceable against
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MFI in accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity.
4.4.2. Subject to compliance by Brookline Bancorp with the
terms and conditions of this Agreement, (A) the execution and delivery of this
Agreement by MFI, (B) subject to receipt of Regulatory Approvals, and MFI's and
Brookline Bancorp's compliance with any conditions contained therein, and
subject to the receipt of the approval of the stockholders of MFI, the
consummation of the transactions contemplated hereby, and (C) compliance by MFI
with any of the terms or provisions hereof will not (i) conflict with or result
in a breach of any provision of the Certificate of Incorporation or Bylaws of
MFI or any MFI Subsidiary or the Certificate of Incorporation and Bylaws of
Medford Co-operative; (ii) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to MFI or any
MFI Subsidiary or any of their respective properties or assets; or (iii)
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 MFI or Medford Co-operative under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other investment or obligation to which MFI
or Medford Co-operative is a party, or by which they or any of their respective
properties or assets may be bound or affected, except for such violations,
conflicts, breaches or defaults under clause (ii) or (iii) hereof which, either
individually or in the aggregate, will not have a Material Adverse Effect on MFI
and the MFI Subsidiaries taken as a whole.
4.5. CONSENTS.
Except for (a) the receipt of the Regulatory Approvals and compliance with
any conditions contained therein, (b) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware, and (c) the approval of
this Agreement by the requisite vote of the stockholders of MFI, no consents,
waivers or approvals of, or filings or registrations with, any Governmental
Entity or Bank Regulator are necessary, and, to MFI's Knowledge, no consents,
waivers or approvals of, or filings or registrations with, any other third
parties are necessary, in connection with (x) the execution and delivery of this
Agreement by MFI, and the completion by MFI of the Merger or (y) the execution
and delivery of the Plan of Bank Merger and the completion of the Bank Merger.
MFI has no reason to believe that (i) any required Regulatory Approvals or other
required consents or approvals will not be received or will include the
imposition of any condition or requirement that could reasonably be expected to
result in a Material Adverse Effect on Brookline Bancorp and its Subsidiaries,
taken as a whole, or that (ii) any public body or authority having jurisdiction
over the affairs of MFI or its subsidiaries, the consent or approval of which is
not required or to which a filing is not required, will object to the completion
of the transactions contemplated by this Agreement.
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4.6. FINANCIAL STATEMENTS.
4.6.1. The MFI Regulatory Reports have been prepared in all
material respects in accordance with applicable regulatory accounting principles
and practices throughout the periods covered by such statements, and fairly
present in all material respects, the consolidated financial position, results
of operations and changes in shareholders' equity of MFI as of and for the
periods ended on the dates thereof, in accordance with applicable regulatory
accounting principles applied on a consistent basis.
4.6.2. MFI has previously made available to Brookline Bancorp
the MFI Financial Statements covering periods ended prior to the date hereof.
Except as disclosed in MFI DISCLOSURE SCHEDULE 4.6, the MFI Financial Statements
have been prepared in accordance with GAAP, and (including the related notes
where applicable) fairly present in each case in all material respects (subject
in the case of the unaudited interim statements to normal year-end adjustments)
the consolidated financial position, results of operations and cash flows of MFI
and the MFI Subsidiaries on a consolidated basis as of and for the respective
periods ended on the dates thereof, in accordance with GAAP during the periods
involved, except as indicated in the notes thereto, or in the case of unaudited
statements, as permitted by Form 10-Q.
4.6.3. Except as disclosed in MFI DISCLOSURE SCHEDULE 4.6, at
the date of each balance sheet included in the MFI Financial Statements or in
the MFI Regulatory Reports, MFI did not have any liabilities, obligations or
loss contingencies of any nature (whether absolute, accrued, contingent or
otherwise) of a type required to be reflected in such MFI Financial Statements
or in the MFI Regulatory Reports or in the footnotes thereto which are not fully
reflected or reserved against therein or fully disclosed in a footnote thereto,
except for liabilities, obligations and loss contingencies which are not
material individually or in the aggregate, and except for liabilities,
obligations and loss contingencies which are within the subject matter of a
specific representation and warranty herein and subject, in the case of any
unaudited statements, to normal, recurring audit adjustments and the absence of
footnotes.
4.7. TAXES.
Except as set forth in MFI DISCLOSURE SCHEDULE 4.7, MFI and the MFI
Subsidiaries that are at least 80 percent owned by MFI are members of the same
affiliated group within the meaning of Code Section 1504(a). MFI has duly filed
all federal, state and material local tax returns required to be filed by or
with respect to MFI and each Subsidiary of MFI, taking into account any
extensions (all such returns, to MFI's Knowledge, being accurate and correct in
all material respects) and has duly paid or made provisions for the payment of
all material federal, state and local taxes which have been incurred by or are
due or claimed to be due from MFI and any Subsidiary of MFI by any taxing
authority or pursuant to any written tax sharing agreement, other than taxes or
other charges which (i) are not delinquent, (ii) are being contested in good
faith, or (iii) have not yet been fully determined. Except as set forth in MFI
DISCLOSURE SCHEDULE 4.7, as of the date of this Agreement, MFI has received no
written notice of, and to MFI's Knowledge there is no audit examination,
deficiency assessment, tax investigation or refund litigation with respect to
any taxes of MFI or any of its Subsidiaries, and no claim has been made by any
taxing authority in a jurisdiction where MFI or any of its Subsidiaries do not
file tax returns that MFI or any such Subsidiary is subject to taxation in that
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jurisdiction. Except as set forth in MFI DISCLOSURE SCHEDULE 4.7, MFI and its
Subsidiaries have not executed an extension or waiver of any statute of
limitations on the assessment or collection of any material tax due that is
currently in effect. MFI and each of its Subsidiaries has timely withheld and
paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party, and MFI and each of its Subsidiaries, to MFI's
Knowledge, has timely complied with all applicable information reporting
requirements under Part III, Subchapter A of Chapter 61 of the Code and similar
applicable state and local information reporting requirements.
4.8. NO MATERIAL ADVERSE EFFECT.
MFI and the MFI Subsidiaries, taken as a whole, have not suffered any
Material Adverse Effect since June 30, 2003 and no event has occurred or
circumstance arisen since that date which, in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on MFI and the MFI
Subsidiaries, taken as a whole.
4.9. MATERIAL CONTRACTS; LEASES; DEFAULTS.
4.9.1. Except as set forth in MFI DISCLOSURE SCHEDULE 4.9.1,
neither MFI nor any MFI Subsidiary is a party to or subject to: (i) any
employment, consulting or severance contract with any past or present officer,
director or employee of MFI or any MFI Subsidiary, except for "at will"
arrangements; (ii) any plan or contract providing for bonuses, pensions,
options, deferred compensation, retirement payments, profit sharing or similar
material arrangements for or with any past or present officers, directors or
employees of MFI or any MFI Subsidiary; (iii) any collective bargaining
agreement with any labor union relating to employees of MFI or any MFI
Subsidiary; (iv) any agreement which by its terms limits or affects the payment
of dividends by MFI or any MFI Subsidiary; (v) any instrument evidencing or
related to indebtedness for borrowed money in excess of $100,000, whether
directly or indirectly, by way of purchase money obligation, conditional sale,
lease purchase, guaranty or otherwise, in respect of which MFI or any MFI
Subsidiary is an obligor to any person, which instrument evidences or relates to
indebtedness other than deposits, FHLB advances with a term to maturity not in
excess of one year, repurchase agreements, bankers' acceptances, and "treasury
tax and loan" accounts established in the ordinary course of business and
transactions in "federal funds" or which contains financial covenants or other
material non-customary restrictions (other than those relating to the payment of
principal and interest when due) which would be applicable on or after the
Closing Date to Brookline Bancorp or any Brookline Bancorp Subsidiary; (vi) any
other agreement, written or oral, which is not terminable without cause on 60
days' notice or less without material penalty or payment, or that obligates MFI
or any MFI Subsidiary for the payment of more than $25,000 annually or for the
payment of more than $50,000 over its remaining term; or (vii) any agreement
(other than this Agreement), contract, arrangement, commitment or understanding
(whether written or oral) that restricts or limits in any material way the
conduct of business by MFI or any MFI Subsidiary (it being understood that any
non-compete or similar provision shall be deemed material).
4.9.2. Each real estate lease that will require the consent of
the lessor or its agent as a result of the Merger or the Bank Merger by virtue
of the terms of any such lease, is
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listed in MFI DISCLOSURE SCHEDULE 4.9.2 identifying the section of the lease
that contains such prohibition or restriction. Subject to any consents that may
be required as a result of the transactions contemplated by this Agreement, to
its Knowledge, neither MFI nor any MFI Subsidiary is in default in any material
respect under any material contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party, by which its
assets, business, or operations may be bound or affected, or under which it or
its assets, business, or operations receive benefits, and there has not occurred
any event that, with the lapse of time or the giving of notice or both, would
constitute such a default.
4.9.3. True and correct copies of agreements, contracts,
arrangements and instruments referred to in Section 4.9.1 and 4.9.2 have been
made available to Brookline Bancorp on or before the date hereof, are listed on
MFI DISCLOSURE SCHEDULE 4.9.1 and are in full force and effect on the date
hereof. Except as set forth in MFI DISCLOSURE SCHEDULE 4.9.3, no plan, contract,
employment agreement, termination agreement, or similar agreement or arrangement
to which MFI or any MFI Subsidiary is a party or under which MFI or any MFI
Subsidiary may be liable contains provisions which permit an employee or
independent contractor to terminate it without cause and continue to accrue
future benefits thereunder. Except as set forth in MFI DISCLOSURE SCHEDULE
4.9.3, no such agreement, plan, contract, or arrangement (x) provides for
acceleration in the vesting of benefits or payments due thereunder upon the
occurrence of a change in ownership or control of MFI or any MFI Subsidiary or
upon the occurrence of a subsequent event; or (y) requires MFI or any MFI
Subsidiary to provide a benefit in the form of MFI Common Stock or determined by
reference to the value of MFI Common Stock.
4.10. OWNERSHIP OF PROPERTY; INSURANCE COVERAGE.
4.10.1. Except as set forth in MFI DISCLOSURE SCHEDULE 4.10.1,
MFI and each MFI Subsidiary has good and, as to real property, marketable title
to all material assets and properties owned by MFI or each MFI Subsidiary in the
conduct of its businesses, whether such assets and properties are real or
personal, tangible or intangible, including assets and property reflected in the
balance sheet contained in the most recent MFI Financial Statements or acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of in the ordinary course of business, since the date of such
balance sheet), subject to no material encumbrances, liens, mortgages, security
interests or pledges, except (i) those items which secure liabilities for public
or statutory obligations or any discount with, borrowing from or other
obligations to FHLB, inter-bank credit facilities, reverse repurchase agreements
or any transaction by a MFI Subsidiary acting in a fiduciary capacity, and (ii)
statutory liens for amounts not yet delinquent or which are being contested in
good faith. MFI and the MFI Subsidiaries, as lessee, have the right under valid
and existing leases of real and personal properties used by MFI and the MFI
Subsidiaries in the conduct of their businesses to occupy or use all such
properties as presently occupied and used by each of them. Such existing leases
and commitments to lease constitute or will constitute operating leases for both
tax and financial accounting purposes and the lease expense and minimum rental
commitments with respect to such leases and lease commitments are as disclosed
in all material respects in the notes to the MFI Financial Statements.
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4.10.2. With respect to all material agreements pursuant to
which MFI or any MFI Subsidiary has purchased securities subject to an agreement
to resell, if any, MFI or such MFI Subsidiary, as the case may be, has a lien or
security interest (which to MFI's Knowledge is a valid, perfected first lien) in
the securities or other collateral securing the repurchase agreement, and the
value of such collateral equals or exceeds the amount of the debt secured
thereby.
4.10.3. MFI, Medford Co-operative, and each other Subsidiary of
MFI currently maintain insurance considered by each of them to be reasonable for
their respective operations. Neither MFI, Medford Co-operative, nor any other
Subsidiary of MFI, has received notice from any insurance carrier on or before
the date hereof that (i) such insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be substantially increased. There are presently
no material claims pending under such policies of insurance and no notices have
been given by MFI, Medford Co-operative, or any other Subsidiary of MFI under
such policies. All such insurance is valid and enforceable and in full force and
effect (other than insurance that expires in accordance with its terms), and
within the last three years MFI, Medford Co-operative, and each other Subsidiary
of MFI has received each type of insurance coverage for which it has applied and
during such periods has not been denied indemnification for any material claims
submitted under any of its insurance policies. MFI DISCLOSURE SCHEDULE 4.10.3
identifies all policies of insurance maintained by MFI, Medford Co-operative,
and each Subsidiary of MFI as well as the other matters required to be disclosed
under this Section 4.10.3.
4.11. LEGAL PROCEEDINGS.
Except as set forth in MFI DISCLOSURE SCHEDULE 4.11, neither MFI nor any
MFI Subsidiary is a party to any, and there are no pending or, to MFI's
Knowledge, threatened legal, administrative, arbitration or other proceedings,
claims (whether asserted or unasserted), actions or governmental investigations
or inquiries of any nature, (i) against MFI or any MFI Subsidiary, (ii) to which
MFI or any MFI Subsidiary's assets are or may be subject, (iii) challenging the
validity or propriety of any of the transactions contemplated by this Agreement,
or (iv) which would reasonably be expected to adversely affect the ability of
MFI to perform under this Agreement, except for any proceeding, claim, action,
investigation or inquiry which, if adversely determined, individually or in the
aggregate, could not be reasonably expected to have a Material Adverse Effect.
4.12. COMPLIANCE WITH APPLICABLE LAW.
4.12.1. To MFI's Knowledge, each of MFI and each MFI Subsidiary
is in compliance in all material respects with all applicable federal, state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable to it, its properties, assets and deposits, its
business, and its conduct of business and its relationship with its employees,
including, without limitation, the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (the
"USA PATRIOT Act") of 2001, the Equal Credit Opportunity Act, the Truth in
Lending Act, the Real Estate Settlement Procedures Act, the Consumer Credit
Protection Act, the Fair Credit Reporting Act, the Fair Debt Collections Act,
the Fair Housing Act, the Community Reinvestment Act of 1977 ("CRA"),
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the Home Mortgage Disclosure Act, and all other applicable fair lending laws and
other laws relating to discriminatory business practices, and neither MFI nor
any MFI Subsidiary has received any written notice to the contrary.
4.12.2. Each of MFI and each MFI Subsidiary has all material
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, all Governmental Entities and Bank
Regulators that are required in order to permit it to own or lease its
properties and to conduct its business as presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect and, to the Knowledge of MFI, no suspension or cancellation of any such
permit, license, certificate, order or approval is threatened or will result
from the consummation of the transactions contemplated by this Agreement,
subject to obtaining the approvals set forth in Section 8.3.
4.12.3. For the period beginning July 1, 2001, neither MFI nor
any MFI Subsidiary has received any written notification or, to MFI's Knowledge,
any other communication from any Bank Regulator (i) asserting that MFI or any
MFI Subsidiary is not in material compliance with any of the statutes,
regulations or ordinances which such Bank Regulator enforces; (ii) threatening
to revoke any license, franchise, permit or governmental authorization which is
material to MFI or any MFI Subsidiary; (iii) requiring or threatening to require
MFI or any MFI Subsidiary, or indicating that MFI or any MFI Subsidiary may be
required, to enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement with any federal or state governmental
agency or authority which is charged with the supervision or regulation of banks
or engages in the insurance of bank deposits restricting or limiting, or
purporting to restrict or limit, in any material respect the operations of MFI
or any MFI Subsidiary, including without limitation any restriction on the
payment of dividends; or (iv) directing, restricting or limiting, or purporting
to direct, restrict or limit, in any material manner the operations of MFI or
any MFI Subsidiary (any such notice, communication, memorandum, agreement or
order described in this sentence is hereinafter referred to as a "Regulatory
Agreement"). Neither MFI nor any MFI Subsidiary has consented to or entered into
any Regulatory Agreement that is currently in effect. The most recent regulatory
rating given to Medford Co-operative as to compliance with the CRA is
satisfactory or better.
4.13. EMPLOYEE BENEFIT PLANS.
4.13.1. MFI DISCLOSURE SCHEDULE 4.13.1 contains a descriptive
list of each compensation, consulting, employment, termination or collective
bargaining agreement, and each stock option, stock purchase, stock appreciation
right, recognition and retention, life, health, accident or other insurance,
bonus, deferred or incentive compensation, severance or separation agreement or
any agreement providing any payment or benefit resulting from a change in
control, profit sharing, retirement, or other employee benefit plan, practice,
policy or arrangement of any kind, oral or written, covering employees, former
employees, directors or former directors of MFI or each MFI Subsidiary or their
respective beneficiaries, including, but not limited to, any employee benefit
plans within the meaning of Section 3(3) of ERISA, which MFI or any MFI
Subsidiary maintains, to which MFI or any MFI Subsidiary contributes, or under
which any employee, former employee, director or former director of MFI or any
MFI Subsidiary is covered or has benefit rights and pursuant to which any
liability of MFI or any MFI Subsidiary exists or is reasonably likely to occur
(the "Compensation and Benefit Plans"). MFI
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has made available for inspection true and correct copies of the Compensation
and Benefit Plans, as well as current summary plan descriptions, trust
agreements, and insurance contracts, Internal Revenue Service Form 5500 (for the
three most recently completed plan years) and the most recent IRS determination
letters with respect thereto, and the loan agreement and related documents,
including any amendments thereto, evidencing any outstanding loan to an employee
stock ownership plan maintained by MFI or any MFI Subsidiary. Except as set
forth on MFI DISCLOSURE SCHEDULE 4.13.1, MFI neither maintains nor has entered
into any Compensation and Benefit Plan or other document, plan or agreement
which contains any change in control provisions which would cause an increase or
acceleration of benefits or benefit entitlements to employees or former
employees of MFI or any MFI Subsidiary or their respective beneficiaries, or
other provisions, which would cause an increase in the liability of MFI or any
MFI Subsidiary or to Brookline Bancorp as a result of the transactions
contemplated by this Agreement or any related action thereafter (a "Change in
Control Benefit"). The term "Compensation and Benefit Plans" as used herein
refers to all plans contemplated under the preceding sentences of this Section
4.13.1, provided that the term "Plan" or "Plans" is used in this Agreement for
convenience only and does not constitute an acknowledgment that a particular
arrangement is an employee benefit plan within the meaning of Section 3(3) of
ERISA. Neither MFI nor any MFI Subsidiary has been notified by any Governmental
Entity to modify or limit any payments or other compensation paid or payable by
MFI or any MFI Subsidiary under this Agreement, any Compensation and Benefit
Plan or otherwise, to or for the benefit of any employee or director of MFI or
any MFI Subsidiary and to the best knowledge of MFI, all such payments are in
compliance with all applicable rules, regulations and bulletins promulgated by
the Governmental Entities. Neither MFI nor any of its Subsidiaries has any
commitment to create any additional Compensation and Benefit Plan or to
materially modify, change or renew any existing Compensation and Benefit Plan
(any modification or change that increases the cost of such plans would be
deemed material), except as required to maintain the qualified status thereof.
4.13.2. Each of the Compensation and Benefit Plans that is
intended to be a pension, profit sharing, stock bonus, thrift, savings or
employee stock ownership plan that is qualified under Section 401(a) of the Code
("MFI Qualified Plans") has been determined by the Internal Revenue Service to
qualify under Section 401(a) of the Code (a copy of each such determination
letter is included on MFI DISCLOSURE SCHEDULE 4.13.2), and, to the best
knowledge of MFI, there exist no circumstances likely to materially adversely
affect the qualified status of any such MFI Qualified Plan. All such MFI
Qualified Plans established or maintained by MFI or each MFI Subsidiary or to
which MFI or any MFI Subsidiary contribute are in compliance in all material
respects with all applicable requirements of ERISA, and are in compliance in all
material respects with all applicable requirements (including qualification and
non-discrimination requirements in effect as of the Effective Time) of the Code
for obtaining the tax benefits the Code permits with respect to such MFI
Qualified Plans. Except as set forth on MFI DISCLOSURE SCHEDULE 4.13.2, no MFI
Qualified Plan is a defined benefit pension plan which is subject to Title IV of
ERISA. All accrued contributions and other payments required to be made by MFI
or each MFI Subsidiary to any Compensation and Benefit Plan through the date
hereof, have been made or reserves adequate for such purposes as of the date
hereof, have been set aside therefor and reflected in MFI consolidated financial
statements to the extent required by GAAP and MFI and its Subsidiaries have
expensed and accrued as a liability the present value of future benefits under
each applicable Compensation and Benefit Plan for
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financial reporting purposes to the extent required by GAAP. Neither MFI nor any
MFI Subsidiary is in material default in performing any of its respective
contractual obligations under any of Compensation and Benefit Plans or any
related trust agreement or insurance contract, and there are no material
outstanding liabilities of any such Plan other than liabilities for benefits to
be paid to participants in such Plan and their beneficiaries in accordance with
the terms of such Plan. Neither MFI nor any MFI Subsidiary has engaged in a
transaction, or omitted to take any action, with respect to any Compensation and
Benefit Plan that would reasonably be expected to subject MFI or any MFI
Subsidiary to an unpaid tax or penalty imposed by either Section 4975 of the
Code or Section 502 of ERISA.
