U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _____________ to _______________
Commission file number 0-21021
Enterprise Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-3308902
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
222 Merrimack Street, Lowell, Massachusetts, 01852
(Address of principal executive offices) (Zip code)
(978) 459-9000
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes ..X.... No......
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
October 31, 1999, Common Stock - Par Value $0.01, 3,202,588 shares outstanding
<PAGE>
<TABLE>
<CAPTION>
ENTERPRISE BANCORP, INC.
INDEX
Page Number
<S> <C> <C>
Cover Page 1
Index 2
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements of Enterprise Bancorp, Inc.
Consolidated Balance Sheets - September 30, 1999 and December 31, 1998 3
Consolidated Statements of Income
Three months and nine months ended September 30, 1999 and 1998 4
Consolidated Statement of Changes in Stockholders' Equity 5
Nine months ended September 30, 1999
Consolidated Statements of Cash Flows
Nine months ended September 30, 1999 and 1998 6
Notes to Financial Statements 7
Item 2 Management's Discussion and
Analysis of Financial Condition and Results of Operations 8
Item 3 Quantitative and Qualitative Disclosures about Market Risk 22
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 23
Item 2 Changes in Securities 23
Item 3 Defaults upon Senior Securities 23
Item 4 Submission of Matters to a Vote of Security Holders 23
Item 5 Other Information 23
Item 6 Exhibits and Reports on Form 8-K 23
Signature Page 24
</TABLE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain "forward-looking statements" including statements
concerning plans, objectives, future events or performance and assumptions and
other statements which are other than statements of historical fact. Enterprise
Bancorp, Inc. (the "company") wishes to caution readers that the following
important factors, among others, may have affected and could in the future
affect the company's results and could cause the company's results for
subsequent periods to differ materially from those expressed in any
forward-looking statement made herein: (i) the effect of changes in laws and
regulations, including federal and state banking laws and regulations, with
which the company or its subsidiaries must comply, and the associated costs of
compliance with such laws and regulations either currently or in the future as
applicable; (ii) the effect of changes in accounting policies and practices, as
may be adopted by the regulatory agencies as well as by the Financial Accounting
Standards Board, or of changes in the company's organization, compensation or
benefit plans; (iii) the effect on the company's competitive position within its
market area of the increasing competition from larger regional and out-of-state
banking organizations as well as non-bank providers of various financial
services; (iv) the effect of changes in interest rates; (v) the effect of
changes in the business cycle and downturns in the local, regional or national
economies; (vi) the effect of changes in federal and state income tax
regulations; and (viii) the potential for the company to materially
underestimate the cost to be incurred and/or the time required in connection
with systems preparation for Year 2000 compliance.
2
<PAGE>
<TABLE>
<CAPTION>
ENTERPRISE BANCORP, INC.
Consolidated Balance Sheets
September 30, 1999 and December 31, 1998
September 30, December 31,
1999 1998
($ in thousands) (Unaudited)
------------ ------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 15,350 19,668
Daily federal funds sold 6,275 6,255
Investment securities, at fair value 140,075 114,659
Loans, less allowance for loan losses of $5,549
at September 30, 1999 and $5,234 at December 31, 1998 237,544 209,978
Premises and equipment 6,062 4,272
Accrued interest receivable 2,729 2,424
Prepaid expenses and other assets 1,621 863
Income taxes receivable 649 271
Real estate acquired by foreclosure 254 304
Deferred income taxes, net 3,471 1,787
--------- ---------
Total assets $ 414,030 360,481
========= =========
Liabilities and Stockholders' Equity
Deposits $ 333,162 317,666
Short-term borrowings 50,186 12,085
Escrow deposits of borrower 805 687
Accrued expenses and other liabilities 1,886 2,222
Accrued interest payable 588 623
--------- ---------
Total liabilities 386,627 333,283
--------- ---------
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares authorized,
no shares issued at September 30, 1999 -- --
Common stock $.01 par value; 10,000,000 and 5,000,000
shares authorized, 3,202,588 and 3,167,684 shares
issued and outstanding at September 30, 1999 and
December 31, 1998, respectively 32 32
Additional paid-in capital 15,994 15,560
Retained earnings 12,980 10,610
Accumulated other comprehensive income (loss) (1,603) 996
--------- ---------
Total stockholders' equity 27,403 27,198
--------- ---------
Total liabilities and stockholders' equity $ 414,030 360,481
========= =========
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
Three months and nine months ended September 30, 1999 and 1998
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
($ in thousands) 1999 1998 1999 1998
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest and dividend income:
Loans $ 5,423 4,876 15,146 13,845
Investment securities 1,934 1,441 5,358 4,767
Federal funds sold 2 314 67 396
---------- ---------- ---------- ----------
Total interest income 7,359 6,631 20,571 19,008
---------- ---------- ---------- ----------
Interest expense:
Deposits 2,441 2,442 7,231 6,998
Borrowed funds 411 99 737 409
---------- ---------- ---------- ----------
Total interest expense 2,852 2,541 7,968 7,407
---------- ---------- ---------- ----------
Net interest income 4,507 4,090 12,603 11,601
Provision for loan losses -- 440 270 710
---------- ---------- ---------- ----------
Net interest income after provision for
loan losses 4,507 3,650 12,333 10,891
Non-interest income:
Deposit service fees 222 225 648 674
Trust fees 305 244 883 703
Gain on sale of loans 28 57 148 132
Gain on sale of investments 80 268 183 433
Losses on sale of real estate acquired by foreclosure -- (14) -- (14)
Other income 89 75 253 229
---------- ---------- ---------- ----------
Total non-interest income 724 855 2,115 2,157
---------- ---------- ---------- ----------
Non-interest expense:
Salaries and employee benefits 2,207 1,854 6,052 5,262
Occupancy expenses 648 535 1,809 1,629
Advertising and public relations 124 137 405 359
Office and data processing supplies 98 83 234 269
Audit, legal and other professional fees 190 324 510 614
Trust professional and custodial expenses 97 80 250 225
Other operating expenses 419 354 1,015 938
---------- ---------- ---------- ----------
Total non-interest expense 3,783 3,367 10,275 9,296
---------- ---------- ---------- ----------
Income before income taxes 1,448 1,138 4,173 3,752
Income tax expense 384 246 1,137 1,179
---------- ---------- ---------- ----------
Net income $ 1,064 892 3,036 2,573
========== ========== ========== ==========
Basic earnings per average common share outstanding $ 0.33 0.28 0.95 0.81
========== ========== ========== ==========
Diluted earnings per average common share outstanding $ 0.32 0.27 0.91 0.78
========== ========== ========== ==========
Basic weighted average common shares outstanding 3,202,412 3,167,090 3,180,730 3,164,330
========== ========== ========== ==========
Diluted weighted average common shares outstanding 3,361,275 3,307,094 3,339,593 3,287,968
========== ========== ========== ==========
</TABLE>
4
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<TABLE>
<CAPTION>
ENTERPRISE BANCORP, INC.
Consolidated Statement of Changes in Stockholders' Equity
Nine months ended September 30, 1999
Common Stock Additional Comprehensive Income(Loss) Total
----------------- Paid-in Retained --------------------------- Stockholders'
($ in thousands) Shares Amount Capital Earnings Period Accumulated Equity
--------- ------ ---------- -------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998 3,167,684 $ 32 $ 15,560 $ 10,610 $ 996 $ 27,198
Comprehensive income
Net income 3,036 $ 3,036 3,036
Unrealized loss on securities,
net of reclassification (2,599) (2,599) (2,599)
-------
Total comprehensive income, net of tax $ 437
=======
Dividends paid ($.21 per share) (666) (666)
Common stock issued-Dividend Reinvestment Plan 27,054 -- 388 388
Stock Stock Stock options exercised 7,850 -- 46 46
--------- ------ --------- -------- ------- ---------
Balance at September 30, 1999 3,202,588 $ 32 $ 15,994 $ 12,980 $(1,603) $ 27,403
========= ====== ========= ======== ======= =========
Disclosure of reclassification amount:
Gross unrealized holding loss arising during the period $(4,027)
Less: tax effect 1,548
-------
Unrealized holding loss, net of tax (2,479)
-------
Less: reclassification adjustment for gains included
in net income (net of $63 tax expense) 120
-------
Unrealized loss on securities, net of reclassification $(2,599)
=======
</TABLE>
5
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<TABLE>
<CAPTION>
ENTERPRISE BANCORP, INC.
Consolidated Statements of Cash Flows
Nine months ended September 30, 1999 and 1998
September 30, September 30,
1999 1998
($ in thousands) (Unaudited) (Unaudited)
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,036 2,573
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 270 710
Depreciation and amortization 1,020 820
Gains on sales of loans (148) (132)
Gains on sales of securities (183) (433)
Losses on sales of real estate owned -- 14
Write-downs of foreclosed property 50 --
Change in loans held for sale, net of gains 98 (663)
(Increase)/Decrease:
Accrued interest receivable (305) 617
Prepaid expenses and other assets (758) (66)
Deferred income taxes (74) (321)
Increase/(Decrease):
Accrued expenses and other liabilities (336) 481
Accrued interest payable (35) 10
Change in income taxes receivable (378) (16)
-------- --------
Net cash provided by operating activities 2,257 3,594
-------- --------
Cash flows from investing activities:
Proceeds from maturities, calls and paydowns
of investment securities 15,585 32,062
Proceeds from sales of investment securities 12,524 20,253
Purchase of investment securities (57,675) (42,460)
Net proceeds from sales of real estate acquired by foreclosure -- 148
Net increase in loans (27,786) (26,180)
Additions to premises and equipment, net (2,686) (777)
-------- --------
Net cash used in investing activities (60,038) (16,954)
-------- --------
Cash flows from financing activities:
Net increase in deposits, including escrow deposits 15,614 26,586
Change in short term borrowings 38,101 4,051
Dividends paid (666) (554)
Common stock issued - Dividend Reinvestment 388 --
Stock options exercised 46 44
-------- --------
Net cash provided by financing activities 53,483 30,127
-------- --------
Net (decrease) increase in cash and cash equivalents (4,298) 16,767
Cash and cash equivalents at beginning of period 25,923 23,554
-------- --------
Cash and cash equivalents at end of period $ 21,625 40,321
======== ========
Supplemental financial data:
Cash paid for:
Interest on deposits and short-term borrowings $ 8,003 7,397
Income taxes 1,498 1,521
Transfers from loans to real estate acquired by foreclosure -- 73
</TABLE>
6
<PAGE>
ENTERPRISE BANCORP, INC.
Notes to Financial Statements
(1) Organization of Holding Company
Enterprise Bancorp, Inc. (the "company") is a Massachusetts corporation, which
was organized on February 29, 1996, at the direction of Enterprise Bank and
Trust Company, a Massachusetts trust company (the "bank"), for the purpose of
becoming the holding company for the bank. The company had no material assets or
operations prior to completion of the holding company reorganization on July 26,
1996.
(2) Basis of Presentation
The accompanying unaudited financial statements should be read in conjunction
with the company's December 31, 1998, audited financial statements and notes
thereto. Interim results are not necessarily indicative of results to be
expected for the entire year.
In preparing the financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of
the date of the balance sheet and revenues and expenses for the period. Actual
results could differ from those estimates. Material estimates that are
particularly susceptible to change relate to the determination of the allowance
for loan losses.
In the opinion of management, the accompanying financial statements reflect all
necessary adjustments consisting of normal recurring accruals for a fair
presentation.
(3) Earnings per share
Basic earnings per share are calculated by dividing net income by the year to
date weighted average number of common shares outstanding for the period.
Diluted earnings per share reflect the effect on weighted average shares
outstanding of the number of additional shares outstanding if dilutive stock
options were converted into common stock using the treasury stock method.
(4) Dividend Reinvestment Plan
The Board of Directors adopted a Dividend Reinvestment Plan (the "DRP"). The DRP
enables stockholders, at their discretion, to elect to reinvest dividends paid
on their outstanding shares of company common stock by purchasing additional
shares of company common stock from the company. The stockholders utilized the
DRP to reinvest $388,000 of the dividends paid by the company in 1999 in 27,054
shares of the company's common stock.
(5) Purchase and Assumption Agreement
On September 22, 1999, the company and the bank entered into a Purchase and
Assumption Agreement (the "Agreement") with Fleet Financial Group, Inc. and its
principal banking subsidiary, Fleet National Bank, pursuant to which the bank
will purchase two branch offices of Fleet National Bank. The bank's acquisition
of these branch offices is part of the overall sale of 306 branch offices of
Fleet National Bank and BankBoston, N.A. to be completed in accordance with a
divestiture order of the United States Department of Justice issued in
connection with the merger of BankBoston Corporation with Fleet Financial Group,
Inc. The bank's acquisition of the branches remains subject to the parties'
receipt of required federal and state regulatory approvals and satisfaction of
various other customary closing conditions specified in the Agreement. The
parties presently anticipate that the bank's acquisition of the branches will be
completed in the second or third quarter of 2000.
(6) Reclassification
Certain fiscal 1998 information has been reclassified to conform to the 1999
presentation.
7
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources
The company's actual capital amounts and capital adequacy ratios are presented
in the table below. The bank's capital amounts and ratios do not differ
materially from the amounts and ratios presented.
<TABLE>
<CAPTION>
Minimum Capital Minimum Capital
for Capital to be
Actual Adequacy Purposes Well Capitalized
------------------------- ------------------------ ---------------------------
($ in thousands) Amount Ratio Amount Ratio Amount Ratio
-------------- --------- ------------- --------- ------------ ------------
As of September 30, 1999:
<S> <C> <C> <C> <C> <C> <C>
Total Capital
(to risk weighted assets) $ 32,062 11.82% $ 21,694 8.00% $ 27,117 10.00%
Tier 1 Capital
(to risk weighted assets) 28,641 10.56% 10,847 4.00% 16,270 6.00%
Tier 1 Capital*
(to average assets) 28,641 7.31% 15,668 4.00% 19,585 5.00%
<FN>
* For the bank to qualify as "well capitalized", it must maintain a leveraged capital ratio (Tier 1 capital
to average assets) of at least 5%. This requirement does not apply to the company and is reflected merely
for informational purposes with respect to the bank.
</FN>
</TABLE>
On April 20, 1999, the Board of Directors declared a dividend in the amount of
$0.21 per share to be paid on or about July 1, 1999 to shareholders of record as
of the close of business on June 11, 1999. The Board of Directors intends to
consider the payment of future dividends on an annual basis. The Board of
Directors adopted a Dividend Reinvestment Plan (the "DRP"). The DRP enables
stockholders, in their discretion, to elect to reinvest dividends paid on their
outstanding shares of company common stock by purchasing additional shares of
company common stock from the company. The stockholders utilized the DRP to
reinvest $388,000 of the dividends paid by the company in 1999 in 27,054 shares
of the company's common stock.
On September 22, 1999, the company and the bank entered into a Purchase and
Assumption Agreement (the "Agreement") with Fleet Financial Group, Inc. and its
principal banking subsidiary, Fleet National Bank, pursuant to which the bank
will purchase two branch offices of Fleet National Bank. The bank will purchase
approximately $7.1 million in loans, furniture, fixtures, and equipment with a
net book value of approximately $0.1 million, and will purchase the land and
buildings at agreed upon values totaling approximately $1.5 million. The bank
will assume $66.5 million in deposits, in exchange for a premium of
approximately 13.6% of total deposits, presently estimated to be $9.1 million.
The acquisition will close with a net cash payment from Fleet National Bank to
the bank. Management anticipates using the proceeds to repay the bank's current
Federal Home Loan Bank ("FHLB") borrowings and/or to increase the bank's
investment portfolio.
The bank's acquisition of these branch offices is part of the overall sale of
306 branch offices of Fleet National Bank and BankBoston, N.A. to be completed
in accordance with a divestiture order of the United States Department of
Justice issued in connection with the merger of BankBoston Corporation with
Fleet Financial Group, Inc. The bank's acquisition of the branches remains
subject to the parties' receipt of required federal and state regulatory
approvals and satisfaction of various other customary closing conditions
specified in the Agreement. The parties presently anticipate that the bank's
acquisition of the branches will be completed in the second or third quarter of
2000. However, no assurance can be given that the acquisition will be
consummated.
8
<PAGE>
The company presently intends to raise approximately $14.5 million from an
offering of trust preferred securities to be made in the fourth quarter of 1999
or the first quarter of 2000. However, no assurance can be given that the
offering will be consummated. The company currently intends to contribute a
portion of the offering proceeds to the bank. This anticipated capital
contribution is intended to ensure that the bank remains "well capitalized" for
regulatory purposes following the completion of the acquisition. The completion
of the trust preferred offering is not a condition to the parties respective
obligations under the Agreement and management does not believe that the company
would be required to raise additional capital in order to obtain the regulatory
approvals required for the transactions contemplated by the Agreement.
9
<PAGE>
Balance Sheet
Total Assets
Total assets increased $53.5 million, or 14.9%, since December 31, 1998. The
increase is primarily attributable to an increase in gross loans of $27.9
million, and in increase in investments of $25.4 million. The increase in assets
was funded by an increase in short-term borrowings of $38.1 million and an
increase in deposits of $15.6 million.
Investments
At September 30, 1999, all of the company's investment securities were
classified as available-for-sale and carried at fair value. The net unrealized
loss at September 30, 1999 was $2.6 million, compared to an unrealized gain at
December 31, 1998 of $1.6 million. The net unrealized gain (loss), after tax
effects, is shown under accumulated other comprehensive income (loss), a
separate component of stockholders' equity, in the amounts of $(1.6) million and
$996 thousand at September 30, 1999 and December 31, 1998, respectively. The tax
effects are recorded as a change to deferred income taxes, as discussed below.
The change in the net unrealized gain (loss) was due to an increase in market
interest rates since the end of 1998.
Loans
Total loans, before the allowance for loan losses, were $243.1 million, or 58.7%
of total assets, at September 30, 1999, compared to $215.2 million, or 59.7% of
total assets, at December 31, 1998. The increase in loans of $27.9 million was
primarily attributed to continued strong loan origination in the commercial real
estate and commercial loan portfolios. The bank continues to pursue active
customer calling efforts as well as increased marketing and advertising to
identify quality-lending opportunities.
Premises and Equipment
Premises and equipment increased by $1.8 million from December 31, 1998 to
September 30, 1999. The increase was primarily attributed to the construction of
the new Westford branch, scheduled for opening in November of 1999, and from
various leasehold improvements for administrative and executive office space
necessary due to the bank's growth.
Deferred Income Taxes
The increase in deferred income taxes was caused primarily by a decrease in
investment market values from an unrealized gain at December 31, 1998 of $1.6
million to an unrealized loss of $2.6 million at September 30, 1999. This
resulted in the deferred tax asset increasing from a $0.6 million deferred tax
liability as of December 31, 1998 to a $1.0 million deferred tax asset at
September 30, 1999. Deposits and Borrowings
Total deposits, including escrow deposits of borrowers, increased $15.6 million,
or 4.9%, during the first nine months of 1999 from $318.4 million at December
31, 1998, to $334.0 million at September 30, 1999. The increase was primarily
due to increased market penetration of the bank's newer branches and aggressive
customer calling efforts.
Total borrowings, consisting of securities sold under agreements to repurchase
and FHLB (Federal Home Loan Bank) borrowings, increased $38.1 million, or
315.3%, from $12.1 million at December 31, 1998 to $50.2 million at September
30, 1999. Management periodically takes advantage of opportunities to fund asset
growth with borrowings, but on a long-term basis the bank intends to replace any
FHLB borrowings with deposits. Management also actively uses FHLB borrowings in
managing the bank's asset/liability position. The bank had FHLB borrowings
outstanding of $25.5 million at September 30, 1999 compared to $0.5 million at
December 31, 1998. The bank had the ability to borrow approximately an
additional $58.1 million at September 30, 1999.
10
<PAGE>
Loan Loss Experience/Non-Performing Assets
The following table summarizes the activity in the allowance for loan losses for
the periods indicated:
<TABLE>
<CAPTION>
Nine months ended September 30,
---------------------------------------
($ in thousands) 1999 1998
------------- --------------
<S> <C> <C>
Balance at beginning of year $5,234 4,290
Loans charged-off
Commercial 51 72
Commercial real estate -- --
Construction -- --
Residential real estate -- --
Home equity -- --
Other 9 11
------ ------
60 83
Recoveries on loans charged off
Commercial 45 5
Commercial real estate 2 --
Construction -- --
Residential real estate -- 6
Home equity 4 5
Other 54 34
------ ------
105 50
Net loans recovered (charged off) 45 (33)
Provision charged to income 270 710
------ ------
Balance at September 30 $5,549 4,967
====== ======
Allowance for loan losses: Gross loans 2.28% 2.39%
====== ======
Annualized net recoveries (charge-offs): Average loans outstanding 0.02% (0.02%)
====== ======
Allowance for loan losses: Non-performing loans 652.06% 436.85%
====== ======
</TABLE>
<TABLE>
The following table sets forth non-performing assets at the dates indicated:
($ in thousands) September 30, December 31, September 30,
1999 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Loans on non-accrual:
Commercial $ 396 754 519
Residential real estate 72 113 74
Commercial real estate 270 63 104
Construction -- 174 178
Consumer, including home equity 64 159 159
------ ------ ------
Total loans on non-accrual 802 1,263 1,034
Loans past due >90 days, still accruing 49 97 103
------ ------ ------
Total non-performing loans 851 1,360 1,137
Other real estate owned 254 304 304
------ ------ ------
Total non-performing loans and real estate owned $1,105 1,664 1,441
====== ====== ======
Non-performing loans: Gross loans 0.35% 0.63% 0.55%
====== ====== ======
Non-performing loans and real estate owned: Total assets 0.27% 0.46% 0.40%
====== ====== ======
Delinquent loans 30-89 days past due: Gross loans 0.53% 0.68% 0.88%
====== ====== ======
</TABLE>
Total non-performing loans decreased $0.3 million from September 30, 1998
through September 30, 1999. The ratio of non-performing loans to gross loans
decreased from 0.55% to 0.35% during this period. The primary cause for the
declines was the removal of several commercial and consumer loans from
non-accrual status. These loans were either paid in full or brought current and
assessed as fully collectable by management.
11
<PAGE>
Total non-performing loans decreased $0.5 million from December 31, 1998 to
September 30, 1999. The ratio of non-performing loans to gross loans decreased
from 0.63% as of December 31, 1998 to 0.35% during this period. The primary
cause for the decline was the pay-off of several commercial loans that were
classified as non-accrual. The level of non-performing assets is largely a
function of economic conditions and the overall banking environment, as well as
the strength of the bank's loan underwriting. Adverse changes in local, regional
or national economic conditions could negatively impact the level of
non-performing assets in the future, despite prudent underwriting.
Year 2000 Compliance
The statements in the following section include "Year 2000 Readiness Disclosure"
within the meaning of the Year 2000 Information and Readiness Disclosure Act.
This section contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1993, as amended. The company's readiness
for the Year 2000, and the eventual effects of the Year 2000 on the company may
be materially different than projected.
The company has determined, tested and remediated the impact of the so-called
"millennium" or "Y2K" bug (i.e., that many existing computer chips and programs
use only two digits to identify the year in a date field and if such programs
are not corrected many computer applications or computer chip dependent
operations could fail or create erroneous results by or beginning in the year
2000). Every department and function of the company is affected and is included
in the company's analysis and compliance process. The remediation efforts
discussed below relate to both information technology systems (i.e. computer
systems, phone systems, telecommunications, etc.) and non-information technology
systems (i.e. alarm systems, security systems, elevators, electrical systems,
etc.).
The company primarily utilized internal resources to manage the Y2K remediation
process and test, update, and/or replace all software information systems for
Y2K modifications. The company has a "Year 2000 Steering Committee" consisting
of various members of senior management and all department managers. The Year
2000 Steering Committee's purpose is to evaluate risks, formulate timetables and
allocate resources to ensure timely and effective completion of Y2K testing,
remediation and contingency planning. The company also has a technology
committee, consisting of certain members of the Board of Directors and
management, which oversees the Year 2000 Steering Committee and is responsible
for ensuring proper reporting of results to the full Board of Directors. One
full time information system specialist and one consultant on a part time basis
are solely devoted to Y2K issues. Many other employees are also actively
involved including each department manager and members of their staff. The
company also utilizes external resources (information systems consultants,
auditors, speakers, accountants, etc.) as deemed necessary by the various
committees and management.
The company is addressing the Y2K issue in accordance with regulatory guidelines
promulgated by the Federal Financial Institutions Examination Council ("FFIEC").
The company does not perform any in-house programming and, according to our
vendor, since 1987, the system we use for our core loan and deposit processing
was designed to process dated data into the next century and beyond. Management
has completed testing of internal mission critical information systems.
Management has also completed the testing required for mission critical systems
associated with service providers including the trust accounting system. Mission
critical systems are those critical to daily operations and failure of which
would result in definite disruption to business. Testing of the company's
non-mission critical applications will continue through 1999 and will be
completed prior to any anticipated impact on its operating systems. Contingency
plans have been developed for each function so that the company is adequately
prepared in the event of a system failure, despite remediation efforts. A
sub-committee of the Y2K Steering Committee has been formed to facilitate
preparation of contingency plans. These contingency plans will be reviewed,
enhanced and updated, as needed, throughout the remainder of the year.
Additionally, the bank has formed a coalition with surrounding financial
institutions to periodically meet and discuss contingency plans and pool
resources to deal with potential disruptions (i.e., failure of security systems,
failure of electrical grids, cash needs, etc.).
12
<PAGE>
Included in other non-interest expenses are charges incurred in connection with
the preparation, testing, modification or replacement of software and hardware
in connection with the process of rendering the company's computer systems Y2K
compliant. Excluding internal salary and benefit costs, approximately $10,000 in
costs associated with Y2K remediation efforts were expended in the year ended
December 31, 1998 and $111,000 through the third quarter of 1999. Management
expects that the costs incurred to replace or upgrade existing hardware and
software will be capitalized and amortized in accordance with the company's
existing accounting policies, while miscellaneous consulting, salary,
maintenance and modification costs will be expensed as incurred. Anticipated
future costs, excluding internal salary and benefit costs, associated with Y2K
compliance are estimated at $75,000, which mostly consists of consulting costs.
Due to short-term personnel constraints it was necessary to engage consultants
to assist in the Year 2000 management process. Other than the one dedicated
information system specialist the company does not separately track the portion
of its salary and benefit costs allocable to the Y2K project. It is not
anticipated that material incremental costs will be incurred in any single
period.
The cost of the project and the date on which the company plans to complete the
Y2K modifications are based on management's best estimates, which were derived
utilizing numerous assumptions of future events including the continued
availability of certain resources, third party availability and other factors.
However, there can be no guarantee that these estimates will be achieved and
actual results could differ materially from those plans. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, employee turnover,
non-compliance of the company's vendors or service providers and similar
uncertainties. The company is working closely with all of its vendors and
service providers to determine the extent to which the company is vulnerable to
those third parties' failure to remediate their own Y2K issues.
Management recognizes the potential risk of Y2K on the bank's customers. The
bank has approached the credit risk component of Y2K through education of all
lending officers, education of customers, analysis of the bank's loan portfolio,
and consideration of Y2K in the underwriting of loans. All lending officers were
required to undergo internal training to learn the potential risks of Y2K. The
bank has sponsored numerous seminars for bank customers, in addition to
distribution of literature regarding Y2K to all customers. In 1998, an analysis
of the bank's commercial loan portfolio was performed to determine potential
exposure to Y2K risks. Increases in the allowance for loan losses, solely as a
result of Y2K, were not deemed necessary. Any new commercial loans require an
assessment of the customer's Y2K compliance as part of preliminary underwriting.
The need for additional provisions to the bank's allowance for loan losses
resulting from borrowers' Y2K compliance problems will be considered, on an
ongoing basis, based on management's assessment of the potential exposure of its
customer base to such problems.
In addition, Enterprise Bank's Trust Division is working with its business
partners to make sure that analysts are routinely monitoring quarterly, annual
and other financial reports on the companies they invest in and that they are
monitoring reports for the required SEC disclosure. For international companies
where there is no SEC mandate, we are making inquiries of our business partners
to verify that analysts are looking for satisfactory disclosure of Y2K readiness
and if none is present that they are contacting management directly to determine
Y2K status.
The internal and external risks associated with Y2K are numerous. The company is
addressing the Y2K issue in accordance with regulatory guidelines promulgated by
the FFIEC. However, there can be no guarantee that the systems of the company,
bank customers or other associated companies (i.e. electric company, telephone
company, printing companies, office supply companies, etc.) will be timely
remediated. There can be no guarantee that the systems of third party vendors on
which the company's systems rely will be timely remediated. The failure of the
company or a critical third party vendor to timely remediate Y2K issues may
cause systems malfunctions, incorrect or incomplete transaction processing, the
inability to reconcile accounting books and records, or other problematic
situations.
The company's operations and/or financial condition could possibly be negatively
impacted to the extent the company, customers or entities doing business with
the company are unsuccessful in timely and properly addressing their respective
Y2K compliance responsibilities.
13
<PAGE>
Results of Operations
Nine Months Ended September 30, 1999 vs. Nine Months Ended September 30, 1998
The company reported net income of $3,036,000 for the nine months ended
September 30, 1999, versus $2,573,000 for the nine months ended September 30,
1998, or an increase of 18.0%. The company had basic earnings per common share
of $0.95 and $0.81 for the nine months ended September 30, 1999 and September
30, 1998, respectively. Diluted earnings per share were $0.91 and $0.78 for the
nine months ending September 30, 1999 and September 30, 1998, respectively.
The following table highlights changes that affected the company's earnings for
the periods indicated:
<TABLE>
<CAPTION>
Nine months ended September 30,
-------------------------------
($ in thousands) 1999 1998
---------- ----------
<S> <C> <C>
Average assets $371,555 333,297
Average deposits and short-term borrowings 340,905 306,220
Average investment securities (1) 122,067 104,491
Average loans 227,004 196,436
Net interest income 12,603 11,601
Provision for loan losses 270 710
Tax expense 1,137 1,179
Average loans: Average deposits and borrowings 66.59% 64.15%
Non interest expense: Average assets (2) 3.70% 3.73%
Non interest income, exclusive of securities
gains: Average assets (2) 0.70% 0.69%
Average tax equivalent rate earned on interest earning assets 8.08% 8.32%
Average rate paid on interest bearing deposits and
short-term borrowings 3.81% 3.91%
Net interest margin 5.05% 5.13%
<FN>
(1) Average investment securities are shown at average amortized cost
(2) Ratios have been annualized based on number of days for the period
</FN>
</TABLE>
Net Interest Income
The company's net interest income was $12,603,000 for the nine months ended
September 30, 1999, an increase of $1,002,000 or 8.6% from $11,601,000 for the
nine months ended September 30, 1998. Interest income increased $1,563,000,
primarily a result of an increase of average loan balances of $30.6 million and
average investment balances of $17.6 million. The increase in interest income
was partially offset by an increase in interest expense of $561,000, primarily
due to an increase in average deposits and short-term borrowings.
The average tax-equivalent yield on earning assets in the nine months ended
September 30, 1999, was 8.08%, down 24 basis points from 8.32% for the nine
months ended September 30, 1998. The decrease in average yield on earning assets
is primarily attributable to a decrease in yield on loans, partially offset by
an increase in yield on investment securities. The decrease in yield on loans is
primarily attributable to a 75 basis point decrease in the prime lending rate
during the fourth quarter of 1998, slightly offset by a 50 basis point increase
during the third quarter of 1999. The increase in the tax equivalent yield on
investment securities from 6.51% to 6.58% was primarily a result of a change in
investment mix to higher yielding securities, such as collateralized mortgage
obligations and tax-exempt municipal securities. The average rate paid on
interest bearing deposits and short-term borrowings in the nine months ended
September 30, 1999, was 3.81%, a decrease of 10 basis points from 3.91% in the
nine months ended September 30, 1998, primarily due to a drop in rates paid on
certificates of deposit. The average rate on short-term borrowings increased
from 3.67% to 4.58% as a result of an increase in sweep account rates and
increased borrowings from the FHLB.
The following table sets forth, among other things, the extent to which changes
in interest rates and changes in the average balances of interest-earning assets
and interest-bearing liabilities have affected interest income and expense
during the nine months ended September 30, 1999, and 1998. For each category of
interest-earning assets and interest-bearing liabilities, information is
provided on changes attributable to: (1) volume (change in average balance
multiplied by prior year average rate); (2) interest rate (change in average
interest rate multiplied by prior year average balance); and (3) rate and volume
(the remaining difference).
