Exhibit 2.1
AGREEMENT
AND PLAN OF MERGER
by and among
Peoples United Financial, Inc.,
Peoples United Bank,
Bridgeport Merger Corporation,
LSB Corporation,
and
River Bank
Dated as of July 15, 2010
TABLE
OF CONTENTS
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Page
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ARTICLE I THE MERGER
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1
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1.1
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The Merger
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1
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1.2
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Bank Merger
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1
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1.3
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Effective Date and Effective Time; Closing; Effects of the Merger
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2
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1.4
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Articles of Organization and Bylaws
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2
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1.5
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Directors of the Surviving Corporation
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2
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1.6
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Officers of the Surviving Corporation
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2
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ARTICLE II MERGER CONSIDERATION AND EXCHANGE PROCEDURES
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2
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2.1
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Merger Consideration
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2
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2.2
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Rights as Shareholders; Closing of the Companys Transfer
Books
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3
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2.3
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Exchange Procedures
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3
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2.4
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Options; Restricted Stock
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4
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2.5
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Tax Withholding
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5
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2.6
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Reservation of Right to Revise Structure
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5
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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5
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3.1
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Making of Representations and Warranties
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5
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3.2
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Organization, Standing and Authority
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6
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3.3
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Capitalization
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6
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3.4
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Subsidiaries
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7
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3.5
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Corporate Power
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7
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3.6
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Corporate Authority
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7
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3.7
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Non-Contravention
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8
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3.8
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Articles of Organization; Bylaws; Corporate Records
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8
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3.9
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Regulatory Approvals
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8
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3.10
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Compliance with Laws
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9
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3.11
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Litigation; Regulatory Action
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9
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3.12
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SEC Documents; Financial Reports; and Regulatory Reports
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10
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3.13
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Absence of Certain Changes or Events
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11
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3.14
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Taxes and Tax Returns
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12
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3.15
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Employee Benefit Plans
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13
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3.16
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Labor Matters
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16
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3.17
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Insurance
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16
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3.18
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Environmental Matters
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16
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3.19
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Intellectual Property
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18
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3.20
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Material Agreements; Defaults
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19
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3.21
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Property and Leases
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20
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3.22
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Regulatory Capitalization
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21
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3.23
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Loans; Nonperforming and Classified Assets
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21
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3.24
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Risk Management Instruments
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21
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3.25
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Investment Securities and Commodities
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22
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3.26
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Repurchase Agreements
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22
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3.27
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Deposit Insurance
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22
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Page
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3.28
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CRA; Anti-money Laundering; Privacy Regulations
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22
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3.29
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Transactions with Affiliates
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23
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3.30
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Inapplicability of Takeover Provisions
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23
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3.31
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Brokers; Fairness Opinion
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23
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3.32
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Rights Agreement
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23
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3.33
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Company Information
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24
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3.34
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Disclosure
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24
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
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24
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4.1
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Making of Representations and Warranties
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24
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4.2
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Organization, Standing and Authority
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25
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4.3
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Corporate Power
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25
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4.4
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Corporate Authority
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25
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4.5
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Regulatory Approvals
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25
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4.6
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Non-Contravention
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25
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4.7
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Certificate of Incorporation; Bylaws
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26
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4.8
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Compliance with Laws
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26
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4.9
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Litigation
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26
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4.10
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Regulatory Capitalization
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26
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4.11
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Absence of Regulatory Actions
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26
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4.12
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Financial Condition of Buyer
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26
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4.13
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Absence of Certain Changes or Events
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26
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4.14
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Net Worth
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26
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4.15
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Sufficient Funds
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26
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4.16
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Brokers
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27
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4.17
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Information Supplied
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27
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4.18
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Disclosure
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27
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ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS
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27
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5.1
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Company Forbearances
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27
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5.2
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Buyer Forbearances
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30
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ARTICLE VI ADDITIONAL AGREEMENTS
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30
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6.1
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Reasonable Best Efforts
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30
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6.2
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Shareholder Approval
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31
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6.3
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Publicity
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32
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6.4
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Access; Information
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32
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6.5
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No Solicitation
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33
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6.6
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Takeover Laws
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35
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6.7
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Regulatory Applications; Filings; Consents
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35
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6.8
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Indemnification; Directors and Officers Insurance
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36
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6.9
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Employees; Benefit Plans
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37
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6.10
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Notification of Certain Matters
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39
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6.11
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Confidentiality Agreement
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39
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6.12
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Current Information
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40
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6.13
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Transition; Informational Systems Conversion
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40
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ii
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Page
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6.14
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Access to Suppliers
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40
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6.15
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Stock Exchange De-listing
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40
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6.16
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Director Resignations
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40
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6.17
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Coordination
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40
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6.18
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Shareholder Litigation
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41
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6.19
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Section 16 Matters
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41
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ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER
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41
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7.1
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Conditions to Each Partys Obligations to Effect the Merger
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41
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7.2
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Conditions to the Obligations of Buyer
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41
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7.3
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Conditions to the Obligations of the Company
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42
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ARTICLE VIII TERMINATION
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43
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8.1
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Termination
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43
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8.2
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Effect of Termination and Abandonment
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44
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ARTICLE IX MISCELLANEOUS
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45
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9.1
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Survival
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45
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9.2
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Certain Definitions
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45
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9.3
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Waiver; Amendment
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50
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9.4
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Expenses
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50
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9.5
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Notices
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50
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9.6
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Understanding; No Third Party Beneficiaries
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51
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9.7
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Assignability; Binding Effect
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51
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9.8
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Headings; Interpretation
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51
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9.9
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Counterparts; Delivery
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51
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9.10
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Governing Law
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51
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9.11
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Jurisdiction
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51
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9.12
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Severability
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52
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9.13
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Enforcement
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52
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iii
INDEX OF
DEFINED TERMS
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2009 Buyer Financial Statements
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26
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2009 Company Financial Statements
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10
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2010 Annual Bonuses
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38
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409A Plan
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15
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Acquisition Proposal
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33
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Acquisition Transaction
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33
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Affiliate
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45
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Agreement
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1
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Articles of Merger
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2
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Bank
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37
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Bank Merger
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1
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Bankruptcy and Equity Exception
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8
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Burdensome Conditions
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35
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Business Day
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45
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Buyer
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1
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Buyer Balance Sheet
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26
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Buyer Balance Sheet Date
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26
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Buyer Bank
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1
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Buyer Board
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25
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Buyer Disclosure Letter
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24
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Buyer Material Adverse Effect
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45
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Buyer Representatives
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32
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Certificate
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3
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Classified Loans
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21
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Closing
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2
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Closing Date
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2
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Code
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5
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Company
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1
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Company 2009
Form 10-K
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10
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Company Balance Sheet
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10
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Company Balance Sheet Date
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10
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Company Bank
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1
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Company Bank Board
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7
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Company Bank Severance Pay Plan
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38
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Company Board
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7
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Company Common Stock
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1
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Company Disclosure Letter
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5
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Company Employees
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37
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Company Intellectual Property
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18
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Company Material Adverse Effect
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45
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Company Material Contract
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19
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Company Meeting
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31
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Company Property
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16
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Company Recommendation
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31
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iv
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Company Representatives
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33
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Company SEC Documents
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10
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Company Shareholder Approval
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8
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Company Shareholders
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45
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Company Stock Plans
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4
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Company Subsequent Determination
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34
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Confidential Buyer Information
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40
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Confidentiality Agreement
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43
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CRA
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8
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Derivative Contracts
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21
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DIF
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22
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Effective Date
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2
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Effective Date Holder
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3
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Effective Time
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2
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Employee Program
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15
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Engagement Letter
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23
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Environment
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18
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Environmental Law
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18
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ERISA
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14
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ERISA Affiliate
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16
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ESOP
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14
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Exchange Act
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46
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Exchange Fund
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3
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Expense Amount
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44
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FDIA
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22
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FDIC
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46
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FHLB
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6
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Financial Advisor
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23
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FRB
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6
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GAAP
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46
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Governmental Authority
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46
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Hazardous Material
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18
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Indemnified Parties
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36
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Indemnified Party
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36
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Informational Systems Conversion
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40
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Intellectual Property
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18
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Interagency Information Security Guidelines
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23
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IRS
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12
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Knowledge
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46
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Known
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46
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Liens
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7
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Loan Property
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17
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Loans
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21
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maintains
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15
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Maximum D&O Tail Premium
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37
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v
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MBCA
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1
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Merger
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1
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Merger Consideration
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3
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Merger Sub
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1
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MHPF
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8
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Multiemployer Plan
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16
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Notice of Superior Proposal
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34
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Oil
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18
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Option
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4
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Option Consideration
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4
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OTS
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25
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Participation Facility
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17
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Paying Agent
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3
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person
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46
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Person
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46
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Policies, Practices and Procedures
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22
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Proxy Materials
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31
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Proxy Statement
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8
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Regulatory Approvals
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46
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Restricted Stock
|
|
|
5
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Rights Agreement
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|
46
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SEC
|
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|
10
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Securities Act
|
|
|
46
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Subsidiary
|
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|
46
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Superior Proposal
|
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34
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Surviving Corporation
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1
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Takeover Laws
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|
23
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Tax Returns
|
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|
46
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Taxes
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|
46
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Termination Date
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|
43
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Termination Fee
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|
|
44
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Treasury Stock
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|
|
46
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USA Patriot Act
|
|
|
22
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Voting Agreement
|
|
|
1
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Voting Agreement Shareholder
|
|
|
1
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|
Voting Agreement Shareholders
|
|
|
1
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|
Voting Agreements
|
|
|
1
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|
vi
This AGREEMENT AND PLAN OF MERGER, dated as of
July 15, 2010 (this Agreement), is by
and among Peoples United Financial, Inc., a Delaware
corporation (the Buyer), Peoples United
Bank, a federally-chartered stock savings bank and wholly owned
subsidiary of Buyer (the Buyer Bank),
Bridgeport Merger Corporation, a Massachusetts corporation and
wholly owned subsidiary of Buyer (the Merger
Sub), LSB Corporation, a Massachusetts corporation
(the Company), and River Bank, a
Massachusetts-chartered stock savings bank and wholly owned
subsidiary of the Company (the Company Bank).
Any capitalized term used and not otherwise defined in this
Agreement shall have the meaning set forth in Section 9.2.
BACKGROUND
STATEMENTS:
A. The respective Boards of Directors of Buyer, Buyer Bank,
Merger Sub, the Company and Company Bank have determined that it
is in the best interests of their respective corporations and
shareholders to enter into this Agreement and to consummate the
strategic business combination provided for herein, pursuant to
which, subject to the terms and conditions set forth in this
Agreement: (i) Merger Sub will merge with and into the
Company, with the Company as the surviving entity (the
Merger); and (ii) simultaneously with
the Merger, Company Bank will merge with and into Buyer Bank,
with Buyer Bank as the surviving entity (the Bank
Merger);
B. As a condition to the willingness of Buyer to enter into
this Agreement, each of the directors and executive officers of
the Company (each a Voting Agreement
Shareholder and collectively, the Voting
Agreement Shareholders) has entered into a Voting
Agreement, substantially in the form of Exhibit A
hereto, dated as of the date hereof, with Buyer (each a
Voting Agreement and collectively, the
Voting Agreements), pursuant to which each
Voting Agreement Shareholder has agreed, among other things, to
vote such Voting Agreement Shareholders shares of common
stock, par value $.10 per share, of the Company
(Company Common Stock), in favor of the
approval of this Agreement and the transactions contemplated
hereby, upon the terms and subject to the conditions set forth
in the Voting Agreement;
C. As an inducement to the Company and the Company Bank to
enter into this Agreement, Buyer and Buyer Bank have undertaken
to use their reasonable best efforts to consummate the Merger
not later than December 31, 2010; and
D. The parties desire to make certain representations,
warranties and agreements in connection with the Merger and also
to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the
terms and conditions of this Agreement, the satisfaction or
waiver of the conditions set forth herein, and in reliance upon
the representations, warranties and covenants set forth herein,
at the Effective Time, Merger Sub shall merge with and into the
Company in accordance with the Massachusetts Business
Corporation Act (the MBCA). Upon
consummation of the Merger, the separate corporate existence of
the Merger Sub shall cease and the Company shall survive and
continue to exist as a corporation incorporated under the laws
of the Commonwealth of Massachusetts (the Company, as the
surviving corporation in the Merger, sometimes being referred to
herein as the Surviving Corporation).
1.2 Bank Merger. The parties
intend that the Bank Merger shall occur simultaneously with the
Merger. As soon as practicable after the execution of this
Agreement and prior to the filing of applications for regulatory
approval, Buyer Bank and Company Bank shall enter into a Plan of
Bank Merger providing for the Bank Merger, and each of Buyer and
the Company shall, to the extent required, approve the Plan of
Bank Merger. The Plan of Bank Merger shall be in a form to be
specified by Buyer and approved by the Company (such approval
not to be unreasonably withheld or delayed).
1.3 Effective Date and Effective Time; Closing;
Effects of the Merger.
(a) On the Closing Date, as promptly as practicable after
all of the conditions set forth in Article VII have been
satisfied or, if permissible, waived by the party entitled to
the benefit of the same, Merger Sub and the Company shall
execute and file with the Secretary of Commonwealth of
Massachusetts the Articles of Merger related to the Merger (the
Articles of Merger). The Merger provided for
herein shall become effective upon the acceptance for filing by
the Secretary of Commonwealth of Massachusetts the Articles of
Merger or such later date and time as may be set forth in the
Articles of Merger. The date of such filing or such later
effective date is herein called the Effective
Date. The Effective Time of the
Merger shall be such date and time as the Merger becomes
effective.
(b) Subject to the terms and conditions of this Agreement,
the transactions contemplated by this Agreement shall be
consummated at a closing (the Closing) that
will take place at 10:00 a.m., local time, on a date to be
specified by the parties, which shall be no later than three
(3) Business Days after all of the conditions to the
closing set forth in Article VII (other than conditions to
be satisfied at Closing, which are satisfied or waived (subject
to applicable law) at the Closing) have been satisfied or waived
in accordance with terms hereof, at the principal offices of
Simpson Thacher & Bartlett LLP, 425 Lexington Avenue,
New York, New York 10017, or such other place or on such other
date as the parties may mutually agree upon in writing (such
date, the Closing Date), unless this
Agreement has been theretofore terminated pursuant to its terms
or unless extended by mutual agreement of the parties. At the
Closing, there shall be delivered to Buyer and the Company the
certificates and other documents required to be delivered
pursuant to Article VII.
(c) At and after the Effective Time, the Merger shall have
the effects set forth in this Agreement and in the appropriate
provisions of the MBCA. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, the
Surviving Corporation shall possess all the rights, privileges,
powers, and franchises, and be subject to all of the
restrictions, disabilities, and duties of the Company and Merger
Sub, as provided under Section 11.07 of the MBCA.
1.4 Articles of Organization and
Bylaws. The Articles of Organization of the
Company, as in effect immediately prior to the Effective Time,
shall be amended and restated as of the Effective Time so as to
read in its entirety in the form of the Articles of Organization
of Merger Sub as in effect immediately prior to the Effective
Time, until thereafter amended as provided therein and in
accordance with applicable law. The Bylaws of the Company, as in
effect immediately prior to the Effective Time, shall be amended
and restated as of the Effective Time so as to read in their
entirety in the form of the bylaws of Merger Sub as in effect
immediately prior to the Effective Time, until thereafter
amended as provided therein and in accordance with applicable
law.
1.5 Directors of the Surviving
Corporation. The directors of Merger Sub
immediately prior to the Effective Time shall become the
directors of the Surviving Corporation, each of whom shall serve
in accordance with the Certificate of Incorporation and Bylaws
of the Surviving Corporation.
1.6 Officers of the Surviving
Corporation. The officers of Merger Sub
immediately prior to the Effective Time shall become the
officers of the Surviving Corporation, each to hold office in
accordance with the Articles of Organization and Bylaws of the
Surviving Corporation.
ARTICLE II
MERGER
CONSIDERATION AND EXCHANGE PROCEDURES
2.1 Merger Consideration. Subject
to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Merger and without any action on
the part of Buyer, Merger Sub, the Company or any shareholder of
the Company or Merger Sub:
(a) Each share of common stock, par value $0.01 per share,
of Merger Sub that is issued and outstanding immediately prior
to the Effective Time shall be converted into one validly
issued, fully paid, and nonassessable share of common stock, par
value $0.01 per share of the Surviving Corporation.
(b) Each share of Company Common Stock held as Treasury
Stock immediately prior to the Effective Time shall be cancelled
and retired at the Effective Time without any conversion
thereof, and no payment shall be made with respect thereto.
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(c) Each share of Company Common Stock owned by any wholly
owned Subsidiary of the Company or by any wholly owned
Subsidiary of Buyer (other than Merger Sub), in each case, other
than shares held in a fiduciary capacity (including custodial or
agency), shall remain outstanding as shares of the Surviving
Company, and no cash or other consideration shall be delivered
in exchange therefor.
(d) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than
Treasury Stock and shares referred to in Section 2.1(c))
shall become and be converted into, as provided in and subject
to the limitations set forth in this Agreement, the right to
receive in cash $21.00 (the Merger
Consideration). The Merger Consideration shall be
payable to the holder thereof, in each case without interest and
less applicable Tax withholdings, if any, upon surrender of the
certificate formerly representing such share of the Company
Common Stock and such other documents as Buyer reasonably may
require in accordance with Section 2.3.
(e) In addition to the Merger Consideration, Buyer shall
pay or cause to be paid together with the Merger Consideration
(i) any regular quarterly dividend declared in accordance
with Section 5.1(c) but unpaid as of the Closing Date, with
respect to each share of Company Common Stock issued and
outstanding on the record date for such dividend; and
(ii) an amount per share of Company Common Stock equal to
the product of $0.001 multiplied by the number of days from but
not including the record date for the most recent regular
quarterly dividend declared in accordance with
Section 5.1(c) and paid prior to the Closing Date through
and including the Closing Date.
2.2 Rights as Shareholders; Closing of the
Companys Transfer Books.
(a) All shares of Company Common Stock, when converted as
provided in Section 2.1(d), shall no longer be outstanding
and shall automatically be cancelled and retired and shall cease
to exist, and each certificate (a
Certificate) previously evidencing such
shares, and all uncertificated shares, shall thereafter
represent only the right to receive the Merger Consideration for
each such share of Company Common Stock. At the Effective Time,
holders of Company Common Stock shall cease to be, and shall
have no rights as, shareholders of the Company, other than the
right to receive the Merger Consideration and the right to
receive any unpaid dividend with respect to the Company Common
Stock with a record date occurring prior to the Effective Time,
as provided in Section 2.1(e).
(b) At the Effective Time, the stock transfer books of the
Company shall be closed and no transfer of shares of Company
Common Stock that were outstanding immediately prior to the
Effective Time shall thereafter be made.
2.3 Exchange Procedures.
(a) Prior to the Effective Time, Buyer shall designate an
independent third party reasonably acceptable to the Company to
act as paying agent in the Merger (the Paying
Agent), and at the Closing, Buyer shall deposit or
cause to be deposited with the Paying Agent cash in an amount
equal to the aggregate amounts payable under Section 2.1(d)
(the Exchange Fund). In the event the
Exchange Fund shall be insufficient to make all such payments,
Buyer shall promptly deposit, or cause to be deposited,
additional funds with the Paying Agent in an amount that is
equal to the deficiency in the amount of funds required to make
such payments. The Paying Agent shall make payments of the
aggregate Merger Consideration out of the Exchange Fund in
accordance with this Agreement. The Exchange Fund shall not be
used for any other purpose.
(b) As soon as reasonably practicable after the Effective
Time but in no event later than five (5) Business Days
after the Effective Date, Buyer shall cause the Paying Agent to
mail to each holder of record of Certificates representing
Company Common Stock at the Effective Time (each an
Effective Date Holder) whose shares
were converted into the right to receive the Merger
Consideration pursuant to Section 2.1(d): (i) a letter
of transmittal in customary form for transactions of this nature
(which shall specify that for holders of shares issued in
certificated form, delivery of such holders Certificates
shall be effected, and risk of loss and title to the
Certificates shall pass, only upon actual delivery of the
Certificates to the Paying Agent and shall be in such form and
have such other provisions as Buyer or the Paying Agent
reasonably may specify), and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the
Merger Consideration. Upon delivery to the Paying Agent of a
duly executed letter of transmittal and such other documents as
the Paying Agent shall reasonably require, including delivery of
Certificates, each Effective Date Holder shall be entitled to
receive in exchange therefor the Merger Consideration for each
share of Company Common Stock covered by the letter of
transmittal, in accordance with
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Section 2.1(d), and the Certificates so surrendered shall
be cancelled. If a transfer of ownership of Company Common Stock
has occurred but has not been registered in the transfer records
of the Company, a check representing the proper amount of Merger
Consideration may be issued to the transferee if the Certificate
representing such shares of Company Common Stock is presented to
the Paying Agent accompanied by all documents and endorsements
required to evidence and effect such transfer and evidence that
any applicable stock transfer taxes have been paid. Until
surrendered as provided in this Section 2.3, each
Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the
Merger Consideration for each share of Company Common Stock
represented thereby. No interest will be paid or accrue on any
amounts payable upon surrender of any Certificate.
Notwithstanding anything to the contrary contained in this
Agreement, any holder of Company Common Stock that holds such
shares in book-entry form (rather than through a certificate)
shall not be required to deliver a Certificate or an executed
letter of transmittal to the Paying Agent in order to receive
the Merger Consideration that such holder is entitled to receive
pursuant to Section 2.1(d).
(c) Promptly following the date that is one (1) year
after the Effective Time, the Paying Agent, if requested by
Buyer, shall deliver to Buyer (or to such other Person as
directed by Buyer) all cash and any documents in its possession
or control relating to the transactions described in this
Agreement, and the Paying Agents duties shall terminate.
Thereafter, if applicable, each holder of a Certificate may
surrender such Certificate to Buyer and (subject to applicable
abandoned property, escheat or other similar laws) receive in
exchange therefor the Merger Consideration, payable upon due
surrender of the Certificate without any interest thereon.
(d) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or
destroyed, the Paying Agent shall issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof determined in accordance with
this Article II; provided, however, that
Buyer or the Paying Agent may, in its discretion, require the
delivery of an indemnity or bond in customary amount against any
claim that may be made against the Surviving Corporation with
respect to such Certificate or ownership thereof.
(e) The Paying Agent shall invest any funds held by it for
purposes of this Section 2.3 as directed by Buyer. Any
interest and other income resulting from such investments shall
be paid to Buyer. To the extent that there are losses with
respect to any such investments, Buyer shall be responsible to
ensure that the Paying Agent has access to funds sufficient to
make any required payments under this Article II promptly
when due.
(f) None of Buyer, the Company, Buyer Bank, Company Bank,
Merger Sub or the Paying Agent shall be liable to any person in
respect of any cash delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If
any Certificate shall not have been surrendered prior to three
(3) years after the Effective Time, or immediately prior to
such earlier date on which any of the Merger Consideration would
otherwise escheat or become the property of any Governmental
Authority, the amount payable in respect thereof shall, to the
extent permitted by law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any
Person previously entitled thereto.
2.4 Options; Restricted Stock.
(a) At the Effective Time, each option, warrant or other
similar right to acquire shares of Company Common Stock (each an
Option) that then remains outstanding and
originally was granted under any of the Company 2006 Stock
Option and Incentive Plan, and Company Bank 1997 Stock Option
Plan (the Company Stock Plans), whether or
not then vested or exercisable, shall not be assumed by Buyer
and automatically shall be terminated at the Effective Time and
converted into the right of the holder thereof to receive
thereupon in full satisfaction of such Option as of the
Effective Time, an amount in cash (subject to any applicable
withholding Taxes) equal to the product of (x) the excess,
if any, of the Merger Consideration over the applicable exercise
price of such Option and (y) the number (determined without
reference to vesting requirements or other limitations on
exercisability) of shares of Company Common Stock issuable upon
exercise of such Option (the Option
Consideration). For the avoidance of doubt, Buyer and
the Company acknowledge and agree that any Option that is
outstanding immediately prior to the Effective Time and has an
exercise price greater than the Merger Consideration shall
expire without the right to receive any Company Common Stock or
any payment in lieu thereof. As soon as reasonably practicable
after the Effective Time, Buyer or the Surviving Corporation
shall mail to each holder of an Option immediately prior to the
Effective Time, a check in an amount equal to the Option
Consideration due and
4
payable to such holder pursuant to this Section 2.4(a) in
respect of such Option. Notwithstanding the foregoing, the
Company shall provide each holder of outstanding Options the
opportunity to exercise in full all such Options for at least
fifteen (15) days prior to the Effective Time (as well as
advance written notice thereof, as required by the terms of the
Company Stock Plans).
(b) At the Effective Time, each share of restricted Company
Common Stock outstanding as of the Effective Time and issued
pursuant to the Company 2006 Stock Option and Incentive Plan
(Restricted Stock) shall represent a right to
receive the Merger Consideration pursuant to Section 2.1
above and all transfer restrictions thereon shall lapse.
