EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
By and Among
CITIZENS BANK OF MASSACHUSETTS
CITIZENS FINANCIAL GROUP, INC.
and
MEDFORD BANCORP, INC.
Dated as of June 13, 2002
TABLE OF CONTENTS
ARTICLE I - THE MERGER.......................................................1
1.1 The Merger.......................................................1
1.2 Effective Time...................................................2
1.3 Effects of the Merger............................................2
1.4 Conversion of Seller Common Stock................................2
1.5 Merger Sub Common Stock..........................................3
1.6 Employee Stock Options...........................................3
1.7 Articles of Organization.........................................4
1.8 By-Laws..........................................................4
1.9 Directors and Officers...........................................4
ARTICLE II - EXCHANGE OF SHARES..............................................4
2.1 Buyer to Deposit Aggregate Merger Consideration..................4
2.2 Exchange of Shares...............................................4
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE BUYER....................5
3.1 Corporate Organization...........................................5
3.2 Authority; No Violation..........................................6
3.3 Consents and Approvals...........................................6
3.4 Financial Statements.............................................7
3.5 Broker's Fees....................................................7
3.6 Legal Proceedings................................................7
3.7 Capital; Availability of Funds...................................7
3.8 Buyer Information................................................8
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE SELLER....................8
4.1 Corporate Organization...........................................8
4.2 Capitalization...................................................9
4.3 Authority; No Violation.........................................10
4.4 Consents and Approvals..........................................12
4.5 Financial Statements............................................12
4.6 Broker's Fees...................................................13
4.7 Absence of Certain Changes or Events............................13
4.8 Legal Proceedings...............................................14
4.9 Reports.........................................................14
4.10 Agreements with Banking Authorities.............................15
4.11 Absence of Undisclosed Liabilities..............................15
4.12 Compliance with Applicable Law..................................15
4.13 Taxes and Tax Returns...........................................16
4.14 Labor...........................................................17
4.15 Employees.......................................................17
4.16 Capitalization..................................................19
4.17 CRA, Anti-money laundering and Customer Information Security...19
(i)
4.18 Material Agreements.............................................19
4.19 Property and Leases.............................................20
4.20 Loan Portfolio..................................................21
4.21 Investment Securities...........................................21
4.22 Derivative Transactions.........................................21
4.23 Insurance.......................................................21
4.24 Environmental Matters...........................................22
4.25 Administration of Accounts......................................23
4.26 Investment Management Activities................................23
4.27 Recent Acquisitions.............................................24
4.28 Seller Rights Agreement.........................................24
4.29 State Takeover Laws.............................................24
4.30 Proxy Statement; Seller Information.............................24
4.31 Deposit/Loan Agreements.........................................24
4.32 Disclosure......................................................24
ARTICLE V - COVENANTS RELATING TO CONDUCT OF BUSINESS.......................24
5.1 Conduct of Businesses Prior to the Effective Time...............24
5.2 Seller Forbearances.............................................25
5.3 Buyer Forbearances..............................................28
5.4 System Conversions..............................................28
5.5 Certain Changes and Adjustments.................................29
5.6 Branches........................................................29
5.7 Servicing.......................................................29
5.8 Purchaser Products and Services.................................29
5.9 ALCO Management.................................................30
5.10 Deposit Incentive Plan..........................................30
5.11 Charitable Foundation...........................................30
ARTICLE VI - ADDITIONAL AGREEMENTS..........................................30
6.1 Regulatory Matters; Consents....................................30
6.2 No Solicitation.................................................31
6.3 Access to Information...........................................33
6.4 Legal Conditions to Merger......................................34
6.5 Employment and Benefit Matters..................................35
6.6 Directors' and Officers' Indemnification and Insurance..........36
6.7 Additional Agreements...........................................38
6.8 Advice of Changes...............................................38
6.9 Update of Disclosure Schedules..................................38
6.10 Current Information.............................................38
6.11 Transition Committee............................................38
6.12 Bank Merger.....................................................39
6.13 Organization of the Merger Sub..................................39
6.14 Community Commitments...........................................40
6.15 Citizens Financial Group........................................40
(ii)
6.16 Section 16 Matters..............................................40
ARTICLE VII - CONDITIONS PRECEDENT..........................................41
7.1 Conditions to Each Party's Obligations To Effect the Merger.....41
7.2 Conditions to the Obligations of the Buyer......................41
7.3 Conditions to the Obligations of the Seller.....................42
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER............................42
8.1 Termination.....................................................42
8.2 Effect of Termination...........................................43
8.3 Amendment.......................................................44
8.4 Extension; Waiver...............................................44
ARTICLE IX - MISCELLANEOUS..................................................45
9.1 Closing.........................................................45
9.2 Nonsurvival of Representations, Warranties and Agreements.......45
9.3 Expenses........................................................45
9.4 Notices.........................................................45
9.5 Interpretation..................................................46
9.6 Counterparts....................................................47
9.7 Entire Agreement................................................47
9.8 Governing Law...................................................47
9.9 Severability....................................................47
9.10 Publicity.......................................................47
9.11 Assignment; Reliance of Other Parties...........................47
9.12 Specific Performance............................................47
9.13 Alternative Structure...........................................48
9.14 Definitions.....................................................48
Exhibits
Exhibit I Agreement and Plan of Merger
Exhibit II Amendment to the Seller Rights Agreement
Exhibit III Stockholders Agreement
Schedules
4.1(c) Subsidiaries and Equity Investments
4.2(a) Capitalization
4.2(c) Subsidiaries
4.7 Certain Changes or Events
4.8 Legal Proceedings
4.9 Reports
4.13 Taxes and Tax Returns
(iii)
4.15(a) Seller Pension Plans
4.15(c) Value of Pension Assets
4.15(d) Administration of Pension Plans
4.15(h) Post-employment Benefits
4.15(i) Post-termination Benefits
4.18 Seller Contract
4.23(a) InsurancePolicies
4.23(b) O&D Life Insurance Policies
4.24(d) Environmental Matters
5.2 Seller Forbearances
7.2(e) Stockholders Agreements
(iv)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June 13,
2002, by and among, CITIZENS BANK OF MASSACHUSETTS, a Massachusetts chartered
trust company (the "Buyer"), MEDFORD BANCORP, INC., a Massachusetts corporation
(the "Seller") and for the purpose of Article III and Section 6.16, CITIZENS
FINANCIAL GROUP, INC., a Delaware corporation and the parent company of the
Buyer (the "Parent"). The capitalized terms used in this Agreement are defined
in Section 9.14 hereof.
WHEREAS, the Boards of Directors of the Buyer and the Seller have
determined that it is in the best interests of their respective stockholders and
other constituencies, as well as the communities they serve, to consummate, and
have approved, the business combination transactions provided for herein, in
which the Buyer will, subject to the terms and conditions set forth herein,
acquire the Seller;
WHEREAS, following the execution and delivery of this Agreement, the Buyer
shall take such action as is appropriate to form a subsidiary to be organized as
a corporation (the "Merger Sub") under the MBCL, and to cause the Merger Sub to
become a party to this Agreement, pursuant to which the Merger Sub shall merge
(the "Merger") with and into the Seller, upon the terms and subject to the
conditions set forth herein (the Seller and the Merger Sub being the constituent
corporations of the Merger);
WHEREAS, following the execution and delivery of this Agreement, Buyer
(sometimes referred to herein as the "Surviving Bank"), shall enter into an
Agreement and Plan of Merger (the "Bank Merger Agreement") with Medford Savings
Bank, a Massachusetts chartered savings bank and subsidiary of the Seller (the
"Seller Bank"), substantially in the form of Exhibit I hereto, providing for the
merger of the Seller Bank with and into the Buyer (the "Bank Merger") under the
MGL, promptly following the consummation of the Merger; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and to prescribe certain conditions
to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I - THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, in
accordance with the MBCL, at the Effective Time (as defined in Section 1.2
hereof), the Merger Sub shall merge with and into the Seller. The Seller shall
be the surviving corporation (hereinafter sometimes called the "Surviving
Corporation") in the Merger, and shall continue its corporate existence under
the laws of The Commonwealth of Massachusetts as a subsidiary of the Buyer. Upon
consummation of the Merger, the separate corporate existence of the Merger Sub
shall terminate.
1.2 Effective Time. The Merger shall become effective as set forth in the
articles of merger (the "Articles of Merger") which shall be submitted for
filing to the Secretary of State of The Commonwealth of Massachusetts pursuant
to Section 78(a) of the MBCL on the Closing Date. The term "Effective Time"
shall be the date and time when the Merger becomes effective, as set forth in
the Articles of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in this Agreement and in Section 80 of the
MBCL.
1.4 Conversion of Seller Common Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the Merger Sub, the Seller or
the holder of any of the shares of the Seller Common Stock (as defined below):
(a) Each share of the common stock, par value $0.50 per share, of
the Seller ("Seller Common Stock") issued and outstanding immediately prior to
the Effective Time (collectively, "Shares") (other than Shares held (x) in the
Seller's treasury or (y) directly or indirectly by the Buyer or the Seller or
any of their respective subsidiaries (except for Trust Account Shares and DPC
shares, as each such term is defined below) shall become and be converted
automatically into the right to receive in cash from the Buyer an amount equal
to $35.00 (the "Merger Consideration").
(b) All of the Shares converted into the Merger Consideration
pursuant to this Article I shall no longer be outstanding and shall
automatically be canceled and shall cease to exist as of the Effective Time, and
each certificate (each, a "Certificate") previously representing any such shares
of Seller Common Stock shall thereafter represent the right to receive the
Merger Consideration. Certificates previously representing shares of Seller
Common Stock shall be exchanged for the Merger Consideration upon the surrender
of such Certificates in accordance with Section 2.2 hereof, without any interest
thereon.
(c) At the Effective Time, all Shares that are owned by the Seller
as treasury stock and all Shares that are owned directly or indirectly by the
Buyer or the Seller or any of their respective subsidiaries (other than Shares
held directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially owned by third
parties, including Shares held in the Deferred Investment Plan for Outside
Directors dated as of November 28, 1990, as amended or restated from time to
time (the "Deferred Investment Plan") and the ESOP (any such Shares, whether
held directly or indirectly by the Buyer or the Seller, as the case may be,
being referred to herein as "Trust Account Shares") and other than any Shares
held by the Buyer or the Seller or any of their respective subsidiaries in
respect of a debt previously contracted (any such Shares which are similarly
held, whether held directly or indirectly by the Buyer or the Seller or any of
their respective subsidiaries, being referred to herein as "DPC Shares")) shall
be canceled and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(d) Notwithstanding anything in this Agreement to the contrary,
Shares which are outstanding immediately prior to the Effective Time, the
holders of which shall have delivered to the Seller a written demand for
appraisal of such Shares in the manner provided in the applicable provisions of
the MBCL ("Dissenting Shares"), shall not be converted into the
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right to receive, or be exchangeable for, the Merger Consideration otherwise
payable in exchange for such Dissenting Shares pursuant to this Section 1.4 but,
instead, the holders thereof shall be entitled to payment of the appraised value
of such Dissenting Shares in accordance with the provisions of the MBCL;
provided, however, that (i) if any holder of Dissenting Shares shall
subsequently deliver a written withdrawal of his demand for appraisal of such
Dissenting Shares or (ii) if any holder fails to establish his entitlement to
appraisal rights as provided in Sections 86 through 98 of the MBCL, such holder
or holders (as the case may be) shall forfeit the right to appraisal of such
Dissenting Shares and each of such shares shall thereupon be deemed to have been
converted into the right to receive, and to have become exchangeable for, as of
the Effective Time, the Merger Consideration otherwise payable in exchange for
such Dissenting Shares pursuant to this Section 1.4, without any interest
thereon.
(e) The Seller shall give the Buyer (i) prompt notice of any
objections filed pursuant to Sections 86 through 98 of the MBCL received by the
Seller, withdrawals of such objections, and any other instruments served in
connection with such objections pursuant to the MBCL and received by the Seller,
and (ii) the opportunity to participate in all negotiations and proceedings with
respect to objections under the MBCL consistent with the obligations of the
Seller thereunder. The Seller shall not, except with the prior written consent
of the Buyer, (x) make any payment with respect to, or to any person making, any
such objection, (y) offer to settle or settle any such objections or (z) waive
any failure to timely deliver a written objection in accordance with the MBCL.
1.5 Merger Sub Common Stock. At and after the Effective Time, each share
of common stock, par value $.01 per share, of the Merger Sub issued and
outstanding immediately prior to the Effective Time shall become and be
converted automatically into one share of common stock of the Surviving
Corporation.
1.6 Employee Stock Options. Prior to and effective as of the Effective
Time, the Seller shall take all such action as is necessary to terminate,
subject to compliance with this Section 1.6, the Seller 2002 Stock Option Plan,
the Seller 1986 Stock Option Plan and the Seller 1993 Stock Option Plan
(collectively, the "Seller Stock Option Plans"), and shall provide written
notice to each holder of a then outstanding stock option to purchase shares of
Seller Common Stock pursuant to the Seller Stock Option Plans (whether or not
such stock option is then vested or exercisable), that such stock option shall
be, as at the date of such notice, exercisable in full and that such stock
option shall terminate at the Effective Time and that, if such stock option is
not exercised or otherwise terminated before the Effective Time, such holder
shall be entitled to receive in cancellation of such option a cash payment from
the Seller at the Closing in an amount equal to the excess of the Merger
Consideration over the per share exercise price of such stock option, multiplied
by the number of shares of Seller Common Stock covered by such stock option,
subject to any required withholding of taxes. Subject to the foregoing, the
Seller Stock Option Plans and all options issued thereunder shall terminate at
the Effective Time. The Seller hereby represents and warrants to the Buyer that
the maximum number of shares of Seller Common Stock subject to issuance pursuant
to the exercise of stock options issued and outstanding under the Seller Stock
Option Plans is not and shall not be at or prior to the Effective Time more than
390,000.
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1.7 Articles of Organization. Unless otherwise provided by the Buyer, at
the Effective Time, the Articles of Organization of the Seller, as in effect at
the Effective Time, shall be the Articles of Organization of the Surviving
Corporation until thereafter amended in accordance with applicable law.
1.8 By-Laws. At the Effective Time, the By-Laws of the Merger Sub, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
1.9 Directors and Officers. The directors of Merger Sub immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles of Organization
and By-laws of the Surviving Corporation, and the officers of Merger Sub
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
ARTICLE II - EXCHANGE OF SHARES
2.1 Buyer to Deposit Aggregate Merger Consideration. At or prior to the
Effective Time, the Buyer shall pay, or shall cause to be paid, to a bank or
trust company selected by the Buyer and reasonably acceptable to the Seller
(which may be a subsidiary or other Affiliate of the Buyer) (the "Exchange
Agent"), for the benefit of the holders of Certificates, for exchange in
accordance with this Article II, such amount of cash as is sufficient to pay the
aggregate Merger Consideration which holders of Shares are entitled to receive
pursuant to Section 1.4 hereof.
2.2 Exchange of Shares.
(a) As soon as practicable after the Effective Time, and in no event
later than three (3) business days thereafter, the Buyer shall cause the
Exchange Agent to mail to each holder of record of a Certificate or Certificates
a form letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent) and instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration into which the shares of Seller Common Stock represented by such
Certificate or Certificates shall have been converted pursuant to this
Agreement. Upon proper surrender of a Certificate for exchange and cancellation
to the Exchange Agent, together with such properly completed letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor, the Merger Consideration, and the Certificate so
surrendered shall forthwith be canceled. No interest shall accrue or be paid on
the Merger Consideration payable upon the surrender of any Certificate for the
benefit of the holder of such Certificate. If payment of the Merger
Consideration is to be made to a person other than the person in whose name the
surrendered Certificate is registered on the stock transfer books of the Seller,
it shall be a condition of payment that the Certificate so surrendered shall be
endorsed properly or otherwise be in proper form for transfer and that the
person requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than
4
the registered holder of the Certificate surrendered or shall have established
to the satisfaction of the Surviving Corporation that such taxes either have
been paid or are not applicable.
(b) At any time following the expiration of the sixth month after
the Effective Time, the Buyer or the Surviving Corporation shall be entitled to
require the Exchange Agent to deliver to it any funds which had been made
available to the Exchange Agent and not disbursed to holders of Shares
(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 the Buyer and the Surviving
Corporation only as general creditors thereof with respect to any Merger
Consideration that may be payable upon due surrender of the Certificates held by
them.
(c) After the Effective Time, there shall be no transfers on the
stock transfer books of the Seller of the shares of Seller Common Stock which
were issued and outstanding immediately prior to the Effective Time. From and
after the Effective Time, the holders of shares of Seller Common Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares except as otherwise provided herein or by
applicable law. If, after the Effective Time, Certificates representing such
shares are presented for transfer to the Exchange Agent, they shall be canceled
and exchanged for the Merger Consideration as provided in this Article II.