14
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES, INTEREST AND AVERAGE INTEREST RATES
Nine Months Ended September 30, 1999 Nine Months Ended September 30, 1998
------------------------------------ --------------------------------------
Average Interest Average Interest
($ in thousands) Balance Interest Rates (3) Balance Interest Rates (3)
-------- ---------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Loans (1) (2) $227,004 $ 15,146 8.92% $196,436 $ 13,845 9.42%
Investment securities (3) 122,067 5,358 6.58 104,491 4,767 6.51
Federal funds sold 1,911 67 4.69 9,666 396 5.48
-------- -------- -------- --------
Total interest earnings assets 350,982 20,571 8.08% 310,593 19,008 8.32%
-------- --------
Other assets (4) 20,573 22,704
-------- --------
Total assets $371,555 $333,297
======== ========
Liabilities and stockholders' equity:
Savings, NOW and money market $114,421 1,774 2.07% $110,234 1,819 2.21%
Time deposits 143,860 5,457 5.07 127,835 5,179 5.42
Short-term borrowings 21,521 737 4.58 14,918 409 3.67
-------- -------- -------- --------
Interest bearing deposits and borrowings 279,802 7,968 3.81% 252,987 7,407 3.91%
-------- --------
Non-interest bearing deposits 61,103 53,233
Other liabilities 2,793 2,414
-------- --------
Total liabilities 343,698 308,634
Stockholders' equity 27,857 24,663
-------- --------
Total liabilities and
Stockholders' equity $371,555 $333,297
======== ========
Net interest rate spread 4.27% 4.41%
Net interest income $ 12,603 $ 11,601
======== ========
Net interest margin 5.05% 5.13%
<CAPTION>
($ in thousands) Changes due to
-----------------------------------------------------
Interest Rate/
Total Volume Rate Volume
------- -------- -------- --------
<S> <C> <C> <C> <C>
Assets:
Loans (1) (2) $1,301 $2,154 $ (735) $ (118)
Investment securities (3) 591 856 55 (320)
Federal funds sold (329) (318) (57) 46
------- ------ ------ --------
Total interest earnings assets 1,563 2,692 (737) (392)
------- ------ ------ --------
Other assets (4)
Total assets
Liabilities and stockholders' equity:
Savings, NOW and money market (45) 69 (115) 1
Time deposits 278 650 (335) (37)
Short-term borrowings 328 181 102 45
------- ------ ------ --------
Interest bearing deposits and borrowings 561 900 (348) 9
------- ------ ------ --------
Non-interest bearing deposits
Other liabilities
Total liabilities
Stockholders' equity
Total liabilities and
Stockholders' equity
Net interest rate spread
Net interest income $ 1,002 $1,792 $ (389) $ (401)
======= ====== ======= ======
Net interest margin
<FN>
(1) Average loans include non-accrual loans.
(2) Average loans are net of average deferred loan fees.
(3) Average balances are presented at average amortized cost and average interest rates are presented on a tax-equivalent basis.
(4) Other assets include cash and due from banks, accrued interest receivable, allowance for loan losses, real estate acquired by
foreclosure, deferred income taxes and other miscellaneous assets.
</FN>
</TABLE>
The bank manages its earning assets by fully using available capital resources
within what management believes are prudent credit and leverage parameters.
Loans, investment securities, and federal funds sold comprise the bank's earning
assets.
15
<PAGE>
The provision for loan losses amounted to $270,000 and $710,000 for the
nine-month periods ended September 30, 1999 and 1998, respectively. Loans,
before the allowance for loan losses, have increased from $207.5 million, at
September 30, 1998, to $243.1 million, at September 30, 1999, or an increase of
17.2%. Despite the increase in the bank's loan portfolio, there has not been an
increase in problem assets or a significant change in the bank's basic
underwriting practices. Management regularly reviews the levels of non-accrual
loans, levels of charge-offs and recoveries, levels of outstanding loans, and
known and inherent risks in the loan portfolio. Based on this review, and taking
into account loan quality, and a net recovery position for the nine months ended
September 30, 1999, management determined that further additions to the
allowance for loan losses were not necessary during the third quarter.
Non-Interest Income
Non-interest income, exclusive of security gains, increased by $208,000 to
$1,932,000 for the nine months ended September 30, 1999, compared to $1,724,000
for the nine months ended September 30, 1998. This increase was caused primarily
by an increase in trust fees of $180,000.
Trust fees increased by $180,000, or 25.6%, for the nine months ended September
30, 1999 compared to the same period in 1998 due to an increase in trust assets.
Deposit fees decreased by $26,000, or 3.9%, for the nine months ended September
30, 1999, compared to the nine months ended September 30, 1998, due primarily to
a reduction in overdraft charges.
Gains on sales of loans increased from $132,000 for the nine months ended
September 30, 1998, to $148,000 for the nine months ended September 30, 1999, as
a result of increased loan volume caused by low interest rates in the first six
months of the year and a strong real estate market.
Other income for the nine months ended September 30, 1999, was $253,000, an
increase of 10.5%, from $229,000 for the nine months ended September 30, 1998,
primarily due to increases in ATM fees, safe deposit fees, wire fees and debit
card fees.
Net gains on sales of investment securities decreased by $250,000 for the nine
months ended September 30, 1999, from $433,000 for the nine months ended
September 30, 1998. The decrease was due to relatively higher interest rates in
1999, resulting in less opportunity to restructure the investment portfolio.
Non-Interest Expense
Salaries and benefits expense totaled $6,052,000 for the nine months ended
September 30, 1999, compared with $5,262,000 for the nine months ended September
30, 1998, an increase of $790,000 or 15.0%. This increase was primarily the
result of new hires, to support the overall growth of the bank, and annual
salary increases.
Occupancy expense was $1,809,000 for the nine months ended September 30, 1999,
compared with $1,629,000 for the nine months ended September 30, 1998, an
increase of $180,000 or 11.0%. The increase was primarily due to the addition
and renovation of new facilities for the bank's accounting and loan servicing
departments, executive offices, commercial lending offices, customer service
center and the Westford branch.
Advertising and public relations expenses increased by $46,000, or 12.8%, for
the nine months ended September 30, 1999 compared to the same period in 1998.
The increase was primarily attributed to increased advertising associated with
the bank's growth.
Office and data processing supplies expense decreased by $35,000, or 13.0%, for
the nine months ended September 30, 1999 compared to the same period in the
prior year. The decrease was primarily due to various cost savings programs.
Audit, legal and other professional expenses decreased by $104,000, or 16.9%,
for the nine months ended September 30, 1999 compared to the prior year period,
primarily as a result of professional services incurred in 1998 relating to tax
saving strategies.
16
<PAGE>
Trust, professional and custodial expenses increased by $25,000, or 11.1%, for
the nine months ended September 30, 1999 as compared to the same period in 1998.
The increase was due to an increase in trust assets under management as well as
additional services provided by the trust department.
The company's effective tax rate for the nine months ending September 30, 1999
was 27.3% compared to 31.4% for the nine months ended September 30, 1998. The
reduction in rate was a result of the implementation of certain tax strategies
in 1998. Expenses for these strategies were fully absorbed in 1998.
17
<PAGE>
Results of Operations
Three Months Ended September 30, 1999 vs. Three Months Ended September 30, 1998
The company reported net income of $1,064,000 for the three months ended
September 30, 1999, versus $892,000 for the three months ended September 30,
1998, or an increase of 19.3%. The company had basic earnings per common share
of $0.33 and $0.28 for the three months ended September 30, 1999 and September
30, 1998, respectively. Diluted earnings per share were $0.32 and $0.27 for the
three months ending September 30, 1999 and September 30, 1998, respectively.
The following table highlights changes that affected the company's earnings for
the periods indicated:
<TABLE>
<CAPTION>
Three months ended September 30,
--------------------------------
($ in thousands) 1999 1998
---------- ---------
<S> <C> <C>
Average assets $ 392,072 342,689
Average deposits and short-term borrowings 361,020 314,122
Average investment securities (1) 133,447 93,730
Average loans 236,879 205,103
Net interest income 4,507 4,090
Provision for loan losses -- 440
Tax expense 384 246
Average loans: Average deposits and borrowings 65.61% 65.29%
Non interest expense: Average assets (2) 3.83% 3.90%
Non interest income, exclusive of securities
gains: Average assets (2) 0.65% 0.68%
Average tax equivalent rate earned on interest earning assets 8.11% 8.34%
Average rate paid on interest bearing deposits and
short-term borrowings 3.82% 3.88%
Net interest margin 5.06% 5.20%
<FN>
(1) Average investment securities are shown at average amortized cost
(2) Ratios have been annualized based on number of days for the period
</FN>
</TABLE>
Net Interest Income
The company's net interest income was $4,507,000 for the three months ended
September 30, 1999, an increase of $417,000 or 10.2% from $4,090,000 for the
three months ended September 30, 1998. Interest income increased $728,000,
primarily a result of an increase of $31.8 million in the average loan balance
and $39.7 million in the average investment balance. The increase in interest
income was partially offset by an increase in interest expense of $311,000,
primarily due to an increase in average time deposits and short-term borrowings.
The average tax-equivalent yield on earning assets in the three months ended
September 30, 1999, was 8.11%, down 23 basis points from 8.34% in the three
months ended September 30, 1998. The decrease in average yield on earning assets
is primarily attributable to a decrease in yield on loans, and a decrease in
yield on investment securities. The decrease in yield on loans is primarily
attributable to a 75 basis point decrease in the prime lending rate during the
fourth quarter of 1998, slightly offset by a 50 basis point increase during the
third quarter of 1999. The decrease in the tax equivalent yield on investment
securities from 6.65% to 6.40% was primarily a result of a decline in investment
rates during the fourth quarter of 1998 and the re-investment of funds from
sales and calls of investment securities during that period. The average rate
paid on interest bearing deposits and short-term borrowings in the three months
ended September 30, 1999, was 3.82%, a decrease of 6 basis points from 3.88% in
the three months ended September 30, 1998, primarily due to a drop in rates paid
on certificates of deposit. The average rate on short-term borrowings increased
from 3.03% to 4.84% as a result of an increase in interest rates on sweep
accounts and increased borrowings from FHLB.
The following table sets forth, among other things, the extent to which changes
in interest rates and changes in the average balances of interest-earning assets
and interest-bearing liabilities have affected interest income and expense
during the three months ended September 30, 1999, and 1998. For each category of
interest-earning assets and interest-bearing liabilities, information is
provided on changes attributable to: (1) volume (change in average balance
multiplied by prior year average rate); (2) interest rate (change in average
interest rate multiplied by prior year average balance); and (3) rate and volume
(the remaining difference).
18
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES, INTEREST AND AVERAGE INTEREST RATES
Three Months Ended September 30, 1999 Three Months Ended September 30, 1998
------------------------------------- --------------------------------------
Average Interest Average Interest
($ in thousands) Balance Interest Rates (3) Balance Interest Rates (3)
-------- ---------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Loans (1) (2) $236,879 $ 5,423 9.08% $205,103 $ 4,876 9.43%
Investment securities (3) 133,447 1,934 6.40 93,730 1,441 6.65
Federal funds sold 235 2 4.00 22,773 314 5.47
-------- ------- -------- -------
Total interest earnings assets 370,561 7,359 8.11% 321,606 6,631 8.34%
------- -------
Other assets (4) 21,511 21,083
-------- --------
Total assets $392,072 $342,689
======== ========
Liabilities and stockholders' equity:
Savings, NOW and money market $118,224 632 2.12% $111,042 605 2.16%
Time deposits 144,464 1,809 4.97 136,105 1,837 5.35
Short-term borrowings 33,684 411 4.84 12,943 99 3.03
-------- ------- -------- -------
Interest bearing deposits and borrowings 296,372 2,852 3.82% 260,090 2,541 3.88%
------- -------
Non-interest bearing deposits 64,648 54,032
Other liabilities 2,130 2,503
-------- --------
Total liabilities 363,150 316,625
Stockholders' equity 28,922 26,064
-------- --------
Total liabilities and
Stockholders' equity $392,072 $342,689
======== ========
Net interest rate spread 4.29% 4.46%
Net interest income $ 4,507 $ 4,090
======= =======
Net interest margin 5.06% 5.20%
<CAPTION>
($ in thousands) Changes due to
-----------------------------------------------------
Interest Rate/
Total Volume Rate Volume
------- -------- -------- --------
<S> <C> <C> <C> <C>
Assets:
Loans (1) (2) $547 $755 $ (181) $ (27)
Investment securities (3) 493 666 (59) (114)
Federal funds sold (312) (311) (84) 83
------ ----- ------ ------
Total interest earnings assets 728 1,110 (324) (58)
------ ----- ------ ------
Other assets (4)
Total assets
Liabilities and stockholders' equity:
Savings, NOW and money market 27 39 (11) (1)
Time deposits (28) 113 (130) (11)
Short-term borrowings 312 158 59 95
------ ----- ------ ------
Interest bearing deposits and borrowings 311 310 (82) 83
------ ----- ------ ------
Non-interest bearing deposits
Other liabilities
Total liabilities
Stockholders' equity
Total liabilities and
Stockholders' equity
Net interest rate spread
Net interest income $ 417 $ 800 $ (242) $ (141)
====== ===== ====== ======
Net interest margin
<FN>
(1) Average loans include non-accrual loans.
(2) Average loans are net of average deferred loan fees.
(3) Average balances are presented at average amortized cost and average interest rates are presented on a tax-equivalent basis.
(4) Other assets include cash and due from banks, accrued interest receivable, allowance for loan losses, real estate acquired by
foreclosure, deferred income taxes and other miscellaneous assets.
</FN>
</TABLE>
The bank manages its earning assets by fully using available capital resources
within what management believes are prudent credit and leverage parameters.
Loans, investment securities, and federal funds sold comprise the bank's earning
assets.
19
<PAGE>
The provision for loan losses amounted to $0 and $440,000 for the three-month
periods ended September 30, 1999 and 1998, respectively. Loans, before the
allowance for loan losses, have increased from $207.5 million, at September 30,
1998, to $243.1 million, at September 30, 1999, or an increase of 17.2%. Despite
the growth in the bank's loan portfolio, there has not been an increase in
problem assets or significant change in the bank's basic underwriting practices,
and the company has recorded a net recovery to the allowance for loan losses for
the nine month period ended September 30, 1999. Management regularly reviews the
level of non-accrual loans, levels of charge-offs and recoveries, levels of
outstanding loans, and known and inherent risks in the nature of the loan
portfolio. Based on this review, and taking into account considerations of loan
quality and the net recovery position, management determined that further
additions to the allowance for loan loss were not necessary at this time.
Non-Interest Income
Non-interest income, exclusive of security gains, increased by $57,000 to
$644,000 for the three months ended September 30, 1999, compared to $587,000 for
the three months ended September 30, 1998. This increase was primarily caused by
an increase in trust fees of $61,000.
Trust fees increased by $61,000, or 25.0%, for the three months ended September
30, 1999 compared to the same period in 1998 due to an increase in trust assets.
Deposit fees decreased by $3,000, or 1.3%, for the three months ended September
30, 1999, compared to the three months ended September 30, 1998, primarily due
to a reduction in overdraft fees.
Other income for the three months ended September 30, 1999, was $89,000, an
increase of 18.7%, from $75,000 for the three months ended September 30, 1998,
primarily due to increases in ATM fees, safe deposit fees, wire transfer fees,
and debit card fees.
Net gains on sales of investments decreased to $80,000 for the three months
ended September 30, 1999, compared to $268,000 in the three months ended
September 30, 1998. The decrease was due to relatively higher interest rates in
1999, resulting in less opportunity to restructure the investment portfolio.
Non-Interest Expense
Salaries and benefits expense totaled $2,207,000 for the three months ended
September 30, 1999, compared with $1,854,000 for the three months ended
September 30, 1998, an increase of $353,000 or 19.0%. This increase was
primarily the result of new hires, to support the overall growth of the bank,
and annual salary increases.
Occupancy expense was $648,000 for the three months ended September 30, 1999,
compared with $535,000 for the three months ended September 30, 1998, an
increase of $113,000 or 21.1%. The increase was primarily due to the addition
and renovation of new facilities for the bank's accounting and loan servicing
departments, executive office space, commercial lending offices, customer
service center, and the Westford branch.
Advertising and public relations expenses decreased by $13,000, or 9.5%, for the
three months ended September 30, 1999 compared to the same period in 1998. The
decrease is due to timing of expenses, as advertising expenditures have
increased for the nine months ended September 30, 1999, as compared to the prior
year period.
Office and data processing supplies expense increased by $15,000, or 18.1%, for
the three months ended September 30, 1999 compared to the same period in the
prior year. The increase was primarily due to overall growth of the bank.
Audit, legal and other professional expenses decreased by $134,000, or 41.4%,
for the three months ended September 30, 1999 compared to the prior year period,
primarily due to consulting fees incurred in 1998 relating to the implementation
of certain tax strategies.
Trust, professional and custodial expenses increased by $17,000, or 21.3%, for
the three months ended September 30, 1999 as compared to the same period in
1998. The increase was due to an increase in trust assets under management as
well as additional services provided by the trust department.
20
<PAGE>
The company's effective tax rate for the three months ending September 30, 1999
was 26.5% compared to 21.6% for the three months ended September 30, 1998.
During the third quarter of 1998, the company implemented certain tax saving
strategies. The effective rate for the three months ended September 30, 1998 was
lower due to accelerating these strategies to achieve full year benefit for
1998.
21
<PAGE>
ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk
The company's primary market risk is interest rate risk, specifically, changes
in the interest rate environment. The bank's investment committee is responsible
for establishing policy guidelines on acceptable exposure to interest rate risk
and liquidity. The investment committee is comprised of certain members of the
Board of Directors and certain members of senior management. The primary
objectives of the company's asset/liability policy is to monitor, evaluate and
control the bank's interest rate risk, as a whole, within certain tolerance
levels while ensuring adequate liquidity and adequate capital. The investment
committee establishes and monitors guidelines for the net interest margin
sensitivity, equity to capital ratios, liquidity, Federal Home Loan Bank
borrowing capacity and loan to deposit ratio. The asset/liability strategies are
reviewed regularly by management and presented and discussed with the investment
committee on at least a quarterly basis. The asset/liability strategies are
revised based on changes in interest rate levels, general economic conditions,
competition in the marketplace, the current position of the bank, anticipated
growth of the bank and other factors.
One of the principal factors in maintaining planned levels of net interest
income is the ability to design effective strategies to manage the impact of
changes in interest rates on future net interest income. The balancing of
changes in interest income from interest earning assets and interest expense of
interest bearing liabilities is accomplished through the asset/liability
management program. The bank's simulation model analyzes various interest rate
scenarios. Variations in the interest rate environment affect numerous factors,
including prepayment speeds, reinvestment rates, maturities of investments (due
to call provisions), and interest rates on various asset and liability accounts.
The investment committee periodically reviews guidelines or restrictions
contained in the asset/liability policy and adjusts them accordingly. The bank's
current asset/liability policy is designed to limit the impact on net interest
income to 10% in the 24 month period following the date of the analysis, in a
rising and falling rate shock analysis of 100 and 200 basis points.
Management believes there have been no material changes in the interest rate
risk reported in the company's Annual Report on Form 10-KSB for the year ended
December 31, 1998.
22
<PAGE>
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
Not Applicable
Item 2 Changes in Securities
Not Applicable
Item 3 Defaults upon Senior Securities
Not Applicable
Item 4 Submission of Matters to a Vote of Security Holders
None
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
(a) The following exhibits are included with this report:
2.1 Purchase and Assumption Agreement dated as
of September 22, 1999 by and among Fleet
Financial Group, Inc., Fleet National Bank,
Enterprise Bancorp, Inc. and Enterprise Bank
and Trust Company (exclusive of disclosure
schedules)
27.1 Financial Data Schedule (included with
electronic copy only)
(b) Reports on Form 8-K. The company filed a report on
Form 8-K on September 24,1999, reporting that the
company and the bank had entered into a Purchase and
Assumption Agreement with Fleet Financial Group, Inc.
and Fleet National Bank on September, 22, 1999,
pursuant to which the bank would purchase two branch
offices of Fleet National Bank.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENTERPRISE BANCORP, INC.
DATE: November 12, 1999 /s/ John P. Clancy, Jr.
John P. Clancy, Jr.
Senior Vice President, Chief Financial Officer,
Chief Investment Officer and Treasurer
24
PURCHASE AND ASSUMPTION AGREEMENT
by and among
Fleet Financial Group, Inc.,
Fleet National Bank,
Enterprise Bank and Trust Company
and
Enterprise Bancorp, Inc.
September 22, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I - DEFINITIONS............................................................................................ 1
Section 1.1. Defined Terms..................................................................................... 1
Section 1.2. Accounting Terms.................................................................................. 15
ARTICLE II PURCHASE AND SALE OF PURCHASED ASSETS AND ASSIGNMENT AND ASSUMPTION OF ASSUMED LIABILITIES.............. 15
Section 2.1. Purchase and Sale of Assets; No Other Assets Purchased............................................ 15
Section 2.2. Assumed Liabilities............................................................................... 16
ARTICLE III PURCHASE PRICE; PAYMENT; SETTLEMENT; TAX ALLOCATION.................................................... 18
Section 3.1. Purchase Price.................................................................................... 18
Section 3.2. Payment at Closing................................................................................ 19
Section 3.3. Adjustment of Estimated Payment Amount............................................................ 19
Section 3.4. Allocation of Purchase Price...................................................................... 20
Section 3.5. Proration; Other Closing Date Adjustments......................................................... 21
ARTICLE IV TAXES.................................................................................................. 22
Section 4.1. Sales, Transfer and Use Taxes..................................................................... 22
Section 4.2. Information Reports............................................................................... 22
ARTICLE V CLOSING................................................................................................. 22
Section 5.1. Closing Date...................................................................................... 22
Section 5.2. Seller's Deliveries............................................................................... 23
Section 5.3. Purchaser's Deliveries............................................................................ 24
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF SELLER................................................................ 25
Section 6.1. Organization...................................................................................... 25
Section 6.2. Authority......................................................................................... 25
Section 6.3. Non-Contravention................................................................................. 26
Section 6.4. Compliance with Law............................................................................... 26
Section 6.5. Legal Proceedings................................................................................. 26
Section 6.6. Tenants; Branch Leases............................................................................ 26
Section 6.7. Title to Purchased Assets......................................................................... 26
Section 6.8. Loans............................................................................................. 27
Section 6.9. No Broker......................................................................................... 27
Section 6.10. Assumed Deposit Liabilities...................................................................... 27
Section 6.11. No Assessable Improvements....................................................................... 28
Section 6.12. No Adverse Notices............................................................................... 28
Section 6.13. No Change in Assessment.......................................................................... 28
Section 6.14. Licenses and Permits............................................................................. 28
Section 6.15. No Condemnation.................................................................................. 28
Section 6.16. Regulatory Matters............................................................................... 28
Section 6.17. Interim Operations............................................................................... 29
Section 6.18. Limitations on and Disclaimer of Representations and Warranties and Purchaser's Release in
Connection Therewith............................................................................................ 29
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER AND ENTERPRISE............................................ 30
Section 7.1. Organization...................................................................................... 30
Section 7.2. Authority......................................................................................... 30
Section 7.3. Non-Contravention................................................................................. 30
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Section 7.4. Legal Proceedings................................................................................. 30
Section 7.5. Consents and Other Regulatory Matters............................................................. 31
Section 7.6. WARN Act.......................................................................................... 32
Section 7.7. Capital Available................................................................................. 32
Section 7.8. No Broker......................................................................................... 32
ARTICLE VIII COVENANTS OF SELLER.................................................................................. 32
Section 8.1. Conduct of the Business........................................................................... 32
Section 8.2. Regulatory Approvals.............................................................................. 33
Section 8.3. Branch and ATM Consents; Other Facilities Consents................................................ 33
Section 8.4. Nonsolicitation................................................................................... 34
Section 8.5. Nonsolicitation of Purchaser's Employees.......................................................... 35
ARTICLE IX COVENANTS OF PURCHASER AND ENTERPRISE.................................................................. 35
Section 9.1. Regulatory Approvals and Standards................................................................ 35
Section 9.2. Consents; Compliance with Law..................................................................... 36
Section 9.3. Solicitation of Accounts.......................................................................... 36
Section 9.4. Nonsolicitation of Seller's Employees............................................................. 37
Section 9.5. Recording of Instruments of Assignment............................................................ 37
Section 9.6. Transferred Employees............................................................................. 37
Section 9.7. Interviews........................................................................................ 40
Section 9.9. No Other Transactions............................................................................. 40
Section 9.10. Enterprise Guaranty.............................................................................. 40
ARTICLE X ACCESS; EMPLOYEE AND CUSTOMER COMMUNICATIONS............................................................ 40
Section 10.1. Access by Purchaser.............................................................................. 40
Section 10.2. Communications to Employees; Training............................................................ 41
Section 10.3. Communications with Customers.................................................................... 41
ARTICLE XI FACILITIES............................................................................................. 42
Section 11.1. Environmental Diligence.......................................................................... 42
ARTICLE XII TRANSITIONAL MATTERS.................................................................................. 45
Section 12.1. Payment of Deposit Liabilities................................................................... 45
Section 12.2. Delivery of Purchaser's Check Forms.............................................................. 46
Section 12.3. Uncollected Checks Returned to Seller............................................................ 46
Section 12.4. Default on Loan Payments to Seller............................................................... 46
Section 12.5. Notices to Obligors on Loans..................................................................... 46
Section 12.6. New Telephone Numbers............................................................................ 47
Section 12.7. New ATM/Debit Cards.............................................................................. 47
Section 12.8. Installation of Equipment by Purchaser........................................................... 47
Section 12.9. Deactivation of ATMs and ATM/Debit Cards......................................................... 47
Section 12.10. Signage......................................................................................... 47
Section 12.11. Letters of Credit............................................................................... 48
Section 12.12. Actions With Respect to IRA, Keogh Plan and Employee Pension Plan Deposit Liabilities........... 49
Section 12.13. Bulk Transfer Laws.............................................................................. 50
Section 12.14. Ancillary Agreements............................................................................ 51
ARTICLE XIII CONDITIONS TO CLOSING................................................................................ 51
Section 13.1. Conditions to Obligations of Seller and Fleet.................................................... 51
Section 13.2. Conditions to Obligations of Purchaser and Enterprise............................................ 51
ARTICLE XIV DATA PROCESSING....................................................................................... 52
Section 14.1. Conversion....................................................................................... 53
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<PAGE>
ARTICLE XV INDEMNITY.............................................................................................. 53
Section 15.1. Fleet's Indemnity................................................................................ 53
Section 15.2. Enterprise Indemnity............................................................................. 53
Section 15.3. Indemnification Procedure........................................................................ 54
Section 15.4. Limitations on Liability......................................................................... 55
Section 15.5. General.......................................................................................... 55
Section 15.6. Survival......................................................................................... 56
ARTICLE XVI POST-CLOSING MATTERS.................................................................................. 56
Section 16.1. Further Assurances............................................................................... 56
Section 16.2. Access to and Retention of Books and Records..................................................... 56
Section 16.3. Deposit Histories................................................................................ 57
ARTICLE XVII MISCELLANEOUS........................................................................................ 57
Section 17.1. Expenses......................................................................................... 57
Section 17.2. Trade Names and Trademarks....................................................................... 58
Section 17.3. Termination; Extension of Closing Date........................................................... 58
Section 17.4. Modification and Waiver.......................................................................... 59
Section 17.5. Binding Effect; Assignment....................................................................... 59
Section 17.6. Confidentiality.................................................................................. 59
Section 17.7. Entire Agreement; Governing Law.................................................................. 60
Section 17.8. Consent to Jurisdiction; Waiver of Jury Trial.................................................... 60
Section 17.9. Waiver of Certain Damages........................................................................ 60
Section 17.10. Severability.................................................................................... 61
Section 17.11. Counterparts.................................................................................... 61
Section 17.12. Notices......................................................................................... 61
Section 17.13. Interpretation.................................................................................. 63
Section 17.14. Specific Performance............................................................................ 63
Section 17.15. No Third Party Beneficiaries.................................................................... 63
Section 17.16. Survival........................................................................................ 63
</TABLE>
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<PAGE>
SCHEDULES
Schedule 1.1(a) ATM Lease Agreements
Schedule 1.1(b) List of Automated Teller Machines
Schedule 1.1(c) Branch Leases
Schedule 1.1(d) Branches
Schedule 1.1(e) Consumer Bank Employees
Schedule 1.1(f) Consumer Bank Loans
Schedule 1.1(g) Consumer Deposit Liabilities
Schedule 1.1(h) Excluded Fixed Assets
Schedule 1.1(i) Fixed Assets
Schedule 1.1(j) [Reserved]
Schedule 1.1(k) ISDA Transactions
Schedule 1.1(l) Letters of Credit
Schedule 1.1(m) [Reserved]
Schedule 1.1(n) Real Property
Schedule 1.1(o) Real Property Purchase Price
Schedule 1.1(p) SBA Loans
Schedule 1.1(q) Small Business Bank Deposit Liabilities
Schedule 1.1(r) Small Business Bank Loans
Schedule 1.1(s) Tenant Leases
Schedule 3.4(a) Allocation of Purchase Price
Schedule 6.6(b) Branch Lease Exceptions
Schedule 6.16 Seller Regulatory Approvals
Schedule 7.5(a) Purchaser Regulatory Approvals
Schedule 14.1 Terms of Data Processing Conversion
Schedule 17.2 Trade Names and Trademarks
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<PAGE>
EXHIBITS
Exhibit A Terms of Fleet Boston Divestiture Severance Plan
Exhibit B Form of Purchaser's Letter of Credit
Exhibit C Form of Quitclaim Deed
Exhibit D Form of Bill of Sale
Exhibit E Form of Assignment and Assumption Agreement
Exhibit F Form of Lease Assignments
Exhibit G Form of Seller's Officer's Certificate
Exhibit H Form of Seller's Power of Attorney
Exhibit I Form of Purchaser Officer's Certificate
Exhibit J Form of Use and Occupancy Agreement
Exhibit K Form of Lease Agreement
Exhibit L Form of Collateral Agency Agreement
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<PAGE>
PURCHASE AND ASSUMPTION AGREEMENT
This Purchase and Assumption Agreement (the "Agreement") dated as of
September 22, 1999 among Fleet Financial Group, Inc., a Rhode Island corporation
with its principal office at One Federal Street, Boston, Massachusetts 02110
("Fleet"), Fleet National Bank, a national banking association with an office at
One Federal Street, Boston, Massachusetts 02110 ("Seller"), Enterprise Bank and
Trust Company, a Massachusetts chartered trust company with its principal office
at 222 Merrimack Street, Lowell, Massachusetts ("Purchaser") and Enterprise
Bancorp, Inc., a Massachusetts corporation with its principal office at 222
Merrimack Street, Lowell, Massachusetts ("Enterprise").
WHEREAS, Seller desires to sell, and Purchaser desires to acquire,
certain assets of the Business in accordance with the terms and provisions of
this Agreement; and
WHEREAS, Seller desires to transfer to Purchaser, and Purchaser desires
to assume from Seller, certain liabilities of the Business in accordance with
the terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby subject to the terms and conditions set
forth herein, Seller, Fleet, Purchaser and Enterprise agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Accrued Interest" shall mean, as of any date, (a) with respect to the
Deposit Liabilities, the interest, dividends, fees, costs and other charges that
have been accrued on but not paid, credited, or charged to the Deposit
Liabilities, all as set forth in Seller's general ledger and (b) with respect to
the Loans, the Advance Lines and the Negative Deposits, interest, fees,
premiums, consignment fees, costs and other charges that have accrued on or been
charged to the Loans, the Advance Lines and the Negative Deposits but not paid
by the applicable borrower, or any guarantor, surety or other obligor therefor,
or otherwise collected by offset, recourse to collateral or otherwise, all as
set forth in Seller's general ledger.
<PAGE>
"ADA" shall mean the Americans with Disabilities Act of 1990, as
amended, and similar state and local laws, regulations, rules and ordinances.
"Adjusted Payment Amount" shall have the meaning specified in Section
3.3(a).
"Advance Lines" shall mean all overdraft lines of credit to owners of
the Deposit Liabilities, plus any and all Accrued Interest thereon.
"Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person, or a director,
officer, partner, joint venturer or member of such Person and any successors of
such Person.
"Assignment and Assumption Agreement" shall have the meaning specified
in Section 5.2(c).
"Assumed Liabilities" shall have the meaning specified in Section 2.2.
"Assumed Severance Obligations" shall have the meaning specified in
Section 9.6(b).
"ATM Lease Agreements" shall mean the lease or operating agreements for
the ATMs listed on Schedule 1.1(a) hereto, as such agreements may be amended,
renewed or extended in the ordinary course of business.
"ATMs" shall mean the automated teller machines listed on Schedule
1.1(b) hereto.
"BankBoston" shall mean BankBoston Corporation, a Massachusetts
corporation.
"Board" shall mean the Board of Governors of the Federal Reserve
System.
"Branch Leases" shall mean the lease agreements for the Branches listed
on Schedule 1.1(c) hereto, as such agreements may be amended, renewed or
extended in the ordinary course of business.
"Branches" shall mean the branch offices of Seller to be acquired by
Purchaser and listed on Schedule 1.1(d) hereto.
"Business" shall mean the Consumer Bank Business and the Small Business
Bank Business.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a
day on which banks are required or authorized by law to be closed in the
Commonwealth of Massachusetts.
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<PAGE>
"Cash" shall mean all petty cash, vault cash, teller cash, ATM cash and
prepaid postage located at the Branches (including foreign currency), in each
case as of the close of business at the respective Branch (6:00 p.m. for each
automated teller machine) on the Closing Date.
"Closing" shall have the meaning specified in Section 5.1(a).
"Closing Date" shall have the meaning specified in Section 5.1(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
"Collateral Agent" shall mean Seller, in its capacity as collateral
agent under the Collateral Agency Agreement.
"Collateral Agency Agreement" shall mean a Collateral Agency Agreement
to be dated as of the Closing Date among Seller, Purchaser and the Collateral
Agent, in the form of Exhibit L hereto.
"Collateral Assignment Instruments" shall mean such assignments,
financing statements, endorsements, stock powers or other instruments as shall
be required under applicable law to transfer to the Collateral Agent in
accordance with the terms of the Collateral Agency Agreement, the Letter of
Credit Collateral and the rights and remedies of Seller with respect thereto.
"Comparable Job" shall mean, with respect to any Consumer Bank Employee
or Consumer Bank Related Employee, a position with Purchaser (a) with the same
base salary, (b) with reasonably similar employment background and skill set
requirements, (c) with no significant changes in work schedule and (d) (i) with
respect to a Consumer Bank Employee or Consumer Bank Related Employee located at
a Branch, to be performed at the same Branch or at a Branch located within
thirty (30) miles of the such employee's current Branch or home, whichever is
closer, or (ii) with respect to any other Consumer Bank Employee or Consumer
Bank Related Employee, to be performed within thirty (30) miles of such
employee's current office or home, whichever is closer, each as applicable to
such employee immediately prior to the Closing Date.
