<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
DECEMBER 22, 1994
BAYBANKS, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 0-959 04-2008039
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
175 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(617) 482-1040
Exhibit Index appears on page 5
<PAGE> 2
ITEM 5. OTHER EVENTS.
------------
On December 22, 1994, BayBanks, Inc. ("BayBanks") and NFS Financial
Corp. ("NFS") entered into an Acquisition Agreement (the "Acquisition
Agreement") pursuant to which BayBanks will acquire NFS (the "Acquisition") for
a combination of cash and BayBanks' common stock, par value $2.00 per share
("BayBanks Stock"). NFS is the New Hampshire-based holding company of NFS
Savings Bank, FSB of Nashua and Plaistow Co-operative Bank, FSB of Plaistow,
N.H. The Acquisition will be effected through a merger of a wholly owned
subsidiary of BayBanks with and into NFS, as a result of which NFS will become
a wholly owned subsidiary of BayBanks and will operate under the BayBanks name.
In accordance with the terms of the Acquisition Agreement, each issued
and outstanding share of NFS common stock, par value $.01 per share ("NFS
Stock"), other than shares as to which dissenters' appraisal rights have been
exercised, will be converted into the right to receive (a) $20.15 in cash and
(b) 0.2038 of a share of BayBanks Stock, subject to adjustment as described
below. In the event that the Acquisition is consummated after September 1, 1995
and NFS's shareholders have approved the Acquisition Agreement prior to such
time, the cash amount payable for each issued and outstanding share of NFS Stock
will be increased by $.005 per day from and including September 1, 1995 until
consummation of the Acquisition.
Under the Acquisition Agreement, if as of the closing date of the
Acquisition the market value of BayBanks Stock (determined in accordance with
the Acquisition Agreement) is less than $43.50 per share, NFS has the right to
terminate the Acquisition Agreement, unless BayBanks agrees to increase the per
share payment for NFS Stock to an aggregate $29.00 per share. The increase in
the per share payment can be through an increase in the cash or BayBanks Stock
portion of the payment, or alternatively, BayBanks may elect to pay all cash at
$29.00 per share. If as of the closing date of the Acquisition the market value
of BayBanks Stock is greater than $63.00 per share, the BayBanks Stock portion
of the per share consideration to be paid for NFS Stock will be reduced so that
the sum of the cash and market value of the BayBanks Stock to be paid for the
NFS Stock equals $33.00. Under the Acquisition Agreement, the market value of
BayBanks Stock as of any day is equal to the average of the closing sale price
of BayBanks Stock, as reported on the Nasdaq National Market on each of the ten
trading days immediately preceding the second business day prior to such day.
The Acquisition Agreement also provides that NFS employee stock options
to acquire up to 204,286 shares of NFS Stock that are outstanding at the time of
the Acquisition will be converted into options to acquire BayBanks Stock based
upon the value of the per share consideration to be received by the holders of
NFS Stock.
Immediately upon the execution of the Acquisition Agreement, BayBanks
and NFS entered into an Option Agreement (the "Option Agreement") pursuant to
which NFS granted to BayBanks an option (the "Option") to purchase at a price of
$21.50 per share up to 274,266 shares of newly issued NFS Stock, or 9.9% of the
outstanding shares of NFS Stock. The Option is exercisable upon the occurrence
of certain events that create the potential for a third party to acquire NFS.
If the Option becomes exercisable, BayBanks or any permitted transferee of
BayBanks may under certain circumstances require NFS to repurchase the Option
(in lieu of its exercise) for a formula price that under no circumstances shall
exceed $4.5 million.
-2-
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Completion of the Acquisition is subject to certain conditions,
including (a) approval by the shareholders of NFS, (b) approval by all requisite
regulatory authorities, and (c) other closing conditions customary in a
transaction of this type. The Acquisition Agreement is subject to termination
under certain circumstances, including if the Acquisition is not consummated on
or before December 31, 1995. Under certain circumstances related to termination
of the Acquisition Agreement, NFS is required to pay BayBanks a termination fee
of $900,000.
Directors and executive officers of NFS having the right to vote in the
aggregate 129,551 shares of NFS Stock, or approximately 4.7% of the presently
outstanding NFS Stock, have agreed to vote their shares in favor of approval of
the Acquisition and against any other acquisition proposal.
The Acquisition Agreement and Option Agreement are attached hereto as
exhibits and incorporated herein by reference. The foregoing summary of such
exhibits is qualified in its entirety by reference to the complete text of such
exhibits.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
------------------------------------------------------------------
(c) Exhibits:
--------
Exhibit
No. Description
- ------- -----------
2(a) Acquisition Agreement By and Between BayBanks, Inc. and NFS
Financial Corp. dated December 22, 1994.
2(b) Option Agreement between BayBanks, Inc. and NFS Financial Corp.
dated December 22, 1994.
-3-
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BAYBANKS, INC.
Date: December 30, 1994 By: /s/ Michael W. Vasily
--------------------------------------
Michael W. Vasily
Executive Vice President and Treasurer
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<PAGE> 5
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
2(a) Acquisition Agreement by and between BayBanks, Inc. and NFS
Financial Corp. dated December 22, 1994.
2(b) Option Agreement between BayBanks, Inc. and NFS Financial Corp.
dated December 22, 1994.
-5-
<PAGE> 1
Exhibit 2(a) to Form 8-K
ACQUISITION AGREEMENT
BY AND BETWEEN
BAYBANKS, INC. AND NFS FINANCIAL CORP.
DATED DECEMBER 22, 1994
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
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<S> <C> <C>
ARTICLE I
INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
WORDS, TERMS AND PHRASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Number and Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Consideration for Seller Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2.1 Conversion of Seller Stock . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2.2 Adjustment of Merger Consideration . . . . . . . . . . . . . . . . . . . . . 6
3.2.3 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2.4 Cancellation of Unissued and Treasury Shares . . . . . . . . . . . . . . . . 7
3.2.5 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Seller Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Buyer Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 Acquisition Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 Buyer Stock Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Exchange of Seller Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7.1 Buyer to Make Merger Consideration Available . . . . . . . . . . . . . . . . . . . . 8
3.7.2 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Representations and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . . 9
4.1.1 Organization of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1.4 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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<TABLE>
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4.1.5 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1.6 Properties and Assets; Environmental Matters . . . . . . . . . . . . . . . . 11
4.1.7 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.1.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.1.9 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1.10 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1.11 Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1.13 Employee Benefit Plans and Matters . . . . . . . . . . . . . . . . . . . . . 15
4.1.14 Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . 16
4.1.15 Regulatory Filings and Reports . . . . . . . . . . . . . . . . . . . . . . . 17
4.1.16 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1.17 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1.18 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1.19 Takeover Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1.20 Matters Regarding the NFS Banks . . . . . . . . . . . . . . . . . . . . . . 19
4.1.21 Reserves for Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1.22 Loan Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1.23 Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1.24 Derivative Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1.25 Deposits and Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1.26 Examination Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1.27 Material Interests of Certain Persons . . . . . . . . . . . . . . . . . . . 21
4.1.28 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1.29 No Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Representations and Warranties of Buyer . . . . . . . . . . . . . . . . . . . . . . 21
4.2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.2.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.2.4 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.2.5 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.2.6 Financial Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.2.7 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.2.8 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.2.9 Regulatory Filings and Reports . . . . . . . . . . . . . . . . . . . . . . 24
4.2.10 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.2.11 Beneficial Ownership of Seller Stock . . . . . . . . . . . . . . . . . . . 24
4.2.12 Matters Regarding Banking Subsidiaries . . . . . . . . . . . . . . . . . . 24
4.2.13 No Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1 Regulatory Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.2 Proxy Statement/Registration Statement . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
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<TABLE>
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5.4 Blue Sky Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.5 Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.6 Conduct of the Business of Seller and its Subsidiaries . . . . . . . . . . . . . . . 28
5.6.1 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.6.2 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.6.3 Disclosure Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.7 Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.7.1 Certificate and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.7.2 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.8 Employee Benefits Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.8.1 Insurance Coverages . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.8.2 Personnel Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.8.3 Qualified Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.8.4 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . 31
5.9 Directors, Officers and Employees . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.10 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.12 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.13 No Solicitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.15 Conduct of Buyer and Buyer Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 34
5.16 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.17 Liaison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.18 System Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VI
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.1 Conditions to Obligations of All Parties . . . . . . . . . . . . . . . . . . . . . . 35
6.1.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.1.2 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.1.3 Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.1.4 Matters Regarding Buyer Stock . . . . . . . . . . . . . . . . . . . . . . . 36
(a) Registration Statement . . . . . . . . . . . . . . . . . . . . . . 36
(b) Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(c) Blue Sky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.1.5 No Orders, Injunctions or Restraints: Illegality . . . . . . . . . . . . . 36
6.2 Conditions to the Obligations of Buyer and Acquisition Company . . . . . . . . . . . 36
6.2.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 37
6.2.2 Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.2.3 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . 37
6.2.4 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.2.5 Accountant's Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.2.6 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.2.7 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.2.8 Subsidiary Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.2.9 Key Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
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<TABLE>
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6.2.10 Corporate Actions of the NFS Banks . . . . . . . . . . . . . . . . . . . . . 38
6.3 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . 38
6.3.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 38
6.3.2 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . 38
6.3.3 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.3.4 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VII
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.1 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.2 Buyer Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.3 Seller Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.4 Fees and Closing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VIII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.1 Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.2 Other Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.2.1 Termination By Any Party . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.2.2 Termination By Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.2.3 Termination By Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.3 Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.4 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.8 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.9 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.10 Parties Not Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.11 No Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.14 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
<PAGE> 6
ACQUISITION AGREEMENT
---------------------
THIS ACQUISITION AGREEMENT ("this Agreement") is made and entered into
effective as of December 22, 1994, by and between BAYBANKS, INC., a
Massachusetts corporation ("Buyer"), and NFS FINANCIAL CORP., a Delaware
corporation ("Seller").
RECITALS
A. Buyer is a publicly held and traded corporation whose $2.00 par
value per share common stock (the "Buyer Stock") is quoted on the Nasdaq
National Market (the "Nasdaq NNM").
B. Seller is a publicly held and traded corporation whose $0.01 par
value per share common stock (the "Seller Stock") is quoted on the Nasdaq NNM.
Seller owns all of the issued and outstanding capital stock of NFS Savings Bank,
FSB, Nashua, New Hampshire ("NFS Bank") and Plaistow Co-operative Bank, FSB,
Plaistow, New Hampshire ("Plaistow"), both of which are federally chartered
savings banks. Collectively, NFS Bank and Plaistow are sometimes referred to
herein as the "NFS Banks".