2.5 Tax Withholding. Each of
Buyer, the Surviving Corporation, and the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any former holder of
shares of Company Common Stock or Options, as the case may be,
such amounts as Buyer, the Surviving Corporation, or the Paying
Agent is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986,
as amended (the Code), or any other provision
of federal, state, local or foreign Tax law. To the extent that
amounts are so withheld by Buyer, the Surviving Corporation, or
the Paying Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the former
holder of the shares of Company Common Stock or Options in
respect of which such deduction and withholding was made by
Buyer, the Surviving Corporation, or the Paying Agent.
2.6 Reservation of Right to Revise
Structure. Buyer may at any time change the
method of effecting the business combination contemplated by
this Agreement if and to the extent that it deems such a change
to be desirable; provided, however, that no such change shall
(a) alter or change the amount or kind of the consideration
to be issued to holders of Company Common Stock as Merger
Consideration or (b) materially impede or delay
consummation of the Merger. In the event Buyer elects to make
such a change, the parties agree to execute appropriate
documentation to reflect such change as Buyer may reasonably
request.
ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
3.1 Making of Representations and Warranties.
(a) As a material inducement to Buyer, Buyer Bank and
Merger Sub to enter into this Agreement and to consummate the
transactions contemplated hereby, the Company and Company Bank
jointly and severally hereby make to Buyer, Buyer Bank and
Merger Sub the representations and warranties contained in this
Article III.
(b) On or prior to the date hereof, the Company has
delivered to Buyer, Buyer Bank and Merger Sub a disclosure
letter (the Company Disclosure Letter)
listing, among other things, items the disclosure of which is
necessary or appropriate in relation to any or all of the
Companys and Company Banks representations and
warranties contained in this Article III; provided,
however, that no such item is required to be set forth on
the Company Disclosure Letter as an exception to a
representation or warranty if its absence is not reasonably
likely to result in the related representation or warranty being
untrue or incorrect under the standards established by
Section 3.1(c). Without limiting the scope of the
immediately preceding sentence, any disclosure made in the
Company Disclosure Letter with respect to a Section of this
Article III shall be deemed to qualify (i) any
subsection of such Section specifically referenced or
cross-referenced and (ii) any other Section or subsection
of this Article to the extent that it is reasonably apparent
(notwithstanding the absence of a specific cross-reference) from
a reading of the disclosure that such disclosure is relevant to
such other Section or subsection and contains sufficient detail
to enable a reasonable person to recognize the relevance of such
disclosure to such other Section or subsection.
(c) No representation or warranty of the Company and
Company Bank contained in this Article III shall be deemed
untrue or incorrect, and the Company and Company Bank shall not
be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, change, development,
effect, circumstance or event unless such fact, change,
development, effect, circumstance or event, individually or
taken together with all other facts, changes, developments,
effects, circumstances or events inconsistent with any section
of this Article III (read for this purpose without regard
to any individual reference to materiality, material adverse
effect or Company
5
Material Adverse Effect), has had or would reasonably be
expected to have a Company Material Adverse Effect;
provided, however, that the foregoing standard
shall not apply to the representations and warranties contained
in Sections 3.3, 3.4(a), 3.5, 3.6, 3.9(a), 3.13(i), 3.15(h)
and 3.30, as well as the first two sentences of
Section 3.2, which shall be deemed untrue, incorrect and
breached if they are not true and correct in all respects.
3.2 Organization, Standing and
Authority. The Company is a corporation duly
organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts. The Company is duly
registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended, and the regulations of the
Board of Governors of the Federal Reserve System (the
FRB) promulgated thereunder. The Company is
duly qualified to do business and is in good standing in the
jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified. The
Company Bank is a member in good standing of the Federal Home
Loan Bank (FHLB) of Boston.
3.3 Capitalization.
(a) As of the date hereof, the authorized capital stock of
the Company consists solely of (i) 20,000,000 shares
of Company Common Stock, of which 4,506,686 shares are
issued and outstanding (including 6,750 shares of
Restricted Stock), and (ii) 5,000,000 shares of
preferred stock, par value $.10 per share, none of which are
issued and outstanding. As of the date hereof, there were
200,000 shares of the Companys preferred stock
designated as Series A Junior Participating Preferred
Stock and reserved for issuance pursuant to the Rights
Agreement. In addition, as of the date hereof, there are
210,400 shares of Company Common Stock reserved for
issuance upon exercise of outstanding Options. The outstanding
shares of the Company Common Stock are validly issued, fully
paid and nonassessable with no personal liability attaching to
the ownership thereof, and subject to no preemptive or similar
rights (and were not issued in violation of any preemptive or
similar rights). Other than shares issuable under the Rights
Agreement, and except as set forth on Schedule 3.3
of the Company Disclosure Letter, (A) there are no
additional shares of the Companys capital stock or other
equity interests authorized or reserved for issuance,
(B) the Company does not have any securities (including
units of beneficial ownership interest in any partnership or
limited liability company) convertible into or exchangeable for
any additional shares of capital stock or other equity
interests, any stock appreciation rights, or any other rights to
subscribe for or acquire shares of its capital stock or other
equity interests issued and outstanding, and (C) the
Company does not have, and is not bound by, any commitment to
authorize, register, issue, transfer or sell any such shares or
other rights.
(b) Except for the Rights Agreement and as set forth on
Schedule 3.3 of the Company Disclosure Letter, there
are no outstanding contractual obligations or other commitments
of the Company to repurchase, redeem or otherwise acquire any
shares of capital stock of, or other equity interests in, the
Company, or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in any
Subsidiary of the Company.
(c) Schedule 3.3 of the Company Disclosure
Letter sets forth, as of the date hereof, for each Option, the
name of the grantee, the date of grant, the type of grant, the
status of the Option grant as qualified or non-qualified under
Section 422 of the Code, the number of shares of Company
Common Stock subject to each Option, the vesting schedule of
each Option, the number of shares of Company Common Stock that
are currently exercisable with respect to such Option, the
expiration date of each Option, and the exercise price per
share. Schedule 3.3 of the Company Disclosure Letter
also sets forth the weighted average exercise price of all
outstanding Options.
(d) The Company Board has taken all action necessary under
the Companys Dividend Reinvestment and Common Stock
Purchase Plan to suspend the purchase of shares of Company
Common Stock thereunder, effective as of 12:01
a.m. on the
Business Day next following the date of this Agreement and
continuing unless and until this Agreement is terminated in
accordance with its terms.
(e) The Company does not have outstanding any bonds,
debentures, notes or other indebtedness having the right to vote
(or that are convertible into, or exchangeable for, securities
having the right to vote) on any matters on which the Company
Shareholders may vote, and it is not party to any voting
agreement with respect to the voting of its capital stock,
voting securities or other equity interests.
6
3.4 Subsidiaries.
(a) (i) Schedule 3.4 of the Company Disclosure
Letter sets forth a complete and correct list of all of the
Companys Subsidiaries, including the jurisdiction of
organization of each such Subsidiary, the authorized and
outstanding shares of capital stock of such Subsidiary, and the
record or beneficial owner of such shares of capital stock,
(ii) the Company owns, directly or indirectly, all of the
issued and outstanding equity securities of each Subsidiary,
(iii) no equity securities of any of the Companys
Subsidiaries are or may become required to be issued, sold or
otherwise transferred (other than to the Company) by reason of
any contractual right or otherwise, (iv) there are no
contracts, commitments, understandings or arrangements by which
any of such Subsidiaries is or may be bound to sell or otherwise
transfer any of its equity securities (other than to the Company
or a wholly-owned Subsidiary of the Company), (v) there are
no contracts, commitments, understandings or arrangements
relating to the Companys rights to vote or to dispose of
such securities, and (vi) all of the equity securities of
each such Subsidiary held by the Company, directly or
indirectly, are validly issued, fully paid and nonassessable,
not subject to preemptive or similar rights and are owned by the
Company free and clear of all mortgages, pledges, liens,
security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any
kind (collectively, Liens).
(b) Except for equity interests held in the investment
portfolios of the Companys Subsidiaries, a list of which
is set forth on Schedule 3.4 of the Company Disclosure
Letter, equity interests held by the Companys Subsidiaries
in a fiduciary capacity, and equity interests held in connection
with the lending activities of the Companys Subsidiaries,
including stock in the FHLB of Boston, in each case acquired in
the ordinary course of business consistent with recent past
practice, and except as set forth on Schedule 3.4 of
the Company Disclosure Letter, the Company does not own (other
than in a bona fide fiduciary capacity or in satisfaction of a
debt previously contracted) beneficially, directly or
indirectly, any equity securities or similar interests of any
Person, or any interest in a joint venture of any kind.
(c) Each of the Companys Subsidiaries has been duly
organized and qualified under the laws of the jurisdiction of
its organization, is validly existing and is duly qualified to
do business and in good standing in the jurisdictions where its
ownership or leasing of property or the conduct of its business
requires it to be so qualified. A complete and correct list of
all such jurisdictions is set forth on Schedule 3.4
of the Company Disclosure Letter.
(d) Except for its ownership of Company Bank, the Company
does not own, beneficially or of record, either directly or
indirectly, any stock or equity interest in any depository
institution (as defined in 12 U.S.C.
Section 1813(c)(1)).
3.5 Corporate Power. Each of the
Company and its Subsidiaries has the requisite corporate power
and authority to carry on its business as it is now being
conducted and to own all of its properties and assets; and each
of the Company and Company Bank has the requisite corporate
power and authority to execute and deliver this Agreement, to
perform its obligations under this Agreement and to consummate
the transactions contemplated hereby, subject to obtaining the
Company Shareholder Approval.
3.6 Corporate Authority. Subject
only to the receipt of Company Shareholder Approval, this
Agreement and the transactions contemplated hereby have been
authorized by all necessary corporate action of the Company and
the Board of Directors of the Company (the Company
Board) and Company Bank and the board of directors of
Company Bank (the Company Bank Board). The
Company Shareholder Approval is the only vote of the holders of
any class or series of the Companys capital stock
necessary to approve this Agreement and the transactions
contemplated hereby. The Company Board and the Company Bank
Board (i) adopted this Agreement and determined that this
Agreement and the transactions contemplated hereby, including
the Merger, are advisable and in the best interests of the
holders of Company Common Stock and (ii) voted to recommend
that the holders of Company Common Stock vote for the approval
of this Agreement at the Company Meeting. Each of the Company
and Company Bank has duly executed and delivered this Agreement,
and assuming the due authorization, execution and delivery by
Buyer, Buyer Bank, and Merger Sub, this Agreement is a legal,
valid and binding agreement of the Company and Company Bank,
enforceable against it in accordance with its terms, except to
the extent that enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
7
similar laws of general applicability relating to or affecting
creditors rights or by a courts application of
general equitable principles (the Bankruptcy and Equity
Exception).
3.7 Non-Contravention. Subject to
the receipt of the Regulatory Approvals, the required filings
under federal and state securities laws, the receipt of the
Company Shareholder Approval and the filing of the Articles of
Merger and the Articles of Merger relating to the Bank Merger,
and except as set forth on Schedule 3.7 of the
Company Disclosure Letter, the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby (including, without limitation,
the Merger) by each of the Company and Company Bank do not and
will not (i) constitute a breach or violation of, or a
default under, give rise to any Lien, result in a right of
termination or the acceleration of any right or obligation under
(or have any of such results or effects upon notice or lapse of
time, or both), any law, rule or regulation or any judgment,
decree, order, permit, license, credit agreement, indenture,
loan, note, bond, mortgage, reciprocal easement agreement,
lease, instrument, concession, franchise or other agreement of
the Company or any of its Subsidiaries or to which the Company
or any of its Subsidiaries, properties or assets is subject or
bound, (ii) constitute a breach or violation of, or a
default under, the Companys Articles of Organization or
Bylaws or Company Banks Articles of Organization or Bylaws
or the articles of organization or bylaws (or similar governing
documents) of any other Subsidiaries of the Company, or
(iii) require the consent or approval of any third party
under any such law, rule, regulation, judgment, decree, order,
permit, license, credit agreement, indenture, loan, note, bond,
mortgage, reciprocal easement agreement, lease, instrument,
concession, franchise or other agreement.
3.8 Articles of Organization; Bylaws; Corporate
Records. The Company has made available to
Buyer, Buyer Bank and Merger Sub a complete and correct copy of
the Articles of Organization and the Bylaws or equivalent
organizational documents, each as amended to date, of the
Company and each of its Subsidiaries. The Company is not in
violation of any of the terms of its Articles of Organization or
Bylaws; and the Company Bank is not in violation of any of the
terms of its Articles of Organization or Bylaws. The minute
books of the Company and each of its Subsidiaries contain
complete and accurate records in all material respects of all
meetings held, and complete and accurate records of all other
corporate actions of their respective shareholders and boards of
directors (including committees of their respective boards of
directors).
3.9 Regulatory Approvals.
(a) No consents or approvals of, or waivers by, or filings
or registrations with, any Governmental Authority are required
to be made or obtained by the Company or any of its Subsidiaries
in connection with the execution, delivery or performance by the
Company of this Agreement or to consummate the transactions
contemplated hereby, except for (i) filings of applications
or notices with, and consents, approvals or waivers by, the OTS,
the Office of the Massachusetts Commissioner of Banks and the
Massachusetts Board of Bank Incorporation, (ii) any
required applications, filings, waivers or notices with any
federal or state banking or other regulatory authorities and
approval of or non-objection to such applications, filings,
waivers and notices, (iii) the obtaining by Buyer of a
letter from the Massachusetts Housing Partnership Fund (the
MHPF) to the Massachusetts Commissioner of
Banks stating that Buyer has made satisfactory
arrangements with the MHPF, (iv) the filing of the
Articles of Merger and Articles of Merger relating to the Bank
Merger, (v) the filing with the SEC of a proxy statement
(as amended and supplemented, the Proxy
Statement) and related proxy materials to be used in
soliciting the Company Shareholders approval and the filing of
such other reports under and such other compliance with the
Exchange Act as may be required in respect of this Agreement and
the transactions contemplated hereby, (vi) the approval of
this Agreement by the holders of not less than two-thirds of the
shares of Company Common Stock then outstanding and entitled to
vote at the Company Meeting (the Company Shareholder
Approval), and (vii) to the extent applicable,
compliance with the rules and regulations of the Nasdaq Stock
Market.
(b) As of the date hereof, the Company is not aware of any
reason relating to the Company or Company Bank (including,
without limitation, Community Reinvestment Act
(CRA) compliance or the USA Patriot Act)
(i) why all of the Regulatory Approvals shall not be
procured from the applicable Governmental Authorities having
jurisdiction over the transactions contemplated by this
Agreement or (ii) why any Burdensome Condition would be
imposed.
8
3.10 Compliance with Laws. Each of
the Company and its Subsidiaries:
(a) is in compliance in all material respects with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees
applicable thereto or to the employees conducting their
businesses, including, without limitation, state usury laws, the
Bank Secrecy Act, the Truth in Lending Act, the Real Estate
Settlement Procedures Act, the Consumer Credit Protection Act,
the Equal Credit Opportunity Act, the Fair Credit Reporting Act,
the Homeowners Ownership and Equity Protection Act, the Fair
Debt Collections Act, the Fair Housing Act, the CRA, the Home
Mortgage Disclosure Act, the Truth in Savings Act, and all other
applicable consumer protection laws, fair lending laws and other
laws relating to discriminatory business practices. In addition,
each of the Company and its Subsidiaries has complied in all
material respects with all applicable laws, privacy policies and
terms of use or other contractual obligations relating to
privacy, data security, and the collection, storage, use and
dissemination of consumer information, including nonpublic
personal information. The Company and each of its Subsidiaries
have reasonable data security and consumer information
protections in place, in compliance with the Interagency
Information Security Guidelines, and there has been no material
breach thereof or loss of data since December 31, 2006;
(b) has all material permits, licenses, authorizations,
orders, franchises and approvals of, and has made all filings,
applications and registrations with, all Governmental
Authorities that are required in order to permit them to own or
lease their properties and to conduct their businesses as
presently conducted; all such material permits, licenses,
authorizations, orders, franchises and approvals are in full
force and effect and, to the Knowledge of the Company, no
suspension or cancellation of any of them is threatened;
(c) has not received, since December 31, 2006, any
written, or to the Knowledge of the Company, oral, notification
from any Governmental Authority (i) asserting that the
Company or any of its Subsidiaries is not in material compliance
with any statute, law, regulation, ordinance, rule, judgment,
order or decree, or threatening an investigation with respect to
possible violations of same, (ii) threatening revocation of
any license, authorization, order, franchise or approval,
(iii) threatening revocation or limitation of, or which
would have the effect of revoking or limiting, federal deposit
insurance (nor, to the Knowledge of the Company, is there any
fact or circumstance reasonably apparent that would reasonably
be expected to give rise to such revocation or termination), or
(iv) failing to approve any proposed acquisition, or
stating its intention not to approve acquisitions, proposed to
be effected by the Company or any of its Subsidiaries within a
certain time period or indefinitely; and
(d) has properly administered all accounts for which it
acts as a fiduciary, including accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms
of the governing documents, applicable law and common law, and
none of the Company, any of its Subsidiaries, or any director,
officer or employee of the Company or of any of its
Subsidiaries, has committed any breach of trust or fiduciary
duty with respect to any such fiduciary account, and the
accountings for each such fiduciary account are true and correct
and accurately reflect the assets of such fiduciary account.
3.11 Litigation; Regulatory Action.
(a) Except as set forth in the Company SEC Documents filed
or furnished prior to the date of this Agreement (excluding any
disclosures set forth in any risk factor section
thereof) or as set forth on Schedule 3.11 of the
Company Disclosure Letter, no litigation, claim, suit,
investigation or other proceeding before any court, Governmental
Authority or arbitrator is pending against the Company or any of
its Subsidiaries (or, to the Knowledge of the Company, any of
the current or former directors or executive officers of the
Company and its Subsidiaries, to the extent related to or
affecting the business of the Company or any of its
Subsidiaries), and, to the Knowledge of the Company, no such
litigation, claim, suit, investigation or other proceeding has
been threatened and there are no facts that are reasonably
apparent that would reasonably be expected to give rise to any
litigation, claim, suit, investigation or other proceeding that
would result in a Company Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries nor any
of their respective properties is a party to or is subject to
any
cease-and-desist
or other order or enforcement action, assistance agreement,
board resolution, order, decree, supervisory agreement,
memorandum of understanding, condition or similar arrangement
with, or a
9
commitment letter or similar submission to, any Governmental
Authority charged with the supervision or regulation of
financial institutions or issuers of securities or engaged in
the insurance of deposits (including, without limitation, the
FRB, the FDIC, the OTS, and the Massachusetts Commissioner of
Banks) or the supervision or regulation of the Company or any of
its Subsidiaries. Except as set forth on
Schedule 3.11 of the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries has been subject
to any order or directive by, or been ordered to pay any civil
money penalty by, or has been since December 31, 2006, a
recipient of any supervisory letter from, or since
December 31, 2006, has adopted any policies, procedures or
board resolutions at the request or suggestion of, any
Governmental Authority that currently regulates in any material
respect the conduct of its business or that in any manner
relates to its capital adequacy, its ability to pay dividends,
its credit or risk management policies, its management or its
business, other than those of general application that apply to
similarly-situated bank or financial holding companies or their
Subsidiaries.
(c) No Governmental Authority has advised the Company or
any of its Subsidiaries in writing, or to the Knowledge of the
Company, orally, that it will issue any such order, decree,
agreement, board resolution, memorandum of understanding,
supervisory letter, commitment letter, condition or similar
submission, nor to the Knowledge of the Company is there any
fact or circumstance reasonably apparent that would reasonably
be expected to give rise to the issuance of any such order,
decree, agreement, board resolution, memorandum of
understanding, supervisory letter, commitment letter, condition
or similar submission.
3.12 SEC Documents; Financial Reports; and Regulatory
Reports.
(a) The Company has filed all required reports,
registration statements, proxy statements and information
statements with the Securities and Exchange Commission
(SEC) since December 31, 2006, and has
paid all fees and assessments due and payable in connection
therewith. The Companys Annual Report on
Form 10-K,
as amended through the date hereof, for the fiscal year ended
December 31, 2009 (the Company 2009
Form 10-K),
and all other reports, registration statements, definitive proxy
statements and information statements required to be filed by
the Company or any of its Subsidiaries subsequent to
December 31, 2006 under the Securities Act, or under
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
(collectively, the Company SEC
Documents), with the SEC, and all of the Company SEC
Documents filed with the SEC after the date hereof, in the form
filed or to be filed, (i) complied or will comply, at the
time filed, in all material respects as to form with the
applicable requirements under the Securities Act or the Exchange
Act, as the case may be, and (ii) did not and will not
contain, at the time filed, any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not
misleading. None of the Companys Subsidiaries is required
to file periodic reports with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act.
(b) The Company has provided to Buyer, Buyer Bank and
Merger Sub a complete and correct copy of the audited
consolidated balance sheet of the Company and its Subsidiaries
(the Company Balance Sheet) as of
December 31, 2009 (the Company Balance Sheet
Date) and the audited consolidated statements of
income and changes in shareholders equity and cash flows
or equivalent statements of the Company and its Subsidiaries for
each of the years in the two-year period ended December 31,
2009 (together with the Company Balance Sheet, the 2009
Company Financial Statements). The Company Balance
Sheet, and each of the balance sheets contained in or
incorporated by reference into any Company SEC Document,
including Company SEC Documents filed with the SEC after the
date hereof, (including the related notes and schedules thereto)
fairly presents and will fairly present the financial position
of the entity or entities to which such balance sheet relates as
of its date; and each statement of income and changes in
shareholders equity and cash flows or equivalent
statements in the 2009 Company Financial Statements and each
such statement contained in or incorporated by reference into
any Company SEC Document, including Company SEC Documents filed
with the SEC after the date hereof, (including any related notes
and schedules thereto) fairly present and will fairly present
the results of operations, changes in shareholders equity
and changes in cash flows, as the case may be, of the entity or
entities to which such statement relates for the periods to
which it relates, in each case in accordance with GAAP
consistently applied during the periods involved, except in each
case as may be noted therein, subject to normal year-end audit
adjustments in the case of unaudited statements. Since
December 31, 2009, except for (i) liabilities that are
fully reflected or reserved against in the Company Balance
Sheet, (ii) liabilities discharged or otherwise satisfied
in the ordinary course of business consistent with recent past
practices, and (iii) liabilities incurred since the Company
Balance Sheet Date in the ordinary course of
10
business consistent with recent past practices or in connection
with this Agreement, neither the Company nor any of its
Subsidiaries has incurred any material liability or obligation
of any nature (whether accrued, absolute, contingent or
otherwise). The books and records of the Company and its
Subsidiaries have been, and will be, maintained in all material
respects in accordance with GAAP and any other applicable legal
and accounting requirements and reflect only actual
transactions. Each of the balance sheets contained in or
incorporated by reference into any Company SEC Document, and
each of the statements of income and changes in
shareholders equity and cash flows or equivalent
statements in such Company SEC Document has been prepared from,
and is in accordance with, the books and records of the Company
and its Subsidiaries.
(c) The records, systems, controls, data and information of
the Company and its Subsidiaries are recorded, stored,
maintained and operated under means (including any electronic,
mechanical or photographic process, whether computerized or not)
that are under the exclusive ownership and direct control of the
Company or its Subsidiaries or accountants (including all means
of access thereto and therefrom), except for any non-exclusive
ownership and non-direct control that would not reasonably be
expected to have a material adverse effect on the system of
internal accounting controls described below in
Section 3.12(d).
(d) The Company and each of its Subsidiaries, officers and
directors are in compliance with, and have complied, with
(1) the applicable provisions of the Sarbanes-Oxley Act of
2002, as amended, and the related rules and regulations
promulgated under such act and the Exchange Act and (2) the
applicable listing and corporate governance rules and
regulations of the Nasdaq Stock Market. The Company (i) has
established and maintained disclosure controls and procedures
and internal control over financial reporting (as such terms are
defined in paragraphs (e) and (f), respectively, of
Rule 13a-15
under the Exchange Act) as required by
Rule 13a-15
under the Exchange Act, and (ii) has disclosed based on its
most recent evaluations, to its outside auditors and the audit
committee of the Company Board (A) all significant
deficiencies and material weaknesses in the design or operation
of internal control over financial reporting (as defined in
Rule 13a-15(f)
of the Exchange Act) which are reasonably likely to adversely
affect the Companys ability to record, process, summarize
and report financial data and (B) any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Companys internal control over
financial reporting. Since December 31, 2006,
(i) neither the Company nor any of its Subsidiaries nor, to
the Knowledge of the Company, any director, officer, employee,
auditor, accountant or representative of the Company or any of
its Subsidiaries has received or otherwise had or obtained
knowledge of any material complaint, allegation, assertion or
claim regarding the accounting or auditing practices,
procedures, methodologies or methods of the Company or any of
its Subsidiaries or their respective internal accounting
controls, including any material complaint, allegation,
assertion or claim that the Company or any of its Subsidiaries
has engaged in questionable accounting or auditing practices,
and (ii) no attorney representing the Company or any of its
Subsidiaries, whether or not employed by the Company or any of
its Subsidiaries, has reported evidence of a material violation
of securities laws, breach of fiduciary duty or similar
violation by the Company, any of its Subsidiaries or any of the
Companys or its Subsidiaries officers, directors,
employees or agents to the Company Board or any committee
thereof or to any director or officer of the Company.