(d) Neither the Buyer nor the Seller nor any other Person shall be
liable to any former holder of Shares for any shares or any dividends or
distributions with respect thereto or any Merger Consideration delivered in
respect of any such shares properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(e) In the event any Certificate shall have been lost, stolen or
destroyed, upon receipt of appropriate evidence as to such loss, theft or
destruction and to the ownership of such Certificate by the Person claiming such
Certificate to be lost, stolen or destroyed, and the receipt by the Buyer of
appropriate and customary indemnification, the Buyer will issue in exchange for
such lost, stolen or destroyed Certificate, the Merger Consideration, as
determined in accordance with this Article II.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller as follows:
3.1 Corporate Organization.
(a) The Buyer is a trust company duly organized, validly existing
and in good standing under the laws of The Commonwealth of Massachusetts. The
Parent is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
(b) Each of the Parent and the Buyer has all requisite corporate
power and authority to own, lease or operate all of its properties and assets
and to carry on its business as it is now being conducted. Each of the Parent
and the Buyer is duly licensed or qualified to do business and is in corporate
good standing in each jurisdiction in which the nature of the business
5
conducted by it or the character or location of the properties and assets owned,
leased or operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified and in good standing would not
result in a Material Adverse Effect.
3.2 Authority; No Violation.
(a) Each of the Parent and the Buyer has all requisite corporate
power and authority to execute and deliver this Agreement and the other
Transaction Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by the Board
of Directors of each of the Buyer and the Parent. Except for the adoption of the
Bank Merger Agreement by the Buyer's stockholders, no other corporate
proceedings on the part of the Parent or the Buyer are necessary to consummate
the Merger. This Agreement and the other Transaction Documents have been duly
and validly executed and delivered by each of the Parent and the Buyer and
(assuming due authorization, execution and delivery by the Seller and the Seller
Bank), constitute the valid and binding obligation of the Parent and the Buyer
enforceable against each of them in accordance with their respective terms. The
Buyer shall cause the Bank Merger Agreement to be approved by its stockholders
prior to the Effective Time.
(b) Neither the execution and delivery of this Agreement or the
other Transaction Documents by the Parent and the Buyer nor the consummation by
the Parent and the Buyer of the transactions contemplated hereby or thereby; nor
compliance by the Parent and the Buyer with any of the terms or provisions
hereof or thereof, will (i) assuming that the consents and approvals referred to
in Section 3.3 hereof are duly obtained, violate in any respect any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Parent or the Buyer, or (ii) violate, conflict with, or result
in a breach of, any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of, accelerate the performance required by, or result in a right
of termination or acceleration or the creation of any lien, security interest,
charge or other encumbrance upon any of the properties or assets of the Parent
or the Buyer under any of the terms, conditions or provisions of (A) the
Articles of Organization or other charter document of like nature or By-Laws of
the Parent or the Buyer, or (B) any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which the
Parent or the Buyer is a party as issuer, guarantor or obligor, or by which it
or any of its properties or assets may be bound or affected, except, in the case
of clause (ii)(B) above, for such violations, conflicts, breaches or defaults
which either individually or in the aggregate will not have a Material Adverse
Effect on the Parent or the Buyer.
3.3 Consents and Approvals. Except for consents, waivers, notifications to
or approvals of, or filings or registrations with, the FDIC, the Federal Reserve
Board, the Massachusetts Commissioner, the MBBI, the Massachusetts Depositors
Insurance Fund ("DIF"), the Massachusetts Housing Partnership Fund ("MHPF"), the
Secretary of State of The Commonwealth of Massachusetts, the DOJ, The London
Stock Exchange Limited, and the Financial Services Authority, no consents,
waivers or approvals of or filings or registrations with any public body or
authority are necessary, and no consents or approvals of any third parties are
necessary, in connection with (a) the execution and delivery by the Parent and
the Buyer of this
6
Agreement and the Bank Merger Agreement or (b) the consummation by the Parent
and the Buyer of the Merger or the Bank Merger. The Buyer does not have any
knowledge of any fact or circumstance relating to the Buyer or its subsidiaries
or other Affiliates, that is reasonably likely to materially impede or delay
receipt of any consents of regulatory or governmental authorities.
3.4 Financial Statements. The Buyer has made available to the Seller
copies of (a) the consolidated balance sheets of the Parent and its subsidiaries
as of December 31 for the fiscal years 2000 and 2001, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1999 through 2001, inclusive, accompanied by the
audit report of Deloitte & Touche LLP, independent public accountants for the
Parent, and (b) the unaudited consolidated balance sheet of the Parent and its
subsidiaries as of March 31, 2002, and the related unaudited consolidated
statements of income and changes in stockholders' equity for the three (3)
months ended March 31, 2002 and March 31, 2001. The March 31, 2002 consolidated
balance sheet of the Parent (including the related notes, where applicable) and
the other financial statements referred to herein (including the related notes,
where applicable) fairly present the consolidated financial position and results
of the consolidated operations and cash flows and changes in stockholders'
equity of the Parent and its subsidiaries for the respective fiscal periods or
as of the respective dates therein set forth; and each of such statements
(including the related notes, where applicable) has been prepared in accordance
with GAAP consistently applied during the periods involved, except as otherwise
set forth in the notes thereto (subject, in the case of unaudited interim
statements, to normal year-end adjustments).
3.5 Broker's Fees. Neither the Buyer nor any of its officers, directors,
employees, Affiliates or agents has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection with
any of the transactions contemplated by this Agreement, except for the fees
incurred in connection with the engagement of Goldman, Sachs & Company and for
legal, accounting and other professional fees payable in connection with the
Merger. The Buyer will be responsible for the payment of all such fees.
3.6 Legal Proceedings. There is no claim, suit, action, proceeding or
investigation of any nature pending or, to the best knowledge of the Buyer,
threatened, against the Buyer or any subsidiary or other Affiliate of the Buyer
or challenging the validity or propriety of the transactions contemplated by
this Agreement, and which, if adversely determined, would, individually or in
the aggregate, materially adversely affect the Buyer's ability to perform its
respective obligations under this Agreement or the Bank Merger Agreement, nor is
there any judgment, decree, injunction, rule or order of any legal or
administrative body or arbitrator outstanding against the Buyer or any
subsidiary or other Affiliate of the Buyer having, or which insofar as
reasonably can be foreseen, in the future could have, any such effect.
3.7 Capital; Availability of Funds. On the date hereof, the Buyer is, and
on the Closing Date, the Buyer will be, "adequately capitalized" as such term is
defined in the rules and regulations promulgated by the FDIC. Buyer will have
available to it at the Effective Time sources of capital and financing
sufficient to pay the aggregate Merger Consideration and to pay any other
amounts payable pursuant to this Agreement and to effect the transactions
contemplated hereby.
7
3.8 Buyer Information. The information relating to the Parent, Buyer,
their respective subsidiaries and other Affiliates to be contained in the Seller
Proxy Statement, as described in Section 6.1 hereof, and any other documents
filed with the Securities and Exchange Commission (the "SEC") in connection
herewith, to the extent such information is provided in writing by the Buyer,
will not, on the date the Seller Proxy Statement (or any supplement or amendment
thereto) is first mailed to stockholders of the Seller or on the date of the
Seller Stockholders Meeting, contain any untrue statement of a material fact or
omit to state a material fact necessary to make such information not misleading
at the time and in light of the circumstances under which such statement is
made.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer as follows:
4.1 Corporate Organization.
(a) The Seller is a corporation duly organized, validly existing and
in good standing under the laws of The Commonwealth of Massachusetts. The Seller
has all requisite corporate power and authority to own, lease or operate all of
its properties and assets and to carry on its business as it is now being
conducted. The Seller is duly licensed or qualified to do business and is in
corporate good standing in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets owned,
leased or operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified and in corporate good standing
would not, individually or in the aggregate, result in any Material Adverse
Effect on the Seller. The Seller is a bank holding company registered with the
Federal Reserve Board under the BHCA. The Articles of Organization and By-Laws
of the Seller, copies of which have previously been made available to the Buyer,
are true, complete and correct copies of such documents in effect as of the date
of this Agreement. The Seller is not in violation of any provision of its
Articles of Organization or By-Laws. The minute books of the Seller contain in
all material respects true and complete records of all meetings held and
corporate actions taken since January 1, 1999 of the Seller's stockholders and
Board of Directors (including committees of the Seller's Board of Directors)
other than minutes which have not been prepared as of the date hereof.
(b) Each Significant Subsidiary of the Seller is duly organized,
validly existing and in corporate good standing under the laws of the
jurisdiction of its incorporation. Each Significant Subsidiary of the Seller has
all requisite corporate power and authority to own, lease or operate all of its
properties and assets and to carry on its business as it is now being conducted.
Each Significant Subsidiary of the Seller is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned, leased, or
operated by it makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified and in good standing would not
individually or in the aggregate, result in any Material Adverse Effect on the
Seller.
8
(c) Except as set forth in Section 4.1(c) of the Seller Disclosure
Schedule, the Seller has no subsidiaries and no Equity Investments (other than
investments in such subsidiaries).
(d) The Articles of Organization and By-Laws or equivalent
organizational documents of each Significant Subsidiary, copies of which have
previously been made available to the Buyer are true, correct and complete
copies of such documents in effect as of the date of this Agreement. Neither the
Seller nor any of its subsidiaries is in violation of any provision of its
Articles of Organization or equivalent organizational documents or of its
By-laws. The minute books of the Seller Bank contains in all material respects
true and complete records of all meetings held and corporate actions taken since
January 1, 1999 of its stockholders and board of director (including committees
of its board of director) other than minutes which have not been prepared as of
the date hereof.
4.2 Capitalization.
(a) The authorized capital stock of the Seller consists of
15,000,000 shares of Seller Common Stock and 5,000,000 shares of preferred
stock, par value $0.50 per share ("Seller Preferred Stock"). As of the date
hereof, there are 7,801,652 shares of Seller Common Stock and no shares of
Seller Preferred Stock issued and outstanding. As of the date hereof, there are
1,320,944 shares of Seller Common Stock and no shares of Seller Preferred Stock
held in the treasury of the Seller. Except for Trust Account Shares and DPC
Shares, no shares of Seller Common Stock are held by the Seller's subsidiaries.
In addition, as of the date hereof, there are 388,000 shares of Seller Common
Stock reserved for issuance upon exercise of outstanding stock options. All
issued and outstanding shares of Seller Common Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. Except
(i) for rights issuable to holders of Seller Common Stock in accordance with the
Seller Rights Agreement, (ii) for the Seller Stock Option Plans (which includes
director and employee stock options) or (iii) as reflected in Section 4.2(a) of
the Seller Disclosure Schedule, the Seller does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments, rights
agreements or agreements of any character calling for the Seller to issue,
deliver or sell, or cause to be issued, delivered or sold any shares of Seller
Common Stock or Seller Preferred Stock or any other equity security of the
Seller or any subsidiary of the Seller or any securities convertible into,
exchangeable for or representing the right to subscribe for, purchase or
otherwise receive any shares of Seller Common Stock or Seller Preferred Stock or
any other equity security of the Seller or any subsidiary of the Seller or
obligating the Seller or any such subsidiary to grant, extend or enter into any
such subscriptions, options, warrants, calls, commitments, rights agreements or
agreements. Except as set forth in Section 4.2(a) of the Seller Disclosure
Schedule, there are no outstanding contractual obligations of the Seller to
repurchase, redeem or otherwise acquire any shares of capital stock of, or other
equity interests in, the Seller or to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any subsidiary of
the Seller. Section 4.2 of the Seller Disclosure Schedule sets forth as of the
date hereof the names of the optionees, the date of each option to purchase
shares of Seller Common Stock granted, the number of shares subject to each such
option, the expiration date of each such option, and the price at which each
such option may be exercised under the Seller Option Plans. There are no Shares
outstanding which are subject to vesting over
9
time or upon the satisfaction of any condition precedent, or which are otherwise
subject to any right or obligation of repurchase or redemption on the part of
the Seller.
(b) The authorized capital stock of the Seller Bank consists of
15,000,000 shares of common stock, par value $.50 per share ("Bank Common
Stock"), and 5,000,000 shares of preferred stock, par value $.50 per share
("Bank Preferred Stock"). As of the date hereof, (i) 4,541,148 shares of Bank
Common Stock are issued and outstanding, all of which are owned directly or
indirectly by the Seller, all of which are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof, (ii) no shares of Bank Common
Stock are held in the treasury of the Seller Bank, and (iii) no shares of Bank
Common Stock are held by any of Seller's subsidiaries. Each share of Bank Common
Stock owned by the Seller or any of its subsidiaries is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Seller's or any of its subsidiaries' voting
rights, charges and other encumbrances of any nature whatsoever. No shares of
Bank Preferred Stock have been issued.
(c) Section 4.2(c) of the Seller Disclosure Schedule lists each of
the subsidiaries of the Seller on the date of this Agreement and indicates for
each such subsidiary as of such date: (i) the percentage and type of equity
securities owned or controlled by the Seller; and (ii) the jurisdiction of
incorporation. Seller Bank has its deposits insured by the Bank Insurance Fund
of the FDIC in accordance with the FDIA to the fullest extent permitted by law,
and such subsidiary has paid all premiums and assessments and filed all reports
required by the FDIA. As of the date hereof, no proceedings for the revocation
or termination of such deposit insurance are pending or, to the best knowledge
of the Seller, threatened. Except as set forth in Section 4.2(c) of the Seller
Disclosure Schedule, no subsidiary of the Seller has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments, rights
agreements or agreements of any character calling for a subsidiary of the Seller
to issue, deliver or sell, or cause to be issued, delivered or sold any equity
security of the Seller or of any subsidiary of the Seller or any securities
convertible into, exchangeable for or representing the right to subscribe for,
purchase or otherwise receive any such equity security or obligating a
subsidiary of the Seller to grant, extend or enter into any such subscriptions,
options, warrants, calls, commitments, rights agreements or agreements. There
are no outstanding contractual obligations of any subsidiary of the Seller to
repurchase, redeem or otherwise acquire any shares of capital stock of, or other
equity interests in, the Seller or any such subsidiary or to provide funds to,
or make any investment (in the form of a loan, capital contribution or
otherwise) in, any such subsidiary of the Seller. All of the shares of capital
stock of each of the subsidiaries of the Seller held by the Seller are fully
paid and nonassessable and, except for directors' qualifying shares, are owned
by the Seller free and clear of any claim, lien, encumbrance or agreement with
respect thereto.
4.3 Authority; No Violation.
(a) The Seller has all requisite corporate power and authority to
execute and deliver this Agreement and the other Transaction Documents and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the other Transaction Documents, and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the unanimous vote of the Board of Directors of the
Seller. The Board of Directors of the Seller has directed that this Agreement
and the
10
transactions contemplated hereby, including the Merger, be submitted to the
stockholders of the Seller for approval at a meeting of such stockholders and,
except for the adoption of this Agreement by the Seller's stockholders, no other
corporate action and no other corporate proceedings on the part of the Seller
are necessary to authorize this Agreement and the other Transaction Documents or
to consummate the Merger. This Agreement and the other Transaction Documents
have been duly and validly executed and delivered by the Seller and (assuming
due authorization, execution and delivery by the Buyer and the Parent)
constitute the valid and binding obligations of the Seller, enforceable against
the Seller in accordance with their respective terms.
(b) The Seller Bank has full corporate power and authority to
execute and deliver the Bank Merger Agreement, to perform its obligations
thereunder and to consummate the transactions contemplated thereby. The
execution and delivery of the Bank Merger Agreement, the performance of its
obligations thereunder and the consummation of the transactions contemplated
thereby have been duly and validly approved by the unanimous action of the Board
of Directors of the Seller Bank. Except for adoption of the Bank Merger
Agreement by the Seller Bank's stockholder, no other corporate action and no
other corporate proceedings on the part of the Seller Bank are necessary to
authorize the Bank Merger Agreement or the performance of the Seller Bank's
obligations thereunder or to consummate the transactions contemplated thereby.
The Bank Merger Agreement, upon execution and delivery by the Seller Bank, will
be duly and validly executed and delivered by the Seller Bank and will
constitute a legal, valid and binding obligation of the Seller Bank, enforceable
against the Seller Bank in accordance with its terms. Seller shall cause the
Bank Merger Agreement to be approved by the stockholder of the Seller Bank prior
to the Effective Time.
(c) Neither the execution and delivery of this Agreement or the
other Transaction Documents by the Seller nor the consummation by the Seller of
the transactions contemplated hereby or thereby; nor the execution and delivery
of the Bank Merger Agreement by the Seller Bank, nor the consummation by the
Seller Bank of the transactions contemplated thereby; nor compliance by the
Seller or the Seller Bank with any of the terms or provisions hereof or thereof,
will (i) assuming that the consents, waivers and approvals referred to in
Section 4.4 hereof are duly obtained, violate any statute, law, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to the
Seller or any of its subsidiaries or by which any property or asset of the
Seller or any of its subsidiaries is bound or affected, or (ii) violate,
conflict with, result in a breach of any provisions of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in a right of termination or acceleration or the creation
of any lien, security interest, charge or other encumbrance upon any of the
properties or assets of the Seller or any of its subsidiaries under any of the
terms, conditions or provisions of (A) the Articles of Organization or other
charter document of like nature or By-laws of the Seller or any of its
subsidiaries, or (B) any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the Seller
is a party as issuer, guarantor or obligor, or by which they or any of their
respective properties or assets may be bound or affected, except, in the case of
clause (ii)(B) above, for such violations, conflicts, breaches or defaults as
set forth in Section 4.3(c) of the Seller Disclosure Schedule or which either
individually or in the aggregate would not have a Material Adverse Effect on the
Seller.