"Confidentiality Agreement" shall mean that certain letter agreement
between Purchaser and Fleet dated as of May 24, 1999.
"Consumer Bank Assets" shall mean the Real Property, the ATMs, the
Fixed Assets, the Consumer Bank Loans, the Cash, the Branch Leases, the ATM
Lease Agreements, the Tenant Leases, and the Safe Deposit Agreements and all
keys for the related safe deposit boxes.
"Consumer Bank Business" shall mean the Consumer Bank Assets, the
Consumer Bank Liabilities and the Consumer Bank Employees.
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<PAGE>
"Consumer Bank Employees" shall mean the employees of Seller listed on
Schedule 1.1(e) hereto, but excluding such employees who shall leave Seller's
employ between the date hereof and the close of business on the Closing Date,
but including replacements of such employees made in the ordinary course of
business between the date hereof and the Closing Date and including any Person
who fills a vacant position at a Branch in the ordinary course of business
between the date hereof and the Closing Date to provide Branch services to
Customers.
"Consumer Bank Liabilities" shall mean (a) the Consumer Deposit
Liabilities, and (b) any and all liabilities and obligations relating to or
arising out of the Consumer Bank Assets, to the extent that such liabilities and
obligations arise or accrue after the close of business on the Closing Date, but
including Unfunded Advances under the Loans included therein.
"Consumer Bank Loans" shall mean (a) the loans listed on Schedule
1.1(f) hereto (exclusive of any reserves for loan losses) and all obligations of
Seller to make additional extensions of credit in connection with such loans, as
such loans may be increased, decreased, amended, renewed or extended in the
ordinary course of business between July 1, 1999 and the close of business on
the Closing Date, (b) loans made in the ordinary course of business between July
1, 1999 and the close of business on the Closing Date and linked, including by
direct debit, to a Consumer Deposit Liability account (exclusive of any reserves
for loan losses) and all obligations of Seller to make additional extensions of
credit in connection with such loans, as such loans may be increased, decreased,
amended, renewed or extended in the ordinary course of business between July 1,
1999 and the close of business on the Closing Date, and (c) any application
pending on the Closing Date for a loan which would be linked, including by
direct debit, to a Consumer Deposit Liability account if such loan had been made
by Seller prior to the Closing Date, provided, however, that Consumer Bank Loans
shall not include any loan described in subsections (a) or (b) above, if such
loan, as of the Closing Date, is (i) subject to a current legal proceeding
related to a Customer's inability or refusal to pay such loan or (ii) not
current and with respect to which proceedings are pending against the obligor or
obligors of such loan under Title 11 of the United States Code or (iii)
Nonperforming. Each Consumer Bank Loan shall include all documents executed or
delivered in connection with such loan to the extent such documents are in the
loan file relating to such loan, any and all collateral held as security
therefor or in which a security interest, Lien or mortgage has been granted and
any and all guarantees, insurance and other credit enhancements relating
thereto, together with Accrued Interest thereon, all as exists at the close of
business on the Closing Date.
"Consumer Bank Related Employees" shall mean the employees of Seller
(other than Consumer Bank Employees) as shall be designated by Seller from time
to time hereafter in writing to Purchaser for possible interviews for employment
with Purchaser following the Closing Date.
"Consumer Deposit Liabilities" shall mean all of Seller's obligations
and liabilities relating to (a) the deposit accounts listed on Schedule 1.1(g)
hereto, and (b) deposit accounts which are opened on behalf of a customer by
Consumer Bank Employees between July 1, 1999 and the close of business on the
Closing Date, including, without limitation, all passbook accounts, statement
savings accounts, checking, Money Market and NOW accounts, certificates
-4-
<PAGE>
of deposit, and IRA, Keogh Plan and Employee Pension Plan accounts, together
with Accrued Interest thereon, all as exists at the close of business on the
Closing Date, but excluding any claim or other liability relating to the
origination of any such deposit account or the administration of any such
deposit account prior to the close of business on the Closing Date.
"Contribution Agreement" shall mean that certain Contribution Agreement
dated as of October 28, 1997, as amended on February 20, 1998, by and between
Advanta Corporation and Fleet.
"Customers" shall mean, individually and collectively, (a) the Persons
named as the owners of the deposit accounts relating to the Deposit Liabilities,
(b) the primary obligors under the Loans, and (c) the parties (other than Seller
and its Affiliates) to the Safe Deposit Agreements.
"Customer Notices" shall have the meaning specified in Section 10.3(a).
"Damages" shall have the meaning specified in Section 15.1.
"Deposit Liabilities" or "Deposit Liability" shall mean collectively
the Consumer Deposit Liabilities and the Small Business Bank Deposit
Liabilities, but shall exclude the Excluded IRA/Keogh/Employee Pension Plan
Deposits and the Excluded Deposits.
"Draft Closing Statement" shall mean a draft closing statement as of
the close of business of the fifth (5th) Business Day immediately preceding the
Closing Date setting forth an estimate of the Purchase Price (including all
adjustments and prorations thereto).
"Employee Pension Plan" shall mean any employee pension plan for which
Seller serves as a trustee, including but not limited to, employee pension
benefit plans as defined in Section 3(2) of ERISA, retirement plans qualified
under the requirements of Section 401(a) of the Code, nonqualified deferred
compensation plans, excess benefit plans and supplemental executive retirement
plans.
"Employee Pension Plan Deposit Liability" shall mean a Deposit
Liability in an account owned by an Employee Pension Plan.
"Environmental Consultant" shall have the meaning specified in Section
11.1.
"Environmental Due Diligence Date" shall mean the thirtieth (30th) day
following the execution hereof or, if such day shall not be a Business Day, the
next Business Day thereafter, unless said date is extended in accordance with
Section 11.1(c), in which case, said date shall mean the date to which extended
thereunder.
"Environmental Due Diligence Period" shall mean the period commencing
on the date hereof and ending on the Environmental Due Diligence Date.
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<PAGE>
"Environmental Hazard" shall mean the presence of any Hazardous
Materials in violation of any Environmental Laws.
"Environmental Laws" shall mean all Federal, state or local laws,
rules, regulations, codes, ordinances, or by-laws, and any judicial or
administrative interpretations thereof, including orders, decrees, judgments,
rulings, directives or notices of violation, that create duties, obligations or
liabilities with respect to (a) human health or (b) environmental pollution,
impairment or disruption, including, without limitation, laws governing the
existence, use, storage, treatment, discharge, release, containment,
transportation, generation, manufacture, refinement, handling, production,
disposal, or management of any Hazardous Materials, or otherwise regulating or
providing for the protection of the environment, and further including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. ss. 9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. ss. 1801 et seq.), the Public Health Service Act (42 U.S.C. ss. 300 et
seq.), the Pollution Prevention Act (42 U.S.C. ss. 13101 et seq.), the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss. 136 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Safe
Drinking Water Act (21 U.S.C. ss. 349, 42 U.S.C. ss.ss.201, 300f), the Toxic
Substances Control Act (15 U.S.C. ss.2601 et seq.), the Clean Water Act (33
U.S.C. ss.1251 et seq.), the Clean Air Act (42 U.S.C. ss.7401 et seq. ), and
similar state and local statutes, and all regulations adopted pursuant thereto.
"Environmental Remediation" shall mean performing response actions in
relation to identified Environmental Hazards, including removal, disposal,
treatment or in-place containment actions, which are reasonably required to
achieve permanent regulatory closure with respect to such Environmental Hazard
in accordance with applicable Environmental Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended (11 U.S.C.ss.1101 et seq.)
"Estimated Payment Amount" shall have the meaning specified in Section
3.2.
"Estimated Purchase Price" shall mean the estimate of the Purchase
Price set forth on the Draft Closing Statement.
"Excluded Deposits" shall mean all Deposit Liabilities (a) owned by
employees of Seller or its Affiliates (other than Transferred Employees) or
Affiliates of Seller and (b) which were assumed by Seller in connection with the
consummation of the transactions contemplated by the Contribution Agreement, in
each case as exists at the close of business on the Closing Date.
"Excluded Fixed Assets" shall mean (a) artwork, supplies, signs,
marketing aids, trade fixtures or equipment specifically identifying or relating
to Seller or any of its Affiliates located at the Facilities, (b) telephone
systems located at the Facilities, (c) software, source and object code, user
manuals and related documents and all updates, upgrades or other revisions
thereto and all copies or duplicates thereof located at the Facilities, (d)
copying machines, facsimile machines, scanners, computers, printers, modems,
peripheral equipment, electronic teller station
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<PAGE>
hardware and other hardware related to teller stations and platforms located at
the Facilities, and (e) any other personal property of Seller or any of its
Affiliates identified on Schedule 1.1(h) hereto, less any such items consumed or
disposed of, plus new similar items acquired or obtained, in the ordinary course
of the operation of the Facilities through the close of business on the Closing
Date.
"Excluded IRA/Keogh/Employee Pension Plan Deposits" shall have the
meaning specified in Section 12.12(a).
"Facilities" shall mean the Branches and the ATM locations.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended (12
U.S.C. ss.ss.1811 et seq.).
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Funds Rate" shall mean, for the period involved, the average
of the interest rates for each day of the period set forth in H.15(519) opposite
the caption "Federal Funds (Effective)". H.15(519) means the weekly statistical
release designated as such, or any successor publication, published by the
Board.
"Final" shall mean, as applied to any governmental order or action,
that such order or action has not been stayed, vacated or otherwise rendered
ineffective and either (a) the time period for taking an appeal therefrom shall
have passed without an appeal therefrom having been taken, or (b) if any such
appeal shall have been dismissed or resolved, all applicable periods for further
appeal of such order or action shall have passed.
"Final Approval Date" shall mean, with respect to the transactions
contemplated hereby, the date upon which the last of the following has occurred:
(a) all Regulatory Approvals have been obtained; (b) all applicable regulatory
notices which are required to be published or given prior to consummation of the
transactions contemplated hereby have been published or given; (c) the filing of
all applicable regulatory reports; and (d) the expiration of all applicable
regulatory comment and waiting periods.
"Final Closing Statement" shall have the meaning specified in Section
3.3(a).
"Final Loan Schedule" shall have the meaning specified in Section
3.3(a).
"Final Settlement Date" shall have the meaning specified in Section
3.3(b).
"FIRPTA Affidavits" shall mean affidavits pursuant to Section 1445 of
the Code certifying to the non-foreign entity status of Seller.
"Fixed Assets" shall mean all of the furniture, fixtures, equipment and
other assets of Seller set forth on Schedule 1.1(i) hereto, including but not
limited to leasehold improvements,
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<PAGE>
less any items consumed or disposed of, plus new items acquired or obtained, in
the ordinary course of the operation of the Facilities through the close of
business on the Closing Date, but excluding the Excluded Fixed Assets (whether
or not such Excluded Fixed Assets have been listed as furniture, fixtures,
equipment or other assets of Seller on Schedule 1.1(i)).
"Fleet" shall have the meaning specified in the preamble.
"Fleet Boston Divestiture Severance Plan" shall mean that certain
severance plan of Fleet and its Affiliates to be dated as of the Closing Date
and containing the terms set forth on Exhibit A hereto.
"GAAP" shall have the meaning specified in Section 1.2.
"Hazardous Materials" means (a) any "hazardous material", "hazardous
substance", "hazardous waste", "oil", "regulated substance", "toxic substance"
or words of similar import as defined under any of the Environmental Laws, (b)
asbestos in any form, (c) urea formaldehyde foam insulation, (d) polychlorinated
biphenyls, (e) radon gas, (f) flammable explosives, (g) radioactive materials,
(h) any chemical, contaminant, solvent, material, pollutant or substance that
may be dangerous or detrimental to any of the Facilities, the environment or the
health and safety of employees or other occupants of any of the Facilities, and
(i) any substance, the generation, storage, transportation, utilization,
disposal, management, release or location of which, on, under or from any of the
Facilities is prohibited or otherwise regulated pursuant to any of the
Environmental Laws.
"Indemnified Party" shall have the meaning specified in Section 15.3.
"Indemnitor" shall have the meaning specified in Section 15.3.
"IRA" shall mean an individual retirement account as specified in
Section 408 and 408A of the Code.
"IRA Deposit Liability" shall mean a Deposit Liability in a deposit
account which is an IRA.
"IRS" shall mean the Internal Revenue Service of the United States.
"ISDA Agreements" shall mean those International Securities Dealer
Agreements between a Customer and Seller or other Person or one of its
Affiliates evidencing an ISDA Transaction.
"ISDA Transactions" shall mean (a) those transactions set forth on
Schedule 1.1(k) hereto, as such transactions may be renewed or extended in the
ordinary course of business between July 1, 1999 and the close of business on
the Closing Date, and (b) any and all interest rate swap, currency swap,
forward, hedge or similar transactions entered into between
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July 1, 1999 and the close of business on the Closing Date which relate to a
Loan, each as exists as of the close of business on the Closing Date.
"ISP98" shall mean the International Standby Practices (ISP98), ICC
Publication No. 590.
"Items" shall mean (a) transfers of funds by wire or through the
Automated Clearing House, checks, drafts, negotiable orders of withdrawal and
items of a like kind which are drawn on or deposited and credited to the Deposit
Liabilities, and (b) payments, advances, disbursements, fees, reimbursements and
items of a like kind which are debited or credited to the Loans.
"Keogh Plan" shall mean an Employee Pension Plan covering self-employed
individuals.
"Keogh Plan Deposit Liability" shall mean a Deposit Liability in a
deposit account which is owned by a Keogh Plan.
"Knowledge" shall mean, with respect to Seller, the actual knowledge as
of the date hereof, without further investigation, of any of Seller's officers
that hold the title of senior vice president or above and have responsibility
with respect to the operations of the Business.
"Landlord Consents" shall have the meaning set forth in Section 5.2(e).
"Lease Assignments" shall have the meaning set forth in Section 5.2(d).
"Letter of Credit Customer" shall mean an obligor under a Loan for
whose account a Letter of Credit was issued.
"Letters of Credit" shall mean (a) those letters of credit listed on
Schedule 1.1(l) hereto, (b) all letters of credit issued in connection with a
Loan between July 1, 1999 and the close of business on the Closing Date, and (c)
any letter of credit applied for by a Customer (but not yet issued by Seller) as
of the Closing Date, each as exists as of the close of business on the Closing
Date. To the extent Purchaser shall assume (and the Seller has been released
from) any Letter of Credit or Purchaser has issued a replacement letter of
credit whether on or after the Closing Date, each as described in Section
12.11(c), the assumed or replaced Letter of Credit shall no longer be deemed a
"Letter of Credit" hereunder.
"Letter of Credit Collateral" shall mean (a) all collateral in which
Seller, as issuer of a Letter of Credit, has been granted a lien, security
interest or encumbrance, whether pursuant to a pledge, collateral assignment,
security agreement, mortgage or otherwise, and (b) any other security for any
such Letter of Credit for the benefit of such Seller, including without
limitation, any guaranties, subordination agreements, insurance or other credit
enhancements and any collateral therefor.
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"Letter of Credit Disbursement" shall mean an amount equal to the sum
of (a) the amount drawn under any Letter of Credit in connection with a Request
plus (b) all reasonable and customary out-of-pocket charges and expenses which
Seller may pay or incur relative to such Request which are chargeable to the
Customer under the related Reimbursement Agreement.
"Lien" shall mean any lien, easement, restrictions, pledge, charge,
encumbrance, security interest, mortgage, deed of trust, lease, option or other
adverse claim of any kind or description.
"Loan Value" shall mean, as of any date, the unpaid principal balance
of the Loans, plus Accrued Interest thereon, as set forth in Seller's general
ledger and, for purposes of Section 3.3, on the Final Loan Schedule, less (a)
accrued servicing fees under arrangements with third parties to service such
Loans, less (b) Accrued Interest which as of the Closing Date shall be
outstanding and unpaid for more than ninety (90) days after it shall have first
become due and payable.
"Loans" shall mean, collectively, the Consumer Bank Loans, the SBA
Loans, and the Small Business Bank Loans.
"Material Adverse Effect" shall mean any circumstance, change in or
effect on the Purchased Assets or the Assumed Liabilities that is materially
adverse to the business, operation, results of operations or the financial
condition of the Business, taken as a whole; provided, however, that "Material
Adverse Effect" shall not include any circumstance, change in or effect on the
Business directly or indirectly arising out of or attributable to (a) changes in
general economic, legal, regulatory or political conditions, (b) changes in
prevailing interest rates, (c) changes in GAAP, (d) any actions taken or omitted
to be taken pursuant to this Agreement, or (e) the announcement of the
transactions contemplated by this Agreement, any similar other agreement entered
into in connection with the Merger and relating to the divestiture by Seller,
BankBoston, N.A. or any of their Affiliates of certain of their respective
assets and liabilities or the Merger Agreement.
"Mediator" shall mean a nationally recognized accounting firm agreed
upon by Seller and Purchaser and if Seller and Purchaser do not promptly agree
in the selection of a mediator, then it shall mean the nationally recognized
accounting firm selected by their respective independent accounting firms.
"Merger" shall mean the merger of Fleet and BankBoston pursuant to the
terms of the Merger Agreement.
"Merger Agreement" shall mean that certain Agreement and Plan of Merger
dated as of March 14, 1999 by and between Fleet and BankBoston, as the same may
be amended or modified from time to time.
"Negative Deposits" shall mean overdrafts in Deposit Liability accounts
which are not covered by Advance Lines, plus any and all Accrued Interest
thereon.
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"Nonperforming" shall mean as of the close of business on the Closing
Date any Loan with respect to which any principal or interest shall be due and
unpaid by the borrower thereunder for more than one hundred and twenty (120)
days prior to the Closing Date.
"Offering Memorandum" shall mean the Offering Memorandum provided to
Purchaser pursuant to the terms of the Confidentiality Agreement and describing
the Business.
"Outstanding Credit Exposure" shall mean, at any time, the aggregate
maximum amount available to be drawn or advanced under each Outstanding Credit
Obligation, the determination of such maximum amount to assume (a) compliance
with all conditions for drawing or advance under the specific Letter of Credit,
and (b) no reduction (i) for any amount drawn under any Outstanding Credit
Obligation unless such amount is not to be reinstated under the terms of the
specific Letter of Credit, or (ii) for any amount not available to be drawn or
advanced under the terms of the specific Letter of Credit.
"Outstanding Credit Obligations" shall mean at any time, those Letters
of Credit (a) which have not been replaced or terminated, and (b) as to which
Seller has not been released from liability.
"Permitted Liens" shall mean (a) Liens for taxes, assessments,
governmental charges or levies not yet due and payable or which although
delinquent can be paid without penalty or are being contested in good faith by
appropriate proceedings, (b) Liens resulting from a filing by a lessor as a
precautionary filing for a lease, (c) landlords' Liens under the Branch Leases
and ATM Lease Agreements, (d) Liens imposed by law, such as carriers',
warehousemen's and mechanics' Liens and other similar Liens arising in the
ordinary course of business which secure payment of obligations not more than
ninety (90) days past due or which are being contested in good faith by
appropriate proceedings, and (e) any other Liens affecting the Purchased Assets
which do not impede the ownership, operation or value of such Purchased Assets
in any material respect.
"Person" shall mean any individual, partnership, joint venture,
corporation, trust, limited liability company, unincorporated organization,
government or other entity.
"Purchase Price" shall have the meaning specified in Section 3.1.
"Purchased Assets" shall have the meaning specified in Section 2.1(a).
"Purchaser" shall have the meaning specified in the preamble.
"Purchaser Regulatory Approvals" shall have the meaning specified in
Section 7.5(a).
"Purchaser's Account" shall have the meaning specified in Section 3.2.
"Purchaser's Letter of Credit" shall mean a standby letter of credit
issued by Purchaser in favor of Seller, in substantially the form of Exhibit B
hereto, in a face amount equal to the sum of
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the aggregate maximum amount available to be drawn or advanced under each Letter
of Credit as of the Closing Date, the determination of such maximum amount to
assume (a) compliance with all conditions for drawing or advance under the
specific Letter of Credit and (b) no reduction (i) for any amount drawn or
advanced under any Letter of Credit unless such amount is not to be reinstated
under the terms of the specific Letter of Credit or (ii) for any amount not
available to be drawn or advanced under the terms of the specific Letter of
Credit.
"Quitclaim Deeds" shall have the meaning specified in Section 5.2(a).
"Real Property" shall mean each parcel of real property owned by Seller
on which a Facility is located, and all improvements thereon and other easements
and other rights appurtenant thereto, all as more fully described on Schedule
1.1(n) hereto.
"Real Property Purchase Price" shall mean, with respect to any parcel
or parcels of Real Property, the purchase price specified on Schedule 1.1(o)
hereto.
"Regulatory Approvals" shall mean the Seller Regulatory Approvals and
the Purchaser Regulatory Approvals.
"Reimbursement Agreement" shall mean all documents and agreements
evidencing, securing or insuring the obligation of a Letter of Credit Customer
to repay, or the rights of Seller to recover, sums paid under a Letter of
Credit.
"Release" shall mean releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, ejecting, escaping, leaching, disposing,
seeping, infiltrating, draining or dumping.
"Request" shall have the meaning specified in Section 12.11(c).
"Safe Deposit Agreements" shall mean the agreements between Seller and
a Customer or Customers relating to safe deposit boxes located in the Branches
as of the close of business on the Closing Date.
"SBA" shall mean the United States Small Business Administration.
"SBA Consents" shall mean all consents necessary to transfer to
Purchaser the SBA Loans.
"SBA Loans" shall mean (a) the loans listed on Schedule 1.1(p) hereto
(exclusive of any reserves for loan losses) and all obligations of Seller to
make additional extensions of credit in connection with such loans, as such
loans may be increased, decreased, amended, renewed, or extended in the ordinary
course of business between July 1, 1999 and the close of business on the Closing
Date (included within such loans shall be any Letters of Credit and ISDA
Transactions related to such loans), (b) loans originated at the Branches and
made in the ordinary course of business between July 1, 1999 and the close of
business on the Closing Date, which loans are secured by an SBA guaranty,
whether in whole or in part (exclusive of any reserves for loan
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losses) (included within such loans shall be any Letters of Credit and ISDA
Transactions related to such loans), and all obligations of Seller to make
additional extensions of credit in connection with such loans, as such loans may
be increased, decreased, amended, renewed, or extended in the ordinary course of
business between July 1, 1999 and the close of business on the Closing Date and
(c) any application taken at a Branch in the ordinary course of business between
the date hereof and the close of business on the Closing Date and pending on the
Closing Date for a loan which would be secured by an SBA guaranty, whether in
whole or in part; provided, however, that SBA Loans shall not include any loan
described in subsections (a) or (b) above if such loan, as of the Closing Date,
is (i) subject to a current legal proceeding related to a Customer's inability
or refusal to pay such loan, (ii) not current and with respect to which
proceedings are pending against the obligor or obligors of such loan under Title
11 of the United States Code or (iii) Nonperforming; and provided, further, that
with respect to any such loan, to the extent that as of the Closing Purchaser
shall not have received an SBA Consent, such loan shall no longer be deemed an
"SBA Loan" hereunder and shall not be included in the Purchased Assets. Each SBA
Loan shall include all documents executed or delivered in connection with such
loan to the extent such documents are in the loan file relating to such loan,
any and all collateral held as security therefor or in which a security
interest, Lien or mortgage has been granted and any and all guarantees,
insurance and other credit enhancements relating thereto, together with Accrued
Interest thereon, all as exists at the close of business on the Closing Date.
"Seller" shall have the meaning specified in the preamble.
"Seller Regulatory Approvals" shall have the meaning specified in
Section 6.16.
"Small Business Bank Assets" shall mean the Small Business Bank Loans
and the SBA Loans.
"Small Business Bank Business" shall mean the Small Business Bank
Assets and the Small Business Bank Liabilities.
"Small Business Bank Deposit Liabilities" shall mean all of Seller's
obligations and liabilities relating to (a) the deposit accounts listed on
Schedule 1.1(q) hereto, (b) the deposit accounts which are opened at the
Branches between July 1, 1999 and the close of business on the Closing Date by
an obligor of a Small Business Bank Loan or an SBA Loan, and (c) the deposit
accounts which are opened at the Branches between July 1, 1999 and the close of
business on the Closing Date on behalf of a non-borrowing small business
customer by a Consumer Bank Employee including, without limitation, all passbook
accounts, statement savings accounts, checking, Money Market and NOW accounts,
certificates of deposit, and IRA, Keogh Plan and Employee Pension Plan accounts,
together with Accrued Interest thereon, all as exists at the close of business
on the Closing Date, but excluding any claim or other liability relating to the
origination of any such deposit account or the administration of any such
deposit account prior to the close of business on the Closing Date.
"Small Business Bank Liabilities" shall mean any and all liabilities
and obligations relating to or arising out of the Small Business Bank Assets, to
the extent that such liabilities and
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obligations arise and accrue after the close of business on the Closing Date,
but including any Unfunded Advances under the Loans included therein.
"Small Business Bank Loans" shall mean (a) the loans listed on Schedule
1.1(r) hereto (exclusive of any reserves for loan losses) and all obligations of
Seller to make additional extensions of credit in connection with such loans, as
such loans may be increased, decreased, amended, renewed or extended in the
ordinary course of business between July 1, 1999 and the close of business on
the Closing Date (included within such loans shall be any Letters of Credit and
ISDA Transactions related to such loans), (b) loans made to small businesses and
originated at the Branches in the ordinary course of business between July 1,
1999 and the close of business on the Closing Date (exclusive of any reserves
for loan losses) and all obligations of Seller to make additional extensions of
credit in connection with such loans, as such loans may be increased, decreased,
amended, renewed or extended in the ordinary course of business between July 1,
1999 and the close of business on the Closing Date (included within such loans
shall be any Letters of Credit and ISDA Transactions related to such loans), and
(c) any application taken at a Branch in the ordinary course of business between
the date hereof and the Closing Date and pending on the Closing Date for a loan
to be made to a small business; provided, however, that Small Business Bank
Loans shall not include any loan described in subsections (a) or (b) above if
such loan, as of the Closing Date, is (i) subject to a current legal proceeding
related to a Customer's inability or refusal to pay such loan, (ii) not current
and with respect to which proceedings are pending against the obligor or
obligors of such loan under Title 11 of the United States Code or (iii)
Nonperforming. Each Small Business Loan shall include all documents executed or
delivered in connection with such loan to the extent such documents are in the
loan file relating to such loan, and any and all collateral held as security
therefor or in which a security interest, Lien or mortgage has been granted and
any and all guarantees, insurance and other credit enhancements relating
thereto, together with Accrued Interest thereon, all as exists at the close of
business on the Closing Date.
"Sublease Agreement" shall have the meaning specified in Section
8.3(c).
"Swap Market Value of the ISDA Transactions" shall be equal to the
aggregate of bid-offer spread for each ISDA Transaction, calculated by a
nationally recognized securities dealer mutually acceptable to Fleet and
Enterprise and calculated as if an Early Termination Event (as defined in the
standard form of the ISDA Agreement) has occurred on the Closing Date (as such
term is defined in the standard ISDA Agreement); provided, however, that in the
event that Fleet and Enterprise are unable to mutually agree upon such
securities dealer, then Fleet shall designate a nationally recognized securities
dealer, Enterprise shall designate a nationally recognized securities dealer and
such securities dealers shall designate a third nationally recognized securities
dealer to calculate such aggregate bid-offer spread.
"Swap Portfolio Adjustment" shall be an amount equal to the Swap Market
Value of the ISDA Transactions.
"Tenant Leases" shall mean leases or subleases between Seller, as
lessor, and the tenants, if any, listed on Schedule 1.1(s) hereto.
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"Transfer Date" shall mean the first Business Day following the Closing
Date.
"Transferred Employees" shall mean all Consumer Bank Employees and the
Consumer Bank Related Employees who accept offers of employment from Purchaser
as contemplated by Section 9.6(a).
"UCC" shall mean the Uniform Commercial Code in effect in the
Commonwealth of Massachusetts.
"UCC Article 5" shall mean Article 5 of the UCC.
"UCP 500" shall mean the Uniform Customs and Practice for Documentary
Credits, 1993 Revision, ICC Publication No. 500.
"Unfunded Advance" shall mean an advance requested under a Loan on or
prior to the Closing Date pursuant to the terms and provisions of such Loan
which Seller is not obligated to fund until following the Closing Date.
"WARN Act" shall mean the Worker Adjustment and Retraining Notification
Act, as amended (29 U.S.C. ss.2101, et seq.) and similar state and local laws,
regulations and other issuances, including, without limitation, the
Massachusetts law on plant closings under General Laws of the Commonwealth of
Massachusetts, Chapter 151A.
Section 1.2. Accounting Terms. All accounting terms not otherwise
defined herein shall have the respective meanings assigned to them in accordance
with "generally accepted accounting principles" consistently applied as are in
effect from time to time in the United States of America ("GAAP").
ARTICLE II
PURCHASE AND SALE OF Purchased Assets AND
ASSIGNMENT AND ASSUMPTION OF ASSUMED LIABILITIES
Section 2.1. Purchase and Sale of Assets; No Other Assets Purchased
(a) Subject to the terms and conditions hereof, including without
limitation the assumption by Purchaser of the Assumed Liabilities, as of the
close of business on the Closing Date, Seller shall sell, convey, assign,
transfer and deliver to Purchaser, and Purchaser shall purchase and accept from
Seller, all of Seller's right, title and interest in, to and under certain
assets of the Seller as described below (collectively, the "Purchased Assets"):
(i) The Consumer Bank Assets;
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(ii) The Small Business Bank Assets;
(iii) All of Seller's rights with respect to the contracts
and relationships giving rise to the Deposit
Liabilities;
(iv) The Advance Lines and the Negative Deposits, each as
of the Closing Date;
(v) All insurance premiums paid by Seller to the FDIC
which are allocated to insurance coverage for the
Deposit Liabilities following the Closing Date, to
the extent a proration or adjustment is made with
respect thereto pursuant to Section 3.5;
(vi) All of Seller's right, title and interest in and to
all books and records relating to the Purchased
Assets described in the other subsections of this
Section 2.1(a) and the Assumed Liabilities, as such
books and records may exist and as are held by Seller
at the Branches;
(vii) The ISDA Agreements; and
(viii) A 100% participation interest in the Letters of
Credit as contemplated by Section 12.11.
(b) Purchaser understands and agrees that it is purchasing only the
Purchased Assets (and assuming only the Assumed Liabilities) specified in this
Agreement and (i) except as may be expressly provided for in this Agreement,
Purchaser has no interest in any other business relationship which Seller or any
of its Affiliates has or may have with any Customer or (ii) any other customer
of Seller or its Affiliates. Purchaser further understands and agrees that
Seller and its Affiliates are retaining any and all rights and claims which any
of them may have, including but not limited to indemnification or reimbursement
rights, with respect to the Purchased Assets and the Assumed Liabilities, to the
extent that such rights or claims relate to the conduct of the business of the
Business prior to the Closing.
Section 2.2. Assumed Liabilities.
(a) Subject to the terms and conditions of this Agreement, including
without limitation the transfer of the Purchased Assets to Purchaser, on the
Closing Date, Purchaser shall assume, and thereafter honor and fully and timely,
pay, perform and discharge when due, the following liabilities of Seller and
shall perform all duties, responsibilities, and obligations of Seller under the
following, to the extent that such liabilities, duties, responsibilities and
obligations arise or accrue after close of business on the Closing Date (other
than those described in Section 2.2(a)(viii)(A), which shall not be so limited)
(collectively, the "Assumed Liabilities"):
(i) The Consumer Bank Liabilities;
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(ii) The Small Business Bank Liabilities;
(iii) All of Seller's duties and responsibilities relating
to the Deposit Liabilities, including without
limitation, with respect to: (x) the abandoned
property laws of any state; (y) any legal process
which is served on Seller on or before the Closing
Date with respect to claims against or related to the
Deposit Liabilities; or (z) any other applicable law;
(iv) The Assumed Severance Obligations;
(v) The Advance Lines and the Negative Deposits, each as
of the Closing Date;
(vi) Any of Seller's accrued and unpaid expenses related
to the operations of the Business to the extent a
proration or adjustment is made with respect thereto
pursuant to Section 3.5;
(vii) The ISDA Agreements;
(viii) Any and all liabilities or obligations of Seller or
Fleet or any of their Affiliates under Environmental
Laws relating to, resulting from or arising out of:
(A) Use or operation of the Real Property or the
Facilities (other than Real Property leased
to Purchaser pursuant to Section 11.1
hereof) prior to, on or after the Closing
Date, or
(B) Use or operation of the Real Property or
Facilities by the Purchaser on or after the
Closing Date,
in either case including without limitation (1) the
presence of any Hazardous Materials or a release or
the threat of a release on, at or from the Real
Property or Facilities, (2) investigative,
containment, removal, clean up and other remedial
actions with respect to a release or the threat of
release on, at or from the Real Property or
Facilities, or (3) human exposure to any Hazardous
Materials or nuisances of whatever kind to the extent
the same arise from the condition of the Real
Property or Facilities or the ownership, use,
operation, sale, transfer or conveyance thereof;
(ix) Any and all other liabilities and obligations
relating to or arising out of the Purchased Assets or
Assumed Liabilities to be performed after the Closing
or arising out of the operation of the Facilities or
the Real Property from and after the Closing Date,
but only to the extent that such liabilities or
obligations arise or accrue after the close of
business on the Closing Date;
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(x) Unfunded Advances under the Loans; and
(xi) The participation obligations as contemplated in
Section 12.11 relating to the Letters of Credit.