(e) Since December 31, 2006, neither the Company nor
any of its Subsidiaries has received any SEC comment letter. The
Company has made available to Buyer true, correct and complete
copies of all written correspondence between the Company and its
Subsidiaries and the SEC occurring since January 1, 2008
and the date of this Agreement.
(f) Since December 31, 2006, the Company and its
Subsidiaries have duly filed with the FRB, the FDIC, the
Massachusetts Commissioner of Banks and any other applicable
Governmental Authority, in correct form, the reports required to
be filed under applicable laws and regulations (and have paid
all fees and assessments due and payable in connection
therewith) and such reports were in all material respects
complete and accurate in compliance with the requirements of
applicable laws and regulations.
3.13 Absence of Certain Changes or
Events. Except as disclosed in
Schedule 3.13 of the Company Disclosure Letter or in
the Company SEC Documents filed or furnished prior to the date
of this Agreement (excluding any disclosures set forth in any
risk factor section thereof), or as otherwise
expressly contemplated by this Agreement, since
December 31, 2009, (i) there has not been any change
or development in the business, operations, assets, liabilities,
condition (financial or otherwise), results of operations, cash
flows or properties of the
11
Company or any of its Subsidiaries which has had, or would
reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect and (ii) the
Company and its Subsidiaries have not taken any action that
would have been prohibited by Section 5.1 if taken after
the date of this Agreement.
3.14 Taxes and Tax Returns. Except
as set forth on Schedule 3.14 of the Company
Disclosure Letter:
(a) The Company and each of its Subsidiaries have timely
filed (or have caused to be timely filed on their behalf) (after
taking into account any extension of time within which to file)
in correct form all Tax Returns that were required to be filed
by any of them, and have paid (or have caused to be paid on
their behalf) all Taxes whether or not shown as due on any Tax
Returns, except for Taxes that are being diligently contested in
good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP.
(b) No assessment that has not been settled or otherwise
resolved has been made with respect to Taxes, other than such
additional Taxes as are being diligently contested in good faith
and which are described on Schedule 3.14 of the
Company Disclosure Letter and for which adequate reserves have
been established in accordance with GAAP. The Tax Returns of the
Company and its Subsidiaries have been examined by the Internal
Revenue Service (IRS) or other taxing
authority, as applicable, for all years through
December 31, 2005 (or the statute of limitations has closed
without examination) and any liability with respect thereto has
been satisfied. There is no dispute pending or written claim
asserted for Taxes or assessments upon either the Company or any
of its Subsidiaries, nor has the Company or any of its
Subsidiaries been requested to give, or has given, any currently
effective waiver extending the statutory period of limitation
applicable to any Tax assessment or deficiency. Neither the
Company nor any of its Subsidiaries is currently the beneficiary
of any extension of time within which to file any Tax Return. No
deficiency in Taxes or other proposed adjustment that has not
been settled or otherwise resolved has been asserted in writing
by any taxing authority against the Company or any of its
Subsidiaries. To the Knowledge of the Company, no Tax Return of
the Company or any of its Subsidiaries is now under examination
by any applicable taxing authority. There is no Lien for Taxes
(other than current Taxes not yet due and payable) on any of the
assets of the Company or any of its Subsidiaries. To the
knowledge of the Company, no written claim has ever been made by
any taxing authority in a jurisdiction where neither the Company
nor any of its Subsidiaries files Tax Returns that it is or may
be subject to any material Tax liability by that jurisdiction.
(c) Adequate provision has been made on the Company Balance
Sheet for all Taxes of the Company and its Subsidiaries in
respect of all periods through the Company Balance Sheet Date.
In addition, (A) proper and accurate amounts have been
withheld by the Company and each of its Subsidiaries from its
respective employees for all prior periods in compliance in all
respects with the Tax withholding provisions of applicable
federal, state, county and local laws; (B) federal, state,
county and local Tax Returns, which are complete and accurate in
all material respects, have been filed by the Company and each
of its Subsidiaries for all periods for which Tax Returns were
due with respect to income Tax withholding, Social Security and
unemployment Taxes; and (C) the amounts shown on such Tax
Returns to be due and payable have been paid in full or adequate
provision therefor has been included by the Company in its
consolidated financial statements included in the Company 2009
Form 10-K,
or, with respect to Tax Returns filed after the date hereof,
will be so paid or provided for in the consolidated financial
statements of the Company for the period covered by such Tax
Returns. Since the date of the Company Balance Sheet, neither
the Company nor any of its Subsidiaries has incurred any
liability for Taxes arising from extraordinary gains or losses,
as that term is used in GAAP, outside the ordinary course of
business consistent with recent past practice. The Company has
made available to Buyer, Buyer Bank and Merger Sub correct and
complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or
agreed to by the Company, or any of its Subsidiaries filed or
received since December 31, 2005.
(d) All material Taxes required to be withheld, collected
or deposited by or with respect to the Company and each
Subsidiary have been timely withheld, collected or deposited as
the case may be, and to the extent required, have been paid to
the relevant taxing authority. The Company and each of its
Subsidiaries have complied in all material respects with all
information reporting requirements imposed by the Code (or any
similar provision under any state or local law).
12
(e) Neither the Company nor any of its Subsidiaries has
entered into any transactions that are or would be part of any
listed transaction or that could give rise to any
list maintenance obligation under Sections 6011, 6111, or
6112 of the Code (or any similar provision under any state or
local law) or the regulations thereunder.
(f) Neither the Company nor any of its Subsidiaries is a
party to or bound by any Tax indemnification, Tax allocation or
Tax sharing agreement with any Person or has any current or
potential contractual obligation to indemnify any other Person
with respect to Taxes.
(g) Neither the Company nor any of its Subsidiaries
(i) has filed or been included in a combined, consolidated
or unitary income Tax Return (including any consolidated federal
income Tax Return) other than one of which the Company was the
parent or (ii) has any material liability for Taxes of any
Person (other than the Company and its Subsidiaries) arising
from the application of Treasury
Regulation Section 1.1502-6
or any analogous provision of state, local or foreign law, or as
a transferee or successor, by contract, or otherwise.
(h) Except as set forth on Schedule 3.14 of the
Company Disclosure Letter, neither the Company nor any of its
Subsidiaries has made any payment, is obligated to make any
payment, or is a party to any agreement that could obligate it
or its successor after the Merger to make any payment that will
not be deductible under Code Section 162(m) or Code
Section 280G.
(i) No property of the Company or any of its Subsidiaries
is property that is or will be required to be treated as being
owned by another Person pursuant to the provisions of
Section 168(f)(8) of the Code (as in effect prior to its
amendment by the Tax Reform Act of 1986) or is tax
exempt use property within the meaning of
Section 168(h) of the Code. Neither the Company nor any of
its Subsidiaries has been required to include in income any
adjustment pursuant to Section 481 of the Code by reason of
a voluntary change in accounting method initiated by the Company
or any of its Subsidiaries, and the IRS has not initiated or
proposed any such adjustment or change in accounting method.
(j) None of the Company or its Subsidiaries will be
required to include any item of income in, or exclude any item
of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of
any: (A) closing agreement as described in Code
Section 7121 (or any corresponding or similar provision of
state, local, or foreign income Tax law) executed on or prior to
the Closing Date; (B) intercompany transactions or any
excess loss account described in Treasury Regulations under Code
Section 1502 (or any corresponding or similar provision of
state, local, or foreign income Tax law); (C) installment
sale or open transaction disposition made on or prior to the
Closing Date; or (D) prepaid amount received on or prior to
the Closing Date.
(k) No closing agreement pursuant to Section 7121 of
the Code (or any similar provision of state, local or foreign
law) has been entered into by or with respect to the Company or
any of its Subsidiaries that would affect the calculation of
Taxes owed by the Company, the Surviving Corporation or any of
their respective Affiliates for any period after
December 31, 2005.
(l) Neither the Company nor any of its Subsidiaries has
distributed stock of another Person, or has had its stock
distributed by another Person, in a transaction that was
purported or intended to be governed in whole or in part by Code
Section 355 or Section 361.
3.15 Employee Benefit Plans.
(a) Schedule 3.15(a) of the Company Disclosure
Letter sets forth a list of every Employee Program that is
currently maintained by the Company or an ERISA Affiliate, or
with respect to which the Company or an ERISA Affiliate has any
liability, known or unknown.
(b) Except as described in Schedule 3.15(b) of
the Company Disclosure Letter, each Employee Program maintained
by the Company or an ERISA Affiliate which is intended to
qualify under Section 401(a) or 501(c)(9) of the Code has
received a favorable determination or approval letter from the
IRS regarding its qualification under such section, or an
application for such a determination has been or will be
submitted within the applicable period established by the IRS.
All amendments and filings required to maintain the qualified
status of any Employee Program after initial qualification have
been adopted or made on a timely basis. No event or omission has
occurred which would reasonably be likely to cause any Employee
Program to lose its qualification to provide tax-favored
13
benefits under the applicable Code Section (including, without
limitation, Code Sections 105, 106, 125, 132, 137 or
401(a)). Each asset held under any such Employee Program may be
liquidated or terminated without the imposition of any material
redemption fee or surrender charge. No partial termination
(within the meaning of Section 411(d)(3) of the Code) has
occurred with respect to any Employee Program.
(c) Each Employee Program intended to qualify as an
employee stock ownership plan within the meaning of
Section 4975(e) of the Code (an ESOP)
satisfies the applicable requirements of Section 409 of the
Code including, without limitation, Section 409(e). Each
ESOP provides that shares of Company Common Stock held as a plan
asset shall be voted in a manner that conforms with the Code and
the Employee Retirement Income Security Act of 1974, as amended
(ERISA).
(d) None of the Company or any ERISA Affiliate has failed
to comply, and all Employee Programs are in compliance, both in
form and operation, with any laws applicable with respect to the
Employee Programs maintained by the Company or any ERISA
Affiliate. With respect to any Employee Program maintained by
the Company or any ERISA Affiliate, there has been no
(i) prohibited transaction, as defined in
Section 406 of ERISA or Code Section 4975,
(ii) failure to comply with any provision of ERISA, other
applicable law, or any agreement, or (iii) non-deductible
contribution, which, in the case of any of (i), (ii), or (iii),
could subject the Company or any ERISA Affiliate to liability
either directly or indirectly (including, without limitation,
through any obligation of indemnification or contribution) for
any damages, penalties, or Taxes, or any other loss or expense.
No litigation or governmental administrative proceeding (or
investigation) or other proceeding (other than those relating to
routine claims for benefits) is pending or, to the Knowledge of
the Company, threatened, with respect to any such Employee
Program. All payments and contributions required to have been
made (under the provisions of any agreements or other governing
documents or applicable law) with respect to any and all
Employee Programs ever maintained by the Company or any ERISA
Affiliate, for all periods prior to the Closing Date, either
have been made or have been properly accrued.
(e) Neither the Company nor any ERISA Affiliate has ever
maintained, or contributed to (or been obligated to contribute
to) a Multiemployer Plan. Except as described in
Schedule 3.15(e) of the Company Disclosure Letter,
neither the Company nor any ERISA Affiliate has ever maintained,
or contributed to (or been obligated to contribute to) any
Employee Program which has been subject to Title IV of
ERISA or Code Section 412 or ERISA Section 302. Except
as described in Schedule 3.15(e) of the Company
Disclosure Letter, none of the Employee Programs ever maintained
by the Company or any ERISA Affiliate has ever provided health
care benefits to any employees after their employment is
terminated (other than as required by part 6 of subtitle B
of Title I of ERISA or comparable state law) or has ever
promised to provide such post-termination health care benefits.
(f) With respect to each Employee Program, complete and
correct copies of the following documents (if applicable to such
Employee Program) have been made available to Buyer, Buyer Bank
and Merger Sub: (i) all documents embodying such Employee
Program, and any funding medium for the Employee Program
(including, without limitation, trust agreements) as they may
have been amended to the date hereof; (ii) the most recent
IRS determination or approval letter with respect to such
Employee Program under Code Sections 401(a) or 501(c)(9),
and any applications for determination or approval subsequently
filed with the IRS; (iii) the two (2) most recently
filed IRS Forms 5500, with all applicable schedules and
accountants opinions attached thereto; (iv) the two
(2) most recent actuarial valuation reports completed with
respect to such Employee Program; (v) the summary plan
description for such Employee Program (or other descriptions of
such Employee Program provided to employees) and all
modifications thereto; and (vi) any correspondence since
December 31, 2005 from any Governmental Authority with
respect to any Employee Program that threatens any litigation,
claim, suit, investigation or other proceeding against the
Company, any ERISA Affiliate or any Employee Program or that
refers to or alleges any fact or circumstance which could
reasonably be expected to give rise to any such litigation,
claim, suit, investigation or other proceeding, together with
any response thereto by or on behalf of the Company or of any
Subsidiary or Employee Program.
(g) Except as described in Schedule 3.15(g) of
the Company Disclosure Letter, each Employee Program required to
be listed on Schedule 3.15(a) of the Company
Disclosure Letter may be amended, terminated, or otherwise
modified by the Company subject to applicable law, including the
elimination of any and all future benefit accruals under any
Employee Program and no employee communications or provision of
any Employee Program
14
document has restricted the right of the Company or the ERISA
Affiliate to so amend, terminate or otherwise modify such
Employee Program.
(h) Except as described in Schedule 3.15(h) of
the Company Disclosure Letter, neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (either alone or in
conjunction with any other event) result in, cause the
accelerated vesting, funding or delivery of, or increase the
amount or value of, any payment or benefit to any current or
former employee, officer, director or service provider of the
Company or any of its Subsidiaries or result in any excess
parachute payment within the meaning of Section 280G
of the Code.
(i) Each Employee Program ever maintained by the Company
(including each non-qualified deferred compensation arrangement)
has been maintained in compliance with all applicable
requirements of federal and state laws, including securities
laws, including (without limitation, if applicable) the
requirements that the offering of interests in such Employee
Program be registered under the Securities Act
and/or state
blue sky laws.
(j) Each Employee Program ever maintained by the Company or
an ERISA Affiliate has complied with the applicable notification
and other applicable requirements of the Consolidated Omnibus
Budget Reconciliation Act of 1985, the Family and Medical Leave
Act of 1993, the Health Insurance Portability and Accountability
Act of 1996, the Newborns and Mothers Health
Protection Act of 1996, the Mental Health Parity Act of 1996,
the Womens Health and Cancer Rights Act of 1998, and any
other applicable federal or state law.
(k) Except as set forth on Schedule 3.15(k) of
the Company Disclosure Letter, no Employee Program is a
nonqualified deferred compensation plan, as such term is defined
under Code Section 409A(d)(1) and the guidance thereunder
(a 409A Plan) nor are there any so-called
rabbi trusts or secular trusts
established to satisfy, in whole or in part, the obligations of
any such plan. Each 409A Plan complies in all respects, in both
form and operation, with the requirements of Section 409A
of the Code and the Treasury regulations and guidance thereunder.
(l) Except as set forth in Schedule 3.15(l) of
the Company Disclosure Letter, neither the Company nor any of
its Subsidiaries has taken any action to take corrective action
or make a filing under any voluntary correction program of the
IRS, Department of Labor or any other Governmental Authority
with respect to any Employee Program, and neither the Company
nor any of its Subsidiaries has any Knowledge of any plan defect
including, without limitation, any defect that would qualify for
correction under any such program.
(m) Except as set forth in Schedule 3.15(m) of
the Company Disclosure Letter, each Employee Program that is a
single employer plan (within the meaning of
Section 3(41) of ERISA) that is maintained by the Company
or any ERISA Affiliate that is intended to satisfy the
qualifications requirements of Section 401(a) of the Code
has assets valued in excess of the accumulated benefit
obligations of such plan.
(n) For purposes of this Agreement:
(i) Employee Program means
(A) all employee benefit plans within the meaning of ERISA
Section 3(3), including, but not limited to, multiple
employer welfare arrangements (within the meaning of ERISA
Section 3(40)), plans to which more than one unaffiliated
employer contributes and employee benefit plans (such as foreign
or excess benefit plans) which are not subject to ERISA; and
(B) all employment, stock incentive, stock purchase, bonus,
retention or incentive award, vacation, fringe benefit,
severance pay, deferred compensation, non-qualified retirement,
supplemental income and other similar agreements, plans,
policies and arrangements, and any arrangements not described in
(A) above that are intended to comply with Code
Sections 105, 106, 120, 125, 127, 129, 132 or 137. In the
case of an Employee Program funded through a trust described in
Code Section 401(a) or an organization described in Code
Section 501(c)(9), each reference to such Employee Program
shall include a reference to such trust or organization.
(ii) An entity maintains an Employee
Program if such entity sponsors, contributes to, or provides
benefits under or through such Employee Program, or has any
obligation (by agreement or under applicable law) to contribute
to or provide benefits under or through such Employee Program,
or if such Employee Program provides benefits to or otherwise
covers employees, directors or independent contractors of such
entity (or their spouses, dependents, or beneficiaries).
15
(iii) An entity is an ERISA Affiliate of
the Company if it would be considered a single employer with the
Company under ERISA Section 4001(b) or part of the same
controlled group as the Company for purposes of
ERISA Section 302(d)(8)(C) or Code Section 414(b).
(iv) Multiemployer Plan
means a multiemployer plan within the meaning of
Section 3(37) of ERISA, a multiple employer welfare
arrangement within the meaning of Section 3(40) of
ERISA or a multiple employer plan within the meaning
of Section 4063 of ERISA.
3.16 Labor Matters. The Company
and its Subsidiaries are, and since December 31, 2006 have
been, in compliance with all federal, state and local laws
respecting employment and employment practices, terms and
conditions of employment, and wages and hours, and other than
normal accruals of wages during regular payroll cycles, there
are no arrearages in the payment of wages. There are no
complaints, lawsuits, arbitrations, administrative proceedings,
or other proceedings of any nature pending or, to the Knowledge
of the Company, threatened, against the Company or any of its
Subsidiaries brought by or on behalf of any applicant for
employment, any current or former employee, any person alleging
to be a current or former employee, any class of the foregoing,
or any Governmental Authority, relating to any such law or
regulation, or alleging breach of any express or implied
contract of employment, wrongful termination of employment, or
alleging any other discriminatory, wrongful or tortious conduct
in connection with the employment relationship. Neither the
Company nor any of its Subsidiaries is a party to, or bound by
any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor organization, nor
is the Company or any of its Subsidiaries the subject of a
proceeding asserting that the Company or any of its Subsidiaries
has committed an unfair labor practice (within the meaning of
the National Labor Relations Act) or seeking to compel the
Company or any of its Subsidiaries to bargain with any labor
organization as to wages and conditions of employment. No work
stoppage involving the Company or any of its Subsidiaries is
pending or, to the Knowledge of the Company, threatened. Neither
the Company nor any of its Subsidiaries is involved in, or, to
the Knowledge of the Company, threatened with, any dispute,
arbitration, lawsuit or administrative proceeding relating to
labor or employment matters that would reasonably be expected to
interfere in any respect with the respective business activities
of the Company or its Subsidiaries. To the Knowledge of the
Company, no labor union is attempting to organize employees of
the Company or any of its Subsidiaries. The Company has made
available to Buyer, Buyer Bank and Merger Sub a copy of all
written policies and procedures related to the Companys
and its Subsidiaries employees.
3.17 Insurance. The Company and
each of its Subsidiaries is insured, and during each of the past
three (3) calendar years has been insured, for reasonable
amounts with financially sound and reputable insurance companies
against such risks as companies engaged in a similar business
would, in accordance with good business practice, customarily be
insured, and has maintained all insurance required by applicable
laws and regulations. Schedule 3.17 of the Company
Disclosure Letter lists all insurance policies maintained by the
Company and each of its Subsidiaries as of the date hereof. All
of the policies and bonds maintained by the Company or any of
its Subsidiaries are in full force and effect and, to the
Knowledge of the Company, all claims thereunder have been filed
in a due and timely manner and no such claim has been denied.
Neither the Company nor any of its Subsidiaries is in breach of
or default under any insurance policy, and to the Knowledge of
the Company, there has not occurred any event that, with the
lapse of time or the giving of notice or both, would constitute
such a breach or default.
3.18 Environmental Matters. Except
as described in Schedule 3.18 of the Company
Disclosure Letter:
(a) Each of the Company and its Subsidiaries and each
property owned, leased or operated by any of them (each, a
Company Property) and, to the Knowledge of
the Company, the Loan Properties, are, and, since
December 31, 2006, have been, in material compliance with
all Environmental Laws.
(b) The Company has not received any notice from the United
States Environmental Protection Agency, the Massachusetts
Department of Environmental Protection, or any other
Governmental Authority claiming that (i) any Company
Property or any use thereof violates any Environmental Law, or
(ii) the Company or any of its Subsidiaries or any of their
respective employees or agents has violated any Environmental
Law with respect to any Company Property.
16
(c) Neither the Company nor any of its Subsidiaries has any
outstanding liability to the Commonwealth of Massachusetts, the
United States of America or any other Governmental Authority
under any Environmental Law. No Lien against any Company
Property has arisen due to any Environmental Law.
(d) There is no suit, claim, action or proceeding pending
or, to the Knowledge of the Company, threatened, before any
Governmental Authority in which the Company or any of its
Subsidiaries has been or, with respect to threatened
proceedings, may be, named as a defendant, responsible party or
potentially responsible party (A) for alleged noncompliance
(including by any predecessor) with any Environmental Law or
(B) relating to the release or presence of any Hazardous
Materials or Oil at, on, affecting or from any Company Property
or any previously owned, operated or leased property.
(e) To the Knowledge of the Company, neither the Company
nor any of its Subsidiaries has received or been named in any
written notice regarding a matter on which a suit, claim, action
or proceeding as described in Section 3.18(d) would
reasonably be based.
(f) During the period of (i) the Companys or any
of its Subsidiaries ownership or operation of any Company
Property or (ii) the Companys or any of its
Subsidiaries holding of a security interest in a Loan
Property, to the Knowledge of the Company, there has been no
release of Hazardous Material or Oil at, on, affecting or from
any Company Property or Loan Property, and no Hazardous Material
is present at, on, affecting or from any Company Property or
Loan Property that would reasonably be expected to result in any
material liability or obligation pursuant to Environmental Laws.
To the Knowledge of the Company, prior to the period of the
Companys or any of its Subsidiaries ownership or
operation of any Company Property or any previously owned,
operated or leased property, there was no release or presence of
Hazardous Material or Oil at, on, affecting or from any Company
Property or any previously owned, operated or leased property
that would reasonably be expected to result in any material
liability or obligation pursuant to Environmental Laws.
(g) No Hazardous Materials have been or are currently
generated, stored, transported, utilized, disposed of, managed,
released or located at, on, affecting or from any Company
Property, whether or not in reportable quantities, or have been
in any manner introduced onto any Company Property, including,
without limitation, any septic, sewage or other waste disposal
systems servicing any Company Property, in material violation of
any Environmental Law.
(h) To the Knowledge of the Company, there is no
underground storage tank on or under any Company Property.
(i) The Company has obtained and is in compliance with
every material permit, license and approval required for any
activity or operation at any Company Property by any
Environmental Law.
(j) Neither the Company nor any of its Subsidiaries is an
owner or operator (as such terms are defined under any
Environmental Law) of any Loan Property, and neither the Company
nor any of its Subsidiaries has any relationship to a
Participation Facility.
(k) The Company has delivered to Buyer an accurate list,
together with correct and complete copies, of any and all
environmental monitoring, sampling, tests or studies, and any
report in respect thereof, which the Company or any of its
Subsidiaries may have initiated, or were conducted by or on
behalf of the Company or any of its Subsidiaries and any and all
environmental tests, studies or reports conducted or made by
others which are in the possession of the Company or any of its
Subsidiaries in respect of any Company Property.
(l) For purposes of this Agreement:
(i) Loan Property means any
property in which the Company or any of its Subsidiaries holds a
security interest, and, where required by the context (as a
result of foreclosure), said term means the owner or operator of
such property;
(ii) Participation Facility
means any facility in which the Company or any of its
Subsidiaries participates or has participated in the management
and, where required by the context, said term means the owner or
operator of such property, pursuant to any Environmental Law;
17
(iii) Hazardous Material
means any compound, chemical, pollutant, contaminant, toxic
substance, hazardous waste, hazardous material, or hazardous
substance (whether solid, liquid or gas), as any of the
foregoing may be defined, identified or regulated under or
pursuant to any Environmental Laws, and including without
limitation, asbestos, asbestos-containing materials,
polychlorinated biphenyls, toxic mold, or fungi, or any other
material that may pose a threat to the Environment or to human
health and safety but excludes substances in kind and amounts
used or stored for cleaning purposes or other maintenance or for
the operation of motor vehicles used by tenants (if applicable)
or guests, and otherwise in compliance with Environmental Laws;
(iv) Oil means oil or
petroleum of any kind or origin or in any form, as defined in or
pursuant to the Federal Clean Water Act, 33 U.S.C.
