AGREEMENT AND PLAN OF REORGANIZATION
By and Among
VERMONT FINANCIAL SERVICES CORPORATION
EASTERN BANCORP, INC.
and
VERMONT FEDERAL BANK, FSB
November 13, 1996
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated as of
November 13, 1996, by and among Vermont Financial Services Corporation, a
Delaware Corporation (the "Buyer"), Eastern Bancorp, Inc., a Delaware
corporation (the "Seller") and Vermont Federal Bank, FSB, the wholly owned
subsidiary of the Seller and a federal savings bank in stock form (the "Bank").
The parties deem it advisable and in the best interests of their
respective stockholders to consummate the business combination provided for
herein.
In consideration of the mutual covenants, representations, warranties
and agreements contained herein, and in consideration of (a) the execution and
delivery of the Seller Option Agreement (as hereinafter defined in Article I
hereof) between the Seller and the Buyer, pursuant to which the Seller has on
this day granted the Seller Option (as defined in Article I hereof) to the
Buyer, and (b) the execution and delivery by the Principal Stockholders of the
Seller Stockholders' Agreement (as such terms are defined in Article I hereof),
each as a condition and inducement to the Buyer to enter into this Agreement,
the parties agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein or as otherwise clearly required by
the context, the following terms shall have the respective meanings indicated
when used in this Agreement:
"Acquisition Merger" shall mean the merger of Seller with and into
Buyer in accordance with the terms and conditions of this Agreement.
"Acquisition Price" shall have the meaning ascribed thereto in Section
2.09(a) hereof.
"Acquisition Transaction" shall have the meaning ascribed thereto in
Section 5.03 hereof.
"Adjusted Acquisition Price" shall have the meaning ascribed thereto in
Section 2.09(a) hereof.
"Agreement" shall mean this Agreement and Plan of Reorganization by and
among the Buyer, the Seller and the Bank.
"Average Closing Price" shall have the meaning ascribed thereto in
Section 2.09(a) hereof.
"Bank" shall have the meaning ascribed thereto in the preamble to this
agreement.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"Buyer" shall have the meaning ascribed thereto in the preamble to this
Agreement.
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"Buyer Balance Sheet" shall have the meaning ascribed thereto in
Section 3.05 hereof.
"Buyer Common Stock" shall have the meaning ascribed thereto in Section
3.02(a) hereof.
"Buyer Benefit Plan" shall have the meaning ascribed thereto in Section
3.18 hereof.
"Buyer Pension Plan" shall have the meaning ascribed thereto in Section
3.18 hereof.
"Buyer Preferred Stock" shall have the meaning ascribed thereto in
Section 3.02(a) hereof.
"Buyer Registration Statement" shall have the meaning ascribed thereto
in Section 5.04 hereof.
"Buyer Reports" shall have the meaning ascribed thereto in Section 3. l
2 hereof.
"Buyer Requisite Vote" shall have the meaning ascribed thereto in
Section 3.04 hereof.
"Cash Conversion Number" shall have the meaning ascribed thereto in
Section 2.14(e) hereof.
"Cash Designee Shares" shall have the meaning ascribed thereto in
Section 2.14(e) hereof.
"Cash Distribution" shall have the meaning ascribed thereto in Section
2.09(a) hereof.
"Cash Election Designee Shares" shall have the meaning ascribed thereto
in Section 2.14(e) hereof.
"Cash Election Shares" shall have the meaning ascribed thereto in
Section 2.14(b) hereof.
"Certificate" shall have the meaning ascribed thereto in Section
2.11(a) hereof.
"Certificate of Merger" shall have the meaning ascribed thereto in
Section 2.07 hereof.
"Closing Date" shall mean the date on which the Effective Time occurs.
"CMPs" shall have the meaning ascribed thereto in Section 3.13 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Companies" shall have the meaning ascribed thereto in Section 4.10(a)
hereof.
"Confidentiality Agreement" shall mean that certain letter agreement
between the Buyer and the Seller dated August 15, 1996.
"Confidential Information" shall have the meaning ascribed thereto in
Section 5.02(b) hereof.
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"Constituent Corporations" shall have the meaning ascribed thereto in
Section 2.01 hereof.
"DGCL" shall mean the Delaware General Corporation Law, as amended.
"Dissenting Holder" shall have the meaning ascribed thereto in section
2.09(c) hereof.
"Dissenting Shares" shall have the meaning ascribed thereto in Section
2.09(c) hereof.
"DOJ" shall mean the United States Department of Justice.
"DPC Shares" shall have the meaning ascribed thereto in Section 3.16
hereof.
"Effective Time" shall mean the specific time on the Closing Date at
which the Acquisition Merger has become effective pursuant to the laws of the
State of Delaware.
"Election Deadline" shall have the meaning ascribed thereto in Section
2.14(c) hereof.
"Election Form" shall have the meaning ascribed thereto in Section
2.14(a) hereof.
"Election Form Record Date" shall have the meaning ascribed thereto in
Section 2.11(b) hereof.
"EPA" shall mean the United States Environmental Protection Agency.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean, with reference to any person, within the
meaning of Section 414 (b), (c), (m) or (o) of the Code, (a) any member of a
controlled group of corporations that includes such person, (b) any trade or
business, whether or not incorporated, under common control with such person,
(c) any member of an affiliated service group with such person, and (iv) any
member of a group that is treated as a single employer by regulation and that
includes such person.
"Exchange Act" shall have the meaning ascribed thereto in Section 3.05
hereof.
"Exchange Agent" shall have the meaning ascribed thereto in Section
2.13 hereof.
"Exchange Ratio" shall have the meaning ascribed thereto in Section
2.09(a) 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.
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"FTC" shall mean the Federal Trade Commission.
"GAAP" shall mean generally accepted accounting principles and
practices in effect from time to time within the United States applied
consistently throughout the period involved.
"HOLA" shall mean the Home Owners Loan Act of 1933, as amended.
"Injunction" shall have the meaning ascribed thereto in Section 6.01(d)
hereof.
"IRS" shall mean the United States Internal Revenue Service.
"Loans" shall have the meaning ascribed thereto in Section 4.24 hereof.
"Mailing Date" shall have the meaning ascribed thereto in Section
2.11(b) hereof.
"Material Adverse Effect" shall mean with respect to Buyer or Seller,
or any other entity, a material adverse effect on the assets, liabilities,
business, operations, results of operations or condition (financial or
regulatory) of Buyer or Seller or such other entity, as the case may be, and its
subsidiaries, taken as a whole.
"Merger Consideration" shall have the meaning ascribed thereto in
Section 2.09(a) hereof.
"Minimum Price" shall have the meaning ascribed thereto in Section
2.09(a) hereof.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Nasdaq-NM" shall mean the National Association of Securities Dealers
Automated Quotation - National Market.
"No Election Cash Designee Shares" shall have the meaning ascribed
thereto in Section 2.14(e) hereof.
"No Election Designee Shares" shall have the meaning ascribed thereto
in Section 2.14(e) hereof.
"No Election Shares" shall have the meaning ascribed thereto in Section
2.14(b) hereof.
"OCC" shall mean the Office of the Comptroller of the Currency of the
United States Department of the Treasury.
"OTS" shall mean the Office of Thrift Supervision of the United States
Department of the Treasury.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
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"Principal Stockholders" shall mean ▇▇▇▇ ▇. ▇▇▇▇, E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Proxy Statement" shall have the meaning ascribed thereto in Section
5.04(a) hereof.
"Recapitalization" shall have the meaning ascribed thereto in Section
2.10 hereof.
"Records" means all records and original documents in the Seller's
possession which pertain to and are utilized by the Seller and its subsidiaries
to administer, reflect, monitor, evidence or record information respecting
Seller's consolidated business and operations, including but not limited to all
records and documents relating to (a) corporate, regulatory, supervisory and
litigation matters, (b) tax planning and payment of taxes, (c) personnel and
employment matters, and (d) the business or conduct of the consolidated business
of the Seller.
"Requisite Regulatory Approvals" shall have the meaning ascribed
thereto in Section 6.01(b) hereof.
"SEC" shall have the meaning ascribed thereto in Section 3.04 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning ascribed thereto in the preamble to
this Agreement.
"Seller Affiliates" shall have the meaning ascribed thereto in Section
5.06 hereof.
"Seller Affiliates Agreement" shall mean the form of written agreement
to be executed and delivered to the Buyer prior to the Effective Time by the
Seller Affiliates, substantially in the form attached hereto as Exhibit C.
"Seller Balance Sheet" shall have the meaning ascribed thereto in
Section 4.05 hereof.
"Seller Benefit Plans" shall have the meaning ascribed thereto in
Section 4.11(a) hereof.
"Seller Common Stock" shall have the meaning ascribed thereto in
Section 4.02(a) hereof.
"Seller Disclosure Schedule" shall have the meaning ascribed thereto in
Section 4.01(a) hereof.
"Seller Option" shall mean the option granted to the Buyer pursuant to
the Seller Option Agreement.
"Seller Option Agreement" shall mean that certain stock option
agreement of even date herewith by and between the Buyer and the Seller in the
form attached as Exhibit A.
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"Seller Other Plans" shall have the meaning ascribed thereto in Section
4.11(a) hereof.
"Seller Pension Plans" shall have the meaning ascribed thereto in
Section 4.11(a) hereof.
"Seller Preferred Stock" shall have the meaning ascribed thereto in
Section 4.02(a) hereof.
"Seller Reports" shall have the meaning ascribed thereto in Section
4.15 hereof.
"Seller Stock Option Plans" shall mean the 1984 and 1987 stock option
plans of Seller.
"Seller Stockholders' Agreement" shall mean that certain letter
agreement of even date herewith executed and delivered to the Buyer by the
Principal Stockholders in the form attached hereto as Exhibit B.
"Seller Requisite Vote" shall have the meaning ascribed thereto in
Section 4.04 hereof.
"Stock Conversion Number" shall have the meaning ascribed thereto in
Section 2.14(e) hereof.
"Stock Distribution" shall have the meaning ascribed thereto in Section
2.09(a) hereof.
"Stock Election Cash Designee Shares" shall have the meaning ascribed
thereto in Section 2.14(e) hereof.
"Stock Election Shares" shall have the meaning ascribed thereto in
Section 2.14(b) hereof.
"subsidiaries" shall mean, when used with reference to a party, any
corporation or other organization, whether incorporated or unincorporated, of
which such party or any other subsidiary of such party is a general partner
(excluding partnerships the general partnership interests of which held by such
party or any subsidiary of such party do not have a majority of the voting
interests in such partnership) or, with respect to such corporation or other
organization, at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the board of directors
or others performing similar functions is directly or indirectly owned or
controlled by such party or by any one or more of its subsidiaries, or by such
party and one or more of its subsidiaries.
"Surviving Corporation" shall have the meaning ascribed thereto in
Section 2.01 hereof.
"Tax" shall have the meaning ascribed thereto in Section 4.10(t)(A)
hereof.
"Tax Return" shall have the meaning ascribed thereto in Section
4.10(t)(B) hereof.
"Termination Date" shall have the meaning ascribed thereto in Section
8.01(b) hereof.
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"Trust Account Shares" shall have the meaning ascribed thereto in
Section 3.16 hereof.
"Valuation Period" shall have the meaning ascribed thereto in Section
2.09(a) hereof.
"Vermont Commissioner" shall mean the Vermont Commissioner of Banking,
Insurance and Securities.
ARTICLE II
THE ACQUISITION MERGER
2.01 Surviving Corporation. In accordance with the provisions of this
Article II and Section 251 of the DGCL, at the Effective Time, Seller shall be
merged with and into Buyer (the two merging corporations being sometimes
collectively referred to herein as the "Constituent Corporations") and the
separate corporate existence of Seller shall cease. Buyer shall be the surviving
corporation in the Acquisition Merger (hereinafter sometimes referred to as the
"Surviving Corporation") and shall continue its corporate existence under the
laws of the State of Delaware. The name of the Surviving Corporation shall
continue to be "Vermont Financial Services Corporation".
2.02 Purposes and Authorized Capital Stock of Surviving Corporation. As
of the Effective Time, the purposes and authorized capital stock of the
Surviving Corporation shall be as stated in the Certificate of Incorporation of
Buyer immediately prior to the Effective Time.
2.03 Effect of the Acquisition Merger.
(a) At the Effective Time, all of the estate, property,
rights, privileges, powers and franchises of the Constituent
Corporations and all of their property, real, personal and mixed, and
all the debts due on whatever account to any of them, as well as all
stock subscriptions and other choses in action belonging to any of
them, shall be transferred to and vested in the Surviving Corporation,
without further act or deed, and all claims, demands, property and
other interest shall be the property of the Surviving Corporation, and
the title to all real estate vested in any of the Constituent
Corporations shall not revert or be in any way impaired by reason of
the Acquisition Merger, but shall be vested in the Surviving
Corporation.
(b) From and after the Effective Time, the rights of creditors
of any Constituent Corporation shall not in any manner be impaired, nor
shall any liability or obligation, including taxes due or to become
due, or any claim or demand in any cause existing against such
corporation, or any stockholder, director, or officer thereof, be
released or impaired by the Acquisition Merger, but the Surviving
Corporation shall be deemed to have assumed, and shall be liable for,
all liabilities and obligations of each of the Constituent Corporations
in the same manner and to the same extent as if the Surviving
Corporation had itself incurred such liabilities or obligations. The
stockholders, directors, and officers of the Constituent
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Corporations shall continue to be subject to all liabilities, claims
and demands existing against them as such at or before the Acquisition
Merger. No action or proceeding then pending before any court or
tribunal of the State of Delaware, the State of Vermont, the State of
New Hampshire or otherwise in which any Constituent Corporation is a
party, or in which any such stockholder, director, or officer is a
party, shall ▇▇▇▇▇ or be discontinued by reason of the Acquisition
Merger, but any such action or proceeding may be prosecuted to final
judgment as though no merger had taken place, or the Surviving
Corporation may be substituted as a party in place of any Constituent
Corporation by the court in which such action or proceeding is pending.
2.04 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Constituent Corporations acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Acquisition Merger or to otherwise carry out this Agreement, the officers and
directors of the Surviving Corporation shall and will be authorized to execute
and deliver, in the name and on behalf of the Constituent Corporations or
otherwise, all such deeds, bills of sale, assignments and assurances and to take
and do, in the name and on behalf of the Constituent Corporations or otherwise,
all such other actions and things as may be necessary or desirable to vest,
perfect or confirm any and all right, title and interest in, to and under such
rights, properties or assets in the Surviving Corporation or to otherwise carry
out the purposes and intent of this Agreement.
2.05 Certificate of Incorporation and By-laws. The Certificate of
Incorporation and the By-Laws of Buyer, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation and the By-laws of the
Surviving Corporation and shall thereafter continue to be the Surviving
Corporation's Certificate of Incorporation and By-Laws until amended as provided
therein or by applicable law.
2.06 Directors and Officers. The directors and officers of the
Surviving Corporation shall be the directors and officers of Buyer immediately
prior to the Effective Time and, in addition, the Board of Directors of the
Surviving Corporation shall include at least three (3) and up to four (4)
additional persons to be designated by Buyer prior to the Effective Time, who
shall be selected from among the members of Seller's Board of Directors, and
each such director and officer shall hold office in accordance with the
Certificate of Incorporation and By-Laws of the Surviving Corporation. Subject
to the first sentence of this Section 2.06, the exact number of Seller directors
who shall be selected to serve on the Board of Directors of the Surviving
Corporation upon the Effective Time shall be determined by Buyer in its sole
discretion.
2.07 Effective Time; Conditions. If all of the conditions precedent set
forth in Article VI hereof have been satisfied or waived (to the extent
permitted by law), and this Agreement has not otherwise been properly terminated
under Article VIII hereof, the appropriate form of certificate of merger with
respect to the Acquisition Merger shall be prepared by Buyer and Seller and
filed and
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recorded pursuant to Section 251 of the DGCL with the Delaware Secretary of
State (as so filed and recorded, the "Certificate of Merger"). The Acquisition
Merger shall become effective at, and the Effective Time shall be, the time
specified in the Certificate of Merger.
2.08 Dissenters' Appraisal Rights. Any Dissenting Holder (i) who files
with Seller an objection to the Acquisition Merger in writing before the
approval of this Agreement by the stockholders of Seller and who states in such
objection that he intends to demand payment for his shares of Seller Common
Stock if the Acquisition Merger is concluded and (ii) whose shares of Seller
Common Stock are not voted in favor of the Acquisition Merger shall be entitled
to demand payment for his shares of Seller Common Stock and an appraisal of the
value thereof, subject to and in accordance with the provisions of Section 262
of the DGCL.
2.09 Effect on Outstanding Shares.
(a) Seller Common Stock. By virtue of the Acquisition Merger,
automatically and without any action on the part of the holder thereof,
and subject to and in accordance with Section 2.14 hereof, each share
of Seller Common Stock issued and outstanding immediately prior to the
Effective Time (other than Dissenting Shares and any such shares held
directly or indirectly by Buyer, other than Trust Account Shares and
DPC Shares, and any such shares held as treasury stock by Seller) shall
become and be converted into either (i) an amount in cash equal to the
sum of (x) $7.25 and (y) the product of 0.4900 and the Average Closing
Price (such total per share purchase price being referred to herein as
the "Acquisition Price" and such total per share cash amount being
referred to herein as the "Cash Distribution") or (ii) the number of
shares or fraction of a share of Buyer Common Stock, rounded to the
nearest ten-thousandth of a share, equal to the number obtained by
dividing the Acquisition Price by the Average Closing Price (such
number being referred to herein as the "Exchange Ratio" or the "Stock
Distribution"); provided, however, that if the Average Closing Price is
greater than or equal to $39.96 per share the Acquisition Price shall
equal $26.83 and if the Average Closing Price is less than or equal to
$29.54 per share but greater than or equal to $26.06 per share the
Acquisition Price shall equal $21.72. If the Average Closing Price is
less than $26.06, the Acquisition Price shall equal the sum of (x)
$7.25 and (y) the product of 0.5553 and the Average Closing Price.