4.13.3. Except as set forth in MFI DISCLOSURE SCHEDULE 4.13.3,
no liability, other than PBGC premiums arising in the ordinary course of
business, has been or is expected by MFI or any of its Subsidiaries to be
incurred with respect to any MFI Compensation and Benefit Plan which is a
defined benefit plan subject to Title IV of ERISA ("MFI Defined Benefit Plan"),
or with respect to any "single-employer plan" (as defined in Section 4001(a) of
ERISA) currently or formerly maintained by MFI or any entity which is considered
one employer with MFI under Section 4001(b)(1) of ERISA or Section 414 of the
Code (an "ERISA Affiliate") (such plan hereinafter referred to as an "ERISA
Affiliate Plan"). Except as set forth in MFI DISCLOSURE SCHEDULE 4.13.3, based
upon the report of MFI's third-party actuary and plan administrator, no MFI
Defined Benefit Plan had an "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, as of the last day of the end of
the most recent plan year ending prior to the date hereof. Except as set forth
in MFI DISCLOSURE SCHEDULE 4.13.3, the net fair market value of the assets of
each MFI Defined Benefit Plan exceeds the actuarial present value of the
accumulated plan benefits guaranteed under Section 4022 of ERISA as of the end
of the most recent plan year ending prior to the date hereof for which MFI has
completed actuarial reports that have been filed with the Internal Revenue
Service. There is not currently pending with the PBGC any filings with respect
to any reportable event under Section 4043 of ERISA nor has any reportable event
occurred as to which a filing is required and has not been made (other than as
might be required with respect to this Agreement and transactions contemplated
thereby). Except as set forth in MFI DISCLOSURE SCHEDULE 4.13.3, neither MFI nor
any ERISA Affiliate has contributed to any "multi-employer plan," as defined in
Section 3(37) of ERISA, on or after September 26, 1980. Except as set forth in
MFI DISCLOSURE SCHEDULE 4.13.3, neither MFI nor any of its Subsidiaries has
provided, or is required to provide, security to any MFI Defined Benefit Plan or
to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29)
of the Code or has taken any action, or omitted to take any action, that has
resulted, or would reasonably be expected to result in the imposition of a lien
under Section 412(n) of the Code or pursuant to ERISA. Except as set forth in
MFI DISCLOSURE SCHEDULE 4.13.3. neither MFI nor any ERISA Affiliate nor any MFI
Compensation and Benefit Plan, nor any trust created thereunder, nor any trustee
or administrator thereof has engaged in a transaction in connection with which
any of the aforesaid persons or entities would reasonably be expected to be
subject to either a civil liability or penalty pursuant to Section 409, 502(i)
or 502(l) of ERISA or a tax imposed pursuant to Chapter 43 of the Code. To the
Knowledge of MFI, and except as set forth in MFI DISCLOSURE SCHEDULE 4.13.3,
there is no pending investigation or enforcement action by any Bank Regulator
with respect to any Compensation and Benefit Plan or any ERISA Affiliate Plan.
There is no pending or, to the best knowledge of MFI, threatened litigation or
pending claim (other than individual benefit claims made in the ordinary course)
by or on behalf of or against
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any of Compensation and Benefit Plans (or with respect to the administration of
any of such Plans) now or heretofore maintained by MFI or any MFI Subsidiary
which allege violations of applicable state or federal law or the terms of the
Plan which are reasonably likely to result in a liability on the part of MFI or
any MFI Subsidiary or any such Plan.
4.13.4. Except as set forth in MFI DISCLOSURE SCHEDULE 4.13.4,
neither MFI nor any MFI Subsidiary has any obligations to provide retiree
health, life insurance, disability insurance, or other retiree death benefits
under any Compensation and Benefit Plan, other than benefits mandated by Section
4980B of the Code. Except as set forth in MFI DISCLOSURE SCHEDULE 4.13.4, there
has been no communication to employees by MFI or any MFI Subsidiary that would
reasonably be expected to preclude MFI (or Brookline Bancorp as successor to
MFI) from amending or terminating any obligations to its employees or former
employees with respect to retiree health, life insurance, disability insurance,
or other retiree death benefits.
4.13.5. All Compensation and Benefit Plans that are group
health plans have been operated in compliance with the group health plan
continuation requirements of Section 4980B of the Code and Sections 601-609 of
ERISA and with the certification of prior coverage and other requirements of
Sections 701-702 and 711-713 of ERISA.
4.13.6. Except as set forth in MFI DISCLOSURE SCHEDULE 4.13.6,
MFI and its Subsidiaries do not maintain any Compensation and Benefit Plans
covering employees who are not United States residents.
4.13.7. MFI DISCLOSURE SCHEDULE 4.13.7, lists and describes:
(i) each employee, officer and director of MFI and each MFI Subsidiary who is
eligible to receive a Change in Control Benefit, showing the amount of such
Change in Control Benefit for the individuals listed on MFI DISCLOSURE SCHEDULE
7.8.3; (ii) each other employee of MFI or any MFI Subsidiary who may be eligible
for a Change in Control Benefit, showing the date of hire of each such employee,
and his or her estimated salary for 2004 and bonus amount for 2003; as well as
his or her exempt status, (iii) the unpaid balance of any loans owing by the
Mystic ESOP to MFI or any party as of the date hereof (the "ESOP Loan") and the
number of unallocated shares of MFI Common Stock held by such trust; and (iv)
each employee, officer or director for whom a supplemental executive retirement,
salary continuation or deferred compensation plan or agreement is maintained,
showing the amounts due under each such plan or agreement and the payment
schedule thereof, and the amounts accrued in MFI Financial Statements with
respect thereto. Except as disclosed in MFI DISCLOSURE SCHEDULE 4.13.7, the
consummation of the Merger will not, directly or indirectly (including, without
limitation, as a result of any termination of employment or service at any time
prior to or following the Effective Time) (A) entitle any employee, consultant
or director to any payment or benefit (including severance pay, change in
control benefit, or similar compensation) or any increase in compensation, (B)
result in the vesting or acceleration of any benefits under any Compensation and
Benefit Plan or (C) result in any material increase in benefits payable under
any Compensation and Benefit Plan.
4.13.8. Except as disclosed in MFI DISCLOSURE SCHEDULE 4.13.8,
neither MFI nor any MFI Subsidiary maintains any compensation plans, programs or
arrangements
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under which any payment is reasonably likely to become non-deductible, in whole
or in part, for tax reporting purposes as a result of the limitations under
Section 162(m) of the Code and the regulations issued thereunder.
4.13.9. Except as set forth in MFI DISCLOSURE SCHEDULE 4.13.9,
the consummation of the Merger and/or the Bank Merger will not, directly or
indirectly (including without limitation, as a result of any termination of
employment or service at any time prior to or following the Effective Time),
entitle any current or former employee, director or independent contractor of
MFI or any MFI Subsidiary to any actual or deemed payment (or benefit) which
would reasonably be expected to constitute a "parachute payment" (as such term
is defined in Section 280G of the Code).
4.14. BROKERS, FINDERS AND FINANCIAL ADVISORS.
Neither MFI nor any MFI Subsidiary, nor any of their respective officers,
directors, employees or agents, has employed any broker, finder or financial
advisor in connection with the transactions contemplated by this Agreement, or
incurred any liability or commitment for any fees or commissions to any such
person in connection with the transactions contemplated by this Agreement except
for the retention of RBC Capital Markets ("RBC") by MFI and the fee payable
pursuant thereto. A true and correct copy of the engagement agreement with RBC,
setting forth the fee payable to RBC for its services rendered to MFI in
connection with the Merger and transactions contemplated by this Agreement, is
attached to MFI DISCLOSURE SCHEDULE 4.14.
4.15. ENVIRONMENTAL MATTERS.
4.15.1. Except as may be set forth in MFI DISCLOSURE SCHEDULE
4.15, with respect to MFI and each MFI Subsidiary:
(A) Each of MFI and the MFI Subsidiaries and, to MFI's
Knowledge, the Participation Facilities and the Loan Properties are, and have
been, in substantial compliance with, and are not liable under, any
Environmental Laws;
(B) MFI has received no written notice that there is
any suit, claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending and, to MFI's Knowledge, no such action is
threatened, before any court, governmental agency or other forum against it or
any of the MFI Subsidiaries or any Participation Facility (x) for alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (y) relating to the presence of or release into the
environment of any Materials of Environmental Concern (as defined herein),
whether or not occurring at or on a site owned, leased or operated by it or any
of the MFI Subsidiaries or any Participation Facility;
(C) MFI has received no written notice that there is
any suit, claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending and, to MFI's Knowledge no such action is
threatened, before any court, governmental agency or other forum relating to or
against any Loan Property (or MFI or any of the MFI Subsidiaries in respect of
such Loan Property) (x) relating to alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or (y) relating to
the presence of or
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release into the environment of any Materials of Environmental Concern, whether
or not occurring at or on a site owned, leased or operated by a Loan Property;
(D) To MFI's Knowledge, the properties currently owned
or operated by MFI or any MFI Subsidiary (including, without limitation, soil,
groundwater or surface water on, or under the properties, and buildings thereon)
are not contaminated with and do not otherwise contain any Materials of
Environmental Concern other than as permitted under applicable Environmental
Law;
(E) Neither MFI nor any MFI Subsidiary has received
any written notice, demand letter, executive or administrative order, directive
or request for information from any federal, state, local or foreign
governmental entity or any third party indicating that it may be in violation
of, or liable under, any Environmental Law;
(F) To MFI's Knowledge, there are no underground
storage tanks on, in or under any properties owned or operated by MFI or any of
the MFI Subsidiaries or any Participation Facility, and to MFI's Knowledge, no
underground storage tanks have been closed or removed from any properties owned
or operated by MFI or any of the MFI Subsidiaries or any Participation Facility;
and
(G) To MFI's Knowledge, during the period of (s) MFI's
or any of the MFI Subsidiaries' ownership or operation of any of their
respective current properties or (t) MFI's or any of the MFI Subsidiaries'
participation in the management of any Participation Facility, there has been no
contamination by or release of Materials of Environmental Concerns in, on, under
or affecting such properties that could reasonably be expected to result in
material liability under the Environmental Laws. To MFI's Knowledge, prior to
the period of (x) MFI's or any of the MFI Subsidiaries' ownership or operation
of any of their respective current properties or (y) MFI's or any of the MFI
Subsidiaries' participation in the management of any Participation Facility,
there was no contamination by or release of Materials of Environmental Concern
in, on, under or affecting such properties that could reasonably be expected to
result in material liability under the Environmental Laws.
(H) Neither MFI nor any other MFI Subsidiary has
conducted any environmental studies during the past ten years (other than Phase
I studies which did not indicate any contamination of the environment by
Materials of Environmental Concern) with respect to any properties owned or
leased by it or any of its Subsidiaries, or with respect to any Loan Property or
any Participation Facility.
4.15.2. "Loan Property" means any property in which the
applicable party (or a Subsidiary of it) holds a security interest, and, where
required by the context, includes the owner or operator of such property, but
only with respect to such property. "Participation Facility" means any facility
in which the applicable party (or a Subsidiary of it) participates in the
management (including all property held as trustee or in any other fiduciary
capacity) and, where required by the context, includes the owner or operator of
such property, but only with respect to such property.
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4.16. LOAN PORTFOLIO.
4.16.1. The allowance for loan losses reflected in the notes to
MFI's audited consolidated statement of financial condition at June 30, 2003
was, and the allowance for loan losses shown in the notes to the unaudited
consolidated financial statements in MFI's Securities Documents for periods
ending after June 30, 2003 were, or will be, adequate, as of the dates thereof,
under GAAP.
4.16.2. MFI DISCLOSURE SCHEDULE 4.16.2 sets forth a listing, as
of May 31, 2004, by account, of: (A) all loans (including loan participations)
of MFI or any other MFI Subsidiary that have been accelerated during the past
twelve months; (B) all loan commitments or lines of credit of MFI or any other
MFI Subsidiary which have been terminated by MFI or any other MFI Subsidiary
during the past twelve months by reason of a default or adverse developments in
the condition of the borrower or other events or circumstances affecting the
credit of the borrower; (C) all loans, lines of credit and loan commitments as
to which MFI or any other MFI Subsidiary has given written notice of its intent
to terminate during the past twelve months; (D) with respect to all commercial
loans (including commercial real estate loans), all notification letters and
other written communications from MFI or any other MFI Subsidiary to any of
their respective borrowers, customers or other parties during the past twelve
months wherein MFI or any other MFI Subsidiary has requested or demanded that
actions be taken to correct existing defaults or facts or circumstances which
may become defaults; (E) each borrower, customer or other party which has
notified Medford Co-operative or any other MFI Subsidiary during the past twelve
months of, or has asserted against Medford Co-operative, or any other MFI
Subsidiary, in each case in writing, any "lender liability" or similar claim,
and, to the knowledge of MFI or any MFI Subsidiary, each borrower, customer or
other party which has given Medford Co-operative, or any other MFI Subsidiary
any oral notification of, or orally asserted to or against Medford Co-operative,
or any other MFI Subsidiary, any such claim; and (F) all loans, (1) that are
contractually past due 90 days or more in the payment of principal and/or
interest, (2) that are on non-accrual status, (3) that as of May 31, 2004 are
classified as "Other Loans Specially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Watch list" or
words of similar import, together with the principal amount of and accrued and
unpaid interest on each such Loan and the identity of the obligor thereunder,
(4) where a reasonable doubt exists as to the timely future collectability of
principal and/or interest, whether or not interest is still accruing or the
loans are less than 90 days past due, (5) where the interest rate terms have
been reduced and/or the maturity dates have been extended subsequent to the
agreement under which the loan was originally created due to concerns regarding
the borrower's ability to pay in accordance with such initial terms, or (6)
where a specific reserve allocation exists in connection therewith; and (G) all
other assets classified by Medford Co-operative, or any other MFI Subsidiary as
real estate acquired through foreclosure or in lieu of foreclosure, including
in-substance foreclosures, and all other assets currently held that were
acquired through foreclosure or in lieu of foreclosure. DISCLOSURE SCHEDULE
4.16.2 may exclude any individual loan with a principal outstanding balance of
less than $50,000, provided that DISCLOSURE SCHEDULE 4.16.2 includes, for each
category described, the aggregate amount of individual loans with a principal
outstanding balance of less than $50,000 that has been excluded.
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4.16.3. All loans receivable (including discounts) and accrued
interest entered on the books of MFI and the MFI Subsidiaries arose out of bona
fide arm's-length transactions, were made for good and valuable consideration in
the ordinary course of MFI's or the appropriate MFI Subsidiary's respective
business, and the notes or other evidences of indebtedness with respect to such
loans (including discounts) are true and genuine and are what they purport to
be, except as set forth in MFI DISCLOSURE SCHEDULE 4.16.3. To the Knowledge of
MFI, the loans, discounts and the accrued interest reflected on the books of MFI
and the MFI Subsidiaries are subject to no defenses, set-offs or counterclaims
(including, without limitation, those afforded by usury or truth-in-lending
laws), except as may be provided by bankruptcy, insolvency or similar laws
affecting creditors' rights generally or by general principles of equity. Except
as set forth in MFI DISCLOSURE SCHEDULE 4.16.3, all such loans are owned by MFI
or the appropriate MFI Subsidiary free and clear of any liens.
4.16.4. The notes and other evidences of indebtedness
evidencing the loans described above, and all pledges, mortgages, deeds of trust
and other collateral documents or security instruments relating thereto are, in
all material respects, valid, true and genuine, and what they purport to be.
4.17. SECURITIES DOCUMENTS.
MFI has made available to Brookline Bancorp copies of its (i) annual
reports on Form 10-K for the years ended June 30, 2003, 2002 and 2001, (ii)
quarterly reports on Form 10-Q for the quarters ended September 30, 2003,
December 31, 2003 and March 31, 2004, and (iii) proxy materials used or for use
in connection with its meetings of stockholders held in 2003 and 2002. Such
reports, as amended, and proxy materials complied, at the time filed with the
SEC, in all material respects, with the Securities Laws.
4.18. RELATED PARTY TRANSACTIONS.
Except as described in MFI's proxy statement dated September 12, 2003 (the
"MFI Proxy Statement") distributed in connection with its annual meeting of
stockholders held on October 22, 2003 (which has previously been made available
to Brookline Bancorp), or as set forth in MFI DISCLOSURE SCHEDULE 4.18, neither
MFI nor any MFI Subsidiary is a party to any transaction (including any loan or
other credit accommodation) with any Affiliate of MFI or any MFI Subsidiary.
Except as described in the MFI Proxy Statement, all such transactions (a) were
made in the ordinary course of business, (b) were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other Persons, and (c) did not involve more
than the normal risk of collectability or present other unfavorable features. No
loan or credit accommodation to any Affiliate of MFI or any MFI Subsidiary is
presently in default or, during the three year period prior to the date of this
Agreement, has been in default or has been restructured, modified or extended
except for rate modifications pursuant to Medford Co-operative's loan
modification policy that is applicable to all Persons. Neither MFI nor any MFI
Subsidiary has been notified that principal or interest with respect to any such
loan or other credit accommodation will not be paid when due or that the loan
grade classification accorded such loan or credit accommodation by MFI is
inappropriate.
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4.19. DEPOSITS.
None of the deposits of any MFI Subsidiary is a "brokered deposit" as
defined in 12 C.F.R. Section 337.6(a)(2).
4.20. ANTITAKEOVER PROVISIONS INAPPLICABLE; REQUIRED VOTE.
The Board of Directors of MFI has, to the extent such statute is
applicable, taken all action (including appropriate approvals of the Board of
Directors of MFI) necessary to exempt Brookline Bancorp, the Merger, this
Agreement and the transactions contemplated hereby from Section 203 of the DGCL.
The affirmative vote of a majority of the issued and outstanding shares of MFI
Common Stock is required to approve this Agreement and the Merger under MFI's
certificate of incorporation (and no greater voting requirement is applicable by
reason of Article VIII of the Certificate of Incorporation) and the DGCL.
4.21. REGISTRATION OBLIGATIONS.
Neither MFI nor any MFI Subsidiary is under any obligation, contingent or
otherwise, which will survive the Effective Time by reason of any agreement to
register any transaction involving any of its securities under the Securities
Act.
4.22. RISK MANAGEMENT INSTRUMENTS.
All material interest rate swaps, caps, floors, option agreements, futures
and forward contracts and other similar risk management arrangements, whether
entered into for MFI's own account, or for the account of one or more of MFI's
Subsidiaries or their customers (all of which are set forth in MFI DISCLOSURE
SCHEDULE 4.22), were in all material respects entered into in compliance with
all applicable laws, rules, regulations and regulatory policies, and to the
Knowledge of MFI and each MFI Subsidiary, with counterparties believed to be
financially responsible at the time; and to MFI's and each MFI Subsidiary's
Knowledge each of them constitutes the valid and legally binding obligation of
MFI or such MFI Subsidiary, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and is in full force and effect. Neither MFI nor any MFI
Subsidiary, nor, to the Knowledge of MFI, any other party thereto, is in breach
of any of its obligations under any such agreement or arrangement in any
material respect.
4.23. FAIRNESS OPINION.
MFI has received an opinion from RBC to the effect that, subject to the
terms, conditions and qualifications set forth therein, as of the date hereof,
the Merger Consideration to be received by the stockholders of MFI pursuant to
this Agreement is fair to such stockholders from a financial point of view. Such
opinion has not been amended or rescinded as of the date of this Agreement.
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4.24. INTELLECTUAL PROPERTY.
MFI and each MFI Subsidiary owns or, to MFI's Knowledge, possesses valid
and binding licenses and other rights (subject to expirations in accordance with
their terms) to use all patents, copyrights, trade secrets, trade names,
servicemarks and trademarks used in their business, each without payment, and
neither MFI nor any MFI Subsidiary has received any notice of conflict with
respect thereto that asserts the rights of others. MFI and each Significant
Subsidiary of MFI have performed all the obligations required to be performed,
and are not in default in any respect, under any contract, agreement,
arrangement or commitment relating to any of the foregoing.
4.25. TRUST ACCOUNTS.
Neither MFI, nor any MFI Subsidiary conducts any trust business.
4.26. LABOR MATTERS.
There are no labor or collective bargaining agreements to which MFI or any
MFI Subsidiary is a party. To the Knowledge of MFI, there is no union organizing
effort pending or threatened against MFI or any MFI Subsidiary. There is no
labor strike, labor dispute (other than routine employee grievances that are not
related to union employees), work slowdown, stoppage or lockout pending or, to
the Knowledge of MFI, threatened against MFI or any MFI Subsidiary. There is no
unfair labor practice or labor arbitration proceeding pending or, to the
Knowledge of MFI, threatened against MFI or any MFI Subsidiary (other than
routine employee grievances that are not related to union employees). MFI and
each MFI Subsidiary is in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and are not engaged in any unfair
labor practice.
4.27. MFI INFORMATION SUPPLIED
The information relating to MFI and any MFI Subsidiary to be contained in
the Merger Registration Statement, or in any other document filed with any Bank
Regulator or other Governmental Entity in connection herewith, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading. The Merger Registration Statement will comply
with the provisions of the Exchange Act and the rules and regulations thereunder
and the provisions of the Securities Act and the rules and regulations
thereunder, except that no representation or warranty is made by MFI with
respect to statements made or incorporated by reference therein based on
information supplied by Brookline Bancorp specifically for inclusion or
incorporation by reference in the Merger Registration Statement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BROOKLINE BANCORP
Brookline Bancorp represents and warrants to MFI that the statements
contained in this Article V are correct as of the date of this Agreement and
will be correct as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this
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Agreement throughout this Article V), subject to the standard set forth in
Section 5.1 and except as set forth in the BROOKLINE BANCORP DISCLOSURE SCHEDULE
delivered by Brookline Bancorp to MFI on the date hereof, and except to any
representation of warranty which specifically relates to an earlier date, which
only need be so correct as of such earlier date. Brookline Bancorp has made a
good faith effort to ensure that the disclosure on each schedule of the
BROOKLINE BANCORP DISCLOSURE SCHEDULE corresponds to the section referenced
herein. However, for purposes of the BROOKLINE BANCORP DISCLOSURE SCHEDULE, any
item disclosed on any schedule therein is deemed to be fully disclosed with
respect to all schedules under which such item may be relevant as and to the
extent that it is reasonably clear on the face of such schedule that such item
applies to such other schedule. References to the Knowledge of Brookline Bancorp
shall include the Knowledge of Brookline Bank.