Section 1251 et seq., the Massachusetts Oil and Hazardous
Material Release Prevention and Response Act, G.L. c. 21E, or
any other Environmental Law;
(v) Environment means any
air, water vapor, surface water, groundwater, drinking water
supply, surface soil, subsurface soil, sediment, surface or
subsurface strata, plant and animal life, and any other
environmental medium or natural resource; and
(vi) Environmental Law
means any federal, state, regional or local law, statute,
ordinance, rule, regulation, code, license, permit, approval,
consent order, judgment, decree, injunction or agreement with
any Governmental Authority relating to (1) the protection,
preservation or restoration of the Environment,
and/or
(2) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production,
release or disposal of Hazardous Material or Oil. The term
Environmental Law includes without limitation
(a) the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, 42 U.S.C. § 9601,
et seq.; the Resource Conservation and Recovery Act, as amended,
42 U.S.C. § 6901, et seq.; the Clean Air Act, as
amended, 42 U.S.C. § 7401, et seq.; the Federal
Water Pollution Control Act, as amended, 33 U.S.C.
§ 1251, et seq.; the Toxic Substances Control Act, as
amended, 15 U.S.C. § 2601, et seq.; the Emergency
Planning and Community Right to Know Act, 42 U.S.C.
§ 11001, et seq.; the Safe Drinking Water Act,
42 U.S.C. § 300f, et seq.; and all comparable
state, regional and local laws, regulations, policies or
guidance, and (b) any common law (including, without
limitation, common law that may impose strict liability) that
may impose liability or obligations for injuries or damages to
persons or property due to the presence of or exposure to any
Hazardous Material or Oil as in effect on or prior to the date
of this Agreement.
3.19 Intellectual Property.
(a) Schedule 3.19 of the Company Disclosure
Letter sets forth a complete and correct list of all Company
Intellectual Property. The Company or its Subsidiaries owns or
has a valid license to use all Company Intellectual Property,
free and clear of any Lien, royalty or other payment obligation
(except for royalties or payments with respect to
off-the-shelf
software at standard commercial rates). To the Knowledge of the
Company, the conduct of the business of the Company or any of
its Subsidiaries does not violate, misappropriate or infringe
upon the intellectual property rights of any third party, nor,
to the knowledge of the Company, has the Company or any of its
Subsidiaries received any communications alleging that any of
them has violated, misappropriated or infringed any of the
intellectual property rights of any third party. To the
Knowledge of the Company, no other Person is violating,
misappropriating or infringing on any Company Intellectual
Property. The consummation of the transactions contemplated by
this Agreement will not result in the loss or impairment of the
right of the Company or any of its Subsidiaries to own or use
any Company Intellectual Property. All renewal and maintenance
fees, Taxes, and other fees required to be paid and applicable
to the Company Intellectual Property have been paid in full
through the date of this Agreement and will be paid in full
through the Effective Time.
(b) For purposes of this Agreement:
(i) Company Intellectual
Property means the Intellectual Property used in
or held for use in the conduct of the business of the Company
and its Subsidiaries that is material to the financial
condition, results of operations or business of the Company.
(ii) Intellectual Property
means (A) trademarks, service marks, trade names, Internet
domain names, designs, logos, slogans, and general intangibles
of like nature, together with all goodwill, registrations and
18
applications related to the foregoing; (B) patents and
industrial designs (including any continuations, divisionals,
continuations-in-part,
renewals, reissues, and applications for any of the foregoing);
(C) copyrights (including any registrations and
applications for any of the foregoing); and (D) technology,
trade secrets and other confidential information, know-how,
proprietary processes, formulae, algorithms, models, and
methodologies.
3.20 Material Agreements; Defaults.
(a) Except as filed as an exhibit to any Company SEC
Document filed or furnished prior to the date of this Agreement,
Schedule 3.20 of the Company Disclosure Letter, and
except for this Agreement and the transactions contemplated
hereby, neither the Company nor any of its Subsidiaries is a
party to or is bound by (i) any agreement, arrangement, or
commitment that is material to the financial condition, results
of operations or business of the Company; (ii) any written
(or oral) agreement, arrangement, or commitment in excess of
$100,000 per annum relating to the employment, including,
without limitation, engagement as a consultant of any Person, or
the election or retention in office or severance of any present
or former director or officer of the Company or any of its
Subsidiaries; (iii) any agreement by and among the Company
or any of its Subsidiaries,
and/or any
of its directors or executive officers or any of their immediate
family members or any Person controlled by any of them (except
as set forth on the Company Banks
Schedule RC-M
(Extensions of credit by the reporting bank to its executive
officers, directors, principal shareholders, and their related
interests as of the report date) filed as part of the Company
Banks Call Report for the quarter ended March 31,
2010, which Schedule has been provided to Buyer, Buyer Bank and
Merger Sub); (iv) any contract or agreement or amendment
thereto that would be required to be filed as an exhibit to a
Form 10-K
filed by the Company as of the date hereof that has not been
filed as an exhibit to the Company 2009
Form 10-K;
(v) any agreement, arrangement, or commitment (whether
written or oral) which, upon the consummation of the
transactions contemplated by this Agreement, would result in any
payment (whether of severance pay or otherwise) becoming due
from the Company or any of its Subsidiaries to any director,
officer or employee thereof; (vi) any agreement,
arrangement or commitment (whether written or oral) which is a
consulting or other agreement (including agreements entered into
in the ordinary course and data processing, software programming
and licensing contracts) not terminable on sixty (60) days
or less notice or involving the payment of in excess of $100,000
per annum; (vii) any agreement, arrangement or commitment
(whether written or oral) which restricts the conduct of any
line of business by the Company or any of its Subsidiaries or
limits the freedom of the Company or any of its Subsidiaries to
compete in any geographic area or with any Person, or which
requires referrals of business or requires the Company or any of
its Subsidiaries to make available investment opportunities to
any Person on a priority or exclusive basis; (viii) any
agreement, arrangement or commitment (whether written or oral)
(including any stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan) any of the
payments or benefits of which will be increased, or the vesting
of the benefits of which will be accelerated, by the occurrence
of any of the transactions contemplated by this Agreement, or
the value of any of the benefits of which will be affected by,
or calculated on the basis of, any of the transactions
contemplated by this Agreement; (ix) any agreement relating
to the incurrence of indebtedness (other than deposit
liabilities and advances and loans from the FHLB of Boston
incurred in the ordinary course of business consistent with past
practice) by the Company or any of its Subsidiaries, including
any sale and leaseback transactions, capitalized leases and
other similar financing transactions; (x) any agreement
which grants any right of first refusal, right of first offer or
similar right with respect to any material assets, rights or
properties of the Company or any of its Subsidiaries;
(xi) any agreement that contains a most favored
nation clause or other similar term providing preferential
pricing or treatment to a party (other than the Company or its
Subsidiaries) that is material to the Company or its
Subsidiaries; (xii) any agreement that provides for the
indemnification by the Company or its Subsidiaries of any Person
(other than customary agreements with vendors providing goods or
services to the Company or its Subsidiaries where the potential
indemnity obligations thereunder are not reasonably expected to
be material to the Company); (xiii) any agreement that
relates to a joint venture, partnership or other similar
arrangement; (xiv) any agreement that relates to an
acquisition, divestiture, merger or similar transaction that
contains representations, covenants, indemnities or other
obligations (including indemnification, earn-out and
other contingent obligations) that are still in effect;
(xv) any agreement that provides for material payments to
be paid by the Company or any of its Subsidiaries upon a change
in control thereof or (xvi) any agreement that relates to
material Company Intellectual Property. Each contract,
arrangement, commitment or understanding of the type described
in this Section 3.20(a) is referred to herein as a
Company Material Contract. The Company has
previously made available to Buyer, Buyer Bank and Merger Sub
19
complete and correct copies of all of the Company Material
Contracts, including any and all amendments and modifications
thereto.
(b) Each Company Material Contract is legal, valid and
binding upon the Company or its Subsidiaries, as the case may
be, and to the Knowledge of the Company, all other parties
thereto, and is in full force and effect and is enforceable in
accordance with its terms (except as such enforceability may be
limited by the Bankruptcy and Equity Exception). Neither the
Company nor any of its Subsidiaries is in breach of or default
under any Company Material Contract and, to the Knowledge of the
Company, there has not occurred any event that, with the lapse
of time or the giving of notice or both, would constitute such a
breach or default. To the Knowledge of the Company, no other
party to any Company Material Contract is in breach of or
default under such Company Material Contract, and there has not
occurred any event that, with the lapse of time or the giving of
notice or both, would constitute such a breach or default.
3.21 Property and Leases.
(a) Schedule 3.21(a) of the Company Disclosure
Letter lists all real property leased or subleased to or by the
Company or any of its Subsidiaries. The Company has made
available to Buyer, Buyer Bank and Merger Sub complete and
correct copies of the leases and subleases (each as amended to
date) of the properties listed in Schedule 3.21(a)
of the Company Disclosure Letter. With respect to each such
lease and sublease of the properties listed in
Schedule 3.21(a) of the Company Disclosure Letter:
(i) the lease or sublease is a valid, binding and
enforceable obligation of the Company or its Subsidiary, as the
case may be, subject to the Bankruptcy and Equity Exception;
(ii) neither the Company nor any of its Subsidiaries, or to
the Knowledge of the Company, any other party, is in breach or
violation of, or default under, any such lease or sublease, and
no event has occurred, is pending or to the Knowledge of the
Company, is threatened which, after the giving of notice or the
lapse of time or both, would constitute a breach or default by
the Company or any of its Subsidiaries;
(iii) neither the Company nor any of its Subsidiaries has
assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in any leasehold or
subleasehold; and
(iv) there are no Liens, easements, covenants or other
restrictions applicable to the real property subject to such
lease or sublease, except for recorded easements, covenants, and
other restrictions, which do not, individually or in the
aggregate, materially impair the current uses or the occupancy
by the Company or its Subsidiaries, as the case may be, of the
property subject thereto.
(b) The Company owns fee simple title to the real property
listed on Schedule 3.21(b) of the Company Disclosure
Letter, free and clear of any Liens, easements, covenants, or
other restrictions applicable to such real property, except for
recorded easements, covenants, and other restrictions, which do
not, individually or in the aggregate, materially impair the
current uses or the occupancy by the Company or its
Subsidiaries, as the case may be, of the property subject
thereto. Except as set forth on Schedule 3.21(b), no tenant
or other party in possession of any of such property has any
right to purchase, or holds any right of first refusal to
purchase, such properties.
(c) To the Knowledge of the Company, none of the properties
listed on Schedules 3.21(a) or (b) of the Company
Disclosure Letter, or the buildings, structures, facilities,
fixtures or other improvements thereon, or the use thereof,
contravenes or violates any building, zoning, administrative,
occupational safety and health or other applicable statute, law,
ordinance, rule or regulation in any respect that could
reasonably be expected to require material expenditures by the
Company or any of its Subsidiaries or to result in a material
impairment in or limitation on the activities presently
conducted there.
(d) The plants, buildings, structures and equipment located
on the property listed on Schedules 3.21(a) and (b) of the
Company Disclosure Letter and used by the Company or any of its
Subsidiaries are in good operating condition and in a state of
good maintenance and repair, ordinary wear and tear excepted,
are adequate and suitable for the purposes for which they are
presently being used and, to the Knowledge of the Company, there
are no condemnation or appropriation proceedings pending or
threatened against any of the Company Real Property or any
plants, buildings or other structures thereon.
20
(e) To the Knowledge of the Company and except as set forth
on Schedule 3.21(e) of the Company Disclosure
Letter, the Company and its Subsidiaries own good title, free
and clear of all Liens, to all personal property and other
non-real estate assets, in all cases excluding Intellectual
Property assets, necessary to conduct the business of the
Company as currently conducted, except for (i) Liens
reflected in the Company Financial Statements, (ii) Liens or
imperfections of title that do not materially detract from the
value or materially interfere with the present use of the assets
subject thereto or affected thereby, (iii) Liens for
current Taxes not yet due and payable, and (iv) Liens on
the landlords interest in the premises. The Company and
its Subsidiaries, as lessees, have the right under valid and
subsisting leases to use, possess, and control all personal
property leased by the Company or its Subsidiaries as now used,
possessed, and controlled by the Company or its Subsidiaries, as
applicable.
3.22 Regulatory
Capitalization. The Company Bank is, and
immediately prior to the Effective Time will be, well
capitalized, as such term is defined in the rules and
regulations promulgated by the FDIC. The Company is, and
immediately prior to the Effective Time will be, well
capitalized as such term is defined in the rules and
regulations promulgated by the FRB.
3.23 Loans; Nonperforming and Classified
Assets.
(a) Each loan agreement, note or borrowing arrangement,
including, without limitation, portions of outstanding lines of
credit and loan commitments (collectively,
Loans), on the Companys or any of its
Subsidiaries books and records, (i) was made and has
been serviced in accordance with the Companys lending
standards in the ordinary course of business; (ii) is
evidenced by appropriate and sufficient documentation;
(iii) to the extent secured, has been secured by valid
liens and security interests which have been perfected; and
(iv) constitutes the legal, valid and binding obligation of
the obligor named therein, enforceable in accordance with its
terms, subject to the Bankruptcy and Equity Exception. The
Company has made available to Buyer, Buyer Bank and Merger Sub
complete and correct copies of its lending policies. The deposit
and loan agreements of the Company and its Subsidiaries comply
with all applicable laws, rules and regulations. The allowance
for loan losses reflected in the Company SEC Documents and
financial statements filed therewith, as of their respective
dates, is adequate under GAAP and all regulatory requirements
applicable to financial institutions.
(b) Schedule 3.23 of the Company Disclosure
Letter discloses as of May 31, 2010: (A) any Loan
under the terms of which the obligor is sixty (60) or more
days delinquent in payment of principal or interest, or to the
Knowledge of the Company, in default of any other provision
thereof; (B) each Loan which has been classified as
other loans specially mentioned,
classified, criticized,
substandard, doubtful, credit risk
assets, watch list assets, loss or
special mention (or words of similar import) by the
Company, its Subsidiaries or a Governmental Authority (the
Classified Loans); (C) a listing of the
real estate owned, acquired by foreclosure or by
deed-in-lieu
thereof, including the book value thereof; and (D) each
Loan with any director, executive officer or five percent (5%)
or greater shareholder of the Company, or to the Knowledge of
the Company, any Person controlling, controlled by or under
common control with any of the foregoing. All Loans which are
classified as Insider Transactions by
Regulation O of the FRB have been made by the Company or
any of its Subsidiaries in an arms-length manner made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other Persons and do not involve more than
normal risk of collectibility or present other unfavorable
features.
3.24 Risk Management Instruments.
(a) Derivative Contracts
means a derivative contract or derivative instrument as such
terms are used for purposes of reporting the same under the
FFIEC Reports of Condition and Income and related Glossary (each
as revised as of the date of this Agreement); provided
that, for the avoidance of doubt, the term
Derivative Contracts shall not include any
Option.
(b) The Company and its Subsidiaries have adopted policies
and procedures consistent with the publications of Governmental
Authorities with respect to Derivative Contracts. All Derivative
Contracts, whether entered into for the account of the Company
or any of its Subsidiaries or for the account of a customer of
the Company or any of its Subsidiaries, were entered into in the
ordinary course of business consistent with recent past practice
and in accordance with applicable laws, rules, regulations and
policies of any Governmental Authority and in accordance with
the investment, securities, commodities, risk management and
other policies, practices and procedures
21
employed by the Company and its Subsidiaries, and with
counterparties believed at the time to be financially
responsible and able to understand (either alone or in
consultation with their advisers) and to bear the risks of such
Derivative Contracts. All of such Derivative Contracts are valid
and binding obligations of the Company or one of its
Subsidiaries enforceable against it in accordance with their
terms (subject to the Bankruptcy and Equity Exception), and are
in full force and effect. The Company and its Subsidiaries and,
to the Knowledge of the Company, all other parties thereto, have
duly performed their obligations under the Derivative Contracts
to the extent that such obligations to perform have accrued and,
to the Knowledge of the Company, there is no breach, violation
or default or allegation or assertion of such by any party
thereunder.
3.25 Investment Securities and Commodities.
(a) Each of the Company and its Subsidiaries has good title
to all securities and commodities owned by it (except those sold
under repurchase agreements or held in any fiduciary or agency
capacity), free and clear of any Lien, except to the extent such
securities or commodities are pledged in the ordinary course of
business to secure obligations of the Company or its
Subsidiaries. Such securities and commodities are valued on the
books of the Company in accordance with GAAP in all material
respects.
(b) The Company and its Subsidiaries and their respective
businesses employ investment, securities, commodities, risk
management and other policies, practices and procedures (the
Policies, Practices and Procedures)
which the Company believes are prudent and reasonable in the
context of such businesses. Prior to the date hereof, the
Company has made available to Buyer, Buyer Bank and Merger Sub
the material Policies, Practices and Procedures.
(c) The Company has provided to Buyer a correct and
complete listing of Company Banks investment securities
portfolio as of June 30, 2010.
3.26 Repurchase Agreements. With
respect to all agreements pursuant to which the Company or any
of its Subsidiaries has purchased securities subject to an
agreement to resell, if any, the Company or any of its
Subsidiaries, as the case may be, has a valid, perfected first
lien or security interest in the government securities or other
collateral securing the repurchase agreement, and, as of the
date hereof, the value of such collateral equals or exceeds the
amount of the debt secured thereby.
3.27 Deposit Insurance.
(a) The deposits of Company Bank are insured by the FDIC in
accordance with the Federal Deposit Insurance Act (the
FDIA) to the fullest extent permitted by law.
The Company Bank has paid all premiums and assessments and filed
all reports required by the FDIA. No proceeding for the
revocation or termination of such FDIC deposit insurance is
pending or, to the Knowledge of the Company, threatened.
(b) The Company Bank has paid all premiums and assessments
and filed all reports required by the Depositors Insurance Fund
(the DIF). No proceeding for the revocation
or termination of such DIF deposit insurance is pending or, to
the Knowledge of the Company, threatened.
3.28 CRA; Anti-money Laundering; Privacy
Regulations. Neither the Company nor any of
its Subsidiaries is a party to any agreement with any individual
or group regarding CRA matters and the Company is not aware of,
and none of the Company and its Subsidiaries has been advised
of, or has any reason to believe that any facts or circumstances
exist, which would cause the Company Bank: (i) to be deemed
not to be in satisfactory compliance with the CRA, and the
regulations promulgated thereunder, or to be assigned a rating
for CRA purposes by federal or state bank regulators of lower
than satisfactory; or (ii) to be deemed to be
operating in violation of the federal Bank Secrecy Act, as
amended, and its implementing regulations (31 C.F.R.
Part 103), the USA Patriot Act of 2001, Public Law
107-56, and
the regulations promulgated thereunder (the USA
Patriot Act), any order issued with respect to
anti-money laundering by the U.S. Department of the
Treasurys Office of Foreign Assets Control, or any other
applicable anti-money laundering statute, rule or regulation.
The Company Bank Board has adopted, and the Company Bank has
implemented: (i) an anti-money laundering program that
contains adequate and appropriate customer identification
verification procedures that comply with Section 326 of the
USA Patriot Act and such anti-money laundering program meets the
requirements in all material respects of Section 352 of the
USA Patriot Act and the regulations thereunder, and Company Bank
has complied in all material respects with any requirements to
22
file reports and other necessary documents as required by the
USA Patriot Act and the regulations thereunder; and (ii) a
written information security program that includes reasonable
and appropriate administrative, physical, and technical
safeguards sufficient to comply with the requirements set forth
in 201 CMR 17.00 and the Interagency Guidelines Establishing
Information Security Standards (12 C.F.R. Part 364)
(the Interagency Information Security
Guidelines). To the Companys Knowledge, there
are no facts or circumstances that would cause the Company Bank
to be deemed not to be in satisfactory compliance in any
material respect with the applicable security and privacy of
customer information requirements contained in any federal or
state privacy or information security laws and regulations,
including without limitation, in Title V of the
Gramm-Leach-Bliley Act of 1999, the Interagency Information
Security Guidelines, and 201 CMR 17.00, as well as the
provisions of the written information security program adopted
by the Company Bank. To the Companys Knowledge, no
non-public customer information has been disclosed to or
accessed by an unauthorized third party in a manner which would
require the Company Bank to notify any customer or Governmental
Authority of such disclosure or undertake any other remedial
action pursuant to any federal or state data security breach law
or regulation including, without limitation, Mass. Gen. L. c.
93H and Supplement A to the Interagency Information Security
Guidelines.
3.29 Transactions with
Affiliates. Except as set forth in
Schedule 3.29 of the Company Disclosure Letter,
(i) there are no outstanding amounts payable to or
receivable from, or advances by the Company or any of its
Subsidiaries to, and neither the Company nor any of its
Subsidiaries is otherwise a creditor or debtor to, any
shareholder, director, employee or Affiliate of the Company or
any of its Subsidiaries, other than as part of the normal and
customary terms of such persons employment or service as a
director with the Company or any of its Subsidiaries and
(ii) there are no agreements, contracts, plans or
arrangements between the Company or any of its Subsidiaries on
the one hand and (A) any officer or director of the Company
or any of its Subsidiaries, (B) any record or beneficial
owner of five percent (5%) or more of the Company Common Stock,
(C) any affiliate or family member of any such officer,
director or record or beneficial owner or (D) any other
Affiliate of the Company, on the other hand, except those of a
type available to employees of the Company generally. All
agreements between the Company and any of its Affiliates comply,
to the extent applicable, with Regulation W of the FRB.
3.30 Inapplicability of Takeover Provisions.
(a) The Company has taken all action required to be taken
by it in order to exempt this Agreement, the Voting Agreements
and the transactions contemplated hereby and thereby from, and
this Agreement, the Voting Agreements and the transactions
contemplated hereby and thereby are exempt from, the
requirements of any moratorium, business
combination, control share, fair
price or other takeover defense laws and regulations
(collectively, Takeover Laws), if any, of the
Commonwealth of Massachusetts or any other applicable state.
(b) In accordance with Section 4 of Article VI(A)
of the Companys Articles of Organization, the Company
Board has determined that Buyer is not an Interested Stockholder
(as defined in the Companys Articles of Organization).
3.31 Brokers; Fairness Opinion. No
action has been taken by the Company or any of its Subsidiaries
that would give rise to any valid claim against the Company for
a brokerage commission, finders fee or other like payment
with respect to the transactions contemplated by this Agreement,
except in connection with the engagement of Sandler ONeill
+ Partners, L.P. (the Financial
Advisor) by the Company. The fee payable to the
Financial Advisor in connection with the transactions
contemplated by this Agreement is accurately and completely
described in an engagement letter between the Company and the
Financial Advisor, a complete and correct copy of which has been
made available to Buyer, Buyer Bank and Merger Sub (the
Engagement Letter). The Company Board has
received the opinion of the Financial Advisor, to the effect
that, as of the date hereof, and based upon and subject to the
factors and assumptions set forth therein, the Merger
Consideration to be received by the Company Shareholders
pursuant to the Merger is fair from a financial point of view to
such Company Shareholders, and such opinion has not been amended
or rescinded, and remains in full force and effect. The Company
has been authorized by the Financial Advisor to permit the
inclusion of such opinion in its entirety in the Proxy Statement.
3.32 Rights Agreement. The Company
or the Company Board, as the case may be, has (a) taken all
necessary actions so that the execution and delivery of this
Agreement and the Voting Agreements and the consummation of the
transactions contemplated hereby and thereby will not result in
a Distribution Date or
23
Stock Acquisition Date (each as defined in the
Rights Agreement) or result in Buyer being an Acquiring
Person or Adverse Person (each as defined in
the Rights Agreement) and (b) amended the Rights Agreement
to (i) render it inapplicable to this Agreement and the
Voting Agreements and the transactions contemplated hereby and
thereby and (ii) provide that the Expiration
Date (as defined in the Rights Agreement) shall occur
immediately prior to the Closing.
3.33 Company Information. The
information relating to the Company and its Subsidiaries that is
provided by the Company or its representatives for inclusion in
the Proxy Statement or in any application, notification or other
document filed with any other Governmental Authority in
connection with the transactions contemplated by this Agreement,
will not, on the date the Proxy Statement is first mailed to the
Company Shareholders or at the time of the Company Meeting or
the date such application notification or other document is
filed, as applicable, contain any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they
are made, not misleading. The portions of the Proxy Statement
relating to the Company and its Subsidiaries and other portions
within the reasonable control of the Company and its
Subsidiaries will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations
thereunder.
3.34 Disclosure. No representation
or warranty contained in this Agreement, and no statement
contained in any certificate delivered hereunder, in the Company
Disclosure Letter or in any Company SEC Document as the same may
be updated as of the date hereof, furnished to Buyer pursuant to
the provisions hereof, contains or will contain any untrue
statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements herein
or therein not misleading.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF BUYER
4.1 Making of Representations and Warranties.
(a) As a material inducement to the Company to enter into
this Agreement and to consummate the transactions contemplated
hereby, Buyer, Buyer Bank and Merger Sub jointly and severally
hereby make to the Company the representations and warranties
contained in this Article IV.