Notwithstanding the foregoing, however, if the Average Closing Price is
less than $26.06 per share (the "Minimum Price"), then Seller shall
have the right to terminate this Agreement pursuant to Section 8.01(f)
of this Agreement, unless Buyer elects, in its sole discretion, to
adopt $21.72 (the "Adjusted Acquisition Price") as the Acquisition
Price. The parties hereto acknowledge and agree that the Acquisition
Price shall be identical without regard to any election made pursuant
to Section 2.14 hereof. As of the Effective Time, each share of Seller
Common Stock held directly or indirectly by Buyer, other than Trust
Account Shares and DPC Shares, and held by Seller as treasury stock
shall be canceled, retired and cease to exist, and no payment shall be
made with respect thereto. For purposes of this Agreement, "Average
Closing Price" shall mean the average of the closing bid prices of
shares of Buyer Common Stock as reported on the Nasdaq-NM composite
transactions reporting system for the twenty consecutive trading days
(the "Valuation Period") ending on the fifth business day prior to
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the Closing Date and "Merger Consideration" shall mean the shares of
Buyer Common Stock and/or cash that holders of Seller Common Stock are
entitled to receive hereunder. Subject to the provisions of Section
2.09(c) with respect to Dissenting Shares, each certificate which
immediately prior to the Effective Time represented outstanding shares
of Seller Common Stock shall on and after the Effective Time be deemed
for all purposes to represent the Merger Consideration into which the
shares of Seller Common Stock represented by such certificate shall
have been converted pursuant to this Section 2.09(a).
(b) Buyer Common Stock. Each share of Buyer Common Stock
issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding upon the Effective Time and shall
constitute one share of common stock of the Surviving Corporation
("Surviving Corporation Common Stock"). Each certificate which
immediately prior to the Effective Time represented outstanding shares
of Buyer Common Stock shall on and after the Effective Time be deemed
for all purposes to represent such like number of shares of Surviving
Corporation Common Stock issued and outstanding as of the Effective
Time in accordance with this Section 2.09(b).
(c) Dissenting Shares. No conversion under Section 2.09(a)
hereof shall be made with respect to the shares of Seller Common Stock
held by a Dissenting Holder (such shares being referred to herein as
"Dissenting Shares"); provided, however, (i) each Dissenting Share
outstanding immediately prior to the Effective Time and held by a
Dissenting Holder who shall, at or prior to the Effective Time,
withdraw his demand for appraisal or lose his right of appraisal, in
either case pursuant to the applicable provisions of the DGCL shall be
deemed to be converted, as of the Effective Time, into the Merger
Consideration payable with respect to such Dissenting Share in
accordance with the terms of Section 2.09(a) hereof and (ii) each
Dissenting Share outstanding immediately prior to the Effective Time
and held by a Dissenting Holder who shall, after the Effective Time,
withdraw his demand for appraisal or lose his right of appraisal, in
either case pursuant to the applicable provisions of the DGCL, shall be
deemed to be converted, as of the Effective Time, into the Stock
Distribution or the Cash Distribution as the Buyer shall determine in
its sole and absolute discretion. For purposes of this Agreement, the
term "Dissenting Holder" shall mean a holder of shares of Seller Common
Stock who has demanded appraisal rights in compliance with the
applicable provisions of the DGCL concerning the right of such holder
to dissent from the Acquisition Merger and demand appraisal of such
holder's shares of Seller Common Stock.
2.10 Anti-Dilution. In the event that during the period beginning on
the first day of the Valuation Period and ending on the Closing Date the
outstanding shares of Buyer Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or kind of shares or securities
through reorganization, recapitalization, reclassification, stock (or other
non-cash) dividend, stock split, reverse stock split, or other like changes in
Buyer's capitalization (a "Recapitalization"), then an appropriate and
proportionate adjustment shall be made to the number and/or kind of securities
to be delivered to the holders of Seller Common Stock who are to receive the
Stock Distribution so that each such holder of Seller Common Stock shall receive
under
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Section 2.09(a) hereof the number of shares of Buyer Common Stock and/or other
securities that such holder would have received if the Recapitalization had
occurred immediately after the Effective Time. Nothing contained in this Section
2.10 is intended to mean that Buyer may engage in a Recapitalization for the
intended purpose of affecting the Average Closing Price in a way that would be
adverse to the interests of Seller and its stockholders.
2.11 Exchange Procedures.
(a) Certificates which represent shares of Seller Common Stock
that are outstanding immediately prior to the Effective Time (each a
"Certificate") and are converted into the Merger Consideration pursuant
to this Article II shall, after the Effective Time, be deemed to
represent the Merger Consideration into which such shares have been
converted and shall be exchangeable by the holders thereof in the
manner provided in the transmittal materials described below for (i)
new certificates representing the shares of Buyer Common Stock into
which such shares have been converted and/or (ii) a check for the total
cash amount into which such shares have been converted.
(b) Following the meeting of Seller's and Buyer's respective
stockholders contemplated by Section 5.05 hereof and twenty-five
business days prior to the anticipated Closing Date, or on such other
date as may be mutually agreed upon by the parties (the "Mailing
Date"), the Exchange Agent shall send to each holder of record of
shares of Seller Common Stock outstanding as of five business days
prior to the Mailing Date (the "Election Form Record Date"),
transmittal materials and the Election Form as provided for in Section
2.14 hereof (which materials and form shall be approved by Seller,
which approval shall not be unreasonably withheld) for use in
exchanging the Certificates for such shares for the Merger
Consideration into which such shares of Seller Common Stock have been
converted pursuant to this Article II. Upon surrender of a Certificate,
together with a duly executed letter of transmittal and any other
required documents, the holder of such Certificate shall be entitled to
receive, in exchange therefor, as soon as practicable following the
Effective Time, a certificate for the number of shares of Buyer Common
Stock and/or a check for the cash amount to which such holder is
entitled, and such Certificate shall forthwith be canceled. Buyer shall
use all reasonable efforts to cause the Exchange Agent to distribute
the Merger Consideration as promptly as practicable to the former
holders of the Certificates. No dividend or other distribution payable
after the Effective Time with respect to Buyer Common Stock shall be
paid to the holder of any unsurrendered Certificate representing Stock
Election Shares until the holder thereof surrenders such Certificate in
accordance with the provisions of this Article II and the transmittal
materials, at which time such holder shall receive all dividends and
distributions, without interest thereon, previously payable but
withheld from such holder pursuant hereto. No interest shall be paid on
the cash amount payable with respect to any unsurrendered Certificate
representing Cash Election Shares, and such cash amount shall be paid
at such time as such Certificate is properly surrendered by the holder
thereof. After the Effective Time, there shall be no transfers on the
stock transfer books of Seller of shares of Seller Common Stock which
were issued and outstanding at the Effective Time and converted
pursuant to the provisions of this Article II. If, after the
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Effective Time, Certificates are presented for transfer to Seller, they
shall be canceled and exchanged for the Merger Consideration
deliverable in respect thereof as determined in accordance with the
provisions and procedures set forth in this Article II.
(c) In lieu of the issuance of fractional shares of Buyer
Common Stock pursuant to the applicable provisions of Section 2.09(a)
hereof, cash adjustments, without interest, shall be paid to the
holders of Seller Common Stock in respect of any fractional share that
would otherwise be issuable, and the amount of such cash adjustment
shall be equal to an amount in cash determined by multiplying such
holder's fractional interest by the Acquisition Price (rounded up to
the nearest cent). For purposes of determining whether, and in what
amounts, a particular holder of Seller Common Stock would be entitled
to receive cash adjustments under this Section 2.11(c), shares of
record held by such holder and represented by two or more Certificates
shall be aggregated.
(d) After the Effective Time, holders of Seller Common Stock
shall have no rights as stockholders of Seller, other than (i) to
receive the Merger Consideration into which such shares of Seller
Common Stock have been converted and fractional share payments, if any,
pursuant to the provisions of Section 2.11(c) above and (ii) the rights
afforded to any Dissenting Holder under applicable provisions of the
DGCL.
(e) Any amounts remaining unclaimed by stockholders of Seller
twenty-four months after the Effective Time (or such earlier date
immediately prior to such time as such amounts would otherwise escheat
to or become property of any governmental entity) shall, to the extent
permitted by applicable law, become the property of Buyer free and
clear of any claims of interest of any person previously entitled
thereto; provided, however, that Buyer shall send 30-days' prior
written notice to former stockholders of Seller at such stockholders'
last known addresses as reflected in Seller's stockholder records prior
to Buyer's taking possession of any such unclaimed amounts
(f) Notwithstanding anything contained in this Section 2.11,
neither Buyer, Seller, the Surviving Corporation nor any other person
shall be liable to any former holder of shares of Seller Common Stock
for any shares or any dividends or distributions with respect thereto
or any other cash amounts properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen
or destroyed, upon receipt of appropriate evidence as to such loss,
theft or destruction and to the ownership of such Certificate by the
person claiming such Certificate to be lost, stolen or destroyed, and
the receipt by Buyer of appropriate and customary indemnification,
Buyer will deliver in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration and the fractional share payment,
if any, deliverable in respect thereof as determined in accordance with
this Article II.
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(h) If any Merger Consideration is to be issued in a name
other than that in which the Certificate surrendered in exchange
therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer (including, but not limited to, that the
signature of the transferor shall be properly guaranteed by a
commercial bank, trust company or member firm of the New York Stock
Exchange or other eligible guarantor institution), and that the person
requesting such exchange shall pay to the Exchange Agent in advance any
transfer or other taxes required by reason of the delivery of the
Merger Consideration in any name other than that of the registered
holder of the Certificate surrendered, or required for any other
reason, or shall establish to the reasonable satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
2.12 Treatment of Seller Stock Options. As soon as practicable
following the date of the meeting of Seller's stockholders contemplated by
Section 5.05 hereof, and in any event not later than ten (10) business days
prior to the Effective Time, each holder of a then outstanding stock option to
purchase shares of Seller Common Stock pursuant to the Seller Stock Option Plans
(it being understood that the aggregate number of shares of Seller Common Stock
subject to purchase under such stock options is not or shall not at the
Effective Time be more than 398,975 shares) shall be entitled to exercise such
option (whether or not such option would otherwise have been exercisable) at the
exercise price thereof, and if such options are not so exercised at such time
prior to the Effective Time, then each such holder shall be entitled to elect by
written notice to Buyer, delivered not later than such ten (10) business days
prior to the Effective Time, one of the two following alternatives: (i) to
receive, immediately prior to the Effective Time, from Seller in cancellation of
each such option a cash payment in an amount equal to the excess of $24.28 over
the per share exercise price of such option, multiplied by the number of shares
covered by such option or (ii) to have each such option, upon the Effective
Time, converted into an option to purchase shares of Buyer Common Stock with the
following terms:
(A) the number of shares of Buyer Common Stock
subject to such option shall be equal to the product of the
number of shares of Seller Common Stock previously subject
thereto and the Exchange Ratio, rounded down to the nearest
whole share;
(B) the exercise price per share of Buyer Common
Stock subject to such option shall be equal to the exercise
price per share of Seller Common Stock previously subject
thereto divided by the Exchange Ratio, rounded up to the
nearest cent;
(C) the duration and other terms of such option shall
be unchanged, except that all references to Seller shall be
deemed to be references to Buyer;
(D) Buyer shall assume the option as contemplated by
Section 424(a) of the Code; and
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(E) with respect to any such option that is an
incentive stock option within the meaning of Section 422 of
the Code, Buyer shall take such actions (other than delaying
the date on which such option becomes exercisable beyond the
date on which it would otherwise become exercisable pursuant
to the terms thereof) as may be necessary or appropriate to
cause such option, upon being converted into an option to
purchase shares of Buyer Common Stock, to remain such an
incentive stock option.
If any such holder fails to either exercise such holder's options as
provided for above or elect either of the other two foregoing alternatives, then
such holder's options shall terminate at the Effective Time as provided in the
Seller Stock Option Plans.
2.13 Exchange Agent. Prior to the Election Form Record Date, Buyer
shall appoint an exchange agent reasonably acceptable to Seller (it being
acknowledged and agreed by Seller that Vermont National Bank is so acceptable)
for the purpose of exchanging certificates representing shares of Buyer Common
Stock for Certificates (the "Exchange Agent"). Buyer shall issue and deliver on
the Closing Date to the Exchange Agent certificates representing the shares of
Buyer Common Stock to be issued and shall deposit with the Exchange Agent the
aggregate cash amount to be paid in consideration of the aggregate Cash
Distribution and in lieu of fractional share interests, all in accordance with
the terms of this Article II.
2.14 Election Procedures. The election to receive shares of Buyer
Common Stock or cash in exchange for shares of Seller Common Stock and the
allocation of shares of Buyer Common Stock and cash among holders of shares of
Seller Common Stock shall be conducted as follows:
(a) The Exchange Agent shall mail to each holder of record
(or, in the case of individuals who have established individual
retirement accounts ("IRAs"), to such individuals, treating each such
individual and his or her ▇▇▇(s) as a single holder of record for this
purpose) of shares of Seller Common Stock outstanding at the Election
Form Record Date an election form (the "Election Form"), together with
appropriate transmittal materials, on the Mailing Date.
(b) The Election Form shall permit a holder of shares of
Seller Common Stock to elect, with respect to some or all of such
holder's shares of Seller Common Stock, (i) to receive the Stock
Distribution (the "Stock Election Shares"), (ii) to receive the Cash
Distribution (the "Cash Election Shares"), or (iii) to indicate that
such holder makes no election (the "No Election Shares").
(c) Any shares of Seller Common Stock with respect to which
the holder thereof shall not, as of the Election Deadline (as defined
below), have made such an election by submission to the Exchange Agent,
of a properly completed Election Form shall be deemed to be No Election
Shares. "Election Deadline" means 5:00 p.m., local time, on the
fifteenth
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business day following but not including the Mailing Date or such other
date as Buyer and Seller shall mutually agree upon in writing.
(d) Any election shall have been properly made only if the
Exchange Agent shall have received a properly completed Election Form
by the Election Deadline. Subject to Section 2.11(g) hereof, an
Election Form will be properly completed only if accompanied by either
(i) certificates representing all shares of Seller Common Stock covered
thereby or (ii) an appropriate guarantee of delivery of such
certificates as set forth in the Election Form from a member of a
national securities exchange or the NASD, or a commercial bank or trust
company in the United States, provided that if the certificates are not
delivered by the time set forth in the guarantee of delivery (which
time may not be later than two business days after the Election
Deadline), the holder shall be entitled only to receive in respect of
each share of Seller Common Stock represented by such certificates the
Merger Consideration to be received by holders of No Election Shares,
subject to the allocation and other provisions of this Section 2.14 and
Section 2.11 hereof. Any Election Form may be revoked or changed by the
person submitting such Election Form to the Exchange Agent by written
notice to the Exchange Agent, provided such notice is received by the
Exchange Agent at or prior to the Election Deadline. The Exchange Agent
shall have reasonable discretion to determine when any election,
modification or revocation is received and whether any such election,
modification or revocation has been properly made.
(e) If the aggregate number of Stock Election Shares does not
equal the Stock Conversion Number (as defined below), within ten
business days after the Election Deadline, unless the Effective Time
has not yet occurred, in which case as soon thereafter as practicable,
the Exchange Agent shall allocate among holders of shares of Seller
Common Stock outstanding at the Effective Time the rights to receive
with respect to each such share the Stock Distribution or the Cash
Distribution as follows:
(i) if the number of Stock Election Shares is less than
the Stock Conversion Number, then
(A) all Stock Election Shares will be converted into
the right to receive the Stock Distribution,
(B) the Exchange Agent will select, on a pro rata
basis, first from among the holders of No Election Shares, a
sufficient number of such shares ("No Election Designee
Shares") such that the number of No Election Designee Shares
will, when added to the number of Stock Election Shares, equal
as closely as practicable the Stock Conversion Number, and all
such No Election Designee Shares will be converted into the
right to receive the Stock Distribution,
(C) if, after giving effect to clauses (A) and (B)
above, the number of Stock Election Shares plus No Election
Designee Shares is less than the Stock Conversion Number, the
Exchange Agent will select, on a pro rata basis, from among
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the holders of Cash Election Shares, a sufficient number of
such shares ("Cash Election Designee Shares") such that the
number of Cash Election Designee Shares will, when added to
the number of No Election Designee Shares and Stock Election
Shares, equal as closely as practicable the Stock Conversion
Number, and all Cash Election Designee Shares will be
converted into the right to receive the Stock Distribution,
and
(D) the Cash Election Shares and the No Election
Shares not so selected as Cash Election Designee Shares or No
Election Designee Shares, respectively, shall be converted
into the right to receive the Cash Distribution; or
(ii) if the aggregate number of Stock Election Shares is
greater than the Stock Conversion Number, then
(A) all Cash Election Shares will be converted into
the right to receive the Cash Distribution,
(B) the Exchange Agent will select, on a pro rata
basis, first from among the holders of No Election Shares, a
sufficient number of such shares ("No Election Cash Designee
Shares") such that the number of No Election Cash Designee
Shares will, when added to the number of Cash Election Shares
and Dissenting Shares, equal as closely as practicable the
Cash Conversion Number (as defined below), and all No Election
Cash Designee Shares will be converted into the right to
receive the Cash Distribution,
(C) if, after giving effect to clauses (A) and (B)
above, the number of Cash Election Shares plus No Election
Cash Designee Shares plus Dissenting Shares is less than the
Cash Conversion Number, the Exchange Agent will select, on a
pro rata basis, from among the holders of Stock Election
Shares, a sufficient number of such shares ("Stock Election
Cash Designee Shares") such that the number of Stock Election
Cash Designee Shares will, when added to the number of Cash
Election Shares and No Election Cash Designee Shares and
Dissenting Shares, equal as closely as practicable the Cash
Conversion Number, and all Stock Election Cash Designee Shares
will be converted into the right to receive the Cash
Distribution, and
(D) the Stock Election Shares and the No Election
Shares not so selected as Stock Election Cash Designee Shares
or No Election Cash Designee Shares, respectively, will be
converted into the right to receive the Stock Distribution.