5.1. STANDARD.
No representation or warranty of Brookline Bancorp contained in this
Article V shall be deemed untrue or incorrect, and Brookline Bancorp shall not
be deemed to have breached a representation or warranty, as a consequence of the
existence of any fact, circumstance or event unless such fact, circumstance or
event, individually or taken together with all other facts, circumstances or
events inconsistent with any paragraph of Article V, has had or is reasonably
expected to have a Material Adverse Effect, disregarding for these purposes (x)
any qualification or exception for, or reference to, materiality in any such
representation or warranty and (y) any use of the terms "material",
"materially", "in all material respects", "Material Adverse Effect" or similar
terms or phrases in any such representation or warranty. The foregoing standard
shall not apply to representations and warranties contained in Sections 5.2
(other than the last sentence of Sections 5.2.1 and 5.2.2), 5.3 and 5.4, which
shall be deemed untrue, incorrect and breached if they are not true and correct
in all material respects.
5.2. ORGANIZATION.
5.2.1. Brookline Bancorp is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is duly registered as a savings and loan holding company under the HOLA.
Brookline Bancorp has full corporate power and authority to carry on its
business as now conducted and is duly licensed or qualified to do business in
the states of the United States and foreign jurisdictions where its ownership or
leasing of property or the conduct of its business requires such qualification.
5.2.2. Brookline Bank is a savings association duly organized,
validly existing and in good standing under Federal law. The deposits of
Brookline Bank are insured by the FDIC to the fullest extent permitted by law,
and all premiums and assessments required to be paid in connection therewith
have been paid when due. Brookline Bank is a member in good standing of the FHLB
and owns the requisite amount of stock therein.
5.2.3. BROOKLINE BANCORP DISCLOSURE SCHEDULE 5.2.3 sets forth
each Brookline Bancorp Subsidiary. Each Brookline Bancorp Subsidiary (other than
Brookline Bank) is a corporation or limited liability company duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization.
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5.2.4. The respective minute books of Brookline Bancorp and
each Brookline Bancorp Subsidiary accurately records, in all material respects,
all material corporate actions of their respective stockholders and boards of
directors (including committees).
5.2.5. Prior to the date of this Agreement, Brookline Bancorp
has made available to MFI true and correct copies of the certificate of
incorporation or charter and bylaws of Brookline Bancorp and Brookline Bank and
the Brookline Bancorp Subsidiaries.
5.3. CAPITALIZATION.
5.3.1. The authorized capital stock of Brookline Bancorp
consists of 200,000,000 shares of Brookline Bancorp Common Stock, of which
60,409,532 shares are outstanding, validly issued, fully paid and nonassessable
and free of preemptive rights, and 50,000,000 shares of preferred stock, $0.01
par value ("Brookline Bancorp Preferred Stock"), none of which are outstanding.
There are 1,335,299_ shares of Brookline Bancorp Common Stock held by Brookline
Bancorp as treasury stock. Neither Brookline Bancorp nor any Brookline Bancorp
Subsidiary has or is bound by any Rights of any character relating to the
purchase, sale or issuance or voting of, or right to receive dividends or other
distributions on any shares of Brookline Bancorp Common Stock, or any other
security of Brookline Bancorp or any securities representing the right to vote,
purchase or otherwise receive any shares of Brookline Bancorp Common Stock or
any other security of Brookline Bancorp, other than shares issuable under the
Brookline Bancorp Stock Benefit Plans.
5.3.2. Brookline Bancorp owns all of the capital stock of
Brookline Bank free and clear of any lien or encumbrance. Either Brookline
Bancorp or Brookline Bank owns all of the outstanding shares of capital stock of
each Brookline Bancorp Subsidiary free and clear of all liens, security
interests, pledges, charges, encumbrances, agreements and restrictions of any
kind or nature.
5.3.3. Except as set forth in BROOKLINE BANCORP DISCLOSURE
SCHEDULE 5.3.3, to the Knowledge of Brookline Bancorp, no Person is the
beneficial owner (as defined in Section 13(d) of the Exchange Act) of 5% or more
of the outstanding shares of Brookline Bancorp Common Stock.
5.3.4. No bonds, debentures, notes or other indebtedness
having the right to vote on any matters on which Brookline Bancorp's
stockholders may vote has been issued by Brookline Bancorp and are outstanding.
5.4. AUTHORITY; NO VIOLATION.
5.4.1. Brookline Bancorp has full corporate power and
authority to execute and deliver this Agreement and, subject to receipt of the
required Regulatory Approvals, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Brookline Bancorp and
the completion by Brookline Bancorp of the transactions contemplated hereby, up
to and including the Merger, have been duly and validly approved by the Board of
Directors of Brookline Bancorp, and no other corporate proceedings on the part
of Brookline Bancorp are necessary to complete the transactions contemplated
hereby, up to and including the Merger. This Agreement has been duly and validly
executed and delivered by
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Brookline Bancorp, and subject to the receipt of the Regulatory Approvals
described in Section 8.3 and approval by the stockholders of MFI and due and
valid execution and delivery of this Agreement by MFI, constitutes the valid and
binding obligations of Brookline Bancorp, enforceable against Brookline Bancorp
in accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity.
5.4.2. (A) The execution and delivery of this Agreement by
Brookline Bancorp, (B) subject to receipt of the Regulatory Approvals, and
compliance by MFI and Brookline Bancorp with any conditions contained therein,
and subject to the receipt of the approval of the stockholders of MFI, the
consummation of the transactions contemplated hereby, and (C) compliance by
Brookline Bancorp with any of the terms or provisions hereof will not (i)
conflict with or result in a breach of any provision of the certificate of
incorporation or bylaws of Brookline Bancorp or any Brookline Bancorp Subsidiary
or the charter and bylaws of Brookline Bank; (ii) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Brookline Bancorp or any Brookline Bancorp Subsidiary or any of
their respective properties or assets; or (iii) 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 Brookline
Bancorp, Brookline Bank or any Brookline Bancorp Subsidiary under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other investment or obligation to which any
of them is a party, or by which they or any of their respective properties or
assets may be bound or affected, except for such violations, conflicts, breaches
or defaults under clause (ii) or (iii) hereof which, either individually or in
the aggregate, will not have a Material Adverse Effect on Brookline Bancorp and
the Brookline Bancorp Subsidiaries taken as a whole.
5.5. CONSENTS.
Except for (a) the receipt of the Regulatory Approvals and compliance with
any conditions contained therein, (b) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware, (c) the filing with the
SEC of (i) the Merger Registration Statement and (ii) such reports under
Sections 13(a), 13(d), 13(g) and 16(a) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby and the
obtaining from the SEC of such orders as may be required in connection
therewith, (d) approval of the listing of Brookline Bancorp Common Stock to be
issued in the Merger on the Nasdaq, (e) such filings and approvals as are
required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of Brookline
Bancorp Common Stock pursuant to this Agreement, and (f) the approval of this
Agreement by the requisite vote of the stockholders of MFI, no consents, waivers
or approvals of, or filings or registrations with, any Governmental Entity or
Bank Regulator are necessary, and, to the Knowledge of Brookline Bancorp, no
consents, waivers or approvals of, or filings or registrations with, any other
third parties are necessary, in connection with (x) the execution and delivery
of this Agreement by Brookline Bancorp and the completion by Brookline Bancorp
of the Merger or (y) the execution and delivery of the Plan of Bank Merger and
the completion of
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the Bank Merger. Brookline Bancorp has no reason to believe that (i) any
Regulatory Approvals or other required consents or approvals will not be
received or will include the imposition of any condition or requirement that
could reasonably be expected by Brookline Bancorp to result in a Material
Adverse Effect on Brookline Bancorp and its Subsidiaries, taken as a whole, or
that (ii) any public body or authority having jurisdiction over affairs of
Brookline Bancorp, the consent or approval of which is not required or to which
a filing is not required, will object to the completion of the transactions
contemplated by this Agreement.
5.6. FINANCIAL STATEMENTS.
5.6.1. Brookline Bancorp has previously made available to MFI
the Brookline Bancorp Financial Statements covering periods ended prior to the
date hereof. The Brookline Bancorp Financial Statements have been prepared in
accordance with GAAP, and (including the related notes where applicable) fairly
present in each case in all material respects (subject in the case of the
unaudited interim statements to normal year-end adjustments) the consolidated
financial position, results of operations and cash flows of Brookline Bancorp
and the Brookline Bancorp Subsidiaries on a consolidated basis as of and for the
respective periods ending on the dates thereof, in accordance with GAAP during
the periods involved, except as indicated in the notes thereto, or in the case
of unaudited statements, as permitted by Form 10-Q.
5.6.2. At the date of each balance sheet included in the
Brookline Bancorp Financial Statements, Brookline Bancorp did not have any
liabilities, obligations or loss contingencies of any nature (whether absolute,
accrued, contingent or otherwise) of a type required to be reflected in such
Brookline Bancorp Financial Statements or in the footnotes thereto which are not
fully reflected or reserved against therein or fully disclosed in a footnote
thereto, except for liabilities, obligations and loss contingencies which are
not material individually or in the aggregate or which are incurred in the
ordinary course of business, consistent with past practice, and except for
liabilities, obligations and loss contingencies which are within the subject
matter of a specific representation and warranty herein and subject, in the case
of any unaudited statements, to normal, recurring audit adjustments and the
absence of footnotes.
5.7. TAXES.
Brookline Bancorp and the Brookline Bancorp Subsidiaries that are at least
80 percent owned by Brookline Bancorp are members of the same affiliated group
within the meaning of Code Section 1504(a). Brookline Bancorp has duly filed all
federal, state and material local tax returns required to be filed by or with
respect to Brookline Bancorp and each Subsidiary of Brookline Bancorp, taking
into account any extensions (all such returns, to the Knowledge of Brookline
Bancorp, being accurate and correct in all material respects) and has duly paid
or made provisions for the payment of all federal, state and material local
taxes which have been incurred by or are due or claimed to be due from Brookline
Bancorp and any Subsidiary of Brookline Bancorp by any taxing authority or
pursuant to any written tax sharing agreement other than taxes or other charges
which (i) are not delinquent, (ii) are being contested in good faith, or (iii)
have not yet been fully determined. As of the date of this Agreement, Brookline
Bancorp has received no notice of, and to the Knowledge of Brookline Bancorp,
there is no audit examination, deficiency assessment, tax investigation or
refund litigation with respect to any
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taxes of Brookline Bancorp or any of its Subsidiaries, and no claim has been
made by any taxing authority in a jurisdiction where Brookline Bancorp or any of
its Subsidiaries do not file tax returns that Brookline Bancorp or any such
Subsidiary is subject to taxation in that jurisdiction. Except as set forth in
BROOKLINE BANCORP DISCLOSURE SCHEDULE 5.7, Brookline Bancorp and its
Subsidiaries have not executed an extension or waiver of any statute of
limitations on the assessment or collection of any material tax due that is
currently in effect. Brookline Bancorp and each of its Subsidiaries has timely
withheld and paid all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party, and Brookline Bancorp and each of
its Subsidiaries, to the Knowledge of Brookline Bancorp, has timely complied
with all applicable information reporting requirements under Part III,
Subchapter A of Chapter 61 of the Code and similar applicable state and local
information reporting requirements.
5.8. NO MATERIAL ADVERSE EFFECT.
Except as disclosed in Brookline Bancorp's Securities Documents filed on or
prior to the date hereof, Brookline Bancorp and the Brookline Bancorp
Subsidiaries, taken as a whole, have not suffered any Material Adverse Effect
since December 31, 2003 and no event has occurred or circumstance arisen since
that date which, in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect on Brookline Bancorp and the Brookline Bancorp
Subsidiaries, taken as a whole.
5.9. OWNERSHIP OF PROPERTY; INSURANCE COVERAGE.
5.9.1. Brookline Bancorp and each Significant Subsidiary of
Brookline Bancorp has good and, as to real property, marketable title to all
material assets and properties owned by Brookline Bancorp or each Significant
Subsidiary of Brookline Bancorp in the conduct of its businesses, whether such
assets and properties are real or personal, tangible or intangible, including
assets and property reflected in the balance sheets contained in the Brookline
Bancorp Financial Statements or acquired subsequent thereto (except to the
extent that such assets and properties have been disposed of in the ordinary
course of business, since the date of such balance sheets), subject to no
material encumbrances, liens, mortgages, security interests or pledges, except
(i) those items which secure liabilities for public or statutory obligations or
any discount with, borrowing from or other obligations to FHLB, inter-bank
credit facilities, or any transaction by a Significant Subsidiary of Brookline
Bancorp acting in a fiduciary capacity, and (ii) statutory liens for amounts not
yet delinquent or which are being contested in good faith. Brookline Bancorp and
the Significant Subsidiaries of Brookline Bancorp, as lessee, have the right
under valid and subsisting leases of real and personal properties used by
Brookline Bancorp and the Significant Subsidiaries of Brookline Bancorp in the
conduct of their businesses to occupy or use all such properties as presently
occupied and used by each of them.
5.9.2. Brookline Bancorp and each Significant Subsidiary of
Brookline Bancorp currently maintain insurance considered by Brookline Bancorp
to be reasonable for their respective operations. Neither Brookline Bancorp nor
any Significant Subsidiary of Brookline Bancorp has received notice from any
insurance carrier on or before the date hereof that such insurance will be
canceled or that coverage thereunder will be reduced or eliminated.
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All such insurance is valid and enforceable and in full force and effect (other
than insurance that expires in accordance with its terms), and within the last
three years Brookline Bancorp and each Significant Subsidiary of Brookline
Bancorp has received each type of insurance coverage for which it has applied
and during such periods has not been denied indemnification for any material
claims submitted under any of its insurance policies.
5.10. LEGAL PROCEEDINGS.
Neither Brookline Bancorp nor any Brookline Bancorp Subsidiary is a party
to any, and there are no pending or, to the Knowledge of Brookline Bancorp,
threatened legal, administrative, arbitration or other proceedings, claims
(whether asserted or unasserted), actions or governmental investigations or
inquiries of any nature (i) against Brookline Bancorp or any Brookline Bancorp
Subsidiary, (ii) to which Brookline Bancorp or any Brookline Bancorp
Subsidiary's assets are or may be subject, (iii) challenging the validity or
propriety of any of the transactions contemplated by this Agreement, or (iv)
which would reasonably be expected to adversely affect the ability of Brookline
Bancorp to perform under this Agreement, except for any proceeding, claim,
action, investigation or inquiry which, if adversely determined, individually or
in the aggregate, could not be reasonably expected to have a Material Adverse
Effect.
5.11. COMPLIANCE WITH APPLICABLE LAW.
5.11.1. To the Knowledge of Brookline Bancorp, each of
Brookline Bancorp and each Brookline Bancorp Subsidiary is in compliance in all
material respects with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable to it, its properties, assets and deposits, its business, and its
conduct of business and its relationship with its employees, including, without
limitation, the USA PATRIOT Act, the Equal Credit Opportunity Act, the Truth in
Lending Act, the Real Estate Settlement Procedures Act, the Consumer Credit
Protection Act, the Fair Credit Reporting Act, the Fair Debt Collections Act,
the Fair Housing Act, the CRA, the Home Mortgage Disclosure Act, and all other
applicable fair lending laws and other laws relating to discriminatory business
practices, and neither Brookline Bancorp nor any Brookline Bancorp Subsidiary
has received any written notice to the contrary.
5.11.2. Each of Brookline Bancorp and each Brookline Bancorp
Subsidiary has all material permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations with, all
Governmental Entities and Bank Regulators that are required in order to permit
it to own or lease its properties and to conduct its business as presently
conducted; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the Knowledge of Brookline
Bancorp, no suspension or cancellation of any such permit, license, certificate,
order or approval is threatened or will result from the consummation of the
transactions contemplated by this Agreement, subject to obtaining the approvals
set forth in Section 8.3.
5.11.3. For the period beginning January 1, 2001, neither
Brookline Bancorp nor any Brookline Bancorp Subsidiary has received any written
notification or, to the Knowledge of Brookline Bancorp, any other communication
from any Bank Regulator (i) asserting that
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Brookline Bancorp or any Brookline Bancorp Subsidiary is not in material
compliance with any of the statutes, regulations or ordinances which such Bank
Regulator enforces; (ii) threatening to revoke any license, franchise, permit or
governmental authorization which is material to Brookline Bancorp or any
Brookline Bancorp Subsidiary; (iii) requiring or threatening to require
Brookline Bancorp or any Brookline Bancorp Subsidiary, or indicating that
Brookline Bancorp or any Brookline Bancorp Subsidiary may be required, to enter
into a cease and desist order, agreement or memorandum of understanding or any
other agreement with any federal or state governmental agency or authority which
is charged with the supervision or regulation of banks or engages in the
insurance of bank deposits restricting or limiting, or purporting to restrict or
limit, in any material respect the operations of Brookline Bancorp or any
Brookline Bancorp Subsidiary, including without limitation any restriction on
the payment of dividends; or (iv) directing, restricting or limiting, or
purporting to direct, restrict or limit, in any manner the operations of
Brookline Bancorp or any Brookline Bancorp Subsidiary, including without
limitation any restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this sentence is
hereinafter referred to as a "Regulatory Agreement"). Neither Brookline Bancorp
nor any Brookline Bancorp Subsidiary has consented to or entered into any
currently effective Regulatory Agreement. The most recent regulatory rating
given to Brookline Bank as to compliance with the CRA is satisfactory or better.
5.12. EMPLOYEE BENEFIT PLANS.
5.12.1. BROOKLINE BANCORP DISCLOSURE SCHEDULE 5.12.1 includes a
list of all Compensation and Benefit Plans sponsored by Brookline Bancorp or any
of its Subsidiaries. "Compensation and Benefit Plans" as used herein shall have
the same meaning as set forth in Section 4.13.1, substituting the name of
Brookline Bancorp for MFI wherever used therein. Neither Brookline Bancorp nor
any of its Subsidiaries has been notified by any Governmental Entity to modify
or limit any payments or other compensation paid or payable by Brookline Bancorp
or any of its Subsidiaries under this Agreement, any Compensation and Benefit
Plan or otherwise, to or for the benefit of any employee or director of
Brookline Bancorp or any of its Subsidiaries and to the best knowledge of
Brookline Bancorp, all such payments are in compliance with all applicable
rules, regulations and bulletins promulgated by the any Governmental Entities.
Neither Brookline Bancorp nor any of its Subsidiaries has any commitment to
create any additional Compensation and Benefit Plan or to materially modify,
change or renew any existing Compensation and Benefit Plan (any modification or
change that increases the cost of such plans would be deemed material), except
as required to maintain the qualified status thereof, Brookline Bancorp has made
available to MFI true and correct copies of the Brookline Bancorp Compensation
and Benefit Plans.
5.12.2. Each of the Compensation and Benefit Plans that is
intended to be a pension, profit sharing, stock bonus, thrift, savings or
employee stock ownership plan that is qualified under Section 401(a) of the Code
("Brookline Bancorp Qualified Plans") has been determined by the Internal
Revenue Service to qualify under Section 401(a) of the Code (a copy of each such
determination letter is included on BROOKLINE BANCORP DISCLOSURE SCHEDULE
5.12.2), and, to the best knowledge of Brookline Bancorp, there exist no
circumstances likely to materially adversely affect the qualified status of any
such Brookline Bancorp Qualified Plan. All such Brookline Bancorp Qualified
Plans established or maintained
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by Brookline Bancorp or each Brookline Bancorp Subsidiary or to which Brookline
Bancorp or any Brookline Bancorp Subsidiary contribute are in compliance in all
material respects with all applicable requirements of ERISA, and are in
compliance in all material respects with all applicable requirements (including
qualification and non-discrimination requirements in effect as of the Effective
Time) of the Code for obtaining the tax benefits the Code permits with respect
to such Brookline Bancorp Qualified Plans. Except as set forth on BROOKLINE
BANCORP DISCLOSURE SCHEDULE 5.12.2, no Brookline Bancorp Qualified Plan is a
defined benefit pension plan which is subject to Title IV of ERISA. All accrued
contributions and other payments required to be made by Brookline Bancorp or
each Brookline Bancorp Subsidiary to any Compensation and Benefit Plan through
the date hereof, have been made or reserves adequate for such purposes as of the
date hereof, have been set aside therefor and reflected in Brookline Bancorp's
consolidated financial statements to the extent required by GAAP and Brookline
Bancorp and its Subsidiaries have expensed and accrued as a liability the
present value of future benefits under each applicable Compensation and Benefit
Plan for financial reporting purposes to the extent required by GAAP. Neither
Brookline Bancorp nor any Brookline Bancorp Subsidiary is in material default in
performing any of its respective contractual obligations under any Compensation
and Benefit Plans or any related trust agreement or insurance contract, and
there are no material outstanding liabilities of any such Plan other than
liabilities for benefits to be paid to participants in such Plan and their
beneficiaries in accordance with the terms of such Plan. Neither Brookline
Bancorp nor any of its Subsidiaries has engaged in a transaction, or omitted to
take any action, with respect to any Compensation and Benefit Plan that would
reasonably be expected to subject Brookline Bancorp or any of its Subsidiaries
to an unpaid tax or penalty imposed by either Section 4975 of the Code or
Section 502 of ERISA.