C. Buyer has agreed to effect the acquisition of Seller through the
merger of a wholly owned subsidiary of Buyer ("Acquisition Company") with and
into Seller, on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, the
representations, warranties, covenants and agreements contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby represent, warrant,
covenant and agree as follows.
ARTICLE I
INCORPORATION BY REFERENCE
1.1 RECITALS. The foregoing Recitals are incorporated into this
Agreement by reference as if set forth in full in the body hereof.
1.2 EXHIBITS AND SCHEDULES. Each exhibit and schedule appended to
or required by and delivered with this Agreement is incorporated into this
Agreement by reference as if set forth in full in the body hereof.
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ARTICLE II
WORDS, TERMS AND PHRASES
2.1 NUMBER AND GENDER. When used in this Agreement, all words in
the singular number shall extend to and include the plural number, where the
context so requires; all words used in the plural number shall extend to and
include the singular number where the context so requires; and all words used in
any gender, whether male, female or neuter, shall extend to and include all
genders that may be applicable in any particular context.
2.2 DEFINITIONS. In addition to any other definitions contained in
this Agreement, the following words, terms and phrases shall have the following
meanings when utilized in this Agreement:
"APPLICATION": Any application, notice, request, correspondence or
other filing, material or communication submitted to any Governmental Authority
in connection with any Regulatory Approval.
"BENEFIT ARRANGEMENT": Any form of current or deferred compensation,
bonus, stock option, stock appreciation right, severance pay, salary
continuation, retirement or incentive plan or arrangement or any group or
individual health, disability or life insurance plan or welfare or similar plan
or arrangement for the benefit of any one or more of the directors, officers and
employees of Seller or any Subsidiary, whether active or retired, by reason of
their employment by or service with Seller or any Subsidiary, other than
Employee Plans and plans and agreements providing for base salary and base
wages.
"BHCA": The Bank Holding Company Act of 1956, as amended.
"BLUE SKY LAWS": The securities laws of any applicable state.
"BUSINESS DAY": Any day other than a Saturday, a Sunday, an official
federal or State of New Hampshire holiday, a day on which banks operating in
Nashua, New Hampshire, generally are not open for business and a day on which
the OTS and/or the FDIC are not open for business.
"BUYER DISCLOSURE SCHEDULE": All of the disclosure schedules required
of Buyer pursuant to this Agreement, which disclosure schedules shall be
cross-referenced to the specific sections and subsections of this Agreement and
delivered herewith.
"BUYER OPTION": The option granted to Buyer pursuant to the Option
Agreement.
"BUYER SUBSIDIARY": Each corporation, partnership or other business
enterprise which is consolidated with Buyer for financial reporting purposes or
of which Buyer owns, directly or indirectly, a majority of the outstanding
capital stock or other ownership interest.
"CLOSING": The consummation of the Merger and any other transactions
contemplated by this Agreement on the Closing Date.
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"CLOSING CONDITIONS": All conditions precedent to the obligation of any
one or more parties hereto to consummate the transactions contemplated by this
Agreement, including, without limitation, those conditions set forth in Article
VI.
"CLOSING DATE": The date on which the Closing occurs, which shall be
the fifth Business Day after the satisfaction or waiver of all Closing
Conditions or such other earlier Business Day as the parties may mutually
determine after the satisfaction or waiver of all of the Closing Conditions.
"CLOSING MARKET VALUE": The Market Value of the Buyer Stock on the
Closing Date.
"CRA": The Community Reinvestment Act of 1977, as amended.
"DEFAULT": A party shall be in Default hereunder if:
(i) any representation or warranty of said party contained
in this Agreement shall have been incorrect, incomplete or otherwise
misleading when made or deemed to be made in any material respect; or
(ii) such party shall have failed to perform or otherwise
breached in any material respect any of its covenants and obligations
contained in this Agreement and, unless such failure or breach cannot
by its nature be cured within the specified time period and prior to
the Closing Date, such failure or breach shall remain uncured for 10
business days after notice thereof to the defaulting party by any other
party hereto.
"DISSENTING SHARES": The shares of Seller with respect to which holders
thereof have timely and properly perfected their appraisal rights pursuant to
Section 262 of the DGCL.
"DGCL": The General Corporation Law of the State of Delaware.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"EMPLOYEE PLAN": Any "employee benefit plan" (as that term is defined
in Section 3(3) of ERISA) that is subject to any provisions of ERISA and covers
any one or more of the directors, officers and employees of Seller or any
Subsidiary, whether active or retired, by reason of employment by or service
with Seller or any Subsidiary.
"EXCHANGE ACT": The Securities Exchange Act of 1934, as amended.
"FDIA": The Federal Deposit Insurance Act, as amended.
"FDIC": The Federal Deposit Insurance Corporation.
"GAAP": Generally accepted accounting principles.
"GOVERNMENTAL AUTHORITY": Any federal, state, county, municipal or
other local legislative, regulatory or judicial body or other entity with
jurisdiction over all or any portion
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of any one or more of Seller, Buyer, the NFS Banks, or any of their respective
properties, businesses and affairs.
"HOLA": The Home Owners' Loan Act of 1933, as amended.
"IRC": The United States Internal Revenue Code of 1986, as amended.
"KNOWLEDGE": As to any person, and as of the date of the statement in
question, such person's actual knowledge or what such person should have known
in the ordinary exercise of that person's duties in the capacity referred to
herein.
"LAWS": Any and all statutes, laws, ordinances, rules, regulations,
orders, permits, judgments, injunctions, decrees, case law and other rules of
law enacted, promulgated or issued by any Governmental Authority.
"MARKET VALUE": As of any day, the average, without respect to the
number of shares traded, of the closing sale price of the Buyer Stock as
reported on the Nasdaq NNM on each of the ten trading days immediately preceding
the second Business Day prior to such day.
"MATERIAL ADVERSE CHANGE IN BUYER": (a) Any material adverse change in
the business, financial condition, or operating results of Buyer and the Buyer
Subsidiaries taken as a whole (other than from changes in laws and regulations
and GAAP affecting financial institutions generally) or the occurrence of any
event or condition that would result in such a change; or (b) the existence of
any pending or threatened litigation or administrative action which challenges
any portion of the transactions contemplated hereby, and which, in the
reasonable opinion of Seller, would be likely to enjoin consummation, or result
in rescission, of any of such transactions to the detriment of holders of Seller
Stock.
"MATERIAL ADVERSE CHANGE IN SELLER": (a) any material adverse change in
the business, financial condition, or operating results of Seller and the
Subsidiaries taken as a whole (other than from changes in laws and regulations
and GAAP affecting financial institutions generally) or the occurrence of any
event or condition that would result in such a change; or (b) the existence of
any pending or threatened litigation or administrative action which (i) creates
any reasonable possibility that Seller or the Subsidiaries may incur a material
loss that has not been reserved against (other than as set forth in the Seller
Disclosure Schedule); or (ii) challenges any portion of the transactions
contemplated hereby, and which, in the reasonable opinion of Buyer, would be
likely to enjoin consummation, or result in rescission, of such transactions.
The expenses of Seller related to the Merger, including those expenses
contemplated hereby, shall not be taken into consideration in determining if
there has been a Material Adverse Change in Seller.
"MERGER": The merger of Acquisition Company with and into Seller in
accordance with the terms and provisions of the Plan of Merger.
"MERGER CONSIDERATION": Collectively, the Buyer Stock and cash to be
received by the holders of the Seller Stock in accordance with Section 3.2 of
this Agreement.
"NHBCA": The New Hampshire Business Corporation Act.
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"OPTION AGREEMENT": The Option Agreement by and between Buyer and
Seller, dated as of the date hereof, in the form of Exhibit A hereto.
"PEAT MARWICK": KPMG Peat Marwick LLP, independent public accountants
with respect to Buyer and with respect to Seller.
"PROXY STATEMENT/PROSPECTUS": The proxy statement and prospectus to be
used to solicit Seller's stockholders for the approvals required to consummate
the transactions contemplated by this Agreement, and to offer Buyer Stock in
connection therewith.
"REGISTRATION STATEMENT": The registration statement filed with the SEC
by Buyer for the purpose of registering the Buyer Stock to be issued as part of
the Merger Consideration, in the form declared effective by the SEC, together
with all amendments and supplements thereto, as declared effective by the SEC.
"REGULATIONS": The rules and regulations of the FDIC, the OTS and any
other Governmental Authority.
"REGULATORY APPROVALS": Each and every consent, approval, expiration of
a waiting period and similar action or inaction by any governmental authority
(including, without limitation, the FDIC, OTS, the United States Federal Trade
Commission, the United States Department of Justice, the Board of Governors of
the Federal Reserve System, the Office of the Comptroller of the Currency, the
Massachusetts Board of Bank Incorporation and the New Hampshire Board of Trust
Company Incorporation) that is required under any applicable statute, regulation
or other legal or governmental requirement in connection with and as a condition
precedent to the consummation of the Merger and any other transactions
contemplated by this Agreement.
"SEC": The United States Securities and Exchange Commission.
"SECURITIES ACT": The Securities Act of 1933, as amended.
"SELLER DISCLOSURE SCHEDULE": All of the disclosure schedules required
by Article IV dated as of the date hereof and referenced to the specific
sections and subsections of Article IV and delivered herewith.
"SELLER ESOP": The NFS Financial Corp. Employee Stock Ownership Plan,
effective January 1, 1986, as amended.
"SELLER OPTIONS": Options to purchase shares of the Seller Stock, or
any other rights, granted by Seller pursuant to NFS Financial Corp. Stock Option
Plan.
"SUBSIDIARY": Each corporation, partnership or other business
enterprise, including the NFS Banks, which is consolidated with Seller for
financial reporting purposes or of which Seller owns, directly or indirectly,
25% or more of the outstanding capital stock or other ownership interest.
"SURVIVING CORPORATION": Seller, as the surviving corporation of the
Merger.
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"TAX RETURNS": All federal, state and local tax returns, reports and
declarations of estimated tax with respect to income and all other applicable
taxes, and all other tax returns and reports, the filing of which is required by
applicable Laws (including returns and reports with respect to taxes withheld
from or imposed in respect of employees' wages and with respect to deposit
accounts, of interest and dividends paid, of interest received, and of all other
payments made or received).