"Cash Conversion Number" means the number of outstanding shares of Seller Common
Stock as of the Effective Time, including all Dissenting Shares, if any,
multiplied by the ratio of $7.25 to the Acquisition Price. "Stock Conversion
Number" means the number of outstanding shares of Seller Common Stock as of the
Effective Time minus the Cash Conversion Number.
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(f) The proration process to be used by the Exchange Agent
shall be as the Exchange Agent deems equitable in its sole reasonable
discretion, provided that each holder of Stock Election Shares shall,
to the greatest extent possible, except for rounding to whole numbers
of shares, be subject to the same degree of proration as each other
holder of Stock Election Shares.
(g) In the event that this Agreement is duly terminated in
accordance with Section 8.01 hereof after the Mailing Date, the
Exchange Agent shall use all reasonable efforts to effect the prompt
return of stock certificates representing shares of Seller Common Stock
submitted thereto with Election Forms as provided for hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller and the Bank as follows:
3.01 Corporate Organization.
(a) The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
The Buyer has the corporate power and authority to own, lease or
operate all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned, leased or operated by it makes such licensing or
qualification necessary, except where the failure to be so licensed or
qualified would not result in, with respect to the Buyer, a Material
Adverse Effect. The Buyer is a bank holding company duly registered
with the Federal Reserve Board under the BHCA. The certificate of
incorporation and the by-laws of Buyer, copies of which have been
provided to Seller, are true, complete and correct copies of such
documents as in effect on the date hereof.
(b) Each subsidiary of the Buyer is duly organized, validly
existing and in corporate good standing under the laws of the
jurisdiction of its incorporation. Each subsidiary of the Buyer has the
corporate power and authority to own, lease or operate all of its
properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased, or
operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would neither
individually nor in the aggregate, result in, with respect to the
Buyer, a Material Adverse Effect.
3.02 Capitalization. The authorized capital stock of the Buyer consists
of 20,000,000 shares of common stock, par value $1.00 per share (the "Buyer
Common Stock"), and 5,000,000
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shares of preferred stock, par value $1.00 per share (the "Buyer Preferred
Stock"). As of the close of business on October 31, 1996, there were 4,886,704
shares of the Buyer Common Stock issued and outstanding and no shares of the
Buyer Preferred Stock issued and outstanding. As of the close of business on
October 31, 1996, there were also 184,018 shares of the Buyer Common Stock held
in the Buyer's treasury and 214,125 shares of the Buyer Common Stock reserved
for issuance upon exercise of outstanding stock options. All issued and
outstanding shares of the Buyer Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof.
3.03 Authority; No Violation.
(a) The Buyer has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly approved by the Board of Directors of the Buyer. The Board
of Directors of Buyer has directed that this Agreement and the
transactions contemplated hereby be submitted to the stockholders of
Buyer for approval at a meeting of such stockholders and no other
corporate proceedings on the part of the Buyer are necessary to
consummate any of the transactions so contemplated by this Agreement.
This Agreement has been duly and validly executed and delivered by the
Buyer and (assuming due authorization, execution and delivery by the
Seller and the Bank) constitutes the valid and binding obligation of
the Buyer, enforceable against the Buyer in accordance with its terms,
except that enforcement hereof may be limited by the receivership,
conservatorship and supervisory powers of bank regulatory agencies
generally as well as bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting enforcement of creditors' rights
generally and except that enforcement thereof may be subject to general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law) and the availability of equitable
remedies.
(b) Neither the execution and delivery of this Agreement by
the Buyer nor the consummation by the Buyer of the transactions
contemplated by this Agreement, nor compliance by the Buyer with any of
the terms or provisions of this Agreement, will (i) assuming that the
consents and approvals referred to in Section 3.04 hereof are duly
obtained, violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to the Buyer or
any of its subsidiaries or any of their respective properties or
assets, or, (ii) violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in
the termination of, accelerate the performance required by, or result
in a right of termination or acceleration or the creation of any lien,
security interest, charge or other encumbrance upon any of the
respective properties or assets of the Buyer or any of its subsidiaries
under, any of the terms, conditions or provisions of (A) the
certificate of incorporation or other charter document of like nature
or by-laws of the Buyer, or such Buyer subsidiary, as the case may be,
or (B) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the Buyer
or any
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of its subsidiaries is a party thereto as issuer, guarantor or obligor,
or by which they or any of their respective properties or assets may be
bound or affected, except, in the case of clause (ii)(B) above, for
such violations, conflicts, breaches or defaults which either
individually or in the aggregate will not result, with respect to the
Buyer, in a Material Adverse Effect.
3.04 Consents and Approvals. Except for consents, waivers or approvals
of, notice to, or filings or registrations with, the Federal Reserve Board, the
DOJ, the FTC, the Vermont Commissioner, the Securities and Exchange Commission
(the "SEC"), the NASD, the Delaware Secretary of State, and certain state "Blue
Sky" or securities commissioners, no consents, waivers or approvals of, notices
to, or filings or registrations with, any public body or authority are
necessary, and no permits, consents, waivers, clearances, approvals or
authorizations of or notices to any non-governmental or non-regulatory third
parties (which term does not include the stockholders of the Buyer) are
necessary, in connection with the execution and delivery by the Buyer of this
Agreement or the consummation by the Buyer of the transactions contemplated by
this Agreement (except Section 5.17 hereof). The affirmative vote of the holders
of two-thirds of the outstanding shares of the Buyer Common Stock (the "Buyer
Requisite Vote") is the only vote of the holders of any class or series of the
Buyer's capital stock or other securities necessary to approve this Agreement
and the transactions contemplated hereby, including without limitation the
Acquisition Merger.
3.05 Financial Statements. The Buyer has made available to the Seller
copies of (a) the consolidated balance sheets of the Buyer and its subsidiaries
as of December 31 for the fiscal years 1993 through 1995, inclusive, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1993 through 1995, inclusive, as reported in the
Buyer's Annual Reports on Form 10-K for each of the three fiscal years ended
December 31, 1993 through December 31, 1995 filed with the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each case
accompanied by the audit report of Coopers & ▇▇▇▇▇▇▇ LLP, independent
accountants for the Buyer, and (b) the unaudited consolidated balance sheets of
Buyer and its subsidiaries as of September 30, 1996 and September 30, 1995, the
related unaudited consolidated statements of income and changes in stockholders'
equity for the nine months ended September 30, 1996 and September 30, 1995 and
the related unaudited consolidated statements of cash flows for the nine months
ended September 30, 1996 and September 30, 1995, all as reported in Buyer's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 filed
with the SEC under the Exchange Act. The December 31, 1995 consolidated balance
sheet of the Buyer (the "Buyer Balance Sheet") (including the related notes,
where applicable) and the other financial statements referred to herein
(including the related notes, where applicable) fairly present, and the
financial statements to be included in any reports or statements (including
reports on Forms 10-Q, 10-K and 8-K) to be filed by the Buyer with the SEC after
the date hereof will fairly present, the consolidated financial position and
results of the consolidated operations and cash flows and changes in
stockholders' equity of the Buyer and its subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth; and each of such
statements (including the related notes, where applicable) has been and will be
prepared in accordance with GAAP consistently applied during the periods
involved, except as otherwise set forth in the notes thereto (subject, in the
case of unaudited interim statements, to normal year-end adjustments). The books
and records of the
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Buyer and its subsidiaries have been, and are being, maintained in accordance
with GAAP and applicable legal and regulatory requirements and reflect only
actual transactions.
3.06 Absence of Undisclosed Liabilities. As of December 31, 1995, none
of the Buyer or any of its subsidiaries had any obligation or liability
(contingent or otherwise) that is material on a consolidated basis to the Buyer,
or that when combined with all similar obligations or liabilities would be
material on a consolidated basis to the Buyer, except as disclosed or reflected
in the Buyer's Quarterly Report on Form 10-Q for the quarter ended September 30,
1996.
3.07 Broker's Fees. Neither the Buyer nor any of its officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement, except that Buyer has engaged, and
will pay a fee or commission to, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated.
3.08 Absence of Certain Changes or Events. Since December 31, 1995, the
Buyer and its subsidiaries have not incurred any material liability, except in
the ordinary course of their business consistent with their past practices, nor
has there been any change in the assets, liabilities, business, operations,
results of operations or condition of the Buyer or any of its subsidiaries which
has had or could be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on the Buyer.
3.09 Legal Proceedings. There is no pending or, to the Buyer's
knowledge, threatened legal, administrative, arbitral, or other proceeding,
claim, action or governmental investigation against Buyer or any subsidiary of
the Buyer or challenging the validity or propriety of the transactions
contemplated by this Agreement, as to which there is a reasonable probability of
an adverse determination and which, if adversely determined, would have or could
be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Buyer or otherwise materially adversely affect the Buyer's
ability to perform its obligations under this Agreement, nor is there any
judgment, decree, injunction, rule or order of any legal, administrative or
governmental body or arbitrator outstanding against the Buyer or any subsidiary
of the Buyer having any such effect.
3.10 Agreements with Banking Authorities. Neither Buyer nor any of its
subsidiaries is a party to any commitment letter, written agreement, memorandum
of understanding or order to cease and desist with, or has adopted any
resolutions at the request of, any federal or state governmental entity charged
with the supervision or regulation of banks, bank holding companies, savings
associations or savings and loan holding companies or engaged in the insurance
of bank or savings association deposits which restricts materially the conduct
of its business, or in any manner relates to its capital adequacy, credit
policies, management or overall safety and soundness or such entity's ability to
perform its obligations hereunder.
3.11 Material Agreements. Except as set forth in the index of exhibits
in Buyer's Annual Report on Form 10-K for the year ended December 31, 1995 or in
Buyer's Quarterly Reports for the fiscal quarters ended March 31, 1996, June 30,
1996 and September 30, 1996, and except for this
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Agreement and the agreements specifically referred to herein, neither the Buyer
nor any of its subsidiaries is a party to or is bound by any other contract or
agreement or amendment thereto that would be required to be filed as an exhibit
to a Form 10-K filed by the Buyer as of the date hereof or is otherwise material
to the business, operations, results of operations or condition of the Buyer on
a consolidated basis.
3.12 Reports. Since January 1, 1993, the Buyer 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 and
proxy statements (and all such reports, registrations and statements have been
made available by the Buyer to the Seller), (b) the OCC, (c) the FDIC, (d) the
Federal Reserve Board and (e) any applicable state securities or banking
authorities (except, in the case of state securities authorities, no such
representation is made as to filings which are not material) (all such reports,
registrations and statements are collectively referred to herein as the "Buyer
Reports"). As of their respective dates, the Buyer Reports complied and, with
respect to filings made after the date of this Agreement, will at the date of
filing comply, in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the regulatory authority with which they
were filed. As of their respective dates, the Buyer Reports did not contain and,
with respect to filings made after the date of this Agreement, will not at the
date of filing contain, any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.13 Compliance with Applicable Law. Buyer and its subsidiaries hold
all material licenses, franchises, permits and authorizations necessary for the
lawful conduct of Buyer's consolidated business, and Buyer and its subsidiaries
have complied with, and are not in default in any respect under any, applicable
law, statute, order, rule, regulation or policy of, or agreement with, any
federal, state or local governmental agency or authority relating to Buyer on a
consolidated basis, other than where such default or noncompliance does not have
and could not reasonably be expected to have a Material Adverse Effect on Buyer
or otherwise materially adversely affect Buyer's ability to perform its
obligations under this Agreement. Buyer has not received any notice of any
violation of, or commencement of any proceeding in connection with any violation
(including without limitation any hearing or investigation relating to the
imposition or contemplated imposition of civil money penalties or other
financial penalty under Section 8(i) of the FDIA or applicable state law
("CMPs")) of any such law, statute, order, rule, regulation, policy or
agreement.
3.14 Environmental Matters. Buyer and its subsidiaries are in
compliance and have always been in compliance with all environmental laws,
rules, regulations and standards promulgated, adopted or enforced by the EPA and
of similar agencies in states in which they conduct their respective business,
except for any noncompliance that singly or in the aggregate would not have a
Material Adverse Effect on Buyer. There is no suit, claim, action or proceeding
now pending before any court, governmental agency or board or other forum or, to
the knowledge of Buyer, threatened by any person, as to which there is a
reasonable probability of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have a
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Material Adverse Effect on Buyer (i) for alleged noncompliance with any
environmental law, rule or regulation or (ii) relating to the discharge or
release into the environment of any hazardous material or waste at or on a site
presently or formerly owned, leased or operated by Buyer or any subsidiary of
Buyer or in which Buyer or any Buyer subsidiary has a lien or other security
interest.
3.15 Buyer Common Stock. The Buyer Common Stock to be issued in
connection with the Acquisition Merger is duly authorized and, when issued in
accordance with Article II hereof, will be validly issued, fully paid and
nonassessable and not subject to preemptive rights, with no personal liability
attaching thereto.
3.16 Ownership of Seller Common Stock. Neither the Buyer nor, to its
best knowledge, any of its affiliates or associates (as such terms are defined
under the Exchange Act), (a) beneficially own, directly or indirectly, or (b)
are parties to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, shares of capital
stock of the Seller, which in the aggregate represent five percent (5%) or more
of the outstanding shares of capital stock of the Seller entitled to vote
generally in the election of directors (other than shares in trust accounts,
managed accounts and the like that are beneficially owned by third parties (any
such shares, "Trust Account Shares") and any other shares held in respect of a
debt previously contracted (any such shares, "DPC Shares").
3.17 Financing. Buyer's ability to pay the total amount of the cash
consideration to be paid with respect to those shares of Seller Common Stock
that are converted into the Cash Distribution in accordance with Section 2.09(a)
above is not contingent upon raising additional equity capital (which does not
include receipt of cash dividends from its banking or other subsidiaries) or
obtaining specific financing from any third-party lender.
3.18 Buyer Benefit Plans.
(a) Buyer represents that with respect to each employee pension benefit
plan (as defined in Section 3(2) of ERISA) ("Buyer Pension Plan") and each
employee welfare benefit plan (as defined in Section 3(1) of ERISA) ("Buyer
Benefit Plan") which the Buyer, any subsidiary of Buyer or any ERISA Affiliate
maintains or to which the Buyer, any subsidiary of Buyer or any ERISA Affiliate
contributes, each such plan 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, the Code and other applicable laws, and each of
the Buyer Pension Plans intended to qualify under Section 401(a) of the Code is
so qualified. Neither the Buyer nor any subsidiary of Buyer has taken any
action, nor has any event occurred, that has resulted, or will likely result in
liability under Title IV of ERISA or has engaged in a prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code).
(b) There is no "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA and Section 412 of the Code), whether or not waived, with
respect to any Buyer Pension Plan. The Buyer, its subsidiaries, and their ERISA
Affiliates have made all contributions to the Buyer Pension Plans and Buyer
Benefit Plans required thereunder as of the date of this
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representation, and have established adequate reserves on their books for all
contributions to Buyer Pension Plans and Buyer Benefit Plans required thereunder
for the period prior to the date of this representation, to the extent such
contributions are not required to have been made, and have not been made, prior
to the date of this representation.
3.19 Buyer Information. The information relating to the Buyer and its
subsidiaries to be contained or incorporated by reference in the Buyer
Registration Statement and the Proxy Statement, as described in Section 5.04
hereof, and any other documents filed with the SEC or any regulatory agency in
connection herewith, to the extent such information is provided in writing by
the Buyer, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make such information not misleading.
3.20 Disclosure. To the best of Buyer's knowledge, no representation or
warranty contained in this Agreement, and no statement contained in any
certificate, list or other writing furnished to the Seller pursuant to the
provisions hereof, contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements herein or
therein not misleading. No information believed by Buyer to be material to
Seller's interests in the transactions contemplated by this Agreement, which has
not otherwise been disclosed to Seller in connection with this Agreement, has
been intentionally withheld from Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE BANK
Seller and the Bank hereby represent and warrant to Buyer as follows:
4.01 Corporate Organization.
(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
The Bank is a federal savings bank in stock form duly organized,
validly existing and in good standing under the laws of the United
States. Each of the Seller and the Bank has the corporate power and
authority to own, lease or operate all of its respective properties and
assets and to carry on its respective business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased or
operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would not result in,
with respect to the Seller, any Material Adverse Effect. The deposits
of the Bank are insured by the FDIC in accordance with the FDIA, and,
except as disclosed in Section 4.01(a) of the disclosure schedule
prepared by Seller and delivered to Buyer on the date hereof in
conjunction with the parties' execution and delivery of this Agreement
(the "Seller Disclosure Schedule"), the Bank has paid all assessments
that have become due and payable
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to the FDIC. The Seller is a savings and loan holding company
registered with the OTS under the HOLA.
(b) Each subsidiary of the Seller, other than the Bank, is
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation. Each subsidiary of the Seller
has the corporate power and authority to own, lease or operate all of
its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it
or the character or location of the properties and assets owned, leased
or operated by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would, neither
individually nor in the aggregate, result in, with respect to the
Seller, a Material Adverse Effect.
(c) Except as disclosed in Section 4.01(c) of the Seller
Disclosure Schedule, the minute books of the Seller and its
subsidiaries contain complete and accurate records of all meetings and
other corporate actions authorized at such meetings held or taken since
December 31, 1990 by its stockholders and Board of Directors. The
certificate of incorporation and the by-laws of the Seller and the
federal stock charter and by-laws of the Bank, copies of which have
been provided to the Buyer, are true, complete and correct copies of
such documents as in effect on the date hereof.