5.12.3. No liability, other than PBGC premiums arising in the
ordinary course of business, has been or is expected by Brookline Bancorp or any
of its Subsidiaries to be incurred with respect to any Compensation and Benefit
Plan which is a defined benefit plan subject to Title IV of ERISA ("Brookline
Bancorp Defined Benefit Plan"), or with respect to any "single-employer plan"
(as defined in Section 4001(a) of ERISA) currently or formerly maintained by
Brookline Bancorp or any entity which is considered one employer with Brookline
Bancorp under Section 4001(b)(1) of ERISA or Section 414 of the Code (an "ERISA
Affiliate") (such plan hereinafter referred to as an "ERISA Affiliate Plan"). No
Brookline Bancorp Defined Benefit Plan had an "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived, as of the last day
of the end of the most recent plan year ending prior to the date hereof. The net
fair market value of the assets of each Brookline Bancorp Defined Benefit Plan
exceeds the actuarial present value of the accumulated plan benefits guaranteed
under Section 4022 of ERISA as of the end of the most recent plan year ending
prior to the date hereof for which Brookline Bancorp has completed actuarial
reports that have been filed with the Internal Revenue Service. There is not
currently pending with the PBGC any filings with respect to any reportable event
under Section 4043 of ERISA nor has any reportable event occurred as to which a
filing is required and has not been made (other than as might be required with
respect to this Agreement and transactions contemplated thereby). Neither
Brookline Bancorp nor any ERISA Affiliate has contributed to any "multi-employer
plan," as defined in Section 3(37) of ERISA, on or after September 26, 1980.
Neither Brookline Bancorp nor any of its Subsidiaries has provided, or is
required to provide, security to any Brookline Bancorp Defined Benefit Plan or
to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29)
of the Code
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or has taken any action, or omitted to take any action, that has resulted, or
would reasonably be expected to result in the imposition of a lien under Section
412(n) of the Code or pursuant to ERISA. Neither Brookline Bancorp nor any ERISA
Affiliate nor any Brookline Bancorp Compensation and Benefit Plan, nor any trust
created thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which any of the aforesaid persons or entities
would reasonably be expected to be subject to either a civil liability or
penalty pursuant to Section 409, 502(i) or 502(l) of ERISA or a tax imposed
pursuant to Chapter 43 of the Code. To the Knowledge of Brookline Bancorp, there
is no pending investigation or enforcement action by any Bank Regulator with
respect to any Compensation and Benefit Plan or any ERISA Affiliate Plan. There
is no pending or, to the best knowledge of Brookline Bancorp, threatened
litigation or pending claim (other than individual benefit claims made in the
ordinary course) by or on behalf of or against any of Compensation and Benefit
Plans (or with respect to the administration of any of such Plans) now or
heretofore maintained by Brookline Bancorp or any Brookline Bancorp Subsidiary
which allege violations of applicable state or federal law or the terms of the
Plan which are reasonably likely to result in a liability on the part of
Brookline Bancorp or any of its Subsidiaries or any such Plan.
5.12.4. All Compensation and Benefit Plans that are group
health plans have been operated in compliance with the group health plan
continuation requirements of Section 4980B of the Code and Sections 601-609 of
ERISA and with the certification of prior coverage and other requirements of
Sections 701-702 and 711-713 of ERISA.
5.13. ENVIRONMENTAL MATTERS.
5.13.1. To the Knowledge of Brookline Bancorp, neither the
conduct nor operation of their business nor any condition of any property
currently or previously owned or operated by any of them (including, without
limitation, in a fiduciary or agency capacity), or on which any of them holds a
lien, results or resulted in a violation of any Environmental Laws that is
reasonably likely to impose a material liability (including a material
remediation obligation) upon Brookline Bancorp or any of Brookline Bancorp
Subsidiary. To the Knowledge of Brookline Bancorp, no condition has existed or
event has occurred with respect to any of them or any such property that, with
notice or the passage of time, or both, is reasonably likely to result in any
material liability to Brookline Bancorp or any Brookline Bancorp Subsidiary by
reason of any Environmental Laws. Neither Brookline Bancorp nor any Brookline
Bancorp Subsidiary has received any written notice from any Person that
Brookline Bancorp or any Brookline Bancorp Subsidiary or the operation or
condition of any property ever owned, operated, or held as collateral or in a
fiduciary capacity by any of them are currently in violation of or otherwise are
alleged to have financial exposure under any Environmental Laws or relating to
Materials of Environmental Concern (including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any Materials of Environmental Concern at, on, beneath, or
originating from any such property) for which a material liability is reasonably
likely to be imposed upon Brookline Bancorp or any Brookline Bancorp Subsidiary.
5.13.2. There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to the
Brookline Bancorp's Knowledge, threatened, before any court, governmental agency
or other forum against Brookline Bancorp or any Brookline Bancorp Subsidiary (x)
for alleged noncompliance (including by any predecessor)
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with, or liability under, any Environmental Law or (y) relating to the presence
of or release into the environment of any Materials of Environmental Concern (as
defined herein), whether or not occurring at or on a site owned, leased or
operated by any of the Brookline Bancorp.
5.14. LOAN PORTFOLIO.
5.14.1. The allowance for loan losses reflected in Brookline
Bancorp's audited consolidated statement of condition at December 31, 2003 was,
and the allowance for loan losses shown on the balance sheets in Brookline
Bancorp's Securities Documents for periods ending after December 31, 2003 were
or will be, adequate, as of the dates thereof, under GAAP.
5.14.2. BROOKLINE BANCORP DISCLOSURE SCHEDULE 5.14.2 sets forth
a listing, as of the most recently available date, all loans of Brookline
Bancorp and any Brookline Bancorp Subsidiary (1) that are contractually past due
90 days or more in the payment of principal and/or interest, (2) that are on
non-accrual status, (3) that as of the date of this Agreement are classified as
"Other Loans Specially Mentioned", "Special Mention", "Substandard", "Doubtful",
"Loss", "Classified", "Criticized", "Watch list" or words of similar import,
together with the principal amount of and accrued and unpaid interest on each
such Loan and the identity of the obligor thereunder, (4) where a reasonable
doubt exists as to the timely future collectability of principal and/or
interest, whether or not interest is still accruing or the loans are less than
90 days past due, (5) where the interest rate terms have been reduced and/or the
maturity dates have been extended subsequent to the agreement under which the
loan was originally created due to concerns regarding the borrower's ability to
pay in accordance with such initial terms, or (6) where a specific reserve
allocation exists in connection therewith; and all assets classified by
Brookline Bancorp or any Brookline Bancorp Subsidiary as real estate acquired
through foreclosure or in lieu of foreclosure, including in-substance
foreclosures, and all other assets currently held that were acquired through
foreclosure or in lieu of foreclosure. DISCLOSURE SCHEDULE 5.14.2 may exclude
any individual loan with a principal outstanding balance of less than $100,000.
5.14.3. All loans receivable (including discounts) and accrued
interest entered on the books of Brookline Bancorp and each Brookline Bancorp
Subsidiary arose out of bona fide arm's-length transactions, were made for good
and valuable consideration in the ordinary course of business, and the notes or
other evidences of indebtedness with respect to such loans (including discounts)
are true and genuine and are what they purport to be.
5.14.4. The notes and other evidences of indebtedness
evidencing the loans described above, and all pledges, mortgages, deeds of trust
and other collateral documents or security instruments relating thereto are, in
all material respects, valid, true and genuine, and what they purport to be.
5.15. SECURITIES DOCUMENTS.
Brookline Bancorp has made available to MFI copies of its (i) annual report
on Form 10-K for the year ended December 31, 2003, (ii) quarterly report on Form
10-Q for the quarter ended March 31, 2004 and (iii) proxy materials used or for
use in connection with its meeting of
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stockholders held in 2004. Such reports and such proxy materials complied, at
the time filed with the SEC, in all material respects, with the Securities Laws.
5.16. DEPOSITS.
None of the deposits of any Brookline Bancorp Subsidiary is a "brokered
deposit" as defined in 12 C.F.R. Section 337.6(a)(2).
5.17. ANTITAKEOVER PROVISIONS INAPPLICABLE.
The transactions contemplated by this Agreement are not subject to the
requirements of any "moratorium," "control share," "fair price," "affiliate
transactions," "business combination" or other antitakeover laws and regulations
of any state, including the provisions of Section 203 of the DGCL applicable to
Brookline Bancorp or any Brookline Bancorp Subsidiary.
5.18. BROKERS, FINDERS AND FINANCIAL ADVISORS.
Neither Brookline Bancorp nor any Brookline Bancorp Subsidiary, nor any of
their respective officers, directors, employees or agents, has employed any
broker, finder or financial advisor in connection with the transactions
contemplated by this Agreement, or incurred any liability or commitment for any
fees or commissions to any such person in connection with the transactions
contemplated by this Agreement, except for the retention of Ryan Beck & Co. by
Brookline Bancorp and the fee payable pursuant thereto.
5.19. BROOKLINE BANCORP COMMON STOCK
The shares of Brookline Bancorp Common Stock to be issued pursuant to this
Agreement, when issued in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and non-assessable and subject to no
preemptive rights.
5.20. MATERIAL CONTRACTS; LEASES, DEFAULTS.
Neither Brookline Bancorp nor any Brookline Bancorp Subsidiary is a party
to or subject to: (i) any collective bargaining agreement with any labor union
relating to employees of Brookline Bancorp or any Brookline Bancorp Subsidiary;
nor (ii) any agreement which by its terms limits the payment of dividends by
Brookline Bancorp or any Brookline Bancorp Subsidiary.
5.21. BROOKLINE BANCORP INFORMATION SUPPLIED.
The information relating to Brookline Bancorp and any Brookline Bancorp
Subsidiary to be contained in the Merger Registration Statement, or in any other
document filed with any Bank Regulator or other Governmental Entity in
connection herewith, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading. The Merger
Registration Statement will comply with the provisions of the Exchange Act and
the rules and regulations thereunder and the provisions of the Securities Act
and the rules and regulations thereunder, except that no representation or
warranty is made by Brookline Bancorp with respect
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to statements made or incorporated by reference therein based on information
supplied by MFI specifically for inclusion or incorporation by reference in the
Merger Registration Statement.
ARTICLE VI
COVENANTS OF MFI
6.1. CONDUCT OF BUSINESS.
6.1.1. AFFIRMATIVE COVENANTS. During the period from the date
of this Agreement to the Effective Time, except with the written consent of
Brookline Bancorp, which consent will not be unreasonably withheld, conditioned
or delayed, MFI will, and it will cause each MFI Subsidiary to: operate its
business only in the usual, regular and ordinary course of business; use
reasonable efforts to preserve intact its business organization and assets and
maintain its rights and franchises; and voluntarily take no action which would:
(i) adversely affect the ability of the parties to obtain the Regulatory
Approvals or materially increase the period of time necessary to obtain the
Regulatory Approvals, or (ii) adversely affect its ability to perform its
covenants and agreements under this Agreement.
6.1.2. NEGATIVE COVENANTS. MFI agrees that from the date of
this Agreement to the Effective Time, except as otherwise specifically permitted
or required by this Agreement, set forth in MFI DISCLOSURE SCHEDULE 6.1.2, or
consented to by Brookline Bancorp in writing (which consent shall not be
unreasonably withheld, conditioned or delayed), it will not, and it will cause
each of the MFI Subsidiaries not to:
(A) change or waive any provision of its Certificate
of Incorporation, Charter or Bylaws, except as required by law;
(B) change the number of authorized or issued shares
of its capital stock, issue any shares of MFI Common Stock that are held as
Treasury Shares as of the date of this Agreement, or issue or grant any Right or
agreement of any character relating to its authorized or issued capital stock or
any securities convertible into shares of such stock, make any grant or award
under the MFI Stock Benefit Plans, or split, combine or reclassify any shares of
capital stock, or declare, set aside or pay any dividend or other distribution
in respect of capital stock, or redeem or otherwise acquire any shares of
capital stock, except that (i) MFI may issue shares of MFI Common Stock upon the
valid exercise, in accordance with the information set forth in MFI DISCLOSURE
SCHEDULE 4.3.1, of presently outstanding MFI Options issued under the MFI Stock
Benefit Plans, (ii) MFI may continue to pay its regular quarterly cash dividend
of $0.115 per share with payment and record dates consistent with past practice
(provided the declaration of the last quarterly dividend by MFI prior to the
Effective Time and the payment thereof shall be coordinated with Brookline
Bancorp so that holders of MFI Common Stock do not receive dividends on both MFI
Common Stock and Brookline Bancorp Common Stock received in the Merger in
respect of such quarter or fail to receive a dividend on at least one of the MFI
Common Stock or Brookline Bancorp Common Stock received in the Merger in respect
of such quarter), (iii) any MFI Subsidiary may pay dividends to its parent
company (as permitted under applicable law or regulations).
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(C) enter into, amend in any material respect or
terminate any material contract or agreement (including without limitation any
settlement agreement with respect to litigation) except in the ordinary course
of business;
(D) other than as set forth in MFI DISCLOSURE SCHEDULE
6.1.2(D), make application for the opening or closing of any, or open or close
any, branch or automated banking facility;
(E) grant or agree to pay any bonus, severance or
termination to, or enter into, renew or amend any employment agreement,
severance agreement and/or supplemental executive agreement with, or increase in
any manner the compensation or fringe benefits of, any of its directors,
officers or employees, except (i) as may be required pursuant to commitments
existing on the date hereof and set forth on MFI DISCLOSURE SCHEDULES 4.9.1 and
4.13.1 or as required pursuant to Section 7.8 of this Agreement, (ii) as to
non-management employees, merit pay increases, of no more than 5% individually,
in the ordinary course of business consistent with past practices, (iii) with
respect to severance or termination pay or benefits, pursuant to terminations of
employment in the ordinary course of business consistent with past practice,
(iv) the payment by MFI or Medford Co-operative immediately prior to the
Effective Time of bonuses for services rendered during calendar 2004, to the
extent that these bonuses are accrued in accordance with GAAP and provided that
such bonuses are consistent, as to amount (individually and in the aggregate)
and persons covered, with past practice, and (v) as otherwise contemplated by
this Agreement. Neither MFI nor any MFI Subsidiary shall hire or promote any
employee to a rank having a title of vice president or other more senior rank or
hire any new employee at an annual rate of compensation in excess of $50,000,
provided that a MFI Subsidiary may hire at-will, non-officer employees to fill
vacancies that may from time to time arise in the ordinary course of business;
(F) enter into or, except as may be required by law,
materially modify any pension, retirement, stock option, stock purchase, stock
appreciation right, stock grant, savings, profit sharing, deferred compensation,
supplemental retirement, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement related thereto, in respect of any of its directors, officers or
employees; or make any contributions to any defined contribution or defined
benefit plan not in the ordinary course of business consistent with past
practice, except (i) as may be required by applicable law, or (ii) as otherwise
contemplated by this Agreement;
(G) merge or consolidate MFI or any MFI Subsidiary
with any other corporation; sell or lease all or any substantial portion of the
assets or business of MFI or any MFI Subsidiary; make any acquisition of all or
any substantial portion of the business or assets of any other Person other than
in connection with foreclosures, settlements in lieu of foreclosure, troubled
loan or debt restructuring, or the collection of any loan or credit arrangement
between MFI, or any MFI Subsidiary, and any other Person; enter into a purchase
and assumption transaction with respect to deposits and liabilities; incur
deposit liabilities, other than liabilities incurred in the ordinary course of
business consistent with past practice and in keeping with prevailing
competitive rates; permit the revocation or surrender by any MFI Subsidiary of
its certificate of authority to maintain, or file an application for the
relocation of, any existing branch office, or file an application for a
certificate of authority to establish a new branch office;
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(H) except as permitted by Section 6.1.2(B) sell or
otherwise dispose of the capital stock of MFI or sell or otherwise dispose of
any asset of MFI or of any MFI Subsidiary other than in the ordinary course of
business consistent with past practice; except for transactions with the FHLB,
subject any asset of MFI or of any MFI Subsidiary to a lien, pledge, security
interest or other encumbrance (other than in connection with deposits,
repurchase agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business, including pledges in connection
with acceptance of governmental deposits, and transactions in "federal funds"
and the satisfaction of legal requirements in the exercise of trust powers)
other than in the ordinary course of business consistent with past practice;
incur any indebtedness for borrowed money (or guarantee any indebtedness for
borrowed money), except in the ordinary course of business consistent with past
practice;
(I) take any action which would be reasonably expected
to result in any of the representations and warranties of MFI set forth in this
Agreement becoming untrue as of any date after the date hereof or in any of the
conditions set forth in Article IX hereof not being satisfied, except in each
case as may be required by applicable law;
(J) change its method, practice or principle of
accounting, except as may be required from time to time by GAAP (without regard
to any optional early adoption date) or any Bank Regulator responsible for
regulating MFI or Medford Co-operative or regulatory accounting principles;
(K) waive, release, grant or transfer any material
rights of value or modify or change in any material respect any existing
material agreement or indebtedness to which MFI or any MFI Subsidiary is a
party;
(L) purchase any equity securities, or purchase any
other securities except securities (i) rated "A" or higher by either Standard &
Poor's Ratings Services or Moody's Investors Service, (ii) having a face amount
of not more than $1,000,000, (iii) with a weighted average life of not more than
two years and (iv) otherwise in the ordinary course of business consistent with
past practice;
(M) except as specifically provided below, and except
for commitments issued prior to the date of this Agreement which have not yet
expired and which have been disclosed on the MFI DISCLOSURE SCHEDULE 6.1.2(M),
and the renewal of existing lines of credit, make any new loan or other credit
facility commitment (including without limitation, loan participations, lines of
credit and letters of credit) to any borrower or group of affiliated borrowers
in excess of $200,000 in the aggregate for unsecured loans and $500,000 in the
aggregate for secured loans. In addition, the following require the prior
consent of Brookline Bancorp: a residential loan of $500,000 or greater (except
for residential loans sold as to which there is an agreement to sell on a
non-recourse basis); a construction loan of $500,000 or greater; an unsecured
loan of $25,000 or greater; a secured commercial business loan of $250,000 or
greater; and a commercial real estate loan of $500,000 or greater; or purchase,
invest in or originate any finance lease or any loan secured by a lease of
personal property;
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(N) except as set forth on the MFI DISCLOSURE SCHEDULE
6.1.2(N), enter into, renew, extend or modify any other transaction (other than
a deposit transaction) with any Affiliate;
(O) enter into any futures contract, option, interest
rate caps, interest rate floors, interest rate exchange agreement or other
agreement or take any other action for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in market
rates of interest;
(P) except for the execution of this Agreement, and
actions taken or which will be taken in accordance with this Agreement and
performance thereunder, take any action that would give rise to a right of
payment to any individual under any employment agreement;
(Q) except as set forth in MFI DISCLOSURE SCHEDULE
6.1.2(Q), make any change in policies in existence on the date of this Agreement
with regard to: the extension of credit, or the establishment of reserves with
respect to the possible loss thereon or the charge off of losses incurred
thereon; investments; asset/liability management; or other material banking
policies in any material respect except as may be required by changes in
applicable law or regulations, GAAP or regulatory accounting principles or by a
Bank Regulator;
(R) except for the execution of this Agreement, and
the transactions contemplated therein, take any action that would give rise to
an acceleration of the right to payment to any individual under any MFI
Compensation and Benefit Plan;
(S) except as set forth in MFI DISCLOSURE SCHEDULE
6.1.2(S), make any capital expenditures in excess of $25,000 individually or
$50,000 in the aggregate, other than pursuant to binding commitments existing on
the date hereof and other than expenditures necessary to maintain existing
assets in good repair;
(T) except as set forth in MFI DISCLOSURE SCHEDULE
6.1.2(T), purchase or otherwise acquire, or sell or otherwise dispose of, any
assets or incur any liabilities other than in the ordinary course of business
consistent with past practices and policies;
(U) sell any participation interest in any loan (other
than sales of loans secured by one- to four-family real estate that are
consistent with past practice and other than as listed on MFI DISCLOSURE
SCHEDULE 6.1.2(v)) unless Brookline Bank has been given the first opportunity
and a reasonable time to purchase any loan participation being sold, or purchase
any participation interest in any loan other than purchases of participation
interests from Brookline Bancorp;
(V) except as set forth in MFI DISCLOSURE SCHEDULE
6.1.2(V), undertake or enter into any lease, contract or other commitment for
its account, other than in the normal course of providing credit to customers as
part of its banking business, involving a payment by MFI or any MFI Subsidiary
of more than $100,000 annually, or containing any financial commitment extending
beyond 12 months from the date hereof;
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(W) pay, discharge, settle or compromise any claim,
action, litigation, arbitration or proceeding, other than any such payment,
discharge, settlement or compromise in the ordinary course of business
consistent with past practice that involves solely money damages in the amount
not in excess of $25,000 individually or $50,000 in the aggregate, and that does
not create negative precedent for other pending or potential claims, actions,
litigation, arbitration or proceedings;
(X) foreclose upon or take a deed or title to any
commercial real estate without first conducting a Phase I environmental
assessment of the property or foreclose upon any commercial real estate if such
environmental assessment indicates the presence of a Materials of Environmental
Concern;
(Y) purchase or sell any mortgage loan servicing
rights other than in the ordinary course of business consistent with past
practice;
(Z) issue any broadly distributed communication of a
general nature to employees (including general communications relating to
benefits and compensation) without prior consultation with Brookline Bancorp
and, to the extent relating to post-Closing employment, benefit or compensation
information without the prior consent of Brookline Bancorp (which shall not be
unreasonably withheld, conditioned or delayed) or issue any broadly distributed
communication of a general nature to customers without the prior approval of
Brookline Bancorp (which shall not be unreasonably withheld), except as required
by law or for communications in the ordinary course of business consistent with
past practice that do not relate to the Merger or other transactions
contemplated hereby; or
(AA) agree to do any of the foregoing.
6.2. CURRENT INFORMATION.
6.2.1. During the period from the date of this Agreement to
the Effective Time, MFI will cause one or more of its representatives to confer
with representatives of Brookline Bancorp and report the general status of its
ongoing operations at such times as Brookline Bancorp may reasonably request.
MFI will promptly notify Brookline Bancorp of any material change in the normal
course of its business or in the operation of its properties and, to the extent
permitted by applicable law, 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 MFI or any MFI
Subsidiary. Without limiting the foregoing, senior officers of Brookline Bancorp
and MFI shall meet on a reasonably regular basis (expected to be at least
monthly) to review the financial and operational affairs of MFI and its
Subsidiaries, in accordance with applicable law, and MFI shall give due
consideration to Brookline Bancorp's input on such matters, with the
understanding that, notwithstanding any other provision contained in this
Agreement, neither Brookline Bancorp nor any Brookline Bancorp Subsidiary shall
under any circumstance be permitted to exercise control of MFI or any MFI
Subsidiary prior to the Effective Time.