(b) Except for the Assumed Liabilities and except as otherwise set
forth in this Agreement, Purchaser shall not assume or be bound by any duties,
responsibilities, obligations or liabilities of any kind or nature, whether
known or unknown, whether asserted or unasserted, whether accrued or unaccrued,
whether contingent or otherwise.
ARTICLE III
PURCHASE PRICE; PAYMENT;
SETTLEMENT; TAX ALLOCATION
Section 3.1. Purchase Price The purchase price for the Purchased Assets
shall be an amount computed as follows (the "Purchase Price"):
(a) An amount equal to the sum of (i) and (ii) below:
(i) An amount equal to 14.125% of Deposit Liabilities
transferred to Purchaser as of the close of business on
the Closing Date with respect to Branch 2482 (Drum Hill);
and
(ii)An amount equal to 13.125% of Deposit Liabilities
transferred to Purchaser as of the close of business on
the Closing Date with respect to Branch 56862 (Billerica);
PLUS
(b) The aggregate of the Real Property Purchase Prices for all of the
Real Property; (other than the Real Property leased pursuant to Section 11.1);
PLUS
(c) The aggregate net book value of the Fixed Assets as reflected on
the general ledger of Seller as of the close of business on the Closing Date;
PLUS
(d) The Loan Value of the Loans as of the close of business on the
Closing Date; PLUS
(e) The aggregate unpaid principal balance of the Advance Lines and the
Negative Deposits, plus Accrued Interest thereon (to the extent such Accrued
Interest shall be outstanding and unpaid for ninety (90) days or less prior to
the Closing Date), each as set forth on the general ledger of Seller, as of the
close of business on the Closing Date, PLUS
(f) The aggregate net book value of the owned ATMs, as set forth on the
general ledger of Seller, as of the close of business on the Closing Date; PLUS
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(g) The aggregate amount of Cash as of the close of business on the
Closing Date; PLUS
(h) (i) The Swap Portfolio Adjustment, if such adjustment is a positive
number or (ii) if the Swap Portfolio Adjustment is a negative number, MINUS the
absolute value of the Swap Portfolio Adjustment.
Section 3.2. Payment at Closing. On or prior to the second Business Day
immediately preceding the Closing Date, Seller shall deliver to Purchaser the
Draft Closing Statement. On the Closing Date, Seller shall pay to Purchaser by
wire transfer of immediately available funds to such account as Purchaser shall
advise Seller no later than three (3) Business Days prior to the Closing Date
("Purchaser's Account") the amount by which the aggregate balance (including
Accrued Interest) of the Deposit Liabilities as of the close of business on the
fifth (5th) Business Day preceding the Closing Date exceeds the Estimated
Purchase Price (the "Estimated Payment Amount").
Section 3.3. Adjustment of Estimated Payment Amount.
(a) On or before 12:00 noon on the thirtieth (30th) day following the
Closing Date, Seller shall deliver to Purchaser a statement (the "Final Closing
Statement") setting forth (i) the Purchase Price (including all adjustments and
prorations thereto) and each component thereof (including with respect to the
Loans a Schedule as of the close of business on the Closing Date of the Loans
(the "Final Loan Schedule")) and (ii) the amount of Deposit Liabilities
(including Accrued Interest thereon) transferred to Purchaser as of the close of
business on the Closing Date. Seller shall make available to Purchaser and/or
its representatives such work papers, schedules and other supporting data as may
be reasonably requested by Purchaser to enable Purchaser to verify such
determinations. Such statement shall also set forth the amount (the "Adjusted
Payment Amount") by which the aggregate balance of the Deposit Liabilities
(including Accrued Interest thereon) transferred to Purchaser exceeded the
Purchase Price (including all adjustments and prorations thereto) calculated as
of the close of business on the Closing Date.
(b) On or before 12:00 noon on the sixtieth (60th) day following the
Closing Date (the "Final Settlement Date"), Seller shall pay to Purchaser by
wire transfer of immediately available funds to Purchaser's Account, an amount
equal to the excess of the Adjusted Payment Amount over the Estimated Payment
Amount, plus interest calculated using the Federal Funds Rate on such excess
amount from the Closing Date to but excluding the payment date, or, if the
Estimated Payment Amount exceeds the Adjusted Payment Amount, Purchaser shall
pay to Seller by wire transfer of immediately available funds to such account as
Seller shall advise Purchaser, an amount equal to such excess, plus interest
thereon calculated using the Federal Funds Rate from the Closing Date to but
excluding the payment date. Any payment or refund pursuant to this Section
3.3(b) shall be treated, for all purposes, as an adjustment to the Purchase
Price.
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(c) Notwithstanding the provisions of Section 3.3(b) above, if
Purchaser disagrees with the Final Closing Statement, then Purchaser shall
contact Seller and Purchaser and Seller shall cooperate in good faith to resolve
the matters in dispute. Interest shall accrue on the unpaid amount in dispute
from the Final Settlement Date to but excluding the date of payment at the
Federal Funds Rate. If the parties are unable to agree on the Final Closing
Statement within thirty (30) days of Purchaser's notice to Seller of its
disagreement with the Final Closing Statement, then Purchaser and Seller may
submit the matter to the Mediator, who shall determine all disputed portions of
the Final Closing Statement, provided however that the aggregate amount in
dispute must equal at least two hundred and fifty thousand dollars ($250,000).
The Mediator's fees and expenses shall be paid by the party who fails to prevail
in the mediation, but if the Mediator does not agree with either party's
position the parties shall each pay one-half of the fees and expenses of the
Mediator. The Final Closing Statement, as agreed upon by the parties and/or
determined through the process prescribed by this Section 3.3(c), shall be final
and binding upon the parties.
Section 3.4. Allocation of Purchase Price.
(a) Purchaser and Seller agree that, upon final determination of the
Purchase Price, the Purchase Price shall be allocated to the Purchased Assets in
accordance with Schedule 3.4(a) hereto.
(b) Purchaser and Seller shall report the transaction contemplated by
this Agreement (including income tax reporting requirements imposed pursuant to
Section 1060 of the Code) in accordance with the allocation specified on
Schedule 3.4(a) hereto. In the event any party hereto receives notice of a tax
audit with respect to the allocation of the Purchase Price specified herein,
such party shall immediately notify the other party in writing as to the date
and subject of such audit.
(c) If any federal, state or local tax return report or filing by
Purchaser or Seller relating to the transactions contemplated hereby and filed
on the basis of the allocation set forth on Schedule 3.4(a) hereto, is
challenged by the taxing authority with which such return, report or filing was
filed, the filing party shall assert and maintain in good faith the validity and
correctness of such allocation during the audit thereof until the issuance by
the taxing authority of a "30 Day Letter", or a determination of liability
equivalent thereto, to such party, whereupon such party shall, in its sole
discretion, have the right to pay, compromise, settle, dispute or otherwise deal
with its alleged tax liability. If such a tax return, report or filing is
challenged as herein described, the party filing such return, report or filing
shall timely keep the other party apprised of its decisions and the current
status and progress of all administrative and judicial proceedings, if any, that
are undertaken at the election of the filing party.
(d) If either party (including permitted successors and assigns
thereof) to this Agreement defaults under this Section 3.4, it shall pay as
damages to the other party, so long as such other party is not in default under
this Section 3.4, an amount which, after reduction for all income or gain taxes,
including without limitation interest and penalties, which would be incurred
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(calculated at the highest marginal rate applicable in the relevant
jurisdictions) as a result of receiving said amount, is equal to the result (but
not less than zero) of subtracting the amount in (ii) below from the amount in
(i) below:
(i) The total amount of income or gains taxes (including
interest and penalties calculated at the highest
marginal rate applicable in the relevant
jurisdictions) to all jurisdictions imposing such
taxes upon the non-defaulting party with respect to
the transactions contemplated hereby; and
(ii) The total amount of income or gains taxes which would
have been incurred (including interest and penalties
calculated at the highest marginal rate applicable in
the relevant jurisdictions) to all jurisdictions
imposing such taxes upon the non-defaulting party
with respect to the transactions contemplated hereby,
if such taxing jurisdictions had accepted the
allocations specified in Schedule 3.4(a) hereto.
Section 3.5. Proration; Other Closing Date Adjustments.
(a) Except as otherwise specifically provided in this Agreement, it is
the intention of the parties that Seller will operate the Facilities for its own
account and own the Loans and other Purchased Assets (and all rights associated
therewith) until the close of business on the Closing Date, and that Purchaser
shall operate the Facilities, own the Loans and other Purchased Assets and
assume the Deposit Liabilities and other Assumed Liabilities (and all rights
associated therewith) for its own account from and after the close of business
on the Closing Date. Thus, except as otherwise specifically provided in this
Agreement, items of income and expense shall be prorated as of the close of
business on the Closing Date, and shall be settled between Seller and Purchaser
as of the Closing Date, whether or not such adjustment would normally be made as
of such time. Items of proration will be handled as an adjustment to the
Purchase Price and not as adjustments to the Estimated Payment Amount, unless
otherwise agreed by the parties hereto.
(b) For purposes of this Agreement, items of proration and other
adjustments shall include, without limitation: (i) amounts prepaid and unused
for safe deposit rentals; (ii) rental and other payments under the Branch
Leases, ATM Lease Agreements and Tenant Leases, including security deposits;
(iii) sales, real estate and use taxes (other than such sales, real estate and
use taxes that arise as a result of the transactions contemplated by this
Agreement which shall be paid by Purchaser or by Seller in accordance with
Section 4.1 hereof); (iv) insurance premiums paid or payable to the FDIC
attributable to insurance coverage for the Deposit Liabilities for the period
from and after the Closing Date; (v) fees for customary annual or periodic
licenses or permits; (vi) water, sewer, fuel and utility charges; and (vii)
other prepaid items of income and expense, in each case as of the close of
business on the Closing Date; provided that items of proration and other
adjustments shall not include commitment and other fees paid in advance by
Customers with respect to Loans, Letters of Credit and ISDA Agreements.
Notwithstanding the foregoing, if accurate arrangements cannot be made as of the
Closing Date for any of the foregoing items of proration, the parties shall
apportion the charges
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for the foregoing items on the basis of the bill therefor for the most recent
billing period prior to the Closing Date.
ARTICLE IV
TAXES
Section 4.1. Sales, Transfer and Use Taxes. Except as otherwise
provided in this Agreement, any sales, transfer, use or similar taxes, including
but not limited to all transfer taxes required in connection with the transfer
of the Real Property to Purchaser, which are payable or arise as a result of
this Agreement or the consummation of the transactions contemplated hereby,
shall be paid by Purchaser on the Closing Date.
Section 4.2. Information Reports. Purchaser and Seller shall each
provide to the IRS on a timely basis and otherwise as required by law Forms
1099INT, 1099R, W-2P, 5498 and any other required forms and reports with respect
to each Deposit Liability concerning interest paid on, or contributions to and
distributions from, the Deposit Liability accounts, as appropriate, for the
periods during which Purchaser and Seller, respectively, administered such
accounts, including without limitation, any information required by the IRS
pursuant to any request for back-up withholding and taxpayer identification
number certification records and documents. Seller shall make such reports for
interest paid or credited to Customers through and including the Closing Date
and Purchaser shall make such reports after the Closing Date.
ARTICLE V
CLOSING
Section 5.1. Closing Date.
(a) Upon the terms and subject to the conditions of this Agreement, the
purchase and sale of the Purchased Assets and the assumption of the Assumed
Liabilities contemplated by this Agreement shall take place at a closing (the
"Closing") to be held at the offices of Edwards & Angell, LLP, 101 Federal
Street, 23rd Floor, Boston, Massachusetts 02110 at 10:00 a.m. (which Closing
shall be effective as of the close of business on the Closing Date) on a date
mutually agreed upon by Purchaser and Seller following the satisfaction or
waiver of all conditions to the obligations of the parties set forth in Article
XIII hereof (other than obligations to be performed at the Closing); provided,
however, that the Closing Date shall be no later than sixty (60) days following
the final conversion of data from Seller's and its Affiliates' data processing
systems to Sovereign Bank's data processing systems; and provided further,
however, that in no event (regardless of when the final conversion of data from
Seller's and its Affiliates' data processing systems to Sovereign Bank's data
processing systems occurs) shall the Closing Date be later than August 30, 2000
(the day on which the Closing takes place being the "Closing Date").
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(b) It is anticipated that the Transfer Date shall coincide with the
conversion of Seller's account information as to the Deposit Liabilities and the
Loans onto Purchaser's data processing system. Seller and Purchaser shall each
use their commercially reasonable efforts to take such actions, and Seller and
Purchaser shall cooperate with each other, to ensure that such conversion is
completed on the Transfer Date. However, notwithstanding the foregoing, in the
event of an extraordinary data processing occurrence on or prior to the Transfer
Date which prevents such conversion, then at either party's option (i) the
Closing may be postponed (but not to a date that would be beyond the date
required under Section 5.1(a), unless Purchaser otherwise consents in writing),
or (ii) the Closing shall take place and Seller and its Affiliates shall assist
Purchaser in servicing the Deposit Liabilities and the Loans upon such terms and
for such fees as are customarily charged by unaffiliated third party processors
for such arrangements, including but not limited to, any out-of-pocket costs
incurred by Seller or its Affiliates as a result of Seller or its Affiliates
providing such service. In the event of a Closing pursuant to clause (ii) above,
the parties shall negotiate in good faith one or more interim servicing
agreements for the Deposit Liabilities and Loans.
Section 5.2. Seller's Deliveries. On or before the Closing Date, Seller
shall deliver to Purchaser, duly executed and acknowledged where required:
(a) Deeds for the Real Property in substantially the form of Exhibit C
hereto, pursuant to which the Real Property (other than Real Property leased
pursuant to Section 11.1 hereof) shall be transferred to Purchaser "AS IS",
"WHERE IS" and with all faults but with the benefit of any statutory quitclaim
covenants (the "Quitclaim Deeds");
(b) A bill of sale for the Purchased Assets in substantially the form
of Exhibit D hereto, pursuant to which the Purchased Assets (other than the Real
Property) shall be transferred to Purchaser "AS IS", "WHERE IS" and with all
faults;
(c) An assignment and assumption agreement with respect to the Assumed
Liabilities in substantially the form of Exhibit E hereto (the "Assignment and
Assumption Agreement");
(d) To the extent applicable, lease assignment and assumption
agreements with respect to each of the Branch Leases and ATM Lease Agreements in
substantially the form of Exhibit F hereto (the "Lease Assignments");
(e) To the extent applicable, subject to the provisions of Section 8.3,
such consents of landlords under the Branch Leases and ATM Lease Agreements as
shall be required pursuant to the terms of such Branch Leases and ATM Lease
Agreements to the assignment of the Branch Leases and ATM Lease Agreements to
Purchaser and to the release of Seller from liability thereunder (the "Landlord
Consents");
(f) An Officer's Certificate in substantially the form of Exhibit G
hereto;
(g) An opinion of counsel of Seller and Fleet (which opinion may be
from in-house counsel), dated the Closing Date, in form and substance reasonably
satisfactory to Purchaser to
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the effect that: (i) each of Seller and Fleet is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation or incorporation, with full corporate power and authority to enter
into and perform its obligations under this Agreement; and (ii) this Agreement
has been duly and validly authorized, executed and delivered by each of Seller
and Fleet and (assuming due authorization, execution and delivery by Purchaser
and Enterprise) is a legal, valid and binding obligation of each of Seller and
Fleet, enforceable against each of Seller and Fleet in accordance with its
terms, except as enforcement may be limited by receivership, conservatorship,
and supervisory powers of bank regulatory agencies generally as well as
bankruptcy, insolvency, reorganization, moratorium or other laws of general
applicability relating to or affecting creditor's rights, or the limiting effect
of rules of law governing specific performance, equitable relief and other
equitable remedies or the waiver of rights or remedies;
(h) The Draft Closing Statement;
(i) The resignation of Seller as trustee or custodian, as applicable,
with respect to each IRA, Keogh Plan or Employee Pension Plan deposit account
included in the Deposit Liabilities and the designation of Purchaser as
successor trustee or custodian with respect thereto;
(j) A limited power of attorney granting Purchaser the authority to
execute certain documents on behalf of Seller in substantially the form of
Exhibit H hereto;
(k) The FIRPTA Affidavits;
(l) To the extent applicable, the Collateral Agency Agreement and the
Collateral Assignment Instruments;
(m) Physical possession of all Purchased Assets as are capable of
physical delivery;
(n) Possession of all loan files held in the Facilities and collateral
in the custody of Seller relating to the Loans; and
(o) Such other documents as are necessary to effect the transactions
contemplated hereby as Purchaser shall reasonably request.
Section 5.3. Purchaser's Deliveries. On or before the Closing Date,
Purchaser shall deliver to Seller:
(a) The Assignment and Assumption Agreement;
(b) Purchaser's acceptance of its appointment as of the close of
business on the Closing Date as successor trustee or custodian, as applicable,
of the IRA, Keogh Plan and Employee Pension Plan deposit accounts included in
the Deposit Liabilities and its assumption of the fiduciary obligations of the
trustee or custodian with respect thereto;
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(c) To the extent applicable, the Lease Assignments and such other
instruments and documents as any landlord under a Branch Lease or ATM Lease
Agreement may reasonably require as necessary or desirable for providing for the
assumption by Purchaser of such Branch Lease or ATM Lease Agreement, as
applicable, each such instrument and document in the form and substance
reasonably satisfactory to the parties hereto and dated as of the Closing Date;
(d) An Officer's Certificate in substantially the form of Exhibit I
hereto;
(e) An opinion of counsel of Purchaser and Enterprise, dated the
Closing Date, in the form and substance reasonably satisfactory to Seller, to
the effect that (i) each of Purchaser and Enterprise is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation or incorporation, with full corporate power and authority to enter
into and perform its obligations under this Agreement; and (ii) this Agreement
has been duly and validly authorized, executed and delivered by each of
Purchaser and Enterprise, and (assuming due authorization, execution and
delivery by Seller and Fleet) is a legal, valid and binding obligation of each
of Purchaser and Enterprise, enforceable against Purchaser and Enterprise in
accordance with its terms, except as enforcement may be limited by receivership,
conservatorship and supervisory powers of bank regulatory agencies generally as
well as bankruptcy, insolvency, reorganization, moratorium or other laws of
general applicability relating to or affecting creditors' rights, or the
limiting effect of rules of law governing specific performance, equitable relief
and other equitable remedies of the waiver of rights or remedies;
(f) To the extent applicable, the Purchaser's Letter of Credit;
(g) To the extent applicable, the Collateral Agency Agreement and the
Collateral Assignment Instruments;
(h) The SBA Consents; and
(i) Such other documents as are necessary to effect the transactions
contemplated hereby as Seller shall reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
Section 6.1. Organization. Seller is a national bank duly organized,
validly existing and in good standing under the laws of the United States. Fleet
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Rhode Island.
Section 6.2. Authority. Seller and Fleet each have the power and
authority to enter into and perform this Agreement and any other documents
executed pursuant hereto. This Agreement
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and any other documents or instruments executed pursuant hereto and the
execution, delivery and performance hereof and thereof have been duly authorized
and approved by all necessary corporate action on the part of Seller and Fleet,
and this Agreement and the instruments and documents executed pursuant hereto
constitutes, or when executed will constitute, the valid and binding obligations
of each of Seller and Fleet, enforceable against each of Seller and Fleet in
accordance with its terms, except as enforcement may be limited by receivership,
conservatorship and supervisory powers of bank regulatory agencies generally as
well as by bankruptcy, insolvency, reorganization, moratorium or other laws of
general applicability relating to or affecting creditors' rights, or the
limiting effect of rules of law governing specific performance, equitable relief
and other equitable remedies or the waiver of rights or remedies.
Section 6.3. Non-Contravention. The execution and delivery of this
Agreement and the instruments and documents executed pursuant hereto by Seller
do not and, subject to the receipt of all Regulatory Approvals, the consummation
of the transactions contemplated by this Agreement will not constitute (a) a
material breach or violation of or default under any law, rule, regulation,
judgment, order, governmental permit or license of Seller or to which Seller is
subject, which breach, violation, or default would have a Material Adverse
Effect or (b) a breach or violation of or a default under the articles of
association or bylaws of Seller or Fleet.
Section 6.4. Compliance with Law. To the Knowledge of Seller, the
business and operations of the Business are being conducted in accordance with
all applicable laws, rules and regulations of all governmental authorities,
other than those laws, rules and regulations of governmental authorities the
penalty or liability for the violation of which, if imposed or asserted, would
not have a Material Adverse Effect.
Section 6.5. Legal Proceedings. There are no actions, suits, or
proceedings, whether civil, criminal or administrative, pending as of the date
of the Agreement or, to the Knowledge of Seller, threatened as of the date of
the Agreement against or affecting Seller, which would reasonably be expected to
have a Material Adverse Effect.
Section 6.6. Tenants; Branch Leases.
(a) Except for the tenants listed on Schedule 1.1(s) hereto, there are
no tenants or, to the Knowledge of Seller, other occupants of the Facilities
owned by Seller.
(b) Except as set forth in Schedule 6.6(b) hereto, each of the Branch
Leases and ATM Lease Agreements is in full force and effect, and to the
Knowledge of Seller, Seller is not in default under any of its obligations
thereunder, except for such defaults which would not have a Material Adverse
Effect.
Section 6.7. Title to Purchased Assets.
(a) Seller is the lawful owner of each of the Purchased Assets (other
than the Real Property), free and clear of all Liens other than Permitted Liens
and, except for consents required
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to transfer the Purchased Assets, Seller has the right to sell, convey,
transfer, assign and deliver to Purchaser all of the Purchased Assets.
(b) A Seller or an Affiliate thereof is the lawful owner of the Real
Property as shown on the title commitments related to such Real Property
previously delivered to Purchaser.
Section 6.8. Loans. (a)(i) Each Loan represents the legal, valid and
binding obligation of the related borrower, enforceable by the holder thereof in
accordance with its terms subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization, liquidation and other similar laws and equitable
principles relating to or affecting the enforcement of creditors' rights
generally.
(ii) Each Loan (A) was originated or purchased by Seller, (B) to the
extent secured is secured by a valid and enforceable Lien in the collateral
therefor, which Lien is assignable, and (C) contains customary and enforceable
provisions such that the rights and remedies of the holder thereof shall be
adequate for practical realization against any collateral therefor.
(iii) Each Loan complied at the time the Loan was originated in all
material respects with all applicable requirements of applicable federal, state,
and local laws, and regulations thereunder.
(b) Except as set forth in Section 6.8(a)(i), (ii) and (iii) above,
neither Seller nor Fleet makes any representation or warranty of any kind to
Purchaser relating to the Loans and neither Seller nor Fleet shall be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency, value or collectibility of the Loans or any document,
instrument or agreement in the loan file, including, without limitation,
documents granting Seller a security interest in any collateral relating to a
Loan, (ii) any representation, warranty or statement made by an obligor or other
party in or in connection with any Loan, (iii) the financial condition or
creditworthiness of any primary or secondary obligor under any Loan or any
guarantor or surety or other obligor thereof, (iv) the performance by the
obligor or compliance with any of the terms or provisions of any of the
documents, instruments and agreements relating to any Loan, (v) inspecting any
of the property, books or records of any obligor, or (vi) any of the warranties
set forth in Section 3-417 of the UCC.
Section 6.9. No Broker. Other than Credit Suisse First Boston
Corporation and Keefe Bruyette & Woods (each of whose fees and expenses will be
paid solely by Fleet), no broker or finder, or other party or agent performing
similar functions, has been retained by Seller or its Affiliates or is entitled
to be paid based on any arrangements, agreements or understandings made by
Seller or its Affiliates in connection with the transactions contemplated
hereby, and no brokerage fee or other commission has been agreed to be paid by
Seller or its Affiliates on account of such transactions.
Section 6.10. Assumed Deposit Liabilities. The Deposit Liabilities are
insured by the FDIC through the Bank Insurance Fund or the Savings Association
Insurance Fund to the extent
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permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due by Seller.
Section 6.11. No Assessable Improvements. To the Knowledge of Seller,
no material assessments for public improvements have been made against the Real
Property or the Facilities which remain unpaid.
Section 6.12. No Adverse Notices. No notices or citations of any
applicable private restrictions or of the violation of any zoning regulation or
other law, rule, regulation or directive of any governmental authority or
authorities having jurisdiction relating to the Real Property or the Facilities
or any part thereof have been received by Seller relating to any material matter
affecting the Real Property or the Facilities. No notices have been issued and
served upon the Seller or upon the Real Property or the Facilities from or by
any constituted authority concerning the making of any required material
alterations, repairs or corrections of any condition or act affecting the Real
Property or the Facilities which remain uncomplied with or unpaid.
Section 6.13. No Change in Assessment. To the Knowledge of Seller,
Seller has not received any notice or order from any governmental authority with
respect to any proposed change in valuation of the Real Property or the
Facilities for real estate tax purposes from that assessed for the current
assessment period.
Section 6.14. Licenses and Permits. Seller has all material licenses,
permits, easements and rights of way, including proof of dedication, building
permits, certificates of occupancy and occupancy permits which are required from
any governmental authority having jurisdiction over the Real Property and the
Facilities (other than permits or authorizations required pursuant to
Environmental Laws) or from private parties as necessary to make use of the Real
Property and the Facilities and in order to insure adequate vehicular and
pedestrian ingress and egress to the Real Property and the Facilities, except
where the failure to hold such licenses, permits, easements and rights of way
would not result in a Material Adverse Effect.
Section 6.15. No Condemnation. To the Knowledge of Seller, there are no
condemnation proceedings or other proceedings in the nature of eminent domain
with respect to the Real Property or the Facilities.
Section 6.16. Regulatory Matters.
(a) The execution, delivery and performance of this Agreement and the
other agreements to be entered into in connection herewith by Fleet and Seller
do not and will not require any consent, approval, authorization or other order
of, action by, filing or registration with or notification to any governmental
authority except as set forth on Schedule 6.16 hereto ("Seller Regulatory
Approvals").
(b) There are no pending, or to the Knowledge of Seller, threatened
disputes or controversies between Seller or Fleet and any federal, state or
local governmental authority, including without limitation with respect to
capital requirements or year 2000 readiness
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that (i) would reasonably be expected to prevent or materially delay Seller or
Fleet from being able to perform their respective obligations under this
Agreement or (ii) would reasonably be expected to impair the validity or
consummation of this Agreement or the transactions contemplated hereby. Neither
Seller nor Fleet has received any indication from any federal, state or other
governmental authority that such governmental authority would oppose or refuse
to grant or issue its consent or approval, if required, with respect to the
transactions contemplated hereby.
Section 6.17. Interim Operations. From May 30, 1999 through the date
hereof, other than in connection with the transactions contemplated by this
Agreement or any similar agreement relating to the divestiture of assets in
connection with the Merger and other than in connection with the transactions
contemplated by the Merger Agreement, Seller has conducted the Business in the
usual, regular and ordinary course consistent with past practices.
Section 6.18. Limitations on and Disclaimer of Representations and
Warranties and Purchaser's Release in Connection Therewith. Except as otherwise
addressed in this Article VI, notwithstanding anything to the contrary contained
herein or in any other document or agreement delivered in connection herewith:
(a) Neither Seller nor Fleet make any representations or warranties,
express or implied, as to the physical condition of the Fixed Assets, all of
which are being sold "AS IS", "WHERE IS", without recourse and with all faults
at the Closing Date.
(b) Neither Seller nor Fleet makes any representations or warranty,
express or implied, of any type or nature with respect to the physical condition
of the Facilities or Real Property which are being sold "AS IS, "WHERE IS"
without recourse and with all faults, without any obligation on the part of
Seller. Except as otherwise expressly set forth in this Agreement, by closing
this transaction, Purchaser hereby releases and agrees to hold harmless Seller
and Fleet and waives any claims which Purchaser may now or hereafter have
against Seller or Fleet relating to the physical condition of the Facilities or
the Real Property from and after the Closing, including without limitation with
respect to claims under Environmental Laws or with respect to the presence of
Hazardous Materials or with respect to claims under the ADA.
(c) Neither Seller nor Fleet makes any representations or warranties to
Purchaser as to whether, or the length of time during which, any accounts
relating to Deposit Liabilities will be maintained by the owners of such Deposit
Liabilities at the Branches after the Transfer Date.
(d) Except as specifically provided for in this Agreement, Seller and
Fleet disclaim and make no representations or warranties whatsoever with respect
to the Business, Purchased Assets or Assumed Liabilities, express or implied,
including, without limitation, any representations or warranties with respect to
merchantability, fitness, title, enforceability, collectibility, documentation
or freedom from Liens (in whole or in part) and disclaim any liability and
responsibility for any negligent representation, warranty, statement or
information otherwise made or communicated, by oversight or information
otherwise made or communicated, by oversight or otherwise (orally or in
writing), to Purchaser in connection with the transactions contemplated hereby
(including without limitation, any opinion, information, projection,
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statement or advice contained in the Offering Memorandum or which may have been
provided to Purchaser by any employee, officer, agent, stockholder or other
representative of Seller, Fleet or their Affiliates in connection with the
transactions contemplated hereby).
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND
ENTERPRISE
Purchaser and Enterprise represent and warrant to Seller as follows:
Section 7.1. Organization. Purchaser is a trust company duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts. Enterprise is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts.
Section 7.2. Authority. Each of Purchaser and Enterprise has the power
and authority to enter into and perform this Agreement and any instruments or
other documents executed pursuant hereto. This Agreement and any instruments or
other documents executed pursuant hereto, and the execution, delivery and
performance hereof and thereof have been duly authorized and approved by all
necessary corporate action on the part of each of Purchaser and Enterprise, and
this Agreement constitutes a valid and binding obligation of each of Purchaser
and Enterprise, enforceable against each of Purchaser and Enterprise in
accordance with its terms, except as enforcement may be limited by receivership,
conservatorship and supervisory powers of bank regulatory agencies generally as
well as bankruptcy, insolvency, reorganization, moratorium or other laws of
general applicability relating to or affecting creditors' rights, or the
limiting effect of rules of law governing specific performance, equitable relief
and other equitable remedies or the waiver of rights or remedies.
Section 7.3. Non-Contravention. The execution and delivery of this
Agreement and any instruments or other documents executed pursuant hereto by
Purchaser do not and, subject to the receipt of all Regulatory Approvals, the
consummation of the transactions contemplated by this Agreement, will not
constitute (a) a material breach or violation of or default under any law, rule,
regulation, judgment, order, governmental permit or license of Purchaser or
Enterprise or to which either is subject, which breach, violation or default
would prevent or materially delay Purchaser or Enterprise from being able to
perform their respective obligations under this Agreement in all material
respects, or (b) a breach or violation of or a default under the charter or
bylaws of Purchaser or Enterprise or any material contract or other instrument
to which either of them is a party or by which either of them is bound which
breach, violation or default would prevent Purchaser or Enterprise from
performing its obligations under this Agreement in all material respects.
Section 7.4. Legal Proceedings. There are no actions, suits, or
proceedings, whether civil, criminal or administrative, pending or, to the
knowledge of Purchaser or Enterprise threatened against or affecting Purchaser
or Enterprise which could prevent or materially delay
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Purchaser or Enterprise from performing its obligations under this Agreement in
all material respects.
Section 7.5. Consents and Other Regulatory Matters.
(a) The execution, delivery and performance of this Agreement and the
other agreements to be entered into in connection herewith by Purchaser and
Enterprise do not and will not require any consent, approval, authorization or
other order of, action by, filing or registration with or notification to (i)
any governmental authority except as set forth on Schedule 7.5(a) hereto
("Purchaser Regulatory Approvals") or (ii) any other party (other than with
respect to any SBA Consents).
(b) There are no pending, or to the knowledge of Purchaser, threatened
disputes or controversies between Purchaser or Enterprise and any federal, state
or local governmental authority, including without limitation with respect to
capital requirements or year 2000 readiness that (i) would reasonably be
expected to prevent or materially delay Purchaser or Enterprise from being able
to perform its obligations under this Agreement or (ii) would reasonably be
expected to impair the validity or consummation of this Agreement or the
transactions contemplated hereby. Neither Purchaser nor Enterprise has received
any indication from any federal, state or other governmental authority that such
governmental authority would oppose or refuse to grant or issue its consent or
approval, if required, with respect to the transactions contemplated hereby.
Purchaser believes that it can satisfy all capital and other regulatory
requirements necessary to obtain all Purchaser Regulatory Approvals.
(c) The deposits of Purchaser are insured by the FDIC in accordance
with the FDIA, and Purchaser has paid all assessments and has filed all reports
required to be filed by it by the FDIC.
(d) As of the date hereof, without giving effect to the transactions
contemplated hereby, and following the transactions contemplated hereby,
Purchaser is (i) at least "adequately capitalized", as defined in the FDIA, and
(ii) meets all capital requirements, standards and ratios required by each state
or federal bank regulator with jurisdiction over Purchaser, including without
limitation, any such higher requirement, standard or ratio as applies to
institutions engaging in the acquisition of insured institution deposits, assets
or branches, and no such regulator is likely to, or has indicated that it will,
condition any of the Purchaser Regulatory Approvals upon an increase in
Purchaser's capital or compliance with any capital requirement, standard or
ratio.
(e) To the knowledge of Purchaser, it will not be required to divest
any of the Purchased Assets or Assumed Liabilities or any other asset or
liability as a condition to the receipt of any of the Purchaser Regulatory
Approvals.
(f) Purchaser was rated "Satisfactory" or "Outstanding" following its
most recent CRA examination by the regulatory agency responsible for its
supervision. Purchaser has received no notice of and has no knowledge of any
planned or threatened objection by any community group to the transactions
contemplated hereby.