4.02 Capitalization.
(a) The authorized capital stock of the Seller consists of
5,000,000 shares of common stock, par value $0.01 per share (the
"Seller Common Stock"), and 1,000,000 shares of preferred stock, par
value $0.01 per share (the "Seller Preferred Stock"). As of October 31,
1996, there were 3,677,226 shares of the Seller Common Stock and no
shares of the Seller Preferred Stock issued and outstanding, 418,323
shares of the Seller Common Stock held in the Seller's treasury and
392,775 shares of Seller Common Stock reserved for issuance upon the
exercise of outstanding stock options. All issued and outstanding
shares of the Seller Common Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. Section
4.02(a) of the Seller Disclosure Schedule identifies by name all of the
holders of record as of the date hereof of any options or rights,
whether or not presently exercisable, to purchase any shares of Seller
Common Stock, the number of shares of Seller Common Stock subject to
such outstanding stock options or rights held by each such holder,
together with the various dates on which such options or rights were
granted and the various exercise prices for such options or rights, the
number of shares for which such options or rights are presently vested
and the vesting schedule for the remaining balance of shares for which
such options or rights are not presently vested. Except as referred to
in this Section 4.02 or disclosed in Section 4.02(a) of the Seller
Disclosure Schedule, and except for the Seller Option Agreement and the
Seller Stock Option Plans, the Seller does not have and is not bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the Seller to issue, deliver or
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sell, or cause to be issued, delivered or sold any shares of the Seller
Common Stock or any other equity security of the Seller or any Seller
subsidiary or any securities convertible into, exchangeable for or
representing the right to subscribe for, purchase or otherwise receive
any shares of the Seller Common Stock or any other equity security of
the Seller or any Seller subsidiary or obligating the Seller to grant,
extend or enter into any such subscriptions, options, warrants, calls,
commitments or agreements. As of the date hereof, there are no
outstanding contractual obligations of the Seller to repurchase, redeem
or otherwise acquire any shares of capital stock of the Seller or any
Seller subsidiary.
(b) Section 4.02(b) to the Seller Disclosure Schedule lists
each of the subsidiaries of the Seller as of the date of this Agreement
and indicates for such subsidiary as of such date, the number,
percentage and type of equity securities owned or controlled by the
Seller and the jurisdiction of incorporation. No subsidiary of the
Seller has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for
such Seller subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, any equity security of the Seller or of any
Seller subsidiary or any securities convertible into, exchangeable for
or representing the right to subscribe for, purchase or otherwise
receive any such equity security or obligating a Seller subsidiary to
grant, extend or enter into any such subscriptions, options, warrants,
calls, commitments or agreements. As of the date hereof, there are no
outstanding contractual obligations of any Seller subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of
the Seller or any Seller subsidiary. All of the shares of capital stock
of each of the Seller's subsidiaries held by the Seller are fully paid
and nonassessable and are owned by the Seller free and clear of any
claim, lien, encumbrance or agreement with respect thereto.
4.03 Authority; No Violation.
(a) The Seller has full corporate power and authority to
execute and deliver this Agreement and the Seller Option Agreement and
to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Seller Option
Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly and validly approved by the Board of
Directors of the Seller. The Board of Directors of Seller has directed
that this Agreement and the transactions contemplated hereby be
submitted to the stockholders of the Seller for approval at a meeting
of such stockholders and no other corporate proceedings on the part of
Seller are necessary to consummate any of the transactions so
contemplated by this Agreement or the Seller Option Agreement. This
Agreement and the Seller Option Agreement have been duly and validly
executed and delivered by the Seller and (assuming due authorization,
execution and delivery of this Agreement and the Seller Option
Agreement by the Buyer) constitute the valid and binding obligations of
the Seller, enforceable against it in accordance with their respective
terms, except that enforcement thereof may be limited by the
receivership, conservatorship and supervisory powers of bank regulatory
agencies generally as well as bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors'
rights generally and except that enforcement thereof may be
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subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and the
availability of equitable remedies.
(b) Neither the execution and delivery of this Agreement and
the Seller Option Agreement by the Seller nor the consummation by the
Seller of the transactions contemplated hereby and thereby, nor
compliance by the Seller with any of the terms or provisions hereof or
thereof, will (i) assuming that the consents and approvals referred to
in Section 4.04 are duly obtained, violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to the Seller or any of its subsidiaries or any
of their respective properties or assets, or (ii) except as set forth
in Section 4.03(b) of the Seller Disclosure Schedule, violate, conflict
with, result in a breach of any provisions of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute
a default) under, result in the termination of, accelerate the
performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or
other encumbrance upon any of the respective properties or assets of
the Seller or any of its subsidiaries under, any of the terms,
conditions or provisions of (A) the certificate of incorporation or
other charter documents of like nature or by-laws of the Seller or such
Seller subsidiary, as the case may be, or (B) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument
or obligation to which the Seller or any of its subsidiaries is a party
thereto as issuer, guarantor or obligor, or by which they or any of
their respective properties or assets may be bound or affected, except,
in the case of clause (ii)(B) above, for such violations, conflicts,
breaches or defaults which either individually or in the aggregate will
not result, with respect to the Seller, in a Material Adverse Effect.
4.04 Consents and Approvals. Except for consents, waivers or approvals
of, notices to, or filings or registrations with, the Federal Reserve Board, the
DOJ, the FTC, the Vermont Commissioner, the SEC, the Delaware Secretary of
State, or as may be set forth in Section 4.04 or 4.03(b) of the Seller
Disclosure Schedule, no consents, waivers or approvals of, notices to, or
filings or registrations with, any public body or authority are necessary, and
no permits, consents, waivers, clearances, approvals or authorizations of or
notices to any non-governmental or non-regulatory third parties (which term does
not include the stockholders of the Seller) are necessary, in connection with
the execution and delivery by the Seller of this Agreement and the Seller Option
Agreement or the consummation by the Seller of the transactions contemplated by
this Agreement (except Section 5.17 hereof) or the Seller Option Agreement. The
affirmative vote of holders of two-thirds of the outstanding shares of the
Seller Common Stock (the "Seller Requisite Vote") is the only vote of the
holders of any class or series of the Seller's capital stock or other securities
necessary to approve this Agreement and the transactions contemplated hereby,
including without limitation the Acquisition Merger.
4.05 Financial Statements. The Seller has made available to the Buyer
copies of (a) the consolidated balance sheets of the Seller and its subsidiaries
as of September 30 for the fiscal years 1993 through 1995, inclusive, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for such fiscal years 1993 through 1995, inclusive, as reported in
the Seller's Annual Reports on Form 10-K for each of the three fiscal years
ended September 30,
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1993 through September 30, 1995 filed with the SEC under the Exchange Act, in
each case accompanied by the audit report of KPMG Peat Marwick LLP, independent
accountants for the Seller, (b) the unaudited consolidated balance sheets of
Seller and its subsidiaries as of June 30, 1996 and June 30, 1995, the related
unaudited consolidated statements of income and changes in stockholders' equity
for the nine months ended June 30, 1996 and June 30, 1995 and the related
unaudited consolidated statements of cash flows for the nine months ended June
30, 1996 and June 30, 1995, all as reported in Seller's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996 filed with the SEC under the Exchange
Act, and (c) the unaudited consolidated balance sheet of Seller and its
subsidiaries as of September 30, 1996, the related unaudited consolidated
statements of income and changes in stockholders' equity for the fiscal year
ended September 30, 1996 and the related unaudited consolidated statement of
cash flows for the fiscal year ended September 30, 1996, all as prepared by
management, but not yet certified by KPMG Peat Marwick LLP as of the date
hereof. The September 30, 1995 consolidated balance sheet of the Seller (the
"Seller Balance Sheet") (including the related notes, where applicable) and the
other financial statements referred to herein (including the related notes,
where applicable) fairly present, and the financial statements to be included in
any reports or statements (including reports on Forms 10-Q, 10-K and 8-K) to be
filed by the Seller with the SEC after the date hereof will fairly present, the
consolidated financial position and results of the consolidated operations and
cash flows and changes in shareholders' equity of the Seller and its
subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; and each of such statements (including the related notes,
where applicable) has been and will be prepared in accordance with GAAP
consistently applied during the periods involved, except as otherwise set forth
in the notes thereto (subject, in the case of unaudited interim statements, to
normal year-end adjustments). The books and records of the Seller and its
subsidiaries have been, and are being, maintained in accordance with GAAP and
applicable legal and regulatory requirements and reflect only actual
transactions.
4.06 Absence of Undisclosed Liabilities. As of September 30, 1995, none
of the Seller or any of its subsidiaries had any obligation or liability
(contingent or otherwise) that is material on a consolidated basis to the
Seller, or that when combined with all similar obligations or liabilities would
be material on a consolidated basis to the Seller, except as disclosed or
reflected in the Seller's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996 or Section 4.06 of the Seller Disclosure Schedule.
4.07 Broker's Fees. Neither the Seller or any of its subsidiaries nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement, except
that Seller has engaged, and will pay a fee or commission to, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇, Inc.
4.08 Absence of Certain Changes or Events. Except as disclosed in
Schedule 4.08 of the Seller Disclosure Schedule, since September 30, 1995 the
Seller and its subsidiaries have not incurred any material liability, except in
the ordinary course of their business consistent with their past practices, nor
has there been any change in the assets, liabilities, business, operations,
results of operations or condition of the Seller or any of its subsidiaries
which has had or could be
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reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Seller.
4.09 Legal Proceedings. Except as disclosed in Section 4.09 of the
Seller Disclosure Schedule, there is no pending or, to Seller's knowledge,
threatened legal, administrative, arbitral, or other proceeding, claim, action
or governmental investigation against the Seller or any subsidiary of the Seller
or challenging the validity or propriety of the transactions contemplated by
this Agreement, as to which there is a reasonable probability of an adverse
determination and which, if adversely determined, would have or could be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Seller or otherwise materially adversely affect the
Seller's ability to perform its obligations under this Agreement, nor is there
any judgment, decree, injunction, rule or order of any legal, administrative or
governmental body or arbitrator outstanding against the Seller or any subsidiary
of the Seller having any such effect.
4.10 Taxes and Tax Returns. Except as may be set forth in Section 4.10
of the Seller Disclosure Schedule:
(a) The Seller has timely filed all Tax Returns required to be
filed by it, each such Tax Return has been prepared in compliance with
all applicable laws and regulations, and all such Tax Returns are true
and accurate in all respects material to the financial condition of the
Seller and its subsidiaries, taken as a whole. All Taxes shown on such
Tax Returns as due and payable by Seller have been paid and, to
Seller's knowledge, Seller will not be liable for any additional Taxes
for any taxable period ending on or before the Effective Time in excess
of the amounts set up as reserves for taxes on the Seller Balance
Sheet. Seller has made available to Buyer correct and complete copies
of all federal income Tax Returns filed with respect to Seller for
taxable periods ended on or after December 31, 1990, and all
examination reports, and statements of deficiencies assessed against or
agreed to by Seller with respect to such taxable periods;
(b) Seller has neither requested nor been granted an extension
of the time for filing any Tax Return to a date later than the
Effective Time;
(c) With respect to each taxable period of Seller through
September 30, 1992, either such taxable period has been audited by the
relevant taxing authority or the time for assessing or collecting
income Tax with respect to each such taxable period has closed and such
taxable period is not subject to review by any relevant taxing
authority or the statute of limitations for assessing or collecting
income Tax with respect to each such taxable period has not yet
expired;
(d) Seller has not consented to extend the time in which any
Tax may be assessed or collected by any tax authority;
(e) No deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Tax has been asserted
or assessed by any taxing authority against
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Seller, other than such additional Taxes as are being contested in good
faith and which if determined adversely to Seller would not have a
Material Adverse Effect on Seller, and Seller has not executed or
entered into a closing agreement pursuant to Code Section 7121 or any
predecessor provision thereof or any similar provision of state, local
or foreign law;
(f) There is no action, suit, taxing authority proceeding or
audit now in progress, pending or, to the knowledge of Seller,
threatened against or with respect to Seller with respect to any Tax;
(g) To the best of Seller's knowledge, no claim has ever been
made by a taxing authority in a jurisdiction where Seller does not pay
Tax or file Tax Returns that Seller is or may be subject to Taxes
assessed by that jurisdiction;
(h) To the best of Seller's knowledge, there are no liens for
Taxes (other than current Taxes not yet due and payable) on the assets
of Seller;
(i) Seller has not filed or been included in a combined,
consolidated or unitary income Tax Return (other than consolidated Tax
Returns in which it is the parent corporation);
(j) Seller has neither made nor is affected by any elections
under Code Sections 108(b)(5), 338(g), or 565, or Treasury Regulation
Section 1.1502-20(g);
(k) Seller is not a party to or bound by any Tax allocation or
Tax sharing agreement nor does Seller have any current or potential
contractual obligation to indemnify any other person or entity with
respect to Taxes (other than the tax sharing agreement among Seller and
its subsidiaries, a copy of which has been made available to Buyer);
(l) Seller has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party;
(m) Seller has no permanent establishment in any foreign
country, as defined in the relevant tax treaty between the United
States of America and such foreign country, nor otherwise operates or
conducts business through any branch in any foreign country;
(n) Seller will not be required, as a result of a change in
method of accounting for any period before and immediately prior to the
Effective Time, to include any adjustment under Section 481(c) of the
Code (or any similar or corresponding provision or requirement of
federal, state, local or foreign income Tax law) in taxable income for
any period ending after the Effective Time;
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(o) None of the assets of Seller directly or indirectly
secures any indebtedness the interest on which is tax-exempt under
Section 103(a) of the Code, and Seller is not directly or indirectly an
obligor or a guarantor with respect to any such indebtedness;
(p) Seller has not filed a consent under Code Sec. 341(f)
concerning collapsible corporations;
(q) Seller has not made any payments, nor is obligated to make
any payments, nor is it a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Code Sec. 280G;
(r) Seller and each of its subsidiaries is not currently, has
not been within the last five years and does not anticipate becoming a
"United States real property holding corporation" within the meaning of
Code Section 897(c) .
(s) The liabilities of the Bank will not, as of the Effective
Time, exceed the tax basis of its assets;
(t) For purposes of this Section 4.10:
(A) "Tax" means any federal, state, local or foreign
income, gross receipts, franchise, estimated, alternative
minimum, add-on minimum, sales, use, transfer, registration,
value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs,
duties, real property, personal property, capital stock,
intangibles, social security, unemployment, disability,
payroll, license, employee or other tax or levy, of any kind
whatsoever, including any interest, penalties or additions to
tax in respect of the foregoing.
(B) "Tax Return" means any return, declaration,
report, claim for refund, information return or other document
(including any related or supporting estimates, elections,
schedules, statements or information) filed or required to be
filed in connection with the determination, assessment or
collection of any Tax or the administration of any laws,
regulations or administrative requirements relating to any
Tax.
4.11 Employees. Except as set forth in Section 4.11 of the Seller
Disclosure Schedule:
(a) Neither the Seller, any of its subsidiaries, nor any ERISA
Affiliate of the Seller or 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, for the employees of Seller, any of
its subsidiaries, or any ERISA Affiliate of Seller or any of its
subsidiaries, and neither Seller nor any of its subsidiaries maintains
or contributes to any stock option plan, stock purchase plan, deferred
-31-
compensation plan, other employee benefit plan for employees of the
Seller or any subsidiary thereof, or any other plan, program or
arrangement of the same or similar nature that provides benefits to
non-employee directors of the Seller or any subsidiary thereof
(collectively, the "Seller Other Plans").
(b) The Seller shall have delivered or made available to the
Buyer prior to, or contemporaneously with, the delivery of the Seller
Disclosure Schedule a complete and accurate copy of each of the
following with respect to each of the Seller Pension Plans, the Seller
Benefit Plans and the Seller Other Plans: (i) plan document (including
all amendments, if any); (ii) trust agreement or insurance contract, if
any; (iii) most recent IRS determination letter, if any; (iv) most
recent financial statements and actuarial report, if any;(v) most
recent annual report on Form 5500 (including all schedules thereto), if
any; and (vi) summary plan description currently in effect and all
material modifications thereto, if any, and any written communications
to employees to the extent the substance of the plan described therein
differs materially from the other documentation relating to such plan
furnished by Seller to Buyer hereunder.
(c) The current value of the assets of each of the Seller
Pension Plans subject to Title IV of ERISA exceeds that plan's "Benefit
Liabilities" as that term is defined in Section 4001(a)(16) of ERISA,
when determined under actuarial factors that would apply if that plan
terminated in accordance with all applicable legal requirements.
(d) Neither Seller, any of its subsidiaries, any of their
ERISA Affiliates, nor any plan administrator of a Seller Pension Plan
subject to Title IV of ERISA has given notice of intent to terminate
such plan, nor, to the knowledge of Seller or any of its subsidiaries,
has the PBGC instituted proceedings to terminate any such plan.
(e) Neither Seller, any of its subsidiaries, nor any of their
ERISA Affiliates has incurred any liability to the PBGC (other than for
premium payments that are not yet due), to any Seller Pension Plan
subject to Title IV of ERISA, or to any trustee under Section 4042 of
ERISA, on account of the termination of or withdrawal as a contributing
employer from, any Seller Pension Plan, which liability has not been
satisfied in full as of the date of this representation.
(f) Each of the Seller Pension Plans and each of the Seller
Benefit Plans has been administered in compliance with its terms in all
material respects and is in compliance in all material respects with
the applicable provisions of ERISA (including, but not limited to, the
funding and prohibited transactions provisions thereof), the Code and
other applicable laws.
(g) There has been no reportable event within the meaning of
Section 4043(c) of ERISA (except for any such event, notice of which
has been waived by PBGC regulation) 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.
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(h) There is no "accumulated funding deficiency" (within the
meaning of Section 302 of ERISA and Section 412 of the Code), whether
or not waived, with respect to any Seller Pension Plan. The Seller, its
subsidiaries, and their ERISA Affiliates have made all contributions to
the Seller Pension Plans and Seller Benefit Plans required thereunder
as of the date of this representation, and have established adequate
reserves on their books for all contributions to Seller Pension Plans
and Seller Benefit Plans required thereunder for the period prior to
the date of this representation, to the extent such contributions are
not required to have been made, and have not been made, prior to the
date of this representation.
(i) Neither the Seller, any of its subsidiaries, nor any of
their ERISA Affiliates has, since September 2, 1974, contributed to any
"Multiemployer Plan," as such term is defined in Section 3(37) of
ERISA.
(j) Each of the Seller Pension Plans which is intended to be a
qualified plan within the meaning of Section 401(a) of the Code is so
qualified, and Seller is not aware of any fact or circumstance which
would adversely affect the qualified status of any such plan.