6.2.2. Medford Co-operative and Brookline Bank shall meet on a
regular basis to discuss and plan for the conversion of data processing and
related electronic informational
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systems of Medford Co-operative to those used by Brookline Bank, which planning
shall include, but not be limited to, discussion of the possible termination by
Medford Co-operative of third-party service provider arrangements effective at
the Effective Time or at a date thereafter, non-renewal of personal property
leases and software licenses used by Medford Co-operative in connection with its
systems operations, retention of outside consultants and additional employees to
assist with the conversion, and outsourcing, as appropriate, of proprietary or
self-provided system services, it being understood that neither Medford
Co-operative shall be obligated to take any such action prior to the Effective
Time and, unless Medford Co-operative otherwise agrees and provided it is
permitted by applicable law, no conversion shall take place prior to the
Effective Time. In the event that Medford Co-operative takes, at the request of
Brookline Bank, any action relative to third parties to facilitate the
conversion that results in the imposition of any termination fees or charges,
Brookline Bank shall indemnify Medford Co-operative for any such fees and
charges, and the costs of reversing the conversion process, if for any reason
the Merger is not consummated for any reason other than a breach of this
Agreement by MFI, or a termination of this Agreement under Section 11.1.8 or
11.1.9.
6.2.3. MFI shall provide Brookline Bancorp, within fifteen
(15) business days of the end of each calendar month, a written list of
nonperforming assets (the term "nonperforming assets," for purposes of this
subsection, means (i) loans that are "troubled debt restructuring" as defined in
Statement of Financial Accounting Standards No. 15, "Accounting by Debtors and
Creditors for Troubled Debt Restructuring," (ii) loans on nonaccrual, (iii) real
estate owned, (iv) all loans ninety (90) days or more past due) as of the end of
such month and (iv) and impaired loans. On a monthly basis, MFI shall provide
Brookline Bancorp with a schedule of all loan approvals, which schedule shall
indicate the loan amount, loan type and other material features of the loan.
6.2.4. MFI shall promptly inform Brookline Bancorp upon
receiving notice of any legal, administrative, arbitration or other proceedings,
demands, notices, audits or investigations (by any federal, state or local
commission, agency or board) relating to the alleged liability of MFI or any MFI
Subsidiary under any labor or employment law.
6.3. ACCESS TO PROPERTIES AND RECORDS.
Subject to Section 12.1, MFI shall permit Brookline Bancorp reasonable
access upon reasonable notice to its properties and those of the MFI
Subsidiaries, and shall disclose and make available to Brookline Bancorp during
normal business hours all of its books, papers and records relating to the
assets, properties, operations, obligations and liabilities, including, but not
limited to, all books of account (including the general ledger), tax records,
minute books of directors' (other than minutes that discuss any of the
transactions contemplated by this Agreement or any other subject matter MFI
reasonably determines should be treated as confidential) and stockholders'
meetings, organizational documents, Bylaws, material contracts and agreements,
filings with any regulatory authority, litigation files, plans affecting
employees, and any other business activities or prospects in which Brookline
Bancorp may have a reasonable interest; provided, however, that MFI shall not be
required to take any action that would provide access to or to disclose
information where such access or disclosure, in MFI's reasonable judgment, would
interfere with the normal conduct of MFI's business or would violate or
prejudice the rights or business interests or confidences of any customer or
other person or would result in the waiver
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by it of the privilege protecting communications between it and any of its
counsel or contravene any applicable law. MFI shall provide and shall request
its auditors to provide Brookline Bancorp with such historical financial
information regarding it (and related audit reports and consents) as Brookline
Bancorp may reasonably request for Securities Law disclosure purposes. Brookline
Bancorp shall use commercially reasonable efforts to minimize any interference
with MFI's regular business operations during any such access to MFI's property,
books and records. MFI and each MFI Subsidiary shall permit Brookline Bancorp,
at Brookline Bancorp's expense, to cause a "phase I environmental audit" and a
"phase II environmental audit" to be performed at any physical location owned
or, to the extent permitted under the applicable lease agreement, occupied by
MFI or any MFI Subsidiary.
6.4. FINANCIAL AND OTHER STATEMENTS.
6.4.1. Promptly upon receipt thereof, MFI will furnish to
Brookline Bancorp copies of each annual, interim or special audit of the books
of MFI and the MFI Subsidiaries made by its independent accountants and copies
of all internal control reports submitted to MFI by such accountants, or by any
other accounting firm rendering internal audit services, in connection with each
annual, interim or special audit of the books of MFI and the MFI Subsidiaries
made by such accountants.
6.4.2. As soon as reasonably available, but in no event later
than five business days after such documents are filed with the SEC, MFI will
deliver to Brookline Bancorp the Securities Documents filed by it with the SEC
under the Securities Laws other than those Securities Documents that are
available publicly through the SEC's EDGAR data base. Within 25 days after the
end of each month, MFI will deliver to Brookline Bancorp a consolidated balance
sheet and a consolidated statement of operations, without related notes, for
such month prepared in accordance with current financial reporting practices, as
well as a month-end and year to date comparison to budget.
6.4.3. With reasonable promptness, MFI will furnish to
Brookline Bancorp such additional financial data that MFI possesses and as
Brookline Bancorp may reasonably request, including without limitation, detailed
monthly financial statements and loan reports.
6.5. MAINTENANCE OF INSURANCE.
MFI shall use commercially reasonable efforts to maintain, and to cause the
MFI Subsidiaries to maintain, insurance in such amounts as are reasonable to
cover such risks as are customary in relation to the character and location of
its properties and the nature of its business, with such coverage and in such
amounts not less than that currently maintained by MFI and the MFI Subsidiaries
and set forth in MFI DISCLOSURE SCHEDULE 4.10.3. MFI will promptly inform
Brookline Bancorp if MFI or any MFI Subsidiary receives notice from an insurance
carrier that (i) an insurance policy will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
any policy of insurance will be substantially increased.
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6.6. DISCLOSURE SUPPLEMENTS.
From time to time prior to the Effective Time, MFI will promptly supplement
or amend the MFI DISCLOSURE SCHEDULE delivered in connection herewith with
respect to any matter hereafter arising which, if existing, occurring or known
at the date of this Agreement, would have been required to be set forth or
described in such MFI DISCLOSURE SCHEDULE or which is necessary to correct any
information in such MFI DISCLOSURE SCHEDULE which has been rendered materially
inaccurate thereby. No supplement or amendment to such MFI DISCLOSURE SCHEDULE
shall have any effect for the purpose of determining satisfaction of the
conditions set forth in Article IX. Notwithstanding anything to the contrary
contained herein, no failure to provide any such supplement or amendment to the
MFI DISCLOSURE SCHEDULE shall constitute the failure of any condition set forth
in Article IX to be satisfied unless the underlying breach or inaccuracy would
individually or collectively result in the failure of a condition set forth in
Article IX to be satisfied.
6.7. CONSENTS AND APPROVALS OF THIRD PARTIES.
MFI and Medford Co-operative shall use all commercially reasonable efforts,
and shall cause each MFI Subsidiary to use all commercially reasonable efforts
to obtain as soon as practicable all consents and approvals of any other persons
necessary or desirable for the consummation of the transactions contemplated by
this Agreement. Without limiting the generality of the foregoing, MFI shall
utilize the services of a professional proxy soliciting firm to provide
assistance in obtaining the stockholder vote required to be obtained by it
hereunder.
6.8. ALL REASONABLE EFFORTS.
Subject to the terms and conditions herein provided, MFI agrees to use, and
agrees to cause Medford Co-operative to use, all commercially reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
6.9. FAILURE TO FULFILL CONDITIONS.
In the event that MFI or Medford Co-operative determines that a condition
to its obligation to complete the Merger cannot be fulfilled and that it will
not waive that condition, it will promptly notify Brookline Bancorp.
6.10. NO SOLICITATION.
From and after the date hereof until the termination of this Agreement,
neither MFI, nor any MFI Subsidiary, nor any of their respective officers,
directors, employees, representatives, agents and affiliates (including, without
limitation, any investment banker, attorney or accountant retained by MFI or any
of the MFI Subsidiaries), will, directly or indirectly, initiate, solicit or
knowingly encourage (including by way of furnishing non-public information or
assistance) any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as defined below),
or enter into or maintain or continue discussions or negotiate with any Person
in furtherance of such inquiries or to obtain an
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Acquisition Proposal or agree to or endorse any Acquisition Proposal, or
authorize or permit any of its officers, directors, or employees or any of its
Subsidiaries or any investment banker, financial advisor, attorney, accountant
or other representative retained by any of its Subsidiaries to take any such
action, and MFI shall notify Brookline Bancorp orally (within one business day)
and in writing (as promptly as practicable) of all of the relevant details
relating to all inquiries and proposals which MFI or any of its Subsidiaries or
any of its officers, directors or employees, or, to MFI's Knowledge, investment
bankers, financial advisors, attorneys, accountants or other representatives of
MFI may receive relating to any of such matters, provided, however, that nothing
contained in this Section 6.10 shall prohibit the Board of Directors of MFI from
(i) complying with its disclosure obligations under federal or state law; or
(ii) furnishing information to, or entering into discussions or negotiations
with, any person or entity that makes an unsolicited Acquisition Proposal, if,
and only to the extent that, (A) the Board of Directors of MFI determines in
good faith (after consultation with its financial and legal advisors), taking
into account all legal, financial and regulatory aspects of the proposal and the
Person making the proposal, that such proposal, if consummated, is reasonably
likely to result in a transaction more favorable to MFI's stockholders from a
financial point of view than the Merger; (B) the Board of Directors of MFI
determines in good faith (after consultation with its financial and legal
advisors) that the failure to furnish information to or enter into discussions
with such Person would likely cause the Board of Directors to breach its
fiduciary duties to stockholders under applicable law; (C) such Acquisition
Proposal was not solicited by MFI and did not otherwise result from a breach of
this Section 6.10 by MFI (such proposal that satisfies clauses (A), (B) and (C)
being referred to herein as a "Superior Proposal"); (D) MFI promptly notifies
Brookline Bancorp of such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or negotiations sought to be
initiated or continued with MFI or any of its representatives indicating, in
connection with such notice, the name of such Person and the material terms and
conditions of any inquiries, proposals or offers, and receives from such Person
an executed confidentiality agreement in form and substance identical in all
material respects to the confidentiality agreements that MFI and Brookline
Bancorp entered into; and (E) the MFI Stockholders Meeting has not occurred. For
purposes of this Agreement, "Acquisition Proposal" shall mean any proposal or
offer as to any of the following (other than the transactions contemplated
hereunder) involving MFI or any of its Subsidiaries: (i) any merger,
consolidation, share exchange, business combination, or other similar
transactions; (ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of 25% or more of the assets of MFI and the MFI Subsidiaries,
taken as a whole, in a single transaction or series of transactions; (iii) any
tender offer or exchange offer for 25% or more of the outstanding shares of
capital stock of MFI or the filing of a registration statement under the
Securities Act in connection therewith; or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
6.11. RESERVES AND MERGER-RELATED COSTS.
On or before the Effective Date, to the extent consistent with GAAP, the
rules and regulations of the SEC and applicable banking laws and regulations,
MFI shall establish such additional accruals and reserves as may be necessary to
conform the accounting reserve practices and methods (including credit loss
practices and methods) of MFI to those of Brookline Bancorp (as such practices
and methods are to be applied to MFI from and after the Closing Date) and
Brookline Bancorp's plans with respect to the conduct of the business of MFI
following the
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Merger and otherwise to reflect Merger-related expenses and costs incurred by
MFI, provided, however, that MFI shall not be required to take such action
unless Brookline Bancorp agrees in writing that all conditions to closing set
forth in Section 9.2 have been satisfied or waived (except for the expiration of
any applicable waiting periods). No accrual or reserve made by MFI or any MFI
Subsidiary pursuant to this subsection, or any litigation or regulatory
proceeding arising out of any such accrual or reserve, shall constitute or be
deemed to be a breach or violation of any representation, warranty, covenant,
condition or other provision of this Agreement or to constitute a termination
event within the meaning of Section 11.1.2. No action shall be required to be
taken by MFI pursuant to this Section 6.11 if, in the opinion of MFI's
independent auditors, such action would contravene GAAP.
6.12. BOARD OF DIRECTORS AND COMMITTEE MEETINGS.
MFI and the MFI Subsidiaries shall permit a representative of Brookline
Bancorp to attend any meeting of their Board of Directors, and shall permit no
more than two (2) representatives of Brookline Bancorp to attend any meeting of
their loan (security) committee, as an observer (the "Observer"), provided that
neither MFI nor any MFI Subsidiary shall be required to permit the Observer to
remain present during any confidential discussion of this Agreement and the
transactions contemplated hereby or any third party proposal to acquire control
of MFI or during any other matter that the respective Board of Directors has
been advised of by counsel that such attendance by the Observer may violate a
confidentiality obligation or fiduciary duty or any legal, regulatory or Nasdaq
requirements.
ARTICLE VII
COVENANTS OF BROOKLINE BANCORP
7.1. CONDUCT OF BUSINESS.
During the period from the date of this Agreement to the Effective Time,
except with the written consent of MFI, which consent will not be unreasonably
withheld, Brookline Bancorp will, and it will cause each Brookline Bancorp
Subsidiary to: conduct its business only in the usual, regular and ordinary
course consistent with past practices; use reasonable efforts to preserve intact
its business organization and assets and maintain its rights and franchises; and
voluntarily take no action that would: (i) adversely affect the ability of the
parties to obtain the Regulatory Approvals or materially increase the period of
time necessary to obtain such approvals; (ii) adversely affect its ability to
perform its covenants and agreements under this Agreement; or (iii) result in
the representations and warranties contained in Article V of this Agreement not
being true and correct on the date of this Agreement or at any future date on or
prior to the Closing Date or in any of the conditions set forth in Article IX
hereof not being satisfied.
7.2. CURRENT INFORMATION AND CONSULTATION.
During the period from the date of this Agreement to the Effective Time,
Brookline Bancorp will cause one or more of its representatives to confer with
representatives of MFI and report the general status of its financial condition,
operations and business and matters relating to the completion of the
transactions contemplated hereby, at such times as MFI may reasonably
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request. Brookline Bancorp will promptly notify MFI, to the extent permitted by
applicable law, 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 Brookline Bancorp and any
Brookline Bancorp Subsidiary. Brookline Bancorp shall be reasonably responsive
to requests by MFI for access to such information and personnel regarding
Brookline Bancorp and its Subsidiaries as may be reasonably necessary for MFI to
confirm that the representations and warranties of Brookline Bancorp contained
herein are true and correct and that the covenants of Brookline Bancorp
contained herein have been performed in all material respects; provided,
however, that Brookline Bancorp shall not be required to take any action that
would provide access to or to disclose information where such access or
disclosure, in Brookline Bancorp's reasonable judgment, would interfere with the
normal conduct of Brookline Bancorp's business or would violate or prejudice the
rights or business interests or confidences of any customer or other person or
would result in the waiver by it of the privilege protecting communications
between it and any of its counsel.
7.3. FINANCIAL AND OTHER STATEMENTS.
As soon as reasonably available, but in no event later than the date such
documents are filed with the SEC, Brookline Bancorp will deliver to MFI the
Securities Documents filed by it with the SEC under the Securities Laws other
than those Securities Documents that are available publicly though the SEC's
EDGAR data base. Brookline Bancorp will advise MFI promptly of the receipt of
any examination report of any Bank Regulator with respect to the condition or
activities of Brookline Bancorp or any of the Brookline Bancorp Subsidiaries.
7.4. DISCLOSURE SUPPLEMENTS.
From time to time prior to the Effective Time, Brookline Bancorp will
promptly supplement or amend the BROOKLINE BANCORP DISCLOSURE SCHEDULE delivered
in connection herewith with respect to any matter hereafter arising which, if
existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such BROOKLINE BANCORP DISCLOSURE
SCHEDULE or which is necessary to correct any information in such BROOKLINE
BANCORP DISCLOSURE SCHEDULE which has been rendered inaccurate thereby. No
supplement or amendment to such BROOKLINE BANCORP DISCLOSURE SCHEDULE shall have
any effect for the purpose of determining satisfaction of the conditions set
forth in Article IX. Notwithstanding anything to the contrary contained herein,
no failure to provide any such supplement or amendment to the BROOKLINE BANCORP
DISCLOSURE SCHEDULE shall constitute the failure of any condition set forth in
Article IX to be satisfied unless the underlying breach or inaccuracy would
individually or collectively result in the failure of a condition set forth in
Article IX to be satisfied.
7.5. CONSENTS AND APPROVALS OF THIRD PARTIES.
Brookline Bancorp and Brookline Bank shall use all commercially reasonable
efforts to obtain as soon as practicable all consents and approvals of any other
Persons necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
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7.6. ALL REASONABLE EFFORTS.
Subject to the terms and conditions herein provided, Brookline Bancorp
agrees to use and agrees to cause Brookline Bank to use all commercially
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. Subject to the advice of its counsel, Brookline Bancorp shall
execute any supplemental indentures and take such other actions as shall be
required pursuant to the Indenture, dated April 10, 2002 between MFI, as issuer,
and Wilmington Trust Company, as trustee, and the Indenture, dated February 14,
2003, between MFI, as issuer, and The Bank of New York, as trustee, in order for
the transactions contemplated by this Agreement not to conflict with or result
in a breach of such Indentures.
7.7. FAILURE TO FULFILL CONDITIONS.
In the event that Brookline Bancorp determines that a condition to its
obligation to complete the Merger cannot be fulfilled and that it will not waive
that condition, it will promptly notify MFI.
7.8. EMPLOYEE BENEFITS.
7.8.1. Brookline Bancorp agrees that it will honor all
Compensation and Benefit Plans in accordance with their terms as in effect
immediately before the Effective Time, subject to any amendment or termination
thereof that may be required or permitted by this Agreement. Following the
Effective Time, Brookline Bancorp shall provide Continuing Employees (as defined
below in Section 7.8.6) with compensation and benefits that are, in the
aggregate, substantially similar to the compensation and benefits provided to
similarly situated Brookline Bancorp employees (as of the date any such
compensation or benefit is provided). All MFI Employees who become participants
in a Brookline Bancorp Compensation and Benefit Plan shall, for purposes of
determining eligibility for and for any applicable vesting periods of such
employee benefits only (and not for benefit accrual purposes) be given credit
for service as an employee of MFI or any MFI Subsidiary or any predecessor
thereto prior to the Effective Time, provided, however, that credit for prior
service shall not be given under the Brookline Bancorp ESOP, under the Brookline
Bancorp retiree health plan, or to the extent that providing such credit would
result in a duplication of benefits; and provided further, that credit for prior
service with MFI or a MFI Subsidiary shall also be given for benefit accrual
purposes under any vacation policy or plan of Brookline Bancorp or under any
severance compensation plan for employees that Brookline Bancorp has or may
adopt in the future. This Agreement shall not be construed to limit the ability
of Brookline Bancorp or Brookline Bank to terminate the employment of any
employee or to review employee benefits programs from time to time, or to make
such changes as they deem appropriate, subject to the terms and conditions of
such programs, or to terminate any Compensation and Benefit Plan.
7.8.2. Subject to the occurrence of the Effective Time, the
Mystic ESOP shall be terminated immediately prior to and effective as of the
Effective Time (all shares held by the ESOP shall be converted into the right to
receive the Merger Consideration, as elected by the ESOP participants), all
outstanding Mystic ESOP indebtedness shall be repaid, and the balance
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of the shares and any other assets remaining in the Loan Suspense Account (as
such term is defined in the Mystic ESOP) shall be allocated and distributed to
Mystic ESOP participants (subject to the receipt of a favorable determination
letter from the IRS), as provided for in the Mystic ESOP and unless otherwise
required by applicable law. Prior to the Effective Time, MFI, and following the
Effective Time, Brookline Bancorp shall use their respective best efforts in
good faith to obtain such favorable determination letter (including, but not
limited to, making such changes to the ESOP and the proposed allocations as may
be requested by the IRS as a condition to its issuance of a favorable
determination letter). MFI and following the Effective Time, Brookline Bancorp,
will adopt such amendments to the Mystic ESOP as may be reasonably required by
the IRS as a condition to granting such favorable determination letter on
termination. Neither MFI, nor following the Effective Time, Brookline Bancorp
shall make any distribution from the Mystic ESOP except as may be required by
applicable law until receipt of such favorable determination letter. In the case
of a conflict between the terms of this Section 7.8.2 and the terms of the
Mystic ESOP, the terms of the Mystic ESOP shall control however, in the event of
any such conflict, MFI before the Merger, and Brookline Bancorp after the
Merger, shall use their best efforts to cause the ESOP to be amended to conform
to the requirements of this Section.