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Section 7.6. WARN Act. Purchaser is not planning or contemplating, and
has not made or taken, any decisions or actions concerning the Transferred
Employees after the Closing that would require the service of notice under the
WARN Act.
Section 7.7. Capital Available. Purchaser or Enterprise has sufficient
capital to support the acquisition of the Business and to perform Purchaser's
other obligations hereunder and under any of the other documents executed in
connection herewith; provided, however that Purchaser's or Enterprise's
obligation to purchase the Purchased Assets and to assume the Assumed
Liabilities and to perform Purchaser's other obligations hereunder is not
conditioned on raising any equity capital, obtaining specific financing thereof,
obtaining the consent of any lender or any other matter.
Section 7.8. No Broker. No broker or finder, or any other party or
agent performing similar functions, has been retained by Purchaser or its
Affiliates or is entitled to be paid based on any arrangements, agreements or
understandings made by Purchaser or its Affiliates in connection with the
transactions contemplated hereby and no brokerage fee or other commission has
been agreed to be paid by Purchaser or its Affiliates on account of such
transactions.
ARTICLE VIII
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser as follows:
Section 8.1. Conduct of the Business.
(a) From the date hereof through the Closing Date, Seller shall (i)
conduct its business relating to the Purchased Assets and Assumed Liabilities in
the usual, regular and ordinary course consistent with past practice, (ii) not
grant any salary or wage increase to any existing employee or agree to any base
salary or wage level with any new employee, other than grants or agreements made
in the ordinary course of business consistent with past practice, (iii) use
commercially reasonable efforts to maintain and preserve intact its
relationships generally with its Consumer Bank Employees and Customers, and (iv)
take no action which would adversely affect or delay the ability of any party
hereto to obtain any Regulatory Approval or to perform its covenants and
agreements under this Agreement; provided, however that Seller shall be under no
obligation to advertise or promote new or substantially new customer services in
the principal market area of, or for the benefit of, the Business.
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(b) Without limitation of the foregoing, from the date hereof through
the Closing Date Seller shall not:
(i) Solicit, encourage or induce a Customer to transfer,
before the Closing Date, such Customer's business to a branch other than a
Branch or otherwise to transfer such Customer's business such that it will not
constitute part of the Business;
(ii) With respect to the Loans, other than in the usual,
regular and ordinary course consistent with past practice, amend the terms of
any Loan to reduce the interest rate applicable to such Loan to a rate that is
below the market rate of interest for similar loans with the same credit rating
that are originated by Seller for its own portfolio at the time of such
amendment, if such amendment would, in the aggregate, result in a change in the
characteristics of such portfolio of Loans that would have a material adverse
effect on the Loan Value of the Loans, taken as a whole; or
(iii) With respect to the Deposit Liabilities other than in
the usual, regular and ordinary course consistent with past practice, (A)
solicit, encourage or induce a depositor to transfer any Deposit Liability to a
branch other than a Branch, or (B) offer deposit accounts at a Branch at
interest rates or on other terms which are different than those offered by
Seller at any branch other than a Branch if such actions described in
subsections (A) and (B), would, in the aggregate, have a Material Adverse
Effect.
Section 8.2. Regulatory Approvals. Seller shall use its commercially
reasonable efforts to assist Purchaser in obtaining the Purchaser Regulatory
Approvals. Seller shall provide Purchaser or the appropriate governmental
authorities with all information reasonably required to be submitted by Seller
in connection with the Purchaser Regulatory Approvals.
Section 8.3. Branch and ATM Consents; Other Facilities Consents.
(a) Seller shall use its commercially reasonable efforts (which shall
not require Seller or its Affiliates to pay any money or other consideration to
any Person or to initiate any claim or proceeding against any Person) to cause
every landlord of a Branch Lease or ATM Lease Agreement, the consent of which is
required under the terms of the applicable Branch Lease or ATM Lease Agreement
to the assignment of such Branch Lease or ATM Lease Agreement to Purchaser, to
execute in favor of Purchaser a Landlord Consent.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Seller's failure to obtain a Landlord Consent from a landlord under a
Branch Lease or ATM Lease Agreement after using such commercially reasonable
efforts to obtain the same shall not entitle Purchaser to terminate this
Agreement and Purchaser shall remain obligated to perform all of its obligations
hereunder with respect to the applicable Branch or ATM location, including
without limitation, the assumption of the Deposit Liabilities relating thereto
and the payment of the full Purchase Price without any reduction or adjustment,
but excluding only the Purchaser's obligation to assume such Branch Lease or ATM
Lease Agreement.
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(c) If, despite Seller's commercially reasonable efforts, a Landlord
Consent to assignment of a Branch Lease or ATM Lease Agreement cannot be
obtained, or cannot be obtained without the payment of an assignment fee or
similar lump sum or rent increase, Seller shall, if permitted without the
consent of the Landlord under the Branch Lease or ATM Lease Agreement, sublease
the Branch or ATM location to Purchaser pursuant to a sublease agreement which
shall be for the remainder of the existing term of the Branch Lease or ATM Lease
Agreement, as applicable, and which shall provide for Purchaser to perform all
of the obligations of Seller under such Branch Lease or ATM Lease Agreement and
which otherwise shall contain mutually agreeable terms (a "Sublease Agreement").
(d) If despite its commercially reasonable efforts (which shall not
require Seller or its Affiliates to pay any money or other consideration to any
Person or to initiate any claim or proceeding against any Person) Seller shall
be unable to deliver (i) a Landlord Consent with respect to a Branch Lease or
ATM Lease Agreement or (ii) a Sublease Agreement, Seller shall make available to
Purchaser the space necessary for the operations of the applicable Branch or ATM
pursuant to a Use and Occupancy Agreement substantially in the form of Exhibit J
hereto.
(e) Anything contained in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
Purchased Asset, contract, Deposit Liability or other Assumed Liability, or any
claim or right or any benefit arising thereunder or resulting therefrom if an
attempted assignment thereof, without the consent of a third party thereto,
would constitute a breach thereof or in any way affect the rights of any Seller
thereunder or be contrary to applicable law. If any such consent or approval is
not obtained, Seller will use its commercially reasonable efforts (which shall
not require Seller or its Affiliates to pay any money or other consideration to
any Person or to initiate any claim or proceeding against any Person) to secure
an arrangement reasonably satisfactory to Purchaser insuring that Purchaser will
receive the benefits under the agreement for which such consent is being sought
following the Closing; provided, however, that Seller shall have no obligation
to obtain such consent or approval or to provide such an alternative arrangement
other than the undertaking to use commercially reasonable efforts to obtain the
same as set forth in this Section 8.3 and Purchaser shall remain obligated to
close the transactions contemplated herein, subject to the other provisions
hereof, and shall have no remedy for Seller's failure to obtain any such consent
or approval or to provide any such alternative arrangement.
Section 8.4. Nonsolicitation. For a period of two (2) years following
the Closing Date, Seller shall not use any list of Customers as a means to offer
the same or similar products and services of the Business to any Customer as was
provided to such Customer by the Business immediately prior to the Closing Date.
Notwithstanding the foregoing sentence, Seller and its Affiliates shall be
permitted to (a) engage in advertising, solicitations or marketing campaigns,
programs or other efforts not primarily directed to or targeted at the
Customers, including without limitation such campaigns, programs or efforts in
connection with lending, deposit, safe deposit, trust or other financial
services relationships with such Customers, (b) engage in other lending,
deposit, safe deposit, trust or other financial services relationships, (c)
respond to unsolicited inquiries, and (d) provide notices or communications
relating to the transactions contemplated hereby in accordance with the
provisions hereof.
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Section 8.5. Nonsolicitation of Purchaser's Employees.
(a) In consideration of the consummation of the transactions
contemplated hereby, Seller agrees that, for a period of two (2) years following
the Closing Date, it shall not, directly or indirectly, solicit for employment,
retain as an independent contractor or consultant, induce to terminate
employment with Purchaser or otherwise interfere with Purchaser's employment
relationship with any Transferred Employee; provided, however, that this Section
8.5 shall not apply (i) if any such employee has been terminated by Purchaser or
any of its Affiliates for any reason or (ii) if such employee is hired by Seller
or any of its Affiliates as a result of a general solicitation for employment in
newspaper advertisements or other periodicals of general circulation not
specifically targeted to employees of Purchaser.
(b) For a period of two (2) years following the Closing Date, Seller
shall notify Purchaser in writing, within thirty (30) days of the date of hire,
of Seller's hiring of any then current employee of Purchaser or its Affiliates.
ARTICLE IX
COVENANTS OF PURCHASER AND
ENTERPRISE
Purchaser and Enterprise covenant and agree with Seller as follows:
Section 9.1. Regulatory Approvals and Standards
(a) Purchaser will use its commercially reasonable efforts to obtain as
expeditiously as possible the Purchaser Regulatory Approvals and SBA Consents
and will file within sixty (60) days after the execution of this Agreement all
necessary applications of Purchaser to obtain the Purchaser Regulatory Approvals
and SBA Consents. Purchaser will supply to Seller, at least five (5) Business
Days prior to filing, copies of all proposed regulatory applications and filings
(other than confidential portions thereof) and will use reasonable efforts to
reflect any comments of Seller in such filings. As of the Closing Date,
Purchaser will satisfy any and all of the standards and requirements reasonably
within its control imposed as a condition to obtaining or necessary to comply
with the Purchaser Regulatory Approvals and the SBA Consents. Purchaser shall
pay any fees charged by any governmental authorities to which it must apply to
obtain any of the Purchaser Regulatory Approvals or the SBA Consents. Purchaser
shall take no action which would adversely affect or delay the ability of any
other party hereto to obtain any Regulatory Approval or to perform its covenants
and agreements under this Agreement. Purchaser shall notify Seller promptly (and
in no event later than one (1) Business Day following notice) of any significant
development with respect to any application or notice Purchaser files with any
governmental authority in connection with the transactions contemplated by this
Agreement.
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(b) From the date hereof through the Transfer Date, Purchaser shall (i)
remain at least "adequately capitalized", as defined in the FDIA, (ii) meet all
capital requirements, standards and ratios required by each state or federal
bank regulator with jurisdiction over Purchaser, including without limitation,
any such higher requirement, standard or ratio as shall apply to institutions
engaging in the acquisition of insured institution deposits, assets or branches
and (iii) maintain at least "satisfactory" CRA ratings.
(c) Purchaser hereby confirms that after the Transfer Date it is
Purchaser's intention to conduct a banking business at the Branches, and
therefore as of the date of this Agreement it is not expected that the
transactions contemplated by this Agreement will result in the closing,
consolidation or relocation of any of the Branches. Purchaser agrees that it
shall be solely responsible for complying with any required branch closing or
other notices to regulators and customers in the event Purchaser should at any
time determine to close, consolidate or relocate any of the Branches or to
close, consolidate or relocate any branch of Purchaser in connection with or
relating to the transactions contemplated by this Agreement.
Section 9.2. Consents; Compliance with Law. Purchaser shall provide
such financial and other information as shall be reasonably requested by
landlords under the Branch Leases and ATM Lease Agreements. Notwithstanding
anything to the contrary contained herein, Purchaser agrees that the form of
Landlord Consent with respect to a Branch Lease or an ATM Lease Agreement may be
modified at the request of a landlord to incorporate any and all conditions,
terms and agreements such landlord may require with respect to such landlord's
required consent to the assignment of such Branch Lease or ATM Lease Agreement
to Purchaser, provided that such conditions, terms and agreements do not
constitute a material or monetary modification or alteration of the terms,
covenants and conditions of such Branch Lease or ATM Lease Agreement or
otherwise impose any material burden on Seller or Purchaser not otherwise
contemplated by such Branch Lease or ATM Lease Agreement.
Section 9.3. Solicitation of Accounts. Prior to the Closing Date,
neither Purchaser nor any of its Affiliates shall solicit Customers through
advertising specifically referencing or targeted to such Customers or otherwise
transact their respective businesses in any way which in either case is
reasonably likely to (a) induce such Customers to close Deposit Liability
accounts and open deposit accounts directly with Purchaser or any of its
Affiliates, or (b) result in the transfer of all or a portion of an existing
Deposit Liability from Seller. Notwithstanding the foregoing sentence, Purchaser
and its Affiliates shall be permitted to (i) engage in advertising,
solicitations or marketing campaigns not primarily directed to or targeted at
such Customers, (ii) engage in lending, deposit, safe deposit, trust or other
financial services relationships existing as of the date hereof with such
Customers through branch offices of Purchaser, (iii) respond to unsolicited
inquiries by such Customers with respect to banking or other financial services
offered by Purchaser and (iv) provide notices or communications relating to the
transactions contemplated hereby in accordance with the provisions hereof.
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Section 9.4. Nonsolicitation of Seller's Employees.
(a) In consideration of, among other things, the willingness of Seller
to provide Purchaser with the opportunity to interview and hire the Consumer
Bank Related Employees, Purchaser and its Affiliates agree that, except in
accordance with this Section 9.4, for a period of two (2) years following the
Closing Date, it shall not, directly or indirectly, solicit for employment,
retain as an independent contractor or consultant, induce to terminate
employment with Seller or otherwise interfere with Seller's employment
relationship with any then current employee or officer of Seller or any of its
Affiliates who is not employed by Purchaser pursuant to Section 9.6; provided,
however, that this Section 9.4 shall not apply (i) if any such employee has been
terminated by Seller or any of its Affiliates for any reason or (ii) if such
employee is hired by Purchaser or any of its Affiliates as a result of a general
solicitation for employment in newspaper advertisements or other periodicals of
general circulation not specifically targeted to employees of Seller.
(b) For a period of two (2) years following the Closing Date, Purchaser
shall notify Seller in writing, within (30) days of the date of hire, of
Purchaser's hiring of any then current employee of Seller or its Affiliates.
Section 9.5. Recording of Instruments of Assignment.
(a) No later than ten (10) Business Days following the Closing Date,
Purchaser shall have recorded all deeds relating to the Real Property.
(b) No later than six (6) months following the Closing Date, Purchaser
shall have recorded all other instruments required, necessary or reasonably
desirable to evidence the acquisition, assignment and assumption of the
Purchased Assets and the Assumed Liabilities, including, without limitation, all
assignments of mortgage, financing statements, and security agreements relating
to the Loans.
Section 9.6. Transferred Employees. Purchaser covenants to Seller that
it will do or cause the following to occur:
(a) No later than the Final Approval Date, Purchaser shall offer
employment beginning as of the Closing Date to all Consumer Bank Employees upon
terms and conditions described in subsection (c) below and subject to the
Closing. Purchaser may but shall not be obligated to offer employment to any
Consumer Bank Related Employee following the Final Approval Date on the same
terms as required hereunder for offers of employment to Consumer Bank Employees;
provided, however, that Purchaser must offer employment to such Consumer Bank
Related Employees no later than thirty (30) days following the date on which a
list of such Consumer Bank Related Employees is provided to Purchaser. The
position offered to each Consumer Bank Employee and each Consumer Bank Related
Employee must be a Comparable Job. Subject to the provisions of this Section
9.6, Transferred Employees will be subject to the employment terms, conditions
and rules applicable to other similarly situated employees of
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Purchaser. Nothing contained in this Agreement shall be construed as an
employment contract between Purchaser and any Transferred Employee.
(b) Effective as of the Closing Date, Purchaser shall assume the Fleet
Boston Divestiture Severance Plan and all obligations for all severance benefits
payable pursuant to such plan (the "Assumed Severance Obligations") to any
Consumer Bank Employee to whom Purchaser does not provide a Comparable Job in
accordance with Section 9.6(a) hereof; provided, however, that transitional
assistance programs for which Purchaser shall be responsible under the Fleet
Boston Divestiture Severance Plan shall be limited to outplacement services. For
a period of one (1) year following the Closing Date, Purchaser shall provide
severance benefits to any Transferred Employee who is terminated by Purchaser on
or after the Closing Date pursuant to the terms of the Fleet Boston Divestiture
Severance Plan. Purchaser shall compute severance benefits by giving all
Transferred Employees full credit for all years of service with Seller, its
Affiliates and predecessors. After the one (1) year period provided for herein,
Purchaser shall provide Transferred Employees with severance benefits in
accordance with Purchaser's severance policy, if any, crediting Transferred
Employees with years of service as provided under this Agreement.
(c) Each Consumer Bank Employee and Consumer Bank Related Employee
offered employment by Purchaser shall be offered employment subject to the
following terms and conditions:
(i) Salary or base wages shall be equivalent to the base
salary or base wage paid by the Seller to such
employee as of the close of business on the Closing
Date until such time that Purchaser's compensation
policies would entitle each such employee to an
increased salary or base wage; and
(ii) Vacation benefits shall be equivalent to vacation
benefits provided by the Seller to such employee as
of the close of business on the Closing Date, until
December 31, 2000. Any vacation balance to which such
employee is entitled in the year of Closing shall
carry over to Purchaser. As of January 1, 2001,
Transferred Employees shall receive in the aggregate
for vacation, sick and personal days the amount of
paid time off to which they are entitled under
Purchaser's policies as in effect then and from time
to time thereafter.
(d) Purchaser shall treat each Transferred Employee as a new hire of
Purchaser but shall provide such Transferred Employee with the following:
(i) Each Transferred Employee will be eligible to
participate in any qualified profit sharing
plan/40l(k) plan or plans of Purchaser, based on each
plan's eligibility criteria as of the close of
business on the Closing Date. Purchaser shall credit
each Transferred Employee with the period of years of
service with Seller, its Affiliates and predecessors
in determining
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eligibility to participate, vesting and level of
matching contributions in such plan or plans;
(ii) Each Transferred Employee will be eligible to
participate in the Purchaser's qualified pension plan
or plans, based on each such plan's eligibility
criteria as of the close of business on the Closing
Date. Purchaser shall credit each Transferred
Employee with the period of years of service with
Seller, its Affiliates and predecessors in
determining eligibility to participate, vesting and
eligibility to receive benefits in Purchaser's
pension plan(s); provided, however, that such
crediting of service shall not operate to duplicate
any benefit or the funding of any benefit for any
period of service;
(iii) Each Transferred Employee will receive credit for
years of service with Seller, its Affiliates and
predecessors for purposes of calculation of benefits
and waiting period eligibility in Purchaser's other
miscellaneous benefits programs, including but not
limited to, vacation, severance, leaves of absence,
education assistance, sick leave, short and long-term
disability plans and other similar benefits;
(iv) On the Closing Date each Transferred Employee will
become immediately eligible to participate in the
Purchaser's health and welfare plans, including but
not limited to, dental, life insurance and short and
long-term disability plans, as such plans may exist,
on the same basis as other similarly-situated
employees of Purchaser. Purchaser shall waive any
pre-existing condition limitations with respect to
such Transferred Employee and his or her dependents.
Purchaser shall cause each Transferred Employee to be
eligible as of the Closing Date for at least the
amount of insurance coverage that he or she
maintained under Seller's plans, without requiring
such Transferred Employee to provide any evidence of
insurability;
(v) Upon conclusion of his or her short term disability
or temporary leave of absence, subject to the terms
and conditions of Purchaser's plans and policies and
applicable law, each Transferred Employee on such
leave as of the Closing Date shall receive the
greater of the salary and vacation benefits in effect
(y) when he or she went on leave or (z) upon the
conclusion of such leave to the extent that such
Transferred Employee is entitled to any pay increase
or vacation entitlement during such leave of absence
pursuant to Seller's leave of absence policies, shall
otherwise be treated as a Transferred Employee and
shall be offered by Purchaser the same or a
substantially equivalent position to his or her
position with Seller prior to the leave; and
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(vi) To the extent that Purchaser provides any Transferred
Employee with benefit or other plans and such plans
accept cash roll-overs, Purchaser shall allow such
Transferred Employee to roll over into such plans any
cash distributions or contributions received from
Seller or its plans, including any outstanding loan
balances from Seller's qualified or thrift retirement
plan.
(e) Purchaser shall be responsible for all obligations (including
obligations to provide notices) or liabilities, if any, which may arise in
connection with any Transferred Employee under the WARN Act. Purchaser shall
indemnify and hold Seller harmless for any WARN Act obligations or liabilities
of Seller that are triggered by any mass layoff, plant closing or other
employment action by Purchaser within the ninety (90) day period following after
Closing Date.
Section 9.7. Interviews. Purchaser shall be solely responsible for any
acts or omissions which are wrongful, illegal or in contravention of this
Agreement made by it in connection with interviewing or hiring the Consumer Bank
Employees and Consumer Bank Related Employees. Purchaser shall reimburse the
Consumer Bank Employees and Consumer Bank Related Employees (if applicable) for
transportation costs to and from the location where Purchaser shall interview
such employees.
Section 9.8. No Other Transactions. Between the date hereof and the
Closing Date, neither Purchaser nor Enterprise nor any of their Affiliates will
undertake or agree to undertake any material acquisition of the business, assets
or equity interests of any Person, directly or indirectly, whether by merger,
consolidation, combination, subscription, purchase or otherwise, unless, after
giving pro forma effect to any such acquisition, (a) Purchaser and Enterprise
shall be in compliance with Section 9.1(b) hereof and (b) the representations
and warranties made by Purchaser and Enterprise in Section 7.7 above shall be
true and correct in all material respects.
Section 9.9. Enterprise Guaranty. Subject to the terms and conditions
of the Agreement, Enterprise hereby guarantees the performance by the Purchaser
of Purchaser's obligations (a) hereunder, and (b) under any other agreements
made or documents executed in connection herewith.
ARTICLE X
ACCESS; EMPLOYEE AND CUSTOMER COMMUNICATIONS
Section 10.1. Access by Purchaser. Upon execution of this Agreement,
Seller shall provide Purchaser and its representatives, accountants and counsel
reasonable access during normal business hours and upon five (5) Business Days'
notice to Seller to the Facilities, Consumer Bank Employees, Consumer Bank
Related Employees, depository records, Loan files, and all other documents and
other information concerning the Facilities, the Business, the Purchased Assets,
the Assumed Liabilities and the Transferred Employees as Purchaser may
reasonably request; provided that a representative of Seller shall be permitted
to be present at all times and provided further that with respect to information
concerning Consumer Bank
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Employees and Consumer Bank Related Employees, Seller's sole obligation shall be
to provide Purchaser with information concerning the name, position, date of
hire and salary of the Consumer Bank Employees and Consumer Bank Related
Employees and Seller shall not be required to provide Purchaser with access to
or copies of any personnel files or other individualized employee files or
documents, all of which shall remain the sole property of Seller.
Notwithstanding the foregoing, in no event shall Seller be required to provide
(a) any information which Seller, in its sole discretion deems proprietary,
including without limitation, Seller's "credit scoring" system, branch or credit
practices, policies or procedures, or staffing models, (b) any information,
which is protected by the attorney-client privilege, or (c) its or any of its
Affiliates' tax returns.
Section 10.2. Communications to Employees; Training.
(a) Seller and Purchaser agree that promptly following the execution of
this Agreement, meetings shall be held at such location as Purchaser and Seller
shall mutually agree, provided that representatives of Seller shall be permitted
to attend such meetings, to announce Purchaser's proposed acquisition of the
Business to the Consumer Bank Employees. Seller and Purchaser shall mutually
agree as to the scope and content of all communications to the Consumer Bank
Employees and Consumer Bank Related Employees. Except as specifically provided
in this Section 10.2, in no event shall Purchaser contact any Consumer Bank
Employee or Consumer Bank Related Employee without the prior written consent of
Seller which consent may be granted or withheld in Seller's sole discretion.
(b) At mutually agreed upon times following the initial announcement
described in Section 10.2(a), Purchaser shall be permitted to meet with the
Consumer Bank Employees and Consumer Bank Related Employees to discuss
employment opportunities with Purchaser, provided that representatives of Seller
shall be permitted to attend any such meeting. From and after the Final Approval
Date, Purchaser shall also be permitted to conduct training sessions outside of
normal business hours or at other times as Seller may agree, with the Consumer
Bank Employees and Consumer Bank Related Employees (if applicable) and may, at
Seller's sole option, conduct such training seminars at the Branches; provided
that Purchaser will in good faith attempt to schedule such training sessions in
a manner which does not unreasonably interfere with Seller's normal business
operations. Purchaser shall reimburse the Consumer Bank Employees and Consumer
Bank Related Employees (if applicable) for transportation costs to and from the
locations where Purchaser shall train such employees and compensate the Consumer
Bank Employees and Consumer Bank Related Employees (if applicable) or reimburse
Seller at the Consumer Bank Employees and Consumer Bank Related Employees (if
applicable) respective applicable standard or overtime rates for the time spent
in such training.
Section 10.3. Communications with Customers.
(a) Following the Final Approval Date but not earlier than fifteen (15)
days prior to the anticipated Closing Date, Purchaser shall send statements to
the Customers announcing the transactions contemplated hereby (such statements
being herein called "Customer Notices"). The form and content of each Customer
Notice shall be subject to the approval of
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both parties and the cost of printing and mailing the Customer Notices shall be
borne solely by Purchaser. Following the Final Approval Date, Purchaser shall
also be entitled to provide solely at its own expense such other notices or
communications to Customers relating to the transactions contemplated hereby as
may be required by law; provided that the text of any such notice or
communication and the timing of such notice or communication which is provided
prior to the Closing shall be approved in advance by Seller, which approval
shall not unreasonably be withheld or delayed.
(b) Except as specifically provided herein, in no event will Purchaser
or its Affiliates contact any Customers prior to the Final Approval Date without
the prior written consent of Seller which consent shall not be unreasonably
withheld or delayed; provided that Purchaser may contact Customers in connection
with (i) advertising, solicitations or marketing campaigns not primarily
directed to or targeted at Customers, (ii) lending, deposit, safe deposit, trust
or other financial services relationships of Purchaser with Customers through
branch offices of Purchaser existing as of the date hereof, (iii) unsolicited
inquiries by Customers to Purchaser with respect to banking or other financial
services provided by Purchaser, and (iv) notices or communications relating to
the transactions contemplated hereby in accordance with the provisions hereof.
ARTICLE XI
FACILITIES
Section 11.1. Environmental Diligence.
(a) Purchaser may conduct, and if so, shall complete within the
Environmental Due Diligence Period and at Purchaser's own expense, environmental
investigations for purpose of identifying Environmental Hazards, including, at
Purchaser's election, so-called "Phase I" assessments and/or "Phase II"
subsurface investigations, by an independent, qualified environmental engineer
or consultant ("Environmental Consultant") of the Real Property during the
Environmental Due Diligence Period, provided that Purchaser shall use its
commercially reasonable efforts to commence any such investigation within five
(5) Business Days from the date hereof.
(b) In the event any such environmental investigation involves any
subsurface investigation of any of the Real Property, Purchaser shall provide
not less than five (5) Business Days notice of same to Seller, identifying the
particular Real Property involved and describing generally the location and
extent of the subsurface investigation to be conducted.
(c) In the event that any such environmental investigations are not
completed within the Environmental Due Diligence Period through no fault of
Purchaser or its Environmental Consultant, Purchaser may request, prior to the
expiration of the initial thirty (30) day period, an extension of the
Environmental Due Diligence Period for a reasonable period of time, not
exceeding thirty (30) days, solely to permit completion of such investigations,
and Seller shall approve same, such approval not to be unreasonably withheld or
delayed. If so approved, the
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Environmental Due Diligence Period shall be deemed to extend for such additional
period of time.
(d) In the event that as a result of such investigation, potential
Environmental Hazards are disclosed, the Environmental Remediation of which, in
the reasonable judgment of Purchaser's Environmental Consultant, is or will be
the responsibility of Seller, or of Purchaser should it acquire such parcel, and
which in the reasonable judgment of Environmental Consultant to a reasonable
degree of professional certainty will cost more than fifty thousand dollars
($50,000), Purchaser shall deliver to Seller on or before the close of the
Environmental Due Diligence Period the written report of the Environmental
Consultant presenting all necessary information regarding the Environmental
Hazards and the Environmental Remediation required. Seller shall have the right
to review and to deliver to Purchaser Seller's response, which shall include
whether Seller agrees or disagrees regarding the cost of any such Environmental
Remediation. Seller shall deliver such response to Purchaser in writing not more
than fifteen (15) days after receipt of such report, and if Seller disagrees
with Purchaser's position, a statement of the reasons for such disagreement.
(e) In the event that Seller agrees with the conclusions of the
Purchaser's Environmental Consultant in connection with the cost of
Environmental Remediation at any parcel of Real Property, Seller may, at its
election:
(i) make an adjustment to the Purchase Price for the
estimated costs of the Environmental Remediation of
any such Environmental Hazard(s) in excess of fifty
thousand dollars ($50,000), which shall not have been
completed on or prior to the Closing Date, with
respect to such parcel of Real Property; or
(ii) take such steps as are necessary to perform
Environmental Remediation by the Closing Date (or
make provisions to take such steps following the
Closing Date as shall be reasonably satisfactory to
Seller and Purchaser); or
(iii) lease to Purchaser such parcel of Real Property for
an initial period of ten (10) years pursuant to a
lease agreement in the form specified by Exhibit K;
provided further that if, during the term of such
lease agreement or renewal or extension thereof,
Seller shall deliver to Purchaser a report of an
Environmental Consultant certifying that the
Environmental Remediation of any Environmental
Hazards at or on any such leased parcel of Real
Property has been completed, Purchaser shall be
required to purchase such parcel of Real Property, at
the Real Property Purchase Price, in the event such
report is delivered within six (6) months of the
Closing Date, and, thereafter, at the fair market
value of such real property as agreed to by the
parties hereto or, if no such agreement is reached
within thirty (30) days of delivery of such report,
as determined pursuant to an real estate appraisal
performed by an experienced real estate
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appraiser selected by two other real estate
appraisers designated by Seller and Purchaser,
respectively.
(f) In the event that Seller does not agree with the conclusions of
Purchaser's Environmental Consultant regarding a parcel of Real Property, the
parties agree to refer the matter to a third Environmental Consultant reasonably
acceptable to all parties (or, if the parties cannot agree, selected by the
parties' respective Environmental Consultants) for dispute resolution as
follows:
(i) The parties, through their respective Environmental
Consultants, may make reasonable presentations to the
third Environmental Consultant of their respective
positions regarding the cost of Environmental
Remediation required to address the identified
Environmental Hazards at such parcel of Real
Property, and following such presentations, the third
Environmental Consultant shall render his or her
opinion regarding the extent and cost of the required
Environmental Remediation. The parties agree that the
determination of the third Environmental Consultant
regarding the cost of any required Environmental
Remediation shall be final and binding on the parties
for purposes of the applicability of this Section
11.1. In the event that the third Environmental
Consultant determines that the cost of such
Remediation will exceed fifty thousand dollars
($50,000,) the provisions of Section 11.1(e), above,
shall apply, and the Purchaser shall be considered
the "prevailing party" for purposes of subparagraph
(ii), immediately below. In the event such cost shall
be fifty thousand dollars ($50,000) or less, Seller
shall be such "prevailing party".
(ii) Each of the parties shall bear their own fees and
expenses in connection with the resolution of
disputes hereunder, and the fees and expenses of the
third Environmental Consultant shall be borne by the
party who did not prevail in its position before the
third Environmental Consultant.
(iii) With respect to any dispute to be resolved hereunder
involving a parcel of Real Property located in any
state in which environmental professionals are
licensed by such state (in Massachusetts, "Licensed
Site Professionals"), each of the three Environmental
Consultants participating in the dispute resolution
process hereunder shall be so licensed.
(g) Purchaser agrees that it and its Environmental Consultant shall
conduct any environmental investigations permitted pursuant to this Section with
reasonable care and subject to customary practices among environmental
consultants and engineers, including without limitation, following completion
thereof, the restoration of any site to the extent practicable to its condition
prior to such investigation and in the case of any subsurface investigations,
the removal of all monitoring wells (unless Seller requests such monitoring
wells to remain). Purchaser's Environmental Consultant must be duly licensed
under applicable state laws and provide proof of
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adequate liability and professional errors and omissions insurance (which
insurances shall, in each instance, name Seller as an additional insured upon
Seller's request, and shall be in an amount not less than one million dollars
($1,000,000) per claim and ten million dollars ($10,000,000) in the aggregate).
ARTICLE XII
TRANSITIONAL MATTERS
Section 12.1. Payment of Deposit Liabilities.
(a) From and after the Closing Date, Purchaser shall (i) pay all
properly drawn and presented checks, negotiable orders of withdrawal, drafts,
debits and other withdrawal orders presented to Purchaser by Deposit Liability
account customers, whether drawn on checks, negotiable orders of withdrawal,
drafts, or other withdrawal order forms provided by Seller or by Purchaser and
(ii) in all other respects discharge, in the usual course of the banking
business, all of the duties and obligations of Seller with respect to the
balances due and owing to the Customers who have Deposit Liability accounts. If
any Customer who has a Deposit Liability account draws checks, drafts, or
negotiable orders of withdrawal against the Deposit Liabilities which are
presented or delivered to Seller not later than ninety (90) days after the
Closing Date, Seller shall use its commercially reasonable efforts to batch all
such checks, drafts, negotiable orders of withdrawal, or other withdrawal order
forms and to deliver the same to Purchaser at Purchaser's sole expense.
Purchaser acknowledges that any delay, failure, or inability on its part to
comply with the obligations imposed upon it as a depository institution under
applicable federal or state law, with regard to such checks, drafts, negotiable
orders of withdrawal or other withdrawal orders shall not result in any
liability or obligation of Seller and shall not affect any of the rights of
Seller under this Agreement. Seller shall not be deemed to have made any
representations or warranties to Purchaser with respect to any such checks,
drafts, negotiable orders of withdrawal or other withdrawal orders and any such
representations or warranties implied by law are hereby disclaimed and are the
responsibility of Purchaser, except that Seller shall be chargeable with the
warranties and representations implied by law with respect to any such check,
draft, negotiable orders of withdrawal order, or other withdrawal order, which
is paid by Seller over the counter.