(k) Neither the Seller nor any of its subsidiaries has engaged
in a prohibited transaction (within the meaning of Section 406 of ERISA
or Section 4975 of the Code) which could have a Material Adverse Effect
on Seller or its subsidiaries.
(l) There are no material pending or, to the knowledge of the
Seller, threatened or anticipated claims by or on behalf of any of the
Seller Pension Plans, Seller Benefit Plans, or Seller Other Plans, by
any employee or beneficiary covered under any such plan, or otherwise
involving such plan, other than routine claims for benefits or actions
seeking qualified domestic relations orders.
(m) Neither Seller, any of its subsidiaries, nor any of their
ERISA Affiliates 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 other than health benefit continuation rights
under federal or state law, of any kind or providing that any otherwise
disclosed plan, program or arrangement will irrevocably continue, with
respect to any or all of its participants, for any period of time.
4.12 Agreements with Banking Authorities. Except as disclosed in
Section 4.12 of the Seller Disclosure Schedule, neither the Seller nor any of
its subsidiaries is a party to any commitment letter, written agreement,
memorandum of understanding or order to cease and desist with, or has adopted
any resolutions at the request of, any federal or state governmental entity
charged with the supervision or regulation of savings associations, savings and
loan holding companies, banks or bank holding companies or engaged in the
insurance of savings association or bank deposits which restricts materially the
conduct of its business, or in any manner relates to its capital adequacy,
credit policies, management or overall safety and soundness or such entity's
ability to perform its obligations hereunder.
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4.13 Material Agreements. Except as set forth in the index of exhibits
in Seller's Annual Report on Form 10-K for the year ended September 30, 1995 or
in Seller's Quarterly Reports for the fiscal quarters ended December 31, 1995,
March 31, 1996 and June 30, 1996 or as otherwise disclosed in Section 4.13 of
the Seller Disclosure Schedule, and except for this Agreement and the agreements
specifically referred to herein, neither the Seller nor any of its subsidiaries
is a party to or is bound by (a) any agreement, arrangement, or commitment
(other than contracts entered into in the ordinary course of the Bank's banking
business that are consistent with past practice and have terms of not more than
one year and require payments by the Seller or any subsidiary of not more than
$100,000 annually); (b) any written or oral agreement, arrangement, or
commitment relating to the employment (including severance) of any person; (c)
any contract, agreement, or understanding with any labor union; or (d) any other
contract or agreement or amendment thereto that would be required to be filed as
an exhibit to a Form 10-K filed by the Seller as of the date hereof or is
otherwise material to the business, operations, results of operations or
condition of the Seller on a consolidated basis.
4.14 Ownership of Property. Except as disclosed in Section 4.14 of the
Seller Disclosure Schedule, the Seller and its subsidiaries have good and, as to
real property, marketable title to all assets and properties, whether real or
personal, tangible or intangible (including, without limitation, the capital
stock of its subsidiaries and all other assets and properties), reflected on the
Seller Balance Sheet, or acquired subsequent thereto subject to no encumbrances,
liens, mortgages, security interests or pledges, except (a) those items that
secure liabilities that are reflected in the Seller Balance Sheet or the notes
thereto or incurred in the ordinary course of business after the date of such
balance sheet, (b) statutory liens for amounts not yet delinquent or which are
being contested in good faith, (c) those items that secure public or statutory
obligations or any discount with, borrowing from, or other obligations to any
Federal Reserve Bank, Federal Home Loan Bank, inter-bank credit facilities, or
any transaction by the Seller or any subsidiary acting in a fiduciary capacity,
and (d) such encumbrances, liens, mortgages, security interests, and pledges
that are not in the aggregate material to the Seller on a consolidated basis.
The Seller and its subsidiaries as lessees have the right under valid and
existing leases to use, possess and control all of the personal property and
real estate leased by Seller and its subsidiaries as presently used, possessed
and controlled by the Seller and its subsidiaries.
4.15 Reports. Except as disclosed in Section 4.15 of the Seller
Disclosure Schedule, since January 1, 1993, 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 and proxy
statements, (b) the OTS, (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) (and all such
reports, registrations and statements have been made available by Seller to
Buyer and are collectively referred to herein as the "Seller Reports"). As of
their respective dates, the Seller Reports complied and, with respect to filings
made after the date of this Agreement, will at the date of filing comply, in all
material respects with all of the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed. As of their
respective dates,
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the Seller Reports did not contain and, with respect to filings made after the
date of this Agreement, will not at the date of filing contain, any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
4.16 Compliance with Applicable Law. Except as disclosed in Section
4.16 of the Seller Disclosure Schedule, Seller and its subsidiaries hold all
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of Seller's consolidated business, and each of the Seller, its
subsidiaries and each "institution-affiliated party" of Seller or the Bank, as
such term is defined in Section 3(u) of the FDIA, has complied with and is not
in default in any respect under any, applicable law, statute, order, rule,
regulation or policy of, or agreement with, any federal, state or local
governmental agency or authority relating to the Seller or its business on a
consolidated basis or any such institution-affiliated party, other than where
such default or noncompliance does not have and could not reasonably be expected
to have a Material Adverse Effect on Seller or otherwise materially adversely
affect Seller's or the Bank's ability to perform its obligations under this
Agreement or otherwise result in the imposition of CMPs on the Seller, the Bank
or any such institution-affiliated party, and neither the Seller nor the Bank
has received notice of any violation of, or commencement of any proceeding in
connection with any violation (including without limitation any hearing or
investigation relating to the imposition or contemplated imposition of CMPs) of
any such law, statute, order, rule, regulation, policy or agreement, which could
have any such result.
4.17 Environmental Matters. Except as disclosed in Section 4.17 of the
Seller Disclosure Schedule, Seller and its subsidiaries are in compliance and
have always been in compliance with all environmental laws, rules, regulations
and standards promulgated, adopted or enforced by the EPA and of similar
agencies in states in which they conduct their respective business, except for
any noncompliance that singly or in the aggregate would not have a Material
Adverse Effect on Seller. Except as disclosed in Section 4.17 of the Disclosure
Schedule, there is no suit, claim, action or proceeding now pending before any
court, governmental agency or board or other forum or, to the knowledge of
Seller, threatened by any person, as to which there is a reasonable probability
of an adverse determination and which, if adversely determined, would,
individually or in the aggregate, have a Material Adverse Effect on Seller (i)
for alleged noncompliance with any environmental law, rule or regulation or (ii)
relating to the discharge or release into the environment of any hazardous
material or waste at or on a site presently or formerly owned, leased or
operated by Seller or any subsidiary of Seller or in which Seller or any Seller
subsidiary has a lien or other security interest.
4.18 Antitakeover Statutes Not Applicable. Assuming the accuracy of
Buyer's representation in Section 3.14 above, no "fair price," "moratorium,"
"control share acquisition" or other form of antitakeover statute or regulation
is applicable to the transactions contemplated by this Agreement.
4.19 Ownership of Buyer Common Stock. As of the date hereof, neither
the Seller nor, to its best knowledge, any of its affiliates or associates (as
such terms are defined under the Exchange Act), (a) beneficially own, directly
or indirectly, or (b) are parties to any agreement,
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arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, shares of capital stock of the Buyer, which in the
aggregate represent five percent (5%) or more of the outstanding shares of
capital stock of the Buyer entitled to vote generally in the election of
directors (other than Trust Account Shares or DPC Shares).
4.20 Insurance. Except as disclosed in Section 4.20 of the Seller
Disclosure Schedule, the Seller and each of its subsidiaries is presently
insured, and since January 1, 1993 has been insured, for reasonable amounts
against such risks as companies engaged in a similar business in a similar
location would, in accordance with good business practice, customarily be
insured.
4.21 Labor. No work stoppage involving the Seller or any of its
subsidiaries is pending or, to the best knowledge of the Seller, threatened.
Except as disclosed in Section 4.21 of the Seller Disclosure Schedule, neither
the Seller nor any of its subsidiaries is involved in, or, to the best knowledge
of the Seller, threatened with or affected by, any dispute, arbitration, lawsuit
or administrative proceeding relating to labor or employment matters which might
reasonably be expected to result in a Material Adverse Effect with respect to
the Seller. No employees of the Seller or any of its subsidiaries are
represented by any labor union, and, to the best knowledge of the Seller, no
labor union is attempting to organize employees of the Seller or any of its
subsidiaries.
4.22 Material Interests of Certain Persons. Except as disclosed in
Section 4.22 of the Seller Disclosure Schedule, no officer or director of the
Seller, or any "associate" (as such term is defined in Rule 14a-1 under the
Exchange Act) of any such officer or director, has any material interest in any
material contract or property (real or personal), tangible or intangible, used
in or pertaining to the business of the Seller or any of its subsidiaries.
4.23 Absence of Registration Obligations. Neither the Seller nor any of
its subsidiaries is under any obligation, contingent or otherwise, by reason of
any agreement to register or otherwise issue any of its securities which will
continue after the Effective Time.
4.24 Loans. All currently outstanding loans of, or current extensions
of credit by, Seller or the Bank (individually, a "Loan," and collectively, the
"Loans") were solicited, originated and currently exist in compliance with all
applicable requirements of federal and state statutory and common law and
regulations and regulatory policies promulgated thereunder, except to the extent
that any such non-compliance, individually or in the aggregate, would not have a
Material Adverse Effect with respect to Seller. Except as disclosed in Section
4.24 of the Seller Disclosure Schedule, each note evidencing a Loan or loan or
credit agreement or security instrument related to the Loans constitutes a
valid, legal and binding obligation of the obligor thereunder, enforceable in
accordance with the terms thereof, except where the failure thereof,
individually or in the aggregate, would not have a Material Adverse Effect with
respect to Seller. There are no oral modifications or amendments or additional
agreements related to the Loans that are not reflected in Seller's records, no
claims of defense as to the enforcement of any Loan has been asserted and Seller
has committed no acts or omissions which would give rise to any claim or right
of rescission, set-off, counterclaim or defense, except where any of the
foregoing would not have, either individually or in the aggregate, a Material
Adverse Effect with respect to Seller. Seller currently maintains, and shall
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continue to maintain, an allowance for loan losses allocable to the Loans which
is adequate to provide for all known and estimable losses, net of any recoveries
relating to such extensions of credit previously charged off, on the Loans, such
allowance for loan losses complying in all material respects with all applicable
loan loss reserve requirements established in accordance with GAAP and by any
governmental authorities having jurisdiction with respect to Seller or any of
its subsidiaries, except to the extent that any such inadequacy or
non-compliance would not have, either individually or in the aggregate, a
Material Adverse Effect with respect to Seller. Except as disclosed in Section
4.24 of the Seller Disclosure Schedule, (i) none of the Loans are presently
serviced by third parties and there is no obligation which could result in any
Loan becoming subject to any third party servicing and (ii) no Loan has been
sold with continuing recourse liability on the part of Seller or any of its
subsidiaries.
4.25 Investment Securities. Except as disclosed in Section 4.25 of the
Seller Disclosure Schedule, none of the investments reflected in the
consolidated balance sheet contained in Seller's Quarterly Report on Form 10-Q
filed with the SEC for the quarter ended June 30, 1996, and none of the
investments made by the Seller or the Bank since June 30, 1996, 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, except to the extent that any such restriction
would not have, either individually or in the aggregate, a Material Adverse
Effect with respect to Seller. Seller and the Bank have (a) properly reported as
such any investment securities which are required under GAAP to be classified as
"available for sale" at fair value, and (b) accounted for any decline in the
market value of its securities portfolio in accordance with Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 115, including
without limitation the recognition through the Seller's consolidated statement
of income of any unrealized loss with respect to any individual security as a
realized loss in the accounting period in which a decline in the market value of
such security is determined to be "other than temporary", except to the extent
that any such failure to so properly report or to so properly account would not
have, either individually or in the aggregate, a Material Adverse Effect with
respect to Seller.
4.26 Derivative Transactions. Except as disclosed in Section 4.26 of
the Seller Disclosure Schedule, neither Seller nor the Bank has engaged in
transactions in or involving forwards, futures, options on futures, swaps or
other derivative instruments.
4.27 Intellectual Property. Seller and the Bank each owns or, to
Seller's knowledge, possesses valid and binding licenses and other rights to use
all material patents, copyrights, trade secrets, trade names, servicemarks and
trademarks used in its businesses, each without payment, and neither Seller nor
the Bank has received any notice of conflict with respect thereto that asserts
the rights of others. Seller and the Bank have performed in all material
respects all the obligations required to be performed by them and are not in
default in any material respect under any contract, agreement, arrangement or
commitment relating to any of the foregoing.
4.28 Seller Information. The information relating to the Seller and its
subsidiaries to be contained or incorporated by reference in the Buyer
Registration Statement and the Proxy Statement as described in Section 5.04
hereof, and any other documents filed with the SEC or any regulatory
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agency in connection herewith, to the extent such information is provided in
writing by the Seller, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make such information not
misleading.
4.29 Disclosure. To the best of Seller's knowledge, 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 Schedules, furnished to the Buyer pursuant to the provisions
hereof, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading. No information believed by Seller to be material to Buyer's
interests in the transactions contemplated by this Agreement, which has not
otherwise been disclosed to Buyer in connection with this Agreement, has been
intentionally withheld from Buyer.