11
4.4 Consents and Approvals.
(a) Except for consents, waivers or approvals of, or filings or
registrations with, or notifications to, the Federal Reserve Board, the FDIC,
the Massachusetts Commissioner, the MBBI, the DIF, the MHPF, the SEC, the
Secretary of State of The Commonwealth of Massachusetts, NASDAQ, and the DOJ, no
consents, waivers or approvals of or filings or registrations with any public
body or authority are necessary in connection with (a) the execution and
delivery by the Seller of this Agreement and the execution and delivery of the
Bank Merger Agreement by the Seller Bank, or (b) the consummation by the Seller
of the Merger or by the Seller Bank of the Bank Merger. The affirmative vote of
holders of two-thirds of the outstanding shares of Seller Common Stock is the
only vote of the holders of any shares or series of capital stock or other
securities of the Seller necessary to approve this Agreement and the Merger. The
affirmative vote of two-thirds of the outstanding shares of Bank Common Stock is
the only vote of the holders of any shares or series of capital stock or other
securities of the Seller Bank necessary to approve the Bank Merger. The Seller
has no knowledge of any fact or circumstance relating to the Seller or its
subsidiaries, that is reasonably likely to materially impede or delay receipt of
any consents of regulatory or governmental authorities.
(b) The execution and delivery of this Agreement by the Seller, and
the execution and delivery of the Bank Merger Agreement by the Seller Bank, does
not require any consent, approval, authorization or permit of, or filing with or
notification to, any third party (which term does not include the Board of
Directors or the stockholders of the Seller or the Seller Bank), except where
the failure to obtain any such consent, approval, authorization or permit, or to
make any such filing or notification, would not have a Material Adverse Effect
on the Seller or prevent or significantly delay consummation of the Merger or
the Bank Merger.
4.5 Financial Statements. The Seller has made available to the Buyer
copies of (a) the consolidated balance sheets of the Seller and its subsidiaries
as of December 31 for the fiscal years 2000 and 2001, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1999 through 2001, inclusive, as reported in the
Annual Report of the Seller on Form 10-K for the fiscal year ended December 31,
2001 filed with the SEC under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), accompanied by the audit report of Wolf & Company, P.C.,
independent public accountants for the Seller, and (b) the unaudited
consolidated balance sheet of the Seller and its subsidiaries as of March 31,
2002, the related unaudited consolidated statements of income and changes in
stockholders' equity for the three (3) months ended March 31, 2002 and March 31,
2001 and the related unaudited consolidated statements of cash flows for the
three (3) months ended March 31, 2002 and March 31, 2001, all as reported in the
Seller's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002
filed with the SEC under the Exchange Act. The December 31, 2001 consolidated
balance sheet ("Seller Balance Sheet") of the Seller (including the related
notes, where
12
applicable) and the other financial statements referred to herein (including the
related notes, where applicable) fairly present, and the financial statements to
be included in any reports or statements (including reports on Forms 10-Q and
10-K) to be filed by the Seller with the SEC after the date hereof will fairly
present, the consolidated financial position and results of the consolidated
operations and cash flows and changes in stockholders' equity of the Seller and
its subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; and each of such statements (including the related notes,
where applicable) has been and will be prepared in accordance with GAAP
consistently applied during the periods involved, except as otherwise set forth
in the notes thereto (subject, in the case of unaudited interim statements, to
normal year-end adjustments). Each of the consolidated financial statements of
the Seller and its subsidiaries, including, in each case, the notes thereto,
made available to the Buyer comply, and the financial statements to be filed
with the SEC by the Seller after the date hereof will comply, with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. The books and records of the Seller and its subsidiaries
have been, and are being, maintained in accordance with GAAP and applicable
legal and regulatory requirements.
4.6 Broker's Fees. Neither the Seller nor any of its officers, directors,
employees, Affiliates or agents has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection with
any of the transactions contemplated by this Agreement, except for the fees
incurred in connection with the engagement of CIBC World Markets Corp. ("CIBC")
and for legal, accounting and other professional fees payable in connection with
the Merger. The Seller will be responsible for the payment of all such fees. The
fee payable to CIBC in connection with the transactions contemplated by this
Agreement is as described in an engagement letter between the Seller and CIBC, a
true and complete copy of which has heretofore been furnished to the Buyer. The
Seller has previously received the opinion of CIBC to the effect that, as of the
date of such opinion, the Merger Consideration to be received by the
stockholders of the Seller pursuant to the Merger is fair to such stockholders,
and such opinion has not been amended or rescinded as of the date of this
Agreement.
4.7 Absence of Certain Changes or Events. Except as disclosed in Section
4.7 of the Seller Disclosure Schedule, the Seller's Quarterly Report on Form
10-Q for the quarter ended March 31, 2002, in any Current Reports of the Seller
on Form 8-K filed prior to the date of this Agreement, in the Seller's Proxy
Statement filed with respect to its 2002 Annual Meeting of stockholders, in the
Seller's Annual Report on Form 10-K for the year ended December 31, 2001, or as
otherwise expressly permitted or expressly contemplated by this Agreement, since
December 31, 2001, the Seller and its subsidiaries have not incurred any
material liability or obligation of any nature (whether accrued, absolute,
contingent or otherwise and whether due or to become due), except in the
ordinary course of their business consistent with their past practices, nor has
there been (a) any change in the business, assets, financial condition or
results of operations of the Seller or any of its subsidiaries which has had, or
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Seller or any Significant Subsidiary of the Seller, and to
the best knowledge of the Seller, no fact or condition exists which is
reasonably likely to cause such a Material Adverse Effect in the future, (b) any
change by the Seller or any of its subsidiaries in its accounting methods,
principles or practices, other than changes required by applicable law or GAAP
or regulatory accounting as concurred in by the Seller's independent
accountants, (c) any entry by the Seller or any of its subsidiaries into any
contract or commitment of more than $200,000 or with a term of more than one
year other than loans and loan commitments, (d) any declaration, setting aside
or payment of any dividend or distribution in respect of any capital stock of
the Seller or any of its subsidiaries or any redemption, purchase or other
acquisition of any of its securities, other than in the ordinary course of
business consistent with past practice, (e) any increase in or establishment of
any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, without limitation, the granting of
stock options, stock appreciation rights,
13
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any directors, officers or employees of the Seller or any of
its subsidiaries, or any grant of severance or termination pay, or any contract
or arrangement entered into to make or grant any severance or termination pay,
any payment of any bonus, or the taking of any action not in the ordinary course
of business with respect to the compensation or employment of directors,
officers or employees of the Seller or any of its subsidiaries, (f) any material
election made by the Seller or any of its subsidiaries for federal or state
income tax purposes, (g) any material change in the credit policies or
procedures of the Seller or any of its subsidiaries, the effect of which was or
is to make any such policy or procedure less restrictive in any material
respect, (h) any material acquisition or disposition of any assets or
properties, or any contract for any such acquisition or disposition entered into
other than loans and loan commitments, or (i) any material lease of real or
personal property entered into, other than in connection with foreclosed
property or in the ordinary course of business consistent with past practice.
4.8 Legal Proceedings. There is no claim, suit, action, proceeding or
investigation of any nature pending or, to the best knowledge of the Seller,
threatened, against the Seller or any subsidiary of the Seller or challenging
the validity or propriety of the transactions contemplated by this Agreement,
which, if adversely determined, would, individually or in the aggregate, have a
Material Adverse Effect on the Seller or otherwise materially adversely affect
the Seller's or the Seller Bank's ability to perform its obligations under this
Agreement or the Bank Merger Agreement, nor is there any judgment, decree,
injunction, rule, award or order of any legal or administrative body or
arbitrator outstanding against the Seller or any subsidiary of the Seller
having, or which insofar as reasonably can be foreseen, in the future could
have, any such effect or restricting, or which could restrict its ability to
conduct business in any material respect in any area. Section 4.8 of the Seller
Disclosure Schedule sets forth as of the date hereof all claims, suits, actions,
proceedings or investigations pending or, to the best knowledge of the Seller,
threatened against the Seller or any of its subsidiaries.
4.9 Reports. Since January 1, 1999, the Seller and its subsidiaries have
timely filed, and subsequent to the date hereof will timely file, all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that were and are required to be filed with (a) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K, proxy
statements and all other communications mailed by the Seller to its stockholders
since January 1, 1999 (and copies of all such reports, registrations statements
and communications have been or will be delivered or otherwise made available by
the Seller to the Buyer), (b) the Federal Reserve Board, (c) the FDIC, and (d)
any applicable state securities or banking authorities (except, in the case of
state securities authorities, no such representation is made as to filings which
are not material) (all such reports and statements are collectively referred to
herein as the "Seller Reports") and has paid all fees and assessments due and
payable in connection with any of the foregoing. As of their respective dates,
the Seller Reports complied and, with respect to filings made after the date of
this Agreement, will at the date of filing comply, in all material respects with
all of the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed and did not contain and, with
respect to filings made after the date of this Agreement, will not at the date
of filing contain, any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
14
were made, not misleading. Except as set forth in Section 4.9 of the Seller
Disclosure Schedule, none of the Seller's subsidiaries is required to file any
form, report or other document with the SEC. The Seller has made available to
the Buyer true and complete copies of all amendments and modifications that have
not been filed by the Seller with the SEC to all agreements, documents and other
instruments that previously had been filed by the Seller with the SEC and are
currently in effect. Except for normal periodic examinations (the "Bank
Examinations") conducted by the FRB, the FDIC, or the Massachusetts Commissioner
in the regular course of the business of the Seller and its subsidiaries, since
January 1, 2001, no Bank Regulator has initiated any proceeding or, to the best
knowledge of the Seller, investigation into the business or operations of the
Seller or any of its subsidiaries. Except as set forth in Section 4.9 of the
Seller Disclosure Schedule, the Seller and its subsidiaries have resolved all
material violations, criticisms or exceptions by any Bank Regulator with respect
to any Bank Examination.
4.10 Agreements with Banking Authorities. Neither the Seller nor any of
its subsidiaries is a party to any commitment, letter (other than letters
addressed to regulated depository institutions generally), written agreement,
memorandum of understanding, order to cease and desist with, is subject to any
order or directive specifically naming or referring to Seller or any of its
subsidiaries by, has been required to adopt any board resolution by, any federal
or state governmental entity charged with the supervision or regulation of banks
or bank holding companies or engaged in the insurance of bank deposits which is
currently in effect and restricts materially the conduct of its business, or in
any manner relates to its capital adequacy, loan loss allowances or reserves,
credit policies, management or overall safety and soundness or such entity's
ability to perform its obligations hereunder, and neither the Seller nor any of
its subsidiaries has received written notification from any such federal or
state governmental entity that any such Person may be requested to enter into,
or otherwise be subject to, any such commitment, letter, written agreement,
memorandum of understanding or cease and desist order. Neither the Seller nor
any of its subsidiaries has been informed by any Bank Regulator that it is
contemplating issuing or requesting any such order, directive, agreement,
memorandum of understanding, commitment letter or similar submission. Neither
the Seller nor any of its subsidiaries is a party to any agreement or
arrangement entered into in connection with the consummation of a federally
assisted acquisition of a depository institution pursuant to which the Seller or
any of its subsidiaries is entitled to receive financial assistance or
indemnification from any governmental agency.
4.11 Absence of Undisclosed Liabilities. Except for those liabilities that
are fully reflected or reserved against on the Seller Balance Sheet and for
liabilities incurred in the ordinary course of business consistent with past
practice or in connection with this Agreement, since December 31, 2001, neither
the Seller nor any of its subsidiaries has incurred any obligation or liability
(contingent or otherwise) that, either alone or when combined with all similar
liabilities, has had, or could reasonably be expected to have, a Material
Adverse Effect on the Seller.
4.12 Compliance with Applicable Law. Each of the Seller and each
Significant Subsidiary thereof holds all material licenses, franchises, permits
and authorizations necessary for the lawful conduct of its business, and each of
the Seller and each Significant Subsidiary thereof has complied with and is not
in violation of or default in any material respect under any, applicable law,
statute, order, rule, regulation or policy of, or agreement with, any federal,
state
15
or local governmental agency or authority relating to the Seller or such
Significant Subsidiary, other than where such default or noncompliance will not
result in, or create the possibility of resulting in any Material Adverse Effect
on the Seller or any Significant Subsidiary of the Seller, and neither the
Seller nor any Significant Subsidiary of the Seller has received any notice of
any violation of any such law, statute, order, rule, regulation, policy or
agreement, or commencement of any proceeding in connection with any such
violation, and does not know of any violation of, any such law, statute, order,
rule, regulation, policy or agreement which would have such a result.
4.13 Taxes and Tax Returns. Except as set forth in Section 4.13 of the
Disclosure Schedule:
(a) Except where the failure to do so would not have a Material
Adverse Effect on the Seller Companies as a whole, the Seller and each of its
subsidiaries (referred to for purposes of this Section 4.13, collectively, as
the "Seller Companies") have, since December 31, 1995, timely filed in correct
form all Tax Returns that were required to be filed by any of them on or prior
to the date hereof (the "Filed Tax Returns"), and have paid all Taxes shown as
being due thereon.
(b) No assessment that has not been settled or otherwise resolved
has been made with respect to Taxes not shown on the Filed Tax Returns, other
than such additional Taxes as are being contested in good faith or which if
determined adversely to the Seller Companies would not have a Material Adverse
Effect on the Seller Companies as a whole. The Income Tax Returns of the Seller
Companies have been examined by the Internal Revenue Service ("IRS") or other
taxing authority, as applicable, for all years through 1997 and any liability
with respect thereto has been satisfied. There are no material disputes pending
or written claims asserted for Taxes or assessments upon any Seller Company, nor
has any Seller Company been requested to give any currently effective waivers
extending the statutory period of limitation applicable to any Federal, state,
county or local income tax return for any period. No deficiency in Taxes or
other proposed adjustment that has not been settled or otherwise resolved has
been asserted in writing by any taxing authority against any of the Seller
Companies, which if determined adversely to the Seller Companies would have a
Material Adverse Effect on the Seller Companies as a whole. To the best
knowledge of the Seller, no material Tax Return of any of the Seller Companies
is now under examination by any applicable taxing authority. There are no
material liens for Taxes (other than current Taxes not yet due and payable) on
any of the assets of any Seller Company, except for such liens for Taxes that
would not have a Material Adverse Effect on the Seller Companies as a whole.
(c) Adequate provision has been made on the Seller Balance Sheet for
all Taxes of the Seller Companies in respect of all periods through the date
hereof. In addition, (a) proper and accurate amounts have been withheld by each
Seller Company from their respective employees for all prior periods in
compliance in all material respects with the tax withholding provisions of
applicable federal, state, county and local laws; (b) federal, state, county and
local returns which are accurate and complete in all material respects have been
filed by the Seller Companies for all periods for which returns were due with
respect to income tax withholding, Social Security and unemployment taxes; and
(c) the amounts shown on such returns to be due and payable have been paid in
full or adequate provision therefor has been included by the Seller
16
in its consolidated financial statements included in its Annual Report on Form
10K for the period ended December 31, 2001, or, with respect to returns filed
after the date hereof, will be so paid or provided for in the consolidated
financial statements of the Seller for the period covered by such returns.
(d) Except with respect to intra-Seller Company agreements made or
required under the federal consolidated tax return regulations, none of the
Seller Companies is a party to or bound by any Tax indemnification, Tax
allocation or Tax sharing agreement with any person or entity or has any current
or potential contractual obligation to indemnify any other person or entity with
respect to Taxes.
(e) None of the Seller Companies has filed or been included in a
combined, consolidated or unitary income Tax Return (including any consolidated
federal income Tax Return) other than one of which one of the Seller Companies
was the parent.
(f) None of the Seller Companies has made any payment, is obligated
to make any payment, or is a party to any agreement that could obligate it to
make any payment that will not be deductible under Code Section 162(m) or Code
Section 280G.
(g) No property of any Seller Company is property that is or will be
required to be treated as being owned by another person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code (as in effect prior
to its amendment by the Tax Reform Act of 1986) or is "tax exempt use property"
within the meaning of Section 168(h) of the Internal Revenue Code of 1986, as
amended (the "Code"). None of the Seller Companies has been required to include
in income any adjustment pursuant to Section 481 of the Code by reason of a
voluntary change in accounting method initiated by any Seller Company, and the
IRS has not initiated or proposed any such adjustment or change in accounting
method.
4.14 Labor. No work stoppage involving the Seller or any of its
subsidiaries is pending or, to the best knowledge of the Seller's management,
threatened. Neither the Seller nor any of its subsidiaries is involved in, or,
to the best knowledge of the Seller's management, threatened with or affected
by, any dispute, arbitration, lawsuit or administrative proceeding relating to
labor or employment matters which might reasonably be expected to interfere in
any material respect with the respective business activities of the Seller or
any of its subsidiaries. No employees of the Seller or any of its subsidiaries
are represented by any labor union, and, to the best knowledge of the Seller's
management, no labor union is attempting to organize employees of the Seller or
any of its subsidiaries.