"TUCKER ANTHONY": Tucker Anthony Incorporated, the Seller's financial
adviser.
ARTICLE III
THE MERGER
3.1 THE MERGER. On the Closing Date, Acquisition Company shall be
merged with and into Seller as permitted by and in accordance with applicable
Laws and on the terms and subject to the conditions contained in this Agreement
and the Plan of Merger. Simultaneously with the effectiveness of the Merger,
(a) the separate existence of Acquisition Company shall cease and (b) Seller, as
the Surviving Corporation, shall continue to exist under and be governed by the
DGCL. Upon the effectiveness of the Merger, the certificate of incorporation
and bylaws of the Surviving Corporation shall be the certificate of
incorporation and bylaws of Acquisition Company as in effect immediately prior
to the Merger. Upon the effectiveness of the Merger, the directors and officers
of the Surviving Corporation shall be those persons who were the directors and
officers of the Acquisition Company immediately prior to the Merger. The Merger
shall become effective upon the filing of a Certificate of Merger with the
Secretary of State of the State of Delaware, unless a different date and time is
specified as the effective time in such Certificate of Merger.
3.2 CONSIDERATION FOR SELLER STOCK. In order to consummate the
Merger:
3.2.1 CONVERSION OF SELLER STOCK. On the Closing Date, subject to
adjustment as provided in Section 3.2.2, each issued and outstanding share of
the Seller Stock, other than Dissenting Shares, shall, by virtue of the Merger,
automatically and without any action on the part of the holder thereof, be
converted into the right to receive (i) $20.15 in cash and (ii) 0.2038 share of
Buyer Stock. In the event that the Closing Date is after September 1, 1995 and
the condition in Section 6.1.3 has been satisfied prior to September 1, 1995,
the per share Merger Consideration shall be increased by a cash amount
determined by multiplying (x) the number of calendar days from and including
September 1, 1995 through but excluding the Closing Date by (y) $0.005.
3.2.2 ADJUSTMENT OF MERGER CONSIDERATION.
(a) If, as a result of the Closing Market Value of Buyer Stock being
less than $43.50, Seller elects to terminate this Agreement pursuant to Section
8.2.3(d) and Buyer exercises the right to negate such termination as provided
therein, the per share Merger Consideration shall be increased so that the sum
of the cash and the Closing Market Value of Buyer Stock comprising the per share
Merger Consideration equals $29.00. The increase shall take the form of
additional cash or Buyer Stock valued at the Closing Market Value, as Buyer may
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elect, or, alternatively, Buyer may elect to make the per share Merger
Consideration all cash at $29.00 per share.
(b) If the Closing Market Value of Buyer Stock is greater than $63.00,
the per share Merger Consideration shall be adjusted by reducing the Buyer Stock
portion so that the sum of the cash and the Closing Market Value of Buyer Stock
comprising the per share Merger Consideration equals $33.00.
3.2.3 FRACTIONAL SHARES. Certificates for fractions of shares of Buyer
Stock will not be issued. In lieu of a fraction of a share of Buyer Stock, each
holder of Seller Stock otherwise entitled to a fraction of a share of Buyer
Stock shall be entitled to receive an amount of cash equal to (i) the fraction
of a share of Buyer Stock to which such holder would otherwise be entitled,
multiplied by (ii) the Closing Market Value of Buyer Stock. Following
consummation of the Merger, no holder of Seller Stock shall be entitled to
dividends or any other rights in respect of any such fraction.
3.2.4 CANCELLATION OF UNISSUED AND TREASURY SHARES. No payment shall
be made in respect of authorized but unissued shares of the Seller Stock or
treasury shares of Seller Stock, and such shares shall be canceled upon the
Closing.
3.2.5 DISSENTING SHARES. Notwithstanding anything to the contrary
herein, Dissenting Shares shall not be converted into or represent a right to
receive the consideration specified in Sections 3.2.1 and 3.2.2, but the holder
thereof (to the extent that such holder, as of the Effective Time of the Merger,
has not effectively withdrawn or lost his dissenters' rights) shall be entitled
only to such rights as are granted by applicable Law.
3.3 SELLER OPTIONS. Upon the effectiveness of the Merger, each
Seller Option then outstanding and unexercised shall be converted automatically
into an option under the Buyer's 1988 Stock Option Plan ("Buyer's Plan") to
purchase shares of Buyer Stock in an amount and at an exercise price determined
as provided below and otherwise subject to the terms of the Buyer's Plan:
(i) The number of shares of Buyer Stock to be subject to
the new option shall be equal to the product of the number of
shares of Seller Stock subject to the original option and the
Adjustment Factor, provided, that any fractional shares of Buyer
Stock resulting from such multiplication shall be rounded to
the nearest share; and
(ii) The exercise price per share of Buyer Stock under the
new option shall be equal to the exercise price per share of
Seller Stock under the original option divided by the Adjustment
Factor, provided that such exercise price shall be rounded up to
the nearest cent.
The "ADJUSTMENT FACTOR" shall be the factor determined by dividing the
per share Merger Consideration (valuing the Buyer Stock portion of the Merger
Consideration at the Closing Market Value) by the Closing Market Value of Buyer
Stock.
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The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the IRC) shall be and
is intended to be effected in a manner which is consistent with Section 424(a)
of the IRC. The duration and other terms of the new option shall be the same
as the original option, except that all references to Seller shall be deemed to
be references to Buyer.
3.4 BUYER OPTION. Concurrently with the execution of this
Agreement, Seller and Buyer shall execute and deliver the Option Agreement.
Buyer and Seller confirm that the execution and delivery of the Option
Agreement constitute a material inducement to them to enter into this Agreement
and that absent the execution and delivery of the Option Agreement, they would
not enter into this Agreement on the terms and subject to the conditions
contained herein.
3.5 ACQUISITION COMPANY STOCK. Each share of capital stock of
Acquisition Company issued and outstanding on the Closing Date shall, by virtue
of the Merger, automatically and without any action on the part of the holder
thereof, be converted into the same number of shares of common stock of the
Surviving Corporation.
3.6 BUYER STOCK ADJUSTMENTS. The Buyer Stock portion of the per
share Merger Consideration shall be subject to appropriate adjustments in the
event that, subsequent to the date of this Agreement but prior to the Closing
Date, the outstanding Buyer Stock shall have been increased, decreased, changed
into or exchanged for a different number or kind of shares or securities
through reorganization, recapitalization, reclassification, stock dividend,
stock split, or other like changes in Buyer's capitalization.
3.7 EXCHANGE OF SELLER STOCK. To effect the exchange of Seller
Stock for the Merger Consideration:
3.7.1 BUYER TO MAKE MERGER CONSIDERATION AVAILABLE. At or prior to
the Closing Date, Buyer shall deposit, or shall cause to be deposited, with a
bank or trust company selected by Buyer (and reasonably acceptable to Seller)
(the "Exchange Agent"), for the benefit of the holders of certificates of
Seller Stock (the "Certificates"), for exchange in accordance with this Section
3.7, certificates representing the shares of Buyer Stock and cash which
together constitute the Merger Consideration (such certificates for shares of
Buyer Stock and cash, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund") to be issued and
paid, respectively, pursuant to this Agreement in exchange for outstanding
shares of Seller Stock.
3.7.2 EXCHANGE PROCEDURES.
(a) As soon as practicable after the Closing Date, Buyer shall
cause the Exchange Agent to mail to each holder of record of a Certificate or
Certificates at the Closing Date a form letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent) containing instructions for use in effecting the surrender of the
Certificates. Seller shall have the right to approve the form of the letter of
transmittal, which approval shall not unreasonably be withheld.
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(b) Upon surrender of a Certificate for exchange and cancellation
to the Exchange Agent, duly executed, the holder of such Certificates shall be
entitled to receive in exchange therefor (x) a certificate representing that
number of whole shares of Buyer Stock to which such holder of Seller Stock
shall have become entitled pursuant to the provisions of this Agreement, and
(y) a check representing the amount of cash, if any, which such holder has the
right to receive in respect of the Certificate surrendered pursuant to the
provisions of this Agreement and the Certificate so surrendered shall forthwith
be cancelled. No interest will be paid or accrued on the cash and unpaid
dividends and distributions, if any, payable to holders of Certificates.
(c) After the Closing Date, there shall be no transfers on the
stock transfer books of Seller of the shares of Seller Stock which were issued
and outstanding immediately prior to the Closing Date. If, after the Closing
Date, Certificates representing such shares are presented for transfer to the
Exchange Agent, they shall be cancelled and exchanged for certificates
representing shares of Buyer Stock and cash as provided in this Section 3.7.
(d) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of Seller for 120 days after the Closing Date shall be paid to
Buyer. Any shareholders of Seller who have not theretofore complied with this
Section 3.7 shall thereafter look only to Buyer for payment of their shares of
Buyer Stock, cash and unpaid dividends and distributions of the Buyer Stock
deliverable in respect of each share of Seller Stock such shareholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of Buyer, Seller, the Exchange
Agent nor any other person shall be liable to any former holder of shares of
Seller Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(e) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Buyer, the
posting by such person of a bond in such amount as Buyer may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate, the shares of Buyer Stock and cash deliverable in
respect thereof pursuant to this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby makes
the following representations and warranties to Buyer, each of which is being
relied upon by Buyer as a material inducement to enter into and perform this
Agreement:
4.1.1 ORGANIZATION OF SELLER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has full corporate power and authority to own or lease all of
its properties and assets and to carry on its
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business as now being conducted, which business is described in Seller's Annual
Report on Form 10-K for the year ended December 31, 1993 filed with the SEC.
Seller is duly licensed or qualified to do business and is in good standing in
each jurisdiction in which the nature of the business conducted by it or the
character or location of the employees or of the properties or assets owned or
leased by it makes such licensing or qualification necessary. The certificate
of incorporation and bylaws of Seller and all amendments thereto to the date
hereof (true, correct, and complete copies of which have been filed as
exhibits to Seller's reports under the Exchange Act) are in full force and
effect as of the date of this Agreement. The minute books of Seller reflect
all meetings held and contain complete and accurate records of all corporate
actions taken by Seller's board of directors (or any committee thereof) and
stockholders.