ARTICLE V
COVENANTS OF THE PARTIES
5.01 Conduct of Business. During the period from the date of this
Agreement to the Effective Time or for such other period as may otherwise be
expressly provided for below, and except as may be specifically required or
permitted pursuant to this Agreement or as specifically described in Section
5.01 of the Seller Disclosure Schedule, the parties shall comply with the
following applicable requirements:
(a) Seller and the Bank shall, and shall cause each of its
subsidiaries to, conduct its business and engage in transactions only
in the ordinary and usual course of business consistent with past
practices, which shall mean (i) conducting its banking, trust and other
businesses in the ordinary and usual course, (ii) refraining from any
of the activities described in Section 5.01(b) below and (iii) not
entering into any material transactions except in the ordinary and
usual course of business consistent with past practices;
(b) Seller and the Bank shall not and shall not permit any of
its subsidiaries to, without the prior written consent of the Buyer:
(i) engage or participate in any material transaction or
incur or sustain any material obligation or liability
except in the ordinary, regular and usual course of
its businesses consistent with past practices,
including without limitation entering into any
settlement agreement or understanding with respect to
any material litigation matters;
(ii) accept, renew or roll over any "brokered deposit" as
defined under 12 C.F.R. 337.6(a)(3) or offer an
interest rate with respect to any deposit that would
either constitute an impermissible interest rate with
respect to deposits of an undercapitalized insured
depository institution pursuant to the limitations
contained under 12 C.F.R. 337.6(b)(3)(ii) or
otherwise set interest rates on
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deposits that depart from past practices of the Bank
with respect to the setting of interest rates on
deposits;
(iii) except in the ordinary, regular and usual course of
business consistent with past practices and in an
immaterial aggregate amount, sell, lease, transfer,
assign, encumber or otherwise dispose of or enter
into any contract, agreement or understanding to
lease, transfer, assign, encumber or dispose of any
of its assets;
(iv) relocate, or file any application to relocate, any
branch office;
(v) terminate, or give any notice (written or verbal) to
customers or governmental authorities or agencies to
terminate the operations of any branch office; or
(vi) waive any material right, whether in equity or at
law, that it has with respect to any asset except in
the ordinary, regular and usual course of business
consistent with past practice;
(c) each of Buyer, on the one hand, and Seller and the Bank,
on the other hand, shall use all reasonable efforts, and cause each of
its subsidiaries to use all reasonable efforts, to preserve intact its
respective business organization and goodwill in all material respects,
keep available the services of its respective officers and employees as
a group and maintain satisfactory relationships with its respective
borrowers, depositors, other customers and others having business
relationships with it;
(d) each of Buyer, on the one hand, and Seller and the Bank,
on the other hand, shall use all reasonable efforts to cooperate with
the other with respect to preparation for the combination and
integration of the businesses, systems and operations of Buyer and
Seller, including without limitation their respective banking
subsidiaries, and shall confer on a regular and frequent basis with one
or more representatives of the other to report on operational and
related matters;
(e) each of Buyer, on the one hand, and Seller and the Bank,
on the other hand, shall, subject to any restrictions under applicable
law or regulation, promptly notify the other of any emergency or other
change in the normal course of its or its subsidiaries' businesses or
in the operation of its or its subsidiaries' properties and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated) if such emergency,
change, complaint, investigation or hearing would be material to the
assets, properties, liabilities, business, operations, results of
operations or condition (financial or regulatory) of Buyer or Seller,
as the case may be, or any of its respective subsidiaries;
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(f) Seller shall not declare or pay any dividends on or make
any other distributions in respect of the Seller Common Stock, except
that Seller shall be permitted to declare and pay regular quarterly
cash dividends to its stockholders of $0.14 per share for the quarter
ending September 30, 1996, $0.16 per share for the quarters ending
December 31 and March 31, 1997 and $0.18 per share for the quarter
ending June 30, 1997; provided, however, that in no event shall Seller
be permitted to declare or pay any such regular quarterly cash dividend
hereunder greater than $0.14 per share if the aggregate amount of such
dividend would exceed forty percent (40%) of Seller's net income for
the fiscal quarter for which the dividend would be declared or paid, as
such net income is calculated in accordance with GAAP and then adjusted
to include the amount of all non-recurring expenses incurred by Seller
in such fiscal quarter that result from actions taken by Seller to
prepare for or otherwise complete the consummation of the Acquisition
Merger; and provided further, however, that the parties agree to
consult with respect to the amount of the last Seller quarterly cash
dividend payable prior to the Effective Time with the objective of
ensuring that the stockholders of Seller do not receive a shortfall or
a premium based on the record and payment dates of their last dividend
prior to the Effective Time and the record and payment dates of the
first dividend of Buyer following the Effective Time, and that Seller
may pay a special dividend to holders of record of Seller Common Stock
immediately prior to the Effective Time consistent with the objective
described herein;
(g) Buyer shall not declare or pay any dividend on or make any
other distribution in respect of the Buyer Common Stock during the
Valuation Period, except that Buyer shall be permitted to declare and
pay a cash dividend to its stockholders for the quarter in which the
Valuation Period occurs or the quarter immediately following thereafter
if such dividend does not exceed, on a per share basis, the dividend
paid by Buyer to stockholders for the immediately preceding quarter or
if it does so exceed such prior dividend then the aggregate amount of
such dividend shall not exceed forty percent (40%) of Buyer's net
income for such quarter, as such net income is calculated in accordance
with GAAP and then adjusted to include the amount of all non-recurring
expenses incurred by Buyer in such quarter that result from actions
taken by Buyer to prepare for or otherwise complete the consummation of
the Acquisition Merger;
(h) neither Seller nor the Bank shall adopt or amend (other
than amendments required by applicable law or amendments that reduce
amounts payable by it or its subsidiaries) in any material respect any
Seller Pension Plan, any Seller Benefit Plan or any Seller Other Plan
or enter (or permit any of its subsidiaries to enter) into any
employment, severance or similar contract with any person (including,
without limitation, contracts with management which might require that
payments be made upon the consummation of the transactions contemplated
hereby, including without limitation the consummation of the
Acquisition Merger) or amend any such existing agreements, plans or
contracts to increase any amounts payable thereunder or benefits
provided thereunder, or grant or permit any increase in compensation to
its or its subsidiaries' employees as a class, except in the ordinary
course of business consistent with past practices, or pay any bonus
except as agreed to by the parties and disclosed in Section 5.12 of the
Seller Disclosure Schedule;
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(i) Seller, subject to its directors' fiduciary duties and
obligations referred to in Section 5.03 below, shall not, with respect
to itself or any of its subsidiaries, authorize, recommend, propose or
announce an intention to authorize, recommend or propose, or enter into
an agreement with respect to, any merger, consolidation, purchase and
assumption transaction or business combination (other than the
Acquisition Merger), any acquisition of a material amount of assets or
securities or assumption of liabilities (including deposit
liabilities), any disposition of a material amount of assets or
securities, or any release or relinquishment of any material contract
rights not in the ordinary course of business and consistent with past
practices;
(j) neither Seller nor the Bank shall propose or adopt any
amendments to its certificate of incorporation or other charter
documents or by-laws;
(k) Buyer, on the one hand during the Valuation Period, and
Seller and the Bank, on the other hand at all times during the term of
this Agreement, shall not issue, deliver or sell any shares (whether
original issuance or from treasury shares) of its capital stock or
securities convertible into or exercisable for shares of its capital
stock (or permit any of its subsidiaries to issue, deliver or sell any
shares of such subsidiaries' capital stock or securities convertible
into or exercisable for shares of such subsidiaries' capital stock),
except, in the case of Buyer, upon exercise or fulfillment of options
issued or existing immediately prior to the Valuation Period pursuant
to stock option or other plans of Buyer, and, in the case of Seller,
upon exercise or fulfillment of options issued or existing on the date
hereof pursuant to the Seller Stock Option Plans or as required under
the terms of any other Seller Benefit Plans in effect as of the date
hereof and in all such cases listed in Section 4.02(a) of the Seller
Disclosure Schedule, or effect any stock split, reverse stock split,
recapitalization, reclassification or similar transaction or otherwise
change its equity capitalization as it exists, in the case of Buyer, on
the date immediately prior to the commencement of the Valuation Period,
and, in the case of Seller and the Bank, on the date hereof;
(l) Buyer, on the one hand during the Valuation Period, and
Seller and the Bank, on the other hand at all times during the term of
this Agreement, shall not grant, confer or award any options, warrants,
conversion rights or other rights, not existing, in the case of Buyer,
on the date immediately prior to the commencement of the Valuation
Period, and, in the case of Seller and the Bank, on the date hereof, to
acquire any shares of its capital stock;
(m) Buyer, on the one hand during the Valuation Period, and
Seller and the Bank, on the other hand at all times during the term of
this Agreement, shall not purchase, redeem or otherwise acquire, or
permit any of its subsidiaries to purchase, redeem or otherwise
acquire, any shares of its capital stock or any securities convertible
into or exercisable for any shares of its capital stock, except in a
fiduciary capacity;
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(n) neither Seller nor the Bank shall impose, or suffer the
imposition, on any share of capital stock held by it or by any of its
subsidiaries of any material lien, charge, or encumbrance, or permit
any such lien, charge, or encumbrance to exist;
(o) neither Seller nor the Bank shall incur, or permit any of
its subsidiaries to incur, any additional debt obligation or other
obligation for borrowed money, or to guaranty any additional debt
obligation or other obligation for borrowed money, except in the
ordinary course of business consistent with past practices, which shall
include but not necessarily be limited to creation of deposit
liabilities, purchases of federal funds, sales of certificates of
deposit, borrowings from the Federal Home Loan Bank of Boston and entry
into repurchase agreements or other similar arrangements commonly
employed by banks;
(p) neither Seller nor the Bank shall incur or commit to any
capital expenditures or any obligations or liabilities in connection
therewith, other than capital expenditures and such related obligations
or liabilities incurred or committed to in the ordinary and usual
course of business consistent with past practices, which do not
individually exceed $50,000 or cumulatively exceed $150,000;
(q) Buyer, on the one hand during the Valuation Period, and
Seller and the Bank, on the other hand at all times during the term of
this Agreement, shall not change its methods of accounting in effect,
in the case of Buyer, at December 31, 1995, and, in the case of Seller
and the Bank, at September 30, 1995, except as may be required by
changes in GAAP as concurred in by the Seller's and the Buyer's
respective independent auditors, and Buyer, during the Valuation
Period, and Seller, at all time during the term of this Agreement,
shall not change its fiscal year;
(r) Each of Buyer, on the one hand, and Seller and the Bank,
on the other hand, shall file all reports, applications and other
documents required to be filed by it with the OTS, FDIC, Federal
Reserve Board and any other federal or state banking or other
governmental agency or authority between the date of this Agreement and
the Effective Time and shall furnish to the other copies of all such
reports promptly after the same are filed;
(s) neither Seller nor the Bank shall make any loan or
extension of credit or enter into any commitment therefor on other than
the Bank's customary terms, conditions and standards and in accordance
with applicable law and regulation and consistent with prudent banking
practices, and in any event shall provide Buyer with monthly reports of
all loans, extensions of credit and commitments therefor equal to or
greater than $500,000, individually, and shall consult with Buyer prior
to making or entering into any new loan, extension of credit or
commitment therefor equal to or greater than $750,000 individually, or
which, when aggregated with all other loans, extensions of credit and
commitments therefor to a single borrower or affiliated group of
borrowers equals at least $1,500,000; and
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(t) neither Seller nor the Bank nor Buyer shall agree, in
writing or otherwise, to take any of the actions applicable to it
prohibited under this Section 5.01 or any action which would make any
of its representations or warranties contained in this Agreement untrue
or incorrect or would otherwise violate any of its other agreements or
commitments contained in this Agreement in any material respect.
5.02 Access to Properties and Records; Confidentiality.
(a) The Seller shall permit the Buyer reasonable access, upon
reasonable advance notice, to its properties and those of its
subsidiaries, and shall disclose and make available to the Buyer all
Records, including all books, papers and records relating to the
assets, stock ownership, properties, operations, obligations and
liabilities of the Seller and its subsidiaries, including, but not
limited to, all books of account (including the general ledger), tax
records, minute books of directors and stockholders meetings,
organizational documents, by-laws, material contracts and agreements,
filings with any regulatory authority, accountants' work papers,
litigation files, plans affecting employees, and any other business
activities or prospects in which the Buyer may reasonably have an
interest in light of the transactions contemplated hereby. The Seller
shall use all reasonable efforts to make arrangements with each third
party provider of services to the Seller to permit the Buyer reasonable
access to all of the Seller's Records held by each such third party.
The Buyer shall permit the Seller reasonable access to such properties
and records of the Buyer and/or its subsidiaries in which the Seller
may reasonably have an interest in light of the transactions
contemplated hereby. Neither the Buyer nor the Seller nor any of their
respective subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would violate or
prejudice the rights of any customer, would jeopardize the
attorney-client privilege of the institution in possession or control
of such information, or would contravene any law, rule, regulation,
order, judgment, decree or binding agreement. The parties will use all
reasonable efforts to make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) All Confidential Information, as such term is defined
below, furnished by each party hereto to the other, or to any of its
affiliates or to any of its affiliates' directors, officers, employees,
or representatives or agents (such persons being referred to
collectively herein as "Representatives") shall be treated as the sole
property of the party furnishing the information until consummation of
the transactions contemplated hereby, and, if such transactions shall
not occur, the party receiving the information, or any of its
affiliates or Representatives, as the case may be, shall, upon request,
return to the party which furnished such information all documents or
other materials containing, reflecting or referring to such
information, shall keep confidential all such information for the
period hereinafter referred to, and shall not directly or indirectly at
any time use such information for any competitive or other commercial
purpose; provided, however, that the Buyer and its affiliates shall be
permitted to retain and share with their regulators, examiners and
auditors (who need to know such information and are informed of the
confidential nature thereof and directed to treat such information
confidentially), and with no other persons, such materials, files and
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information relating to or constituting the Buyer's or any of its
affiliates' or Representatives' work product, presentations or
evaluation materials as the Buyer deems reasonably necessary or
advisable in connection with auditing or examination purposes, and
Buyer shall not make use of any such materials, files or information
for any other purpose. The obligation to keep such information
confidential shall continue for two years from the date this Agreement
is terminated or as long as may be required by law. In the event that
either party or its affiliates or Representatives are requested or
required in the context of a litigation, governmental, judicial or
regulatory investigation or other similar proceeding (by oral
questions, interrogatories, requests for information or documents,
subpoenas, civil investigative demands or similar process) to disclose
any Confidential Information, the party or its affiliate or its
Representative so requested or required will directly or through the
party or such affiliate or Representative, if practicable and legally
permitted, prior to providing such information, and as promptly as
practicable after receiving such request, provide the other party with
notice of each such request or requirement so that the other party may
seek an appropriate protective order or other remedy or, if
appropriate, waive compliance with the provisions of this Agreement.
If, in the absence of a protective order or the receipt of a waiver
hereunder, the party or affiliate or Representative so requested or
required is, in the written opinion of its counsel, legally required to
disclose Confidential Information to any tribunal, governmental or
regulatory authority, or similar body, the party or affiliate or
Representative so required may disclose that portion of the
Confidential Information which it is advised in writing by such counsel
it is legally required to so disclose to such tribunal or authority or
similar body without liability to the other party hereto for such
disclosure. The parties and their affiliates and Representatives will
exercise reasonable efforts, at the expense of the party who disclosed
Confidential Information to the other party, to obtain assurance that
confidential treatment will be accorded the information so disclosed.
As used in this Section 5.02(b), "Confidential Information" means all
data, reports, interpretations, forecasts and records (whether in
written form, electronically stored or otherwise) containing or
otherwise reflecting information concerning the disclosing party or its
affiliates which is not available to the general public and which the
disclosing party or any affiliate or any of their respective
Representatives provides or has previously provided to the receiving
party or to the receiving party's affiliates or Representatives at any
time in connection with the transactions contemplated by this
Agreement, including but not limited to any information obtained by
meeting with Representatives of the disclosing party or its affiliates,
together with summaries, analyses, extracts, compilations, studies,
personal notes or other documents or records, whether prepared by the
receiving party or others, which contain or otherwise reflect such
information. Notwithstanding the foregoing, the following information
will not constitute "Confidential Information": (i) information that is
or becomes generally available to the public other than as a result of
a disclosure by the receiving party or any affiliate or Representative
of the receiving party without the consent of the party providing such
information (including without limitation all information of Seller
disclosed or otherwise utilized by Buyer, with the knowledge of Seller,
in connection with presentations to securities analysts or other
investor relations-related activities), (ii) information that was
previously known to the receiving party or its affiliates or
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Representatives on a nonconfidential basis prior to its disclosure by
the disclosing party, its affiliates or Representatives, (iii)
information that became or becomes available to the receiving party or
any affiliate or Representative thereof on a nonconfidential basis from
a source other than the disclosing party or any affiliate or
Representatives of the disclosing party, provided that such source is
not known by the disclosing party or its affiliates or Representatives
to be subject to any confidentiality agreement or other legal
restriction on disclosing such information and (iv) information that
has been independently acquired or developed by the receiving party or
its affiliates or Representatives without violating the obligations of
this Section 5.02(b).
5.03 No Solicitation. Neither the Seller nor any of its subsidiaries
shall (and the Seller and each of its subsidiaries shall use all reasonable
efforts to cause its officers, directors, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, initiate or, subject to the
fiduciary obligations of the Seller's Board of Directors (as advised by outside
counsel), participate in any discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than the Buyer and its affiliates or representatives) concerning any
merger, tender offer, sale of substantial assets, sale of shares of capital
stock or debt securities or similar transaction involving the Seller or any of
its subsidiaries (any of the foregoing being referred to herein as an
"Acquisition Transaction"). Notwithstanding the foregoing, nothing contained in
this Section 5.03 shall prohibit the Seller or its Board of Directors from
taking and disclosing to the Seller's stockholders a position with respect to a
tender offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or from making such disclosure to the Seller's
stockholders which, in the judgment of the Board of Directors, with the advice
of outside counsel, may be required under applicable law. The Seller will
immediately communicate to the Buyer the terms of any proposal, discussion,
negotiation or inquiry relating to an Acquisition Transaction and the identity
of the party making such proposal or inquiry which it may receive in respect of
any such transaction (which shall mean that any such communication shall be
delivered no less promptly than by telephone within twenty-four (24) hours of
the Seller's receipt of any such proposal or inquiry) or its receipt of any
request for information from the Federal Reserve Board, OTS, DOJ or any other
governmental agency or authority with respect to a proposed Acquisition
Transaction.
5.04 Regulatory Matters; Consents.
(a) The parties will cooperate in connection with (i) the
preparation and filing by the Buyer with the SEC under the Securities
Act of a registration statement on Form S-4 and/or such other form as
may be necessary or appropriate relating to the shares of the Buyer
Common Stock to be issued in connection with the Acquisition Merger
(the "Buyer Registration Statement"), and (ii) the preparation and
filing by the Buyer and the Seller of a joint proxy statement (the
"Proxy Statement") as shall be necessary or desirable in order to
consummate the transactions contemplated by this Agreement, each to be
undertaken as promptly as practicable, and the Buyer and the Seller
will use their respective best efforts to have the Buyer Registration
Statement declared effective by the SEC and to mail the
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Proxy Statement to the Buyer's and the Seller's stockholders as
promptly as practicable. The parties shall also take any reasonable
action required to be taken under any state "Blue Sky" laws in
connection with the consummation of the transactions contemplated by
this Agreement. In addition to the foregoing, neither party shall take
or permit any of its subsidiaries to take any action that materially
adversely affects its ability to consummate the transactions
contemplated under this Agreement in a timely manner.
(b) Each of the Seller and the Buyer will cooperate with the
other and use its best efforts to prepare all documentation, to effect
all filings and to obtain all permits, consents, approvals and
authorizations of all third parties and governmental bodies necessary
or appropriate to consummate the transactions contemplated by this
Agreement as promptly as practicable, including without limitation that
Seller shall use its best efforts to obtain all of the non-governmental
third-party permits, consents, approvals and authorizations disclosed
in Sections 4.03(c) and 4.04 of the Seller Disclosure Schedule. Each
party hereto shall have the right to review and approve in advance all
descriptions of it and its subsidiaries which appear in any filing made
in connection with the transactions contemplated by this Agreement,
including without limitation all filings contemplated by Section
5.04(a) above, with any governmental body. In exercising the foregoing
right, the parties hereto shall act reasonably and as promptly as
practicable.
(c) The Buyer shall take all actions necessary or appropriate
to ensure that all shares of Buyer Common Stock received in the
Acquisition Merger are fully registered on the appropriate form to
facilitate sale of such shares by the holders in accordance with the
Securities Act (including in accordance with any applicable exemption
from registration requirements) to the extent customary in transactions
of this nature.
5.05 Approval of Stockholders. Each of the Buyer and Seller will (a) as
promptly as practicable, take all steps necessary to duly call, give notice of,
convene and hold a meeting of its stockholders for the purpose of approving this
Agreement and the transactions contemplated hereby, including without limitation
the Acquisition Merger, and, in each case, for such other purposes as may be
necessary or desirable, (b) subject to the fiduciary duties of its Board of
Directors as advised by outside counsel, recommend to its stockholders the
approval of such foregoing matters to be submitted by it to its stockholders,
and (c) cooperate and consult with each other with respect to each of the
foregoing matters. Subject to the fiduciary duties of its Board of Directors as
advised in writing by outside counsel, each of the Buyer and the Seller will use
all reasonable efforts to obtain the necessary approvals of its stockholders of
the proposals described above to be submitted by it in connection with this
Agreement. If the Board of Directors of either party is required by applicable
law to review or restate the recommendation to its stockholders contemplated in
clause (b) of the preceding sentence, this Section 5.05 shall not prohibit
accurate disclosure by a party that is required in any release or regulatory
filing (including the Proxy Statement and the Buyer Registration Statement) or
otherwise under applicable law in the opinion of such party's Board of
Directors, upon the written advice of outside counsel, as of the date of such
release or regulatory filing or such other required disclosure as to the
transactions contemplated hereby or, in the case of the Seller, as to any
Acquisition Transaction.
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5.06 Agreements of Seller's Affiliates. The Seller shall identify in a
letter to the Buyer, after consultation with counsel, all persons who, at the
time of the meeting of its stockholders referred to in Section 5.05 hereof, it
believes may be deemed to be "affiliates" of the Seller, as that term is defined
for purposes of paragraphs (c) and (d) of Rule 145 under the Securities Act (the
"Seller Affiliates"). The Seller shall use all reasonable efforts to cause each
person who is identified as a Seller Affiliate in the letter referred to above
to deliver to the Buyer at least forty (40) days prior to the Closing Date an
executed copy of the Seller Affiliates Agreement. Prior to the Closing Date, the
Seller shall amend and supplement such letter and use all reasonable efforts to
cause each additional person who is identified as a Seller Affiliate as of the
Closing Date to execute a copy of the Seller Affiliates Agreement.