4.15 Employees.
(a) Except as set forth in Section 4.15(a) of the Seller Disclosure
Schedule, neither the Seller nor any of its subsidiaries maintains or
contributes to any "employee pension benefit plan" (the "Seller Pension Plans"),
as such term is defined in Section 3(2) of ERISA, "employee welfare benefit
plan" (the "Seller Benefit Plans"), as such term is defined in Section 3(1) of
ERISA, stock option plan, stock purchase plan, deferred compensation plan, other
employee benefit plan for employees of the Seller or any of its subsidiaries, or
any other plan,
17
program or arrangement of the same or similar nature that provides benefits to
non-employee directors of the Seller or any of its subsidiaries (collectively,
the "Seller Other Plans").
(b) The Seller shall have made available to the Buyer complete and
accurate copies of each of the following with respect to each of the Seller
Pension Plans, the Seller Benefit Plans and the Seller Other Plans: (i) plan
document and any amendment thereto; (ii) trust agreement or insurance contract
(including any fiduciary liability policy or fidelity bond), if any; (iii) most
recent IRS determination letter, if any; (iv) most recent actuarial report, if
any; (v) most recent annual report on Form 5500; and (vi) summary plan
description.
(c) Except as set forth in Section 4.15(c) of the Seller Disclosure
Schedule, the current value of the assets of each of the Seller Pension Plans
subject to Title IV of ERISA exceeds that plan's "Benefit Liabilities" as that
term is defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if that plan terminated in accordance with all
applicable legal requirements.
(d) Except as set forth in Section 4.15(d) of the Seller Disclosure
Schedule, to the best knowledge of the Seller, each of the Seller Pension Plans
each of the Seller Other Plans and each of the Seller Benefit Plans, which are
maintained or contributed to by the Seller, has been administered in compliance
with its terms in all material respects and is in compliance in all material
respects with the applicable provisions of ERISA (including, but not limited to,
the funding and prohibited transactions provisions thereof), the Code and other
applicable laws.
(e) To the best knowledge of the Seller, there has been no
reportable event within the meaning of Section 4043(b) of ERISA or any waived
funding deficiency within the meaning of Section 412(d)(3) (or any predecessor
section) of the Code with respect to any Seller Pension Plan.
(f) To the best knowledge of the Seller, each of the Seller Pension
Plans which is intended to be a qualified plan within the meaning of Section
401(a) of the Code is so qualified and has received a favorable determination
letter from the IRS that such Plan meets the requirements of Section 401(a) of
the Code and that the trust associated with such Seller Pension Plan is tax
exempt under Section 501(a) of the Code, and the Seller is not aware of any fact
or circumstance which would adversely affect the qualified status of any such
plan.
(g) The Seller has made or provided for all contributions to the
Seller Pension Plans required thereunder.
(h) Except as set forth in Section 4.15(h) of the Seller Disclosure
Schedule, neither the Seller nor any of its subsidiaries is party to or
maintains any contract or other arrangement with any employee or group of
employees, providing severance payments, stock or stock-equivalent payments or
post-employment benefits of any kind or providing that any otherwise disclosed
plan, program or arrangement will irrevocably continue, with respect to any or
all of its participants, for any period of time.
(i) Except as set forth in Section 4.15(i) of the Seller Disclosure
Schedule, neither the Seller nor any of its subsidiaries has ever (i) maintained
any "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA, or
(ii) provided healthcare or any other non-
18
pension benefits to any employees after their employment is terminated (other
than as required by Part 6 of Subtitle B of Title I of ERISA or state health
continuation laws) or has ever promised to provide such post-termination
benefits.
(j) No law suits, governmental administrative proceedings, claims
(other than routine claims for benefits) or complaints to, or by, any person or
governmental entity have been filed, are pending, or to the best knowledge of
the Seller, threatened with respect to any Seller Pension Plan, Seller Benefit
Plan or Seller Other Plan. There is no material correspondence between the
Seller and any Governmental Authority related to any other Seller Pension Plan,
Seller Benefit Plan or Seller Other Plan.
4.16 Capitalization. The Seller and Seller Bank are "well capitalized" as
such term is defined in the rules and regulations promulgated by the Federal
Reserve Board and the FDIC.
4.17 CRA, Anti-money laundering and Customer Information Security. Neither
Seller nor Seller Bank is aware of, has been advised of, or has reason to
believe that any facts or circumstances exist which would cause Seller Bank: (i)
to be deemed not to be in satisfactory compliance in any material respect with
the Community Reinvestment Act of 1977, as amended (the "CRA") and the
regulations promulgated thereunder, or to be assigned a rating for CRA purposes
by federal or state bank regulators of lower than "satisfactory"; or (ii) to be
deemed to be operating in violation in any material respect of the federal Bank
Secrecy Act, as amended and its implementing regulations (31 CFR part 103), the
USA Patriot Act of 2001, Public Law 107-56, (the "USA Patriot Act") and the
regulations promulgated thereunder, any order issued with respect to anti-money
laundering by the U.S. Treasury's Office of Foreign Assets Control, or any other
applicable anti-money laundering statute, rule or regulation; or (iii) to be
deemed not to be in satisfactory compliance in any material respect with the
privacy of customer information requirements contained in Title V of the
Gramm-Leach-Bliley Act of 1999 and regulations promulgated thereunder as well as
the provisions of the Information Security Program adopted by the Seller Bank
pursuant to 12 CFR Part 364. Furthermore, the Board of Directors of Seller Bank
has adopted and Seller Bank has implemented an anti-money laundering program
that meets the requirements in all material respects of Section 352 of the USA
Patriot Act and the regulations thereunder.
4.18 Material Agreements.
(a) Except as set forth in any of the Seller Disclosure Schedules or
the index of exhibits in the Seller's Annual Reports on Forms 10-K for the years
ended December 31, 2001, 2000, and 1999, and except for this Agreement and the
other Transaction Documents, neither the Seller nor any of its subsidiaries is a
party to or is bound by (a) any agreement, arrangement, or commitment that is
material to the financial condition, results of operations or business of the
Seller, except those entered into in the ordinary course of business; (b) any
written (or oral, if material) agreement, arrangement, or commitment relating to
the employment, including without limitation, employment as a consultant of any
person or the election or retention in office or severance of any present or
former director or officer of the Seller or any of its subsidiaries; (c) any
contract, agreement, or understanding with any labor union; (d) any agreement by
and among the Seller, any subsidiary of the Seller and/or any Affiliate thereof;
(e) any contract or agreement or amendment thereto that would be required to be
filed as an Exhibit
19
to a Form 10-K filed by the Seller as of the date hereof that has not been filed
as an Exhibit to the Form 10-K filed by it for 2001; (f) any agreement,
arrangement, or commitment (whether written or oral) which, upon the
consummation of the transactions contemplated by this Agreement or the Bank
Merger Agreement, will result in any payment (whether of severance pay or
otherwise) becoming due from the Seller or any of its subsidiaries to any
officer or employee thereof, (g) any agreement, arrangement or commitment
(whether written or oral) which is a consulting or other agreement (including
agreements entered into in the ordinary course and data processing, software
programming and licensing contracts) not terminable on 60 days or less notice
involving the payment of more than $100,000 per annum, (h) any agreement,
arrangement or commitment (whether written or oral) which materially restricts
the conduct of any line of business by the Seller or any of its subsidiaries, or
(i) except for the Seller Stock Option Plans, any agreement, arrangement or
commitment (whether written or oral) (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan) any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement. The Seller has previously delivered to the Buyer true and complete
copies of all employment, consulting and deferred compensation agreements which
are in writing and to which the Seller or any of its subsidiaries is a party.
Each contract, arrangement, commitment or understanding of the type described in
this Section, whether or not set forth in Section 4.18 of the Seller Disclosure
Schedule, is referred to herein as a "Seller Contract."
(b) (i) To the best knowledge of the Seller, each Seller Contract
listed on such Seller Disclosure Schedule is legal, valid and binding upon the
Seller or Seller subsidiary, as the case may be, and in full force and effect,
(ii) the Seller and each Seller subsidiary has in all material respects
performed all obligations required to be performed by it to date under each such
Seller Contract, and (iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, would constitute, a material default on
the part of the Seller or any Seller subsidiary under any such Seller Contract.
4.19 Property and Leases
(a) Each of the Seller and each Seller subsidiary has good and
marketable title to all the real property and all other property owned by it and
included in the Seller Balance Sheet, free and clear of all mortgages, pledges,
liens, security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any kind
(collectively, "Liens"), other than (A) Liens that secure liabilities that are
reflected in the Seller Balance Sheet or incurred in the ordinary course of
business after the date of the Seller Balance Sheet, (B) Liens for current taxes
and assessments not yet past due or which are being contested in good faith, (C)
inchoate mechanics' and materialmen's Liens for construction in progress, (D)
workmen's, repairmen's, warehousemen's and carriers' Liens arising in the
ordinary course of business of the Seller or any of its subsidiaries consistent
with past practice, (E) all matters of record, Liens and other imperfections of
title and encumbrances which, either individually or in the aggregate, would not
be material, and (F) those items that secure public or statutory obligations or
any discount with, borrowing from, or obligations to any Federal Reserve Bank or
20
Federal Home Loan Bank, interbank credit facilities, or any transaction by any
Seller subsidiary acting in a fiduciary capacity (collectively, "Permitted
Liens").
(b) Each lease of real property leased for the use or benefit of the
Seller or any of its subsidiaries to which any of the foregoing is a party
requiring rental payments in excess of $1,000,000 during the period of the
lease, and all amendments and modifications thereto, is in full force and
effect, and there exists no material default under any such lease by the Seller
or any of its subsidiaries nor, to the best knowledge of the Seller, any event
which with notice or lapse of time or both would constitute a material default
thereunder by the Seller or any other Seller subsidiaries, except for such
defaults which, individually, or in the aggregate, would not result in the
forfeiture of the use or occupancy of the property covered by such lease or in a
material liability to the Seller.
4.20 Loan Portfolio. To the best knowledge of the Seller, all of the loan
agreements, notes or borrowing arrangements with respect to loans in excess of
$500,000 in original principal amount (collectively, "Loans") originated and
held currently and at the Effective Time by the Seller or any of its
subsidiaries, and any other Loans purchased and held currently and at the
Effective Time by the Seller or any of its subsidiaries, were solicited,
originated and exist, and will exist at the Effective Time, in material
compliance with all applicable loan policies of the Seller or such subsidiary.
The information (including electronic information and information contained on
tapes and computer disks) with respect to all loans of the Seller and its
subsidiaries furnished to the Buyer by the Seller is, as of the respective dates
indicated therein, true and complete in all material respects.
4.21 Investment Securities. Except for pledges to secure public and trust
deposits, Federal Reserve borrowings, repurchase agreements and reverse
repurchase agreements entered into in arms'-length transactions pursuant to
normal commercial terms and conditions and other pledges required by law, none
of the investments reflected in the consolidated balance sheet of the Seller and
its subsidiaries included in its Annual Report on Form 10-K for the period ended
December 31, 2001, and none of the material investments made by the Seller or
any of its subsidiaries since December 31, 2001, is subject to any restriction
(contractual, statutory or otherwise) that would materially impair the ability
of the entity holding such investment freely to dispose of such investment at
any time.
4.22 Derivative Transactions. Neither the Seller nor any or its
subsidiaries is engaged in transactions in or involving forwards, futures,
options on futures, swaps or similar derivative instruments except as agent on
the order and for the account of others other than Federal Home Loan Bank
advances or in connection with mortgage loan secondary market activities in the
ordinary course of business consistent with the Seller Bank's past practices.
4.23 Insurance. Section 4.23(a) of the Seller Disclosure Schedule sets
forth a summary of all material policies of insurance of the Seller and its
subsidiaries currently in effect, which summary is accurate and complete in all
material respects. All of the policies relating to insurance maintained by the
Seller or any of its subsidiaries with respect to its material properties and
the conduct of its business in any material respect (or any comparable policies
entered into as a replacement therefor) are in full force and effect and,
neither the Seller nor any of its subsidiaries has received any notice of
cancellation with respect thereto. Except as set forth in
21
Section 4.23(b) of the Seller Disclosure Schedule, all life insurance policies
on the lives of any of the current and former officers and directors of the
Seller or any of its subsidiaries which are maintained by the Seller or any such
subsidiary which are otherwise included as assets on the books of the Seller or
such subsidiary (i) are, or will at the Effective Time be, owned by the Seller
or such subsidiary, as the case may be, free and clear of any claims thereon by
the officers or members of their families, except with respect to the death
benefits thereunder, as to which the Seller or such subsidiary agree that there
will not be an amendment prior to the Effective Time without the consent of the
Buyer, and (ii) are accounted for properly as assets on the books of the Seller
or such subsidiary in accordance with GAAP in all material respects.
4.24 Environmental Matters.
(a) Except as set forth in the Environmental Reports, each of the
Seller and its subsidiaries and each property owned by any of them (the "Owned
Property") and, to the best knowledge of the Seller, the Loan Properties (each
as hereinafter defined), are, and have been, in compliance with all applicable
environmental laws and with all rules, regulations, standards and requirements
of the United States Environmental Protection Agency (the "EPA") and of state
and local agencies with jurisdiction over pollution or protection of the
environment, except in each case as have not been or would not be material.
(b) There is no suit, claim, action or proceeding pending or, to the
best knowledge of the Seller threatened, before any Governmental Authority or
other forum in which the Seller, any of its subsidiaries, or any Owned Property
has been or, with respect to threatened proceedings, may be, named as a
defendant, responsible party or potentially responsible party (i) for alleged
noncompliance (including by any predecessor), with any environmental law, rule,
regulation, standard or requirement or (ii) relating to the release into or
presence in the Environment (as hereinafter defined) of any Hazardous Materials
(as hereinafter defined) or Oil (as hereinafter defined) occurring at or on a
site owned, leased or operated by the Seller or any of its subsidiaries, except
in each case as have not been or would not be material.
(c) To the best knowledge of Seller, there is no suit, claim, action
or proceeding pending or threatened, before any Governmental Authority or other
forum in which any Loan Property has been or, with respect to threatened
proceedings, may be, named as a defendant, responsible party or potentially
responsible party (i) for alleged noncompliance (including by any predecessor)
with any environmental law, rule, regulation, standard or requirement or (ii)
relating to the release into or presence in the Environment of any Hazardous
Material or Oil whether or not occurring at or on a site owned, leased or
operated by a Loan Property, except in each case as have not been or would not
be material.
(d) Except as set forth in Section 4.24(d) of the Seller Disclosure
Schedule, neither the Seller nor any of its subsidiaries, nor to their best
knowledge any Loan Property, has received any written notice regarding a matter
on which a suit, claim, action or proceeding as described in subsection (b) or
(c) of this Section 4.24 could reasonably be based, except in each case as have
not been or would not be material. No facts or circumstances have come to the
Seller's attention which have caused it to believe that a material suit, claim,
action or proceeding as described in subsection (b) or (c) of this Section 4.24
could reasonably be expected to occur.
22
(e) During the period of (i) the Seller's or any of its
subsidiaries' ownership or operation of any of their respective current
properties or (ii) the Seller's or any of its subsidiaries' holding of a
security interest in a Loan Property, to the best knowledge of Seller, there has
been no release or presence of Hazardous Material or Oil in, on, under or
affecting such property or Loan Property, except where such release or presence
is not or would not, either individually or in the aggregate, be material. To
the best knowledge of the Seller, prior to the period of (x) the Seller's or any
of its subsidiaries' ownership or operation of any of their respective current
properties or any previously owned or operated properties, or (y) the Seller's
or any of its subsidiaries' holding of a security interest in a Loan Property,
there was no release or presence of Hazardous Material or Oil in, on, under or
affecting any such property or Loan Property, except where such release or
presence is not or would not, either individually or in the aggregate, be
material.
(f) Neither Seller nor any of its subsidiaries is an owner or
operator of any Loan Property and there are no Participation Facilities.
(g) The following definitions apply for purposes of this Section
4.24: (i) "Loan Property" means any property in which the Seller or any of its
subsidiaries holds a security interest, and, where required by the context (as a
result of foreclosure), said term means the owner or operator of such property;
(ii) "Participation Facility" means any facility in which the Seller or any of
its subsidiaries participates or has participated in the management and, where
required by the context, said term means the owner or operator of such property;
(iii) "Hazardous Material" means any pollutant, contaminant, or hazardous
substance or hazardous material as defined in or pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. ss.9601 et
seq., or any other federal, state, or local environmental law, regulation, or
requirement; (iv) "Oil" means oil or petroleum of any kind or origin or in any
form, as defined in or pursuant to the Federal Clean Water Act, 33 U.S.C. ss.
1251 et seq., or any other federal, state, or local environmental law,
regulation, or requirement; and (v) "Environment" means any soil, surface
waters, groundwaters, stream sediments, surface or subsurface strata, and
ambient air, and any other environmental medium.
4.25 Administration of Accounts. Each of the Seller and any of its
subsidiaries has properly administered in all material respects all accounts for
which it acts as a fiduciary, including, but not limited to, accounts for which
it serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents and applicable law. The accountings for each such fiduciary account
are true and correct in all material respects and accurately reflects the assets
of such fiduciary account.
4.26 Investment Management Activities. None of the Seller or any of its
subsidiaries is required to be registered as an investment adviser, a broker,
dealer, a commodity trading adviser, a commodity pool operator, a futures
commission merchant, an introducing broker, a registered representative or
associated person, a counseling officer, an insurance agent, a sales person or
in any similar capacity with the SEC, The Commodity Futures Trading Commission,
the National Futures Association, the securities commission of any state or any
self-regulatory body.