(b) On or prior to the date hereof, Buyer, Buyer Bank and
Merger Sub have delivered to the Company a schedule (the
Buyer Disclosure Letter) listing, among other
things, items the disclosure of which is necessary or
appropriate in relation to any or all of its representations and
warranties; provided, however, that no such item
is required to be set forth on the Buyer Disclosure Letter as an
exception to a representation or warranty if its absence is not
reasonably likely to result in the related representation or
warranty being untrue or incorrect under the standards
established by Section 4.1(c). Without limiting the scope
of the immediately preceding sentence, any disclosure made in
the Buyer Disclosure Letter with respect to a Section of this
Article IV shall be deemed to qualify (i) any
subsection of such Section specifically referenced or
cross-referenced and (ii) any other Section or subsection
of this Article to the extent that it is reasonably apparent
(notwithstanding the absence of a specific cross-reference) from
a reading of the disclosure that such disclosure is relevant to
such other Section or subsection and contains sufficient detail
to enable a reasonable person to recognize the relevance of such
disclosure to such other Section or subsection.
(c) No representation or warranty of Buyer, Buyer Bank or
Merger Sub contained in this Article IV shall be deemed
untrue or incorrect, and no party hereto shall be deemed to have
breached a representation or warranty, as a consequence of the
existence of any fact, change, development, effect, circumstance
or event unless such fact, change, development, effect,
circumstance or event, individually or taken together with all
other facts, changes, developments, effects, circumstances or
events inconsistent with any section of this Article IV,
has had or would reasonably be expected to have a Buyer Material
Adverse Effect; provided, however, that the
foregoing standard shall not apply to the representations and
warranties contained in Sections 4.3, 4.4, 4.15 and the
first two sentences of Section 4.2, which shall be deemed
untrue, incorrect and breached if they are not true and correct
in all respects.
24
4.2 Organization, Standing and
Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws
of Delaware. Buyer is duly registered as a savings and loan
holding company under the Home Owners Loan Act, as
amended, and the regulations of the Office of Thrift Supervision
(OTS) thereunder. Buyer is duly qualified to
do business and is in good standing in the jurisdictions where
its ownership or leasing of property or the conduct of its
business requires it to be so qualified. Merger Sub is a
corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts,
and is qualified to do business and is in good standing in the
jurisdictions where its ownership of property or the conduct of
its business requires it to be so qualified.
4.3 Corporate Power. Each of Buyer
and its Subsidiaries has the requisite corporate power and
authority to carry on its business as it is now being conducted
and to own all of its properties and assets; and each of Buyer,
Buyer Bank and Merger Sub has the requisite corporate power and
authority to execute and deliver this Agreement, to perform its
obligations under this Agreement and to consummate the
transactions contemplated hereby.
4.4 Corporate Authority. This
Agreement and the transactions contemplated hereby have been
authorized by all necessary corporate action of Buyer and the
Board of Directors of Buyer (Buyer Board),
Buyer Bank and the Board of Directors of Buyer Bank, and Merger
Sub and the Board of Directors of Merger Sub, including the
approval of Buyer as the sole shareholder of Merger Sub. Each of
Buyer, Buyer Bank and Merger Sub has duly executed and delivered
this Agreement and, assuming the due authorization, execution
and delivery by the Company and Company Bank, this Agreement is
a legal, valid and binding agreement of Buyer, Buyer Bank and
Merger Sub, enforceable against it in accordance with its terms
(except as such enforceability may be limited by the Bankruptcy
and Equity Exception).
4.5 Regulatory Approvals. No
consents or approvals of, or waivers by, or filings or
registrations with, any Governmental Authority or with any third
party are required to be made or obtained by Buyer or any of its
Subsidiaries or affiliates in connection with the execution,
delivery or performance by Buyer, Buyer Bank and Merger Sub of
this Agreement, or to consummate the transactions contemplated
hereby, except for (i) filings of applications or notices
with, and consents, approvals or waivers by, the OTS, the Office
of the Massachusetts Commissioner of Banks and the Massachusetts
Board of Bank Incorporation, (ii) any required
applications, filings, waivers or notices with any federal or
state banking or other regulatory authorities, and approval of
or non-objection to such applications, filings, waivers and
notices, (iii) the obtaining by Buyer of a letter from the
MHPF to the Massachusetts Commissioner of Banks stating that
Buyer has made satisfactory arrangements with the
MHPF and (iv) the filing of the Articles of Merger and the
Articles of Merger relating to the Bank Merger.
4.6 Non-Contravention.
(a) Subject to the receipt of the Regulatory Approvals, the
required filings under federal and state securities laws, and
the filing of the Articles of Merger and the Articles of Merger
relating to the Bank Merger, the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby (including, without limitation,
the Merger) by Buyer, Buyer Bank and Merger Sub do not and will
not (i) constitute a breach or violation of, or a default
under, give rise to any Lien, result in a right of termination,
or the acceleration of any right or obligation under (or have
any of such results or effects upon notice or lapse of time or
both), any law, rule or regulation or any judgment, decree,
order, permit, license, credit agreement, indenture, loan, note,
bond, mortgage, reciprocal easement agreement, lease,
instrument, concession, franchise or other agreement of Buyer or
of any of its Subsidiaries or to which Buyer or any of its
Subsidiaries, properties or assets is subject or bound,
(ii) constitute a breach or violation of, or a default
under, Buyers, Buyer Banks or Merger Subs
Articles of Organization or Bylaws, or (iii) require the
consent or approval of any third party or Governmental Authority
under any such law, rule, regulation, judgment, decree, order,
permit, license, credit agreement, indenture, loan, note, bond,
mortgage, reciprocal easement agreement, lease, instrument,
concession, franchise or other agreement.
(b) As of the date hereof, Buyer is not aware of any reason
relating to Buyer or its Subsidiaries (including, without
limitation, CRA compliance or the USA Patriot Act) (i) why
all of the Regulatory Approvals shall not be procured from the
applicable Governmental Authorities having jurisdiction over the
transactions contemplated by this Agreement or (ii) why any
Burdensome Condition(s) would be imposed.
25
4.7 Certificate of Incorporation;
Bylaws. Buyer has made available to the
Company and Company Bank a complete and correct copy of its
Certificate of Incorporation and Bylaws, each as amended to
date. None of Buyer, Buyer Bank nor Merger Sub is in violation
of any of the terms of its Articles of Incorporation or
Certificate of Incorporation or Bylaws.
4.8 Compliance with Laws. Each of
Buyer and its Subsidiaries is in compliance with all applicable
federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting their businesses,
including, without limitation, the Equal Credit Opportunity Act,
the Fair Housing Act, the CRA, the Home Mortgage Disclosure Act
and all other applicable fair lending laws and other laws
relating to discriminatory business practices.
4.9 Litigation. No litigation,
claim, suit, investigation or other proceeding before any court,
Governmental Authority or arbitrator is pending against Buyer or
any of its Subsidiaries, and, to the Knowledge of Buyer, no
litigation, claim, suit, investigation or other proceeding has
been threatened and there are no facts that are reasonably
apparent that would reasonably be expected to give rise to any
litigation, claim, suit, investigation or other proceeding that
would, in each such case, result in a Buyer Material Adverse
Effect.
4.10 Regulatory
Capitalization. Buyer Bank is, and as of the
date of this Agreement Buyer expects that immediately after the
Effective Time Buyer Bank will be, well capitalized
as such term is defined in the rules and regulations promulgated
by the OTS.
4.11 Absence of Regulatory
Actions. Since December 31, 2009,
neither Buyer nor any of its Subsidiaries has been a party to
any cease and desist order, written agreement or memorandum of
understanding with, or any commitment letter or similar
undertaking to, or has been subject to any action, proceeding,
order or directive by any Governmental Authority, or has adopted
any board resolutions at the request of any Governmental
Authority, or has been advised in writing by any Governmental
Authority that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any
such action, proceeding, order, directive, written agreement,
memorandum of understanding, commitment letter, board
resolutions or similar undertaking. There are no unresolved
violations, criticisms or exceptions by any Governmental
Authority with respect to any report or statement relating to
any examination of Buyer or any of its Subsidiaries.
4.12 Financial Condition of
Buyer. Buyer has provided to the Company a
complete and correct copy of the audited consolidated balance
sheet of Buyer and its Subsidiaries (the Buyer
Balance Sheet) as of December 31, 2009 (the
Buyer Balance Sheet Date) and the audited
consolidated statements of income and changes in
shareholders equity and cash flows or equivalent
statements of Buyer and its Subsidiaries for each of the years
in the three-year period ended December 31, 2009 (together
with the Buyer Balance Sheet, the 2009 Buyer Financial
Statements). The Buyer Balance Sheet fairly presents
the financial position of the entity or entities to which such
balance sheet relates as of its date; and each statement of
income and changes in shareholders equity and cash flows
or equivalent statements in the 2009 Buyer Financial Statements
fairly present the results of operations, changes in
shareholders equity and changes in cash flows, as the case
may be, of the entity or entities to which such statement
relates for the periods to which it relates, in each case in
accordance with GAAP consistently applied during the periods
involved, except in each case as may be noted therein, subject
to normal year-end audit adjustments in the case of unaudited
statements.
4.13 Absence of Certain Changes or
Events. As of the date of this Agreement and
except as disclosed in any report, registration statement,
definitive proxy or information statement filed with or
furnished to the SEC subsequent to December 31, 2009 and
prior to the date of this Agreement, since December 31,
2009, there has not been any change or development in the
business, operations, assets, liabilities, condition (financial
or otherwise), results of operations, cash flows or properties
of the Company or any of its Subsidiaries which has had, or
would reasonably be expected to have, individually or in the
aggregate, a Buyer Material Adverse Effect.
4.14 Net Worth. As of
June 30, 2010, Buyer has a tangible common equity
(determined in accordance with GAAP) of at least the amount
specified on Schedule 4.14 of the Buyer Disclosure
Letter.
4.15 Sufficient Funds. As of the
date of this Agreement, Buyer has, and as of the Closing Buyer
will have, sufficient funds to consummate the transactions
contemplated by this Agreement, including the payment of the
26
aggregate Merger Consideration and the aggregate Option
Consideration, subject to the terms and conditions of this
Agreement.
4.16 Brokers. No action has been
taken by Buyer or any of its Subsidiaries that would give rise
to any valid claim against Buyer for a brokerage commission,
finders fee or other like payment with respect to the
transactions contemplated by this Agreement, except in
connection with Buyers engagement of Morgan
Stanley & Co. Inc.
4.17 Information Supplied. None of
the information to be provided by Buyer or Merger Sub for
inclusion in the Proxy Statement will contain any untrue
statement of a material fact or omit to state any material fact
required to be stated in any such document or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading.
4.18 Disclosure. No representation
or warranty contained in this Agreement, and no statement
contained in any certificate delivered hereunder or in the Buyer
Disclosure Letter, furnished to the Company pursuant to the
provisions hereof, contains or will contain any untrue statement
of a material fact or omits or will omit to state a material
fact necessary in order to make the statements herein or therein
not misleading.
ARTICLE V
COVENANTS
RELATING TO CONDUCT OF BUSINESS
5.1 Company Forbearances. From the
date hereof until the Effective Time or the date, if any, on
which this Agreement is terminated pursuant to Section 8.1,
except as expressly set forth in the Company Disclosure Letter,
as expressly provided or expressly contemplated by this
Agreement, or as required by applicable law, without the prior
written consent of Buyer, which consent shall not be
unreasonably withheld, the Company will not, and will cause each
of its Subsidiaries not to:
(a) Ordinary Course. Conduct its
business other than in the ordinary and usual course consistent
with recent past practice or fail to use reasonable best efforts
to preserve intact its business organizations and assets and
maintain its rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take
any action that would (i) adversely affect the ability of
any party to obtain any necessary approval of any Governmental
Authority required for the transactions contemplated hereby or
(ii) adversely affect its ability to perform any of its
material obligations under this Agreement.
(b) Stock. (i) Other than
pursuant to Options outstanding as of the date hereof and listed
on the Company Disclosure Letter, issue, sell, grant any Person
the right to acquire or otherwise permit to become outstanding,
or dispose of, encumber, pledge, or authorize the creation of,
any additional shares of capital stock, voting securities or
other equity interests, any securities (including units of
beneficial ownership interest in any partnership or limited
liability company) convertible into or exchangeable for any
additional shares of capital stock, voting securities or other
equity interests, any stock appreciation rights, any stock
options, restricted shares, restricted stock units, deferred
equity units, awards based on the value of the Companys
capital stock or other equity-based award with respect to shares
of Company Common Stock, or any other rights to subscribe for or
acquire shares of stock, or take any action related to such
issuance or sale, (ii) enter into any agreement with
respect to the foregoing, (iii) accelerate the vesting of
any existing Options, Restricted Stock, stock appreciation
rights or other rights to subscribe for or acquire shares of
stock, or (iv) change (or establish a record date for
changing) the number of, or provide for the exchange of, shares
of its capital stock, voting securities or other equity
interests, any securities (including units of beneficial
ownership interest in any partnership or limited liability
company) convertible into or exchangeable for shares of capital
stock, voting securities or other equity interests, any stock
appreciation rights, or any other rights to subscribe for or
acquire shares of stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend,
recapitalization, reclassification, or similar transaction with
respect to its outstanding stock or any other such securities.
(c) Dividends, Etc. (i) Set
any record or payment dates for the payment of any dividends or
distributions on its capital stock or other equity interests or
make, declare or pay any dividend or distribution on its capital
stock or other equity interests other than (A) regular
quarterly cash dividends on Company Common
27
Stock of no more than $0.09 per share with record and payment
dates set consistent with recent past practice (it being the
intention of the parties hereto that the Company Shareholders
shall not receive more than one dividend in any calendar quarter
with respect to their shares of Company Common Stock) and
provided, that, no dividend shall be paid by the Company on
Company Common Stock if the Company shall be required to borrow
funds to do so, and (B) dividends from wholly-owned
Subsidiaries to the Company or any wholly-owned Subsidiary of
the Company provided that no such dividend shall cause the
Company Bank to cease to qualify as a well
capitalized institution under the prompt corrective action
provisions of the FDIA, as amended, and the applicable
regulations thereunder, as applicable or (ii) directly or
indirectly adjust, split, combine, redeem, reclassify, purchase
or otherwise acquire, any shares of its capital stock, voting
securities or other equity interest, any securities convertible
into or exchangeable for any shares of capital stock, voting
securities or other equity interests, any stock appreciation
rights, or any other rights to subscribe for or acquire shares
of stock issued and outstanding prior to the Effective Time.
(d) Compensation; Employment Agreements;
Etc. Enter into or amend any employment,
severance or similar agreements or arrangements with any of its
directors, officers, employees or consultants, or grant any
salary or wage increase, or increase any employee benefit
(including incentive or bonus payments), except (i) for
normal increases in compensation to non-executive officer
employees in the ordinary course of business consistent with
recent past practice; provided that for employees whose
annual rate of base salary does not exceed $70,000, no such
increase shall exceed five percent (5%) of an individuals
current annual compensation and three percent (3%) in the
aggregate, (ii) as may be required by law, including
Section 409A of the Code, (iii) to satisfy contractual
obligations existing as of the date hereof and disclosed on
Schedule 3.15(g) of the Company Disclosure Letter,
or (iv) the hiring of at-will employees at an annual rate
of salary not to exceed $70,000 to fill vacancies that may arise
from time to time in the ordinary course of business.
(e) Benefit Plans. Except
(i) as may be required by applicable law, (ii) to
satisfy contractual obligations existing as of the date hereof
and disclosed on Schedule 3.15(g) of the Company
Disclosure Letter, (iii) as set forth on
Schedule 5.1(e) of the Company Disclosure Letter or
(iv) as provided in Section 6.9(h), enter into,
establish, adopt or amend any pension, retirement, stock option,
stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust
agreement related thereto, in respect of any director, officer
or other employee of the Company or any of its Subsidiaries,
including, without limitation, taking any action that
accelerates the vesting or exercise of any benefits payable
thereunder.
(f) Dispositions. Except as set
forth on Schedule 5.1(f) of the Company Disclosure
Letter:
(i) sell, license, lease, transfer, mortgage, encumber or
otherwise dispose of or discontinue or fail to maintain any of
its assets, deposits, business or properties or rights,
including capital stock of any Subsidiaries, except
(A) sales of Loans and sales of investment securities
subject to repurchase, in each case in the ordinary course of
business consistent with past practice or (B) as expressly
required by the terms of any contracts or agreements in force at
the date of this Agreement and disclosed on Schedule 5.1(f)
of the Company Disclosure Letter.
(ii) transfer ownership, or grant any license or other
rights, to any person or entity of or in respect of any material
Company Intellectual Property.
(g) Governing Documents. Adopt or
implement any amendment to its Articles of Organization or
Bylaws (or equivalent documents), or take any action to exempt
any Person (other than Buyer or its Subsidiaries), or any action
taken by any Person, from any Takeover Laws or similarly
restrictive provisions of its organizational documents or
terminate, amend or waive any provisions of any confidentiality
or standstill agreements in place with any Person.
(h) Acquisitions. Acquire or
invest in (other than by way of foreclosures or acquisitions of
control in a bona fide fiduciary capacity or in satisfaction of
debts previously contracted in good faith, in each case in the
ordinary course of business consistent with recent past
practice) all or any portion of the assets, business, deposits,
properties, stock, equity interests or other securities of any
other entity.
28
(i) Capital Expenditures. Except
as set forth on Schedule 5.1(i) of the Company
Disclosure Letter, make any capital expenditures other than
capital expenditures in the ordinary course of business
consistent with recent past practice in amounts not exceeding
$75,000 individually or $300,000 in the aggregate.
(j) Contracts. Enter into, renew,
extend or terminate (i) any Loan, lease, license, contract
or other agreement that, other than Loans originated in the
ordinary course of business consistent with past practice and in
accordance with (p) below, calls for aggregate annual
payments of $300,000 or more, (ii) any Company Material
Contract, (iii) any agreement referenced in
Section 3.31 (or any other agreement with any broker or
finder in connection with the Merger or any other transaction
contemplated by this Agreement) or (iv) any agreement or
arrangement of the type described in Section 3.29; or make
any material change in any of such Loans, leases, licenses,
contracts or other agreements.
(k) Claims. Settle any claim,
action, suit, proceeding, or enter into any settlement or
similar agreement with respect to any order or investigation to
which the Company or any of its Subsidiaries is a party as of
the date hereof or becomes a party after the date of this
Agreement.
(l) Banking Operations. Enter into
any new material line of business; change its material lending,
investment, underwriting, risk and asset liability management
and other material banking and operating policies, except as
required by applicable law, regulation or policies imposed by
any Governmental Authority; or file any application or make any
contract with respect to branching or site location or branching
or site relocation, or open any new branches or close any
existing branches.
(m) Derivative Contracts. Enter
into any Derivative Contract.
(n) Indebtedness. Incur any
indebtedness for borrowed money (other than deposits, federal
funds purchased, FHLB of Boston advances, and securities sold
under agreements to repurchase, in each case in the ordinary
course of business consistent with recent past practice) or
assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other Person,
other than in the ordinary course of business consistent with
recent past practice, or cancel, release or assign any material
amount of indebtedness, or any claims held, to any other Person.
(o) Investment
Securities. Acquire, sell or otherwise
dispose of any debt, equity, or other investment security,
except (i) the acquisition, sale or other disposition of
any such investment security in the ordinary course of business
consistent in all material respects with past practice since
December 31, 2008 (particularly with respect to the size
and duration of the portfolio) and in accordance with the
Company Banks investment policy, which policy will not be
amended or modified except to the extent required (A) by
law, (B) to accommodate changes in the collateral or
pledging requirements of the FHLB of Boston, or (C) as the
Company may, in good faith determine, is necessary to comply
with safe and sound banking practices (in which case the Company
shall give Buyer notice thereof and shall give due consideration
to Buyers requests with respect thereto), (ii) by way
of foreclosure or acquisitions or sales in a bona fide fiduciary
capacity, or (iii) in satisfaction of debts previously
contracted in good faith; provided, however, that
any acquisition, sale or other disposition of any such
investment security made consistent with the request of Buyer
pursuant to Section 6.17(b) shall be deemed not to breach
this Section 5.1(o).
(p) Loans. Make any loan, loan
commitment, letter of credit or other extension of credit
(i) other than in the ordinary course of business
consistent with recent past practice, (ii) in excess of
$5,000,000, or (iii) which increases an existing Loan or
commitment to more than $5,000,000.
(q) Investments in Real
Estate. Make any investment or commitment to
invest in real estate or in any real estate development project
(other than by way of acquisitions in a bona fide fiduciary
capacity or in satisfaction of a debt previously contracted in
good faith, in each case in the ordinary course of business
consistent with recent past practice).
(r) Accounting Methods. Implement
or adopt any material change in its accounting principles,
practices or methods, other than as may be required by changes
in laws or regulations or by GAAP.
(s) Tax Matters. Make or change
any Tax election, file any material amended Tax Return, fail to
timely file any material Tax Return, enter into any closing
agreement, settle or compromise any material liability with
29
respect to Taxes, agree to any material adjustment of any Tax
attribute, file any material claim for a refund of Taxes, or
consent to any extension or waiver of the limitation period
applicable to any material Tax claim or assessment.
(t) Loan Policies. Change its loan
policies, practices and procedures in effect as of the date of
this Agreement, except as required by law or any Governmental
Authority.
(u) Environmental
Assessments. Foreclose on or take a deed or
title to any Loan Property without first conducting a Phase I
Environmental Assessment of the property or foreclose on any
Loan Property if such environmental assessment indicates the
presence of a Hazardous Material in amounts which, if such
foreclosure were to occur, would be material to Company Bank.
(v) Adverse Actions. Knowingly
take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material
respect at any time prior to the Effective Time, (ii) any
of the conditions to the Merger set forth in Article VII
not being satisfied, or (iii) a material violation of any
provision of this Agreement, except, in each case, as may be
required by applicable law.
(w) Agreements. Agree or commit to
do, or adopt any resolution of the Company Board in support of,
any of the actions prohibited by this Section 5.1.
5.2 Buyer Forbearances. From the
date hereof until the Effective Time or the date, if any, on
which this Agreement is terminated pursuant to Section 8.1,
except as expressly set forth in the Buyer Disclosure Letter, as
expressly permitted or expressly contemplated by this Agreement,
or as required by law, without the prior written consent of the
Company, which consent shall not be unreasonably withheld, Buyer
will not, and will cause each of its Subsidiaries not to:
(a) knowingly take any action that would, or would
be reasonably likely to result in (i) any of its
representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time prior to
the Effective Time, (ii) any of the conditions to the
Merger set forth in Article VII not being satisfied,
(iii) a material violation of any provision of this
Agreement, except, in each case, as may be required by
applicable law, or (iv) would reasonably be likely to
materially and adversely affect or delay Buyers ability to
receive timely the Regulatory Approvals or otherwise to perform
its obligations under this Agreement or to consummate the
transactions contemplated hereby; or
(b) agree to take, make any commitment to take, or adopt
any resolutions of their or its board of directors in support
of, any of the actions prohibited by this Section 5.2.
ARTICLE VI
ADDITIONAL
AGREEMENTS
6.1 Reasonable Best
Efforts. Subject to the terms and conditions
of this Agreement, each of the Company, Company Bank, Buyer,
Buyer Bank and Merger Sub agree to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or desirable,
or advisable under applicable laws, so as to permit consummation
of the Merger as promptly as practicable, and in any event no
later than December 31, 2010, and otherwise to enable
consummation of the transactions contemplated hereby, including,
without limitation, effecting all filings and obtaining (and
cooperating with the other party hereto to obtain) any permit,
consent, authorization, order or approval of, or any exemption
by, any Governmental Authority (including, but not limited to,
the Regulatory Approvals) and any other third party that is
required to be obtained by the Company or Buyer or any of their
respective Subsidiaries in connection with the Merger and the
other transactions contemplated by this Agreement, and using
reasonable best efforts to lift or rescind any injunction or
restraining order or other order adversely affecting the ability
of the parties to consummate the Merger and the transactions
contemplated hereby, and using reasonable best efforts to defend
any litigation seeking to enjoin, prevent or delay the
consummation of the Merger and the transactions contemplated
hereby or seeking material damages, and each shall cooperate
fully with the other party hereto to that end.
30
6.2 Shareholder Approval.
(a) The Company shall use its reasonable best efforts to
prepare and file, as soon as practicable, but in any event no
later than August 20, 2010, a preliminary form of the Proxy
Statement with the SEC, and each of the Company and Buyer shall
use its reasonable best efforts to respond to any comments of
the SEC or its staff, and to cause the Proxy Statement to be
mailed to the Company Shareholders as promptly as reasonably
practicable after responding to all such comments to the
satisfaction of the SECs staff. The Company shall notify
Buyer promptly of the receipt of any comments from the SEC or
its staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy Statement or for
additional information and shall supply Buyer with copies of all
correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on
the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Company Meeting there shall
occur any event that is required to be set forth in an amendment
or supplement to the Proxy Statement, the Company shall promptly
prepare, and, after consultation with Buyer, mail to the Company
Shareholders such an amendment or supplement. Buyer shall
cooperate with the Company in the preparation of the Proxy
Statement, any amendment or supplement thereto, and any other
communication that could reasonably be deemed to be proxy
solicitation materials relating to the Merger (collectively,
Proxy Materials), and shall furnish the
Company with all information reasonably requested by the Company
for inclusion in, or otherwise in respect of, the Proxy
Materials. Buyer and its counsel shall be given a reasonable
opportunity to review and comment upon any Proxy Material prior
to its filing with the SEC or dissemination to the Company
Shareholders.