5.07 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to, as
promptly as practicable, take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action.
5.08 Disclosure Supplements. On the Closing Date, Seller will
supplement or amend the Seller Disclosure Schedule with respect to any matter
hereafter arising which, if existing, occurring or known at the date of this
Agreement, would have been required to be set forth or described in the Seller
Disclosure Schedule or which is necessary to correct any information in the
Seller Disclosure Schedule which has become inaccurate. To the extent that any
such supplement or amendment to the Seller Disclosure Schedules pursuant to this
Section 5.08 discloses the existence of any material misstatement of fact or
other material misrepresentation contained in any of Seller's representations or
warranties as made as of the date of this Agreement or otherwise discloses facts
or circumstances which constitute or have resulted in the occurrence of a
Material Adverse Effect on Seller, Seller's delivery of such supplement or
amendment to Buyer shall have no effect for the purpose of determining Seller's
satisfaction of any of the conditions set forth in Article VI hereof.
5.09 Public Announcements. Except as otherwise required by law or the
rules of the Nasdaq-NM, the Seller and the Buyer will cooperate with each other
in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby.
5.10 Tax-Free Reorganization Treatment. None of the parties hereto or
any of their respective subsidiaries or affiliates has taken, shall take or
cause to be taken any action, whether before or after the Effective Time, which
would disqualify the Acquisition Merger as a reorganization within the meaning
of Section 368(a) of the Code. Each of the parties hereto shall use all
reasonable efforts to cause the Acquisition Merger to qualify as a tax-free
reorganization under Section 368(a) of the Code and to obtain the opinions of
counsel referred to in Sections 6.02(d) and 6.03(d) hereof.
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5.11 Stock Exchange Listing. The Buyer shall cause the shares of the
Buyer Common Stock to be issued in connection with the Acquisition Merger to be
approved for listing on the Nasdaq-NM, subject to official notice of issuance,
as of or prior to the Effective Time.
5.12 Employment and Benefit Matters.
(a) Termination of Existing Seller Plans; Benefits Service
Credit. Except as otherwise provided herein, Buyer agrees to provide to
those persons who are employees of Seller or any subsidiary of Seller
at the Effective Time and who are employed by Buyer or a subsidiary of
Buyer thereafter with the benefits maintained by Buyer and its
affiliates from time to time for the benefit of their employees
similarly situated. Buyer shall not be required to provide any benefits
with respect to persons who at the Effective Time are former employees
or beneficiaries of former employees of Seller, except as provided
under the terms of the governing documents of the Buyer Pension Plans
and Buyer Benefit Plans or as may be otherwise required under any
health benefit continuation rights provisions of federal or state law.
Buyer shall provide all such Buyer benefits as soon as practicable
following the Effective Time. Until such time as Buyer is able to
provide such benefits to such persons (such time being referred to as
the "Transition Date"), Buyer agrees to provide such persons with the
employee benefits set forth in Section 4.11 of the Seller Disclosure
Schedule as maintained for their benefit immediately prior to the
Effective Time. Buyer shall cause each plan, program or arrangement
included among the benefits of Buyer to be provided after the Effective
Time, except for the Buyer's defined benefit pension plan, to treat the
prior service of each such employee with the Seller or its affiliates,
to the extent such prior service is recognized under the comparable
plan, program or arrangement of the Seller, as service rendered to
Buyer or its affiliate, as the case may be, for purposes of eligibility
to participate, vesting, and eligibility for special benefits under
each such plan, program or arrangement of Buyer, but not in any case
for benefit accrual attributable to any period before the Effective
Time. Without limiting the foregoing, Buyer and its affiliates shall
not treat any employee of Seller or any of its affiliates as a "new"
employee for purposes of any exclusion under any health or similar plan
of Buyer or any of its affiliates for a preexisting medical condition.
Nothing herein shall impose any obligation upon Buyer and its
subsidiaries to maintain, continue or adopt any employee pension plans,
employee benefit plans, or other benefit arrangements after the
Transition Date, nor prohibit the Buyer or its subsidiaries from
amending any such plan or plans after the Transition Date, to the
extent permitted by the terms of such plans and applicable law.
(b) Additional Benefits Matters. Following the Effective Time,
Buyer shall, or shall cause its subsidiaries to, honor in accordance
with their terms all employment, severance and other compensation
contracts between Seller or any subsidiary thereof and any director,
officer or employee thereof, and all provisions for benefits or other
amounts earned or accrued through the Effective Time under the Seller
Pension Plans or the Seller Benefit Plans. Any employee of Seller or
any subsidiary of Seller who becomes an employee of Buyer or any
subsidiary of Buyer immediately following the Effective Time
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who is not otherwise covered by an employment, severance or other
compensation agreement and who has been identified by Buyer within the
first six months from and after the Closing Date as an employee whose
employment shall be terminated as a result of Buyer's consolidation
and/or cost-saving efforts in respect of the Acquisition Merger
following the Effective Time, shall be entitled to receive from and
after the date of such employee's termination of employment two weeks
of salary continuation for each full year of prior service with Seller
prior to the Effective Time, such salary continuation to continue for a
maximum period, regardless of such employee's length of such prior
service, of twenty-six weeks. Buyer shall not be obligated under any
circumstances to employ any person who is employed by Seller
immediately prior to the Effective Time. In addition to the foregoing,
(i) Buyer has agreed to provide the employee benefits set forth in
Section 5.12 of the Seller Disclosure Schedule and (ii) those persons
who are identified in Section 5.12 of the Seller Disclosure Schedule
shall continue to receive, following any termination of their
employment with Buyer or any Buyer subsidiary following the Effective
Time, health care continuation coverage under Buyer's appropriate group
health plan until such persons reach the age at which they become
eligible to receive Medicare health coverage; provided, however, that
such persons must pay to Buyer at all times during which they receive
such continuing coverage the same premium amounts as would be required
of persons receiving such health care continuation coverage pursuant to
the requirements of COBRA and such health care continuation coverage
shall terminate for any such person at such time as he becomes eligible
to receive substantially equivalent health care coverage from any other
employer after the Effective Time.
5.13 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 the Seller or any of Seller's subsidiaries or a trustee of any
Seller Benefit Plans, Seller Pension Plans or Seller Other Plans (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 or she is or was a director, officer
or employee of the Seller or any of Seller's subsidiaries 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 all reasonable efforts to
defend against and respond thereto. It is understood and agreed that
prior to the Effective Time, Seller shall indemnify and hold harmless,
and that from and after the Effective Time the Surviving Corporation
shall indemnify and hold harmless, as and to the fullest extent
permitted by applicable law, each such Indemnified Party against any
losses, claims, damages, liabilities, costs, expenses (including
reasonable attorney's fees and expenses), judgments, fines and amounts
paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation. In the event of any
such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or
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arising before or after the Effective Time), (i) Seller and, from and
after the Effective Time, the Surviving Corporation shall promptly pay
all reasonably documented expenses in advance of the final disposition
of any claim, action, suit, proceeding or investigation to each
Indemnified Party to the full extent permitted by law, (ii) the
Indemnified Parties may retain counsel mutually satisfactory to them
and Seller and, from and after the Effective Time, the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel
for the Indemnified Parties within thirty days after statements
therefor are received, and (iii) Seller and, from and after the
Effective Time, the Surviving Corporation will use all reasonable
efforts to assist in the vigorous defense of any such matter; provided,
however, that neither Seller, Buyer nor the Surviving Corporation shall
be liable for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld); and provided
further, however, that the Surviving Corporation 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 non-appealable, that
indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable law. Any Indemnified Party wishing
to claim indemnification, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify Seller and, from and
after the Effective Time, the Surviving Corporation thereof, provided
that the failure to so notify shall not affect the obligations of
Seller, Buyer or the Surviving Corporation, except to the extent such
failure to notify materially prejudices such party.
(b) Buyer agrees that all rights to indemnification existing
in favor, and all limitations on the personal liability, of any
director, officer or other employee of Seller or any of its
subsidiaries provided for in Seller's certificate of incorporation or
by-laws as in effect as of the date hereof with respect to matters
occurring prior to the Effective Time shall survive the Acquisition
Merger and shall continue in full force and effect in perpetuity. In
the event Buyer or the Surviving Corporation or any of its successors
or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and
in each such case, to the extent necessary, proper provision shall be
made so that the successors and assigns of Buyer or the Surviving
Corporation, as the case may be, assume the obligations set forth in
this Section 5.13.
(c) Buyer shall use all reasonable efforts to cause the
persons serving as officers and directors of the Seller and any
subsidiary of Seller immediately prior to the Effective Time to be
covered for a period of six (6) years from the Closing Date by the
directors' and officers' liability insurance policy maintained as of
the date hereof by the Seller (provided that Buyer may substitute
therefor policies of at least the same coverage and amounts containing
terms and conditions which are not less advantageous than such policy)
with respect to acts or omissions occurring at or prior to the
Effective Time, which were committed by such officers and directors in
their capacity as such; provided, however, that if such coverage cannot
be obtained at a total cost to Buyer of not more than $207,000 then
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Buyer shall only be required hereunder to obtain such lesser coverage
as may be obtained for such amount.
5.14 Accountants' Letters. Each of the parties shall cause to be
delivered to the other "comfort" letters from its independent public
accountants, dated the date on which the Buyer Registration Statement (or last
amendment thereto) shall become effective and dated the Closing Date, relating
to the information about such party included in the Buyer Registration
Statement, including the Proxy Statement, and addressed to the other party, in
form and substance which is reasonably satisfactory to the receiving party and
customary in transactions of the nature contemplated hereby.
5.15 Maintenance of Records. Through the Effective Time, the Seller
will maintain the Records in the same manner and with the same care that the
Records have been maintained prior to the execution of this Agreement. The Buyer
may, at its own expense, make such copies of and excerpts from the Records as it
may deem desirable. All Records, whether held by the Buyer or the Seller, shall
be maintained for such periods as are required by law, unless the parties shall,
applicable law permitting, agree in writing to a different period. From and
after the Effective Time, the Buyer shall be solely responsible for continuing
maintenance of the Records.
5.16 Leases. Seller shall consult with Buyer before renewing or
extending any lease of Seller or any subsidiary of real property or any material
lease of Seller or any subsidiary relating to furniture, fixtures or equipment
or other personal property , in each case that is currently in effect but that
would otherwise expire on or prior to the Effective Time. Seller shall not
cancel, terminate or take any other action that is likely to result in any
cancellation or termination of any such lease without first consulting with
Buyer.
5.17 Bank Merger. To the extent requested by Buyer, Seller shall take,
and cause the Bank to take, all necessary and appropriate actions to effect the
merger of the Bank with and into Buyer's principal banking subsidiary, Vermont
National Bank, on or after the Closing Date, in accordance with the requirements
of all applicable laws and regulations.
5.18 Certain Policies of Seller. At the request of Buyer, after the
time at which all Requisite Regulatory Approvals have been received for the
Acquisition Merger, all other conditions precedent to Seller's obligations under
this Agreement have been satisfied or waived and Buyer has confirmed in writing
that all other conditions precedent to Buyer's obligations under this Agreement
have been satisfied or waived, and prior to the Effective Time, Seller shall
cooperate with Buyer with the objective of modifying and changing its
receivables, loan accrual, charge-off, real estate valuation, loan loss reserve
and investment policies and practices and such other accounting and/or financial
policies and practices as may be requested by Buyer to reflect Buyer's plans
with respect to the conduct of Seller's business following the Acquisition
Merger and to make adequate provision for the cost and expenses relating
thereto. The Seller's representations, warranties and covenants contained in
this Agreement shall not be deemed to be untrue or breached in any respect for
any purpose as a consequence of any modifications or changes undertaken solely
on account of this Section 5.18.
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ARTICLE VI
CLOSING CONDITIONS
6.01 Conditions to Each Party's Obligations Under This Agreement. The
respective obligations of each party under this Agreement shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions,
none of which may be waived:
(a) Stockholders' Approvals. This Agreement and/or the
transactions contemplated hereby shall have been approved by the Buyer
Requisite Vote and the Seller Requisite Vote.
(b) Governmental Consents. All authorizations, consents,
orders or approvals of, or declarations or filings with, and all
expirations of waiting periods imposed by, any governmental or
regulatory authority or agency which are necessary for the consummation
of the transactions contemplated by this Agreement, including without
limitation the Acquisition Merger, shall have been filed, occurred or
been obtained (all such authorizations, orders, declarations,
approvals, filings and consents and the lapse of all such waiting
periods being referred to as the "Requisite Regulatory Approvals") and
all such Requisite Regulatory Approvals shall be in full force and
effect. In addition, the Buyer shall have received all state securities
or blue sky permits and other authorizations necessary to issue the
Buyer Common Stock in connection with the Acquisition Merger in
accordance with all applicable state securities or blue sky laws.
(c) Buyer Registration Statement. The Buyer Registration
Statement shall have been declared effective under the Securities Act
and shall not be subject to a stop order or a threatened stop order.
(d) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
(an "Injunction") preventing the consummation of the transactions
contemplated by this Agreement shall be in effect.
6.02 Conditions to the Obligations of Buyer Under This Agreement. The
obligations of the Buyer under this Agreement shall be further subject to the
satisfaction or waiver by the Buyer, at or prior to the Effective Time, of the
following conditions:
(a) Absence of Material Adverse Changes. There shall not have
occurred any change since September 30, 1995 in the assets,
liabilities, business, operations, results of operations or condition
of the Seller or any of its subsidiaries which has had, individually or
in the aggregate, a Material Adverse Effect on the Seller.
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(b) Representations and Warranties; Performance of
Obligations. The obligations of the Seller to the Bank required to be
performed by them at or prior to the Effective Time pursuant to the
terms of this Agreement shall have been duly performed and complied
with and the representations and warranties of the Seller and the Bank
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time
as though made at and as of the Effective Time (except as otherwise
specifically contemplated by this Agreement and except as to any
representation or warranty which specifically relates to an earlier
date) and the Buyer shall have received certificates to that effect
signed by the chairman or president and the chief financial officer or
chief accounting officer of each of the Seller and the Bank.
(c) Third-Party Approvals. Any and all permits, consents,
waivers, clearances, approvals and authorizations of or notices to all
non-governmental and non-regulatory third parties which are necessary
in connection with the consummation of the transactions contemplated by
this Agreement and are required to be received, made or obtained by the
Seller or the Bank, shall have been so received, made or obtained by
the Seller or the Bank, as applicable, other than permits, consents,
waivers, clearances, approvals, authorizations and notices the failure
of which to have received, made or obtained would neither make it
impossible to consummate the transactions contemplated by this
Agreement nor result in any Material Adverse Effect on the Buyer after
the Effective Time.
(d) Tax Opinion. The Buyer shall have received an opinion
dated the Closing Date from its counsel, ▇▇▇▇▇▇▇▇ & Worcester LLP, or
other counsel selected by the Buyer and reasonably acceptable to the
Seller, substantially to the effect that (A) the Acquisition Merger
should be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, (B) each of the Buyer
and the Seller should be a party to a reorganization within the meaning
of Section 368(b) of the Code, and (C) no gain or loss should be
recognized by the Buyer or the Seller as a result of the Acquisition
Merger. In rendering such opinion, ▇▇▇▇▇▇▇▇ & Worcester LLP shall be
entitled to require delivery of, and to refer to and rely upon, such
facts and representations set forth in certificates received from the
Buyer, the Seller, their respective officers, directors and affiliates,
and from the stockholders of the Seller, as ▇▇▇▇▇▇▇▇ & Worcester LLP
shall deem necessary or appropriate to enable it to render such
opinion, and the parties hereto agree to use their respective best
efforts to obtain such representations and certificates.
(e) Seller Affiliates Agreements. Seller shall have delivered
to Buyer the letter pertaining to the Seller Affiliates, as
contemplated under Section 5.06 above, and each of the executed Seller
Affiliates Agreements that have been received by Seller as of the
Effective Time.
(f) Burdensome Condition. None of the Requisite Regulatory
Approvals shall impose any term, condition or restriction upon Buyer or
any Buyer subsidiary that Buyer in good faith reasonably determines
would so materially adversely impact the economic or business benefits
of the transactions contemplated by this Agreement as to render
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inadvisable in the reasonable judgment of Buyer the consummation of the
Acquisition Merger.
(g) Dissenting Shares. The Dissenting Shares, as defined in
Section 2.09(c) hereof, shall not represent more than 20% of the shares
of Seller Common Stock issued and outstanding immediately prior to the
Effective Time.
(h) Legal Opinion. Buyer shall have received the opinion of
▇▇▇▇ and ▇▇▇▇, counsel to Seller and the Bank, dated the Closing Date,
in a form that is customary for transactions of this type.
In addition to the foregoing, the Seller and the Bank will furnish the
Buyer with such additional certificates, instruments or other documents in the
name or on behalf of the Seller or the Bank, as the case may be, executed by
appropriate officers or others, including without limitation certificates or
correspondence of governmental agencies or authorities or nongovernmental third
parties, to evidence fulfillment of the conditions set forth in this Section
6.02 as the Buyer may reasonably request.
6.03 Conditions to the Obligations of Seller and Bank Under This
Agreement. The obligations of the Seller and the Bank under this Agreement shall
be further subject to the satisfaction or waiver by the Seller, at or prior to
the Effective Time, of the following conditions:
(a) Absence of Material Adverse Changes. There shall not have
occurred any change since December 31, 1995 in the assets, liabilities,
business, operations, results of operations or condition (financial or
otherwise) of the Buyer or any of its subsidiaries which has had,
individually or in the aggregate, a Material Adverse Effect on the
Buyer.
(b) Representations and Warranties; Performance of
Obligations. The obligations of the Buyer required to be performed by
it at or prior to the Effective Time pursuant to the terms of this
Agreement shall have been duly performed and complied with and the
representations and warranties of the Buyer contained in this Agreement
shall be true and correct in all material respects as of the date of
this Agreement and as of the Effective Time as though made at and as of
the Effective Time (except as otherwise specifically contemplated by
this Agreement and except as to any representation or warranty which
specifically relates to an earlier date) and the Seller and the Bank
shall have received a certificate to that effect signed by the
executive vice president and chief financial officer (or other
authorized officer(s)) of the Buyer.