4.1.2 SUBSIDIARIES. (a) Section 4.1.2(a) of the Seller
Disclosure Schedule contains a true, correct and complete list of the
Subsidiaries, and sets forth the correct name of each Subsidiary, the
jurisdiction in which it is incorporated or otherwise organized, each
jurisdiction in which such Subsidiary is qualified to do business as a foreign
corporation, the number of shares of capital stock or other ownership interest
outstanding and the number of such shares or interests and the respective
ownership percentage held by Seller or any other Subsidiary. All the shares of
capital stock or other ownership interest of a Subsidiary that are owned by
Seller or a Subsidiary are owned free and clear of any liens, claims, charges
or other encumbrances. Each Subsidiary is duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization, has full corporate power and authority to own or lease its
properties and assets and to carry on its business as now being conducted and
is duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the employees or of the properties or assets owned or
leased by it makes such licensing or qualification necessary. The minute books
of each Subsidiary reflect all meetings held and contain complete and accurate
records of all corporate actions taken by such Subsidiary's board of directors
(or any committee thereof) and stockholder(s). There is no agreement to which
Seller or any Subsidiary is subject with respect to the issuance, sale, or
voting of issued or unissued shares of the capital stock of such Subsidiaries.
4.1.3 CAPITALIZATION. The entire authorized capital stock of Seller
consists of 15,000,000 shares of the Seller Stock, of which 2,770,367 shares
have been issued and are outstanding as of the date hereof, and 5,000,000
shares of preferred stock, $.01 par value per share, of which none has been
issued or is outstanding as of the date hereof. All the issued and outstanding
shares of the Seller Stock and the capital stock of each corporate Subsidiary
have been duly authorized and validly issued and are fully paid and
non-assessable, free of any preemptive right, and with no personal liability
attaching to the ownership thereof. Except for the Seller Options and the
Buyer Option, there are no options, warrants, calls, preemptive rights or
commitments of any character relating to the authorized but unissued capital
stock or treasury stock or any other equity security of Seller or any
Subsidiary or any securities or obligations convertible into or exchangeable
for or giving any person any right to subscribe for or acquire from Seller or
any corporate Subsidiary any shares of such capital stock, nor are there any
stock appreciation rights, limited rights or other similar rights or
obligations of Seller or any Subsidiary exercisable upon any circumstance,
including upon a change in control of Seller or any Subsidiary. The
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Seller Options, in the aggregate, grant to the holders thereof the right to
acquire up to 204,286 shares of the Seller Stock. The Seller Options and the
Buyer Option have been validly and properly issued. Section 4.1.3 of the
Seller Disclosure Schedule contains a true, correct and complete list of the
holders of all Seller Options, identifying with respect to each such holder the
number of shares of the Seller Stock subject to such option, the date of grant,
the exercise price, the vesting schedule and the expiration date.
4.1.4 AUTHORIZATION. Seller has all requisite corporate power and
authority to execute and deliver this Agreement and, subject to the approval of
this Agreement by the stockholders of Seller entitled to vote thereon and to
the receipt of all Regulatory Approvals, to consummate the transactions
contemplated by this Agreement in accordance with the terms hereof. This
Agreement has been duly authorized by the board of directors of Seller and,
except for the approval of the stockholders of Seller as to this Agreement and
the Merger, no other corporate proceedings on the part of Seller or any
Subsidiary are necessary to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Seller and
constitutes a valid and legally binding obligation of Seller enforceable
against Seller in accordance with its terms.
4.1.5 NON-CONTRAVENTION. The execution and delivery of this
Agreement by Seller does not, and the performance of this Agreement by Seller,
in accordance with the terms hereof, will not (a) violate any provision of the
charter or certificate of incorporation or bylaws of Seller or any Subsidiary
or (b) conflict with or result in a breach of, or default under, or result in
the creation of any lien, claim, charge or other encumbrance upon any of the
assets or properties of Seller or any Subsidiary pursuant to the provisions of,
or right of termination or acceleration under, any agreement, mortgage,
indenture or other document or instrument to which Seller or any Subsidiary is
a party or by which Seller, any Subsidiary or any of their respective
properties or assets is bound.
4.1.6 PROPERTIES AND ASSETS; ENVIRONMENTAL MATTERS.
(a) Except for (a) items reflected in the financial statements of
Seller as of September 30, 1994, (b) exceptions to title that do not interfere
materially with any Subsidiary's use and enjoyment of owned or leased real
property (other than real property acquired through foreclosure or a
transaction in lieu of foreclosure), (c) liens for current real estate taxes
not yet delinquent, or being contested in good faith, properly reserved against
(and reflected on the financial statements referred to in Section 4.1.8 below),
and (d) properties and assets sold or transferred in the ordinary course of
business consistent with past practice since September 30, 1994, Seller and the
Subsidiaries have good and, as to owned real property, marketable and insurable
title to all their respective properties and assets, including the properties
and assets reflected in the financial statements of Seller as of September 30,
1994, whether real, personal, tangible or intangible, free and clear of all
liens, claims, charges and other encumbrances. Seller and the Subsidiaries, as
lessees, have the right under valid and subsisting leases to occupy, use and
possess all property leased by them. All properties and assets used by Seller
and the Subsidiaries are in good operating condition and repair suitable for
the purposes for which they are currently utilized.
(b) Except as set forth at Section 4.1.6(b) of the Seller
Disclosure Schedule, to the Knowledge of any of Seller's officers and directors
and those of its Subsidiaries, none of
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Seller, any Subsidiary or any predecessor in title of any of them has used any
real property owned, leased, subject to purchase, or otherwise occupied or to
be occupied by Seller or any of the Subsidiaries for the manufacture, handling,
disposal, or storage of hazardous wastes, petroleum products, polychlorinated
biphenyls, chemicals, pollutants, contaminants, pesticides, radioactive
substances, or other toxic materials, or other materials or substances (in each
such case, other than small quantities of such substances in retail containers)
regulated under the environmental or public health Laws (collectively,
"Hazardous Substances"). Except as set forth at Section 4.1.6(b) of the Seller
Disclosure Schedule, to the Knowledge of any of Seller's officers and directors
and those of its Subsidiaries, no Hazardous Substances have been manufactured,
stored, or discharged on any property owned, leased, subject to purchase, or
occupied or to be occupied by Seller or any of the Subsidiaries, and all real
property owned, leased, subject to purchase, or occupied or to be occupied by
Seller or any of the Subsidiaries is free from Hazardous Substances and from
asbestos, and asbestos compounds, except for such Hazardous Substances,
asbestos and asbestos compounds which are present on or in such real property
in compliance with applicable Laws.
(c) Except as set forth at Section 4.1.6(c) of the Seller
Disclosure Schedule, neither Seller nor any Subsidiary has violated during the
last five years or is in violation of or liable under any environmental or
public health laws, including, without limitation, the federal Comprehensive
Environmental Response, Compensation and Liability Act and its state
counterparts.
4.1.7 BOOKS AND RECORDS. Except as set forth at Section 4.1.6(c) of
the Seller Disclosure Schedule, true and complete copies of the charter and
bylaws, and of the minute books, of Seller and of each Subsidiary, as in effect
on the date hereof, have been made available to Buyer.
4.1.8 FINANCIAL STATEMENTS.
(a) Seller has previously delivered or made available to Buyer
accurate and complete copies of the consolidated statements of financial
condition of Seller as of December 31, 1993, and the related consolidated
statements of income, stockholders' equity and cash flows for the years ended
December 31, 1993, 1992 and 1991, in each case accompanied by the audit report
of Peat Marwick, and the unaudited consolidated statements of financial
condition of Seller as of September 30, 1994 and 1993, and the related
unaudited consolidated statements of income, stockholders' equity and cash
flows for the nine months ended September 30, 1994 and 1993. The consolidated
statements of financial condition of Seller referred to herein (including the
related notes, where applicable) fairly present the consolidated financial
condition of Seller as of the respective dates set forth therein, and the
related consolidated statements of income, stockholders' equity and cash flows
(including the related notes, where applicable) fairly present the consolidated
results of operations, stockholders' equity and cash flows of Seller for the
respective periods or as of the respective dates set forth therein.
(b) Each of the financial statements referred to in Section
4.1.8(a) has been prepared in accordance with GAAP consistently applied during
the periods involved, except as may be noted therein. The audits of Seller and
the Subsidiaries have been conducted in
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accordance with generally accepted auditing standards. The books and records
of Seller and the Subsidiaries are being maintained in material compliance
with applicable legal and accounting requirements.
(c) Except (i) as set forth in Section 4.1.8(c) of the Seller
Disclosure Schedule, (ii) for those liabilities that are fully reflected or
reserved against on the consolidated statement of financial condition of Seller
as of September 30, 1994 delivered to Buyer and (iii) for liabilities incurred
in the ordinary course of business consistent with past practice since
September 30, 1994, neither Seller nor any of its Subsidiaries has or has
incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due) that, either alone or
when combined with all similar liabilities, is, or could reasonably be expected
to result in, a Material Adverse Change in Seller or the Surviving Corporation.
4.1.9 ABSENCE OF CHANGES. Except with respect to the transactions
contemplated hereby, since September 30, 1994, (i) the business of Seller and
each Subsidiary has been conducted only in the ordinary course consistent with
past practice, (ii) there has not been any Material Adverse Change in Seller
(except for the effects of adjustments under Statement of Financial Accounting
Standards No. 115 on the investment securities available for sale and the
mortgage-backed securities available for sale of Seller or its Subsidiaries
through November 30, 1994), (iii) there has not been any material change in any
policy or practice followed by Seller nor any Subsidiary in the ordinary course
of business, (iv) neither the Seller nor any Subsidiary has incurred any
material liability, except in the ordinary course of its business consistent
with prudent banking practices, (v) there has not been any agreement, contract
or commitment entered into, or agreed to be entered into, except for those in
the ordinary course of business, none of which has caused a Material Adverse
Change in Seller; (vi) there has not been any increase in or establishment of
any bonus, insurance, severance (including severance after a change in
control), deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of any stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase, life insurance or split dollar life insurance, retiree medical or
life insurance, or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any officers or key employees of
the Seller or any Subsidiary, except, with respect to cash compensation, in the
ordinary course of business consistent with past practice; and (vii) there has
not been any change in any of the accounting methods or practices of the Seller
or any Subsidiary other than changes required by applicable law or GAAP.