(b) Without limiting the generality of the foregoing, each
of the parties shall correct promptly any information provided
by it to be used specifically in the Proxy Statement, if and to
the extent any such information shall be or have become false or
misleading in any material respect and shall take all steps
necessary to file with the SEC and have declared effective or
cleared by the SEC any amendment or supplement to the Proxy
Statement so as to correct the same and to cause the Proxy
Statement as so corrected to be disseminated to the Company
Shareholders, in each case to the extent required by applicable
law or otherwise deemed appropriate by the Company.
(c) Following the execution of this Agreement, the Company
shall take, in accordance with applicable law, applicable rules
of Nasdaq and its Articles of Organization and Bylaws, all
action necessary to convene a meeting of its shareholders as
promptly as practicable to consider and vote upon the approval
of this Agreement and any other matter required to be approved
by the Company Shareholders in order to consummate the Merger
and the transactions contemplated hereby (including any
adjournment or postponement thereof, the Company
Meeting).
(d) Subject to Section 6.5 hereof, (i) the
Company shall ensure that the Company Meeting is called,
noticed, convened, held and conducted, and that all proxies
solicited by the Company in connection with the Company Meeting
are solicited, in compliance with the MBCA, the Articles of
Organization and Bylaws of the Company, and all other applicable
legal requirements and (ii) the Company shall take all
lawful action to solicit the approval of this Agreement by the
Company Shareholders. Notwithstanding any Company Subsequent
Determination, unless this Agreement has been terminated in
accordance with Section 8.1, this Agreement shall be
submitted to the Company Shareholders at the Company Meeting for
purposes of voting on the approval of this Agreement and nothing
contained herein shall be deemed to relieve the Company of this
obligation; provided, however, that if the Company
Board shall have effected a Company Subsequent Determination,
then the Company Board may submit this Agreement to the Company
Shareholders without recommendation (although the resolutions
adopting this Agreement as of the date of this Agreement may not
be rescinded or amended), in which event the Company Board may
communicate the basis for its lack of a recommendation to the
Company Shareholders in the Proxy Statement or an appropriate
amendment or supplement thereto to the extent required by
applicable law. In addition to the foregoing, the Company shall
not submit to the vote of the Company Shareholders any
Acquisition Proposal other than the Merger.
(e) Subject to Section 6.5 hereof, (i) the
Company Board shall recommend that the Company Shareholders vote
to adopt this Agreement and any other matters required to be
approved by the Company Shareholders for consummation of the
Merger and the transactions contemplated hereby (the
Company Recommendation), and (ii) the
Proxy Statement shall include the Company Recommendation.
31
(f) Participants in any ESOP maintained by the Company or
Company Bank who have pass-through voting rights
under Section 409(e) of the Code shall be notified of such
rights and may exercise such rights subject to all requirements
of the Code and ERISA.
6.3 Publicity.
(a) Except with respect to any action taken pursuant to,
and in accordance with, Section 6.5 or Article VIII,
so long as this Agreement is in effect, Buyer and the Company
will consult with each other before issuing any press release
with respect to this Agreement and the transactions contemplated
hereby and will not issue any press release or written statement
for general circulation relating to the transactions
contemplated hereby (including statements or postings to the
Companys employees generally) or make any such public
statements without the prior consent of the other party (with
respect to the relevant portions thereof), which consent shall
not be unreasonably withheld; provided, however,
that a party may, without the prior consent of the other party
(but after consultation with the other party, to the extent
practicable), issue such press release or public statement as
may be required by applicable law or the rules and regulations
of any stock exchange on which its securities are then listed.
(b) Without limiting the scope of Section 6.3(a),
(i) Buyer and the Company shall cooperate to develop all
public announcement materials related to the transactions
contemplated by this Agreement; and (ii) the Company shall
make appropriate management available at presentations related
to the transactions contemplated by this Agreement as reasonably
requested by Buyer. In addition, except with respect to any
action taken pursuant to, and in accordance with,
Section 6.5 or Article VIII, so long as this Agreement
is in effect the Company and its Subsidiaries shall coordinate
with Buyer regarding all communications with customers,
suppliers, employees, shareholders, and the community in general
related to the transactions contemplated by this Agreement.
6.4 Access; Information. Upon
reasonable notice and subject to applicable laws relating to the
exchange of information, the Company shall, and shall cause its
Subsidiaries to, afford Buyer and its officers, employees,
counsel, accountants, advisors and other authorized
representatives (collectively, Buyer
Representatives), reasonable access, during normal
business hours throughout the period from the date of this
Agreement until the Effective Time or the date, if any, on which
this Agreement is terminated pursuant to Section 8.1, to
all of its properties, books, contracts, commitments and records
(including, without limitation, work papers of independent
auditors but excluding confidential information contained in
personnel files to the extent the disclosure of such information
is prohibited by privacy laws), and to its officers, employees,
accountants, counsel or other representatives, and, during such
period, it shall, and shall cause its Subsidiaries to, furnish
promptly to Buyer and the Buyer Representatives (i) a copy
of each report, schedule and other document filed by it pursuant
to the requirements of federal or state securities, banking or
similar laws (other than reports or documents that the Company,
or its Subsidiaries, as the case may be, are not permitted to
disclose under applicable law), and (ii) all other
information concerning the business, properties and personnel of
the Company and its Subsidiaries as Buyer or any Buyer
Representative may reasonably request. Neither the Company nor
any of its Subsidiaries shall be required to provide access to
or to disclose information where such access jeopardizes the
attorney-client privilege of the institution in possession or
control of such information or may reasonably be deemed to
contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will make appropriate
substitute disclosure arrangements under circumstances in which
the restrictions of the preceding sentence apply. Buyer agrees
to hold all information and documents obtained pursuant to this
Section 6.4 in confidence (as provided in, and subject to
the provisions of, the Confidentiality Agreement, as if it were
the party receiving the confidential information as described
therein). No investigation by Buyer of the business and affairs
of the Company and its Subsidiaries shall affect or be deemed to
modify or waive any representation, warranty, covenant or
agreement in this Agreement, or the conditions to Buyers
obligation to consummate the transactions contemplated by this
Agreement. Notwithstanding anything to the contrary contained in
this Section 6.4, the Company shall not be obligated, and
shall not be obligated to cause any of its Subsidiaries, to
afford to Buyer or the Buyer Representatives access to any
applicable portions of its properties, books, contracts,
commitments, and records containing specific pricing
information, customer specific information, or other similar
competitively sensitive information.
32
6.5 No Solicitation.
(a) Except as expressly authorized or permitted in this
Section 6.5, the Company shall and shall cause its
Subsidiaries and its and their respective directors and
officers, and shall use its reasonable best efforts to cause the
respective employees, investment bankers, financial advisors,
attorneys, accountants, consultants, affiliates and other agents
of the Company and its Subsidiaries (collectively, the
Company Representatives) not to, directly or
indirectly, (i) initiate, solicit, induce, knowingly
encourage, or knowingly take any action that would reasonably be
expected to facilitate the making of, any inquiry, offer, or
proposal which constitutes, or could reasonably be expected to
lead to, an Acquisition Proposal; (ii) participate in any
discussions or negotiations regarding any Acquisition Proposal
or furnish, or otherwise afford access, to any Person (other
than Buyer, Buyer Bank and Merger Sub) any information with
respect to the Company or any of its Subsidiaries or otherwise
relating to an Acquisition Proposal; (iii) release any
Person from, waive any provisions of, or fail to enforce any
confidentiality agreement or standstill agreement to which the
Company is a party; (iv) enter into any agreement,
including, without limitation, any agreement in principle,
letter of intent, memorandum of understanding or similar
arrangement with respect to an Acquisition Proposal; or
(v) approve or recommend or resolve to approve or recommend
any Acquisition Proposal or any agreement, including without
limitation, any agreement in principle, letter of intent,
memorandum of understanding or similar arrangement with respect
to an Acquisition Proposal. Upon execution of this Agreement,
(i) the Company and its Subsidiaries shall, and shall use
its reasonable best efforts to cause each of the Company
Representatives to, immediately cease and cause to be terminated
any and all existing discussions, negotiations, and
communications with any Persons with respect to any existing or
potential Acquisition Proposal and (ii) the Company will
require any such Persons to promptly return or destroy any
confidential information previously furnished by or on behalf of
the Company in connection with any such discussions,
negotiations or communications to the extent the confidentiality
agreement with such Person so permits. Any violation of the
foregoing restrictions by any of the Company Representatives,
whether or not such Company Representative is so authorized and
whether or not such Company Representative is purporting to act
on behalf of the Company or otherwise, shall be deemed to be a
breach of this Agreement by the Company.
For purposes of this Agreement, Acquisition
Proposal shall mean any inquiry, offer or proposal
(other than an offer or proposal from Buyer), whether or not in
writing, contemplating, relating to, or that could reasonably be
expected to lead to, an Acquisition Transaction, and shall
include any public announcement by any Person (including any
regulatory application or notice, whether in draft or final
form) of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
For purposes of this Agreement, Acquisition
Transaction shall mean (A) any transaction or
series of transactions involving any merger, consolidation,
recapitalization, share exchange, liquidation, dissolution or
similar transaction involving the Company or any of its
Subsidiaries; (B) any transaction pursuant to which any
third party or group acquires or would acquire (whether through
sale, lease or other disposition), directly or indirectly, any
assets of the Company or any of its Subsidiaries representing,
in the aggregate, fifteen percent (15%) or more of the assets,
revenues or net income of the Company and its Subsidiaries on a
consolidated basis; (C) any issuance, sale or other
disposition of (including by way of merger, consolidation, share
exchange or any similar transaction) securities (or options,
rights or warrants to purchase or securities convertible into or
exercisable or exchangeable for, such securities) representing
fifteen percent (15%) or more of the votes attached to the
outstanding securities of the Company or any of its
Subsidiaries; (D) any tender offer or exchange offer that,
if consummated, would result in any third party or group
beneficially owning fifteen percent (15%) or more of any class
of equity securities of the Company or any of its Subsidiaries;
or (E) any transaction which is similar in form, substance
or purpose to any of the foregoing transactions, or any
combination of the foregoing.
(b) Notwithstanding Section 6.5(a), the Company may
take any of the actions described in clause (ii) of
Section 6.5(a) if, but only if, (i) the Company has
received a bona fide unsolicited written Acquisition Proposal
that did not result from a breach of this Section 6.5;
(ii) the Company Board determines in good faith, after
consultation with and having considered the advice of its
outside legal counsel and a nationally recognized, independent
financial advisor, that (A) such Acquisition Proposal
constitutes or is reasonably likely to lead to a Superior
Proposal and (B) the failure to take such action would be
reasonably likely to violate its fiduciary duties to the Company
Shareholders under applicable law; and (iii) prior to
furnishing or affording access to any information or data with
respect to the Company or any of its Subsidiaries or otherwise
relating to an Acquisition Proposal, the
33
Company receives from such Person a confidentiality agreement
with terms no less favorable to the Company than those contained
in the Confidentiality Agreement. The Company shall promptly
provide to Buyer any non-public information regarding the
Company or its Subsidiaries provided to any other Person which
was not previously provided to Buyer, such additional
information to be provided no later than the date of provision
of such information to such other party.
For purposes of this Agreement, Superior
Proposal shall mean any bona fide written proposal (on
its most recently amended or modified terms, if amended or
modified) made by a third party to enter into an Acquisition
Transaction on terms that the Company Board determines in its
good faith judgment, after consultation with and having
considered the advice of outside legal counsel and a nationally
recognized, independent financial advisor (i) would, if
consummated, result in the acquisition of all, but not less than
all, of the issued and outstanding shares of Company Common
Stock or all, or substantially all, of the assets of the Company
and its Subsidiaries on a consolidated basis; (ii) would
result in a transaction that (A) involves consideration to
the holders of the shares of Company Common Stock that is more
favorable, from a financial point of view, than the
consideration to be paid to the Company Shareholders pursuant to
this Agreement, considering, among other things, the nature of
the consideration being offered and any material regulatory
approvals or other risks associated with the timing of the
proposed transaction beyond or in addition to those specifically
contemplated hereby, and any requirement to obtain additional
financing and (B) is, in light of the other terms of such
proposal, more favorable to the Company Shareholders than the
Merger and the transactions contemplated by this Agreement; and
(iii) is reasonably likely to be completed on the terms
proposed, in each case taking into account all legal, financial,
regulatory and other aspects of the proposal.
(c) The Company shall notify Buyer in writing as promptly
as practicable (and in any event within twenty-four
(24) hours) if any proposals or offers are received by, any
information is requested from, or any negotiations or
discussions are sought to be initiated or continued with, the
Company or the Company Representatives, in each case in
connection with any Acquisition Proposal, and such notice shall
indicate the name of the Person initiating such discussions or
negotiations or making such proposal, offer or information
request and the material terms and conditions of any proposals
or offers (and, in the case of written materials, providing
copies of such materials (including
e-mails or
other electronic communications). The Company agrees that it
shall keep Buyer informed, on a current basis, of the status and
terms of any such proposal, offer, information request,
negotiations or discussions (including any amendment or
modification to such proposal, offer or request).
(d) Neither the Company Board nor any committee thereof
shall (i) withdraw, qualify or modify, or propose to
withdraw, qualify or modify, in a manner adverse to Buyer in
connection with the transactions contemplated by this Agreement
(including the Merger), the Company Recommendation, or make any
statement, filing or release, in connection with the Company
Meeting or otherwise, inconsistent with the Company
Recommendation (it being understood that taking a neutral
position or no position with respect to an Acquisition Proposal
shall be considered an adverse modification of the Company
Recommendation); (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal; or
(iii) enter into (or cause the Company or any of its
Subsidiaries to enter into) any letter of intent, agreement in
principle, merger agreement, acquisition agreement or other
agreement (A) related to any Acquisition Transaction (other
than a confidentiality agreement entered into in accordance with
the provisions of Section 6.5(b)) or (B) requiring the
Company to abandon, terminate or fail to consummate the Merger
or any other transaction contemplated by this Agreement.
(e) Notwithstanding Section 6.5(d), prior to the date
of the Company Meeting, the Company Board may approve or
recommend to the Company Shareholders a Superior Proposal and
withdraw, qualify or modify the Company Recommendation in
connection therewith (a Company Subsequent
Determination) after the fifth (5th) Business Day
following Buyers receipt of a notice (the
Notice of Superior Proposal) from the
Company advising Buyer that the Company Board has decided that a
bona fide unsolicited written Acquisition Proposal that it
received (that did not result from a breach of this
Section 6.5) constitutes a Superior Proposal, which notice
shall include, to the extent not already provided, the
information described in Section 6.5(c) (it being
understood that the Company shall be required to deliver a new
Notice of Superior Proposal in respect of any revised Superior
Proposal from such third party or its Affiliates that the
Company proposes to accept) if, but only if, (i) the
Company Board has reasonably determined in good faith, after
consultation with and having considered the advice of outside
legal counsel and a nationally recognized, independent financial
advisor, that the failure to take such action would be
34
reasonably likely to violate its fiduciary duties to the Company
Shareholders under applicable law, (ii) during the five
(5) Business Day period after receipt of the Notice of
Superior Proposal by Buyer, the Company and the Company Board
shall have cooperated and negotiated in good faith with Buyer to
make such adjustments, modifications or amendments to the terms
and conditions of this Agreement as would enable the Company to
proceed with the Company Recommendation without a Company
Subsequent Determination; provided, however, that
Buyer shall not have any obligation to propose any adjustments,
modifications or amendments to the terms and conditions of this
Agreement, and (iii) at the end of such five
(5) Business Day period, after taking into account any such
adjusted, modified or amended terms as may have been proposed by
Buyer since its receipt of such Notice of Superior Proposal, the
Company Board has again in good faith made the determination
(A) in clause (i) of this Section 6.5(e) and
(B) that such Acquisition Proposal constitutes a Superior
Proposal. Notwithstanding the foregoing, the changing,
qualifying or modifying of the Company Recommendation or the
making of a Company Subsequent Determination by the Company
Board shall not change the approval of the Company Board for
purposes of causing any Takeover Laws to be inapplicable to this
Agreement and the Voting Agreements and the transactions
contemplated hereby and thereby, including the Merger.
(f) Nothing contained in this Section 6.5 shall
prohibit the Company or the Company Board from
(i) complying with the Companys obligations required
under
Rules 14d-9
and 14e-2(a)
promulgated under the Exchange Act; provided,
however, that any such disclosure relating to an
Acquisition Proposal shall be deemed a change in the Company
Recommendation unless the Company Board expressly reaffirms the
Company Recommendation in such disclosure, or
(ii) informing any Person of the existence of the
provisions contained in this Section 6.5.
6.6 Takeover Laws. No party shall
take any action that would cause the transactions contemplated
by this Agreement to be subject to requirements imposed by any
Takeover Law, as applicable, and each party shall take all
necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this
Agreement from any applicable Takeover Law, as now or hereafter
in effect, that purports to apply to this Agreement or the
transactions contemplated hereby.
6.7 Regulatory Applications; Filings;
Consents.
(a) Buyer and the Company and their respective Subsidiaries
shall cooperate and use their respective reasonable best efforts
(i) to prepare all necessary documentation, to effect all
necessary filings, to obtain all necessary permits, consents,
approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the
transactions contemplated by this Agreement, including, without
limitation, the Regulatory Approvals, (ii) to comply with
the terms and conditions of such permits, consents, approvals
and authorizations and (iii) to cause the Merger to be
consummated as expeditiously as practicable (including by using
reasonable best efforts to lift or rescind any preliminary or
permanent injunction or other order of any United States federal
or state court of competent jurisdiction or any other
Governmental Authority); provided, however, that
in no event shall Buyer be required to agree to any prohibition,
limitation, or other requirement which would prohibit or
materially limit the ownership or operation by the Company or
any of its Subsidiaries, or by Buyer or any of its Subsidiaries,
of all or any material portion of the business or assets of the
Company and its Subsidiaries, taken as a whole, or Buyer or its
Subsidiaries, or compel Buyer or any of its Subsidiaries to
dispose of or hold separate for more than six (6) months
all or any material portion of the business or assets of the
Company and its Subsidiaries, taken as a whole, or Buyer or any
of its Subsidiaries (together, the Burdensome
Conditions); provided, however, that no
divestiture requirement or other term, condition, or restriction
shall be deemed to constitute a Burdensome Condition if such
divestiture, term, condition, or restriction is consistent with
Department of Justice or FDIC guidelines, policies and practices
as applied in recent bank merger transactions. Provided the
Company has cooperated as required above, Buyer agrees to use
its reasonable best efforts to file, as soon as practicable, but
in any event no later than August 13, 2010, the requisite
applications to be filed by it with the OTS, the Massachusetts
Commissioner of Banks and the Governmental Authorities of the
states in which Buyer, the Company and their respective
Subsidiaries operate. Each of Buyer and the Company shall have
the right to review in advance, and to the extent practicable
each will consult with the other, in each case subject to
applicable laws relating to the exchange of information, with
respect to, all material written information regarding the other
party submitted to any third party or any Governmental Authority
in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the
parties hereto agrees to act reasonably and as promptly as
practicable. Each party hereto agrees that it will consult with
the other parties hereto with respect to the obtaining of all
material permits,
35
consents, approvals and authorizations of all third parties and
Governmental Authorities necessary or advisable to consummate
the transactions contemplated by this Agreement and each party
will keep the other parties apprised of the status of material
matters relating to completion of the transactions contemplated
hereby.
(b) The Company will notify Buyer promptly and shall
promptly furnish Buyer with copies of notices or other
communications received by the Company or any of its
Subsidiaries of (i) any communication from any Person
alleging that the consent of such Person (or another Person) is
or may be required in connection with the transactions
contemplated by this Agreement (and the response thereto from
the Company, its Subsidiaries or the Company Representatives),
(ii) subject to applicable laws and the instructions of any
Governmental Authority, any communication from any Governmental
Authority in connection with the transactions contemplated by
this Agreement (and the response thereto from the Company, its
Subsidiaries or the Company Representatives) and (iii) any
legal action threatened or commenced against or otherwise
affecting Company or any of its Subsidiaries that are related to
the transactions contemplated by this Agreement (and the
response thereto from the Company, its Subsidiaries or the
Company Representatives). With respect to any of the foregoing,
the Company will consult with Buyer and the Buyer
Representatives so as to permit the Company and Buyer and their
respective representatives to cooperate to take appropriate
measures to avoid or mitigate any adverse consequences that may
result from any of the foregoing.
(c) Buyer will notify the Company promptly and shall
promptly furnish the Company with copies of notices or other
communications received by Buyer or any of its Subsidiaries of
(i) any communication from any Person alleging that the
consent of such Person (or another Person) is or may be required
in connection with the transactions contemplated by this
Agreement (and the response thereto from Buyer, its Subsidiaries
or the Buyer Representatives), (ii) subject to applicable
laws and the instructions of any Governmental Authority, any
communication from any Governmental Authority in connection with
the transactions contemplated by this Agreement (and the
response thereto from Buyer, its Subsidiaries or the Buyer
Representatives), and (iii) any legal action threatened or
commenced against or otherwise affecting Company or any of its
Subsidiaries that are related to the transactions contemplated
by this Agreement (and the response thereto from Buyer, its
Subsidiaries or the Buyer Representatives). With respect to any
of the foregoing, Buyer will consult with the Company, its
Subsidiaries and the Company Representatives so as to permit
Buyer and the Company and their respective representatives to
cooperate to take appropriate measures to avoid or mitigate any
adverse consequences that may result from any of the foregoing.
6.8 Indemnification; Directors and
Officers Insurance.
(a) Buyer agrees that, from and after the Effective Time,
all rights to indemnification and all limitations of liability
existing in favor of each former and present director or officer
of the Company or its Subsidiaries (each, an
Indemnified Party and collectively, the
Indemnified Parties) as provided in the
Companys Articles of Organization or Bylaws or in the
similar governing documents of the Companys Subsidiaries
as in effect as of the date hereof (including, without
limitation, the right to the advancement of expenses) with
respect to matters occurring on or prior to the Effective Time
shall survive the Merger and shall continue in full force and
effect, without any amendment thereto, for a period of six
(6) years from the Effective Time; provided,
however, that all rights to indemnification in respect of
any Claim asserted or made within such period shall continue
until the final disposition of such Claim. During such period,
but without limitation of Section 6.8(c), Buyer shall not
amend, repeal or otherwise modify such provisions for
indemnification in any manner that would materially and
adversely affect the rights thereunder of individuals who at any
time prior to the Effective Time was an Indemnified Party in
respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions
contemplated by this Agreement), unless such modification is
required by law; provided, however, that in the
event any claim or claims are asserted or made either prior to
the Effective Time or within such six-year period, all rights to
indemnification in respect of any such claim or claims shall
continue until disposition of any and all such claims.
(b) Prior to the Effective Time, Buyer (or with
Buyers consent, the Company) shall purchase an extended
reporting period endorsement under the Companys existing
directors and officers liability insurance coverage
or other prepaid policy, which, by its terms, shall survive the
Merger, for the Companys directors and officers in a form
reasonably acceptable to the Company which shall provide such
directors and officers with coverage for six (6) years
following the Effective Time of not less than the existing
coverage under, and have other terms not
36
materially less favorable to, the insured persons than the
directors and officers liability insurance coverage
presently maintained by the Company; provided,
however, that in no event may the Company expend (and
Buyer will not be required to expend), in order to maintain or
provide insurance coverage pursuant to this Section 6.8(b),
an amount in the aggregate in excess of 200% of the amount of
the annual premiums paid by the Company most recently for such
insurance (the Maximum D&O Tail
Premium); provided further that, if the
cost of such endorsement exceeds the Maximum D&O Tail
Premium, the Buyer (or, with Buyers consent, the Company)
shall obtain such an endorsement with the greatest coverage
available for a cost not exceeding Maximum D&O Tail Premium.
(c) In the event Buyer or the Surviving Corporation or any
of their respective 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, shall
assume the obligations set forth in this Section 6.8.
(d) The provisions of this Section 6.8 are intended to
be for the benefit of, and to grant third party rights to, and
shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
6.9 Employees; Benefit Plans.
(a) For purposes of this Section 6.9, the term
Bank shall refer to Company Bank after the
Merger and until such time as the Bank Merger in
Section 1.2 occurs, after which the term shall refer to
Buyer Bank.