7.8.3. The payments required to be made under the employment
agreements or change of control agreements between (i) MFI and/or Medford
Co-operative and (ii) the individuals listed on MFI DISCLOSURE SCHEDULE 7.8.3
shall be made by MFI or Medford Co-operative on the Closing Date prior to the
Effective Time (except as indicated below). MFI and/or Medford Co-operative
shall obtain from each individual listed in MFI DISCLOSURE SCHEDULE 7.8.3 an
agreement (a "Settlement Agreement"), substantially in the form attached to
BROOKLINE BANCORP DISCLOSURE SCHEDULE 7.8.3, to accept in full settlement of his
or her rights under the specified programs the amounts and benefits determined
under the individual's Settlement Agreement and pay such amounts to such
individuals who are employed as of the Effective Time. Any officer or employee
of MFI or Medford Co-operative who is a party to a Settlement Agreement and who
(i) is terminated other than for cause, death or disability pursuant to the
terms of the applicable employment or change in control agreement, or (ii)
resigns on or after the Effective Date, shall be entitled to receive the
benefits payable or to be otherwise provided under such Settlement Agreement on
the Closing Date (or following the Closing Date if such termination (voluntary
or involuntary) is initially effective following the Closing Date), and
Brookline Bancorp agrees to provide the non-cash benefits provided in the
Settlement Agreement. If requested by Brookline Bancorp prior to December 1,
2004, all or a portion of the cash payment to be made pursuant to one or more of
the Settlement Agreements referenced in this Section 7.8.3 shall be accelerated
and paid by MFI or Medford Co-operative prior to December 31, 2004, provided,
however, that the acceleration of such amounts shall not be considered
compensation, annual compensation or base cash compensation for purposes of
increasing any payment made under any such employment, severance or change in
control agreement to which such person is a party. At the time of payment of the
amounts set forth in the Settlement Agreements set forth in BROOKLINE BANCORP
DISCLOSURE SCHEDULE 7.8.3, each executive shall enter into an acknowledgment and
release, attached to said Settlement Agreements as Appendix A, acknowledging
that no further payments are due under such sections (other than any
continuation of insurance benefits or corrective Section 280G indemnities to be
provided under the terms of the Settlement Agreements and applicable employment
agreements)
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and releasing MFI, Medford Co-operative, Brookline Bancorp and Brookline Bank
from any and all claims arising thereunder.
7.8.4. Prior to the Effective Time, any shares reserved for
issuance pursuant to grants under the MFI RRP, which were not awarded to
eligible employees, eligible directors or eligible directors emeritus prior to
the execution of this Agreement, shall be cancelled and the MFI RRP shall be
terminated, effective as of the Effective Time.
7.8.5. If requested by Brookline Bancorp prior to December 1,
2004, MFI and/or Medford Co-operative agree to accelerate and pay in 2004, the
payments to be made to the non-employee directors under the Retirement Plan for
Non-Employee Directors in connection with their termination of service at the
Effective Time. If not so requested, MFI or Medford Co-operative shall make all
payments contemplated under the Retirement Plan for Non-Employee Directors, as
computed in accordance with the principles described in the MFI DISCLOSURE
SCHEDULE 4.13.7, to all non-employee directors on the Closing Date. MFI shall
obtain an acknowledgment from each non-employee director that the amounts paid
thereunder are in full satisfaction of the amounts due and owing thereunder, in
the form attached to BROOKLINE BANCORP DISCLOSURE SCHEDULE 7.8.5.
7.8.6. In the event of any termination of any MFI or Medford
Co-operative health plan or consolidation of any such plan with any Brookline
Bancorp or Brookline Bank health plan or to the extent that an employee of MFI
or any MFI Subsidiary who continues employment with Brookline Bancorp or a
Brookline Bancorp Subsidiary ("Continuing Employee") participates in a Brookline
Bancorp health plan, Brookline Bancorp shall make available to such Continuing
Employees and their dependents employer-provided health coverage (including
medical, dental, pharmaceutical and/or vision benefits) on the same basis as it
provides such coverage to Brookline Bancorp employees. Unless a Continuing
Employee affirmatively terminates coverage under a MFI health plan prior to the
time that such Continuing Employee becomes eligible to participate in the
Brookline Bancorp health plan, no coverage of any of the Continuing Employees or
their dependents shall terminate under any of the MFI health plans prior to the
time such Continuing Employees and their dependents become eligible to
participate in the health plans, programs and benefits common to all employees
of Brookline Bancorp and their dependents. In the event of a termination or
consolidation of any MFI health plan, terminated MFI employees and qualified
beneficiaries will have the right to continued coverage under group health plans
of Brookline Bancorp in accordance with Code Section 4980B(f), consistent with
the provisions below. In the event of any termination of any MFI health plan, or
consolidation of any MFI health plan with any Brookline Bancorp health plan, any
coverage limitation under the Brookline Bancorp health plan due to any
pre-existing condition shall be waived by the Brookline Bancorp health plan to
the degree that such condition was covered by the MFI health plan and such
condition would otherwise have been covered by the Brookline Bancorp health plan
in the absence of such coverage limitation. All MFI Employees who cease
participating in an MFI health plan and become participants in a comparable
Brookline Bancorp health plan shall receive credit for any co-payment and
deductibles paid under MFI's health plan for purposes of satisfying any
applicable deductible or out-of-pocket requirements under the Brookline Bancorp
health plan, upon substantiation, in a form satisfactory to Brookline Bancorp
that such co-payment and/or deductible has been
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satisfied. Brookline Bancorp shall assume the retiree health plan of MFI and
each MFI Subsidiary and shall have the same rights and obligations thereunder.
7.9. DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE.
7.9.1. Brookline Bancorp shall maintain, or shall cause
Brookline Bank to maintain, in effect for six years following the Effective
Time, the current directors' and officers' liability insurance policies
maintained by MFI (provided, that Brookline Bancorp may substitute therefor
policies of at least the same coverage containing terms and conditions which are
not materially less favorable) with respect to matters occurring prior to the
Effective Time; provided, however, that in no event shall Brookline Bancorp be
required to expend pursuant to this Section 7.9.1 more than 200% of the annual
cost currently expended by MFI with respect to such insurance, as set forth in
MFI DISCLOSURE SCHEDULE 7.9.1 (the "Maximum Amount"); PROVIDED, FURTHER, that if
the amount of the aggregate premium necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, Brookline Bancorp shall maintain
the most advantageous policies of directors' and officers' insurance obtainable
for an annual premium equal to the Maximum Amount. In connection with the
foregoing, MFI agrees in order for Brookline Bancorp to fulfill its agreement to
provide directors and officers liability insurance policies for six years to
provide such insurer or substitute insurer with such reasonable and customary
representations as such insurer may request with respect to the reporting of any
prior claims.
7.9.2. In addition to Section 7.9.1, Brookline Bancorp shall
indemnify, defend and hold harmless each person who is now, or who has been at
any time before the date hereof or who becomes before the Effective Time, an
officer or director of MFI or an MFI Subsidiary (the "Indemnified Parties")
against all losses, claims, damages, costs, expenses (including attorneys'
fees), liabilities or judgments or amounts that are paid in settlement of or in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, or administrative (each a "Claim"), in which an Indemnified
Party is, or is threatened to be made, a party or witness in whole or in part on
or arising in whole or in part out of the fact that such person is or was a
director, officer or employee of MFI or a MFI Subsidiary if such Claim pertains
to any matter of fact arising, existing or occurring before the Effective Time
(including, without limitation, the Merger and the other transactions
contemplated hereby), regardless of whether such Claim is asserted or claimed
before, or after, the Effective Time (the "Indemnified Liabilities"), to the
fullest extent permitted under Delaware law (to the extent not prohibited by
Federal law), and MFI's Certificate of Incorporation and Bylaws. Brookline
Bancorp shall pay expenses in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the fullest extent permitted
by Delaware law (to the extent not prohibited by Federal law) upon receipt of an
undertaking to repay such advance payments if the Indemnified Party shall be
adjudicated or determined to be not entitled to indemnification in the manner
set forth below. Any Indemnified Party wishing to claim indemnification under
this Section 7.9.2 upon learning of any Claim, shall notify Brookline Bancorp
(but the failure so to notify Brookline Bancorp shall not relieve it from any
liability which it may have under this Section 7.9.2, except to the extent such
failure materially prejudices Brookline Bancorp) and shall, if required by
applicable law, deliver to Brookline Bancorp the undertaking referred to in the
previous sentence.
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7.9.3. In the event that either Brookline Bancorp or any of
its successors or assigns (i) consolidates with or merges into any other person
and shall not be the continuing or surviving bank or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Brookline Bancorp
shall assume the obligations set forth in this Section 7.9.
7.9.4. The obligations of Brookline Bancorp provided under
this Section 7.9 are intended to be enforceable against Brookline Bancorp
directly by the Indemnified Parties and their heirs and representatives and
shall be binding on all respective successors and permitted assigns of Brookline
Bancorp. Brookline Bancorp shall pay all reasonable costs, including attorneys'
fees, that may be incurred by any Indemnified Party in successfully enforcing
the indemnity and other obligations provided for in this Section 7.9 to the
fullest extent permitted under applicable law. The rights of each Indemnified
Party hereunder shall be in addition to any other rights such Indemnified Party
may have under applicable law.
7.10. STOCK LISTING.
Brookline Bancorp agrees to list on the Nasdaq (or such other national
securities exchange on which the shares of the Brookline Bancorp Common Stock
shall be listed as of the Closing Date), subject to official notice of issuance,
the shares of Brookline Bancorp Common Stock to be issued in the Merger.
7.11. STOCK AND CASH RESERVE.
Brookline Bancorp agrees at all times from the date of this Agreement until
the Merger Consideration has been paid in full to reserve a sufficient number of
shares of Brookline Bancorp Common Stock and to maintain sufficient liquid
accounts or borrowing capacity to fulfill its obligations under this Agreement.
7.12. SECTION 16(b) EXEMPTION.
Brookline Bancorp and MFI agree that, in order to most effectively
compensate and retain MFI Insiders (as defined below) in connection with the
Merger, both prior to and after the Effective Time, it is desirable that MFI
Insiders not be subject to a risk of liability under Section 16(b) of the
Exchange Act to the fullest extent permitted by applicable law in connection
with the conversion of shares of MFI Common Stock into shares of Brookline
Bancorp in the Merger, and for that compensatory and retentive purpose agree to
the provisions of this Section 7.12. Assuming that MFI delivers to Brookline
Bancorp the MFI Section 16 Information (as defined below) in a timely fashion
prior to the Effective Time, the Board of Directors of Brookline Bancorp, or a
committee of non-employee directors thereof (as such term is defined for
purposes of Rule 16b-3(d) under the Exchange Act), shall reasonably promptly
thereafter and in any event prior to the Effective Time adopt a resolution
providing in substance that the receipt by the MFI Insiders (as defined below)
of Brookline Bancorp Common Stock in exchange for shares of MFI Common Stock,
pursuant to the transactions contemplated hereby and to the extent such
securities are listed in the MFI Section 16 Information, are intended to be
exempt from liability pursuant to Section 16(b) under the Exchange Act to the
fullest extent permitted by
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applicable law. "MFI Section 16 Information" shall mean information accurate in
all material respects regarding the MFI Insiders, the number of shares of MFI
Common Stock held by each such MFI Insider and expected to be exchanged for
Brookline Bancorp Common Stock in the Merger. "MFI Insiders" shall mean those
officers and directors of MFI who are subject to the reporting requirements of
Section 16(a) of the Exchange Act and who are expected to be subject to Section
16(a) of the Exchange Act with respect to Brookline Bancorp Common Stock
subsequent to the Effective Time.
7.13. COMMUNICATIONS TO MFI EMPLOYEES; TRAINING
Brookline Bancorp and MFI agree that as promptly as practicable following
the execution of this Agreement, meetings with employees of MFI and Medford
Co-operative shall be held at such location as Brookline Bancorp and MFI shall
mutually agree, provided that representatives of MFI shall be permitted to
attend such meetings, to announce the proposed Merger. Brookline Bancorp and MFI
shall mutually agree as to the scope and content of all communications to the
employees of MFI and Medford Co-operative. At mutually agreed upon times
following execution of this Agreement, representatives of Brookline Bancorp
shall be permitted to meet with the employees of MFI and Medford Co-operative to
discuss employment opportunities with Brookline Bancorp, provided that
representatives of MFI shall be permitted to attend any such meeting. From and
after the Determination Date, Brookline Bancorp shall also be permitted to
conduct training sessions outside of normal business hours or at other times as
MFI may agree, with the employees of MFI and Medford Co-operative and may
conduct such training seminars at any branch location of Medford Co-operative;
provided that Brookline Bancorp will in good faith attempt to schedule such
training sessions in a manner which does not unreasonably interfere with Medford
Co-operative's normal business operations. Brookline Bancorp shall reimburse the
employees of MFI and Medford Co-operative for transportation costs to and from
the locations where Brookline Bancorp shall train such employees and compensate
the employees of MFI and Medford Co-operative or reimburse the employees of MFI
and Medford Co-operative respective applicable standard or overtime rates for
the time spent in such training.
ARTICLE VIII
REGULATORY AND OTHER MATTERS
8.1. MEETING OF STOCKHOLDERS.
8.1.1. MFI will (i) take all steps necessary to duly call,
give notice of, convene and hold a special meeting of its stockholders as
promptly as practicable after the Merger Registration Statement is declared
effective by the SEC, for the purpose of considering this Agreement and the
Merger (the "MFI Stockholders Meeting"), (ii) in connection with the
solicitation of proxies with respect to the MFI Stockholders Meeting, have its
Board of Directors recommend approval of this Agreement to the MFI stockholders;
and (iii) cooperate and consult with Brookline Bancorp with respect to each of
the foregoing matters. The Board of Directors of MFI may fail to make such a
recommendation referred to in clause (ii) above, or withdraw, modify or change
any such recommendation only if such Board of Directors, after having consulted
with and considered the advice of its outside financial and legal advisors, has
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determined that the making of such recommendation, or the failure so to
withdraw, modify or change its recommendation, would constitute a breach of the
fiduciary duties of such directors under applicable law.
8.2. PROXY STATEMENT-PROSPECTUS; MERGER REGISTRATION STATEMENT.
8.2.1. For the purposes (x) of registering Brookline Bancorp
Common Stock to be offered to holders of MFI Common Stock in connection with the
Merger with the SEC under the Securities Act and (y) of holding the MFI
Stockholders Meeting, Brookline Bancorp shall draft and prepare, and MFI shall
cooperate in the preparation of, the Merger Registration Statement, including a
proxy statement and prospectus satisfying all applicable requirements of
applicable state securities and banking laws, and of the Securities Act and the
Exchange Act, and the rules and regulations thereunder (such proxy
statement/prospectus in the form mailed by MFI to the MFI stockholders, together
with any and all amendments or supplements thereto, being herein referred to as
the "Proxy Statement-Prospectus"). Brookline Bancorp shall provide MFI and its
counsel with appropriate opportunity to review and comment on the Proxy
Statement-Prospectus, and shall incorporate all appropriate comments thereto,
prior to the time it is initially filed with the SEC or any amendments are filed
with the SEC. Brookline Bancorp shall file the Merger Registration Statement,
including the Proxy Statement-Prospectus, with the SEC. Each of Brookline
Bancorp and MFI shall use its best efforts to have the Merger Registration
Statement declared effective under the Securities Act as promptly as practicable
after such filing, and MFI shall thereafter promptly mail the Proxy
Statement-Prospectus to its stockholders. Brookline Bancorp shall also use its
best efforts to obtain all necessary state securities law or "Blue Sky" permits
and approvals required to carry out the transactions contemplated by this
Agreement, and MFI shall furnish all information concerning MFI and the holders
of MFI Common Stock as may be reasonably requested in connection with any such
action.
8.2.2. Brookline Bancorp shall, as soon as practicable, file
the Merger Registration Statement with the SEC under the Securities Act in
connection with the transactions contemplated by this Agreement. Brookline
Bancorp will advise MFI promptly after Brookline Bancorp receives notice of the
time when the Merger Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any stop order or the
suspension of the qualifications of the shares of Brookline Bancorp Common Stock
issuable pursuant to the Merger Registration Statement, or the initiation or
threat of any proceeding for any such purpose, or of any request by the SEC for
the amendment or supplement of the Merger Registration Statement, or for
additional information, and Brookline Bancorp will provide MFI with as many
copies of such Merger Registration Statement and all amendments thereto promptly
upon the filing thereof as MFI may reasonably request.
8.2.3. MFI and Brookline Bancorp shall promptly notify the
other party if at any time it becomes aware that the Proxy Statement-Prospectus
or the Merger Registration Statement contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. In such event, MFI
shall cooperate with Brookline Bancorp in the preparation of a supplement or
amendment to such Proxy Statement-Prospectus that corrects such misstatement or
omission, and Brookline Bancorp shall
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file an amended Merger Registration Statement with the SEC, and each of MFI and
Brookline Bancorp shall mail an amended Proxy Statement-Prospectus to MFI's
stockholders.
8.3. REGULATORY APPROVALS.
Each of MFI and Brookline Bancorp will cooperate with the other and use all
reasonable efforts to promptly prepare and as soon as practicable following the
date hereof, file all necessary documentation to obtain all necessary permits,
consents, waivers, approvals and authorizations of the OTS, the FRB, and the
Commissioner and any other third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement. MFI and Brookline
Bancorp will furnish each other and each other's counsel with all information
concerning themselves, their Subsidiaries, directors, officers and stockholders
and such other matters as may be necessary or advisable in connection with any
application, petition or other statement made by or on behalf of MFI or
Brookline Bancorp to any Bank Regulator or governmental body in connection with
the Merger, Bank Merger and the other transactions contemplated by this
Agreement. MFI shall have the right to review and approve in advance all
characterizations of the information relating to MFI and any of its Subsidiaries
which appear in any filing made in connection with the transactions contemplated
by this Agreement with any governmental body. In addition, MFI and Brookline
Bancorp shall each furnish to the other for review a copy of each such filing
made in connection with the transactions contemplated by this Agreement with any
governmental body prior to its filing.
8.4. AFFILIATES.
8.4.1. MFI shall use all reasonable efforts to cause each
director, executive officer and other person who is an "affiliate" (for purposes
of Rule 145 under the Securities Act) of MFI to deliver to Brookline Bancorp, as
soon as practicable after the date of this Agreement, and at least thirty (30)
days prior to the date of the MFI Stockholders Meeting, a written agreement, in
the form of Exhibit C hereto, providing that such person will not sell, pledge,
transfer or otherwise dispose of any shares of Brookline Bancorp Common Stock to
be received by such "affiliate" as a result of the Merger otherwise than in
compliance with the applicable provisions of the Securities Act and the rules
and regulations thereunder.
ARTICLE IX
CLOSING CONDITIONS
9.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS UNDER THIS AGREEMENT.
The respective obligations of each party under this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions, none of which may be waived:
9.1.1. STOCKHOLDER APPROVAL. This Agreement and the
transactions contemplated hereby shall have been approved and adopted by the
requisite vote of the stockholders of MFI.
9.1.2. INJUNCTIONS. None of the parties hereto shall be
subject to any order, decree or injunction of a court or agency of competent
jurisdiction, and no statute, rule or
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regulation shall have been enacted, entered, promulgated, interpreted, applied
or enforced by any Governmental Entity or Bank Regulator, that enjoins or
prohibits the consummation of the transactions contemplated by this Agreement.
9.1.3. REGULATORY APPROVALS. All Regulatory Approvals required
to complete the Merger and the Bank Merger shall have been obtained and shall
remain in full force and effect and all waiting periods relating thereto shall
have expired.
9.1.4. EFFECTIVENESS OF MERGER REGISTRATION STATEMENT. The
Merger Registration Statement shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the Merger Registration
Statement shall have been issued, and no proceedings for that purpose shall have
been initiated or threatened by the SEC and, if the offer and sale of Brookline
Bancorp Common Stock in the Merger is subject to the blue sky laws of any state,
shall not be subject to a stop order of any state securities commissioner.
9.1.5. NASDAQ LISTING. The shares of Brookline Bancorp Common
Stock to be issued in the Merger shall have been authorized for listing on the
Nasdaq, subject to official notice of issuance.
9.1.6. TAX OPINIONS. On the basis of facts, representation and
assumptions which shall be consistent with the state of facts existing at the
Closing Date, Brookline Bancorp shall have received an opinion of Luse Gorman
Pomerenk & Schick, P.C., reasonably acceptable in form and substance to
Brookline Bancorp, and MFI shall have received an opinion of Thacher Proffitt &
Wood LLP, reasonably acceptable in form and substance to MFI, each dated as of
the Closing Date, substantially to the effect that, for Federal income tax
purposes:
(A) The Merger, when consummated in accordance with the
terms hereof, either will constitute a reorganization within the meaning of
Section 368(a) of the Code or will be treated as part of a reorganization
within the meaning of Section 368(a) of the Code;
(B) The Bank Merger will not adversely affect the Merger
qualifying as a reorganization within the meaning of Section 368(a) of the
Code;
(C) No gain or loss will be recognized by Brookline
Bancorp, Brookline Bank, MFI or Medford Co-Operative by reason of the
Merger;
(D) The exchange of Brookline Bancorp Common Stock, to the
extent exchanged for MFI Common Stock, will not give rise to the
recognition of gain or loss for Federal income tax purposes to the
stockholders of MFI;
(E) The basis of the Brookline Bancorp Common Stock to be
received (including any fractional shares deemed received for tax purposes)
by an MFI stockholder will be the same as the basis of the MFI Common Stock
surrendered pursuant to the Merger in exchange therefor, increased by any
gain recognized by such MFI stockholder as a result of the Merger and
decreased by any cash received by such MFI stockholder in the Merger; and
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(F) The holding period of the shares of Brookline Bancorp
Common Stock to be received by a stockholder of MFI will include the period
during which the stockholder held the shares of MFI Common Stock
surrendered in exchange therefore, provided the MFI Common Stock
surrendered is held as a capital asset at the Effective Time.
9.2. CONDITIONS TO THE OBLIGATIONS OF BROOKLINE BANCORP UNDER THIS
AGREEMENT.
The obligations of Brookline Bancorp under this Agreement shall be further
subject to the satisfaction of the conditions set forth in Sections 9.2.1
through 9.2.5 at or prior to the Closing Date:
9.2.1. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of MFI set forth in this Agreement shall be true
and correct as of the date of this Agreement and upon the Effective Time with
the same effect as though all such representations and warranties had been made
at the Effective Time (except to the extent such representations and warranties
speak as of an earlier date, which only need be true and correct as of such
earlier date), in any case subject to the standard set forth in Section 4.1; and
MFI shall have delivered to Brookline Bancorp a certificate to such effect
signed by the Chief Executive Officer and the Chief Financial Officer of MFI as
of the Effective Time.