4.1.10 LEGAL PROCEEDINGS.
(a) Section 4.1.10 of the Seller Disclosure Schedule sets forth a
description of all legal, administrative or other claims, actions, suits or
other proceedings pending, or to the Knowledge of any of Seller's officers and
directors or those of any Subsidiary, threatened, to which Seller or any
Subsidiary is a party (other than mortgage foreclosure proceedings on
single-family residences or other routine legal proceedings) before any court
or arbitration tribunal or before or by any Governmental Authority. Neither
Seller nor any Subsidiary is a party to any pending or, to the Knowledge of any
of Seller's officers and directors, threatened legal, administrative or other
claim, action, suit, investigation,
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arbitration or proceeding challenging the validity or propriety of any of the
transactions contemplated by this Agreement or the Option Agreement. Neither
Seller nor any Subsidiary is subject to any judgment, order, writ, injunction,
decree or arbitration award.
(b) Except as set forth at Section 4.1.10(b) of the Seller
Disclosure Schedule, there are no claims, actions, suits, or other proceedings
pending, or, to the Knowledge of any of Seller's officers and directors or
those of any Subsidiary, threatened by or against any officer, director, agent,
or employee of Seller or any Subsidiary in connection with the business, assets
or properties of Seller or any Subsidiary.
4.1.11 CERTAIN CONTRACTS.
(a) Except as set forth at Section 4.1.11 of the Seller Disclosure
Schedule or as have been filed as an exhibit to Seller's Annual Report on Form
10-K for the year ended December 31, 1993 or to subsequent reports filed with
the SEC under the Exchange Act prior to the date hereof, and except as
contemplated by this Agreement, neither Seller nor any Subsidiary is a party to
or is bound or affected by, or receives benefits under (i) any material
agreement, arrangement or understanding not made in the ordinary course of
business; (ii) any agreement, arrangement or understanding relating to the
employment, election, retention in office or severance of any present or former
director, officer or employee of Seller or any Subsidiary; (iii) any agreement,
arrangement or understanding pursuant to which any payment (whether of
severance pay or otherwise) became or may become due to any director, officer
or employee of Seller or any Subsidiary upon execution of this Agreement or
upon or following consummation of the transactions contemplated by this
Agreement (either alone or in connection with the occurrence of any additional
acts or events); (iv) any agreement, arrangement or understanding with a labor
union; (v) any assistance agreement, supervisory agreement, memorandum of
understanding, consent order, cease and desist order or condition of any
regulatory order or decree with or by the OTS, the FDIC, the SEC or any other
regulatory agency; or (vi) any other agreement, arrangement or understanding
which would be required to be filed as an exhibit to Seller's Annual Report on
Form 10-K under the Exchange Act and which has not been so filed, in each case
whether written or oral. True and complete copies of all written contracts,
arrangements and understandings listed at Section 4.1.11 of the Seller
Disclosure Schedule, as in effect on the date hereof, have been made available
to Buyer.
(b) Neither Seller nor any Subsidiary is in default under, or with
the giving of notice or the lapse of time, or both, would be in default under,
any of the terms or conditions of any contract, agreement or commitment to
which Seller or any Subsidiary is a party (including but not limited to the
matters listed in paragraph (a) above). To the Knowledge of any of Seller's
officers and directors, or those of any of the Subsidiaries, there has occurred
no default or event which, with the giving of notice or the lapse of time, or
both, would constitute a default by any other party to any such contract,
agreement, or commitment.
4.1.12 INSURANCE. All insurance policies and bonds maintained by
Seller and the Subsidiaries are in full force and effect and have been in full
force and effect at all times during which Seller or any Subsidiary had any
insurable interest in the subject of such insurance policies and bonds. As of
the date hereof, neither Seller nor any Subsidiary has
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received any notice of cancellation or amendment of any such policy or bond or
is in default under any such policy or bond, no coverage thereunder is being
disputed and all material claims thereunder have been filed in a timely
fashion. True and complete copies of all such policies and bonds referred
to in this Section 4.1.12 have been made available to Buyer. Section 4.1.12 of
the Seller Disclosure Schedule sets forth a true and complete list of all
claims pending under each such policy or bond.
4.1.13 EMPLOYEE BENEFIT PLANS AND MATTERS.
(a) Except as set forth at Section 4.1.13(a) of the Seller
Disclosure Schedule, neither Seller nor any Subsidiary maintains, administers,
or otherwise contributes to or has any liability to or under any Employee Plan.
For purposes of this Section 4.1.13, "Seller" shall include any controlled
group (within the meaning of Section 414(b) of the IRC) of which Seller is a
member, all trades or businesses under common control (within the meaning of
Section 414(c) of the IRC) of which Seller is a member and all affiliated
service groups (within the meaning of Section 414(m) of the IRC) of which
Seller is a member. True, correct and complete copies of each Employee Plan
identified on the Seller Disclosure Schedule, including amendments and trust
agreements relating thereto, have been made available to Buyer, together with
(i) a complete and correct copy of the most recent annual report (Form 5500
including, if applicable, Schedule B thereto) prepared in connection with any
such Employee Plan, (ii) a true, correct and complete copy of the most recent
actuarial valuation report, if any, prepared in connection with any such
Employee Plan, and (iii) a true, correct and complete copy of the most recent
summary plan description (including any summaries of material modifications) of
each such Employee Plan. None of such Employee Plans is a "multiemployer
plan," as defined in Section 3(37) of ERISA, and neither Seller nor any
Subsidiary has been obligated to make a contribution to any such multiemployer
plan within the past five years. Since its inception, each such Employee Plan
which is intended to be qualified under Section 401(a) of the IRC (a "Qualified
Plan") has been operated and administered in all material respects in
accordance with the requirements for a qualified plan under Section 401(a) of
the IRC and each trust maintained in connection with each Qualified Plan has
been operated and administered in all material respects in accordance with the
requirements for a qualified trust under Section 401(a) of the IRC and for a
tax exempt trust under Section 501 of the IRC. Seller has received from the
Internal Revenue Service a determination letter with respect to the
qualification of each such Employee Plan and has delivered to Buyer a true and
complete copy of the most recent determination letter for each Qualified Plan,
as well as all correspondence relating to the application therefor. The
representations made as a part of the application for each such determination
letter were true and complete when made and continue to be true and complete.
Nothing has occurred since the date of the most recent applicable determination
letter that would adversely affect the qualified status of any Qualified Plan
and any trust forming a part thereof.
(b) True and complete copies of all Benefit Arrangements of Seller
have been made available to Buyer. Except as set forth at Section 4.1.13(b) of
the Seller Disclosure Schedule or as set forth in the Seller financial
statements referred to in Section 4.1.8 above, neither Seller nor any
Subsidiary has any liability to or under any Benefit Arrangement.
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(c) Except as set forth at Section 4.1.13(c) of the Seller
Disclosure Schedule, each of the Employee Plans and Benefit Arrangements of
Seller and its Subsidiaries is in compliance with the requirements prescribed
by any and all applicable laws and regulations, including, but not limited to,
ERISA and the IRC. Except as set forth at Section 4.1.13(c) of the Seller
Disclosure Schedule, no Employee Plan of Seller and its Subsidiaries which is
subject to Title IV of ERISA has been terminated other than in a standard
termination under Section 4041(b) of ERISA and no condition exists that could
constitute grounds for the termination of any such Employee Plan under Section
4042 of ERISA. Neither Seller nor any Subsidiary has incurred, or reasonably
expects to incur, any liability to the Pension Benefit Guaranty Corporation,
except for required premium payments which have been paid when due. Neither
Seller nor any Subsidiary nor any Employee Plan of Seller and its Subsidiaries
has engaged in a "prohibited transaction," as defined in Section 406 of ERISA
and Section 4975 of the IRC, which could subject any of them or Buyer or
Acquisition Company to material liability under Section 409 or 502(i) of ERISA
or Section 4975 of the IRC. Neither Seller nor any Subsidiary has incurred or
reasonably expects to incur any material withdrawal liability under Title IV of
ERISA. No Employee Plan of Seller and its Subsidiaries subject to Part 3 of
Subtitle B of Title I of ERISA or Section 412 of the IRC, or both, has any
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA,
whether or not waived, or "unfunded current liability" as defined in Section
412(l) of the IRC, taking into account contributions made within the period
described in Section 412(c)(10) of the IRC. Neither Seller nor any Subsidiary
failed to make any contribution or pay any amount due and owing as required by
the terms of any Employee Plan or Benefit Arrangement. No events have occurred
or are reasonably expected to occur with respect to any Employee Plan of Seller
or any Subsidiary that would cause a material change in the value of the assets
(except, with respect to the Seller ESOP, for changes in the market value of
the Seller Stock) or amount or present value of accrued benefits and other
liabilities of such Employee Plan.
(d) Except as set forth at Section 4.1.13(d) of the Seller
Disclosure Schedule, no assets of any Employee Plan other than the Seller ESOP
are directly or indirectly invested in any personal or real property used by
Seller or any stock, obligations or securities issued by Seller.
(e) No Employee Plan, Benefit Arrangement or other agreement, plan
or arrangement, individually or collectively, provides for any payment by
Seller or any Subsidiary to any employee or independent contractor, in
connection with or as a result of the transactions contemplated by this
Agreement, that is not deductible under Section 162(a)(1), 280G or 404 of the
IRC.
(f) Neither Seller nor any Subsidiary is a party to, or is bound
by, any collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization, nor is Seller or any
Subsidiary the subject of any material proceeding asserting that Seller or any
such Subsidiary has committed an unfair labor practice or seeking to compel
Seller or such Subsidiary to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike involving Seller or any
Subsidiary pending or, to the Knowledge of any of Seller's directors and
officers, threatened, nor to their Knowledge is there any activity involving
its or any Subsidiary's employees seeking to certify a collective bargaining
unit or engaging in any other organizational activity.
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4.1.14 COMPLIANCE WITH APPLICABLE LAWS. Except as set forth at
Section 4.1.14 of the Seller Disclosure Schedule, each of Seller and the
Subsidiaries has complied with all Laws applicable to it or to the operation of
its business and none of them has received any notice of any alleged claim,
threatened claim or violation of or liability or potential responsibility under
any such Laws that has not heretofore been cured and for which there is no
remaining liability.
4.1.15 REGULATORY FILINGS AND REPORTS. Since January 1, 1990, each of
Seller and the Subsidiaries has filed all documents required to be filed by it
under federal securities Laws or applicable savings and loan and savings bank
Laws and regulations, and all such documents, as finally amended, were complete
and accurate, complied in all material respects as to form and substance with
all applicable Laws and did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
4.1.16 TAX MATTERS. Except as set forth at Section 4.1.16 of the
Seller Disclosure Schedule:
(a) Seller has timely filed on behalf of itself and all of the
Subsidiaries, with the appropriate Governmental Authorities, the Tax Returns.