23
4.27 Recent Acquisitions. Neither the Seller nor any of its subsidiaries
has any liability or obligation of any nature (whether accrued, absolute,
contingent, or otherwise and whether or due or to become due) arising out of or
relating to any acquisition which has not been adequately provided for,
reflected or disclosed in the Seller Reports or the Seller Balance Sheet.
4.28 Seller Rights Agreement. Seller has taken all necessary action so
that the entering into of this Agreement and the Bank Merger Agreement and the
transactions contemplated hereby and thereby do not and will not result in the
grant of any rights to any person under the Seller Rights Agreement or enable or
require the Seller rights issuable thereunder to be exercised, distributed or
triggered, and to otherwise ensure that none of Parent, Buyer or any of their
respective Affiliates is an Acquiring Person (as such term is defined in the
Seller Rights Agreement) by reason of the execution of this Agreement, and that
a Distribution Date (as such term is defined in the Seller Rights Agreement)
does not occur by reason of the execution of this Agreement. The Seller has
adopted an amendment to the Seller Rights Agreement in the form of Exhibit II
attached hereto.
4.29 State Takeover Laws. The Board of Directors of the Seller has
approved the transactions contemplated by this Agreement and the Bank Merger
Agreement and taken all other requisite action such that the provisions of Ch.
110F of the Massachusetts General Laws and the provisions of the Seller's
Articles of Organization relating to special voting requirements for certain
business combinations will not apply to this Agreement or any of the
transactions contemplated hereby.
4.30 Proxy Statement; Seller Information. The information relating to the
Seller and its subsidiaries to be contained in the Seller Proxy Statement as
described in Section 6.1 hereof, and any other documents filed with the SEC in
connection herewith, will not, on the date the Seller Proxy Statement is first
mailed to stockholders of the Seller or at the time of the Seller Stockholders
Meeting, contain any statement which is false or misleading with respect to any
material fact, or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not false or misleading at
the time and in light of the circumstances under which such statement is made.
The Seller Proxy Statement will comply in all material respects as to form with
the requirements of the Exchange Act and the rules and regulations thereunder.
4.31 Deposit/Loan Agreements. The deposit and loan agreements of the
Seller Bank comply in all material respects with all applicable laws, rules and
regulations.
4.32 Disclosure. No representation or warranty contained in this
Agreement, and no statement contained in any certificate, list or other writing,
including but not necessarily limited to the Seller Disclosure Schedule,
furnished to the Seller pursuant to the provisions hereof, contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements herein or therein not
misleading.
ARTICLE V - COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. During the period
from the date of this Agreement to the Effective Time, except as expressly
contemplated or permitted by
24
this Agreement or the Bank Merger Agreement, the Seller shall, and shall cause
each of its subsidiaries to, (i) conduct its business in the usual, regular and
ordinary course consistent with past practice, (ii) use reasonable best efforts
to maintain and preserve intact its business organization, employees and
advantageous business relationships and retain the services of its officers and
key employees, including without limitation, implementing a retention program in
furtherance thereof, which program shall be proposed by the Buyer after
consultation with the Seller; provided, that if the Merger shall not be
consummated, the Buyer shall reimburse the Seller for the cost of any retention
bonuses paid to or earned by the employees prior thereto pursuant to such
program, and (iii) take no action which would materially adversely affect or
materially delay the ability of the Seller to obtain any necessary approvals of
any Governmental Authority required for the transactions contemplated hereby or
to perform its covenants and agreements under this Agreement or the Bank Merger
Agreement.
5.2 Seller Forbearances. During the period from the date of this Agreement
to the Effective Time, except as set forth in Section 5.2 of the Seller
Disclosure Schedule and, except as expressly contemplated or permitted by this
Agreement or the Bank Merger Agreement (and the Buyer acknowledges that any
action taken by the Seller or any of its subsidiaries prior to the Effective
Time which is expressly permitted or required by this Agreement shall not be
deemed a breach of any representation, warranty, agreement or covenant herein),
the Seller shall not, and the Seller shall not permit any of its subsidiaries
to, without the prior written consent of the Buyer, which consent shall not be
unreasonably withheld or delayed:
(a) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money (other than short-term
indebtedness incurred to refinance short-term indebtedness and indebtedness of
the Seller or any of its subsidiaries to the Seller or any of its subsidiaries;
it being understood and agreed that incurrence of indebtedness in the ordinary
course of business shall include, without limitation, the creation of deposit
liabilities, Federal Home Loan Bank borrowings, purchases of federal funds,
sales of certificates of deposit and entering into repurchase agreements),
assume, guarantee, endorse or otherwise as an accommodation become responsible
for the obligations of any other individual, corporation or other entity, or
make any loan or advance;
(b) adjust, split, combine or reclassify any shares of its capital
stock or issue any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, make, declare or pay any dividend or make any
other distribution on, whether payable in cash, stock, property or otherwise, or
directly or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or exchangeable
for any shares of its capital stock, or grant any stock appreciation rights or
grant any individual, corporation or other entity any right to acquire any
shares or its capital stock (except (i) Seller shall be entitled to pay the cash
dividend of $.15 per share of Seller Common Stock previously declared on May 29,
2002 and to be paid on July 15, 2002, (ii) in the event that the Closing has not
occurred on or prior to October 31, 2002, the Seller shall be entitled to
declare one or more dividends prior to the Effective Time to holders of record
of Seller Common Stock prior to the Effective Time in an amount equal to $.15
per share for each full calendar quarter after June 30, 2002 and prior to the
Effective Time, and (iii) dividends paid by any of the wholly owned subsidiaries
of the Seller to the Seller or any of its wholly-owned subsidiaries); or issue,
sell pledge or encumber any additional shares of capital stock or any options,
warrants, convertible
25
securities or other rights of any kind to acquire any shares of such capital
stock, or any other ownership interest, except up to a maximum of 390,000 shares
of Seller Common Stock pursuant to the exercise of stock options or warrants
outstanding as of the date of this Agreement or except pursuant to the Seller
Rights Agreement;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any
of its properties or assets to any individual, corporation or other entity other
than a direct or indirect wholly-owned subsidiary, or cancel, release or assign
any indebtedness to any such person or any claims held by any such person,
except in each case contemplated by this clause (c) in the ordinary course of
business consistent with past practice or pursuant to contracts or agreements in
force at the date of this Agreement;
(d) except for transactions in the ordinary course of business
consistent with past practice, make any material investment either by purchase
of stock or securities, contributions to capital, property transfers, or
purchase of any property or assets of any other individual, corporation or other
entity other than a wholly owned subsidiary thereof, or commitment to make such
an investment, and, in any event regardless of whether consistent with past
practice, make any such investment or commitment to make such an investment
which is in excess of $1.0 million; provided, however, that the terms of this
Section 5.2(d) shall not apply to the Seller's investment securities portfolio
or gap position, each of which is expressly covered by Section 5.2(i) hereof;
(e) except for transactions in the ordinary course of business
consistent with past practice, enter into, terminate or renew any material
contract or agreement, or make any change in any of its material contracts;
(f) (i) adopt, amend, renew or terminate any plan or any agreement,
arrangement or plan between the Seller or any of its subsidiaries and one or
more of its current or former directors, officers or employees; (ii) enter into,
modify or renew any employment, severance or other agreement with any director,
officer or employee of the Seller or any of its subsidiaries; (iii) establish,
adopt, enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund policy or arrangement providing for any benefit to any
director, officer or employee; or (iv) increase in any manner the compensation
or fringe benefits of any of its employees or pay any pension or retirement
allowance not required by any existing plan or agreement to any such employees
or become a party to, amend or commit itself to any pension, retirement,
profit-sharing or welfare benefit plan or agreement or employment agreement with
or for the benefit of any employee, in all cases contemplated by clauses (i),
(ii), (iii) or (iv), other than in the ordinary course of business consistent
with past practice; provided, that, notwithstanding anything to the contrary set
forth in this Agreement, prior to the Closing Date, the Seller shall be
permitted to pay bonuses to the employees of Seller and its subsidiaries for
that portion of the 2002 fiscal year completed through the Effective Time;
provided, however, that the aggregate bonuses paid by the Seller to employees
pursuant to this Section 5.2(f) shall not exceed $350,000 times the number of
days elapsed during the 2002 fiscal year through the Effective Time divided by
365.
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(g) settle any claim, action or proceeding, except in the ordinary
course of business consistent with past practice;
(h) amend its Articles of Organization, its By-Laws, or, prior to or
on the record date for the Sellers Stockholders Meeting, the Seller Rights
Agreement;
(i) other than after prior consultation with the Buyer, or in the
ordinary course of business, restructure or materially change its investment
securities portfolio or its gap position, through purchases, sales or otherwise,
or the manner in which the portfolio is classified or reported;
(j) enter into any new line of business or file any application to
relocate or terminate the operations of any banking office of the Seller or any
of its subsidiaries or, other than after prior consultation with Buyer,
materially expand the business currently conducted by the Seller and its
subsidiaries;
(k) acquire or agree to acquire, by merging or consolidating with,
or by purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, other business
organization or any division thereof or any material amount of assets other than
other real estate owned;
(l) incur or commit to any capital expenditures or any obligations
or liabilities in connection therewith other than in the ordinary and usual
course of business consistent with past practice, and in all cases the Seller
agrees to obtain the consent of the Buyer with respect to any capital
expenditures that individually exceed $50,000 or cumulatively exceed $250,000;
(m) take any action with respect to accounting methods, principles
or practices, other than changes required by applicable law or GAAP or
regulatory accounting as concurred in by the Seller's independent accountants;
or make any tax election or settle or compromise any federal, state, local or
foreign tax liability;
(n) make any new or additional equity investment in real estate or
commitment to make such an investment in real estate or in any real estate
development project, other than in connection with foreclosures, settlements in
lieu of foreclosure or troubled loan or debt restructurings in the ordinary
course of business consistent with past practice;
(o) change in any material respect its loan policies, except as
required by regulatory authorities;
(p) enter into or renew, amend or terminate, or give notice of a
proposed renewal, amendment or termination of or make any commitment with
respect to, (i) any lease, contract, agreement or commitment for office space,
operations space or branch space to which the Seller or any of its subsidiaries
is a party or by which the Seller or any of its subsidiaries or their respective
properties is bound; or (ii) regardless of whether consistent with past
practices, any lease, contract, agreement or commitment involving an aggregate
payment by or to the Seller or any of its subsidiaries of more than $200,000 or
having a term of one year or more from the date of execution;
27
(q) commit any act or omission which constitutes a material breach
or default by the Seller or any of its subsidiaries under any Regulatory
Agreement or under any material contract or material license to which any of
them is a party or by which any of them or their respective properties is bound;
(r) engage in any activity that would result in the disqualification
of Medford Securities Corporation as a security corporation, as described in
Section 38B(b) of Chapter 63 of the MGL;
(s) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time prior to
the Effective Time, or in any of the conditions to the Merger set forth in
Article VII not being satisfied or in a violation of any provision of this
Agreement, except, in every case, as may be required by applicable law; or
(t) authorize or agree to, or make any commitment to, take any of
the actions prohibited by this Section 5.2.
5.3 Buyer Forbearances. During the period from the date of this Agreement
to the Effective Time, except as expressly contemplated or permitted by this
Agreement, the Buyer and its Affiliates shall not, and the Buyer shall not
permit any of its subsidiaries to, without the prior written consent of the
Seller:
(a) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time prior to
the Effective Time, or in any of the conditions of the Merger set forth in
Article VII of this Agreement not being satisfied or in a violation of any
provision of this Agreement;
(b) take any action that is intended or may reasonably be expected
to materially adversely affect or, materially delay its ability to obtain any
necessary approvals of any Governmental Authority required for the transactions
contemplated hereby or to perform its covenants and agreements under this
Agreement;
(c) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.3.
5.4 System Conversions. From and after the date hereof, the Buyer and the
Seller shall meet on a regular basis to discuss and plan for the conversion of
the Seller's and its subsidiaries' data processing and related electronic
informational systems to those used by the Buyer and its subsidiaries, which
planning shall include, but not be limited to, discussion of Seller's
third-party service provider arrangements, non-renewal of personal property
leases and software licenses used by the Seller or any of its subsidiaries 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 the Seller shall not be obligated to take any such action prior
to the Effective Time and, unless the Seller otherwise agrees, no conversion
shall take place prior to the Effective Time. In the event that the Seller or
any of its subsidiaries takes, at the request of the
28
Buyer, any action relative to third parties to facilitate the conversion that
results in the imposition of any termination fees, expenses or charges, the
Buyer shall indemnify the Seller and its subsidiaries for any such fees,
expenses and charges, and the costs of reversing the conversion process, if for
any reason the Merger is not consummated in accordance with the terms of this
Agreement.
5.5 Certain Changes and Adjustments. Prior to the Closing, the Buyer and
the Seller shall consult with each other concerning the Seller Bank's loan,
litigation and real estate valuation policies and practices (including loan
classifications and levels of reserves) and the Buyer's plans with respect to
the foregoing after the Effective Time; provided, however, that neither the
Seller nor the Seller Bank shall be obligated to take any action pursuant to
this Section which is inconsistent with GAAP or to which the Seller's
independent auditors object and, in any event, unless and until the Buyer
acknowledges, and the Seller and the Seller Bank are satisfied, that all
conditions to either party's obligation to consummate the Merger have been
satisfied and that the Buyer shall consummate the Merger in accordance with the
terms of this Agreement. No action taken by the Seller or the Seller Bank
pursuant to this Section or the consequences resulting therefrom shall be deemed
to be a breach of any representation, warranty, agreement or covenant herein or
constitute a Material Adverse Effect. In the event that the Seller or any of its
subsidiaries takes, at the request of the Buyer, any action pursuant to this
Section 5.5, the Buyer shall indemnify the Seller and its subsidiaries for any
fees, expenses and charges, and the costs of reversing the action taken, if for
any reason the Merger is not consummated in accordance with the terms of this
Agreement.
5.6 Branches. Prior to the Effective Time, the Buyer and the Seller shall
consult and cooperate with each other concerning alignment of the Buyer's and
the Seller Bank's branches following the Effective Time.
5.7 Servicing. The Seller agrees that upon the expiration of any of the
Seller's or its subsidiaries' 401(k) servicing agreements prior to the Closing,
it will enter into a new 401(k) servicing agreement with the same service
provider as the Buyer, provided, however, that the Seller or its subsidiaries
shall not be obligated to do so unless the terms of such new agreement are
comparable to or not materially less favorable than terms then available to the
Seller. If requested by the Buyer, the Seller shall, and shall cause certain of
its subsidiaries to, provide notices of termination with respect to certain
other servicing arrangements of the Seller or its subsidiaries existing as of
the date hereof; provided, however, that, if for any reason the Merger is not
consummated in accordance with the terms of this Agreement, the Buyer shall
indemnify the Seller and its subsidiaries for any fees, expenses, charges, and
the costs of reversing the action taken or entering into a new servicing
agreement on terms substantially similar to the servicing arrangements so
terminated pursuant to this Section 5.7.
5.8 Purchaser Products and Services. From and after the date of this
Agreement, the Buyer and the Seller shall consult with each other on the
introduction of products and services not currently offered by the Seller Bank
which the Buyer would expect to make available to customers following the
Effective Time; provided, however, that nothing herein shall obligate the Seller
to offer any such products or services prior to the Effective Time.
(29)
5.9 ALCO Management. The Seller and the Seller Bank agree to manage their
assets and liabilities in accordance with Seller's asset and liability
management policy as in effect on the date hereof, unless otherwise agreed by
the parties. Neither the Seller nor the Seller Bank shall amend or modify such
policy without the express written consent of the Buyer. The Seller and the
Buyer agree to consult on investment programs to be administered by the Seller
Bank.
5.10 Deposit Incentive Plan. The Seller agrees that it will consult with
the Buyer in the development and implementation of policies and programs to
retain deposits and, following the execution and delivery of this Agreement, the
Seller and the Buyer shall adopt and implement a deposit incentive plan for
management and branch staff of the Seller and the Seller Bank (the "Deposit
Incentive Plan") on such terms and conditions as may be mutually agreed upon by
the Seller and the Buyer and set forth in the Deposit Incentive Plan. The
purpose of the Deposit Incentive Plan shall be to incentivize management and
branch staff to increase the deposits held by the Seller Bank through the period
of the system conversion. Any such Deposit Incentive Plan shall be funded by the
Buyer.
5.11 Charitable Foundation. At least two (2) days prior to the Effective
Time, the Seller shall establish a charitable foundation with initial assets of
$2 million. The trustees of such foundation shall be three senior officers of
the Buyer; provided, however, that if the Merger is not consummated for any
reason the trustees of said foundation shall be appointed by the Seller. Buyer
agrees that if the Merger is not consummated for any reason, Buyer shall
reimburse Seller for all amounts previously contributed to such charitable
foundation at the Buyer's request (including the $2 million referenced in the
previous sentence).
ARTICLE VI - ADDITIONAL AGREEMENTS
6.1 Regulatory Matters; Consents.
(a) The Seller will as promptly as practicable, take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
stockholders (the "Seller Stockholders Meeting") to be held as soon as possible
following clearance by the SEC of the Seller Proxy Statement, for the purpose of
approving this Agreement and the Merger.