(b) Purchaser hereby acknowledges that if, after the Closing Date, any
Customer who has a Deposit Liability account, instead of accepting the
obligation of Purchaser to pay the Deposit Liabilities (including Accrued
Interest thereon) shall demand payment from Seller for all or any part of any
such Deposit Liabilities (including Accrued Interest thereon), Seller shall not
be liable or responsible for making such payment.
(c) It is Seller's intent to act in a commercially reasonable manner to
ensure that all Deposit Liability transactions will be referred to Purchaser;
provided however that, if, after the Closing Date, Seller honors and pays any
Deposit Liabilities which are presented to Seller for payment, pay any check,
draft, negotiable order of withdrawal or other withdrawal order,
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Purchaser shall upon demand by Seller reimburse Seller for such payment. Any
payment made under this Section 12.1 shall be made within three (3) Business
Days after demand by Seller, by wire transfer of immediately available funds to
an account designated by Seller.
Section 12.2. Delivery of Purchaser's Check Forms. Within fifteen (15)
Business Days following the Final Approval Date, but not less than five (5) days
prior to the Closing Date, Purchaser shall, at its sole cost and expense, notify
all Customers who have a Deposit Liability account by letter, in a form
reasonably acceptable to Seller, of Purchaser's assumption of the Deposit
Liabilities (other than Excluded Deposits) (which shall include a notification
to those Deposit Liability account Customers whose accounts are then covered by
any type of overdraft protection offered by Seller, including but not limited to
Advance Lines, that from and after the Closing Date all such overdraft
protection from Seller shall terminate) and furnish each such Customer with
checks, deposit tickets, or other similar instruments using the forms of
Purchaser, which shall be appropriately encoded with Purchaser's routing number
and with accurate account numbers, and with instructions to the customer to
utilize such checks, deposit tickets, or other similar instruments on
Purchaser's forms on and after the Closing Date and thereafter to destroy any
unused checks on Seller's forms; such notice and such delivery of checks by
Purchaser shall be by first class U.S. mail.
Section 12.3. Uncollected Checks Returned to Seller. From and after the
Closing Date, Purchaser shall promptly pay to Seller an amount equivalent to the
amount of any checks, negotiable orders of withdrawal, drafts, or any other
withdrawal orders (net of the applicable deposit premium paid by Purchaser with
respect to the Deposit Liabilities represented by any such instrument) credited
as of the close of business on the Closing Date to any Deposit Liability
accounts which are returned uncollected to Seller after the Closing Date and
which shall include an amount equivalent to holds placed upon such Deposit
Liability accounts for Items cashed by Seller (net of the applicable deposit
premium paid by Purchaser with respect to the Deposit Liabilities represented by
any such instrument), as of the close of business on the Closing Date which
Items are subsequently dishonored; provided, however, that if Seller shall have
failed to make or properly reflect in the information provided to Purchaser any
provisional credit or hold on any such Deposit Liability accounts in respect of
uncollected funds represented by any such Item, Purchaser's obligations under
this Section 12.3 in respect of such Item shall be limited to the amount of
collected funds in such Deposit Liability accounts.
Section 12.4. Default on Loan Payments to Seller. If the balance due on
any Loan has been reduced by Seller as a result of a payment by check or draft
received prior to the close of business on the Closing Date, which Item is
returned to Seller after the Closing Date, the Loan Value of such Loan shall be
correspondingly increased and an amount in cash equal to such increase shall be
promptly paid by Purchaser to Seller within three (3) Business Days after demand
by Seller by wire transfer of immediately available funds to an account
designated by Seller.
Section 12.5. Notices to Obligors on Loans. (a) Purchaser shall,
following the Final Approval Date, but no later than fifteen (15) days prior to
the Closing Date, prepare and transmit, at Purchaser's sole cost and expense, to
each obligor on each Loan, a notice in a form satisfying
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all legal requirements and reasonably acceptable to Seller to the effect that
the Loan will be transferred to Purchaser and directing that payments be made
after the Closing Date to Purchaser at any address of Purchaser specified by
Purchaser, with Purchaser's name as payee on any checks or other instruments
used to make such payments, and, with respect to all such Loans on which payment
notices or coupon books have been issued, to issue new notices or coupon books
reflecting the name and address of Purchaser as the person to whom and the place
at which payments are to be made. To the extent that Purchaser's notice pursuant
to the prior sentence shall be legally insufficient, Seller agrees, at
Purchaser's sole expense, to provide all Loan obligors with all required notices
of the assignment and transfer of the Loans.
(b) To the extent that any of the Loans transferred from Seller to
Purchaser involve a transfer of servicing as defined and governed by the Real
Estate Settlement Procedures Act (12 U.S.C. ss.2601 et. seq.), Seller and
Purchaser will jointly coordinate any appropriate required Customer notices.
Section 12.6. New Telephone Numbers. Purchaser shall, no later than ten
(10) days prior to the Closing Date, obtain new telephone numbers for the
Facilities in Purchaser's name.
Section 12.7. New ATM/Debit Cards. Purchaser shall, following the Final
Approval Date, but no later than five (5) days prior to the Closing Date,
furnish ATM/Debit cards to Customers who have Deposit Liability accounts to
replace Seller's ATM/Debit cards. Purchaser shall, no later than five (5) days
prior to the Transfer Date, notify affected Customers to destroy Seller's
ATM/Debit cards as of the Transfer Date and shall notify such Customers of
Purchaser's withdrawal limits immediately following the Closing by form of
notice reasonably acceptable to Seller.
Section 12.8. Installation of Equipment by Purchaser. Subsequent to the
Final Approval Date and prior to the Transfer Date, Seller shall cooperate with
and permit Purchaser, at Purchaser's option and sole cost and expense, to make
provision for the installation of teller equipment in the Branches; provided,
however, that Purchaser shall arrange for the installation of such equipment at
such times and in a manner that does not significantly interfere with the normal
business activities and operation of the Branches.
Section 12.9. Deactivation of ATMs and ATM/Debit Cards. On the Transfer
Date, Seller shall deactivate all ATM/Debit cards issued with respect to all
Deposit Liability accounts and shall electronically block access of those cards
to the Deposit Liability accounts, and shall deactivate the ATMs not later than
8:00 a.m. on the Transfer Date. Point of sale transactions shall be settled
between Purchaser and Seller for a period of forty-five (45) days after the
Closing Date.
Section 12.10. Signage. During the ten (10) day period immediately
preceding the Transfer Date, Seller shall cooperate with any commercially
reasonable request of Purchaser directed to accomplishing the installation of
signage of Purchaser's choosing at the Facilities prior to the Closing Date;
provided, however, that all such installations shall be at the sole cost and
expense of Purchaser, that such installation shall be performed in such a manner
that
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does not significantly interfere with the normal business activities and
operations of the Facilities, that such signage complies with all applicable
zoning and permitting laws and regulations, that such signage has, if necessary,
received the prior approval of the owner or landlord of the Real Property, and
that all such installed signage shall be covered in such a way as to be
unreadable at all times prior to the Closing. Immediately following the Closing,
Seller shall, at its sole cost and expense, cover all of its signage in such a
way as to be unreadable after the Closing and shall commence activities directed
to accomplishing the removal of all of Seller's existing signage at the
Facilities and will diligently pursue such activities in good faith so that such
removal may be effected as promptly as practicable following the Closing.
Section 12.11. Letters of Credit.
(a) It is the intention of the parties that Purchaser assume all risks
and obligations arising or accruing after the close of business on the Closing
Date with respect to the Letters of Credit. Accordingly, Purchaser agrees to use
its commercially reasonable efforts to obtain prior to the Closing Date and, in
any event, no later than three (3) months following the Closing Date, the
consent of the beneficiary (if necessary) to the assumption of (and the
resulting release of the Seller from) the Letters of Credit and/or to issue
replacement letters of credit for those Letters of Credit which are standby
Letters of Credit.
(b) Until such time as there are no Letters of Credit, Seller hereby
grants to Purchaser, and Purchaser hereby agrees and commits to acquire, as of
the Closing Date, from Seller a participation in the Letters of Credit equal to
one hundred percent (100%) of the amount thereof.
(c) Seller agrees that, with respect to each request by a beneficiary
for a draw under or payment of a Letter of Credit, (a "Request"), it will (i)
promptly provide, by facsimile sent to Purchaser, copies of documents submitted
to support any Request; (ii) wait 24 hours, or such shorter time period as may
be required under such Letter of Credit, after sending the facsimile before
acting on a Request; (iii) act in accordance with ISP98, UCP 500 and/or UCC
Article 5, as applicable, in deciding whether or not to honor the Request unless
directed in writing by Purchaser to otherwise honor or dishonor a Request; (iv)
provide notice to Purchaser that the Request has been honored and the amount of
the Letter of Credit Disbursement that may become due pursuant to Subsection
12.11(d), below; and (v) after honoring a Request, send the documents submitted
by the beneficiary in support of a Request as directed by Purchaser.
(d) In the event Seller notifies Purchaser that a Letter of Credit
Disbursement has been made and that either (A) the affected Customer has failed
to immediately reimburse such Letter of Credit Disbursement pursuant to its
Reimbursement Agreement or (B) the related Reimbursement Agreement does not
require that the affected Customer immediately reimburse Seller for such Letter
of Credit Disbursement, then, Purchaser agrees to pay to Seller on the day so
notified by Seller, an amount equal to the Letter of Credit Disbursement;
provided, however, if such notice was not given by Seller to Purchaser prior to
2 p.m. on such day, then such amount shall be paid by Purchaser not later than
10:00 a.m. on the next Business Day. Whenever any amounts are due and payable by
Purchaser pursuant to this Subsection 12.11(d), Seller agrees to submit a draw
request to Purchaser in accordance with the terms of the Purchaser's Letter of
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Credit stating the amount due hereunder. Purchaser agrees to pay Seller any
amounts due under this Subsection 12.11(d) by wire transfer of immediately
available funds to an account previously designated by Seller.
(e) Purchaser also agrees to pay Seller (i) interest on any and all
amounts unpaid by Purchaser when due under Subsection 12.11(d), above, from the
date such amounts become due until payment in full, such interest being payable
on demand and accruing at a fluctuating interest rate per annum (computed on the
basis of a year of 365 days for the actual number of days elapsed) which shall
at all times be equal to the Federal Funds Rate during each day until such
amounts are paid in full (but such fluctuating interest rate shall in no event
be higher than the maximum rate permitted by then applicable law) and (ii) any
and all costs and expenses (including, without limitation, reasonable attorneys'
fees) reasonably incurred by Seller in exercising or enforcing any rights or
performing any obligations under Sections 12.11(d) and (e).
(f) So long as Purchaser is not in default of its obligations under
this Section 12.11, Seller shall promptly remit to Purchaser any amounts
subsequently received by Seller from Customers in respect of all Letter of
Credit Disbursements.
(g) Seller further agrees that it will not, without the prior written
consent of Purchaser, amend or modify the terms of any Letter of Credit or
Reimbursement Agreement. Purchaser and Seller acknowledge and agree that with
respect to all Letters of Credit the expiry date of which is, by the terms
thereof, automatically extended, (x) Seller shall give notice in accordance with
the terms of such Letters of Credit that Seller will not extend such expiry date
beyond the current expiry date unless Purchaser and Seller mutually agree to
permit the extension of such Letter of Credit and (y) Seller shall not otherwise
extend a Letter of Credit without Purchaser's consent.
(h) The Purchaser shall pay to Fleet a fee with respect to the
Outstanding Credit Exposure computed (on the basis of a year of 365 days for the
actual number of days elapsed) at a rate per annum determined in good faith to
be fair and reasonable by the parties hereto, taking into consideration the
long-term debt rating of Purchaser and Enterprise if such rating exists. Such
fee shall be payable quarterly in arrears on each June 30, September 30,
December 31 and March 31, commencing on the quarter end immediately following
the Closing Date, and shall be calculated on the average daily outstanding
Credit Exposure during each such period. The initial fee shall be appropriately
pro-rated.
Section 12.12. Actions With Respect to IRA, Keogh Plan and Employee
Pension Plan Deposit Liabilities.
(a) On or before the Closing Date, Seller shall (i) resign as of the
close of business on the Closing Date as the trustee or custodian, as
applicable, of each IRA, Keogh Plan and Employee Pension Plan of which it is the
trustee or custodian, (ii) to the extent permitted by the documentation
governing each such IRA, Keogh Plan or Employee Pension Plan and applicable law,
appoint Purchaser as successor trustee or custodian, as applicable, of each such
IRA, Keogh Plan or Employee Pension Plan, and Purchaser hereby accepts each such
trusteeship or
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custodianship under the terms and conditions of Purchaser's plan documents for
its IRA, Keogh Plans and Employee Pension Plan, and assumes all fiduciary and
custodial obligations with respect thereto as of the close of business on the
Closing Date, and (iii) deliver to the IRA grantor or Keogh Plan or Employee
Pension Plan named fiduciary of each such IRA, Employee Pension Plan or Keogh
Plan such notice of the foregoing as is required by the documentation governing
each such IRA, Employee Pension Plan or Keogh Plan or applicable law. Purchaser
shall be solely responsible for delivering its IRA, Employee Pension Plan and
Keogh Plan documents to the applicable IRA grantor and Keogh Plan or Employee
Pension Plan named fiduciary, including but not limited to a beneficiary
designation form to be completed by the applicable IRA grantor or Keogh Plan or
Employee Pension Plan participant; provided, however, that in the event that an
IRA grantor or Keogh Plan or Employee Pension Plan participant dies before such
time as Purchaser receives a properly completed beneficiary designation form,
Seller shall make available to Purchaser such information as may exist in
Seller's files regarding any beneficiary designation it may have regarding such
decedent. If, pursuant to the terms of the documentation governing any such IRA
or Keogh Plan or Employee Pension Plan or applicable law, (X) Seller is not
permitted to appoint Purchaser as successor trustee or custodian, or the IRA
grantor or Keogh Plan or Employee Pension Plan named fiduciary objects in
writing to such designation, or is entitled to, and does, in fact, name a
successor trustee or custodian other than Purchaser, or (Y) such IRA or Keogh
Plan or Employee Pension Plan includes assets which are not Deposit Liabilities
and are not being transferred to Purchaser or the assumption of such deposit
liabilities included in such IRA or Keogh Plan or Employee Pension Plan would
result in a loss of qualification of such IRA or Keogh Plan or Employee Pension
Plan under the Code or applicable IRS regulations, all deposit liabilities of
Seller held under such IRA or Keogh Plan or Employee Pension Plan shall be
excluded from the Deposit Liabilities (such excluded deposits liabilities being
herein called the "Excluded IRA/Keogh/Employee Pension Plan Deposits"). Upon
appointment as a successor custodian for such IRA Deposit Liabilities or as a
successor trustee for such IRAs or Keogh Plans or Employee Pension Plans,
Purchaser shall perform the services and carry out the duties and obligations
required of it under the applicable plans, the Code and applicable Federal and
state laws and regulations.
(b) To the extent the Deposit Liabilities include certain IRAs, Keogh
Plans and Employee Pension Plans that are required to make certain periodic
distributions to the IRA account owner or Keogh Plan or Employee Pension Plan
participant (or beneficiary) either at the account owner's or participant's
request or because the account owner or participant has attained age 70-1/2,
effective as of the Transfer Date, Purchaser agrees to continue to make such
periodic distributions in accordance with the reasonable distribution
instructions forwarded by Seller to Purchaser. Purchaser hereby assumes the
obligation to pay each minimum distribution required by federal law by December
31 of the calendar year in which the Closing occurs and, in consideration
thereof, Seller agrees not to withhold the amount of such distributions from the
aggregate amount of the Deposit Liabilities.
Section 12.13. Bulk Transfer Laws. Seller and Purchaser hereby waive
compliance with any applicable bulk transfer laws. If by reason of any
applicable bulk sales law any claims are asserted by creditors of Seller, such
claims shall be the responsibility of Purchaser in the case of claims arising
under any of the Purchased Assets or Assumed Liabilities.
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Section 12.14. Ancillary Agreements. At the Closing, Purchaser and
Seller will enter into the Purchaser's Letter of Credit and the Collateral
Agency Agreement.
ARTICLE XIII
CONDITIONS TO CLOSING
Section 13.1. Conditions to Obligations of Seller and Fleet. The
obligations of Seller and Fleet under this Agreement are subject to the
satisfaction (or, if applicable, waiver in the sole discretion of Seller, except
as to the condition described in 13.1(c)) on or before the Closing Date, of each
of the following conditions:
(a) All of the covenants and other agreements required by this
Agreement to be complied with and performed by Purchaser and/or Enterprise on or
before the Closing Date shall have been duly complied with and performed in all
material respects;
(b) The representations and warranties made by Purchaser and/or
Enterprise herein or in any certificate or other document delivered pursuant to
the provisions hereof or in connection with the transactions contemplated hereby
shall be true and correct in all material respects, on and as of the Closing
Date, with the same force and effect as though such representations and
warranties had been made on the Closing Date provided, however, that the
representations and warranties of Purchaser or Enterprise herein or in any
certificate or other document delivered pursuant to the provisions hereof shall
be deemed to be true and correct in all material respects on and as of the
Closing Date, with the same force and effect as though made on the Closing Date,
unless the failure to be so true and correct would have a material adverse
effect on Purchaser's ability to consummate the transactions contemplated by the
Agreement;
(c) All Regulatory Approvals shall have been obtained and shall be
Final;
(d) No court or governmental or regulatory authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect to enjoin, or which
prohibits, consummation of the transactions contemplated hereby;
(e) Seller shall have received the items to be delivered by Purchaser
pursuant to Section 5.3.; and
(f) The transactions contemplated by the Merger Agreement shall have
been consummated.
Section 13.2. Conditions to Obligations of Purchaser and Enterprise.
The obligations of Purchaser under this Agreement are subject to the
satisfaction (or, if applicable, waiver in the
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sole discretion of Purchaser, except as to the condition described in Section
13.2(c)) on or before the Closing Date, of each of the following conditions;
(a) All of the covenants and agreements required by this Agreement to
be complied with and performed by Seller or Fleet on or before the Closing Date
shall have been duly complied with and performed in all material respects;
provided, however, that Fleet and Seller shall be deemed to have duly complied
with and performed such covenants and agreements in all material respects unless
the failure to so perform or comply would have a Material Adverse Effect.
(b) The representations and warranties made by Seller or Fleet herein
or in any certificate or other document delivered pursuant to the provisions
hereof or in connection with the transactions contemplated hereby shall be true
and correct in all material respects, on and as of the Closing Date, with the
same force and effect as though such representations and warranties had been
made on the Closing Date; provided, however, that the representations and
warranties made by Seller or Fleet herein or in any certificate or other
document delivered pursuant to the provisions hereof shall be deemed to be true
and correct in all material respects on and as of the Closing Date, with the
same force and effect as though made on the Closing Date, unless the failure to
be so true and correct would have a Material Adverse Effect;
(c) The Regulatory Approvals shall have been obtained and shall be
Final;
(d) No court or governmental or regulatory authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect to enjoin, or which
prohibits, consummation of the transactions contemplated hereby; and
(e) Purchaser shall have received the items to be delivered by Seller
pursuant to Section 5.2.
ARTICLE XIV
DATA PROCESSING
Section 14.1. Conversion.
(a) Seller and Purchaser shall convert account information as to the
Deposit Liabilities and the Loans in accordance with the provisions of Schedule
14.1 hereof.
(b) All tasks and obligations concerning the provision of data
processing services to or for the Branches after the Closing Date, other than
those specifically set forth in, and to the extent assumed by Seller pursuant
to, Schedule 14.1 hereof shall be performed solely and exclusively by the
Purchaser. Purchaser acknowledges its assumption of all such tasks and
obligations, and further acknowledges that any delay,
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failure, or inability on its part to perform such tasks or comply with such
obligations, except as and to the extent attributable to any delay, failure, or
inability on the part of Seller in performing those tasks or complying with
those obligations specifically set forth in, and to the extent assumed by Seller
pursuant to, Schedule 14.1 hereof shall not result in any liability or
obligation of Seller and shall not affect any of the rights of Seller under this
Agreement.
ARTICLE XV
INDEMNITY
Section 15.1. Fleet's Indemnity. Fleet shall indemnify, hold harmless
and defend Purchaser, its Affiliates, and their respective successors, permitted
assigns, directors, shareholders, officers, agents and employees from and
against all claims, losses, liabilities, demands and obligations of any nature
whatsoever (including reasonable legal fees and expenses) (collectively,
"Damages") which Purchaser or any of its Affiliates or their respective
successors, permitted assigns, directors, shareholders, officers, agents or
employees shall receive, suffer or incur, arising out of or resulting from:
(a) Any liability of Seller which is not an Assumed Liability;
(b) The breach of any representation or warranty made by Seller or
Fleet in this Agreement;
(c) The breach of any covenant or other agreement made by Seller or
Fleet in this Agreement; or
(d) Except for Assumed Liabilities, all liabilities under all pension
and welfare benefit plans (as defined in Sections 3(1) and (2) of ERISA), or any
supplemental unemployment benefit, deferred compensation, or other employee
benefit plan of Seller or its Affiliates with respect to any and all periods
prior to and subsequent to the Closing Date, including without limitation, all
liabilities under ERISA, any liabilities for any accumulated funding deficiency
as such term is defined in Section 302 of ERISA and Section 412 of the Code and
for any liability to the Pension Benefit Guaranty Corporation, the IRS,
participants, beneficiaries, employees, or any other public or private person,
incurred with respect to or attributable to any plan of Seller.
Section 15.2. Enterprise Indemnity. Enterprise shall indemnify, hold
harmless and defend Seller, its Affiliates and their respective successors,
permitted assigns, directors, shareholders, officers, agents and employees from
and against all Damages which Seller or any of its Affiliates or their
respective successors, permitted assigns, directors, shareholders, officers,
agents or employees shall receive, suffer or incur, arising out of or resulting
from:
(a) Any Assumed Liability;
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(b) Any actions taken or omitted to be taken by Purchaser from and
after the date hereof with respect to the Consumer Bank Employees or the
Consumer Bank Related Employees, and any suits or proceedings commenced in
connection therewith;
(c) Any actions taken or omitted to be taken by Purchaser from or after
the Closing Date and relating to the Purchased Assets, Assumed Liabilities and
the Transferred Employees, and any suits or proceedings commenced in connection
therewith (other than proceedings to prevent or limit the consummation of the
transactions contemplated by this Agreement);
(d) The breach of any representation or warranty made by Purchaser or
Enterprise in this Agreement;
(e) The breach of any covenant or other agreement made by Purchaser or
Enterprise in this Agreement; and
(f) Any claims arising under any of the Purchased Assets or Assumed
Liabilities made by creditors of Seller under any applicable bulk sales laws.
Section 15.3. Indemnification Procedure. If a party entitled to
indemnification hereunder ("Indemnified Party") is aware that a claim, demand or
other circumstance exists that has given or may reasonably be expected to give
rise to a right of indemnification under this Article XV (whether or not the
amount of the claim is then quantifiable), such Indemnified Party shall promptly
give written notice thereof to the other party ("Indemnitor"), and the
Indemnified Party will thereafter keep the Indemnitor reasonably informed with
respect thereto, provided that failure of the Indemnified Party to give the
Indemnitor prompt notice as provided herein shall not relieve the Indemnitor of
its obligations hereunder except to the extent, if any, that the Indemnitor's
rights shall have been prejudiced or the Indemnitor's liability shall have been
materially increased thereby. In case any such action, suit or proceeding is
brought against an Indemnified Party, the Indemnitor shall be entitled to
participate in (and, in its discretion, to assume) the defense thereof with
counsel reasonably satisfactory to the Indemnified Party, provided, however,
that the Indemnified Party shall be entitled to participate in any such action,
suit or proceeding with counsel of its own choice at the expense of the
Indemnitor if, in the good faith judgment of the Indemnified Party's counsel,
representation by the Indemnitor's counsel may present a conflict of interest or
there may be defenses available to the Indemnified Party which are different
from or in addition to those available to the Indemnitor. The Indemnitor will
not settle any claim, action, suit or proceeding which would give rise to the
Indemnitor's liability under its indemnity unless such settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff of a release
of the Indemnified Party, in form and substance reasonably satisfactory to the
Indemnified Party and its counsel, from all liability with respect to such
claim, action, suit
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or proceeding. If the Indemnitor assumes the defense of any claim, action, suit
or proceeding as provided in this Section 15.3, the Indemnified Party shall be
permitted to join in the defense thereof with counsel of its own selection and
at its own expense. If the Indemnitor shall not assume the defense of any claim,
action, suit or proceeding, the Indemnified Party may defend against such claim,
action, suit or proceeding in such manner as it may deem appropriate, provided
that an Indemnified Party shall not settle any claim, action, suit or proceeding
which would give rise to the Indemnitor's liability under its indemnity without
the prior written consent of the Indemnitor, which consent shall not be
unreasonably withheld.
Section 15.4. Limitations on Liability. Notwithstanding anything to the
contrary contained in this Article XV, no party shall be entitled to
indemnification pursuant to Section 15.1(b) or 15.2(d) until its aggregate
Damages shall be in excess of one hundred thousand dollars ($100,000), at which
time such party shall be entitled to indemnification for the full amount of its
Damages to the extent such Damages exceed such amount. In no event shall the
Damages payable by Fleet in the aggregate exceed the Purchase Price and in no
event shall any party be entitled to any incidental, consequential, special,
exemplary or punitive Damages.
Section 15.5. General.
(a) Each Indemnified Party shall be obligated in connection with any
claim for indemnification under this Article XV to use all commercially
reasonable efforts to obtain any insurance proceeds available to such
Indemnified Party with regard to the applicable claims. The amount which any
Indemnitor is or may be required to pay to any Indemnified Party pursuant to
this Article XV shall be reduced (retroactively, if necessary) by any insurance
proceeds or other amounts actually recovered (net of any direct relevant
collections costs) by or on behalf of such Indemnified Party in reduction of the
related Damages. If an Indemnified Party shall have received the payment
required by this Agreement from the Indemnitor in respect of Damages and shall
subsequently receive insurance proceeds or other amounts in respect of such
Damages, then such Indemnified Party shall promptly repay to the Indemnitor a
sum equal to the amount of such insurance proceeds or other amounts actually
received (net of any direct relevant collection costs). The amount of any
Damages arising from a breach by Seller of the representation set forth Section
6.7(a) due to the existence of a Lien which is not in respect of borrowed money
and does not materially impair the continued use and operation of any of the
Purchased Assets shall be limited to the lesser of (x) the cost of satisfying or
removing such Lien and (y) the actual impairment to the Purchased Asset caused
by the existence of such Lien.
(b) In addition to the requirements of paragraph (a) above, each
Indemnified Party shall be obligated in connection with any claim for
indemnification under this Article XV to use all commercially reasonable efforts
to mitigate Damages upon and after becoming aware of any event which could
reasonably be expected to give rise to such Damages.
(c) Subject to the rights of existing insurers of an Indemnified Party,
an Indemnitor shall be subrogated to any right of action which the Indemnified
Party may have against any other Person with respect to any matter giving rise
to a claim for indemnification from such Indemnitor hereunder.
(d) Except for the parties' rights to specific performance and
injunctive relief as described in Section 17.14, the indemnification provided in
this Article XV shall be the exclusive post-Closing Date remedy available to any
Indemnified Party with respect to any breach of any representation, warranty,
covenant or agreement made by Purchaser or Seller in this Agreement. The parties
hereto further acknowledge that no indemnity shall be payable for any Damages
with
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respect to any breach of representations or warranties in this Agreement if
prior to Closing such party receives a written notice from the other party (i)
disclosing such breach or breaches and (ii) informing such party that such
breach or breaches constitute a Material Adverse Effect.
(e) All indemnification payments under this Article XV shall be deemed
adjustments to the Purchase Price as defined in Section 3.1 of Article III.
Section 15.6. Survival. All representations, warranties and covenants
contained in or made pursuant to this Agreement shall survive the execution and
delivery of the Agreement and shall continue in full force and effect for a
period of one (1) year after the Closing Date and thereafter shall terminate,
except as to any claim for which written notice shall have been given prior to
such date; and provided, further, that all covenants or agreements which by
their terms are to be performed after the first anniversary of the Closing Date
shall survive until fully discharged.
ARTICLE XVI
POST-CLOSING MATTERS
Section 16.1. Further Assurances. From and after the Closing Date:
(a) Except as specifically provided otherwise herein, Seller shall
assist Purchaser in the orderly transition of the operations of the Business and
shall give such further assurances and execute, acknowledge and deliver all such
instruments as may be necessary and appropriate to effectively vest in Purchaser
title in the Purchased Assets in the manner contemplated hereby; provided that
Seller need not incur any out-of-pocket costs or expenses in connection with its
agreements in this Section 16.1 unless such costs or expenses are reimbursed by
Purchaser; and
(b) Except as specifically provided otherwise herein, Purchaser shall
give such further assurances to Seller and shall execute, acknowledge and
deliver all such acknowledgments and other instruments and take such further
action as may be necessary and appropriate to effectively relieve and discharge
Seller from any obligations remaining with respect to the Deposit Liabilities or
other Assumed Liabilities; provided that Purchaser need not incur any
out-of-pocket costs or expenses in connection with its agreements in this
Section 16.1 unless such costs or expenses are reimbursed by Seller.
Section 16.2. Access to and Retention of Books and Records. For a
period of six (6) years from the Closing Date, each party shall have
commercially reasonable access to any books and records of the other party
relating to the Purchased Assets and the Assumed Liabilities, and the requesting
party, at its own expense, may make copies and extracts when such copies and
extracts are required by regulatory authorities, for litigation purposes, or for
tax or accounting purposes; provided that in the event that as of the end of
such period, any tax year of Seller is under examination by any taxing
authority, such books and records shall be maintained by Purchaser until a final
determination of the tax liability of Seller for that year has been made. If
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such copies or extracts require use of a party's equipment or facilities, the
user shall reimburse the other party for all costs incurred, including without
limitation employee expenses.
Section 16.3. Deposit Histories. In case of any dispute with or inquiry
by any Customer whose Deposit Liability account is included in the Assumed
Liabilities, which dispute or inquiry relates to the servicing of such account
by Seller prior to the date for which a deposit history has been provided to
Purchaser, Seller will provide Purchaser, where available and to the extent
reasonably requested by Purchaser and not already provided to Purchaser,
information regarding the Deposit Liability account and copies of pertinent
documents or instruments with respect to such dispute or inquiry so as to permit
Purchaser to respond to such Customer within a period of time and in a manner
which would comply with standard banking practices and customs and all
applicable laws.
ARTICLE XVII
MISCELLANEOUS
Section 17.1. Expenses.
(a) Except as otherwise provided herein, Seller and Purchaser shall
each pay all of their own out-of-pocket expenses in connection with this
Agreement, including investment banking, appraisal, accounting, consulting,
professional and legal fees, if any, whether or not the transactions
contemplated by this Agreement are consummated.
(b) Purchaser shall pay all (i) recording, filing or other fees, cost
and expenses (including without limitation fees, costs and expenses for (w)
preparation of title commitments, abstracts or searches, surveys, inspections,
environmental audits or other investigations, (x) filing of any forms (including
without limitation tax forms) with governmental authorities in connection with
the transfer of the Real Property or Fixed Assets, (y) recording instruments or
documents evidencing any transfers of interests in real property), and (z) any
real property transfer stamps or taxes imposed on any transfers or interest in
Real Property and any fees or charges payable to landlords in connection with
Landlord Consents; provided that Seller shall pay all such fees, costs or
expenses with respect to matters described in (x), (y) and (z) which Seller is
required by law to pay and which are customarily paid by a seller of property in
the applicable jurisdiction; and (ii) costs and expenses relating to the
preparation, execution and recording of assignments of mortgages, financing
statements, notes, security agreements or other instruments applicable to or
arising in connection with the transfer, assignment or assumption of the
Purchased Assets and Assumed Liabilities including, but not limited to, fees
payable to the SBA in connection with the transfer to Purchaser of the SBA
Loans.
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Section 17.2. Trade Names and Trademarks.
(a) The Purchaser acknowledges and agrees that notwithstanding anything
to the contrary contained herein, it has, and following the Closing shall have,
no interest in or to the names "Fleet", "BankBoston", "Fleet Boston" or any
trade name, trademark or service mark, logo or corporate name of Seller, Fleet,
BankBoston or any of their respective Affiliates, including, without limitation,
the tradenames and trademarks listed on Schedule 17.2 hereto. After the Closing
Date, Enterprise shall not permit Purchaser or any of its Affiliates to use any
of the trade names, trademarks, service marks, logos or corporate names of
Seller, Fleet, BankBoston or any of their respective Affiliates including,
without, limitation, the tradenames and trademarks listed on Schedule 17.2
hereto.
(b) From and after the Closing, Purchaser agrees not to use any forms
or other documents bearing any name or logo of Seller, or the name or logo of
any Affiliate of Seller, without the prior written consent of Seller, which
consent may be denied or given in Seller's sole discretion. If such consent is
given, Purchaser hereby agrees that all forms or other documents to which such
consent relates will be stamped or otherwise marked in such a way that
identifies Purchaser as the party using the form or document.