All of the Tax Returns are accurate and complete in all material respects.
(b) Seller and the Subsidiaries have collected and withheld all
taxes which they are or have been required to collect or withhold and have
timely submitted all such collected and withheld amounts to the appropriate
authorities. Seller and the Subsidiaries are in compliance with the back-up
withholding and information reporting requirements under the IRC, and the rules
and regulations of the Internal Revenue Service thereunder.
(c) All federal, state and local taxes, due and payable by Seller
or any Subsidiary thereof pursuant to the Tax Returns, or pursuant to any
assessment with respect to taxes, penalties or interest in any of such
jurisdictions, have been accrued or paid.
(d) The reserves for taxes contained in the financial statements
(including the notes thereto) described in Section 4.1.8 of this Agreement are
adequate to cover the tax liabilities, including penalties and interest, of
Seller and the Subsidiaries for all periods up to and including September 30,
1994.
(e) Neither Seller nor any Subsidiary has received any notice of
any deficiency or assessment or proposed deficiency or assessment by the
Internal Revenue Service or any other taxing authority in connection with the
Tax Returns which, individually or in the aggregate, exceeds $50,000 and which
has not been resolved. There is no action, suit, proceeding, audit,
examination, investigation, or claim pending, or to the Knowledge of any of
Seller's officers and directors, or those of any of the Subsidiaries,
threatened, in respect of any taxes for which Seller or any Subsidiary thereof
is or may become liable if such action, suit, proceeding, audit, examination,
investigation, or claim were to be resolved, in whole or in part, adversely to
Seller or any Subsidiary thereof. To the Knowledge of any of Seller's officers
and directors, or those of any of the Subsidiaries, no fact exists which
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constitutes grounds for the assessment of material additional taxes with
respect to Seller or any Subsidiary. Seller has made available to Buyer a
true, correct and complete copy of the agreement for the allocation or sharing
of taxes among the Seller and the Subsidiaries.
(f) Except as set forth at Section 4.1.16(f) of the Seller
Disclosure Schedule, neither Seller nor any Subsidiary has waived any Law
fixing, or consented to the extension of, any period of time for assessment of
any tax. Section 4.1.16(f) of the Seller Disclosure Schedule sets forth a true
and complete list of all tax returns of Seller and its Subsidiaries which are
open to audit.
(g) Each of the NFS Banks is, and for all taxable years for which
the applicable statute of limitations on assessment of taxes has not run on the
date hereof has been, a "domestic building and loan association" as defined in
Section 7701(a)(19) of the IRC, with a "qualifying assets test" ratio for
purposes of such definition of not less than 60 percent.
4.1.17 BROKER'S FEES. Except for payments due to Tucker Anthony from
Seller as a result of the Merger and pursuant to that certain letter agreement
between Seller and Tucker Anthony dated as of September 21, 1994 (the "Tucker
Agreement"), a true, correct and complete copy of which has been provided to
Buyer, no agent, finder, broker, investment banker or other person or entity
acting on behalf or under authority of Seller or any Subsidiary is or will be
entitled to any fee as compensation for services as broker or finder or any
other commission or similar fee directly or indirectly in connection with this
Agreement, or any of the transactions contemplated hereby.
4.1.18 INTELLECTUAL PROPERTY. Except where there would be no Material
Adverse Change in Seller, Seller and each Subsidiary owns or possesses valid
and binding licenses and other rights to use without payment all material
patents, copyrights, trade secrets, trade names, servicemarks and trademarks
used in its businesses and neither Seller nor any Subsidiary has received any
notice of conflict with respect thereto that asserts the right of others.
Seller and each Subsidiary have in all material respects performed all the
obligations required to be performed by them and are not in default in any
material respect under any contract, agreement, arrangement or commitment
relating to any of the foregoing, except where such nonperformance or default
would not, individually or in the aggregate, result in a Material Adverse
Change in Seller.
4.1.19 TAKEOVER RESTRICTIONS. (a) The Board of Directors of Seller
has approved the transactions contemplated by this Agreement such that the
supermajority vote provisions and restrictions of Section 203 of the DGCL and
of Seller's Certificate of Incorporation will not apply to this Agreement or
any of the transactions contemplated hereby.
(b) No "business combination", "moratorium", "control share", or
other federal or state antitakeover or change in control statute or regulation
(collectively, "Antitakeover Provisions") other than HOLA, FDIA, BHCA or other
banking regulatory statutes (i) prohibits or restricts Seller's ability to
perform its obligations under this Agreement, or its ability to consummate the
transactions contemplated hereby, (ii) would have the effect of invalidating or
voiding this Agreement, or any provision hereof, (iii) would subject Buyer or
Acquisition Company to any material impediment or condition in connection with
the exercise of any
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of its rights under this Agreement or the Option Agreement, or (iv) would
provide severance payments to any employee of Seller or any Subsidiary.
4.1.20 MATTERS REGARDING THE NFS BANKS.
(a) The NFS Banks are stock savings banks organized and validly
existing under the laws of the United States of America. The NFS Banks are
members in good standing of the Federal Home Loan Bank System.
(b) All eligible deposit accounts issued by the NFS Banks are
insured by the FDIC to the full extent permitted under applicable Law.
(c) Neither of the NFS Banks is a party to any agreements,
arrangements or understandings with, or is subject to any order or directive
by, or is a recipient of any extraordinary supervisory letter from, OTS or the
FDIC which was a result of a violation of any Laws, restricts materially the
conduct of its business, or relates in any manner to its capital adequacy,
credit policies or management, nor has it or Seller been informed by the OTS or
the FDIC that it is issuing or requesting any of the foregoing.
(d) Each of the NFS Banks is a "qualified thrift lender" (as that
term is used in Section 10(m) of HOLA).
(e) No action currently is being taken, proposed or, to the
Knowledge of Seller's directors and officers, threatened by the OTS or the FDIC
to restrict the operations of the NFS Banks in any way, to issue a capital or
other directive to the NFS Banks, to subject the NFS Banks to a supervisory,
management, operating or other written agreement or a cease-and-desist order,
nor to appoint a manager, conservator or receiver for the NFS Banks.
(f) Except as disclosed at Section 4.1.20(f) of the Seller
Disclosure Schedule, or except as noted in the OTS or FDIC examination reports
of each of the NFS Banks referred to in Section 4.1.26 below and made available
to Buyer, each of the NFS Banks has conducted its business in accordance with
all applicable Laws, including, without limitation, disclosure, usury, equal
credit opportunity, equal employment, fair credit reporting, antitrust and
other Laws and the forms, procedures and practices used by each of the NFS
Banks comply with such Laws.
(g) NFS Bank has a CRA rating of "outstanding" and Plaistow has a
CRA rating of "satisfactory". To the Knowledge of the officers and directors
of Seller, since their last Federal regulatory authority examination of CRA
compliance, there has been no protest of any application of either NFS Bank or
Plaistow based on CRA compliance.
4.1.21 RESERVES FOR LOSSES. All reserves or other allowances for
possible losses reflected in Seller's most recent Quarterly Report on Form 10-Q
filed with the SEC under the Exchange Act complied with all statutory and
regulatory requirements, and except as specifically noted in the OTS or FDIC
examination reports of the NFS Banks referred to in Section 4.1.26 below and
made available to Buyer, neither Seller nor any Subsidiary has been notified by
the OTS, the FDIC or Seller's independent auditor, in writing or otherwise,
that such reserves are inadequate or that the NFS Banks' practices and policies
in
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establishing such reserve and in accounting for delinquent and classified
assets materially fails to comply with applicable accounting or regulatory
requirements, or that the OTS, the FDIC or the independent auditors of Seller
believe such reserves to be inadequate or inconsistent with the NFS Banks'
historical loss experience.
4.1.22 LOAN PORTFOLIO. Except as set forth in Section 4.1.22 of the
Seller Disclosure Schedule, as of November 30, 1994, neither the Seller nor any
Subsidiary is a party to any written or oral (a) loan agreement, note or
borrowing arrangement (including, without limitation, leases and credit
enhancements) (collectively, "LOANS") the unpaid principal balance of which
exceeds $100,000 and as to which the obligor was, as of that date, over 90 days
delinquent in payment of principal or interest, or (b) Loan with any director,
executive officer or, to the Knowledge of the officers and directors of Seller,
five percent stockholder of the Seller or any Subsidiary. Section 4.1.22 of
the Disclosure Schedule sets forth as of November 30, 1994, (i) all of the
Loans in original principal amount in excess of $100,000 of the Seller or any
Subsidiary that as of that date was classified as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Restructured", "Watch list" or words of similar import, together
with the principal amount of and accrued and unpaid interest on each such Loan
and the identity of the obligor thereunder, and (ii) by category of Loan (i.e.,
commercial, consumer, etc.), all of the other Loans of the Seller and the
Subsidiaries that as of November 30, 1994 were classified as such, together
with the aggregate principal amount of such Loans by category. Since November
30, 1994, there has been no material adverse change in the Loan portfolio of
Seller and its Subsidiaries. Seller shall promptly inform Buyer in writing of
any Loan the original principal balance of which exceeds $100,000 that becomes
classified in the manner described in this Section 4.1.22, or any Loan the
classification of which is materially and adversely changed at any time after
the date of this Agreement.
4.1.23 INVESTMENT SECURITIES. Section 4.1.23(a) of the Seller
Disclosure Schedule sets forth the book and market value as of November 30,
1994 of the investment securities, mortgage backed securities and securities
classified as available for sale by the Seller and each Subsidiary. Section
4.1.23(b) of the Disclosure Schedule sets forth the names of all the joint
ventures in which the Seller or any Subsidiary has an investment (whether or
not such joint ventures remain active). Except for pledges to secure public
and trust deposits, borrowings, repurchase agreements and reverse repurchase
agreements entered into in arms'-length transactions pursuant to normal
commercial terms and conditions and other pledges required by law, none of the
investments reflected in the consolidated balance sheet of the Seller included
in its Quarterly Report on Form 10-Q for the period ended September 30, 1994,
and none of the material investments made by the Seller or any of its
Subsidiaries since September 30, 1994, is subject to any restriction
(contractual, statutory or otherwise) that would materially impair the ability
of the entity holding such investment freely to dispose of such investment
within a reasonable time.