(b) For the
12-month
period commencing on the Effective Date, Buyer shall, and shall
cause Bank to, provide then current employees of the Company or
any Subsidiary of the Company who remain employed by Bank after
the Effective Time (collectively, the Company
Employees) with base salary, wages, or commission
rates (as applicable) and annual cash incentive compensation
opportunities that are at least at the same levels as the base
salary, wages or commission rates and annual cash incentive
compensation opportunities in effect with respect to such
Company Employees on the date hereof. With respect to
retirement, health, and welfare benefits, Buyer may cause or may
cause the Bank to cause, such Company Employees to be enrolled
in plans of Buyer or Buyer Bank during such 12 month period
(instead of plans of the Company or any Subsidiary of the
Company), provided that during such 12 month period the
retirement, health and welfare benefits offered shall be not
less favorable for the Company Employees than those offered to
similarly situated employees of Buyer Bank (excluding any
defined benefit pension). For purposes of any such plan, Buyer
shall cause, and shall cause Buyer Bank or the Surviving
Corporation to, treat, and cause the applicable benefit plans to
treat, the service of the Company Employees with the Company or
any Subsidiary of Company attributable to any period before the
Effective Time as service rendered to Buyer or the Surviving
Corporation for purposes of eligibility to participate, vesting
and for other appropriate benefits including, but not limited
to, applicability of minimum waiting periods for participation
but excluding benefit accrual under any defined benefit pension
plan of Buyer. For purposes of determining any matching or other
employer contribution under the 401(k) plan of Buyer Bank,
compensation prior to the Effective Time will not be considered.
Without limiting the foregoing, and subject to the consent of
Buyers or Buyer Banks health insurance carriers,
Buyer shall cause any pre-existing conditions or limitations,
eligibility waiting periods or required physical examinations
under any health or similar plan of Buyer to be waived with
respect to the Company Employees and their eligible dependents,
to the extent the Company Employees had satisfied any similar
limitations or requirements under the corresponding plan in
which the Company Employees participated immediately prior to
the Closing Date, and any deductibles paid by the Company
Employees under any of Companys or its Subsidiaries
health plans in the plan year in which the Closing Date occurs
shall be credited towards deductibles under the health plans of
Buyer or any Subsidiary of Buyer. Buyer shall use all
commercially reasonable efforts to attempt and cause the
Surviving Corporation to attempt, to make appropriate
arrangements with its insurance carrier(s) to ensure such
result. Except with respect to employees who have entered into
employments agreements with the Company or its Subsidiaries, and
subject to Section 6.9(j) hereof, the Company Employees who
remain employed after the Effective Time shall be considered to
be employed by Buyer at will and nothing shall be
construed to limit the ability of Buyer or the Surviving
Corporation to terminate the employment of any such Company
Employee at any time.
37
(c) Following the Effective Date, Bank may choose to
maintain any, all, or none of the Employee Programs in its sole
discretion. However, for any Employer Program terminated for
which there is a comparable Buyer Bank benefit plan of general
applicability (meaning that the plan is available to all
employees satisfying uniformly applied age and service
requirements), all Company Employees shall be entitled to
participate prospectively after the Effective Date in such Buyer
Bank benefit plan (or a comparable plan offered by Bank) to the
same extent as similarly-situated employees of Buyer or Buyer
Bank (it being understood that inclusion of Company Employees in
such benefit plans may occur, if at all, at different times with
respect to different plans, and further understood that this
covenant excludes any defined benefit pension plans). Nothing
herein shall limit the ability of Buyer, Buyer Bank or Bank to
amend or terminate any of the Employee Programs or Buyer Bank
benefit plans in accordance with their terms at any time.
(d) The Company may grant retention bonuses to such Company
Employees, and in such amounts, as may be determined (up to an
aggregate maximum amount), and the Company Bank may pay such
retention bonuses, in each such case as in accordance with
Schedule 6.9(d) of the Company Disclosure Letter.
(e) During the one-year period commencing as of the
Effective Date, Buyer (or Bank) shall honor, with respect to
Company Employees employed as of the Effective Time, the Company
Special Separation Plan (the Company Bank Severance Pay
Plan) as in effect as of the date of this Agreement
and disclosed in Schedule 6.9(e) of the Company
Disclosure Letter in connection with the involuntary termination
of employment of any Company Employee (excluding any employee
who is party to an employment agreement,
change-in-control
agreement or any other agreement which provides for severance
payments), in such amounts, at such times and upon such
conditions as set forth in the Company Bank Severance Pay Plan
with respect to involuntary employment terminations for reasons
other than cause.
(f) The Company Bank shall continue to accrue annual cash
bonuses for Company Employees in the ordinary course consistent
with both past practices and subject to the provisions set forth
in Schedule 6.9(d) of the Company Disclosure Letter
as they pertain to the 2010 Annual Bonus Program (the
2010 Annual Bonuses). Not less than three
(3) Business Days prior to the Closing Date, the Company
shall determine, in its reasonable discretion, consistent with
its ordinary course of business past practices, those Company
Employees who shall receive 2010 Annual Bonuses for the period
January 1, 2010 through the Closing Date and, for each such
employee, the amount of the 2010 Annual Bonus for such period;
provided, however, that (i) those Company Employees
identified in item I of Schedule 6.9(d) of the
Company Disclosure Letter may be entitled to receive 2010 Annual
Bonus amounts up to the 2010 Target Bonus amounts
set forth therein (which 2010 Target Bonus amounts, to the
extent paid, shall be in full satisfaction of any obligations of
Buyer to provide annual cash incentive compensation
opportunities under Section 6.9(b) to the recipients of
such amounts for the remainder of 2010) and (ii) the
aggregate amount of all 2010 Annual Bonuses shall not exceed the
amount accrued through the Closing Date on the financial
statements of the Company in accordance with the immediately
preceding sentence, subject to the aggregate maximum amount
provided in Schedule 6.9(d) of the Company
Disclosure Letter; and provided further that the Company shall
not make any 2010 Annual Bonus payments with respect to the 2010
Annual Bonus period prior to the Closing. At the Closing, or as
soon as practicable thereafter but in any event not later than
the Effective Time, the Bank shall pay the Annual Bonus amounts
to such Company Employees and in the amounts as determined by
the Company in accordance with and subject to the foregoing
provisions (inclusive of the applicable provisions of
Schedule 6.9(d) of the Company Disclosure Letter).
(g) Buyer shall honor, in accordance with their terms, all
compensation, employment, severance,
change-in-control,
and deferred compensation obligations of the Company and its
Subsidiaries as set forth on Schedule 6.9(g) of the
Company Disclosure Letter. Without limiting the scope of the
immediately preceding sentence, Buyer agrees that those Company
Employees with
change-in-control
agreements to which the Company is a party that are identified
on Schedule 6.9(g) of the Company Disclosure Letter
shall terminate employment immediately following the Effective
Time and be entitled to receive such severance payments as are
determined in accordance with their respective
change-in-control
agreement, calculated consistently with
Schedule 6.9(g).
38
(h) The Company shall use all commercially reasonable
efforts to cause the ESOP to be terminated at the Effective
Time, and Buyer shall cause the ESOPs assets to be
distributed after such termination in accordance with the terms
of the plan and applicable law.
(i) Buyer agrees to enter into at Closing consulting
agreements in the form attached hereto as Exhibit B with
the individuals and on the applicable terms set forth on
Schedule 6.9(d), which agreements shall be effective
as of the Effective Date.
(j) Nothing in this Section 6.9, expressed or implied,
is intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this
Section 6.9. Without limiting the foregoing, no provision
of this Section 6.9 will create any third party beneficiary
rights in any current or former employee, director or consultant
of the Company or its Subsidiaries in respect of continued
employment (or resumed employment) or any other matter. Nothing
in this Section 6.9 is intended (i) to amend any
Employee Program, (ii) interfere with Buyers or
Banks or the Surviving Corporations right from and
after the Effective Date to amend or terminate any Employee
Program or (iii) interfere with Buyers or Banks
or the Surviving Corporations right from and after the
Effective Time to terminate the employment or provision of
services by any director, employee, independent contractor or
consultant.
(k) The Company shall use reasonable best efforts to cause
the employee welfare benefit plan, within the
meaning of Section 3(1) of ERISA, known as the Company Bank
Severance Pay Plan and referenced in Section 6.9(e) to be
administered at all times in accordance with the requirements
for exemption from Section 409A of the Code available under
Treasury Regulation
section 1.409A-1(b)(9)(iii).
6.10 Notification of Certain Matters.
(a) Each of Buyer and the Company shall give prompt notice
to the other of any fact, event or circumstance known to it that
(a) is reasonably likely, individually or taken together
with all other facts, events and circumstances known to it, to
result in any Buyer Material Adverse Effect or Company Material
Adverse Effect, respectively, or (b) notwithstanding the
standards set forth in Section 3.1(c) or 4.1(c), as
applicable, would cause or constitute a material breach of any
of its representations, warranties, covenants or agreements
contained herein. No such notice by Buyer or the Company shall
affect or be deemed to modify or waive any representation,
warranty, covenant or agreement in this Agreement, or the
conditions to Buyers or the Companys obligations to
consummate the transactions contemplated by this Agreement.
(b) Not less than three (3) Business Days prior to the
contemplated Closing Date, the Company shall supplement or amend
the Company Disclosure Letter delivered in connection with the
execution of this Agreement to reflect any material matter
which, if existing, occurring or Known at the date of this
Agreement, would have been required to be set forth or described
in the Company Disclosure Letter or that is necessary to correct
any information in the Company Disclosure Letter which has been
rendered materially inaccurate thereby; provided, however, that
the Company shall not be required to update the Company
Disclosure Letter to the extent such change is as a result of
any action taken at the request of Buyer. No supplement or
amendment to the Company Disclosure Letter shall have any effect
for the purpose of determining the accuracy of the
representations and warranties contained in Article III in
order to determine the fulfillment of the conditions set forth
in Section 7.2(a) or (b), or the compliance by the Company
with its covenants and agreements contained herein.
6.11 Confidentiality Agreement.
(a) The Confidentiality Agreement shall remain in full
force and effect after the date hereof in accordance with its
terms.
(b) With respect to Confidential Buyer Information, the
Company shall not (i) use any Confidential Buyer
Information or Notes (as defined in the Confidentiality
Agreement) except in connection with the transactions
contemplated by this Agreement, or (b) disclose any
Confidential Buyer Information or Notes other than to those
Company Representatives with a need to know the information
contained therein; provided, that the Company
specifically informs each such Company Representative of the
confidential nature of the Confidential Buyer Information and
the terms of this Agreement; and provided,
further, that the Company shall be responsible for any
breach of this Section 6.11(b) by any Company
Representative. For purposes of this Agreement, the term
39
Confidential Buyer Information shall mean
confidential and proprietary information of Buyer and its
Subsidiaries, whether written or oral, including, without
limitation, the trade secrets of Buyer and all information,
data, reports, analyses, compilations, studies, interpretations,
projections, forecasts, records and other materials (whether
prepared by Buyer or otherwise and in whatever form maintained,
whether documentary, computerized or otherwise).
6.12 Current Information. During
the period from the date of this Agreement to the Effective Time
or the date, if any, on which this Agreement is terminated
pursuant to Section 8.1, the Company will cause one or more
of its designated representatives to confer on a regular and
frequent basis (not less than weekly during normal business
hours) with representatives of Buyer and to report the general
status of the ongoing operations of the Company and each of its
Subsidiaries. Without limiting the foregoing, the Company agrees
to provide Buyer (i) a copy of each report filed by the
Company or any of its Subsidiaries with a Governmental Authority
within one (1) Business Day following the filing thereof,
(ii) a consolidated balance sheet and a consolidated
statement of operations, without related notes, within
twenty-five (25) days after the end of each month, prepared
in accordance with the Companys current financial
reporting practices, and (iii) promptly after the end of
each quarter, a schedule comparable to Schedule 3.23
of the Company Disclosure Letter current as of the end of the
most recent quarter or as recent as practical.
6.13 Transition; Informational Systems
Conversion. Buyer and the Company shall use
their reasonable best efforts to facilitate the integration of
the Company with the business of Buyer following the Effective
Time, and shall meet on a regular basis during normal business
hours to discuss and plan for the conversion of the data
processing and related electronic informational systems of the
Company and each of its Subsidiaries (the Informational
Systems Conversion) to those used by Buyer, which
planning shall include, but not be limited to,
(a) discussion of third-party service provider arrangements
of the Company and each of its Subsidiaries;
(b) non-renewal,
after the Effective Time, of personal property leases and
software licenses used by the Company and each of its
Subsidiaries in connection with the systems operations;
(c) retention of outside consultants and additional
employees to assist with the conversion; (d) outsourcing,
as appropriate after the Effective Time, of proprietary or
self-provided system services; and (e) any other actions
necessary and appropriate to facilitate the conversion, as soon
as practicable following the Effective Time. Buyer shall
indemnify the Company for any reasonable
out-of-pocket
fees, expenses or charges that the Company may incur as a result
of taking, at the request of Buyer, any action to facilitate the
Informational Systems Conversion.
6.14 Access to Suppliers. From and
after the Company Shareholder Approval, the Company shall, upon
Buyers reasonable request, use commercially reasonable
efforts to introduce Buyer and its representatives to suppliers
of the Company and its Subsidiaries for the purpose of
facilitating the integration of the Company and its business
into that of Buyer. Any interaction between Buyer and the
Companys suppliers shall be coordinated by the Company.
The Company shall have the right to participate in any
discussions between Buyer and the Companys suppliers.
6.15 Stock Exchange
De-listing. Prior to the Closing Date, the
Company shall cooperate with Buyer and use reasonable best
efforts to take, or cause to be taken, all actions, and do or
cause to be done all things, reasonably necessary, proper or
advisable on its part under applicable laws and rules and
policies of Nasdaq and the other exchanges on which the common
stock of the Company is listed to enable the de-listing by the
Surviving Corporation of the Company Common Stock from Nasdaq
and the other exchanges on which the Company Common Stock is
listed and the deregistration of the Company Common Stock under
the Exchange Act as promptly as practicable after the Effective
Time, and in any event no more than ten (10) days after the
Closing Date.
6.16 Director Resignations. The
Company shall use its reasonable best efforts to cause to be
delivered to Buyer resignations of all the directors of the
Company and its Subsidiaries to be effective as of the Effective
Time.
6.17 Coordination.
(a) The Company shall take any action Buyer may reasonably
request prior to the Effective Time to facilitate the
consolidation of the operations of Company Bank with Buyer Bank.
Without limiting the foregoing, senior officers of the Company
and Buyer shall meet from time to time as the Company may
reasonably request, and in any event not less frequently than
monthly, to review the financial and operational affairs of the
Company and Company
40
Bank, and the Company shall give due consideration to
Buyers input on such matters, with the understanding that,
notwithstanding any other provision contained in this Agreement,
(i) neither Buyer nor Buyer Bank shall under any
circumstance be permitted to exercise control of the Company,
Company Bank or any of its Subsidiaries prior to the Effective
Time, and (ii) the Company shall not be under any
obligation to act in a manner that could reasonably be deemed to
constitute anti-competitive behavior under federal or state
antitrust laws.
(b) Upon Buyers reasonable request, prior to the
Effective Time and consistent with GAAP, the rules and
regulations of the SEC and applicable banking laws and
regulations, the Company shall give due consideration to
Buyers request that the Company Bank divest itself of such
investment securities and loans as are identified by Buyer in
writing from time to time prior to the Closing Date, provided,
however, that no such divestitures need be made prior to the
Closing.
(c) No accrual or reserve or change in policy or procedure,
or any divestiture of investment securities or loans, made by
the Company or any of its Subsidiaries at the request of Buyer
pursuant to this Section 6.17 shall constitute or be deemed
to be a breach, violation of or failure to satisfy any
representation, warranty, covenant, agreement, condition or
other provision of this Agreement or otherwise be considered in
determining whether any such breach, violation or failure to
satisfy shall have occurred. The recording of any such
adjustment shall not be deemed to imply any misstatement of
previously furnished financial statements or information and
shall not be construed as concurrence of the Company or its
management with any such adjustments.
6.18 Shareholder Litigation. The
Company shall give Buyer the opportunity to participate in the
defense or settlement of any shareholder litigation against the
Company
and/or its
directors relating to the transactions contemplated by this
Agreement, and no such settlement shall be agreed to without
Buyers prior written consent (such consent not to be
unreasonably withheld or delayed).
6.19 Section 16
Matters. Prior to the Effective Time, the
Company shall take all such steps as may be required to cause to
be exempt under
Rule 16b-3
promulgated under the Exchange Act any dispositions of Company
Common Stock (including derivative securities with respect to
Company Common Stock) that are treated as dispositions under
such rule and result from the transactions contemplated hereby
by each director or officer of the Company who is subject to the
reporting requirements of Section 16(a) of the Exchange Act
with respect to the Company.
ARTICLE VII
CONDITIONS
TO CONSUMMATION OF THE MERGER
7.1 Conditions to Each Partys Obligations to
Effect the Merger. The obligations of each of
the parties to consummate the Merger is conditioned upon the
satisfaction (or waiver if permissible under applicable law) at
or prior to the Effective Time of each of the following
conditions:
(a) Shareholder Vote. The Company
Shareholder Approval shall have been obtained.
(b) Regulatory Approvals; No Burdensome
Condition. All Regulatory Approvals required
to consummate the transactions contemplated hereby (including
the Merger and the Bank Merger) shall have been obtained and
shall remain in full force and effect and all statutory waiting
periods in respect thereof shall have expired. None of such
Regulatory Approvals shall impose any term, condition or
restriction upon Buyer or any of its Subsidiaries that Buyer
reasonably determines is a Burdensome Condition.
(c) No Injunction, Etc. No order,
decree or injunction of any court or agency of competent
jurisdiction shall be in effect, and no law, statute or
regulation shall have been enacted or adopted, that enjoins,
prohibits, materially restricts or makes illegal consummation of
any of the transactions contemplated hereby.
7.2 Conditions to the Obligations of
Buyer. The obligation of Buyer to consummate
the Merger is also conditioned upon the satisfaction or waiver
(in writing if permissible under applicable law) by Buyer, at or
prior to the Effective Time, of each of the following conditions:
(a) Company Capital Stock and Common Stock
Equivalents. Notwithstanding the standard set
forth in Section 3.1, (i) the Company shall not have
any outstanding shares of capital stock or common stock
41
equivalents outstanding at immediately prior to the Effective
Time, other than outstanding shares of Company Common Stock and
Options, and (ii) the number of shares of Company Common
Stock outstanding immediately prior to the Effective Time shall
not exceed 4,506,686, except to the extent increased as a result
of the exercise, after the date of this Agreement, of one or
more Options listed on the Company Disclosure Letter, provided
such exercise is in accordance with the terms existing as of the
date of this Agreement; provided, however, that
this condition shall be deemed to be satisfied unless the
consequence of its failure to be true would reasonably be
expected to increase the aggregate Merger Consideration and
Option Consideration, taken as a whole, by more than a de
minimis amount.
(b) Representations, Warranties and Covenants of the
Company. (i) Each of the representations
and warranties of the Company contained herein shall be true and
correct as of the date hereof and as of the Closing Date with
the same effect as though all such representations and
warranties had been made on the Closing Date, except for any
such representations and warranties made as of a specified date,
which shall be true and correct as of such date, in any case
subject to the standard set forth in Section 3.1(c), and
(ii) each and all of the agreements and covenants of the
Company to be performed and complied with pursuant to this
Agreement on or prior to the Closing Date shall have been duly
performed and complied with in all material respects.
(c) Company Material Adverse
Effect. Since the date of this Agreement,
there shall not have occurred any Company Material Adverse
Effect.
(d) Appraisal Claims. The
aggregate number of shares of Company Common Stock, the holders
of which as of the Closing Date are claiming to be entitled to
appraisal rights under Part 13 of the MBCA and demanding
the purchase of their shares of Company Common Stock in
accordance with the provisions of under Part 13 of the
MBCA, shall not exceed ten percent (10%) of the shares of
Company Common Stock then outstanding.
(e) Officers
Certificate. Buyer shall have received a
certificate, dated the Closing Date, signed by the Chief
Executive Officer or Chief Financial Officer of the Company, to
the effect that the conditions set forth in Sections 7.2(b)
and (c) have been satisfied.
(f) Other Actions. The Company
shall have furnished Buyer with such customary certificates of
its officers to evidence fulfillment of the conditions set forth
in Sections 7.1 and 7.2 as Buyer may reasonably request.
7.3 Conditions to the Obligations of the
Company. The obligation of the Company to
consummate the Merger is also conditioned upon the satisfaction
or waiver (in writing if permissible under applicable law) by
the Company, at or prior to the Effective Time, of each of the
following conditions:
(a) Representations, Warranties and Covenants of
Buyer. (i) Each of the representations
and warranties of Buyer contained herein shall be true and
correct as of the date hereof and as of the Closing Date with
the same effect as though all such representations and
warranties had been made on the Closing Date, except for any
such representations and warranties made as of a specified date,
which shall be true and correct as of such date, in any case
subject to the standard set forth in Section 4.1(c), and
(ii) each and all of the agreements and covenants of Buyer
to be performed and complied with pursuant to this Agreement on
or prior to the Closing Date shall have been duly performed and
complied with in all material respects.
(b) Officers
Certificate. The Company shall have received
a certificate, dated the Closing Date, signed by the Chief
Executive Officer or Chief Financial Officer of Buyer, to the
effect that the conditions set forth in Sections 7.3(a)
have been satisfied.
42
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement
may be terminated, and the Merger and the transactions
contemplated hereby may be abandoned at any time prior to the
Effective Time, whether before or after the Company Shareholder
Approval:
(a) by the mutual consent of Buyer and the Company in a
written instrument;
(b) by Buyer or the Company (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein), in the event of either: (i) a breach by the other
party of any representation or warranty contained herein
(subject to the standards set forth in Section 3.1(c) or
4.1(c), as applicable), and such breach shall be incapable of
being cured or, if capable of being cured, shall not have been
cured within thirty (30) days after the giving of written
notice to the breaching party of such breach; or (ii) a
material breach by the other party of any of the covenants or
agreements contained herein, and such breach shall be incapable
of being cured or, if capable of being cured, shall not have
been cured within thirty (30) days after the giving of
written notice to the breaching party of such breach;
(c) by Buyer, in the event that the Merger is not
consummated by March 31, 2011, except to the extent that
the failure of the Merger to be consummated shall be due to
Buyers failure to perform or observe the covenants and
agreements of Buyer set forth herein; or by the Company, in the
event that the Merger is not consummated by December 31,
2010, except to the extent that the failure of the Merger to be
consummated shall be due to the Companys failure to
perform or observe the covenants and agreements of the Company
set forth herein (such date, as applicable, the
Termination Date);
(d) by Buyer or the Company, in the event the approval of
any Governmental Authority required for consummation of the
Merger and the other transactions contemplated by this Agreement
shall have been denied by final nonappealable action of such
Governmental Authority, or any governmental entity of competent
jurisdiction shall have issued a final nonappealable order,
injunction or decree enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement;
provided that the party seeking to terminate this
Agreement shall have used its reasonable best efforts to have
such order, injunction or decree lifted;
(e) by Buyer or the Company, if either (x) the Company
Meeting shall have been duly held and the votes cast at the
Company Meeting (including any adjournment thereof) shall be
insufficient to constitute the Company Shareholder Approval or
(y) a vote on the approval of this Agreement shall not have
been duly taken at the Company Meeting (including by reason of
the absence of a quorum) by the Termination Date.
(f) by Buyer, if (i) the Company Board
(A) modifies, qualifies, withholds or withdraws or fails to
make the Company Recommendation (it being understood that taking
a neutral position or no position with respect to an Acquisition
Proposal shall be considered an adverse modification of the
Company Recommendation), or makes any statement, filing or
release, in connection with the Company Meeting or otherwise,
inconsistent with the Company Recommendation, (B) breaches
its obligations to call, give notice of and commence the Company
Meeting under Section 6.2, (C) approves or recommends
an Acquisition Proposal, (D) fails to publicly recommend
against a publicly announced Acquisition Proposal within five
(5) Business Days of being requested to do so by Buyer, or
(E) resolves or otherwise determines to take, or announces
an intention to take, any of the foregoing actions or
(ii) there shall have been a material breach by the Company
of Section 6.5; or
(g) by the Company, if, at any time after the date of this
Agreement and prior to obtaining the Company Shareholder
Approval, the Company receives a Superior Proposal; provided,
however, that the Company shall not terminate this Agreement
pursuant to the foregoing clause unless:
(i) the Company shall have made a Company Subsequent
Determination in accordance with Section 6.5(e) and shall
otherwise have complied in all material respects with
Section 6.5 of this Agreement;
(ii) the Company concurrently pays the Termination Fee
payable pursuant to Section 8.2(b); and
43
(iii) the Company Board concurrently approves, and the
Company concurrently enters into, a definitive agreement with
respect to such Superior Proposal.
8.2 Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement by either
Buyer or the Company as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, and
none of Buyer, the Company, any of their respective Subsidiaries
or any of the officers or directors of any of them shall have
any liability of any nature whatsoever hereunder, or in
connection with the transactions contemplated hereby, except
that Sections 6.11 and 9.4 and this Section 8.2;
provided, however, that, notwithstanding anything
to the contrary herein (including Section 8.2(e)), neither
Buyer nor the Company shall be relieved or released from any
liabilities or damages arising out of its willful and material
breach of any provision of this Agreement; provided,
that in no event shall any party hereto be liable for
punitive damages. For purposes of this Agreement, willful
and material breach shall mean a material breach that is a
consequence of an act undertaken by the breaching party with the
knowledge (actual or constructive) that the taking of such act
would, or would reasonably be expected to, cause a breach of
this Agreement.