9.2.2. AGREEMENTS AND COVENANTS. MFI shall have performed in
all material respects all obligations and complied in all material respects with
all agreements or covenants to be performed or complied with by each of them at
or prior to the Effective Time, and Brookline Bancorp shall have received a
certificate signed on behalf of MFI by the Chief Executive Officer and Chief
Financial Officer of MFI to such effect dated as of the Effective Time.
9.2.3. REGULATORY CONDITIONS. No Regulatory Approval required
for consummation the Merger and Bank Merger includes any condition or
requirement, excluding standard conditions that are normally imposed by the
regulatory authorities in bank merger transactions, that could reasonably be
expected by Brookline Bancorp to result in a Material Adverse Effect on
Brookline Bancorp and its Subsidiaries, taken as a whole
9.2.4. DISSENTING SHARES. As of immediately prior to the
Effective Time, not more than 10% of the issued and outstanding shares of MFI
Common Stock shall have dissented to the Merger under the DGCL, and preserved,
as of immediately prior to the Effective Time, the right to pursue their right
of appraisal for the fair value of their shares of MFI Common Stock under the
DGCL.
9.2.5. PERMITS, AUTHORIZATIONS, ETC. MFI and the MFI
Subsidiaries shall have obtained any and all material permits, authorizations,
consents, waivers, clearances or approvals required for the lawful consummation
of the Merger and the Bank Merger, the failure of which to obtain would have a
Material Adverse Effect on Brookline Bancorp and its Subsidiaries, taken as a
whole.
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9.3. CONDITIONS TO THE OBLIGATIONS OF MFI UNDER THIS AGREEMENT.
The obligations of MFI under this Agreement shall be further subject to the
satisfaction of the conditions set forth in Sections 9.3.1 through 9.3.4 at or
prior to the Closing Date:
9.3.1. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Brookline Bancorp set forth in this Agreement
shall be true and correct as of the date of this Agreement and upon the
Effective Time with the same effect as though all such representations and
warranties had been made at the Effective Time (except to the extent such
representations and warranties speak as of an earlier date, which only need be
true and correct as of such earlier date), in any case subject to the standard
set forth in Section 5.1; and Brookline Bancorp shall have delivered to MFI a
certificate to such effect signed by the Chief Executive Officer or Chief
Operating Officer and the Chief Financial Officer of Brookline Bancorp as of the
Effective Time.
9.3.2. AGREEMENTS AND COVENANTS. Brookline Bancorp shall have
performed in all material respects all obligations and complied in all material
respects with all agreements or covenants to be performed or complied with by
each of them at or prior to the Effective Time, and MFI shall have received a
certificate signed on behalf of Brookline Bancorp by the Chief Executive Officer
or Chief Operating Officer and Chief Financial Officer of Brookline Bancorp to
such effect dated as of the Effective Time.
9.3.3. PERMITS, AUTHORIZATIONS, ETC. Brookline Bancorp and its
Subsidiaries shall have obtained any and all material permits, authorizations,
consents, waivers, clearances or approvals required for the lawful consummation
of the Merger and the Bank Merger, the failure of which to obtain would have a
Material Adverse Effect on Brookline Bancorp and its Subsidiaries, taken as a
whole.
9.3.4. PAYMENT OF MERGER CONSIDERATION. Brookline Bancorp
shall have delivered the Exchange Fund to the Exchange Agent on or before the
Closing Date and the Exchange Agent shall provide MFI with a certificate
evidencing such delivery.
ARTICLE X
THE CLOSING
10.1. TIME AND PLACE.
Subject to the provisions of Articles IX and XI hereof, the Closing of the
transactions contemplated hereby shall take place at the offices of Luse Gorman
Pomerenk & Schick, 5335 Wisconsin Avenue, Suite 400, Washington, D.C. at 10:00
a.m. on the date determined by Brookline Bancorp, in its sole discretion, upon
five (5) days prior written notice to MFI, but in no event later than thirty
days (30) after the last condition precedent (other than those conditions that
relate to actions to be taken at the Closing, but subject to the fulfillment or
waiver of those conditions) pursuant to this agreement has been fulfilled or
waived (including the expiration of any applicable waiting period), or at such
other place, date or time upon which Brookline Bancorp and MFI mutually agree.
Notwithstanding the foregoing, and at Brookline Bancorp's sole discretion, such
Closing may occur on the close of business on January 7, 2005 (provided that all
conditions precedent have been fulfilled or waived, including the expiration of
any
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applicable waiting period). A pre-closing of the transactions contemplated
hereby (the "Pre-Closing") shall take place at the offices of Luse Gorman
Pomerenk & Schick, 5335 Wisconsin Avenue, Suite 400, Washington, D.C. at 10:00
a.m. on the day prior to the Closing Date (the "Pre-Closing Date").
10.2. DELIVERIES AT THE PRE-CLOSING AND THE CLOSING.
At the Pre-Closing there shall be delivered to Brookline Bancorp and MFI
the opinions, certificates, and other documents and instruments required to be
delivered at the Closing under Article IX hereof. At or prior to the Closing,
Brookline Bancorp shall deliver the Merger Consideration as set forth under
Section 9.3.4 hereof.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1. TERMINATION.
This Agreement may be terminated at any time prior to the Closing Date,
whether before or after approval of the Merger by the stockholders of MFI:
11.1.1. At any time by the mutual written agreement of
Brookline Bancorp and MFI;
11.1.2. By either party (provided, that the terminating party
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein) if there shall have been a material breach of
any of the representations or warranties set forth in this Agreement on the part
of the other party, which breach by its nature cannot be cured prior to the
Termination Date or shall not have been cured within 30 days after written
notice of such breach by the terminating party to the other party provided,
however, that neither party shall have the right to terminate this Agreement
pursuant to this Section 11.1.2 unless the breach of representation or warranty,
together with all other such breaches, would entitle the terminating party not
to consummate the transactions contemplated hereby under Section 9.2.1 (in the
case of a breach of a representation or warranty by MFI) or Section 9.3.1 (in
the case of a breach of a representation or warranty by Brookline Bancorp);
11.1.3. By either party (provided, that the terminating party
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein) if there shall have been a material failure to
perform or comply with any of the covenants or agreements set forth in this
Agreement on the part of the other party, which failure by its nature cannot be
cured prior to the Termination Date or shall not have been cured within 30 days
after written notice of such failure by the terminating party to the other
party; provided, however, that neither party shall have the right to terminate
this Agreement pursuant to this Section 11.1.3 unless the breach of covenant or
agreement, together with all other such breaches, would entitle the terminating
party not to consummate the transactions contemplated hereby under Section 9.2.2
(in the case of a breach of covenant by MFI) or Section 9.3.2 (in the case of a
breach of covenant by Brookline Bancorp);
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11.1.4. At the election of either party, if the Closing shall
not have occurred by the Termination Date, or such later date as shall have been
agreed to in writing by Brookline Bancorp and MFI; provided, that no party may
terminate this Agreement pursuant to this Section 11.1.4 if the failure of the
Closing to have occurred on or before said date was due to such party's material
breach of any representation, warranty, covenant or other agreement contained in
this Agreement;
11.1.5. By either party, if the stockholders of MFI shall have
voted at the MFI Stockholders Meeting on the transactions contemplated by this
Agreement and such vote shall not have been sufficient to approve and adopt such
transactions;
11.1.6. By either party if (i) final action has been taken by a
Bank Regulator whose approval is required in order to satisfy the conditions to
the parties' obligations to consummate the transactions contemplated hereby as
set forth in Article IX, which final action (x) has become unappealable and (y)
does not approve this Agreement or the transactions contemplated hereby, or (ii)
any court of competent jurisdiction or other governmental authority shall have
issued an order, decree, ruling or taken any other action restraining, enjoining
or otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and unappealable;
11.1.7. By the Board of Directors of Brookline Bancorp if MFI
has received a Superior Proposal and the Board of Directors of MFI has entered
into an acquisition agreement with respect to the Superior Proposal, terminated
this Agreement, withdrawn its recommendation of this Agreement, has failed to
make such recommendation or has modified or qualified its recommendation in a
manner adverse to Brookline Bancorp.
11.1.8. By the Board of Directors of MFI if MFI has received a
Superior Proposal and the Board of Directors of MFI has made a determination to
accept such Superior Proposal; provided that MFI shall not terminate this
Agreement pursuant to this Section 11.1.8 and enter in a definitive agreement
with respect to the Superior Proposal until the expiration of five (5) business
days following Brookline Bancorp's receipt of written notice advising Brookline
Bancorp that MFI has received a Superior Proposal, specifying the material terms
and conditions of such Superior Proposal (and including a copy thereof with all
accompanying documentation, if in writing) identifying the person making the
Superior Proposal and stating whether MFI intends to enter into a definitive
agreement with respect to the Superior Proposal. After providing such notice,
MFI shall provide a reasonable opportunity to Brookline Bancorp during the
five-day period to make such adjustments in the terms and conditions of this
Agreement as would enable MFI to proceed with the Merger on such adjusted terms.
11.1.9. By MFI, if its Board of Directors so determines by a
majority vote of the members of its entire Board, at any time during the five
business-day period commencing on the Determination Date if both of the
following conditions are satisfied:
(i) The Brookline Bancorp Market Value on the Determination
Date is less than $12.01, adjusted as indicated on the last sentence of
this Section 11.1.9; and
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(ii) the number obtained by dividing the Brookline Bancorp
Market Value on the Determination Date by the Initial Brookline Bancorp
Market Value ("Brookline Bancorp Ratio") shall be less than the quotient
obtained by dividing the Final Index Price by the Initial Index Price,
minus 0.175;
subject, however, to the following three sentences. If MFI elects to exercise
its termination right pursuant to this Section 11.1.9, it shall give prompt
written notice thereof to Brookline Bancorp. During the fifth business day
period commencing with its receipt of such notice, Brookline Bancorp shall have
the option to increase the consideration to be received by the holders of MFI
Common Stock who elect to receive Brookline Bancorp Common Stock hereunder by
adjusting the Exchange Ratio to one of the following quotients at its sole
discretion: (i) a quotient, the numerator of which is equal to the product of
the Initial Brookline Bancorp Market Value, the Exchange Ratio (as then in
effect), and the Index Ratio minus 0.175, and the denominator of which is equal
to Brookline Bancorp Market Value on the Determination Date; or (ii) the
quotient determined by dividing the Initial Brookline Bancorp Market Value by
the Brookline Bancorp Market Value on the Determination Date, and multiplying
the quotient by the product of the Exchange Ratio (as then in effect) and 0.825.
If Brookline Bancorp so elects, it shall give, within such five business-day
period, written notice to MFI of such election and the revised Exchange Ratio,
whereupon no termination shall be deemed to have occurred pursuant to this
Section 11.1.9 and this Agreement shall remain in full force and effect in
accordance with its terms (except as the Exchange Ratio shall have been so
modified).
For purposes of this Section 11.1.9, the following terms shall have the
meanings indicated below:
"Acquisition Transaction" shall mean (i) a merger or consolidation, or any
similar transaction, involving the relevant companies, (ii) a purchase, lease or
other acquisition of all or substantially all of the assets of the relevant
companies, (iii) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 10% or
more of the voting power of the relevant companies; or (iv) an agreement or
commitment by the relevant companies to take any action referenced above.
"Determination Date" shall mean the first date on which all Regulatory
Approvals (and waivers, if applicable) necessary for consummation of the Merger
have been received (disregarding any waiting period).
"Final Index Price" means the sum of the Final Prices for each company
comprising the Index Group multiplied by the weighting set forth opposite such
company's name in the definition of Index Group below.
"Final Price," with respect to any company belonging to the Index Group,
means the average of the daily closing sales prices of a share of common stock
of such company (and if there is no closing sales price on any such day, then
the mean between the closing bid and the closing asked prices on that day), as
reported on the consolidated transaction reporting system for the market or
exchange on which such common stock is principally traded, for the ten
consecutive trading days immediately preceding the Determination Date.
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"Index Group" means the financial institution holding companies listed
below, the common stock of all of which shall be publicly traded and as to which
there shall not have been an Acquisition Transaction involving such company
publicly announced at any time during the period beginning on the date of this
Agreement and ending on the Determination Date. In the event that the common
stock of any such company ceases to be publicly traded or an Acquisition
Proposal for such company to be acquired, or for such company to acquire another
company in a transaction with a value exceeding 25% of the acquiror's market
capitalization based on the table below, is announced at any time during the
period beginning on the date of this Agreement and ending on the Determination
Date, such company will be removed from the Index Group, and the weights
attributed to the remaining companies will be adjusted proportionately for
purposes of determining the Final Index Price and the Initial Index Price. The
financial institution holding companies and the weights attributed to them are
as follows:
<Table>
<Caption>
MARKET CAP MARKET CAP 7/1/2004 WEIGHTED
COMPANY NAME TICKER (MILLIONS) WEIGHTING PRICE PRICE
------------ ------ ---------- ---------- -------- --------
1. Anchor BanCorp Wisconsin Inc. ABCW 607.70 3.9% $ 25.64 $ 0.99
2. Bank Mutual Corporation BKMU 858.70 5.5% $ 10.99 $ 0.60
3. BankAtlantic Bancorp, Inc. BBX 1,004.80 6.4% $ 17.24 $ 1.10
4. BankUnited Financial Corporation BKUNA 759.70 4.8% $ 25.73 $ 1.24
5. Dime Community Bancshares, Inc. DCOM 652.00 4.1% $ 17.19 $ 0.71
6. Fidelity Bankshares, Inc. FFFL 534.20 3.4% $ 33.96 $ 1.15
7. First Financial Holdings, Inc. FFCH 362.20 2.3% $ 28.38 $ 0.65
8. First Niagara Financial Group, Inc. FNFG 1,009.50 6.4% $ 11.98 $ 0.77
9. First Place Financial Corp. FPFC 285.50 1.8% $ 17.77 $ 0.32
10. Flushing Financial Corporation FFIC 342.90 2.2% $ 17.31 $ 0.38
11. Harbor Florida Bancshares, Inc. HARB 654.20 4.2% $ 27.23 $ 1.13
12. Independence Community Bank Corp. ICBC 3,019.20 19.2% $ 36.25 $ 6.95
13. KNBT Bancorp, Inc. KNBT 510.10 3.2% $ 16.67 $ 0.54
14. NewAlliance Bancshares, Inc. NABC 1,593.70 10.1% $ 14.29 $ 1.45
15. OceanFirst Financial Corp. OCFC 319.60 2.0% $ 23.85 $ 0.48
16. Provident Bancorp, Inc. PBCP 451.70 2.9% $ 11.23 $ 0.32
17. Provident Financial Services, Inc. PFS 1,055.60 6.7% $ 17.35 $ 1.16
18. TrustCo Bank Corp NY TRST 974.70 6.2% $ 12.82 $ 0.79
19. United Community Financial Corp. UCFC 404.90 2.6% $ 12.36 $ 0.32
20. WSFS Financial Corporation WSFS 350.80 2.2% $ 47.74 $ 1.06
------------------------------------------------------------------------------------------------------
WEIGHTED INDEX SHARE PRICE 15,752 100.0% $ 22.12
------------------------------------------------------------------------------------------------------
</Table>
"Index Ratio" shall be the Final Index Price divided by the Initial Index
Price.
"Initial Index Price" means the sum of the per share closing sales price of
the common stock of each company comprising the Index Group multiplied by the
applicable weighting, as such prices are reported on the consolidated
transaction reporting system for the market or exchange on which such common
stock is principally traded, for the ten consecutive trading days ended and
including July 1, 2004.
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"Initial Brookline Bancorp Market Value" means the average of the daily
closing sales prices of a share of Brookline Bancorp Common Stock, as reported
on the Nasdaq, for the ten consecutive trading days ended and including July 1,
2004, adjusted as indicated in the last sentence of this Section 11.1.9.
"Brookline Bancorp Market Value" shall be the average of the daily closing
sales prices of a share of Brookline Bancorp Common Stock as reported on the
Nasdaq for the ten consecutive trading days immediately preceding the
Determination Date.
If Brookline Bancorp or any company belonging to the Index Group declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the date of this
Agreement and the Determination Date, the prices for the common stock of such
company shall be appropriately adjusted for the purposes of applying this
Section 11.1.9.
11.2. EFFECT OF TERMINATION.
11.2.1. In the event of termination of this Agreement pursuant
to any provision of Section 11.1, this Agreement shall forthwith become void and
have no further force, except that (i) the provisions of Sections 11.2, 12.1,
12.2, 12.3, 12.4, 12.5, 12.6, 12.9, 12.10, 12.11, and any other Section which,
by its terms, relates to post-termination rights or obligations, shall survive
such termination of this Agreement and remain in full force and effect.
11.2.2. If this Agreement is terminated, expenses and damages
of the parties hereto shall be determined as follows:
(A) Except as provided below, whether or not the
Merger is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses.
(B) In the event of a termination of this Agreement
because of a willful breach of any representation, warranty, covenant or
agreement contained in this Agreement, the breaching party shall remain liable
for any and all damages, costs and expenses, including all reasonable attorneys'
fees, sustained or incurred by the non-breaching party as a result thereof or in
connection therewith or with respect to the enforcement of its rights hereunder.
(C) As a condition of Brookline Bancorp's willingness,
and in order to induce Brookline Bancorp to enter into this Agreement, and to
reimburse Brookline Bancorp for incurring the costs and expenses related to
entering into this Agreement and consummating the transactions contemplated by
this Agreement, MFI hereby agrees to pay Brookline Bancorp, and Brookline
Bancorp shall be entitled to payment of, a fee of $3,250,000 (the "Fee"), within
three business days after written demand for payment is made by Brookline
Bancorp, following the occurrence of any of the events set forth below:
(i) MFI terminates this Agreement pursuant to Section
11.1.8 or Brookline Bancorp terminates this Agreement pursuant to Section
11.1.7; or
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(ii) The entering into a definitive agreement by MFI
relating to an Acquisition Proposal or the consummation of an Acquisition
Proposal involving MFI within twelve months after the occurrence of any of
the following: (i) the termination of this Agreement by Brookline Bancorp
pursuant to Section 11.1.2 or 11.1.3 because of a willful breach by MFI or
any MFI Subsidiary after the occurrence of an Acquisition Proposal has been
publicly announced or otherwise made known to MFI; or (ii) the termination
of this Agreement by Brookline Bancorp or MFI pursuant to Section 11.1.5
because of the failure of the stockholders of MFI to approve this Agreement
at the MFI Stockholders Meeting after the occurrence of an Acquisition
Proposal has been publicly announced or otherwise made known to the
stockholders of MFI.
(D) If demand for payment of the Fee is made pursuant
to Section 11.2.2(C) and payment is timely made, then Brookline Bancorp will not
have any other rights or claims against MFI or its Subsidiaries, or their
respective officers and directors, under this Agreement, it being agreed that
the acceptance of the Fee under Section 11.2.2(C) will constitute the sole and
exclusive remedy of Brookline Bancorp against MFI and its Subsidiaries and their
respective officers and directors.
11.3. AMENDMENT, EXTENSION AND WAIVER.
Subject to applicable law, at any time prior to the Effective Time (whether
before or after approval thereof by the stockholders of MFI), the parties hereto
by action of their respective Boards of Directors, may (a) amend this Agreement,
(b) extend the time for the performance of any of the obligations or other acts
of any other party hereto, (c) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, or (d)
waive compliance with any of the agreements or conditions contained herein;
provided, however, that after any approval of this Agreement and the
transactions contemplated hereby by the stockholders of MFI, there may not be,
without further approval of such stockholders, any amendment of this Agreement
which reduces the amount or value, or changes the form of, the Merger
Consideration to be delivered to MFI's stockholders pursuant to this Agreement.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto. Any agreement on the part of a party
hereto to any extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party, but such waiver or failure
to insist on strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Any termination of this Agreement pursuant to this
Article XI may only be effected upon a vote of a majority of the entire Board of
Directors of the terminating party.
ARTICLE XII
MISCELLANEOUS
12.1. CONFIDENTIALITY.
Except as specifically set forth herein, Brookline Bancorp and MFI mutually
agree to be bound by the terms of the confidentiality agreement dated May 26,
2004 (the "Confidentiality Agreement") previously executed by the parties
hereto, which Confidentiality Agreement is hereby incorporated herein by
reference, and all information furnished by either party to the
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other party or its representatives pursuant hereto (including pursuant to
Sections 6.2 and 6.3) shall be subject to, and the parties shall hold such
information in confidence in accordance with, the provisions of the
Confidentiality Agreement. The parties hereto agree that such Confidentiality
Agreement shall continue in accordance with its terms, notwithstanding the
termination of this Agreement.
12.2. PUBLIC ANNOUNCEMENTS.
MFI and Brookline Bancorp shall cooperate with each other in the
development and distribution of all news releases and other public disclosures
with respect to this Agreement, and except as may be otherwise required by law,
neither MFI nor Brookline Bancorp shall issue any news release, or other public
announcement or communication with respect to this Agreement unless such news
release or other public announcement or communication has been mutually agreed
upon by the parties hereto.
12.3. SURVIVAL.
All representations, warranties and covenants in this Agreement or in any
instrument delivered pursuant hereto shall expire and be terminated and
extinguished at the Effective Time, except for those covenants and agreements
contained herein which by their terms apply in whole or in part after the
Effective Time.
12.4. NOTICES.
All notices or other communications hereunder shall be in writing and shall
be deemed given if delivered by receipted hand delivery or mailed by prepaid
registered or certified mail (return receipt requested) or by recognized
overnight courier addressed as follows:
If to MFI, to: John J. McGlynn
Chairman of the Board of Directors
Mystic Financial, Inc.
60 High Street
Medford, Massachusetts 02155-3820
Fax: (781) 391-8297
With required copies to: Richard A. Schaberg, Esq.