4.1.24 DERIVATIVE TRANSACTIONS. Except as set forth in Section 4.1.24
of the Seller Disclosure Schedule, neither the Seller nor any of the
Subsidiaries has engaged in transactions in or involving structured notes,
forwards, futures, options on futures, swaps or other derivative instruments.
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4.1.25 DEPOSITS AND BORROWINGS. The deposit accounts and any
borrowings of the NFS Banks comply in all material respects with all applicable
Laws.
4.1.26 EXAMINATION REPORTS. The last safety and soundness
examinations of NFS Bank and Plaistow by the OTS or the FDIC prior to the date
of this Agreement were performed as of June 27, 1994, and access to true,
correct and complete copies of the reports of examination related thereto have
been made available to Buyer. If either of NFS Bank or Plaistow was notified
of any deficiencies as a result of said examinations or any prior examinations
of either of NFS Bank or Plaistow by the OTS or the FDIC, it has taken action
to correct each such deficiency, which action it believes is to the
satisfaction of the appropriate agency, and it has not received notice of any
kind that such action is inadequate, and if any changes in operating methods or
organization were required by reason of such examinations, or such other
examinations, such changes have been made.
4.1.27 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in
Seller's proxy statement for its 1994 annual meeting of shareholders or set
forth in Section 4.1.27 of the Seller Disclosure Schedule, no officer or
director of Seller or its Subsidiaries, or any "associate" (as such term is
defined in Rule 14a-1 under the Exchange Act) of any such officer or director,
has any material interest in any material contract or property (real or
personal), tangible or intangible, used in or pertaining to the business of
Seller or any of Seller's Subsidiaries that would be required to be disclosed
in a proxy statement to shareholders under Regulation 14A of the Exchange Act.
4.1.28 FAIRNESS OPINION. Seller has received from Tucker Anthony an
opinion, dated the date of or immediately before the date of this Agreement,
concluding that, in such financial adviser's opinion, the Merger Consideration
is fair, from a financial point of view, to the Seller's stockholders.
4.1.29 NO MISREPRESENTATION. None of the representations and
warranties of Seller or any Subsidiary set forth in this Agreement, nor any
matter disclosed in the Seller Disclosure Schedule or in any of the schedules,
lists, certificates, exhibits or other documents prepared by Seller or any
Subsidiary and delivered to Buyer hereunder or in connection with the
transactions contemplated hereby (excluding the informational materials
supplied to Buyer by Tucker Anthony, with respect to which neither Tucker
Anthony nor Seller makes any representation except as set forth below) contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances in which they were made, not misleading. With respect to the
informational materials supplied to Buyer by Tucker Anthony, Seller represents
that such informational materials were prepared in good faith and to the
Knowledge of Seller's officers and directors they are not, taken as a whole,
untrue in any material respect.
4.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby makes
the following representations and warranties to Seller, each of which is being
relied upon by Seller as a material inducement to enter into and perform this
Agreement:
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4.2.1 ORGANIZATION.
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts. Buyer has
full corporate power and authority to own or lease its properties and assets
and to carry on its business as now being conducted. Buyer is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
employees or of the properties or assets owned or leased by it makes such
licensing or qualification necessary, except where the failure to be so
licensed or qualified would not result in a Material Adverse Change in Buyer.
(b) Acquisition Company is or will be at the Closing Date a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Acquisition Company has or will have at the
Closing Date full corporate power and authority to participate in the Merger.
4.2.2 SUBSIDIARIES. Each Buyer Subsidiary which is a Significant
Subsidiary (within the meaning of Regulation S-X of the SEC) is duly organized,
validly existing and in good standing under the laws of its state of
incorporation or organization, has full corporate or similar power and
authority to own or lease its properties and assets and to carry on its
business as now being conducted, and is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the nature of
the business conducted by it or the character or location of the employees or
of the properties or assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or
qualified would not result in a Material Adverse Change in Buyer. The shares
of capital stock or other ownership interest of each such Buyer Subsidiary are
owned by Buyer or a Buyer Subsidiary as set forth in Buyer's Annual Report on
Form 10-K for the year ended December 31, 1993 filed with the SEC.
4.2.3 CAPITALIZATION.
(a) The entire authorized capital stock of Buyer consists of
50,000,000 shares of the Buyer Stock, of which 18,999,093 shares were issued
and outstanding as of September 30, 1994, and 1,000,000 shares of preferred
stock, $10.00 par value per share, none of which has been issued or are
outstanding as of the date hereof. All the issued and outstanding shares of
Buyer Stock have been duly authorized and validly issued and are fully paid and
non assessable and were not issued in violation of any preemptive rights. When
issued in accordance with the terms of this Agreement, the shares of Buyer
Stock to be issued pursuant to the Merger will be duly authorized, validly
issued, fully paid and nonassessable, without liability attaching to the
ownership thereof, and will not have been issued in violation of any preemptive
rights.
(b) All the issued and outstanding shares of capital stock of
Acquisition Company have been or, at the Closing Date, will be duly authorized
and validly issued, fully paid and nonassessable, will not have been issued in
violation of any preemptive rights and will be owned by Buyer.
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4.2.4 AUTHORIZATION. Buyer has all requisite corporate power and
authority to execute and deliver this Agreement and, subject to receipt of all
Regulatory Approvals, to consummate the transactions contemplated hereby in
accordance with the terms hereof. The execution, delivery and performance of
this Agreement has been duly authorized by the board of directors of Buyer and
has been or will be prior to the Closing Date duly authorized by the
stockholder and board of directors of Acquisition Corporation, and no other
corporate proceedings or stockholder approvals on the part of Buyer or
Acquisition Company are necessary to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Buyer and
constitutes a valid and legally binding obligation of Buyer enforceable against
Buyer in accordance with its terms.
4.2.5 NON-CONTRAVENTION. The execution and delivery of this
Agreement by Buyer does not, and the performance of this Agreement, in
accordance with the terms hereof, will not (a) violate any provision of the
articles of incorporation or charter or bylaws of Buyer or Acquisition Company
or (b) conflict with or result in a breach of, or default under, or result in
the creation of any lien, claim, charge or other encumbrance upon any of the
assets or properties of Buyer or Acquisition Company pursuant to the provisions
of any provision of, any agreement, mortgage, indenture or other document or
instrument to which Buyer or Acquisition Company is a party or by which it or
any of their respective properties or assets are bound, or (c) violate any
existing Laws binding on Buyer or Acquisition Company or any of their
properties or assets.
4.2.6 FINANCIAL MATTERS. (a) Buyer has previously delivered or made
available to Seller accurate and complete copies of the consolidated balance
sheets of Buyer as of December 31, 1993 and 1992, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
years ended December 31, 1993, 1992 and 1991, in each case accompanied by the
audit report of Peat Marwick, and the unaudited consolidated balance sheets of
Buyer as of September 30, 1994 and 1993, and the related unaudited consolidated
statements of income, changes in stockholders' equity and cash flows for the
nine months ended September 30, 1994 and 1993. The consolidated statements of
financial condition of Buyer referred to herein (including the related notes,
where applicable), fairly present the consolidated financial condition of Buyer
as of the respective dates set forth therein, and the related consolidated
statements of income, stockholders' equity and cash flows (including the
related notes, where applicable) fairly present the consolidated results of
operations, stockholders' equity and cash flows of Buyer for the respective
periods or as of the respective dates set forth therein.
(b) Each of the financial statements referred to in Section
4.2.6(a) has been prepared in accordance with GAAP consistently applied during
the periods involved, except as may be noted therein. The audits of Buyer have
been conducted in accordance with GAAP. The books and records of Buyer and
each Buyer Subsidiary included in such financial statements are being
maintained in material compliance with applicable legal and accounting
requirements.
(c) Buyer has available to it sources of capital and financing
sufficient to fulfill its obligations hereunder, including, without limitation,
the obtaining of all Regulatory Approvals.
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4.2.7 ABSENCE OF CHANGES. Since September 30, 1994, the business of
Buyer has been conducted only in the ordinary course consistent with past
practice and there has not been any Material Adverse Change in Buyer, nor has
there been any material change in any policy or practice followed by Buyer or
any Buyer Subsidiary in the ordinary course of business.
4.2.8 LEGAL PROCEEDINGS. Neither Buyer nor any Buyer Subsidiary is a
party to any pending or, to the Knowledge of any of Buyer's officers and
directors, threatened legal, administrative or other claim, action, suit,
investigation, arbitration or proceeding challenging the validity or propriety
of any of the transactions contemplated by this Agreement.
4.2.9 REGULATORY FILINGS AND REPORTS. Since January 1, 1990, each of
Buyer and the Buyer Subsidiaries has filed all documents required to be filed
by it under federal securities laws or applicable federal and state savings and
loan and savings bank laws and regulations, and all such documents, as finally
amended, were complete and accurate, complied in all material respects as to
form and substance with all applicable requirements of law and regulation and
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.2.10 BROKER'S FEES. Except for payments due to Morgan Stanley & Co.
Incorporated from Buyer as a result of the Merger, no agent, finder, broker,
investment banker, person or firm acting on behalf or under authority of Buyer
or Acquisition Company is or will be entitled to any fee as compensation for
services as broker or finder or any other commission or similar fee directly or
indirectly in connection with this Agreement or any of the transactions
contemplated hereby.
4.2.11 BENEFICIAL OWNERSHIP OF SELLER STOCK. As of the date hereof,
neither Buyer nor any Buyer Subsidiary beneficially owns any shares of Seller
Stock or has any option, warrant or right of any kind to acquire the beneficial
ownership of any Seller Stock, other than pursuant to this Agreement and the
Buyer Option. Section 4.2.11 of the Buyer Disclosure Schedule (which Section
shall be updated hereafter by Buyer upon the request of Seller) sets forth the
number of shares of Seller Stock, if any, beneficially owned by Buyer as of the
date hereof, or the date of such update, as the case may be.
4.2.12 MATTERS REGARDING BANKING SUBSIDIARIES. The Buyer Subsidiaries
which are banks have the CRA ratings set forth in Section 4.2.12 of Buyer
Disclosure Schedule. To the Knowledge of the officers and directors of Buyer,
since their last Federal regulatory authority examination of CRA compliance,
there has been no protest of any application of such Buyer Subsidiaries based
on CRA compliance.
4.2.13 NO MISREPRESENTATION. None of the representations and
warranties of Buyer set forth in this Agreement nor any matter disclosed in any
of the schedules, lists, certificates, exhibits or other documents delivered to
Seller hereunder or in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they were made, not misleading.