(c) Third-Party Approvals. Any and all permits, consents,
waivers, clearances, approvals and authorizations of or notices to all
non-governmental and non-regulatory third parties which are necessary
in connection with the consummation of the transactions contemplated by
this Agreement and are required to be received, made or obtained by the
Buyer, shall have been so received, made or obtained by the Buyer,
other than permits, consents, waivers, clearances, approvals,
authorizations and notices the failure of which to
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obtain would neither make it impossible to consummate the transactions
contemplated by this Agreement nor result in a Material Adverse Effect
on the Buyer after the Effective Time.
(d) Tax Opinion. The Seller shall have received an opinion
dated the Closing Date from its counsel, ▇▇▇▇ and ▇▇▇▇, or other
counsel selected by the Seller and reasonably acceptable to the Buyer,
substantially to the effect that (A) the Acquisition Merger should be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, (B) each of the Buyer and the
Seller should be a party to a reorganization within the meaning of
Section 368(b) of the Code, and (C) gain, if any, realized will be
recognized by a stockholder of the Seller as a result of the
Acquisition Merger, but not in excess of the amount of cash received by
such stockholder. In rendering such opinion, ▇▇▇▇ and ▇▇▇▇ shall be
entitled to require delivery of, and to refer to and rely upon, such
facts and representations set forth in certificates received from the
Buyer and the Seller, their respective officers, directors and
affiliates, and from the stockholders of the Seller, as ▇▇▇▇ and ▇▇▇▇
shall deem necessary or appropriate to enable it to render such
opinion, and the parties hereto agree to use their respective best
efforts to obtain such representations and certificates.
(e) Nasdaq-NM Listing. The shares of the Buyer Common Stock
issuable upon the Effective Time shall have been authorized for listing
on the Nasdaq-NM upon official notice of issuance.
(f) Legal Opinion. Seller shall have received the opinion of
▇▇▇▇▇▇▇▇ & Worcester LLP, counsel to Buyer, dated the Closing Date, in
a form that is customary for transactions of this type.
In addition to the foregoing, the Buyer will furnish the Seller with
such additional certificates, instruments or other documents in the name or on
behalf of the Buyer, executed by appropriate officers or others, including
without limitation certificates or correspondence of governmental agencies or
authorities or nongovernmental third parties, to evidence fulfillment of the
conditions set forth in this Section 6.03 as the Seller may reasonably request.
ARTICLE VII
CLOSING
7.01 Time and Place. Subject to the provisions of Articles VI and VIII
hereof, the closing of the transactions contemplated by this Agreement shall
take place at the Boston, Massachusetts offices of ▇▇▇▇▇▇▇▇ & Worcester LLP at
10:00 A.M., local time, on such date that is not later than the fifth business
day after the date on which all of the conditions contained in Article VI hereof
are satisfied or waived; or at such other place, at such other time, or on such
other date as Seller and Buyer may mutually agree upon for such closing to take
place.
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7.02 Deliveries at the Closing. Subject to the provisions of Articles
VI and VIII hereof, at the closing contemplated by Section 7.01 above there
shall be delivered to Seller and Buyer and their respective subsidiaries as
applicable, the opinions, certificates, and other documents and instruments
required to be delivered under Article VI hereof.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of this Agreement and the
transactions contemplated hereby by the parties' respective stockholders:
(a) by mutual written consent of the Seller and the Buyer
authorized by their respective Boards of Directors;
(b) by either Buyer or Seller, if the Effective Time shall not
have occurred on or prior to November 30, 1997 (the "Termination Date")
or such later date as shall have been agreed to in writing by the Buyer
and the Seller, unless the failure of such occurrence shall be due to
the failure of the party seeking to terminate this Agreement to perform
or observe its agreements herein required to be performed or observed
at or prior to the Effective Time;
(c) by the Buyer or the Seller (i) thirty days after the date
on which any request or application for a Requisite Regulatory Approval
shall have been denied, unless within the thirty-day period following
such denial a petition for rehearing or an amended application has been
filed with such governmental regulatory authority or agency, except
that no party shall have the right to terminate this Agreement pursuant
to this clause (i) if such denial shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe in any
material respects the covenants and agreements of such party set forth
herein, or (ii) if any governmental or regulatory authority or agency,
or court of competent jurisdiction, shall have issued a final permanent
order or Injunction enjoining or otherwise prohibiting the consummation
of the transactions contemplated by this Agreement and the time for
appeal or petition for reconsideration of such order or Injunction
shall have expired without such appeal or petition being granted or
such order or Injunction shall otherwise have become final and
non-appealable;
(d) by the Buyer or the Seller (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein or in the Seller Option
Agreement), in the event of a material breach by the other party of any
representation, warranty, covenant or other agreement contained herein,
or in the Seller Option Agreement, which breach is not cured after
thirty (30) days written notice thereof is given to the party
committing such breach;
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(e) by Buyer or Seller (provided that the terminating party is
not then in material breach of any representation, warranty or covenant
or other agreement contained herein or in the Seller Option Agreement),
if the approval of either party's stockholders specified in Section
5.05 above shall not have been obtained by reason of such party's
failure to have obtained the requisite stockholder vote at a duly held
meeting of such party's stockholders or at any adjournment thereof;
(f) by Seller, by action of its Board of Directors, by giving
written notice of such election to Buyer within two business days after
the Valuation Period, in the event the Average Closing Price is less
than the Minimum Price; provided, however, that no right of termination
shall arise under this Section 8.01(f) if Buyer elects within two
business days of receipt of such written notice to increase the
Acquisition Price by notifying Seller in writing that it has elected to
utilize the Adjusted Acquisition Price in lieu of the Acquisition Price
that would otherwise be required under Section 2.09(a) hereof; or
(g) by Buyer if Seller's Board of Directors does not publicly
recommend in the Proxy Statement that Seller's stockholders approve the
proposals submitted to them in accordance with this Agreement, or if
after recommending in the Proxy Statement that Seller's stockholders
approve such proposals, Seller's Board of Directors shall have
withdrawn, modified or amended such recommendation in any respect
materially adverse to Buyer.
8.02 Effect of Termination.
(a) In the event of termination of this Agreement by either
the Seller or the Buyer as provided above, this Agreement shall
forthwith become null and void (other than Sections 5.02(b), 8.02 (if
applicable) and 9.01 hereof, which shall remain in full force and
effect) and there shall be no further liability on the part of any of
the parties hereto or their respective officers or directors to the
others, except (i) any liability of any party under said Sections
5.02(b), 8.02 (as may be applicable) and 9.01, (ii) that the Seller
Option Agreement shall be governed by its own terms as to termination,
and (iii) in the event of a party's gross negligence or willful breach
of any material representation, warranty, covenant or agreement
contained in this Agreement, in which case, the breaching party shall
remain liable for any and all damages, costs and expenses, including
all reasonable attorneys' fees, sustained or incurred by the
non-breaching party as a result thereof or in connection therewith or
with the enforcement of its rights hereunder.
(b) As a condition of Buyer's willingness, and in order to
induce Buyer, to enter into this Agreement and to reimburse Buyer for
incurring the costs and expenses related to entering into this
Agreement and consummating the transactions contemplated by this
Agreement, Seller shall make a cash payment to Buyer of $1,000,000 if a
Subsequent Triggering Event occurs at any time after the date hereof
and prior to an Exercise Termination Event (as such terms are defined
in Sections 2(b) and 2(e), respectively, of the Seller Option
Agreement). Any payment required under this Section 8.02(b) shall be
(i)
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payable by Seller to Buyer (by wire transfer of immediately available
funds to an account designated by Buyer) within five business days
after demand by Buyer and (ii) net of any expense reimbursement paid or
to be paid by Seller to Buyer in accordance with Section 7(a) of the
Seller Option Agreement and any other payments made on or prior to the
date of such payment under this Section 8.02(b) by Seller to Buyer
pursuant to the provisions of Section 8.02(a) (but in no event shall
the amount payable under this Section 8.02(b) be less than zero).
8.03 Amendment, Extension and Waiver. Subject to applicable law and as
may be authorized by their respective Boards of Directors, at any time prior to
the consummation of the transactions contemplated by this Agreement or
termination of this Agreement in accordance with the provisions of Section 8.01
hereof, whether before or after the approvals of the parties' respective
stockholders contemplated by Section 5.05 above, the parties may, (a) amend this
Agreement, (b) extend the time for the performance of any of the obligations or
other acts of any other party hereto, (c) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (d) waive compliance with any of the agreements or
conditions contained in Articles V and VI (other than Section 6.01) hereof;
provided, however, that there may not be, without further approval of the
parties' stockholders, to the extent required by law, any amendment, extension
or waiver of this Agreement which changes the amount or form of the
consideration to be delivered to Seller's stockholders hereunder other than as
may be expressly contemplated by this Agreement. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. Any agreement on the part of a party hereto to any extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party, but such waiver or failure to insist on strict compliance
with such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
MISCELLANEOUS
9.01 Expenses. Except as otherwise agreed to in Section 8.02 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.
9.02 Non-Survival. None of the representations, warranties, covenants
and agreements of the parties shall survive after the Effective Time, except for
the agreements and covenants contained or referred to in Article II, Section
5.02(b), the last sentence of Section 5.07 and Sections 5.10, 5.12, 5.13, 8.02,
9.01 and 9.02, which agreements and covenants shall survive the Effective Time.
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9.03 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by prepaid
registered or certified mail (return receipt requested) or by telecopy, cable,
telegram or telex addressed as follows:
(a) If to the Seller, to:
Eastern Bancorp, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
President and Chief Executive Officer
Copy to:
▇▇▇▇ and ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) If to the Buyer, to:
Vermont Financial Services Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
President and Chief Executive Officer
Copy to:
▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
delivered to the recipient party.
9.04 Parties in Interest. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other parties, and that nothing in this
Agreement, except for Sections 5.12 and 5.13 above, is intended to confer,
expressly or by implication, upon any other person any rights or remedies under
or by reason of this Agreement.
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9.05 Entire Agreement. This Agreement, including the documents and
other writing referred to herein or delivered pursuant hereto, including the
Seller Disclosure Schedule, the Seller Option Agreement and the Seller
Stockholders' Agreement, is complete, and all promises, representations,
understandings, warranties and agreements with reference to the subject matter
hereof, and all inducements to the making of this Agreement relied upon by
either party hereto, have been expressed herein. This Agreement (including the
aforementioned documents and writings) supersedes any prior or contemporaneous
agreement or understanding between the parties hereto, oral or written,
pertaining to any such matters, including without limitation the Confidentiality
Agreement, which agreements or understandings shall be of no further force or
effect for any persons.
9.06 Counterparts. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and each of which shall
be deemed to be an original and shall become effective when a counterpart has
been signed by each of the parties and delivered to each of the other parties.
9.07 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, without giving effect to the principles of conflicts of laws
thereof, and, to the extent applicable, by federal law.
9.08 Captions. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.09 Effect of Investigations. No investigation by the parties hereto
made heretofore or hereafter, whether pursuant to this Agreement or otherwise
shall affect the representations and warranties of the parties which are
contained herein and each such representation and warranty shall survive such
investigation, subject, however, to Section 9.02 hereof.
9.10 Severability. In the event that any one or more provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, by any court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement and the
parties shall use their best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the purposes and
intents of this Agreement.
9.11 Specific Enforceability. The parties recognize and hereby
acknowledge that it is impossible to measure in money the damages that would
result to a party by reason of the failure of either of the parties to perform
any of the obligations imposed on it by this Agreement. Accordingly, if any
party should institute an action or proceeding seeking specific enforcement of
the provisions hereof, each party against which such action or proceeding is
brought hereby waives the claim or defense that the party instituting such
action or proceeding has an adequate remedy at law and hereby agrees not to
assert in any such action or proceeding the claim or defense that such a remedy
at law exists.
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IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of
Reorganization to be executed as a sealed instrument by their duly authorized
officers as of the day and year first above written.
VERMONT FINANCIAL SERVICES CORPORATION
By:/s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
President and Chief Executive Officer
EASTERN BANCORP, INC.
By:/s/▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇
President and Chief Executive Officer
VERMONT FEDERAL BANK, FSB
By:/s/E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President and Chief Operating Officer
TABLE OF CONTENTS
ARTICLE I: DEFINITIONS........................................................1
ARTICLE II: THE ACQUISITION MERGER............................................7
2.01 Surviving Corporation...............................7
2.02 Purposes and Authorized Capital Stock of
Surviving Corporation...............................7
2.03 Effect of the Acquisition Merger....................7
2.04 Additional Actions..................................8
2.05 Certificate of Incorporation and By-laws............8
2.06 Directors and Officers..............................8
2.07 Effective Time; Conditions..........................8
2.08 Dissenters' Appraisal Rights........................9
2.09 Effect on Outstanding Shares........................9
2.10 Anti-Dilution......................................10
2.11 Exchange Procedures................................11
2.12 Treatment of Seller Stock Options..................13
2.13 Exchange Agent.....................................14
2.14 Election Procedures................................14
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF BUYER.........................17
3.01 Corporate Organization.............................17
3.02 Capitalization.....................................17
3.03 Authority; No Violation............................18
3.04 Consents and Approvals.............................19
3.05 Financial Statements...............................19
3.06 Absence of Undisclosed Liabilities.................20
3.07 Broker's Fees......................................20
3.08 Absence of Certain Changes or Events...............20
3.09 Legal Proceedings.................................20
3.10 Agreements with Banking Authorities................20
3.11 Material Agreements................................20
3.12 Reports............................................21
3.13 Compliance with Applicable Law.....................21
3.14 Environmental Matters..............................21
3.15 Buyer Common Stock.................................22
3.16 Ownership of Seller Common Stock...................22
3.17 Financing..........................................22
3.18 Buyer Benefit Plans................................22
3.19 Buyer Information..................................23
3.20 Disclosure.........................................23
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE BANK.......................................23
4.01 Corporate Organization.............................23
4.02 Capitalization.....................................24
4.03 Authority; No Violation............................25
4.04 Consents and Approvals.............................26
4.05 Financial Statements...............................26
4.06 Absence of Undisclosed Liabilities.................27
4.07 Broker's Fees......................................27
4.08 Absence of Certain Changes or Events...............27
4.09 Legal Proceedings..................................28
4.10 Taxes and Tax Returns..............................28
4.11 Employees..........................................30
4.12 Agreements with Banking Authorities................32
4.13 Material Agreements................................33
4.14 Ownership of Property..............................33
4.15 Reports............................................33
4.16 Compliance with Applicable Law.....................34
4.17 Environmental Matters..............................34
4.18 Antitakeover Statutes Not Applicable...............34
4.19 Ownership of Buyer Common Stock....................34
4.20 Insurance..........................................35
4.21 Labor..............................................35
4.22 Material Interests of Certain Persons..............35
4.23 Absence of Registration Obligations................35
4.24 Loans..............................................35
4.25 Investment Securities..............................36
4.26 Derivative Transactions............................36
4.27 Intellectual Property..............................36
4.28 Seller Information.................................36
4.29 Disclosure.........................................37
ARTICLE V: COVENANTS OF THE PARTIES..........................................37
5.01 Conduct of Business................................37
5.02 Access to Properties and Records; Confidentiality..42
5.03 No Solicitation...................................44
5.04 Regulatory Matters; Consents.......................44
5.05 Approval of Stockholders...........................45
5.06 Agreements of Seller's Affiliates..................46
5.07 Further Assurances.................................46
5.08 Disclosure Supplements.............................46
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5.09 Public Announcements...............................46
5.10 Tax-Free Reorganization Treatment..................46
5.11 Stock Exchange Listing.............................47
5.12 Employment and Benefit Matters.....................47
5.13 Directors' and Officers' Indemnification
and Insurance......................................48
5.14 Accountants' Letters...............................50
5.15 Maintenance of Records.............................50
5.16 Leases.............................................50
5.17 Bank Merger........................................50
5.18 Certain Policies of Seller.........................50
ARTICLE VI: CLOSING CONDITIONS...............................................51
6.01 Conditions to Each Party's Obligations Under
This Agreement.....................................51
6.02 Conditions to the Obligations of Buyer Under
This Agreement.....................................51
6.03 Conditions to the Obligations of Seller and
Bank Under This Agreement..........................53
ARTICLE VII: CLOSING.........................................................54
7.01 Time and Place.....................................54
7.02 Deliveries at the Closing..........................55
ARTICLE VIII: TERMINATION, AMENDMENT AND WAIVER..............................55
8.01 Termination........................................55
8.02 Effect of Termination..............................56
8.03 Amendment, Extension and Waiver....................57
ARTICLE IX: MISCELLANEOUS....................................................57
9.01 Expenses...........................................57
9.02 Non-Survival.......................................57
9.03 Notices............................................58
9.04 Parties in Interest................................58
9.05 Entire Agreement...................................59
9.06 Counterparts.......................................59
9.07 Governing Law......................................59
9.08 Captions...........................................59
9.09 Effect of Investigations...........................59
9.10 Severability.......................................59
9.11 Specific Enforceability............................59
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
Seller Disclosure Schedule
4.01(a) FDIC Assessments
4.01(c) Minute Books
4.02(a) Holders of Seller Stock Options
4.02(b) Seller Subsidiaries
4.03(b) Non Contravention Exceptions
4.04 Consents and Approvals
4.06 Liabilities
4.08 Material Changes
4.09 Legal Proceedings
4.10 Taxes
4.11 Seller Plans
4.12 Regulatory Agreements
4.13 Material Agreements
4.14 Ownership of Property
4.15 Seller Reports
4.16 Compliance With Laws
4.17 Environmental Matters
4.20 Insurance Matters
4.21 Labor Matters
4.22 Material Interests of Certain Persons
4.24 Loans
4.25 Investment Securities
4.26 Derivative Transactions
5.01 Conduct of the Business
5.12 Additional Employee Benefits; Senior Executives to
Receive Continuing Health Care Coverage
EXHIBITS
A. Form of Seller Option Agreement
B. Form of Seller Stockholders' Agreement
C. Form of Seller Affiliates Agreement
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