(b) The Seller's Board of Directors has adopted a resolution
recommending approval and adoption of this Agreement and the Merger by the
Seller's stockholders, and except as provided in Section 6.2, the Board of
Directors of the Seller shall at all times recommend approval and adoption of
this Agreement and the Merger by the Seller's stockholders.
(c) As soon as practicable after the date hereof, and in any event
by July 22, 2002, the Seller shall prepare and file a proxy statement with the
SEC under the Exchange Act (the "Seller Proxy Statement") and shall use its
reasonable best efforts to have the Seller Proxy Statement cleared by the SEC.
The Buyer and the Seller shall cooperate with each other in the preparation of
the Seller Proxy Statement and the Seller shall notify the Buyer promptly of the
receipt of any comments of the SEC with respect to the Seller Proxy Statement
and of any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to the Buyer promptly copies of all
correspondence between the Seller or any
30
representative of the Seller and the SEC. The Seller shall give the Buyer and
its counsel the opportunity to review and discuss the Seller Proxy Statement
prior to its being filed with the SEC and shall give the Buyer and its counsel
the opportunity to review and discuss all amendments and supplements to the
Seller Proxy Statement and all responses to requests for additional information
and replies to comments prior to their being filed with, or sent to, the SEC.
Each of the Buyer and the Seller agrees to use its reasonable best efforts,
after consultation with the other party hereto, to respond promptly to all such
comments of and requests by the SEC and to cause the Seller Proxy Statement and
all required amendments and supplements thereto to be mailed to the holders of
Seller Common Stock entitled to vote at the Seller Stockholders Meeting referred
to in Section 6.1(a) hereof at the earliest practicable time.
(d) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Authorities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger and the Bank Merger), and
to comply with the terms and conditions of all such permits, consents, approvals
and authorizations of all such Governmental Authorities. The Buyer and the
Seller shall have the right to review in advance, and, to the extent
practicable, each will consult the other on, in each case subject to applicable
laws relating to the exchange of information, all the information relating to
the Buyer or the Seller, as the case may be, and any of their respective
subsidiaries, which appear in any filing made with, or written materials
submitted to, any third party or any Governmental Authority in connection with
the transactions contemplated by this Agreement. In exercising the foregoing
right, each of the parties hereto shall act reasonably and as promptly as
practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(e) The Buyer and the Seller shall, upon request, furnish each other
with all information concerning themselves, their subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Seller Proxy Statement or any other
statement, filing, notice or application made by or on behalf of any Affiliate
of the Buyer, the Buyer or the Seller or any of their respective subsidiaries to
any Governmental Authority in connection with the Merger, the Bank Merger and
the other transactions contemplated by this Agreement.
(f) The Buyer and the Seller shall promptly advise each other upon
receiving (and the Buyer shall so advise with respect to communications received
by any Affiliate of the Buyer) any communication from any Governmental Authority
whose consent or approval is required for consummation of the transactions
contemplated by this Agreement that causes such party to believe that there is a
reasonable likelihood that any Requisite Regulatory Approval will not be
obtained or that the receipt of any such approval will be materially delayed.
6.2 No Solicitation. Seller agrees that, during the term of this
Agreement, it shall not, and shall not authorize or permit any of its
subsidiaries or any of its or its subsidiaries'
31
directors, officers, employees, agents or representatives (collectively, its
"Agents") to, directly or indirectly, solicit, initiate, knowingly encourage or
take any action to facilitate, or furnish or disclose nonpublic information in
furtherance of, any inquiries or the making of any offer or proposal regarding,
or participate in any discussions or negotiations with, or provide any
information to, any Person (other than the Buyer and its Affiliates or
representatives) concerning any Acquisition Transaction or enter into any
definitive agreement, arrangement or understanding for any Acquisition
Transaction or requiring it to abandon, terminate or fail to consummate the
Merger or any other transactions contemplated by this Agreement; provided, that
the Seller or its Agents may furnish or cause to be furnished information to,
and negotiate or otherwise engage in discussions with, any individual or entity
that delivers a written proposal for an Acquisition Transaction that was not
solicited, knowingly encouraged or facilitated by the Seller or any of its
Agents after the date of this Agreement if and so long as (A) the Board of
Directors of the Seller determines (i) in good faith by a majority vote, after
consultation with its outside legal counsel, that failing to take such action
would be inconsistent with its fiduciary duties under applicable laws and (ii)
that such a proposal is or would be reasonably likely to result in a Superior
Proposal and (B) prior to furnishing any information to such individual or
entity, Seller shall enter into a confidentiality agreement with such individual
or entity that is no less restrictive, in any material respect, than the
Confidentiality Agreement dated June 6, 2002 by and between Buyer and Seller
(the "Confidentiality Agreement"), and Seller shall enforce, and shall not waive
any of the provisions of any such confidentiality agreement. The Board of
Directors of the Seller shall be permitted to withdraw, modify or change in a
manner adverse to the Buyer (or not to continue to make) its recommendation to
the Seller's stockholders required under Section 6.1(b) and/or comply with Rule
14e-2 under the Exchange Act with respect to an Acquisition Transaction if, but
only if, (a) after consultation with the Seller's outside legal counsel, the
Board of Directors of the Seller determine that failing to take such action, in
response to an unsolicited bona fide written Superior Proposal, would be
inconsistent with the fiduciary duties of the Board of Directors of the Seller
under applicable law, (b) the Seller has given the Buyer five (5) business days'
prior written notice of its intention to do so and the Seller's Board of
Directors has considered any changes to this Agreement (if any) proposed by the
Buyer and has determined, after consultation with the Seller's outside legal
counsel and after consultation with a financial advisor of nationally recognized
reputation, that such unsolicited proposal remains a Superior Proposal, and (c)
the Seller has complied in all material respects with this Section 6.2
(provided, that the foregoing shall in no way limit or otherwise affect Buyer's
right to terminate this Agreement pursuant to Section 8.1(f)). Any such
withdrawal, modification or change of the recommendation of the Board of
Directors of the Seller shall not change the approval of the Board of Directors
of the Seller for purposes of causing any state takeover statute or other state
law to be inapplicable to the transactions contemplated by this Agreement,
including the Merger or the transactions contemplated by this Agreement.
Seller immediately will cease, and shall cause its subsidiaries and its
subsidiaries' representatives to cease, all existing activities, discussions and
negotiations with any individual or entity conducted heretofore with respect to
any proposal for an Acquisition Transaction and request the return or
destruction of all confidential information regarding Seller or its subsidiaries
provided to any such individual or entity prior to the date of this Agreement
pursuant to the terms of any confidentiality agreements and the Seller shall
enforce, and shall not waive, any of the provisions of any such confidentiality
agreement.
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From and after the execution of this Agreement, Seller shall advise Buyer within
the Notice Period (as defined below) of the receipt, directly or indirectly, of
any inquiries, discussions, negotiations, or proposals relating to an
Acquisition Transaction (including a summary of material and significant terms
thereof and the identity of the other individual or entity or individuals or
entities involved), or its receipt of any request for information from the
Federal Reserve Board, the DOJ, or any other Governmental Authority with respect
to an Acquisition Transaction, and promptly furnish to Buyer a copy of any such
written proposal in addition to a copy of any information provided to or by any
third party relating thereto. In addition, Seller shall immediately advise
Buyer, in writing, if the Board of Directors of the Seller shall make any
determination as to any Acquisition Transaction as contemplated by the proviso
to the first sentence of this Section 6.2. Nothing contained in this Section 6.2
shall prohibit Seller from, at any time, taking and disclosing to the Seller's
stockholders a position contemplated by Rule 14d-9 or Rule 14e-2 under the
Exchange Act or making any disclosure required by Rule 14a-9 under the Exchange
Act so long as the requirements set forth in this Section 6.2 are satisfied. For
the purposes of this Agreement, "Superior Proposal" shall mean any bona fide
Acquisition Transaction on terms the Board of Directors of the Seller determines
in its good faith judgment and taking into account the advice of a financial
advisor of nationally recognized reputation (taking into account all the terms
and conditions of the Acquisition Transaction, including any break-up fees,
expense reimbursement provisions and conditions to consummation, the likelihood
and anticipated timing of consummation and all legal, financial, regulatory and
other aspects of the proposal and the individual or entity making the proposal)
are in the aggregate more favorable and provide greater value to all the
Seller's stockholders than this Agreement and the Merger taken as a whole. For
purposes of this Agreement, "Acquisition Transaction" means any offer or
proposal for, or any indication of interest in (w) a merger, tender offer,
recapitalization, or consolidation, or any similar transaction, involving the
Seller or any Significant Subsidiary of the Seller, (x) a purchase, lease or
other acquisition or assumption of all or a substantial portion of the assets or
deposits of the Seller or all or substantially all of the assets or deposits of
any Significant Subsidiary of the Seller, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
beneficial ownership (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the Exchange
Act, and the rules and regulations thereunder) of securities representing 10% or
more of the voting power of the Seller or any Significant Subsidiary of the
Seller, or (z) any substantially similar transaction. For purposes of this
Agreement, the term "Notice Period" shall mean (x) with respect to written
inquiries or proposals or other written materials, written notice immediately
and in no event later than 24 hours after receipt thereof and (y) with respect
to oral inquires, discussions, negotiations, or proposals, oral notice
immediately and in no event later than 24 hours after receipt thereof, followed
by written notice in no event later than one (1) business day after receipt of
such oral inquires, discussions, negotiations, or proposals. Nothing in this
Section 6.2 shall affect Seller's obligation to hold the Seller Stockholders
Meeting in accordance with Section 6.1 above.
6.3 Access to Information.
(a) Upon reasonable notice and subject to applicable laws relating
to the exchange of information, each of the Buyer and the Seller, for the
purposes of verifying the representations and warranties of the other and
relating to the Merger and the other matters contemplated by this Agreement,
shall, and shall cause each of their respective subsidiaries to,
33
afford to the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records, and, during such period, each of the Buyer and the
Seller shall, and shall cause their respective subsidiaries to, make available
to the other party (i) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of federal securities laws or federal or state banking laws (other
than reports or documents which the Buyer or the Seller, as the case may be, is
not permitted to disclose under applicable law) and (ii) all other information
concerning its business, properties and personnel as such party may reasonably
request. Neither the Buyer nor the Seller nor any of their respective
subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights of the
Buyer's or the Seller's, as the case may be, customers, jeopardize the
attorney-client privilege of the institution in possession or control of such
information or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(b) All information furnished by any party hereto to the other or
its representatives pursuant hereto shall be treated as the sole property of the
party providing the information and, if the Merger shall not occur, the party
being furnished such information shall return to the other party all of such
written information and all documents, notes, summaries or other materials
containing, reflecting or referring to, or derived from, such information. The
parties hereto shall, and shall use their reasonable best efforts to cause their
representatives to, keep confidential all such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
continue for five years from the date the proposed Merger is abandoned and shall
not apply to (i) any information which (x) was already in the possession of the
party being furnished such information prior to the disclosure thereof by the
other party, (y) was then generally known to the public, or (z) was disclosed to
the party being furnished such information by a third party not bound by an
obligation of confidentiality; or (ii) disclosures made as required by law.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
6.4 Legal Conditions to Merger. Each of the Buyer and its Affiliates and
the Seller shall, and the Seller shall cause its subsidiaries to, use their
reasonable best efforts (a) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal requirements
that may be imposed on such party or its subsidiaries with respect to the Merger
and, subject to the conditions set forth in Article VII hereof, to consummate
the transactions contemplated by this Agreement, and (b) to obtain (and to
cooperate with the other party to obtain) any material consent, authorization,
order or approval of, or any exemption by, any Governmental Authority and any
other third party that is required to be obtained by the Buyer or the Seller or
any of their respective subsidiaries in connection with the Merger, the Bank
Merger and the other transactions contemplated by this Agreement.
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6.5 Employment and Benefit Matters.
(a) Provision of Benefits. From and after the Effective Time, the
Buyer agrees to provide the employees of the Seller and its subsidiaries (the
"Seller Employees") who remain employed after the Effective Time (collectively,
the "Transferred Seller Employees") with at least the types and levels of
employee benefits (including employee contribution levels) maintained by the
Buyer for similarly situated employees of the Buyer. The Buyer will treat, and
cause its applicable benefit plans to treat, the service of Seller Employees
with Seller or any subsidiary of Seller as service rendered to the Buyer or any
Affiliate of Buyer for purposes of eligibility to participate, vesting and for
other appropriate benefits including, but not limited to, applicability of
minimum waiting periods for participation, but not for benefit accrual
(including minimum pension amount) attributable to any period before the
Effective Time. Without limiting the foregoing, the Buyer shall not treat any
employee of the Seller or any of its subsidiaries as a "new" employee for
purposes of any exclusions under any health or similar plan of the Buyer for a
pre-existing medical condition, and any deductibles paid under any of Seller's
or its subsidiaries health plans shall be credited towards deductibles under
Buyer's health plans upon delivery to the Buyer of appropriate documentation.
The Buyer will make appropriate arrangements with its insurance carrier(s) to
ensure such result.
(b) Continuation of Plans. Notwithstanding anything to the contrary
contained herein, the Buyer shall have sole discretion with respect to the
determination as to whether or when to terminate, merge or continue any employee
benefit plans and programs of the Seller; provided, however, that the Buyer
shall continue to maintain the Seller plans (other than stock based or incentive
plans or stock funds in retirement plans) until the Seller Employees are
permitted to participate in the Buyer's plans. Nothing in this Agreement shall
alter or limit the Buyer's obligations, if any, under ERISA, as amended by the
Consolidated Omnibus Budget Reconciliation Act of 1985 and/or the Health
Insurance Portability and Accountability Act of 1996 with respect to the rights
of Seller Employees and their qualified beneficiaries in connection with the
group health plan maintained by the Seller as of the Effective Time.
(c) Severance Pay Plan. As of the Effective Time, Buyer shall honor,
in accordance with its terms, the Medford Savings Bank Severance Pay Plan (the
"Severance Pay Plan"); provided, that the foregoing shall not prohibit the Buyer
from terminating or amending the Severance Pay Plan at any time after the
expiration of the one-year period following the Effective Time. The Seller
agrees that the Severance Pay Plan shall not be modified or amended without the
Buyer's written consent. In addition, the Buyer agrees to provide selected
outplacement services to terminated employees consistent with its past
practices.
(d) Compensation Agreements. Following the Effective Time, the Buyer
shall honor and shall cause its subsidiaries to honor in accordance with their
terms all written employment, termination, severance (other than the Severance
Pay Plan), change in control, and other compensation agreements all as disclosed
in Section 6.5(d) of the Seller Disclosure Schedule (the "Compensation
Agreements"), and the Buyer will not, and will not cause any of its subsidiaries
to, challenge the validity of any obligation of the Seller or any subsidiary of
the Seller under, any such Compensation Agreements. The Seller shall make, or
shall be permitted to make, all payments reflected in Section 6.5(d) of the
Seller Disclosure Schedule immediately
35
prior to the Effective Time. This Section 6.5(d) is intended to be for the
benefit of and enforceable by the respective parties to those agreements and
their heirs and representatives.
(e) Parachute Payouts. Notwithstanding anything to the contrary
contained in this Agreement, in no event shall the Seller or any of its
subsidiaries take any action or make any payments that would result, either
individually or in the aggregate, in the payment of an "excess parachute
payment" within the meaning of Section 280G of the Code or that would result,
either individually or in the aggregate, in payments that would be nondeductible
pursuant to Section 162(m) of the Code.
(f) Continuation of Employment. No provision of this Section 6.5
shall create any third party beneficiary rights in any employee or former
employee (including any beneficiary or dependent thereof) of the Seller in
respect of continued employment (or resumed employment) with the Buyer or any of
its Affiliates and no provision of this Section 6.5 shall create such rights in
any such persons in respect of any benefits that may be provided, directly or
indirectly, under any employee program or any plan or arrangement which may be
established by the Buyer or any of its Affiliates. No provision of this
Agreement shall constitute a limitation on the rights to amend, modify or
terminate after the Effective Time any such plans or arrangements of the Buyer
or any of its Affiliates.
6.6 Directors' and Officers' Indemnification and Insurance.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date of this Agreement, or who becomes prior to the Effective Time, a
director or officer or employee of Seller or any of its subsidiaries (the
"Indemnified Parties") is, or is threatened to be, made a party based in whole
or in part on, or arising in whole or in part out of, or pertaining to (i) the
fact that he is or was a director, officer or employee of the Seller, any of the
Seller's subsidiaries or any of their respective predecessors or (ii) this
Agreement or any of the transactions contemplated hereby, whether in any case
asserted or arising before or after the Effective Time, the parties hereto agree
to cooperate and use their best efforts to defend against and respond thereto.