Section 17.3. Termination; Extension of Closing Date. This Agreement
shall terminate and shall be of no further force or effect as between the
parties hereto, except as to the liability for actual direct damages due to a
willful breach of any material representation, warranty or covenant occurring or
arising prior to the date of termination, upon the occurrence of any of the
following:
(a) Upon mutual agreement of the parties;
(b) Upon written notice by either Purchaser or Seller to the other
parties immediately upon receipt by Purchaser or Seller of notice from any
governmental authority that Purchaser or Seller, as the case may be, has been
denied any Regulatory Approval by Final order;
(c) Upon written notice by either Purchaser or Seller to the other
parties, if the Closing has not occurred within one (1) year following the
closing of the transactions contemplated by the Merger Agreement;
(d) By either the Purchaser or Seller (provided that the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material breach
of any of the representations, warranties, covenants or other agreements set
forth in this Agreement on the part of the other party, which breach is not
cured within thirty (30) days following written notice to the party committing
such breach, or which breach, by its nature, cannot be cured prior to the
Closing; provided, however, that Purchaser shall not have the right to terminate
this Agreement pursuant to this Section 17.3(d) unless the breach of
representation, warranty, covenant, or other agreement together with all other
such breaches would have a Material Adverse Effect; or
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(e) By Seller upon written notice if Purchaser or Enterprise shall have
breached the representation contained in Section 7.7 hereof or shall not have
satisfied its obligation under Section 9.8 hereof; or
(f) By Seller at any time by notice to Purchaser if the Merger
Agreement is terminated for any reason.
Section 17.4. Modification and Waiver. No modification of any provision
of this Agreement shall be binding unless in writing and executed by the party
or parties sought to be bound thereby. Performance of or compliance with any
covenant given herein or satisfaction of any condition to the obligations of
either party hereunder may be waived by the parties to whom such covenant is
given or whom such condition is intended to benefit, except as otherwise
provided in this Agreement or to the extent any such condition is required by
law; provided, that, any such waiver must be in writing.
Section 17.5. Binding Effect; Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that neither
this Agreement nor any rights, privileges, duties or obligations of the parties
hereto may be assigned without the prior written consent of the other parties
hereto.
Section 17.6. Confidentiality.
(a) From and after the date hereof, the parties hereto and their
Affiliates shall keep confidential the terms of this Agreement and the
negotiations relating hereto and all documents and information obtained by a
party from another party in connection with the transactions contemplated
hereby, except (i) to the extent this Agreement and such negotiations need to be
disclosed to obtain a Regulatory Approval, (ii) for disclosures made in
accordance with the terms of this Agreement, and (iii) to the extent required by
applicable law, regulations or rules of any applicable national securities
exchange. This section shall survive any termination of this Agreement.
(b) Except as otherwise required by law, regulations or rules,
including the rules of any self regulatory organization (as defined in the
Securities Exchange Act of 1934, as amended), the parties hereto shall each
furnish to the other the text of all notices and communications, written or
oral, proposed to be sent by the furnishing party regarding the transactions
contemplated hereby. Except as otherwise required by law, regulations or rules
of the National Association of Securities Dealers or any national stock
exchange, the furnishing party shall not send or transmit such notices or
communications or otherwise make them public unless and until the consent of the
other parties is received, which consent shall not be unreasonably withheld or
delayed. This section shall survive any termination of this Agreement.
(c) Purchaser and Seller shall issue mutually agreed upon press
releases on the date of this Agreement and on the Closing Date or the first
Business Day thereafter.
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Section 17.7. Entire Agreement; Governing Law. This Agreement, together
with the exhibits and schedules attached hereto and made a part hereof, contains
the entire agreement between the parties hereto with respect to the transactions
covered and contemplated hereunder, and supersedes all prior agreements or
understandings between the parties hereto relating to the subject matter hereof,
provided that the terms of the Confidentiality Agreement, to the extent not
inconsistent with the terms hereof, shall continue to apply. This Agreement
shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts (without reference to conflicts or choice of law
provisions).
Section 17.8. Consent to Jurisdiction; Waiver of Jury Trial. EACH PARTY
HERETO, TO THE EXTENT IT MAY LAWFULLY DO SO, HEREBY SUBMITS TO THE JURISDICTION
OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS, AS WELL AS TO THE JURISDICTION
OF ALL COURTS FROM WHICH AN APPEAL MAY BE TAKEN OR OTHER REVIEW SOUGHT FROM THE
AFORESAID COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING
ARISING OUT OF SUCH PARTY'S OBLIGATIONS UNDER OR WITH RESPECT TO THIS AGREEMENT
OR ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY (OTHER
THAN THE CONFIDENTIALITY AGREEMENT), AND EXPRESSLY WAIVES ANY AND ALL OBJECTIONS
IT MAY HAVE AS TO VENUE IN ANY OF SUCH COURTS.
EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONCERNED WITH THIS AGREEMENT OR
ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY. NO PARTY
HERETO, NOR ANY ASSIGNEE OR SUCCESSOR OF A PARTY HERETO SHALL SEEK A JURY TRIAL
IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE BASED
UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE AGREEMENTS, INSTRUMENTS OR
DOCUMENTS CONTEMPLATED HEREBY. NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH
ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS HAVE BEEN
FULLY DISCUSSED BY THE PARTIES HERETO, AND THE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HAS IN ANYWAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY
THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
SECTION 17.9. Waiver of Certain Damages. EACH OF THE PARTIES HERETO TO
THE FULLEST EXTENT PERMITTED BY LAW IRREVOCABLY WAIVES ANY RIGHTS THAT THEY MAY
HAVE TO PUNITIVE, SPECIAL, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES IN
RESPECT OF ANY LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY
RELATED AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR
ACTIONS OF ANY OF THEM RELATING THERETO.
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Section 17.10. Severability. In the event that any provision of this
shall be held invalid, illegal, or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions contained in this
Agreement shall not in any way be affected or impaired thereby, and this
Agreement shall otherwise remain in full force and effect.
Section 17.11. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties hereto.
Section 17.12. Notices. All notices, consents, requests, instructions,
approvals, waivers, stipulations and other communications provided for herein to
be given by one party hereto to the other party shall be deemed validly given,
made or served, if in writing and delivered personally or sent by certified
mail, return receipt requested, nationally recognized overnight delivery
service, or facsimile transmission, if to Seller or to Fleet addressed to:
Fleet Financial Group, Inc.
One Federal Street
37th Floor
Boston, MA 02110
Attention: Brian T. Moynihan
Facsimile number: (617) 346-0137
and
BankBoston Corporation
100 Federal Street
Boston, MA 02110
Attention: Peter J. Manning
Facsimile number: (617) 434-7825
with copies to-:
William C. Mutterperl, Esq.
Executive Vice President, General Counsel and Secretary
Fleet Financial Group, Inc.
One Federal Street
37th Floor
Boston, MA 02110
Facsimile number: (617) 346-0131
and to:
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Gary A. Spiess, Esq.
General Counsel
BankBoston Corporation
100 Federal Street
Boston, MA 02110
Facsimile number: (617) 434-6525
and to:
V. Duncan Johnson, Esq.
Edwards & Angell, LLP
2800 BankBoston Plaza
Providence, RI 02903-2499
Facsimile number: (401) 276-6625
and to:
Norman J. Shachoy, Esq.
Neal J. Curtin, Esq.
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
Facsimile number: (617) 951-8736
and if to Purchaser addressed to:
George L. Duncan
Chairman and Chief Executive Officer
Enterprise Bank and Trust Company
P.O. Box 908
Lowell, MA 01852
Facsimile Number: (978) 934-9726
with a copy to:
Stephen J. Coukos, Esq.
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Facsimile Number: (617) 338-2880
Notice by certified mail shall be deemed to be received three (3)
Business Days after mailing of the same. Either party may change the persons or
addresses to whom or to which notices may be sent by written notice to the
others.
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Section 17.13. Interpretation. Article titles, headings to sections and
any table of contents are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation hereof. The
Schedules and Exhibits referred to herein shall be construed with and as an
integral part of this Agreement to the same extent as if they were set forth
verbatim herein. As used herein, "include", "includes" and "including" are
deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import; "writing", "written" and
comparable terms refer to printing, typing , lithography and other means of
reproducing words in a visible form; references to a person are also to its
successors and assigns; except as the context may otherwise require, "hereof",
"herein", "hereunder" and comparable terms refer to the entirety hereof and not
to any particular article, section or other subdivision hereof or attachment
hereto; references to any gender include the other; except as the context may
otherwise require, the singular includes the plural and vice versa; references
to any agreement or other document are to such agreement or document as amended
and supplemented from time to time; references to "Article", "Section" or
another subdivision or to an "Exhibit" or "Schedule" are to an article, section
or subdivision hereof or an "Exhibit" or "Schedule". The parties acknowledge
that each party and its counsel have reviewed and revised this Agreement and
that the normal rule of construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be employed in the
interpretation, construction and enforcement of this Agreement or any amendment,
schedule or exhibit hereto.
Section 17.14. Specific Performance. The parties hereto acknowledge
that monetary damages could not adequately compensate either party hereto in the
event of a breach of this Agreement by the other, that the non-breaching party
would suffer irreparable harm in the event of such breach and that the
non-breaching party shall have, in addition to any other rights or remedies it
may have at law or in equity, specific performance and injunctive relief as a
remedy for the enforcement hereof.
Section 17.15. No Third Party Beneficiaries. The parties hereto intend
that this Agreement shall not benefit or create any right or cause of action in
or on behalf of any person other than the parties hereto. No future or present
employee or customer of either of the parties nor their affiliates, successors
or assigns or other person shall be treated as a third party beneficiary in or
under this Agreement.
Section 17.16. Survival. Except for Articles XV and XVI and Sections
17.1 and 17.2 and Sections 17.4 through 17.16 no representations, warranties,
covenants or agreements made by the parties herein shall survive termination of
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, by their duly authorized representatives, as of the day and year first
above written.
FLEET FINANCIAL GROUP, INC.
By: /s/ H. Jay Sarles
Name: H. Jay Sarles
Title: Vice Chairman
FLEET NATIONAL BANK
By: /s/ H. Jay Sarles
Name: H. Jay Sarles
Title: Vice Chairman
ENTERPRISE BANK AND TRUST COMPANY
By: /s/ George L. Duncan
Name: George L. Duncan
Title: Chairman and Chief Executive Officer
Enterprise Bancorp, Inc.
By: /s/ George L. Duncan
Name: George L. Duncan
Title: Chairman and Chief Executive Officer
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EXHIBITS AND SCHEDULES TO PURCHASE AND
ASSUMPTION AGREEMENT
by and among
FLEET FINANCIAL GROUP, INC.,
FLEET NATIONAL BANK,
ENTERPRISE BANK & TRUST COMPANY,
and
ENTERPRISE BANCORP INC.
Dated as of September 22, 1999
<PAGE>
EXHIBIT A
Terms of Fleet Boston Divestiture Severance Plan
SEPARATION PROGRAM DESCRIPTION
The Separation Program includes three components: a three-layered cash benefit
payable as salary continuation; continued group medical and life insurance
through the salary continuation period; and the Transition Assistance Program.
PART I - CASH BENEFIT
Transferred Employees who are eligible for benefits will receive a Cash Benefit,
payable as salary continuation that includes three parts: (1) basic severance;
(2) enhanced severance; and (3) merger supplement. The details are outlined
below:
BASIC SEVERANCE
For Transferred Employees, the Basic Severance Amount is two weeks base pay for
each full year of service with a four-week minimum. Partial years of service
will be prorated with each full month of service counted as one-twelfth of a
year.
ENHANCED SEVERANCE
For Transferred Employees, the Enhanced Severance Amount is calculated on an
employee's base pay in effect on the date of the job elimination or termination,
as follows:
ANNUAL BASE PAY ENHANCED SEVERANCE AMOUNT
Less than $50,000 10 weeks
$50,000 to less than $100,000 20 weeks
$100,000 or greater 30 weeks
MERGER SUPPLEMENT
For non-exempt Transferred Employees a Merger Supplement equal to an additional
4.3 weeks of base salary will be paid. For exempt Transferred Employees a merger
supplement equal to an additional 8.7 weeks of base salary will be paid.
The minimum non-exempt benefit is 18.3 weeks and the maximum non-exempt benefit
is 82.3 weeks. The minimum exempt benefit is 22.7 weeks and the maximum exempt
benefit is 86.7 weeks.
<PAGE>
The Cash Benefit component will continue, even if the Transferred Employee
obtains a job outside of Purchaser during his/her salary continuation period.
BASE PAY
Base pay is regular weekly base salary or hourly rate times employee's regularly
scheduled hours per week, and excludes shift differential, overtime, incentive
pay, bonus or commissions.
NOTICE PERIOD
A Transferred Employee must work through his/her notice period to receive
severance benefits. If a Transferred Eligible employee is given less than two
weeks' notice of termination of employment and is eligible under this Plan, such
employee will receive additional separation pay equal to the difference between
the amount of notice received and two weeks.
CALCULATION OF SERVICE
Service is measured in full calendar months. Transferred Employees who have
never experienced a break in service receive credit for service from their
original hire date with Fleet or BankBoston, or their affiliates and
predecessors which includes service with an employer acquired by Fleet or
BankBoston. If a Transferred Employee from an acquired organization had prior
service with Fleet or BankBoston, credit for Fleet or BankBoston service will be
granted.
PART II - GROUP MEDICAL AND LIFE INSURANCE
MEDICAL INSURANCE
Transferred Employees who are participants in a Purchaser sponsored medical plan
at the time of notice of termination may continue such participation on the
following basis:
Transferred Employees may elect to continue to participate in a Purchaser
sponsored group medical plan by paying the prevailing active employee subsidized
rates (the full premium less an amount equal to Purchaser's subsidy attributable
to the medical coverage level selected that would have been allocated to them
had termination not occurred) for the period severance is paid or until covered
by another employer plan (as an employee or otherwise), whichever occurs first.
Transferred Employees may elect to continue to participate in Purchaser's
sponsored group medical plan beyond the period described above, provided they
are not covered by another group plan, by paying the full cost of the group plan
premium (both employee and employer paid portion) plus a 2% administration fee
for a period not to exceed the maximum COBRA continuation period measured from
the Transferred Employee's severance end date.
<PAGE>
GROUP LIFE INSURANCE
Transferred Employees may elect to continue their existing level of coverage in
Purchaser's group life insurance plan by paying the prevailing active employee
subsidized rates (full premium less an amount equal to Purchaser's subsidy that
would have been allocated to them had termination not occurred, except if the
result of this calculation produces a subsidized rate of zero or less, no
premium will be due) for the period severance is paid.
PART III - TRANSITIONAL ASSISTANCE PROGRAMS
Transferred Employees may elect to participate in transition assistance programs
such as outplacement services, external job retraining, and a choice of one of
several transitional options including non-competitor internships, non-profit
stipend, and entrepreneurial support.
This exhibit is intended to serve merely as a guideline to highlight relevant
provisions of the Fleet Boston Divestiture Severance Plan as it relates to
divested employees. It is not intended to serve as a summary plan description.
If any inconsistencies between this exhibit and the summary plan description or
plan document exist, the summary plan description or plan document will control.
<PAGE>
EXHIBIT B
Form of Purchaser's Letter of Credit
ENTERPRISE BANK & TRUST COMPANY
222 Merrimack Street
Lowell, MA 01852
Standby Letter of Credit No. [ ]
Date of Issue: [ ], 2000
Beneficiary: Fleet National Bank
One Federal Street
Boston, MA 02110
Amount/Currency: Up to USD [ ]
Date and Place of Expiry: [ ], 2001
At:[ ]
In accordance with our undertaking in that certain Purchase and Assumption
Agreement dated September 22, 1999, among you, us and others (the "Purchase
Agreement"), we hereby open our Standby Letter of Credit Number [ ] in your
favor. The amount of this credit shall be automatically reduced by (i) the
available amount of any Scheduled Credit (as defined below) as to which the
beneficiary thereof (or its transferee) has not presented a drawing complying
with the terms of such Scheduled Credit on or before such Scheduled Credit's
expiry date, such reduction to occur on such expiry date, (ii) amounts
previously paid under this credit, amounts for which you have received
reimbursement under a Reimbursement Agreement (as defined in the Purchase
Agreement) and amounts otherwise paid directly to you pursuant to Section 12.11
(d) of the Purchase Agreement, such reduction to occur on the date you receive
such payment or reimbursement; provided, however, that no automatic reduction
shall apply under this subsection (ii) to payments by us, reimbursements under a
Reimbursement Agreement or draws by you hereunder relating to any Scheduled
Credit which by its terms reinstates as to the amount available thereunder and
(iii) the available amount of any Scheduled Credit as to which the beneficiary
has unconditionally released you from all obligations thereunder.
Credit available with: [ ] by payment of your draft(s) at sight drawn on [ ].
Drafts must be accompanied by a written statement, signed by your authorized
officer reading as follows:
"The amount of this drawing, $____________ (insert amount), is due to us as we
have paid the amounts drawn hereunder on account of the Scheduled Credits in
compliance with the Purchase Agreement, and have failed to receive reimbursement
from you as agreed under the Purchase Agreement with respect to the following
Scheduled Credits:
<PAGE>
Letter of Credit No./ Applicant Drawing
Acceptance No. Name Amount
(List Letters of Credit/Acceptances Here)"
Other Conditions:
In accordance with the Purchase Agreement, this letter of credit covers
the following letters of credit/banker's acceptances issued by you (the
"Scheduled Credits"):
Letter of Credit/ Available Amount Expiry
Acceptance No. (US $ Balance) Applicant Date
[ ]
Grand Total: USD[ ]
Partial drawings are permitted.
Communications with respect to this letter of credit shall be in writing and
shall be addressed to:
[ ]
[ ]
[ ]
[ ]
This credit shall be automatically extended for an additional period of 90 days
from the present or each future expiration date unless the amount of this credit
shall have been reduced to zero.
Except as expressly otherwise stated herein, this letter of credit is subject to
the International Standby Practices 1998, International Chamber of Commerce
Publication No. 590, and engages us in accordance with its terms.
<PAGE>
ENTERPRISE BANK & TRUST COMPANY
By___________________________________
Its Authorized Officer
<PAGE>
EXHIBIT C
Form of Quit Claim Deed
FLEET NATIONAL BANK, a bank organized under the laws of the United
States of America, having a usual place of business at One Federal Street,
Boston, Massachusetts 02110, [OR THE NAME OF THE APPROPRIATE ENTITY HOLDING
TITLE] in connection with that certain Purchase and Assumption Agreement dated
September 22, 1999 by and among Enterprise Bank & Trust Company, a Massachusetts
trust company, with its principal office at 222 Merrimack Street, Lowell,
Massachusetts 01852, Enterprise Bancorp Inc., a Massachusetts corporation with
its principal office at 222 Merrimack Street, Lowell, Massachusetts 01852, Fleet
Financial Group, Inc., a Rhode Island corporation and Fleet National Bank, a
national banking association, for consideration of ________ DOLLARS
($___________) hereby grants to Enterprise Bank & Trust Company, with QUITCLAIM
COVENANTS:
That certain parcel of land with all buildings and improvements thereon
situated in _______________ in the County of ________________ and
Commonwealth of Massachusetts, bounded and described as follows:
See Exhibit A attached hereto and incorporated herein.
Subject to all easements, restrictions and encumbrances of record, if
any, and to real estate assessments not yet due and payable.
For our title see _________________ Registry of Deeds Book ____, Page ____.
Property Address: _____________________________, Massachusetts
This Deed does not convey all or substantially all of the assets of the
Grantor.
Executed as a sealed instrument as of this ____ day of ________, ____.
GRANTOR
________________________________
By:
Name:____________________
Title:___________________
[SEAL]
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
__________________, ss ___________, ____
Then personally appeared the above-named ________________,
_________________ of __________________, and acknowledged the foregoing to be
his/her free act and deed on behalf of said entity before me,
Notary Public
Print Name: _____________________
My Commission Expires:
[SEAL]
<PAGE>
EXHIBIT A
Legal Description
<PAGE>
EXHIBIT D
Form of Bill of Sale and Assignment
This BILL OF SALE AND ASSIGNMENT is made and entered into as of
___________, 2000, by Fleet National Bank, a national banking association
("Seller"), and Enterprise Bank & Trust Company, a Massachusetts trust company
with its principal offices at 222 Merrimack Street, Lowell, Massachusetts 01852
("Purchaser"). Capitalized terms used herein which are defined in that certain
Purchase and Assumption Agreement dated as of September 22, 1999 among Fleet
Financial Group, Inc. ("Fleet"), Seller, Enterprise Bancorp Inc. and Purchaser
(the "Agreement"), shall have the same meanings herein as therein unless defined
herein or the context requires otherwise herein.
WITNESSETH:
WHEREAS, pursuant to the Agreement, among other matters, Seller has
agreed to transfer the Purchased Assets to Purchaser.
NOW, THEREFORE, for good and valuable consideration paid by Purchaser
to Seller at or before the execution of this Bill of Sale and Assignment, the
receipt and sufficiency of which are hereby acknowledged, Seller by this Bill of
Sale and Assignment does hereby convey, grant, bargain, sell, transfer, set
over, assign, alienate, remise, release, deliver and confirm unto Purchaser, its
successors and assigns, forever, all of Seller's right, title, interest in and
to the Purchased Assets as of the close of business on the date hereof.
TO HAVE AND TO HOLD all and singular the Purchased Assets unto
Purchaser, its successors and assigns, to its and their own use and enjoyment
forever.
SELLER FURTHER COVENANTS AND AGREES AS FOLLOWS:
A. This Bill of Sale and Assignment shall not constitute an assignment in
whole or in part of any Purchased Asset if an attempted assignment of
the same without the consent of any other party thereto or with an
interest therein would constitute a breach thereof or in any way affect
the rights of Seller thereunder or be contrary to applicable law. If
any such consent is not obtained with respect to any such Purchased
Asset, then Seller, its respective successors and assigns, shall act as
Purchaser's agent in order to obtain for Purchaser, its successors and
assigns, the benefits thereunder.
B. This Bill of Sale and Assignment is given pursuant to the provisions of
the Agreement, and, except as herein otherwise provided, the transfer
of the Purchased Assets hereunder is made subject to the terms and
provisions of the Agreement.
<PAGE>
C. This Bill of Sale and Assignment is only for the benefit of the
Purchaser and its successors and assigns and shall not be relied upon
by, or inure to the benefit of, any other party.
D. Any notice, request or other document to be given hereunder or in
connection herewith to any party hereto shall be given in the manner
described in the Agreement.
E. This Bill of Sale and Assignment shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, Seller has duly executed and delivered this Bill of
Sale as of the day and year first above written.
Seller:
FLEET NATIONAL BANK
By:___________________________
Title:
<PAGE>
EXHIBIT E
Form of Assignment and Assumption Agreement
This ASSIGNMENT and ASSUMPTION AGREEMENT ("Agreement") is made and
entered into as of [ ], 2000 by and among Enterprise Bancorp Inc., a
Massachusetts corporation, Enterprise Bank & Trust Company, a Massachusetts
trust company ("Purchaser") and Fleet National Bank, a national banking
association ("Seller"). Capitalized terms used herein which are defined in that
certain Purchase and Assumption Agreement dated as of September 22, 1999 among
Fleet Financial Group, Inc., Seller, Enterprise Bancorp Inc. and Purchaser (the
"Purchase and Assumption Agreement"), shall have the same meanings herein as
therein unless defined herein or the context requires otherwise herein.
W I T N E S S E T H
WHEREAS, pursuant to the terms of the Purchase and Assumption Agreement,
Purchaser agreed to assume certain liabilities and obligations of Seller.
NOW, THEREFORE, in consideration of the mutual agreements contained in
the Purchase and Assumption Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
For value received, Seller hereby assigns, and Purchaser hereby assumes
and agrees to perform and discharge, the Assumed Liabilities.
With respect to the assumption of any Assumed Liability or acceptance of
any right, title, interest or obligation, to any Assumed Liability as to which a
consent is required for the assignment and assumption thereof, this Agreement
shall not constitute an assignment, transfer or sublicense (or attempted
assignment, transfer or sublicense) thereof from Seller to Purchaser
<PAGE>
unless and until such consent is obtained, whereupon this instrument shall
automatically and without further action by any party be effective to assign and
transfer such Assumed Liability from Seller to Purchaser in accordance with all
of the terms and conditions of the Agreement, such assignment and transfer (and
the assumption thereof by Purchaser) to be effective as of the date hereof.
With respect to any Assumed Liability as to which a consent to assignment
is not in full force and effect on the date hereof, Purchaser shall perform all
duties and obligations of Seller thereunder pending the receipt of such consent,
and Seller shall make available to Purchaser all the benefits thereof to the
maximum extent possible during such period.
The Assumed Liabilities being assumed pursuant to this Agreement are
subject to the terms and conditions of the Purchase and Assumption Agreement.
Notwithstanding anything to the contrary set forth herein, if there is any
conflict between the terms and conditions of this Agreement and the terms and
conditions of the Purchase and Assumption Agreement, the terms and conditions of
the Purchase and Assumption Agreement shall control.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns and shall not be
relied upon, or inure to the benefit of, any other party.
Any notice, request or other document to be given hereunder or in
connection herewith to any party hereto shall be given in the manner described
in the Agreement.
This Agreement shall be governed by, construed and enforced in accordance
with the laws of the Commonwealth of Massachusetts.
<PAGE>
IN WITNESS WHEREOF, each of the parties by their respective duly
authorized officers has caused this instrument to be executed as of the date
first above written.
Purchaser:
ENTERPRISE BANCORP INC.
By:___________________________
Title:
ENTERPRISE BANK & TRUST COMPANY
By:___________________________
Title:
Seller:
FLEET NATIONAL BANK
By:___________________________
Title:
<PAGE>
EXHIBIT F
Form of Lease Assignment
KNOW THAT, in connection with that certain Purchase and Assumption
Agreement dated September 22, 1999 by and among Enterprise Bank & Trust Company,
a Massachusetts trust company, Enterprise Bancorp Inc., a Massachusetts
corporation, Fleet Financial Group, Inc., a Rhode Island corporation and Fleet
National Bank, a national banking association ("Assignor"), Assignor hereby
assigns unto Enterprise Bank & Trust Company ("Assignee"), for good and valuable
consideration paid by Purchaser, without recourse, all of Assignor's right,
title and interest as tenant (including, without limitation, renewal rights,
rights of first refusal and options to purchase, if any) under a certain lease
more particularly described on Exhibit A attached hereto, covering premises
described on such Exhibit and in such lease (the "Lease").
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns
from and after the close of business as of the date hereof (the "Closing Date"),
subject to the terms, covenants, conditions and provisions set forth in the
Lease.
Assignee hereby assumes, effective as of the Closing Date, the
performance of all terms, covenants, conditions and obligations of the Lease to
be performed by Assignor under the Lease. Assignee hereby agrees that after the
Closing Date it is liable for all obligations occurring after the Closing Date
with respect to the Lease.
All rent and security deposits paid or payable under the Lease shall be
adjusted between Assignor and Assignee as of the date hereof in accordance with
Section 3.5 of the Agreement.
Assignee hereby agrees that any and all options to extend the term of
the lease or enlarge the area of the leased premises shall not be exercised by
the Assignee unless and until Assignor is released from any and all liability by
the landlord specified in the lease.
IN WITNESS WHEREOF, Assignor and Assignee have executed this agreement
as of the ____ day of _____________, 2000.
FLEET NATIONAL BANK ENTERPRISE BANK & TRUST
COMPANY
By:___________________________ By:___________________________
Title: Title:
<PAGE>
STATE OF MASSACHUSETTS
COUNTY OF _______________, SS _______________, 2000
Personally appeared the above named [Name], [Title], of Fleet National
Bank and acknowledged before me the foregoing instrument to be his/her free act
and deed in his/her said capacity and the free act and deed of said corporation.
Notary Public
My Commission Expires:
Print or type name as signed
STATE OF MASSACHUSETTS
COUNTY OF _______________, SS _______________, 2000
Personally appeared the above named [Name], [Title], of Enterprise Bank
& Trust Company and acknowledged before me the foregoing instrument to be
his/her free act and deed in his/her said capacity and the free act and deed of
said corporation.
Notary Public
My Commission Expires:
Print or type name as signed
<PAGE>
EXHIBIT A
Location: [ ]
Lease by and between [ ]
<PAGE>
EXHIBIT G
Form of Seller's Officer's Certificate
CERTIFICATE OF OFFICER
FLEET NATIONAL BANK
I, [ ], being the duly elected [ ] of Fleet National Bank ("Seller"),
do hereby certify, pursuant to Section 5.2(f) of that certain Purchase and
Assumption Agreement among Fleet Financial Group, Inc. ("Fleet"), Seller,
Enterprise Bancorp Inc. and Enterprise Bank & Trust Company ("Purchaser") dated
as of September 22, 1999 (the "Agreement"), that:
1. All of the covenants and other agreements required by the
Agreement to be complied with and performed by [Seller or
Fleet] on or before the date hereof have been duly complied
with and performed in all material respects.
2. The representations and warranties made by [Seller and/or
Fleet] in the Agreement and in any certificate or other
document delivered pursuant to the provisions thereof or in
connection with the transactions contemplated thereby are true
and correct in all material respects on and as of the date
hereof, with the same force and effect as though such
representations and warranties had been made on the date
hereof, provided, however, that the representations and
warranties made by [Seller and/or Fleet] in the Agreement or
in any certificate or other document delivered pursuant to the
provisions thereof shall be deemed to be true and correct in
all material respects on and as of the date hereof, with the
same force and effect as though made on the date hereof,
unless the failure to be so true and correct would have a
Material Adverse Effect.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings given to them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed by a duly authorized officer on this ______ day of _____________, 2000.
FLEET NATIONAL BANK
_______________________
By:
Title:
<PAGE>
EXHIBIT H
Form of Seller's Power of Attorney
KNOW ALL BY THESE PRESENTS, that in connection with the transfer on
___________, 2000, (the "Closing"), of certain Loans by Fleet National Bank
("Seller"), to Enterprise Bank & Trust Company ("Purchaser"), in accordance with
that certain Purchase and Assumption Agreement, dated as of September 22, 1999,
by and among Enterprise Bank & Trust Company, a Massachusetts trust company,
Enterprise Bancorp Inc., a Massachusetts corporation, Fleet Financial Group,
Inc., a Rhode Island corporation and Fleet National Bank, a national banking
association (the "Agreement"), Seller has made, constituted and appointed and
hereby irrevocably makes, constitutes and appoints each of
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
as its true and lawful attorneys-in-fact for Fleet National Bank's name, place
and stead, with full power of substitution ("Representative(s)"), as provided
herein below, and authorizes and empowers each of them to fulfill the role of
Representative hereunder; and each of them hereby accepts such appointment as
evidenced by the signature of each below. Capitalized terms used herein which
are defined in the Agreement shall have the same meanings herein as therein
unless otherwise defined herein.
The Representatives are hereby empowered to take the following limited
actions: (i) to endorse over to Purchaser any and all notes, installment sale
contracts, reimbursement agreements and other evidences of indebtedness given by
Customers in connection with the Loans, utilizing for such endorsement such
stamps or other devices as may be furnished to the Representatives and/or
approved by Seller for the purpose of such endorsement, (ii) to execute and
record assignments to Purchaser of any and all other documents, agreements and
materials relating to the Loans, by signing appropriate instruments of
assignment and transfer on behalf of Seller as may be approved by Purchaser,
which approval shall not be unreasonably withheld or delayed, including affixing
facsimile signature(s) to such instruments, if so approved, (iii) to execute,
deliver and record, for and on behalf of Seller, any and all documents necessary
to
<PAGE>
effectuate the full and proper discharge after the Closing of mortgages and
other collateral relating to the Loans as transferred by Seller to Purchaser at
Closing, and (iv) to do and perform any and all acts for and on behalf of Seller
which may be necessary or desirable to complete such transfers and discharges as
are referred to in clauses (i), (ii) and (iii) above; provided, however, that
the authority of the Representatives and each of them to perform any or all the
actions specified in the preceding clauses (i) through (iv) pursuant to this
Limited Power of Attorney shall expire at 11:59 p.m.on [6 months following the
Closing Date].
Seller ratifies and confirms, as its own act, all that the
Representatives shall do or cause to be done pursuant to the foregoing
provisions. This grant of a Limited Power of Attorney in favor of the
Representatives is coupled with an interest and is irrevocable.
Seller hereby agrees to indemnify and hold harmless the Representatives
and each of them from and against any and all loss, liability or expense
incurred by them or on their behalf arising out of or in connection with their
serving as Representatives hereunder, including all reasonable costs and
expenses incurred by the Representatives in defending against any claim of
liability in connection herewith, except for any such loss, liability or expense
resulting from bad faith, willful misconduct or gross negligence on the part of
the Representative or any of them.
IN WITNESS WHEREOF, the undersigned have caused this Limited Power of
Attorney to be executed as of this ______ day of _________ 2000.
FLEET NATIONAL BANK
By:_________________________________
[ ]
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
<PAGE>
STATE OF MASSACHUSETTS
COUNTY OF _______________, SS _______________, 2000
Personally appeared the above named [Name], [Title], of Fleet National
Bank, and acknowledged before me the foregoing instrument to be his/her free act
and deed in his/her said capacity and the free act and deed of said corporation.
Notary Public
My Commission Expires:
Print or type name as signed
<PAGE>
EXHIBIT I
Form of Purchaser Officer's Certificate
CERTIFICATE OF OFFICER
[ ]
I, [ ], being the duly elected [ ] of [Enterprise Bank & Trust Company
or Enterprise Bancorp Inc.], do hereby certify, pursuant to Section 5.3(d) of
that certain Purchase and Assumption Agreement among Fleet Financial Group, Inc.
("Fleet"), Fleet National Bank ("Seller"), Enterprise Bancorp Inc. and
Enterprise Bank & Trust Company ("Purchaser") dated as of September 22, 1999
(the "Agreement"), that:
1. All of the covenants and agreements required by the Agreement
to be complied with and performed by [Purchaser or Enterprise
Bancorp Inc.] on or before the date hereof have been duly
complied with and performed in all material respects.