(b) In the event this Agreement is terminated by Buyer
pursuant to Section 8.1(f) or by the Company pursuant to
Section 8.1(g), the Company shall pay to Buyer an amount
equal to $3,500,000 (the Termination Fee).
(c) In the event (i) this Agreement is terminated by
the Company or Buyer pursuant to Section 8.1(e) or 8.1(c)
or Buyer pursuant to Section 8.1(b), and (ii) on or
before the date of any such termination, (x) an Acquisition
Proposal with respect to the Company shall have been publicly
disclosed or announced and not withdrawn (x) in the case of
a termination pursuant to clause (x) of
Section 8.1(e), prior to the Company Meeting, (y) in
the case of a termination pursuant to Section 8.1(b),
before the applicable breach by the Company, or (z) in the
case of a termination pursuant to Section 8.1(c) or
clause (y) of Section 8.1(e), before the date
specified therein, then the Company shall pay to Buyer
(A) an amount equal to 15% of the Termination Fee on the
second Business Day following such termination and (B) if
within eighteen (18) months of such termination, the
Company shall consummate a transaction or have entered into a
definitive agreement for a transaction with any third party that
involves the consummation of a transaction described in the
definition of Acquisition Transaction (but replacing references
to 15% or more with 50% or more), then
the Company shall pay to Buyer, upon consummation of such
transaction, the remaining 85% of the Termination Fee less the
Expense Amount if previously paid.
(d) If this Agreement is terminated pursuant to
Section 8.1(e) or by Buyer pursuant to Section 8.1(b),
but the Termination Fee (or any portion thereof) has not been
paid and is not then payable, the Company shall pay at the
direction of Buyer as promptly as practicable (but in any event
within two (2) Business Days after receipt of Buyers
request therefor), $250,000 (the Expense
Amount) on account of the expenses and opportunity
costs incurred by Buyer and its Subsidiaries in connection with
this Agreement and the transactions contemplated by this
Agreement.
(e) Any payment of the Termination Fee required to be made
pursuant to this Section 8.2 shall be made not more than
two (2) Business Days after the date of the event giving
rise to the obligation to make such payment, unless the
Termination Fee is payable as a result of the termination of
this Agreement by the Company pursuant to Section 8.1(g),
in which case, the Termination Fee shall be payable concurrently
with such termination. All payments under this Section 8.2
shall be made by wire transfer of immediately available funds to
an account designated by Buyer. The payment of the Termination
Fee and/or
Expense Amount by the Company pursuant to Sections 8.2(b),
8.2(c) or 8.2(d) shall be the sole and exclusive remedy of
Buyer, Buyer Bank and Merger Sub in connection with the
termination of this Agreement under the circumstances described
thereunder, except as otherwise provided in the proviso to
Section 8.2(a).
(f) The Company and Company Bank acknowledge that the
agreements contained in this Section 8.2 are an integral
part of the transactions contemplated by this Agreement and
that, without these agreements, Buyer, Buyer Bank and Merger Sub
would not enter into this Agreement. Accordingly, if the Company
fails promptly to pay any amount due pursuant to this
Section 8.2 and, in order to obtain such payment, Buyer
commences a suit which results in a judgment against the Company
for all or a portion of the amount set forth in this
Section 8.2, the Company shall pay to Buyer its costs and
expenses (including reasonable attorneys fees and
expenses) in connection with such
44
suit, together with interest on all amounts due pursuant to this
Section 8.2 at an interest rate equal to the prime rate of
Citibank N.A. in effect on the date such payment was required to
be made plus 200 basis points.
ARTICLE IX
MISCELLANEOUS
9.1 Survival. No representations,
warranties, agreements and covenants contained in this Agreement
shall survive the Effective Time. This Section 9.1 shall
not limit any covenant or agreement of the parties that, by its
terms, contemplates performance after the Effective Time or
relates to the delivery of the Exchange Fund.
9.2 Certain Definitions.
(a) As used in this Agreement, the following terms shall
have the meanings set forth below:
Affiliate shall mean, with respect to
any Person, any other Person controlling, controlled by or under
common control with such Person. As used in this definition,
control (including, with its
correlative meanings, controlled by and
under common control with) means the
possession, directly or indirectly, of power to direct or cause
the direction of the management and policies of a Person whether
through the ownership of voting securities, by contract or
otherwise.
Business Day means Monday through
Friday of each week, except any legal holiday recognized as such
by the U.S. Government or any day on which banking
institutions in the Commonwealth of Massachusetts are authorized
or obligated to close.
Buyer Material Adverse Effect shall
mean any fact, change, event, development, effect or
circumstance that (a) individually or in the aggregate,
would reasonably be expected to materially delay or materially
impair the ability of Buyer, Buyer Bank or Merger Sub to perform
its respective obligations under this Agreement or to consummate
the Merger and the other transactions contemplated by this
Agreement on a timely basis or (b) has a material adverse
effect on the ability of Buyer to obtain in a timely manner all
Regulatory Approvals.
Company Material Adverse Effect shall
mean any fact, change, event, development, effect or
circumstance that, individually or in the aggregate,
(a) are, or would reasonably be expected to be, materially
adverse to the business, operations, assets, liabilities,
condition (financial or otherwise), results of operations, cash
flows or properties of the Company and its Subsidiaries, taken
as a whole, or (b) would reasonably be expected to prevent,
materially delay or materially impair the Company from
performing its obligations under this Agreement or consummating
the transactions contemplated by this Agreement on a timely
basis; provided, however, that notwithstanding the
foregoing, the term Company Material Adverse
Effect shall not include (i) any fact, change,
event, development, effect or circumstance generally affecting
comparable banks or their holding companies arising from changes
in general business or economic conditions (and not specifically
relating to or having the effect of specifically relating to or
having a disproportionate effect (relative to most other
comparable banks or their holding companies) on the Company and
its Subsidiaries, taken as a whole); (ii) any fact, change,
event, development, effect or circumstance resulting from any
change after the date of this Agreement in law, GAAP or
regulatory accounting, which affects generally entities such as
the Company and its Subsidiaries, taken as a whole (and not
specifically relating to or having the effect of specifically
relating to or having a disproportionate effect (relative to
most other comparable banks or their holding companies) on the
Company and its Subsidiaries taken as a whole);
(iii) actions and omissions of the Company and its
Subsidiaries expressly required to be taken or omitted to be
taken by it under this Agreement, including the termination as
of the Effective Time of DIF coverage; and (iv) any fact,
change, event, development, effect or circumstance resulting
from the announcement or pendency of the transactions
contemplated by this Agreement or the consummation of the Merger.
Company Shareholders shall mean the
holders of Company Common Stock.
Confidentiality Agreement shall mean
the letter dated June 18, 2010 from the Financial Advisor,
as the Companys agent, and accepted by Buyer with respect
to, among other things, the parties obligations with
respect to Proprietary Information (as defined therein).
45
Exchange Act shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
FDIC shall mean the Federal Deposit
Insurance Corporation.
GAAP shall mean generally accepted
accounting principles in the United States.
Governmental Authority shall mean any
department, agency, or other body or division of any federal,
state, regional or local government, commission, board, body,
bureau or other regulatory authority or agency, that exercises
any form of jurisdiction or authority under federal, state,
regional, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees, including
without limitation Environmental Laws, or any quasi-governmental
or private body exercising any regulatory, taxing or other
governmental or quasi-governmental authority.
Knowledge or
Known as used with respect to the
Company and Company Bank means the actual knowledge of any of
the persons named in Schedule 9.2(a) of the Company
Disclosure Letter, and with respect to Buyer, Buyer Bank and
Merger Sub, means the actual knowledge of the persons named in
Schedule 9.2(a) of the Buyer Disclosure Letter.
Person or
person shall mean any individual,
bank, corporation, partnership, limited liability company,
association, joint-stock company, business trust or
unincorporated organization.
Regulatory Approvals shall mean
(a) the approval (or waiver) of the OTS (including with
respect to the Merger and the Bank Merger), (b) the
approval of the Office of the Massachusetts Commissioner of
Banks, and (c) the approval of the Massachusetts Board of
Bank Incorporation (including by the Massachusetts Housing
Partnership Fund with respect to an application for credit for
affordable housing lending).
Rights Agreement shall mean the
Renewed Rights Agreement dated as of November 17, 2005,
between the Company and Computershare Trust Company, N.A.,
as Rights Agent.
Securities Act shall mean the
Securities Act of 1933, as amended, and the rules and
regulations thereunder.
Subsidiary shall mean, when used with
reference to a party, any bank, corporation, partnership,
limited liability company, association, joint-stock company,
business trust or other entity, whether incorporated or
unincorporated, of which such party or any other Subsidiary of
such party is a general partner or serves in a similar capacity,
or with respect to such corporation or other entity, at least
twenty percent (20%) of the securities or other interests having
by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions is
directly or indirectly owned or controlled by such party or by
any one of more of its Subsidiaries, or by such party and one or
more of its Subsidiaries.
Tax Returns shall mean any return,
declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
Taxes shall mean (i) all taxes,
charges, fees, levies or other assessments, including, without
limitation, all net income, gross income, gross receipts, sales,
use, ad valorem, goods and services, capital, transfer,
franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp,
occupation, property or other taxes, custom duties, fees,
assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority; and (ii) any
liability for the payment of amounts with respect to payments of
a type described in clause (i) as a result of being a
member of an affiliated, consolidated, combined or unitary
group, or as a result of any obligation under any tax sharing
arrangement or tax indemnity agreement.
Treasury Stock shall mean shares of
Company Common Stock held (i) in the Companys
treasury or (ii) by the Company or by Buyer or Merger Sub,
in each case other than in a fiduciary capacity (including
custodial or agency).
46
(b) The following terms are defined elsewhere in this
Agreement, as indicated below:
2009 Buyer Financial Statements shall
have the meaning set forth in Section 4.12.
2009 Company Financial Statements
shall have the meaning set forth in Section 3.12(b).
2010 Annual Bonuses shall have the
meaning set forth in Section 6.9(f).
409A Plan shall have the meaning set
forth in Section 3.15(k).
Acquisition Proposal shall have the
meaning set forth in Section 6.5(a).
Acquisition Transaction shall have the
meaning set forth in Section 6.5(a).
Agreement shall have the meaning set
forth in the preamble to this Agreement.
Articles of Merger shall have the
meaning set forth in Section 1.3(a).
Bank shall have the meaning set forth
in Section 6.9(a).
Bank Merger shall have the meaning set
forth in the recitals to this Agreement.
Bankruptcy and Equity Exception shall
have the meaning set forth in Section 3.6.
Burdensome Conditions shall have the
meaning set forth in Section 6.7(a).
Buyer shall have the meaning set forth
in the preamble to this Agreement.
Buyer Balance Sheet shall have the
meaning set forth in Section 4.12.
Buyer Balance Sheet Date shall have
the meaning set forth in Section 4.12.
Buyer Bank shall have the meaning set
forth in the preamble to this Agreement.
Buyer Board shall have the meaning set
forth in Section 4.4.
Buyer Disclosure Letter shall have the
meaning set forth in Section 4.1(b).
Buyer Representatives shall have the
meaning set forth in Section 6.4.
Certificate shall have the meaning set
forth in Section 2.2(a).
Classified Loans shall have the
meaning set forth in Section 3.23(b).
Closing shall have the meaning set
forth in Section 1.3(b).
Closing Date shall have the meaning
set forth in Section 1.3(b).
Code shall have the meaning set forth
in Section 2.5.
Company shall have the meaning set
forth in the preamble to this Agreement.
Company 2009
Form 10-K
shall have the meaning set forth in Section 3.12(a).
Company Balance Sheet shall have the
meaning set forth in Section 3.12(b).
Company Balance Sheet Date shall have
the meaning set forth in Section 3.12(b).
Company Bank shall have the meaning
set forth in the preamble to this agreement.
Company Bank Board shall have the
meaning set forth in Section 3.6.
Company Bank Severance Pay Plan shall
have the meaning set forth in Section 6.9(e).
Company Board shall have the meaning
set forth in Section 3.6.
Company Common Stock shall have the
meaning set forth in the recitals to this Agreement.
Company Disclosure Letter shall have
the meaning set forth in Section 3.1(b).
47
Company Employees shall have the
meaning set forth in Section 6.9(b).
Company Intellectual Property shall
have the meaning set forth in Section 3.19(b)(i).
Company Material Contract shall have
the meaning set forth in Section 3.20(a).
Company Meeting shall have the meaning
set forth in Section 6.2(c).
Company Property shall have the
meaning set forth in Section 3.18(a).
Company Recommendation shall have the
meaning set forth in Section 6.2(e).
Company Representatives shall have the
meaning set forth in Section 6.5(a).
Company SEC Documents shall have the
meaning set forth in Section 3.12(a).
Company Shareholder Approval shall
have the meaning set forth in Section 3.9(a).
Company Stock Plan shall have the
meaning set forth in Section 2.4(a).
Company Subsequent Determination shall
have the meaning set forth in Section 6.5(e).
Confidential Buyer Information shall
have the meaning set forth in Section 6.11(b).
CRA shall have the meaning set forth
in Section 3.9(b).
Derivative Contracts shall have the
meaning set forth in Section 3.24(a).
DIF shall have the meaning set forth
in Section 3.27(b).
Effective Date shall have the meaning
set forth in Section 1.3(a).
Effective Date Holder shall have the
meaning set forth in Section 2.3(b).
Effective Time shall have the meaning
set forth in Section 1.3(a).
Employee Program shall have the
meaning set forth in Section 3.15(n)(i).
Engagement Letter shall have the
meaning set forth in Section 3.31.
Environment shall have the meaning set
forth in Section 3.18(l)(v).
Environmental Law shall have the
meaning set forth in Section 3.18(l)(vi).
ERISA shall have the meaning set forth
in Section 3.15(c).
ERISA Affiliate shall have the meaning
set forth in Section 3.15(n)(iii).
ESOP shall have the meaning set forth
in Section 3.15(c).
Exchange Fund shall have the meaning
set forth in Section 2.3(a).
Expense Amount shall have the meaning
set forth in Section 8.2(d).
FDIA shall have the meaning set forth
in Section 3.27(a).
FHLB shall have the meaning set forth
in Section 3.2.
Financial Advisor shall have the
meaning set forth in Section 3.31.
FRB shall have the meaning set forth
in Section 3.2.
Hazardous Material shall have the
meaning set forth in Section 3.18(l)(iii).
Indemnified Party and
Indemnified Parties shall each have
the meaning set forth in Section 6.8(a).
Informational Systems Conversion shall
have the meaning set forth in Section 6.13.
Intellectual Property shall have the
meaning set forth in Section 3.19(b)(ii).
48
Interagency Information Security
Guidelines shall have the meaning set forth in
Section 3.28.
IRS shall have the meaning set forth
in Section 3.14(b).
Liens shall have the meaning set forth
in Section 3.4(a).
Loan Property shall have the meaning
set forth in Section 3.18(l)(i).
Loans shall have the meaning set forth
in Section 3.23(a).
maintains shall have the meaning set
forth in Section 3.15(n)(ii).
Maximum D&O Tail Premium shall
have the meaning set forth in Section 6.8(b).
MBCA shall have the meaning set forth
in Section 1.1.
Merger shall have the meaning set
forth in the recitals to this Agreement.
Merger Consideration shall have the
meaning set forth in Section 2.1(d).
Merger Sub shall have the meaning set
forth in the preamble of this Agreement.
MHPF shall have the meaning set forth
in Section 3.9(a).
Multiemployer Plan shall have the
meaning set forth in Section 3.15(n)(iv).
Notice of Superior Proposal shall have
the meaning set forth in Section 6.5(e).
Oil shall have the meaning set forth
in Section 3.18(l)(iv).
Option shall have the meaning set
forth in Section 2.4(a).
Option Consideration shall have the
meaning set forth in Section 2.4(a).
OTS shall have the meaning set forth
in Section 4.2.
Participation Facility shall have the
meaning set forth in Section 3.18(l)(ii).
Paying Agent shall have the meaning
set forth in Section 2.3(a).
Policies, Practices and Procedures
shall have the meaning set forth in Section 3.25(b).
Proxy Materials shall have the meaning
set forth in Section 6.2(a).
Proxy Statement shall have the meaning
set forth in Section 3.9(a).
Restricted Stock shall have the
meaning set forth in Section 2.4(b).
SEC shall have the meaning set forth
in Section 3.12(a).
Superior Proposal shall have the
meaning set forth in Section 6.5(b).
Surviving Corporation shall have the
meaning set forth in Section 1.1.
Takeover Laws shall have the meaning
set forth in Section 3.30(a).
Termination Date shall have the
meaning set forth in Section 8.1(c).
Termination Fee shall have the meaning
set forth in Section 8.2(b).
USA Patriot Act shall have the meaning
set forth in Section 3.28.
Voting Agreement and
Voting Agreements shall each have the
meaning set forth in the recitals to this Agreement.
Voting Agreement Shareholder and
Voting Agreement Shareholders shall
each have the meaning set forth in the recitals to this
Agreement.
49
9.3 Waiver; Amendment. Subject to
compliance with applicable law, prior to the Effective Time, any
provision of this Agreement may be (a) waived by the party
intended to benefit by the provision, or (b) amended or
modified at any time, by an agreement in writing between the
parties hereto approved by their respective Boards of Directors
and executed in the same manner as this Agreement;
provided, however, that after the approval of this
Agreement by the Company Shareholders, no amendment of this
Agreement shall be made which by law requires further approval
of the Company Shareholders without obtaining such approval.
9.4 Expenses. Each party hereto
will bear all expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby.
9.5 Notices. All notices and other
communications hereunder shall be in writing and may be given by
any of the following methods: (a) personal delivery;
(b) facsimile transmission; (c) registered or
certified mail, postage prepaid return receipt requested; or
(d) overnight delivery service. Notices shall be sent to
the appropriate party at its address or facsimile number (or
such other address or facsimile number for such party as shall
be specified by such party by notice given hereunder):
If to Buyer (or Buyer Bank):
Peoples United Financial, Inc.
850 Main Street
Bridgeport, CT 06604
Attention: John P. Barnes, Interim
Chief Executive Officer
Facsimile: (203) 338-3600
with copies (which shall not constitute notice) to:
Peoples United Financial, Inc.
850 Main Street
Bridgeport, CT 06604
Attention: Robert E. Trautmann,
General Counsel
Facsimile: (203) 338-3600
and
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Attn: Lee Meyerson
Fax: (212) 455-2502
If to the Company (and Company Bank), to:
LSB Corporation
30 Massachusetts Avenue
North Andover, MA 01845
Attn: Gerald T. Mulligan, Chief
Executive Officer and President
Facsimile: (978) 725-7593
with a copy (which shall not constitute notice) to:
Nutter, McClennen & Fish, LLP
Seaport West
155 Seaport Boulevard
Boston, MA 02210
Attention: Michael K.
Krebs, Esq.
Facsimile: (617) 310-9288
All such notices and other communications shall be deemed
received (i) in the case of personal delivery, upon actual
receipt by the addressee, (ii) in the case of overnight
delivery, on the first Business Day following delivery to
50
the overnight delivery service, (iii) in the case of mail,
on the date of delivery indicated on the return receipt, and
(iv) in the case of a facsimile transmission, upon
transmission by the sender and issuance by the transmitting
machine of a confirmation slip that the number of pages
constituting the notice has been transmitted without error. In
the case of notices sent by facsimile transmission, the sender
shall contemporaneously mail by overnight delivery service a
copy of the notice to the addressee at the address provided for
above; however, such mailing shall in no way alter the time at
which the facsimile notice is deemed received.
9.6 Understanding; No Third Party
Beneficiaries. Except for the Confidentiality
Agreement, which shall remain in effect, this Agreement
represents the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and thereby
and supersedes any and all other oral or written agreements
heretofore made. Except for Section 6.8, nothing in this
Agreement, expressed or implied, is intended to confer upon any
person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
9.7 Assignability; Binding
Effect. Prior to the Closing, this Agreement
may not be assigned by Buyer without the written consent of the
Company and no such assignment shall release Buyer of its
obligations hereunder. After the Closing, Buyers rights
and obligations hereunder shall be freely assignable. This
Agreement may not be assigned by the Company without the prior
written consent of Buyer. This Agreement shall be binding upon
and enforceable by, and shall inure to the benefit of, the
parties hereto and their respective successors and permitted
assigns.
9.8 Headings; Interpretation. When
a reference is made in this Agreement to an Article or Section,
such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The table of contents to
this Agreement is for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the words include,
includes or including are used in this
Agreement, they shall be deemed to be followed by the words
without limitation. The words hereof,
herein and hereunder and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document
made or delivered pursuant thereto unless otherwise defined
therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument
that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver
or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments
thereto and instruments incorporated therein. References to a
Person are also to its permitted successors and assigns. Each of
the parties has participated in the drafting and negotiation of
this Agreement. If an ambiguity or question of intent or
interpretation arises, this Agreement must be construed as if it
is drafted by all the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of
authorship of any of the provisions of this Agreement.
9.9 Counterparts; Delivery. This
Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall
constitute one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the
parties and delivered to the other party. Signatures delivered
by facsimile or by electronic data file shall have the same
effect as originals.
9.10 Governing Law. This Agreement
shall be governed and construed in accordance with the Laws of
the State of Delaware (except to the extent that mandatory
provisions of federal Law are applicable and except to the
extent the laws of the Commonwealth of Massachusetts apply to
the Merger).
9.11 Jurisdiction.
(a) Each party hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction and venue of
the Delaware Court of Chancery, New Castle County, or if that
court does not have jurisdiction, a federal court sitting in the
State of Delaware, and the courts hearing appeals therefrom, for
any action, suit or proceeding arising out of or relating to
this Agreement and the transactions contemplated hereby. Each
party hereby irrevocably and unconditionally waives, and agrees
not to assert, by way of motion, as a defense, counterclaim or
otherwise, in
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any such action, suit or proceeding, any claim that it is not
personally subject to the jurisdiction of the aforesaid courts
for any reason, other than the failure to serve process in
accordance with this Section 9.11, that it or its property
is exempt or immune from jurisdiction of any such court or from
any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in
aid of execution of judgment, execution of judgment or
otherwise), and to the fullest extent permitted by applicable
law, that the action, suit or proceeding in any such court is
brought in an inconvenient forum, that the venue of such action,
suit or proceeding is improper, or that this Agreement, or the
subject matter hereof, may not be enforced in or by such courts
and further irrevocably waives, to the fullest extent permitted
by applicable law, the benefit of any defense that would hinder,
fetter or delay the levy, execution or collection of any amount
to which the party is entitled pursuant to the final judgment of
any court having jurisdiction. Each party irrevocably and
unconditionally waives, to the fullest extent permitted by
applicable law, any and all rights to trial by jury in
connection with any action, suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby.
(b) Each party further irrevocably consents to the service
of process out of any of the aforementioned courts in any
action, suit or proceeding arising out of or relating to this
Agreement by the mailing of copies thereof by registered mail,
postage prepaid, to such party at its address specified pursuant
to Section 9.5, such service of process to be effective
upon acknowledgment of receipt of such registered mail.
(c) Each party expressly acknowledges that the foregoing
waivers are intended to be irrevocable under the laws of the
State of Delaware and of the United States of America;
provided, that consent by each party to jurisdiction and
service contained in this Section 9.11 is solely for the
purpose referred to in this Section 9.11 and shall not be
deemed to be a general submission to said courts or in the State
of Delaware other than for such purpose.
9.12 Severability. If any term or
other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any law or public
policy, all other terms and provisions of this Agreement
nevertheless shall remain in full force and effect and the
parties shall use their reasonable efforts to substitute a
valid, legal and enforceable provision which, insofar as
practical, implements the purposes and intents of this Agreement.
9.13 Enforcement. The parties
agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed
that the parties shall be entitled to specific performance of
the terms hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
[Remainder
of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement and Plan of Merger to be executed in counterparts by
their duly authorized officers, all as of the day and year first
above written.
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BUYER
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PEOPLES UNITED FINANCIAL, INC.
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By: /s/ John
P. Barnes
Name: John
P. Barnes
Title: President and Chief Executive Officer
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MERGER SUB
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BRIDGEPORT MERGER CORPORATION
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By: /s/ Eric
J. Appellof
Name: Eric
J. Appellof
Title: President
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BUYER BANK
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PEOPLES UNITED BANK
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By: /s/ John
P. Barnes
Name: John
P. Barnes
Title: President and Chief Executive Officer
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COMPANY
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LSB CORPORATION
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By: /s/ Gerald
T. Mulligan
Name: Gerald
T. Mulligan
Title: Chief Executive Officer and President
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COMPANY BANK
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RIVER BANK
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By: /s/ Gerald
T. Mulligan
Name: Gerald
T. Mulligan
Title: Chief Executive Officer and President
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