It is understood and agreed that after the Effective Time, the Buyer shall
indemnify and hold harmless, as and to the fullest extent permitted by law, each
such Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorney's fees and expenses in advance of the
final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the fullest extent permitted by law upon receipt of any
undertaking required by applicable law), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim, action, suit,
proceeding or investigation, and in the event of any such threatened or actual
claim, action, suit, proceeding or investigation (whether asserted of arising
before or after the Effective Time), the Indemnified Parties may retain counsel
reasonably satisfactory to them after consultation with the Buyer; provided,
however, that (1) the Buyer shall have the right to assume the defense thereof
and upon such assumption the Buyer or the Bank shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other expenses
subsequently incurred by any Indemnified Party in connection with the defense
thereof, except that if the Buyer elects not to assume such defense or counsel
for the Indemnified Parties reasonably advises the Indemnified Parties that
there are
36
issues which raise conflicts of interest between the Buyer and the Indemnified
Parties, the Indemnified Parties may retain counsel reasonably satisfactory to
them after consultation with the Buyer, and the Buyer shall pay the reasonable
fees and expenses of such counsel for the Indemnified Parties, (2) the Buyer
shall be obligated pursuant to this paragraph to pay for only one firm of
counsel for all Indemnified Parties, unless the proposed counsel for the
Indemnified Parties reasonably advises the Indemnified Parties that there are
issues which raise conflicts of interest among such parties, in which case the
Buyer shall pay the reasonable fees and expenses of additional counsel to the
extent necessary to avoid such conflict, (3) the Buyer shall not be liable for
any settlement effected without its prior written consent (which consent shall
not be unreasonably withheld) and (4) the Buyer shall have no obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim Indemnification under this Section 6.6, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify the Buyer
thereof, provided, that the failure to so notify shall not affect the
obligations of the Buyer under this Section 6.6 except to the extent such
failure to notify materially prejudices the Buyer. The Buyer's obligations under
this Section 6.6 shall continue in full force and effect for a period of six (6)
years from the Effective Time; provided, however, that all rights to
indemnification in respect of any claim (a "Claim") asserted or made within such
period shall continue until the final disposition of such Claim.
(b) The Buyer shall maintain the Seller's (including its
subsidiaries') existing directors' and officers' liability insurance (the "D&O
Insurance") covering persons who are currently covered by the Seller's D&O
Insurance for a period of six (6) years after the Effective Time on terms no
less favorable than those in effect on the date hereof and shall at the
Effective Time provide evidence of such extension of coverage to the Seller;
provided, however, that the Buyer may substitute therefor policies providing
substantially comparable coverage and containing terms and conditions no less
favorable than those in effect on the date hereof. In connection with the
foregoing, the Seller agrees to provide such insurer or substitute insurer with
such representations as such insurer may request with respect to the reporting
of any prior claims.
(c) In the event the Buyer or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of the Buyer
assume the obligations set forth in this section.
(d) The provisions of this Section 6.6 are intended to be for the
benefit of, and enforceable by, each Indemnified Party and his or her heirs and
representatives, and nothing herein shall affect any indemnification rights that
any Indemnified Party and his or her heirs and representatives may have under
the charter or by-laws of the Seller or any of its subsidiaries, any contract or
applicable law.
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6.7 Additional Agreements. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation or the Surviving Bank with full
title to all properties, assets, rights, approvals, immunities and franchises of
any of the parties to the Merger or the Bank Merger, the proper officers and
directors of each party to this Agreement and their respective subsidiaries
shall take all such necessary action as may be reasonably requested by, and at
the sole expense of, the Buyer.
6.8 Advice of Changes. The Buyer and the Seller shall each promptly advise
the other party of any change or event having a Material Adverse Effect on it or
which it believes would or would be reasonably likely to cause or constitute a
material breach of any of its representations, warranties or covenants contained
herein; provided, however, that the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
6.9 Update of Disclosure Schedules. From time to time prior to the
Effective Time, the Seller will promptly supplement or amend the Seller
Disclosure Schedule to reflect any matter which, if existing, occurring or known
at the date of this Agreement, would have been required to be set forth or
described in the Seller Disclosure Schedule or which is necessary to correct any
information in the Seller Disclosure Schedule which has been rendered inaccurate
thereby. No supplement or amendment to the Seller Disclosure Schedule shall have
any effect for the purpose of determining satisfaction of the conditions set
forth in Section 7.2(b) hereof or compliance by the Seller with the covenants
set forth in Article V hereof.
6.10 Current Information.
(a) As soon as practicable, the Seller will furnish to the Buyer
copies of all such financial statements and reports as it or any of its
subsidiaries shall send to its stockholders, the SEC or any other Governmental
Authority, to the extent any such reports furnished to any such Governmental
Authority are not confidential and except as legally prohibited thereby, and
will furnish to the Buyer such additional financial data as the Buyer may
reasonably request.
(b) Promptly upon receipt thereof, the Seller will furnish to the
Buyer copies of all internal control reports submitted to the Seller and its
subsidiaries by independent auditors in connection with each annual, interim or
special audit of the books of the Seller and its subsidiaries made by such
auditors.
(c) The Seller will promptly notify the Buyer of any material change
in the normal course of business or in the operation of the properties of the
Seller or any of its subsidiaries and of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of material litigation involving
the Seller or any of its subsidiaries, and will keep the Buyer reasonably
informed of such events.
6.11 Transition Committee. Immediately upon the execution of this
Agreement, the Seller shall designate certain of its respective employees as
"Liaisons." During the period from the date of this Agreement to the Effective
Time, the Seller's Liaisons will (a) confer on a
38
regular and continued basis with representatives of the Buyer to report on (i)
the general status of the ongoing operations of the Seller and its subsidiaries,
(ii) the status of, and the action proposed to be taken with respect to, those
loans held by the Seller or any of its subsidiaries which, either individually
or in combination with one or more other loans to the same borrower thereunder,
have an aggregate outstanding principal amount of $250,000 or more and are
classified or non-performing assets, and (iii) the status of, and the action
proposed to be taken with respect to, foreclosed property and other real estate
owned, and (b) communicate with respect to the manner in which the business of
the Seller and its subsidiaries are conducted and the disposition of certain
assets after the Effective Time, the type and mix of products and services,
personnel matters, branch alignment, branch closings, the granting of credit,
and problem loan management, reserve adequacy and accounting. In order to
facilitate the foregoing, the Seller and the Buyer shall promptly establish a
transition committee (the "Transition Committee"), which will meet on a regular
basis to discuss these matters and may establish sub-committees from
time-to-time to pursue various issues. In addition, during the period from the
date of this Agreement to the Effective Time, within two business days after the
Seller Bank delivers to the members of its senior credit committee applicable
information and reports for the next upcoming meeting of such committee, the
Seller shall provide to a representative designated by the Buyer located in
Boston, Massachusetts access to the same information and reports as are provided
to the Seller Bank's senior credit committee members with respect to new
commercial loans and extensions of credit proposed to be made by the Seller Bank
in excess of $250,000. The representative designated by the Buyer shall also be
allowed to attend the Seller Bank's senior credit committee meetings for
commercial loans and be a non-voting observer thereof. The Seller, if requested
by the Buyer, will assist the Buyer to prepare to sell a portion of its single
family residential mortgage loans and mortgage loan servicing rights following
the Effective Time; provided, that Buyer shall indemnify the Seller and its
subsidiaries for any fees, expenses and charges incurred by Seller in connection
therewith if the Merger is not consummated in accordance with the terms of this
Agreement. Moreover, to facilitate the transactions contemplated herein,
immediately upon execution of this Agreement, the Seller will designate a Senior
Vice President to assist Buyer with interim operating and conversion matters.
6.12 Bank Merger. Unless otherwise determined by the Buyer prior to the
Closing, at the effective time of the Bank Merger the Articles of Organization
and By-Laws of the Buyer, as in effect immediately prior thereto, shall be the
Articles of Organization and By-Laws of the Surviving Bank until thereafter
amended as provided by law and such Articles of Organization and By-Laws. The
directors and officers of the Buyer immediately prior to the effective time of
the Bank Merger shall be the directors and officers of the Surviving Bank, each
to hold office in accordance with the Articles of Organization and By-Laws of
the Surviving Bank and until their respective successors are duly elected or
appointed and qualified.
6.13 Organization of the Merger Sub.
(a) Prior to the Effective Time, the Buyer will take any and all
necessary action to cause (i) the Merger Sub to be organized, (ii) the Merger
Sub to become a direct wholly owned subsidiary of the Buyer, (iii) the directors
and stockholders of the Merger Sub to approve the transactions contemplated by
this Agreement, (iv) the Merger Sub to execute one or more counterparts to this
Agreement and to deliver at least one such counterpart so executed to the
Seller, whereupon the Merger Sub shall become a party to and be bound by this
Agreement, and
39
(v) the Merger Sub to take all necessary action to complete the transactions
contemplated hereby subject to the terms and conditions hereof.
(b) On and as of the date the Merger Sub becomes a party to this
Agreement, the Buyer and the Merger Sub shall, jointly and severally, represent
and warrant to the Seller as follows:
(i) The Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of The Commonwealth of
Massachusetts and all of its outstanding capital stock are owned,
directly, by the Buyer. Since the date of its organization, the
Merger Sub has not engaged in any activities other than in
connection with or as contemplated by this Agreement;
(ii) The Merger Sub has all necessary corporate power and
authority to enter into this Agreement and to carry on its
obligations hereunder. The execution and delivery of this Agreement
by the Merger Sub and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Merger Sub and will not (A)
conflict with or violate the Articles of Organization or By-laws of
the Merger Sub or (B) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Merger Sub
or by which any of its properties or assets is bound or affected;
and
(iii) The Merger Sub has executed and delivered this Agreement
and this Agreement constitutes the legal, valid and binding
obligation of the Merger Sub enforceable against the Merger Sub in
accordance with its terms.
6.14 Community Commitments. From and after the Effective Time, Buyer shall
use its reasonable efforts to continue the community commitments undertaken by
the Seller Bank prior to the date hereof in the communities currently served by
the Seller Bank.
6.15 Citizens Financial Group. The Parent agrees to cause the Buyer, its
subsidiary, to perform its obligations hereunder, and the Parent and the Buyer
shall be jointly and severally liable for all of the obligations of the Buyer
hereunder.
6.16 Section 16 Matters. Prior to the Effective Time, the Board of
Directors of each of Buyer and Seller, or appropriate committees of non-employee
directors thereof, shall adopt (if necessary) a resolution consistent with the
interpretive guidance of the SEC so that the disposition by any officer or
director of Seller or any Seller Subsidiary who is a covered person of Seller
for purposes of Section 16 under the Exchange Act (together with the rules and
regulations promulgated thereunder, "Section 16") of shares of Seller Common
Stock or Seller Options pursuant to this Agreement and the Merger shall be an
exempt transaction for purposes of Section 16.
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ARTICLE VII - CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligations To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions:
(a) Stockholder's Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the requisite affirmative vote
of the holders of the outstanding shares of Seller Common Stock present and
voting at the Seller Stockholders Meeting in accordance with applicable law.
(b) Other Approvals. All regulatory approvals required to consummate
the transactions contemplated hereby shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect thereof
shall have expired (all such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite Regulatory Approvals").
(c) No Injunctions or Restraints; Illegality. No order, injunction
or decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger, the Bank Merger or any of the other transactions contemplated by this
Agreement shall be in effect. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
Governmental Authority which prohibits, materially restricts or makes illegal
consummation of the Merger or the Bank Merger.
7.2 Conditions to the Obligations of the Buyer. The obligation of the
Buyer to effect the Merger is also subject to the satisfaction or waiver by the
Buyer, at or prior to the Effective Time, of the following conditions:
(a) Absence of Material Adverse Changes. There shall not have
occurred any change in the business, assets, financial condition or results of
operations of the Seller or any of its subsidiaries which has had, or is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Seller and its subsidiaries taken as a whole.
(b) Representations and Warranties. The representations and
warranties of Seller contained in this Agreement that are qualified as to
materiality shall be true and correct and any such representations and
warranties that are not so qualified shall be true and correct in all material
respects, in each case, as of the date of this Agreement and as of the Effective
Time as though made as of the Effective Time except as otherwise specifically
contemplated by this Agreement and except as to any representation or warranty
which specifically relates to an earlier date. The Buyer shall have received a
certificate to the foregoing effect signed by the chairman or president and the
chief financial officer of the Seller.
(c) Performance of Obligations of the Seller. The Seller shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Buyer shall
have received a certificate signed on behalf of the Seller by the chairman or
president and the chief financial officer to such effect.
41
(d) Consents Under Agreements. The consent, approval or waiver of
each person (other than Requisite Regulatory Approvals contemplated in Section
7.1(b)) whose consent or approval shall be required in order to permit the
lawful consummation of the Merger and the Bank Merger shall have been obtained,
and none of such permits, consents, waivers, clearances, approvals and
authorizations shall contain any term or condition which would materially impair
the value of the Seller or the Seller Bank to the Buyer.
(e) Stockholders Agreements. Agreements, substantially in the form
attached as Exhibit III hereto, shall have been executed and delivered by the
directors and the senior executive officers of the Seller set forth in Section
7.2(e) of the Seller Disclosure Schedule.
7.3 Conditions to the Obligations of the Seller. The obligation of the
Seller to effect the Merger is also subject to the satisfaction or waiver by the
Seller, at or prior to the Effective Time, of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Buyer contained in this Agreement that are qualified as to
materiality shall be true and correct and any such representations and
warranties that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the Effective
Time (or if made as of a specified date, only as of such date). The Seller shall
have received a certificate to the foregoing effect signed by the chairman or
president and the chief financial officer of the Buyer.
(b) Performance of Obligations of the Buyer. The Buyer shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Seller shall
have received a certificate signed on behalf of the Buyer by the chairman or
president and the chief financial officer to such effect.
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of this Agreement and the
transactions contemplated hereby by the stockholders of the Seller:
(a) by mutual consent of the Seller and the Buyer in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either the Board of Directors of the Buyer or the Board of
Directors of the Seller if any Governmental Authority that must grant a
Requisite Regulatory Approval has denied approval of the Merger and such denial
has become final and nonappealable or any Governmental Authority of competent
jurisdiction shall have issued a final nonappealable order permanently enjoining
or otherwise prohibiting the consummation of the transactions contemplated by
this Agreement;
(c) by either the Board of Directors of the Buyer or the Board of
Directors of the Seller if the Merger shall not have been consummated on or
before March 31, 2003, unless
42
the failure of the Closing to occur by such date shall be due to the failure of
the party seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein;
(d) by either the Board of Directors of the Buyer or the Board of
Directors of the Seller (provided, that the terminating party is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein), in the event of a material breach by the other party of any
representation, warranty, covenant or other agreement contained herein which
breach is not cured after thirty (30) days written notice thereof is given to
the party committing such breach;
(e) by either the Buyer or the Seller if the approval of the
Seller's stockholders required for the consummation of the Merger shall not have
been obtained by reason of the failure to obtain the required vote at a duly
held meeting of such party's stockholders or at any adjournment thereof; or
(f) by the Buyer, if the Board of Directors of the Seller shall not
have publicly recommended to the stockholders of the Seller that such
stockholders vote in favor of the approval of this Agreement, the Merger and the
other transactions contemplated hereby or shall have withdrawn, modified or
amended such recommendation in a manner materially adverse to the Buyer.
8.2 Effect of Termination.
(a) In the event of termination of this Agreement by either the
Buyer or the Seller as provided in Section 8.1, this Agreement shall forthwith
become void and have no effect, and none of the Buyer, the Seller, any of their
respective subsidiaries or any of the officers or directors of any of them shall
have any liability of any nature whatsoever hereunder, or in connection with the
transactions contemplated hereby, except that (i) Sections 6.3(b), 8.2, 9.2 and
9.3 and all obligations of the Buyer to indemnify or reimburse the Seller under
Article V hereof and all other obligations of the parties intended to be
performed after the termination of this Agreement shall survive any termination
of this Agreement; provided, however, that, notwithstanding anything to the
contrary herein, all obligations of the Buyer to indemnify or reimburse the
Seller under Article V hereof shall terminate in the event that this Agreement
is terminated by the Buyer pursuant to Sections 8.1(f) hereof; and (ii)
notwithstanding anything to the contrary contained in this Agreement, neither
the Buyer nor the Seller shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this Agreement.
(b) If this Agreement is terminated as a result of any breach of a
representation, warranty, covenant or other agreement which is caused by the
willful breach of a party hereto, such party shall be liable to the other party
for all out-of-pocket costs and expenses, including, without limitation, the
reasonable fees and expenses of lawyers, accountants and investment bankers,
incurred by such other party in connection with the entering into of this
Agreement and the carrying out of any and all acts contemplated hereunder
("Expenses"). The payment of Expenses is not an exclusive remedy, but is in
addition to any other rights or remedies available to the parties hereto at law
or in equity.
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(c) In the event this Agreement is terminated by
(i) the Buyer pursuant to Section 8.1(f);
(ii) by either the Buyer or Seller pursuant to Section 8.1(e)
in circumstances where the Board of Directors of the Seller shall
not have publicly recommended to the stockholders of the Seller that
such stockholders vote in favor of the approval of this Agreement,
the Merger and the other transactions contemplated hereby or shall
have withdrawn, modified or amended such recommendation in a manner
adverse to Buyer; or
(iii) by either the Buyer or Seller pursuant to Section 8.1(e)
in circumstances where both (x) within twelve (12) months of such
termination, the Seller shall have entered into an agreement to
engage in or there has otherwise occurred an Acquisition Transaction
with any person other than the Buyer or any Affiliate of the Buyer
and (y) at the time of such termination or event giving rise to such
termination, it shall have been publicly announced that any person
(other than the Buyer or any Affiliate of the Buyer) shall have (A)
made, or disclosed an intention to make, a bona fide offer to engage
in an Acquisition Transaction, or (B) filed an application (or given
a notice), whether in draft or final form, under the BHCA or the
Change in Bank Control Act of 1978, for approval to engage in an
Acquisition Transaction,
then Seller shall make a cash payment to the Buyer in the amount of $13,000,000
(the "Expense Fee") upon such termination. Any payment required under this
Section 8.2(c) shall be payable by the Seller to the Buyer (by wire transfer of
immediately available funds to an account designated by the Buyer) within two
(2) business days after demand by the Buyer.