Thacher Proffitt & Wood LLP
1700 Pennsylvania Avenue, NW
Suite 800
Washington, DC 20006
Fax: (202) 626-1930
Attention:
Fax: (212) 403-2000
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If to Brookline Bancorp, to: Richard P. Chapman, Jr.
President and Chief Executive Officer
Brookline
Bancorp, Inc.
160 Washington Street
Brookline, Massachusetts 02445
Fax: (617) 730-3518
With required copies to: John J. Gorman, Esq.
Luse Gorman Pomerenk & Schick, P.C.
5335 Wisconsin Avenue, N.W., Suite 400
Washington, D.C. 20015
Fax: (202) 362-2902
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: (a) as of the
date delivered by hand; (b) three (3) business days after being delivered to the
U.S. mail, postage prepaid; or (c) one (1) business day after being delivered to
the overnight courier.
12.5. PARTIES IN INTEREST.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
that neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party hereto without the prior written
consent of the other party, and that (except as provided in Article III and
Section 7.8) nothing in this Agreement is intended to confer upon any other
person any rights or remedies under or by reason of this Agreement.
12.6. COMPLETE AGREEMENT.
This Agreement, including the Exhibits and Disclosure Schedules hereto and
the documents and other writings referred to herein or therein or delivered
pursuant hereto, and the Confidentiality Agreements referred to in Section 12.1,
contains the entire agreement and understanding of the parties with respect to
its subject matter. There are no restrictions, agreements, promises, warranties,
covenants or undertakings between the parties other than those expressly set
forth herein or therein. This Agreement supersedes all prior agreements and
understandings (other than the Confidentiality Agreement referred to in Section
12.1) between the parties, both written and oral, with respect to its subject
matter.
12.7. COUNTERPARTS.
This Agreement may be executed in one or more counterparts all of which
shall be considered one and the same agreement and each of which shall be deemed
an original. A facsimile copy of a signature page shall be deemed to be an
original signature page.
12.8. 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
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invalidity, illegality or unenforceability shall not affect any other provisions
of this Agreement and the parties shall use their reasonable efforts to
substitute a valid, legal and enforceable provision which, insofar as practical,
implements the purposes and intents of this Agreement.
12.9. GOVERNING LAW.
This Agreement shall be governed by the laws of Delaware, without giving
effect to its principles of conflicts of laws.
12.10. INTERPRETATION.
When a reference is made in this Agreement to Sections or Exhibits, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. The recitals hereto constitute an integral part of this Agreement.
References to Sections include subsections, which are part of the related
Section (e.g., a section numbered "Section 5.5.1" would be part of "Section 5.5"
and references to "Section 5.5" would also refer to material contained in the
subsection described as "Section 5.5.1"). The table of contents, index 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". The phrases
"the date of this Agreement", "the date hereof" and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to the date set
forth in the Recitals to this Agreement. The parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.
12.11. 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 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.
12.12. WAIVER OF TRIAL BY JURY.
The parties hereto hereby knowingly, voluntarily and intentionally waive
the right any may have to a trial by jury in respect to any litigation based
hereon, or rising out of, under, or in connection with this agreement and any
agreement contemplated to be executed in connection herewith, or any course of
conduct, course of dealing, statements (whether verbal or written) or actions of
either party in connection with such agreements.
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IN WITNESS WHEREOF, Brookline Bancorp and MFI have caused this Agreement to
be executed under seal by their duly authorized officers as of the date first
set forth above.
BROOKLINE BANCORP, INC.
Dated: July 7, 2004 By: /s/ Richard P. Chapman, Jr.
------------------------------------
Name: Richard P. Chapman, Jr.
Title: President and Chief Executive
Officer
MYSTIC FINANCIAL, INC.
Dated: July 7, 2004 By: /s/ John J. McGlynn
------------------------------------
Name: John J. McGlynn
Title: Chairman of the Board of
Directors
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EXHIBIT A
VOTING AGREEMENT
July 7, 2004
Brookline Bancorp, Inc.
160 Washington Street
Brookline, Massachusetts 02447
Gentlemen:
Brookline Bancorp, Inc. ("Brookline Bancorp") and Mystic Financial,
Inc. ("MFI") have entered into an Agreement and Plan of Merger dated as of July
7, 2004 (the "Merger Agreement"), pursuant to which, subject to the terms and
conditions set forth therein, (a) MFI will merge with and into Brookline
Bancorp, with Brookline Bancorp surviving the merger, to be followed by the
merger of Medford Co-Operative with and into Brookline Bank, with Brookline Bank
surviving the merger (collectively referred to as the "Merger"); and (b)
shareholders of MFI will receive common stock of Brookline Bancorp and/or cash,
as stated in the Merger Agreement. Terms that are undefined herein shall have
the meaning set forth in the Merger Agreement.
Brookline Bancorp has requested, as a condition to its execution and
delivery to MFI of the Merger Agreement, that the undersigned, being directors
and executive officers of MFI and Medford Co-Operative, execute and deliver to
Brookline Bancorp this Letter Agreement.
Each of the undersigned, in order to induce Brookline Bancorp to
execute and deliver to MFI the Merger Agreement, and intending to be legally
bound, hereby irrevocably:
(a) Agrees to be present (in person or by proxy) at all meetings of
shareholders of MFI called to vote for approval of the Merger Agreement and the
Merger so that all shares of common stock of MFI over which the undersigned or a
member of the undersigned's immediate family now has sole or shared voting power
will be counted for the purpose of determining the presence of a quorum at such
meetings and to vote, or cause to be voted, all such shares (i) in favor of
approval and adoption of the Merger Agreement and the transactions contemplated
thereby (including any amendments or modifications of the terms thereof approved
by the Board of Directors of MFI), and (ii) against approval or adoption of any
other merger, business combination, recapitalization, partial liquidation or
similar transaction involving MFI, it being understood that as to immediate
family members, the undersigned will use his/her reasonable efforts to cause the
shares to be present and voted in accordance with (i) and (ii) above;
(b) Agrees not to vote or execute any written consent to rescind or
amend in any manner any prior vote or written consent, as a shareholder of MFI,
to approve or adopt the Merger Agreement;
(c) Agrees not to sell, transfer or otherwise dispose of any common
stock of MFI on
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or prior to the date of the meeting of MFI shareholders to vote on the Merger
Agreement, except for transfers to charities, charitable trusts, or other
charitable organizations under Section 501(c)(3) of the Code, lineal descendant
or a spouse of the undersigned, or to a trust or other entity for the benefit of
one or more of the foregoing persons, provided that the transferee agrees in
writing to be bound by the terms of this Letter Agreement; and
(d) Agrees in accordance with Section 6.10 of the Merger Agreement not
to solicit, initiate or engage in any negotiations or discussions with any party
other than Brookline Bancorp with respect to an Acquisition Proposal, except as
otherwise permitted by Section 6.10.
(e) Represents that the undersigned has the capacity to enter into this
Letter Agreement and that it is a valid and binding obligation enforceable
against the undersigned in accordance with its terms, subject to bankruptcy,
insolvency and other laws affecting creditors' rights and general equitable
principles.
The obligations set forth herein shall terminate concurrently with any
termination of the Merger Agreement.
----------------------------
This Letter Agreement may be executed in two or more counterparts, each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same Letter Agreement.
----------------------------
The undersigned intend to be legally bound hereby.
Sincerely,
---------------------------------------------
Name
---------------------------------------------
Title
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EXHIBIT B
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of the
_____________ day of _________________, 2005, by and between Medford
Co-operative Bank, a Massachusetts-chartered co-operative bank, and Brookline
Bank, a Federal savings association.
RECITALS:
1. Medford Co-operative Bank and Brookline Bank are wholly-owned
subsidiaries of Brookline Bancorp, Inc., a Delaware corporation ("Brookline
Bancorp");
2. Brookline Bancorp desires that Medford Co-operative Bank merge with
and into Brookline Bank following the consummation of the merger of Mystic
Financial, Inc., a Delaware corporation ("MFI"), with and into Brookline
Bancorp, or a subsidiary thereof, pursuant to the Agreement and Plan of Merger,
dated as of July 7, 2004, by and between Brookline Bancorp and MFI (the "Holding
Company Merger Agreement"); and
3. In consideration of the premises and the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Medford Co-operative
Bank and Brookline Bank hereby agree as follows:
1. DEFINITIONS
Each of the following terms shall have the meanings set forth below:
1.1 "EFFECTIVE TIME" shall refer to the date and time at which the
Merger becomes effective in accordance with the rules and regulations of the
OTS.
1.2 "MERGER" shall refer to the merger of Medford Co-operative Bank
with and into Brookline Bank as provided in Section 2.1 of this Agreement.
1.3 "HOLDING COMPANY MERGER" shall refer to the merger of MFI with and
into Brookline Bancorp as contemplated by the Holding Company Merger Agreement.
1.4 "MERGING INSTITUTIONS" shall collectively refer to Medford
Co-operative Bank and Brookline Bank.
1.5 "OTS" shall refer to the Office of Thrift Supervision.
1.6 "SURVIVING INSTITUTION" shall refer to Brookline Bank as the
surviving institution of the Merger.
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2. TERMS OF THE MERGER
2.1 THE MERGER.
(a) Subject to the terms and conditions set forth in this Agreement, at
the Effective Time, Medford Co-operative Bank shall be merged with and into
Brookline Bank pursuant to applicable Federal laws and regulations. Brookline
Bank shall be the Surviving Institution of the Merger and shall continue as a
savings association chartered and regulated by the OTS. As of a result of the
Merger, (i) each share of common stock, par value $1.00 per share, of Medford
Co-operative Bank issued and outstanding immediately prior to the Effective Time
shall be canceled and (ii) each share of common stock, par value $1.00 per
share, of Brookline Bank issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding and shall constitute the only
shares of capital stock of the Surviving Institution issued and outstanding
following consummation of the Merger.
(b) The consummation of the transactions contemplated by this Agreement
is specifically conditioned upon receipt of all necessary regulatory approvals,
including the approval of the OTS, and the expiration of all applicable waiting
periods with respect to both the Holding Company Merger and the Merger. The
stockholder of Medford Co-operative Bank and Brookline Bank shall have taken
appropriate action to vote to approve this Agreement and the Merger.
(c) At the Effective Time, the Surviving Institution shall be
considered the same business and corporate entity as each of the Merging
Institutions and thereupon and thereafter all the property, rights, powers and
franchises of each of the Merging Institutions shall vest in the Surviving
Institution and the Surviving Institution shall be subject to and be deemed to
have assumed all of the debts, liabilities, obligations and duties of each of
the Merging Institutions and shall have succeeded to all of each of their
relationships, fiduciary or otherwise, as fully and to the same extent as if
such property, rights, privileges, powers, franchises, debts, obligations,
duties and relationship had been originally acquired, incurred or entered into
by the Surviving Institution. In addition, any reference to either of the
Merging Institutions in any contract, will or document, whether executed or
taking effect before or after the Effective Time, shall be considered a
reference to the Surviving Institution if not inconsistent with the other
provisions of the contract, will or document; and any pending, action or other
judicial proceeding to which either of the Merging Institutions is a party shall
not be deemed to have abated or to have been discontinued by reason of the
Merger, but may be prosecuted to final judgment, order or decree in the same
manner as if the Merger had not been made or the Surviving Institution may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of the Merging Institutions if the Merger had not occurred.
(d) All deposit accounts of Medford Co-operative Bank shall be and
become deposit accounts in the Surviving Institution without change in their
respective terms, maturity, minimum required balances or withdrawal value.
Appropriate evidence of the deposit account in the Surviving Institution shall
be provided by the Surviving Institution to each deposit account holder of
Medford Co-operative Bank, as necessary, after consummation of the Merger. Any
liquidation account, as
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such term is defined in OTS regulations, maintained by Medford Co-operative Bank
shall be assumed by Brookline Bank as the Surviving Institution.
(e) All deposit accounts of Brookline Bank prior to consummation of the
Merger shall continue to be deposit accounts in the Surviving Institution after
consummation of the Merger without any change whatsoever in any of the
provisions of such deposit accounts, including, without limitation, their
respective terms, maturity, minimum required balances or withdrawal value.
(f) The principal office of Brookline Bank shall continue to be 160
Washington Street, Brookline, Massachusetts after the Effective Time. The former
offices of Medford Co-operative Bank will be operated as offices of Brookline
Bank immediately following the Effective Time.
2.2 EFFECTIVE TIME; CLOSING DATE. A closing in respect of the
transactions contemplated by this Agreement (the "Closing") shall be held at the
offices of Brookline Bank, on such time and date as Brookline Bank shall
designate, which date shall be the date of the Effective Time of the Holding
Company Merger.
2.3 NAME OF SURVIVING INSTITUTION. The name of the Surviving
Institution shall be "Brookline Bank."
2.4 CHARTER. On and after the Effective Time, the Charter of Brookline
Bank as a Federal savings association shall be the Charter of the Surviving
Institution until amended in accordance with applicable law.
2.5 BYLAWS. On and after the Effective Time, the Bylaws of Brookline
Bank as a Federal savings association shall be the Bylaws of the Surviving
Institution until amended in accordance with applicable law.
2.6 DIRECTORS. Except as otherwise provided in the Merger Agreement, on
and after the Effective Time, until changed in accordance with the Charter and
Bylaws of the Surviving Institution, the directors of the Surviving Institution
shall be those persons serving as directors of Brookline Bank immediately prior
to the Effective Time, subject to the provision of Section 2.5 of the Holding
Company Merger Agreement. The directors of the Surviving Institution shall hold
office in accordance with the Charter and Bylaws of the Surviving Institution.
3. MISCELLANEOUS
3.1 CONDITIONS PRECEDENT. The respective obligations of each party
under this Agreement shall be subject to: (i) the receipt or waiver of all
required regulatory approvals and the expiration of any required waiting periods
specified by applicable Federal law; (ii) the completion of the Holding Company
Merger; and (iii) the approval of this Agreement by Brookline Bancorp in its
capacity as sole stockholder of Medford Co-operative Bank and Brookline Bank.
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3.2 AMENDMENTS. To the extent permitted by the applicable Federal
banking law, this Agreement may be amended by a subsequent writing signed by the
parties hereto upon the approval of the board of directors of each of the
parties hereto.
3.3 SUCCESSORS. This Agreement shall be binding on the successors of
Medford Co-operative Bank and Brookline Bank.
3.4 GOVERNING LAW. This Agreement shall be governed by the laws of the
United States of America except to the extent Massachusetts law governs.
3.5 PARAGRAPH HEADINGS. The paragraph headings in this Agreement are
for convenience only; they form no part of this Agreement and shall not affect
its interpretation.
3.6 MISCELLANEOUS. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which constitute one and the
same instrument.
3.7. TERMINATION. This Agreement shall terminate upon the termination
of the Holding Company Merger Agreement in accordance with its terms. This
Agreement also may be terminated at any time prior to the Effective Time by
mutual consent of the parties. In the event of the termination of this Agreement
as provided in this Section 3.7, this Agreement shall forthwith become null and
void and of no further force or effect and there shall be no liability or
obligation under this Agreement on the part of any of the parties hereto or any
of their respective directors, officers or affiliates.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Medford Co-operative Bank and Brookline Bank have
caused this Agreement to be executed by their duly authorized officers as of the
day and year first above written.
ATTEST: MEDFORD CO-OPERATIVE BANK
By:
- --------------------------- -------------------------------
John J. McGlynn
Secretary Chairman of the Board
ATTEST: BROOKLINE BANK
By:
- --------------------------- -------------------------------
Charles H. Peck Richard P. Chapman, Jr.
Secretary Chief Executive Officer
<Page>
EXHIBIT C
AFFILIATE AGREEMENT
July 7, 2004
Brookline Bancorp, Inc.
160 Washington Street
Brookline, Massachusetts 02447
Gentlemen:
I have been advised that I might be considered to be an "affiliate" of
Mystic Financial, Inc., a Delaware corporation ("MFI"), for purposes of
paragraphs (c) and (d) of Rule 145 of the Securities and Exchange Commission
(the "SEC") under the Securities Act of 1933, as amended (the "Securities Act").
Brookline Bancorp, Inc. ("Brookline Bancorp") and MFI have entered into
an Agreement and Plan of Merger, dated as of July 7, 2004 (the "Agreement").
Upon consummation of the merger contemplated by the Agreement (the "Merger"), I
may receive shares of common stock of Brookline Bancorp ("Brookline Bancorp
Common Stock") in exchange for my shares of common stock, par value $.01 per
share, of MFI ("MFI Common Stock"). This agreement is hereinafter referred to as
the "Letter Agreement." Terms that are undefined herein shall have the meaning
set forth in the Merger Agreement.
I represent and warrant to, and agree with, Brookline Bancorp as
follows:
1. I have read this Letter Agreement and the Agreement and have
discussed their requirements and other applicable limitations upon my ability to
sell, pledge, transfer or otherwise dispose of shares of Brookline Bancorp
Common Stock that I may receive pursuant to the Merger, to the extent I felt
necessary, with my counsel or counsel for MFI.
2. I have been advised that any issuance of shares of Brookline Bancorp
Common Stock to me pursuant to the Merger will be registered with the SEC. I
have also been advised, however, that, because I may be an "affiliate" of MFI at
the time the Merger will be submitted for a vote of the stockholders of MFI and
my disposition of such shares has not been registered under the Securities Act,
I must hold such shares indefinitely unless (i) such disposition of such shares
is subject to an effective registration statement and to the availability of a
prospectus under the Securities Act, (ii) a sale of such shares is made in
conformity with the provisions of Rule 145(d) under the Securities Act, (iii) a
sale of such shares is made following expiration of the restrictive period set
forth in Rule 145(d)(2) or (3) or (iv) in an opinion of counsel, in form and
substance reasonably satisfactory to Brookline Bancorp, such disposition of such
shares is otherwise exempt from registration under the Securities Act.
3. I understand and agree that stop transfer instructions will be given
to the transfer agent of Brookline Bancorp with respect to the shares of
Brookline Bancorp Common Stock I
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receive pursuant to the Merger and that there will be placed on the certificate
representing such shares, or any certificates delivered in substitution
therefor, a legend stating in substance:
The shares represented by this certificate were issued in a
transaction to which Rule 145 under the Securities Act applies. The
shares represented by this certificate may only be transferred in
accordance with Rule 145(d) or an effective registration statement or
exemption from registration under the Securities Act.
4. Brookline Bancorp reserves the right to put an appropriate legend on
the certificate issued to my transferee unless (i) a transfer of my shares of
the Brookline Bancorp Common Stock is a sale made in conformity with the
provisions of Rule 145(d) or made pursuant to any effective registration
statement under the Securities Act, or (ii) I shall have delivered to Brookline
Bancorp an opinion of counsel reasonably satisfactory to Brookline Bancorp to
the effect that such legend is not required for purposes of the Securities Act.
5. I recognize and agree that the foregoing provisions also apply to
(i) my spouse, (ii) any relative of mine or my spouse's occupying my home, (iii)
any trust or estate in which I, my spouse or any such relative owns at least 10%
beneficial interest or of which any of us serves as trustee, executor or in any
similar capacity and (iv) any corporation or other organization in which I, my
spouse and any such relative collectively own at least 10% of any class of
equity securities or of the equity interest.
6. I understand and agree that Brookline Bancorp is under no obligation
to register under the Securities Act the sale, transfer or other disposition of
the shares of Brookline Bancorp that I receive as a result of the Merger.
7. I further recognize that in the event I become a director or officer
of Brookline Bancorp upon consummation of the Merger, any sale of Brookline
Bancorp Common Stock by me may subject me to liability pursuant to Section 16(b)
of the Securities Exchange Act of 1934, as amended.
8. Execution of this Letter Agreement should not be construed as an
admission on my part that I am an "affiliate" of MFI as described in the first
paragraph of this Letter Agreement or as a waiver of any rights I may have to
object to any claim that I am such an affiliate on or after the date of this
Letter Agreement.
It is understood and agreed that this Letter Agreement shall terminate
and be of no further force and effect if the Agreement is terminated in
accordance with its terms. It is also understood and agreed that this Letter
Agreement shall terminate and be of no further force and effect and the stop
transfer instructions set forth above shall be lifted forthwith upon the
delivery by the undersigned to Brookline Bancorp of an opinion of counsel in
form and substance reasonably satisfactory to Brookline Bancorp, or other
evidence reasonably satisfactory to Brookline Bancorp, to the effect that a
transfer of my shares of Brookline Bancorp Common Stock will not violate the
Securities Act or any of the rules and regulations of the SEC thereunder. In
addition, it is understood and agreed that the legend set forth in Paragraph 3
above shall be removed forthwith from the certificate or certificates
representing my shares of Brookline Bancorp Common Stock upon (i) expiration of
the restrictive period set forth in Rule 145(d)(2), so long as Brookline
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Bancorp is then in compliance with SEC Rule 144(c), or the restrictive period
set forth in Rule 145(d)(3) or (ii) if Brookline Bancorp shall have received an
opinion of counsel in form and substance reasonably satisfactory to Brookline
Bancorp, or other evidence satisfactory to Brookline Bancorp that a transfer of
my shares of the Brookline Bancorp Common Stock represented by such certificate
or certificates will be a sale made in conformity with the provisions of Rule
145(d), made pursuant to an effective registration statement under the
Securities Act or made pursuant to an exemption from registration under the
Securities Act.
* * * * *
By acceptance hereof, Brookline Bancorp agrees that, for a period of
two years after the effective time of the Merger, so long as it is obligated to
file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, it will use its reasonable best efforts to timely file such
reports so that the public information requirements of Rule 144(c) promulgated
under the Securities Act are satisfied and the resale provisions of Rule
145(d)(1) and (2) are therefore available to me if I desire to transfer
Brookline Bancorp Common Stock issued to me in the Merger.
This Letter Agreement shall be binding on my heirs, legal
representatives and successors.
Very truly yours,
Signature
--------------------------------------
Name (Please Print)
Accepted as of the date first above written
BROOKLINE BANCORP, INC.
By:
------------------------------------
Name:
Title:
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