2. The representations and warranties made by [Purchaser and/or
Enterprise Bancorp Inc.] in the Agreement or in any
certificate or other document delivered pursuant to the
provisions thereof or in connection with the transactions
contemplated thereby are true and correct in all material
respects, on and as of the date hereof, with the same force
and effect as though such representations and warranties had
been made on the date hereof; provided, however, that the
representations and warranties of [Purchaser or Enterprise
Bancorp Inc.] in the Agreement or in any certificate or other
document delivered pursuant to the provisions thereof shall be
deemed to be true and correct in all material respects on and
as of the date hereof, with the same force and effect as
though made on the date hereof, unless the failure to be so
true and correct would have a material adverse effect on
Purchaser's ability to consummate the transactions
contemplated by the Agreement;
Capitalized terms used herein and not otherwise defined herein shall
have the meanings given to them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed by a duly authorized officer on the ___ day of ________________ 2000.
ENTERPRISE BANK & TRUST COMPANY
------------------------------
By:
Title:
<PAGE>
EXHIBIT J
Form of Use and Occupancy Agreement
This Use and Occupancy Agreement ("Agreement") is made as of
___________, 2000 by and between [ ], having a place of business at [ ]
("Tenant") and Enterprise Bank & Trust Company with an address of 222 Merrimack
Street, Lowell, Massachusetts 01852 ("Occupant").
WHEREAS, Tenant is the tenant pursuant to a lease ("Lease") between
_____________________ ("Landlord") and Tenant, dated ______________, 19___, of
the following described premises:
(collectively, hereinafter "Premises"); and
WHEREAS, Occupant has requested permission of Tenant to use and occupy
the Premises;
WHEREAS, Tenant has not obtained Landlord's consent to an assignment or
sublet of the Lease;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Tenant agrees to permit Occupant to use and occupy the Premises and
Occupant agrees to occupy the Premises upon the following terms and conditions:
1. Occupant shall have the exclusive right to use and occupy the
Premises for the operation of a banking facility, including without limitation
retail banking and automatic teller machines, and for any other lawful
purpose(s) consistent with the terms of the Lease.
2. The term of this Agreement ("Term") shall commence on _____________,
2000 and shall expire on the earlier of the date upon which the term of the
Lease expires or the interest of Tenant in the Lease is terminated for any
reason whatsoever.
3. During the Term Occupant shall pay to Tenant as an occupancy charge
("Occupancy Charge") for its use and occupancy of the Premises the following
amounts, payable in equal monthly installments in advance on the first day of
each calendar month:
Period Annual Occupancy Charge Monthly Occupancy Charge
<PAGE>
Occupancy charges for periods of less than a calendar month at the commencement
of the Term shall be prorated.
4. During the Term Occupant shall reimburse Tenant promptly upon
receipt of an invoice for the amounts actually paid by Tenant (a) on account of
municipal taxes on the Premises and (b) for the cost of fuel, water and sewer
service relating to the Premises. All of such amounts shall be prorated for any
partial calendar and tax years falling within the Term.
5. During the Term Occupant shall (a) pay the cost of the electricity
consumed by it within the Premises and for lighting the parking area serving the
Premises and (b) and all other costs related to its occupancy of the Premises.
6. During the Term Occupant shall repair and maintain the Premises in
as good condition as on the date of the execution of this Agreement, reasonable
wear and tear excepted, and shall not permit the Premises to be overloaded,
damaged, stripped or defaced nor suffer any waste.
7. Occupant shall not make any modifications, improvements or
alterations to the Premises during the term of this Agreement, without the prior
written consent of Tenant.
8. Occupant shall use and occupy the Premises at its sole risk. All
personal property stored or kept in the Premises shall be at Occupant's sole
risk. Occupant shall hold Tenant harmless and indemnify Tenant against any and
all losses, claims, costs, expenses and liabilities (including reasonable
attorney's fees) arising out of Occupant's use and occupancy of the Premises.
Occupant shall maintain liability insurance against personal injury and property
damage in an amount of at least $1,000,000, naming Tenant and Landlord as
additional insureds, and workers compensation coverage as required by law. All
such insurance shall insure the interests of Tenant regardless of any breach or
violation by Occupant of warranties, declarations or conditions contained in
such policies or any action or inaction of Occupant or of any other person.
Prior to occupying the Premises, Occupant shall furnish Tenant with a
certificate evidencing such insurance.
9. Occupant, having inspected the Premises, agrees to occupy the
Premises in "AS IS" condition.
10. Tenant represents to Occupant that attached hereto as Exhibit B is
a true and complete copy of the Lease. Occupant represents to Tenant that it has
read the Lease and understands and accepts the terms and conditions thereof.
11. Except as may be inconsistent with the terms hereof, all of the
terms, provisions, covenants and conditions contained in the Lease are
incorporated herein by reference and are hereby made a part of this Agreement
with the same force and effect as if Tenant were the Landlord under the Lease
and Occupant were the Tenant thereunder from and after the Commencement Date,
and in case of any breach of this Agreement by Occupant, Tenant shall
<PAGE>
have all of the rights and remedies against Occupant as would be available to
the Landlord against the Tenant under the Lease if such breach were by the
tenant thereunder.
12. Occupant shall not do anything which would cause the Lease to be
terminated or forfeited, and Occupant shall indemnify and hold Tenant harmless
from and against any and all claims, liabilities, losses, damage, demands,
expenses (including without limitation reasonable attorneys' fees), actions and
causes of action of any kind whatsoever by reason of any breach or default on
the part of Occupant by reason of which the Lease may be terminated or
forfeited.
13. Upon the expiration date or earlier termination of this Agreement,
Occupant shall, without further demand or notice, terminate its use of the
Premises, leaving the Premises broom-clean and in good condition and repair,
free of trash and debris, reasonable wear and tear excepted. Any personal
property not removed by Occupant shall be deemed abandoned and shall be disposed
of by Tenant at Occupant's sole expense.
14. (a) In the event that the Occupant shall default in the observance
or performance of any of the Occupant's covenants, agreements, or obligations
hereunder or the Occupant shall be declared bankrupt or insolvent according to
law, or, if any assignment shall be made of Occupant's property for the benefit
of creditors then the Tenant shall have the right thereafter, while such default
continues, to re-enter and take complete possession of the Premises, to declare
the term of this Agreement ended, and remove the Occupant's effects, without
prejudice to any remedies which Tenant might otherwise have for arrears of rent
or other default. In addition, Tenant shall have the same remedies against
Occupant as Landlord under the Lease has against Tenant, except that any
remedies relating to rent shall be based on the rent being paid under this
Agreement. If the Occupant shall default in the observance or performance of any
conditions or covenants of Occupant's part to be observed or performed under or
by virtue of any of the provisions of this Agreement, the Tenant, without being
under any obligation to do so and without thereby waiving such default, may
remedy such default, after reasonable notice thereof (except that no notice
shall be required in an emergency which shall mean only such cases as there is a
threat of physical injury to persons or property or the rights of Tenant in the
Lease will, in Tenant's sole judgment, be threatened without immediate action),
for the account and at the expense of the Occupant.
(b) If Tenant makes any expenditures or incurs any obligations
for the payment of money in connection with any default under this Agreement by
Occupant, including, but not limited to, reasonable attorneys' fees in
instituting, prosecuting or defending any action or proceeding under this
Agreement or otherwise exercising its remedies, such sums paid or obligations
incurred, with interest at the rate of twelve percent (12%) per annum (but in no
event in excess of the maximum rate permitted under applicable law) and costs
shall be paid to Tenant by Occupant upon demand as additional rent.
<PAGE>
15. Notices hereunder shall be deemed to be properly given if hand
delivered or mailed by certified mail, postage prepaid, return receipt
requested, to the other party at the address set forth above, or any other
address of which the sending party has been notified in accordance with the
provisions of this paragraph.
16. Nothing in this Agreement shall be deemed to create a
landlord-tenant relationship between the parties.
17. This Agreement shall not be modified in any way except by a writing
executed and delivered by both parties.
18. This Agreement shall not be assigned without the prior written
consent of Tenant nor may a majority of the shares or assets of the Occupant be
transferred without the prior written consent of Tenant. No assignment under
this paragraph 18 shall relieve Occupant of any obligation under this Agreement.
19. Any and all written consents of Tenant shall be granted or denied
by Tenant in its discretion, which consents shall not be unreasonably withheld
or denied.
20. The terms and provisions of this Agreement shall be binding upon
and inure to the benefit of Tenant and Occupant and their respective successors
and assigns.
The undersigned have caused this Agreement to be duly executed this
____th day of ___________, 2000.
[TENANT] ENTERPRISE BANK & TRUST COMPANY
By:__________________________ By:___________________________
Name: Name:
Title: Title:
<PAGE>
EXHIBIT K
Form of Lease Agreement
LOCATION: TO BE DETERMINED
PREMISES/AREA: TO BE DETERMINED
USE: Retail banking
and/or general office
DELIVERY: Upon divestiture
TERM: Ten (10) years unless earlier terminated by
purchase of premises in accordance with Section
11.1(e)(iii) of the Purchase and Assumption
Agreement
EXTENSION OPTIONS:
RENT COMMENCEMENT: Upon delivery
RENTAL RATE: Market rate as agreed to by the parties or
determined pursuant to a real estate appraisal
performed by an experienced real estate appraiser
selected by two other real estate appraisers
designated by Seller and Purchaser, respectively.
ELECTRICITY: Paid by Tenant
OPERATING EXPENSES: Paid by Tenant
TAXES: Paid by Tenant
ASSIGNMENT/SUBLET: Tenant may not assign or sublet without Landlord's
approval.
ACCESS: Tenant may have access 24 hours per day 7 days per
week to the premises.
<PAGE>
EXHIBIT L
Form of Collateral Agency Agreement
This Collateral Agency Agreement is made as of [ ], 2000 (this
"Agreement") by and between Fleet National Bank, a national banking association
with an office at One Federal Street, Boston, Massachusetts 02110 ("Seller") and
Enterprise Bank & Trust Company, a Massachusetts trust company with its
principal office at 222 Merrimack Street, Lowell, Massachusetts 01852
("Purchaser"); and Fleet National Bank, a national banking association with an
office at One Federal Street, Boston, Massachusetts 02110, as collateral agent
hereunder (the "Collateral Agent") for the Seller and Purchaser.
RECITALS
A. The Seller, the Purchaser and others are party to a certain Purchase and
Assumption Agreement dated as of September 22, 1999 (as amended from time to
time, the "Purchase Agreement"). Capitalized terms used herein without
definition have the meanings assigned to them in the Purchase Agreement.
B. Pursuant to the Purchase Agreement, among other things, the Seller has sold,
and the Purchaser has purchased, on the Closing Date, (i) all of the Loans which
are listed as "Direct Loans" on Exhibit A hereto (the "Direct Loans") and (ii) a
100% participation interest in the Letters of Credit listed on Exhibit A hereto
(the "Letter of Credit Obligations").
C. The Liens granted in the Letter of Credit Collateral (herein, the
"Collateral") by borrowers, guarantors, pledgors or other parties granting any
Collateral (each, a "Loan Party") secure both the Letter of Credit Obligations
and Direct Loans (collectively, the "Obligations").
D. The Seller and the Purchaser (individually, a "Lender" and collectively, the
"Lenders") desire that the Collateral Agent shall hold the Collateral and
enforce the Collateral Documents (as defined below) on their behalf as provided
herein.
E. The Collateral Agent is willing to accept the Collateral as Collateral Agent
for the Lenders subject to the terms and conditions set forth herein.
<PAGE>
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by each of the parties hereto, the parties
hereby agree as follows:
1. Appointment.
(a) Each Lender hereby irrevocably designates and appoints the
Collateral Agent as the collateral agent for each of them under this Agreement
with respect to the Collateral and security agreements, assignments, mortgages,
deeds of trust, pledges and other security documents, now or hereafter assigned
to the Collateral Agent by the Lenders pursuant to the Collateral Assignment
Instruments (collectively, the "Collateral Documents"). Each Lender agrees that
the Collateral Agent may act in that Lender's place, name and stead for the
benefit of the Lender and each such Lender irrevocably authorizes the Collateral
Agent, in such capacity, to take such action on its behalf under the provisions
of this Agreement and the Collateral Documents and to exercise such powers and
perform such duties as are expressly delegated to the Collateral Agent by the
terms of this Agreement and the Collateral Documents, together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement, the Collateral Agent shall not have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any Collateral Document or otherwise exist against the Collateral
Agent.
(b) Without limiting the generality of the power and authority vested
in the Collateral Agent pursuant to (a), above, the power and authority vested
in the Collateral Agent includes, but is not limited to, the following:
(i) All powers reasonably incident to the Agent's discharge of
its duties enumerated in Section 2 herein;
(ii) To execute, seal, acknowledge, and deliver as Collateral
Agent, all such instruments as may be appropriate in
connection with the administration of the Collateral and the
exercise by the Collateral Agent of its various rights with
respect thereto pursuant to the Collateral Documents or
otherwise;
(iii) To initiate, prosecute, defend, and to participate in
actions and proceedings in its name as Collateral Agent for
the benefit of the Lenders hereunder;
(iv) To retain attorneys, accountants, and other professionals
to provide advice and professional services to the Collateral
Agent, with their fees and expenses reimbursable to the
Collateral Agent pursuant to Section 6 herein; and
(v) To incur other expenses reasonably incident to the
discharge by the Collateral Agent of its duties and to the
exercise by the Collateral Agent of its
<PAGE>
powers hereunder, with the fees and expenses reimbursable to
the Collateral Agent pursuant to Section 5 herein.
(c) The within appointment of the Collateral Agent, being coupled with
an interest, is irrevocable except upon the written agreement of all of the
Lenders in accordance with Section 18 herein.
2. The Collateral Agent's Duties.
(a) The Collateral Agent's duties hereunder shall be mechanical and
administrative in nature and shall consist of the following:
(i) The safekeeping of all original documents which relate to
the Collateral;
(ii) The acting as secured party, mortgagee, assignee and/or
pledgee with respect to the Collateral;
(iii) The consultation with the Lenders from time to time
concerning the administration of the Collateral;
(iv) The conducting of any foreclosure or disposition of the
Collateral;
(v) The distribution to the Lenders of Collections (as defined
below) (such distribution being subject to Section 5 herein);
and
(vi) The exercise of all rights, remedies, powers, privileges,
and discretions to which the Collateral Agent otherwise might
be entitled under the Collateral Documents as if the
Collateral Agent were the secured party, mortgagee, assignee
and/or pledgee in its own right and in accordance with
customary banking practices, including, without limitation,
such actions which the Collateral Agent may deem necessary or
advisable from time to time to preserve, perfect and continue
perfected its Liens in the Collateral, including, signing and
filing continuation statements or amending financing
statements under the Uniform Commercial Code of the applicable
State.
(b) The Collateral Agent may execute any of its duties under
this Agreement and the Collateral Documents by or through agents or
attorneysinfact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Collateral Agent shall not be responsible
for the negligence or misconduct of any agents or attorneys infact selected by
it with reasonable care.
3. Certain Agreements of the Lenders.
(a) If at any time in the future, any Lender holds or obtains
a Lien on Collateral in its own name, such Lender agrees to assign such Lien,
without warranty or recourse, to the
<PAGE>
Collateral Agent (to be held by the Collateral Agent as the collateral agent for
each of the Lenders).
(b) If any Lender shall receive any Collection in violation of
this Agreement, such Lender shall hold such payment in trust for the benefit of
the Lenders and, promptly upon discovery or notice of such violation, pay such
Collection over to the Collateral Agent for distribution in accordance with
Section 5 below.
(c) The Purchaser shall use commercially reasonable efforts to
provide a true copy of this Agreement (with appropriate redactions to Exhibit A
hereto) to each Loan Party and to obtain the acknowledgment, consent and
agreement of such Loan Party to the provisions of this Agreement.
(d) The Lenders agree that, in the event of any sale or
disposition by any Loan Party of Collateral, the Collateral Agent may act on the
instructions of the Required Lender (as defined below) in releasing the
Collateral Agent's Lien to facilitate such sale or disposition, and all the
Lenders shall be bound by such release of Lien (subject to their rights to the
Collections therefrom); provided, however, without the prior written consent of
Seller (which consent will not be unreasonably withheld or delayed), the
Collateral Agent shall not release the Collateral Agent's Lien on Collateral;
and, provided, further, however, the consent of Seller shall not be required in
connection with any such release of the Collateral Agent's Lien on Collateral if
the Letter of Credit Obligations secured by such Lien: (i) have previously been
paid in full in cash; (ii) will be paid in full in cash in connection with such
sale or disposition; or (iii) have previously been terminated and released or
will be terminated or released in connection with such sale or disposition.
(e) The Lenders agree that upon receipt of (i) notice from the
Collateral Agent pursuant to Section 4(a) below that an event of default has
occurred with respect any Obligation and (ii) notice from the Required Lender
that the Required Lender desires to accelerate payment of the affected
Obligations, all affected Lenders shall promptly exercise their rights, if any,
to declare an event of default under all related loan documents (collectively,
the "Loan Documents") and to accelerate payment of the affected Obligations.
4. Certain Actions By Collateral Agent.
(a) The Collateral Agent shall not be deemed to have knowledge or
notice of the occurrence of any default or event of default with respect to the
Obligations unless the Collateral Agent has received notice from a Lender
(delivered in accordance with Section 8 below) referring to this Agreement,
describing such default or event of default and stating that such notice is a
"notice of default". In the event that the Collateral Agent receives such a
notice, the Collateral Agent shall give notice thereof to all of the Lenders.
(b) The Collateral Agent shall take such action with respect to such
default or event of default as shall be reasonably directed by the Required
Lender and shall, in accordance with such directions, exercise, with respect to
any and all Collateral for such Obligation, all of the rights
<PAGE>
and remedies under the applicable Collateral Documents, a secured party under
the Uniform Commercial Code, a pledgee of securities under applicable law or of
a mortgagee under applicable real property law, as the case may be, available in
the state where the Collateral Agent is seeking to assert such right or remedy.
(c) As used herein, the term "Required Lender" shall mean the
Purchaser; provided, if at any time the Seller shall have notified the Purchaser
and Collateral Agent, in writing, that the Purchaser is in default of its
obligations under Section 12.11(d) of the Purchase Agreement, then, until the
Seller has notified the Collateral Agent that Purchaser's default has been cured
or waived, "Required Lender" shall mean Seller.
(d) In the event that any Letter of Credit Obligation owed to a Seller
is satisfied in full in cash or is terminated prior to the satisfaction of the
related Direct Loan held by the Purchaser, the Seller shall so notify the
Collateral Agent in writing and the Collateral Agent shall assign the subject
Collateral Documents (without representation or warranty) to the Purchaser. Upon
any such assignment, the Collateral Agent shall be wholly discharged of any
obligation which it may then have to the Purchaser hereunder or on account of
the arrangements contemplated hereby with respect to such Collateral Documents
and the Obligations secured thereby.
5. Distribution of Proceeds.
(a) As used herein, the term "Collections" shall mean the following,
whether received by the Collateral Agent or any Lender: (i) any proceeds of any
foreclosure, sale, exchange, disposition of, or other realization upon any
Collateral, including, without limitation, insurance and condemnation proceeds
arising from or relating to collateral, and (ii) any cash, property, securities
or other value, directly or indirectly received, held or otherwise obtained in
respect of any Obligations, whether pursuant to any set-off, attachment,
garnishment, execution or other proceedings for collection thereof or pursuant
to any bankruptcy, reorganization, liquidation or other similar proceeding or
otherwise.
(b) Each Lender shall immediately pay to the Collateral Agent all
Collections received by such Lender for distribution as set forth in Section
5(c) below.
(c) Any Collections shall be distributed by the Collateral Agent, to
the extent available, as follows:
(i) First, to the Collateral Agent, as reimbursement for all
costs and expenses reasonably incurred by the Collateral Agent
in connection with such Collections and in otherwise
discharging its duties hereunder;
(ii) Second, to the Seller for application to (or to be held
as cash collateral for) the affected Letter of Credit
Obligations until paid in full in cash or until cash
collateral in an amount equal to such Letter of Credit
Obligations is held by the Seller;
<PAGE>
(iii) Third, to the Purchaser for application to the affected
Direct Loan until paid in full; and
(iv) Fourth, to any one or more third parties which the
Collateral Agent determines to be entitled thereto.
(d) If any Lender shall be obligated to pay to any other Lender a
portion of any Collection and shall make such payment, the Loan Parties
obligated thereon shall be deemed to have satisfied their obligations in respect
of indebtedness held by such Lender only to the extent of the Collection
actually retained by the such Lender after giving effect to payment by such
Lender to other Lenders in accordance with the terms hereof. The Obligations
held by such other Lenders shall be deemed to have been satisfied to the extent
of the amount of such Collection distributed to each such Lender.
6. Costs and Expenses.
To the extent not paid by third parties pursuant to contractual
obligations of such third parties, the Purchaser will pay all reasonable costs
and expenses incurred by the Collateral Agent on or after this date for legal,
accounting, consulting, and other services rendered to the Collateral Agent in
respect of the Collateral Agent's discharge of its duties hereunder. Collateral
Agent shall not incur costs and expenses in excess of $20,000 in the aggregate
with respect to any Obligation without the prior written consent of the
Purchaser, which consent shall not be unreasonably withheld or delayed.
7. Contribution.
In the event that at any time, whether before or after the termination
of the within Agreement, the Collateral Agent shall be sued or shall have a
threat or claim made upon it by or on behalf of a Loan Party or by any other
third party; any creditor of any of the foregoing; any trustee, receiver,
assignee, or other fiduciary appointed with respect to any of the foregoing; or
any person whose rights derive from any of the foregoing, which suit, threat or
claim is based upon any claim, demand, cause of action, or the like, which
relates to the Collateral Agent's acting in accordance with this Agreement, then
the Purchaser shall pay all monies reasonably paid in satisfaction or compromise
of such suit, threat, or claim and all costs and expenses and reasonable
attorneys' fees incurred by the Collateral Agent in connection with the defense
of such suit, threat, or claim; provided, the Collateral Agent shall promptly
give written notice of any such claim or threat to the Purchaser, and the
Collateral Agent will thereafter keep the Purchaser reasonably informed with
respect thereto; and provided further that the failure of the Collateral Agent
to give the Purchaser prompt notice as provided in this Section 7 shall not
relieve the Purchaser of its obligations hereunder except to the extent, if any,
that the Purchaser's rights have been prejudiced or the Purchaser's liability
shall have been materially increased thereby. The Collateral Agent shall not
settle any such claim or threat which would give rise to the Purchaser's
liability under this Section 7 without the prior written consent of the
Purchaser, which consent shall not be unreasonably withheld. The Purchaser
recognizes that such suit,
<PAGE>
demand, threat, or claim may include one or more claims which are generally
referred to as based upon "lender liability," as to which the claimant may
allege that the Collateral Agent had acted in bad faith or otherwise engaged in
various egregious activities. The Purchaser agrees that, to the extent permitted
by law, its obligations which are described in this Section relate to, and
include, any such suit, demand, threat, or claim unless a final and
non-appealable decision is issued by a court of competent jurisdiction finding
that the Collateral Agent acted with gross negligence or willful misconduct.
8. Notices.
All communications in respect of the within Agreement shall be made to
the following addresses, each of which may be changed upon not less than Seven
(7) days notice given by certified mail, return receipt requested to all other
parties hereto as follows:
If to the Collateral Agent or the Seller: Fleet National Bank
One Federal Street
Mail Stop: MA[ ]
Boston, MA 02110
Attn: [ ]
With a copy to: Edwards & Angell, LLP
101 Federal Street
Boston, MA 02110
Attn: Lauren A. Mogensen, Esq.
If to [ ]: [ ]
With a copy to: [ ]
9. Exculpatory Provisions. Neither the Collateral Agent nor any of its
officers, directors, employees, agents, attorneysinfact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any Collateral Document
(except to the extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any of the representations
or warranties made by any Loan Party contained in any Collateral Document or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Collateral Agent under or in connection with, this
Agreement or any Collateral Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of any Collateral Document or for any
failure of any Loan Party or other party thereto to perform its obligations
thereunder. The Collateral Agent shall not be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of any Collateral Document, or to inspect
the properties, books or records of any Loan Party.
<PAGE>
10. Reliance by Collateral Agent. The Collateral Agent shall be
entitled to rely, and shall be fully protected in relying, upon any instrument,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Collateral Agent. The
Collateral Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any Collateral Document unless it shall first
receive such advice or concurrence of such Lenders as it deems appropriate or it
shall first be indemnified to its satisfaction by the Purchaser against any and
all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. The Collateral Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
and the Collateral Documents in accordance with a request of the Required
Lender, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Lenders and all future holders of the affected
Obligations.
11. Indemnification. The Purchaser agrees to indemnify the Collateral
Agent in its capacity as such (to the extent not reimbursed by any Loan Party
and without limiting the obligation of any Loan Party to do so), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including reasonable attorneys' fees
and expenses) or disbursements of any kind whatsoever that may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against the Collateral Agent in any way relating to or arising out of,
the Obligations, this Agreement, any of the Collateral Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Collateral
Agent under or in connection with, any of the foregoing; provided that Purchaser
shall not be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from the Collateral
Agent's gross negligence or willful misconduct. The agreements in this Section
shall survive the payment of the Obligations and all other amounts payable
hereunder.
12. Collateral Agent in Its Individual Capacity. Except as may
otherwise be agreed to by Seller and Purchaser in the Purchase Agreement,
Seller, in its individual capacity as a Lender, may make loans to, accept
deposits from and generally engage in any kind of business with any Loan Party
as though Seller was not the Collateral Agent hereunder.
13. Successor Collateral Agent. The Collateral Agent may resign at any
time as Collateral Agent upon 10 days' written notice to the Lenders. If the
Collateral Agent shall so resign, then the Lenders shall appoint the Purchaser
as successor Collateral Agent, whereupon such successor agent shall succeed to
the rights, powers and duties of the Collateral Agent, and the term "Collateral
Agent" shall mean such successor agent effective upon such appointment and
approval, and the former Collateral Agent's rights, powers and duties as
Collateral Agent shall be terminated, without any other or further act or deed
on the part of such former Collateral Agent or any of the parties to this
Agreement or any holders of the Obligations. If no successor agent has accepted
appointment as Collateral Agent by the date that is 10 days following a
<PAGE>
retiring Collateral Agent's notice of resignation, Seller shall then appoint a
successor Collateral Agent which shall be a bank or trust company with a
combined capital and surplus of at least $100,000,000. After any retiring
Collateral Agent's resignation as Collateral Agent, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Collateral Agent under this Agreement and the
Collateral Documents.
14. Effect of Bankruptcy. This Agreement shall be and remain
enforceable not withstanding any bankruptcy or other insolvency proceeding by or
against any Loan Party. Nothing herein shall affect or limit the right of any
Lender to file a proof of claim in any bankruptcy or other insolvency proceeding
by or against any Loan Party, or to vote its claim, or to appear or be heard
with respect to any matter, or to file motions or seek relief from the automatic
stay; provided, however, that all provisions hereof with respect to distribution
of Collections and limitations on who may exercise, or control the exercise of
remedies with respect to Collateral, shall continue in full force and effect
during any such bankruptcy or insolvency proceeding.
15. Waiver of Right to Require Marshaling. Each Lender hereby expressly
waives any right that it otherwise might have to require the Collateral Agent or
any other Lender to marshall assets or to resort to Collateral in any particular
order or manner, whether provided for by common law or statute, provided that
this paragraph shall not override any specific provision of this Agreement.
Neither the Collateral Agent nor any Lender shall be required to enforce any
guaranty or Lien given by any Loan Party other than a Customer as a condition
precedent or concurrent to the taking of any enforcement action with respect to
the Collateral.
16. No Joint Venture. Nothing contained in this Agreement, no action
taken by any Lender or the Collateral Agent pursuant hereto or in connection
herewith, or pursuant to or in connection with any of the Collateral Documents
shall be deemed to constitute the Lenders together, with or without the
Collateral Agent, a partnership, association, joint venture or other entity.
17. No Third Parties Benefited. Except for all of the Lenders, no
Person not a party hereto shall be an intended or third party beneficiary
hereof. Although Loan Parties may indirectly become a party hereto for the
purpose of acknowledging the existence of, consenting to and agreeing to be
bound by, the provisions hereof, nothing herein shall provide any Loan Party
with any rights other than or in addition to the rights of the Loan Party
provided for in its Loan Documents, nor shall the provisions hereof in any event
be construed as modifying, or excusing any Loan Party from complying with, the
provisions of any Loan Documents.
18. Amendments and Waivers. No provision of this Agreement may be
altered, amended, supplemented, changed, waived, or rescinded except upon the
concurrence of all of the Lenders. Any waiver of any provision of this
Agreement, or any consent to any departure from the terms of any provisions of
this Agreement, shall be effective only in the specific instance and for the
specific purpose for which given. No failure or delay on the part of any party
hereto in the exercise of any power, right, remedy or privilege under this
Agreement shall impair such power, right, remedy or privilege or shall operate
as a waiver thereof; nor shall any single or
<PAGE>
partial exercise of any such power, right or privilege preclude any other or
further exercise of any other power, right or privilege. The waiver of any such
power, right, remedy or privilege with respect to particular facts and
circumstances shall not be deemed to be a waiver with respect to other facts and
circumstances.
19. Binding Effect; Assignment. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that neither this Agreement
nor any rights, privileges, duties or obligations of the Purchaser hereunder may
be assigned without the prior written consent of the Seller.
20. Entire Agreement; Governing Law. This Agreement, together with the
exhibits attached hereto and made a part hereof, contains the entire agreement
between the parties hereto with respect to the transactions covered and
contemplated hereunder, and supersedes all prior agreements or understandings
between the parties hereto relating to the subject matter hereof, provided that
the terms of the Purchase Agreement, to the extent not inconsistent with the
terms hereof, shall continue to apply. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
(without reference to conflicts or choice of law provisions).
21. Consent to Jurisdiction; Waiver of Jury Trial. EACH PARTY HERETO,
TO THE EXTENT IT MAY LAWFULLY DO SO, HEREBY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS, AS WELL AS TO THE JURISDICTION OF ALL COURTS
FROM WHICH AN APPEAL MAY BE TAKEN OR OTHER REVIEW SOUGHT FROM THE AFORESAID
COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF
SUCH PARTY'S OBLIGATIONS UNDER OR WITH RESPECT TO THIS AGREEMENT OR ANY OF THE
AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY (OTHER THAN THE
CONFIDENTIALITY AGREEMENT), AND EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY
HAVE AS TO VENUE IN ANY OF SUCH COURTS.
EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONCERNED WITH THIS AGREEMENT OR
ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY. NO PARTY
HERETO, NOR ANY PERMITTED ASSIGNEE OR SUCCESSOR OF A PARTY HERETO SHALL SEEK A
JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION
PROCEDURE BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE
AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY. NO PARTY WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE
PROVISIONS OF THIS HAVE BEEN FULLY
<PAGE>
DISCUSSED BY THE PARTIES HERETO, AND THE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HAS IN ANYWAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY
THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
22. Waiver of Certain Damages Each of the parties hereto to the fullest
extent permitted by law irrevocably waives any rights that they may have to
punitive, special, incidental, exemplary or consequential damages in respect of
any litigation based upon, or arising out of, this agreement or any related
agreement or any course of conduct, course of dealing, statements or actions of
any of them relating thereto.
23. Severability. In the event that any provision of this shall be held
invalid, illegal, or unenforceable in any respect, the validity, legality, and
enforceability of the remaining provisions contained in this Agreement shall not
in any way be affected or impaired thereby, and this Agreement shall otherwise
remain in full force and effect.
24. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties hereto.
25. Termination. This Agreement shall terminate and Collateral Agent,
at the sole expense of Purchaser, shall deliver and assign to Purchaser all of
the Collateral, Collateral Documents and related Loan Documents held by
Collateral Agent with respect to any Obligation when the Letter of Credit
Obligations with respect thereto are no longer outstanding.
***The Next Page is the Signature Page***
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as an instrument under seal, by their duly authorized representatives,
as of the day and year first above written.
FLEET NATIONAL BANK, individually ENTERPRISE BANK & TRUST
and as Collateral Agent COMPANY
By:______________________________ By:___________________________
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from
unaudited financial statements of Enterprise Bancorp, Inc. at and for the period
ended September 30, 1999 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 15,350
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,275
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 140,075
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 244,218
<ALLOWANCE> 5,549
<TOTAL-ASSETS> 414,030
<DEPOSITS> 333,967
<SHORT-TERM> 50,186
<LIABILITIES-OTHER> 2,474
<LONG-TERM> 0
0
0
<COMMON> 32
<OTHER-SE> 27,371
<TOTAL-LIABILITIES-AND-EQUITY> 414,030
<INTEREST-LOAN> 15,146
<INTEREST-INVEST> 5,358
<INTEREST-OTHER> 67
<INTEREST-TOTAL> 20,571
<INTEREST-DEPOSIT> 7,231
<INTEREST-EXPENSE> 7,968
<INTEREST-INCOME-NET> 12,603
<LOAN-LOSSES> 270
<SECURITIES-GAINS> 183
<EXPENSE-OTHER> 10,275
<INCOME-PRETAX> 4,173
<INCOME-PRE-EXTRAORDINARY> 4,173
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,036
<EPS-BASIC> 0.95
<EPS-DILUTED> 0.91
<YIELD-ACTUAL> 4.80
<LOANS-NON> 802
<LOANS-PAST> 49
<LOANS-TROUBLED> 494
<LOANS-PROBLEM> 1,291
<ALLOWANCE-OPEN> 5,234
<CHARGE-OFFS> 60
<RECOVERIES> 105
<ALLOWANCE-CLOSE> 5,549
<ALLOWANCE-DOMESTIC> 5,549
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 226
</TABLE>