8.3 Amendment. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with Merger by the stockholders of the Buyer and
the Seller; provided, however, that after any approval of the transactions
contemplated by this Agreement by the stockholders of the Seller, there may not
be, without further approval of such stockholders, any amendment of this
Agreement that changes the amount or the form of the consideration to be
delivered hereunder to the holders of Seller Common Stock. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein; provided, however,
that after any approval of the transactions contemplated by this Agreement by
the stockholders of the Seller, there may not be, without further approval of
such stockholders, any extension or waiver of this Agreement or any portion
thereof which reduces the amount or changes the form of the consideration to be
44
delivered to the holders of Seller Common Stock hereunder. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX - MISCELLANEOUS
9.1 Closing. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on a date
and at a place to be specified by the parties, which shall be no later than five
business days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Article VII hereof (other
than those conditions that relate to actions to be taken at Closing), unless
extended by mutual agreement of the parties (the "Closing Date").
9.2 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement (other than the Bank Merger
Agreement, which shall terminate in accordance with its terms) shall survive the
Effective Time, except for Sections 6.5 and 6.6 and any other Section which by
its terms specifically applies in whole or in part after the Effective Time.
9.3 Expenses. Except as may otherwise be agreed to hereunder or in other
writing by the parties, all legal and other costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
9.4 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by prepaid
registered or certified mail (return receipt requested) or by telecopy, cable,
telegram or telex addressed as follows:
(a) If to Buyer, to: Citizens Bank of Massachusetts
28 State Street
Boston, MA 01209
Attention: Thomas J. Hollister
President and Chief
Executive Officer
(b) If to Parent, to: Citizens Financial Group, Inc.
One Citizens Plaza
Providence, RI 02903-1339
Attention: Lawrence K. Fish
Chairman, President and
Chief Executive Officer
45
and to: Citizens Financial Group, Inc.
28 State Street
Boston, MA 02109
Attention: Joel J. Brickman, Esq.
Senior Vice President,
General Counsel and
Secretary
Tel: (617) 725-5928
Fax: (617) 725-5620
with required copies to: Goodwin Procter LLP
One Exchange Place
Boston, MA 02109
Attention: Regina M. Pisa, P.C.
Tel: (617) 570-1525
Fax: (617) 523-1231
(c) If to Seller, to: Medford Bancorp, Inc.
29 High Street
Medford, MA 02155
Attention: Arthur H. Meehan
Chairman, President
and Chief Executive
Officer
Tel: (781) 395-7700
Fax: (781) 395-9924
(d) with required copies to: Choate, Hall & Stewart
Exchange Place
Boston, MA 02109
Attention: William Gelnaw, P.C. and
James A. McDaniel, P.C.
Tel: (617) 248-5000
Fax: (617) 248-4000
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed or otherwise sent as provided above.
9.5 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are
46
used in this Agreement, they shall be deemed to be followed by the words
"without limitation". No provision of this Agreement shall be construed to
require the Seller or the Buyer or any their respective subsidiaries or
Affiliates to take any action which would violate applicable law, rule or
regulation. The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to be June 13, 2002.
9.6 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
9.7 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) and the Confidentiality Agreement constitute the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
9.8 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of The Commonwealth of Massachusetts, without regard to
any applicable conflicts of law principles.
9.9 Severability. In the event that any one or more provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, by any court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement and the
parties shall use their reasonable best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the original
purposes and intents of this Agreement.
9.10 Publicity. Except as otherwise required by applicable law or the
rules of the NASD, neither the Buyer nor the Seller shall, or shall permit any
of its subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement without
the consent of the party, which consent shall not be unreasonably withheld.
9.11 Assignment; Reliance of Other Parties. Neither this Agreement nor any
of the rights, interests or obligations shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Except as otherwise specifically
provided in Sections 6.5(d) and 6.6 hereof, this Agreement (including the
documents and instruments referred to herein) is not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
9.12 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in this Agreement
were not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to seek an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United
47
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
9.13 Alternative Structure. Notwithstanding anything to the contrary
contained in this Agreement, prior to the time the Seller distributes its proxy
statement, the Buyer shall be entitled to revise the structure of the Merger,
the Bank Merger and the other transactions contemplated hereby and thereby,
provided, that, each of the transactions comprising such revised structure shall
not (i) subject the stockholders of Seller, Seller or any of its subsidiaries to
adverse tax consequences, (ii) change the amount or form of consideration to be
received by the stockholders of Seller, (iii) alter to the detriment of the
Seller or its stockholders the benefits to be received by the Seller's
stockholders hereunder, (iv) jeopardize or materially delay or impede the
receipt of any required regulatory approvals relating to the consummation of the
Merger or the Bank Merger, or (v) reduce the obligations of any party hereunder
or under the Bank Merger Agreement. This Agreement and any related documents
shall be appropriately amended in order to reflect any such revised structure.
9.14 Definitions. Except as otherwise provided herein or as otherwise
clearly required by the context, the following terms shall have the respective
meanings indicated when used in this Agreement:
"Affiliate" shall mean, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person. As used in
this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") means the possession, directly
or indirectly, of power to direct or cause the direction of the management and
policies of a Person whether through the ownership of voting securities, by
contract or otherwise.
"Acquisition Transaction" shall have the meaning ascribed thereto in
Section 6.2 hereof.
"Agreement" shall have the meaning ascribed thereto in the recitals.
"Articles of Merger" shall have the meaning ascribed thereto in Section
1.2 hereof.
"Bank Common Stock" shall have the meaning ascribed thereto in Section
4.2(b) hereof.
"Bank Examinations" shall have the meaning ascribed thereto in Section 4.9
hereof.
"Bank Merger Agreement" shall have the meaning ascribed thereto in the
recitals.
"Bank Merger" shall have the meaning ascribed thereto in the recitals.
"Bank Regulator" shall mean and include, any pertinent federal or state
Governmental Authority changed with the supervision of banks or bank holding
companies or engaged in the insurance of bank deposits, including without
limitation, the FRB, the FDIC, the Massachusetts Commissioner and the MBBI.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
48
"Buyer" shall have the meaning ascribed thereto in the recitals.
"Certificate" shall have the meaning ascribed thereto in Section 1.4(b)
hereof.
"CIBC" shall have the meaning ascribed thereto in Section 4.6 hereof.
"Claim" shall have the meaning ascribed thereto in Section 6.6(a) hereof.
"Closing Date" shall have the meaning ascribed thereto in Section 9.1
hereof.
"Closing" shall have the meaning ascribed thereto in Section 9.1 hereof.
"Code" shall have the meaning ascribed thereto in Section 4.13(g) hereof.
"Compensation Agreements" shall have the meaning ascribed thereto in
Section 6.5(d) hereof.
"Competing Transaction" shall have the meaning ascribed thereto in Section
6.2 hereof.
"Confidentiality Agreement" shall have the meaning ascribed thereto in
Section 6.2 hereof.
"CRA" shall have the meaning ascribed thereto in Section 4.17 hereof.
"D&O Insurance" shall have the meaning ascribed thereto in Section 6.6(b)
hereof.
"Deposit Incentive Plan" shall have the meaning ascribed thereto in
Section 5.10 hereof.
"DIF" shall have the meaning ascribed thereto in Section 3.3 hereof.
"Dissenting Shares" shall have the meaning ascribed thereto in Section
1.4(d) hereof.
"DOJ" shall mean the U.S. Department of Justice.
"DPC Shares" shall have the meaning ascribed thereto in Section 1.4(c)
hereof.
"Effective Time" shall have the meaning ascribed thereto in Section 1.2
hereof.
"Environment" shall have the meaning ascribed thereto in Section 4.2(g)
hereof.
"EPA" shall have the meaning ascribed thereto in Section 4.24(a).
"Equity Investment" shall have the meaning set forth for such term as of
the date hereof in the FDIC's rules and regulations regarding activities and
investments of insured state banks at 12 C.F.R. ss. 362.2(g).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
49
"Exchange Act" shall have the meaning ascribed thereto in Section 4.5
hereof.
"Exchange Agent" shall have the meaning ascribed thereto in Section 2.1
hereof.
"Expense Fee" shall have the meaning ascribed thereto in Section 8.2(c)
hereof.
"Expenses" shall have the meaning ascribed thereto in Section 8.2(b)
hereof.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System or the Federal Reserve Bank of Boston, as applicable.
"Filed Tax Returns" shall have the meaning ascribed thereto in Section
4.13(a) hereof.
"GAAP" shall mean generally accepted accounting principles and practices
in effect from time to time within the United States applied consistently
throughout the period involved.
"Governmental Authority" shall mean any United States federal, state or
local governmental commission, board or other regulatory authority or agency,
including courts and other judicial bodies.
"Hazardous Material" shall have the meaning ascribed thereto in Section
4.24(g) hereof.
"Indemnification Parties" shall have the meaning ascribed thereto in
Section 6.6 hereof.
"Injunction" shall have the meaning ascribed thereto in Section 7.1(c)
hereof.
"IRS" shall have the meaning ascribed thereto in Section 4.13(b).
"Liaison" shall have the meaning ascribed thereto in Section 6.11 hereof.
"Liens" shall have the meaning ascribed to such term in Section 4.19(a)
hereof.
"Loan Property" shall have the meaning ascribed thereto in Section 4.24(g)
hereof.
"Loans" shall have the meaning ascribed to such term in Section 4.20
herein.
"Massachusetts Commissioner" shall mean the Commissioner of Banks of The
Commonwealth of Massachusetts.
"Material Adverse Effect" shall mean, with respect to any Person, a change
or effect that is or is reasonably likely to be materially adverse to the
business, results of operations or financial condition of such Person and its
subsidiaries taken as a whole; provided, however, that "Material Adverse Effect"
shall not be deemed to include the impact of (a) changes in laws and regulations
or interpretations thereof by Governmental Authorities generally applicable to
depository institutions and their holding companies (including changes in
insurance deposit
50
assessment rates and special assessments with respect thereto), (b) changes in
GAAP or regulatory accounting principles generally applicable to financial
institutions and their holding companies, (c) actions and omissions of the
Seller or any of its subsidiaries taken with the prior written consent of the
Buyer, (d) the direct effects of compliance with this Agreement on the operating
performance of the parties including expenses incurred by the parties hereto in
consummating the transactions contemplated by this Agreement and (e) changes in
interest rates generally.
"MBBI" shall mean the Massachusetts Board of Bank Incorporation.
"MBCL" shall mean the Massachusetts Business Corporation Law.
"Merger Consideration" shall have the meaning ascribed thereto in Section
1.4(a) hereof.
"Merger Sub" shall have the meaning ascribed thereto in the recitals.
"Merger" shall have the meaning ascribed thereto in the recitals.
"MGL" shall mean the Massachusetts General Laws.
"MHPF" shall have the meaning ascribed thereto in Section 3.3 hereof.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ" shall mean the National Market System of the National Association
of Securities Dealers Automated Quotation System.
"Oil" shall have the meaning ascribed thereto in Section 4.24(g) hereof.
"Owned Property" shall have the meaning ascribed thereto in Section
4.24(a) hereof.
"Parent" shall have the meaning ascribed thereto in the recitals.
"Participation Facility" shall have the meaning ascribed thereto in
Section 4.24(g) hereof.
"Permitted Liens" shall have the meaning ascribed to such term in Section
4.19(a).
"Person" shall mean any individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other legal entity,
or any governmental agency or political subdivision thereof.
"Requisite Regulatory Approvals" shall have the meaning ascribed thereto
in Section 7.1(b) hereof.
"SEC" shall have the meaning ascribed thereto in Section 3.8 hereof.
"Seller Balance Sheet" shall have the meaning ascribed thereto in Section
4.5 hereof.
"Seller Bank" shall have the meaning ascribed thereto in the recitals.
51
"Seller Benefit Plans" shall have the meaning ascribed thereto in Section
4.15(a) hereof.
"Seller Common Stock" shall have the meaning ascribed thereto in Section
1.4(a) hereof.
"Seller Companies" shall have the meaning ascribed thereto in Section
4.13(a) hereof.
"Seller Contract" shall have the meaning ascribed to such term in Section
4.18(a) hereof.
"Seller Disclosure Schedule" shall mean the disclosure schedule relating
to the Seller delivered to Buyer together herewith.
"Seller Employees" shall have the meaning ascribed thereto in Section
6.5(a) hereof.
"Seller Other Plans" shall have the meaning ascribed thereto in Section
4.15(a) hereof.
"Seller Pension Plans" shall have the meaning ascribed thereto in Section
4.15(a) hereof.
"Seller Preferred Stock" shall have the meaning ascribed thereto in
Section 4.2(a) hereof.
"Seller Proxy Statement" shall have the meaning ascribed thereto in
Section 4.30 hereof.
"Seller Reports" shall have the meaning ascribed thereto in Section 4.9
hereof.
"Seller Rights Agreement" shall mean that certain Amended and Restated
Shareholders Rights Agreement, dated as of November 26, 1997, among the Seller,
the Seller Bank and State Street Bank and Trust Company.
"Seller Stock Option Plans" shall have the meaning ascribed thereto in
Section 1.6 hereof.
"Seller Stockholders Meeting" shall have the meaning ascribed thereto in
Section 6.1(a) hereof.
"Seller" shall have the meaning ascribed thereto in the recitals.
"Severance Pay Plan" shall have the meaning ascribed thereto in Section
6.5(c) hereof.
"Shares" shall have the meaning ascribed thereto in Section 1.4(a) hereof.
"Significant Subsidiary" shall mean those subsidiaries set forth in
Section 9.14 of the Seller Disclosure Schedule.
"Stockholders Agreements" shall mean those certain Stockholder Agreements
dated as of the date hereof respectively between the Buyer and members of the
Seller's board of directors and executive management and substantially in the
form attached hereto as Exhibit B.
"subsidiaries" shall mean, when used with reference to a party, any
corporation or other organization, whether incorporated or unincorporated, of
which such party or any other subsidiary of such party is a general partner
(excluding partnerships the general partnership
52
interests of which held by such party or any subsidiary of such party do not
have a majority of the voting interests in such partnership), or, with respect
to such corporation or other organization, at least twenty percent of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions is directly or indirectly owned or controlled by such party or by any
one or more of its subsidiaries, or by such party and one or more of its
subsidiaries.
"Superior Proposal" shall have the meaning ascribed thereto in Section 6.2
hereof.
"Surviving Bank" shall have the meaning ascribed thereto in the recitals.
"Surviving Corporation" shall have the meaning ascribed thereto in Section
1.1 hereof.
"Tax" shall mean any federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee or other tax or levy, of
any kind whatsoever, including any interest, penalties or additions to tax in
respect of the foregoing.
"Tax Return" shall mean any return, declaration, report, claim for
refund, information return or other document (including any related or
supporting estimates, elections, schedules, statements or information) filed or
required to be filed in connection with the determination, assessment or
collection of any Tax or the administration of any laws, regulations or
administrative requirements relating to any Tax.
"Transaction Documents" shall mean this Agreement and the Bank Merger
Agreement.
"Transferred Seller Employees" shall have the meaning ascribed thereto in
Section 6.5(a) hereof.
"Transition Committee" shall have the meaning ascribed thereto in Section
6.11 hereof.
"Trust Account Shares" shall have the meaning ascribed thereto in Section
1.4(c) hereof.
"USA Patriot Act" shall have the meaning ascribed thereto in Section 4.17
hereof.
53
IN WITNESS WHEREOF, the Buyer, Parent and the Seller have caused this
Agreement to be executed as a sealed instrument by their duly authorized
officers as of the day and year first above written.
CITIZENS FINANCIAL GROUP, INC.
By: /s/ Lawrence K. Fish
------------------------------------
Name: Lawrence K. Fish
Title: Chairman, President and
Chief Executive Officer
Attest:
By: /s/ Michael Edwards
------------------------------------
/s/ Joel J. Brickman Name: Michael Edwards
- ----------------------------------- Title: Executive Vice President
Secretary and Treasurer
CITIZENS BANK OF MASSACHUSETTS
By: /s/ Thomas J. Hollister
------------------------------------
Name: Thomas J. Hollister
Title: President and Chief
Executive Officer
Attest:
By: /s/ Michael Edwards
------------------------------------
/s/ Joel J. Brickman Name: Michael Edwards
- ----------------------------------- Title: Executive Vice President
Assistant Secretary and Treasurer
MEDFORD BANCORP, INC.
By: /s/ Arthur H. Meehan
------------------------------------
Name: Arthur H. Meehan
Title: Chairman, President and
Chief Executive Officer
Attest:
By: /s/ Phillip W. Wong
------------------------------------
/s/ Edward J. Gaffey Name: Phillip W. Wong
- ----------------------------------- Title: Executive Vice President
Clerk Chief Financial Officer