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ARTICLE V
COVENANTS
5.1 REGULATORY APPLICATIONS.
(a) Upon the execution and delivery of this Agreement, the parties
hereto shall thereupon cause to be prepared and filed, as soon as is reasonably
practical, but not later than 45 days after the date of this Agreement, all
required Applications and any other filings with Governmental Authorities that
are necessary or contemplated for consummation of the Merger and the other
transactions contemplated by this Agreement. Such filing deadline is subject
to receipt by the filing party from the other party hereto of all information
required in connection with the filing of such Applications and other filings.
The parties hereto will use their best efforts to supply, on a timely basis, to
the other party all information required in connection with the preparation and
filing of such Applications and other filings. Such Applications and filings
shall be in such forms as may be prescribed by the respective Governmental
Authorities and shall contain such information as they may require. The
parties hereto will cooperate with each other, including their respective
attorneys, advisers and other representatives, and will use their best efforts
to prepare and execute all necessary documentation, to effect all necessary or
contemplated filings and to obtain all necessary or contemplated permits,
consents, Regulatory Approvals, and authorizations of Governmental Authorities
and third parties which are necessary or contemplated to consummate the
transactions contemplated by this Agreement. Buyer shall deliver to Seller,
and Seller shall deliver to Buyer, reasonably in advance of the time it intends
to file any such Application or other filing, a draft of the proposed
Application or other filing, and each shall cooperate with the other in
responding to and considering any reasonable questions or comments regarding
such draft before it is finalized and filed, provided that such questions or
comments are received on a timely basis so as to permit response or
incorporation. Without limiting the generality of the foregoing, each of the
parties shall have the right to review and approve in advance all
characterizations of the information relating to it and any of its subsidiaries
that appears in any Application to any Governmental Authority in connection
with the transactions contemplated by this Agreement. Each party shall deliver
to the others, promptly after receipt, copies of all written communications
regarding Applications and Regulatory Approvals and shall immediately advise
the others of all oral communications regarding Applications and Regulatory
Approvals.
(b) If so requested by Buyer and in cooperation with Buyer, Seller
and its directors and officers shall, and shall use their best efforts to cause
the NFS Banks and their respective directors and officers to, promptly take all
necessary corporate and other action, prepare and file all necessary
documentation, make all necessary applications and filings and obtain as
promptly as practicable all permits, consents, approvals and authorizations of
all third parties and Governmental Authorities that are necessary to change the
names of the NFS Banks, to amend the charter and by-laws of the NFS Banks, to
convert the NFS Banks to a state or national bank charter or to merge the NFS
Banks into a national banking association controlled by Buyer, so that such
name changes, amendments, conversions or mergers may be consummated in
conjunction with the consummation of the Merger, whether effective at the time
of or immediately before or after the Merger.
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5.2 PROXY STATEMENT/REGISTRATION STATEMENT.
(a) Upon the execution and delivery of this Agreement, Buyer shall
thereupon cause to be prepared and filed with the SEC, as soon as reasonably
practical, but not later than 45 days after the date hereof (provided that
Seller has given to Buyer all information concerning Seller which is required
for inclusion in the Registration Statement, including the Proxy
Statement/Prospectus), a Registration Statement, including the Proxy Statement/
Prospectus, complying in form and substance in all material respects with the
requirements of applicable Laws for the purpose of registering the Buyer Stock
to be issued as part of the Merger Consideration and will use its best efforts
to have the Registration Statement declared effective by the SEC upon receipt
of the Regulatory Approvals, or as soon thereafter as possible and remain
effective through the Closing Date.
(b) Buyer shall deliver to Seller, reasonably in advance of the
time it intends to file the Registration Statement with the SEC, a draft
Registration Statement for review and comment upon all information relating to
Seller and any of the Subsidiaries that appears in the Registration Statement.
Buyer shall cooperate with Seller in responding to and considering any
reasonable questions or comments regarding such draft Registration Statement
before it is finalized and filed, provided that such questions or comments are
received on a timely basis so as to permit response or incorporation.
(c) If at any time after the Registration Statement is first filed
with the SEC, and prior to the Closing Date, any event relating to Seller or
any of the Subsidiaries should be discovered which should be set forth in an
amendment of, or a supplement to, the Registration Statement, including the
Proxy Statement/Prospectus, Seller shall promptly so inform Buyer, and will
furnish all necessary information to Buyer relating to such event. Buyer shall
thereupon cause an amendment to the Registration Statement to be filed with the
SEC, and upon the effectiveness of such amendment, if appropriate, Seller will
take any necessary action as promptly as practicable to permit an appropriate
amendment or supplement to be transmitted to the holders of Seller Stock
entitled to vote at the Stockholders Meeting, and will transmit such amendment
or supplement as promptly as practicable.
5.3 STOCKHOLDER APPROVAL.
(a) Concurrent with calling the 1995 annual meeting of Seller's
stockholders, or at such other time as Buyer and Seller may reasonably agree,
but in no event earlier than five Business Days following the date the
Registration Statement (including any amendments necessitated by Regulatory
Approvals) is declared effective by the SEC, Seller will (i) duly and properly
call, and give notice of, and thereafter cause to be convened and held no later
than 30 days after such notice, a meeting of its stockholders (including any
adjournment of such meeting which may be necessary), for the purpose of
approving this Agreement (including the Plan of Merger) and for such other
purposes as may be necessary to effect the transactions contemplated hereby
(the "Stockholders Meeting"), and (ii) subject to the fiduciary duty of its
directors, recommend to its stockholders the approval of this Agreement
(including the Plan of Merger) and use its best efforts to obtain, as promptly
as reasonably practical, such approval. Seller shall mail the Proxy
Statement/Prospectus to its stockholders who are entitled to vote at the
Stockholders Meeting. Seller shall publish such notice or
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notices of the Stockholders Meeting as may be required, and at the times and in
the form and manner required, by applicable provisions of federal and state
statutes, regulations, rules, and orders.
(b) At the time the Proxy Statement/Prospectus is mailed to the
stockholders of Seller for the solicitation of proxies for the approvals
referred to above and at all times subsequent to such mailing up to and
including the Closing Date, Buyer shall cause the Proxy Statement/Prospectus
(including any supplements thereto) and any other documents or notices
delivered to stockholders in connection therewith:
(i) to comply in all material respects with applicable
provisions of the Exchange Act and rules and regulations of the SEC
thereunder and all other applicable Laws; and
(ii) with respect to all information set forth therein
relating to Buyer and its subsidiaries, this Agreement, the Merger,
the Option Agreement, and all other transactions contemplated hereby
and thereby, to not contain any statement which, at the time and
in light of the circumstances under which it is made, is false or
misleading with respect to any material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not false or misleading, or necessary to
correct any statement in an earlier communication with respect to the
solicitation of a proxy for the same meeting or subject matter which
has become false or misleading.
Buyer's obligations hereunder are subject to Seller promptly furnishing
Buyer with the information relating to Seller and the Subsidiaries which is
required under applicable Laws for inclusion in the Proxy Statement/Prospectus,
which information Seller represents and warrants to Buyer shall not contain any
statement which, at the time and in light of the circumstances under which it
is furnished, is false or misleading with respect to any material fact or omits
to state any material fact required to be stated therein or necessary in order
to make the information furnished therein not false or misleading. Seller
further represents and warrants to Buyer that it will amend, supplement or
revise any information so furnished as necessary to make the foregoing sentence
correct and true in all material respects at and as of all times from the date
of the mailing of the Proxy Statement/Prospectus to the stockholders of Seller
to and including the Closing Date.
5.4 BLUE SKY LAWS.
(a) Buyer shall take all actions necessary to have the shares of
Buyer Stock to be delivered as part of the Merger Consideration qualified or
registered for offering and sale, or to identify and perfect an exemption
therefrom, under the securities or "Blue Sky" laws of each jurisdiction within
the United States in which stockholders of Seller reside.
(b) Buyer shall provide all notices and make all filings with the
Nasdaq NNM as may be required in connection with the transactions contemplated
hereby.
5.5 OTHER APPROVALS. The parties shall cooperate and use their
best efforts to obtain all written consents and approvals of other persons in
connection with any lease or
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other agreement the benefits of which cannot be retained upon consummation of
the transactions contemplated hereby without such written consent or approval.
5.6 CONDUCT OF THE BUSINESS OF SELLER AND ITS SUBSIDIARIES.
5.6.1 NEGATIVE COVENANTS. From and after the date of this Agreement
up to and including the Closing Date, none of Seller or the Subsidiaries shall,
except with the prior written consent of Buyer, do any one or more of the
following:
(a) Except for Seller Stock issued upon exercise of Seller Options
existing at the date of this Agreement, issue, sell, pledge, dispose of, grant,
encumber or authorize the issuance, sale, pledge, disposition, grant or
encumbrances of any shares of Seller Stock or shares of stock of the NFS Banks
or securities exercisable for or convertible into any such shares (including
the grant of additional options or other rights under any option or similar
plan of Seller) or stock appreciation or similar rights with respect to such
shares;
(b) (i) Amend or enter into any agreement with any employee
establishing the terms of employment or severance or termination benefits or
permit any such agreement to be so renewed or extended except as Buyer may
otherwise request; (ii) adopt or establish any Employee Plan or Benefit
Arrangement or, except as reasonably necessary to comply with applicable Law or
to maintain the qualified status of a Qualified Plan, amend, supplement or
otherwise modify any existing Employee Plan or Benefit Arrangement; or (iii)
make additional grants or contributions under any existing Employee Plans or
Benefit Arrangements except in accordance with past practices or as otherwise
provided in this Agreement; provided that Seller's and its Subsidiaries
contributions with respect to the 1994 year under any profit sharing plan or
employee stock ownership plan shall not exceed the rate at which such
contributions were accrued on their September 30, 1994 financial statements.
(c) Other than with respect to increases consistent with past
practices, increase the compensation payable to any director, officer or
employee, or pay any bonuses to any officer or employee, except for salary
increases for all officers and other employees of Seller and its Subsidiaries,
as described at Section 5.6.1(c) of the Seller Disclosure Schedule.
(d) Except as otherwise provided in this Agreement, incur any
indebtedness with a maturity of one year or more other than deposits taken in
the ordinary course of business consistent with past practice;
(e) Sell, purchase or lease, or commit to sell, purchase or lease,
any material assets, except for (i) transactions pursuant to legally binding
agreements or commitments entered into or approved before the date hereof and
disclosed to Buyer before the date hereof and (ii) transactions otherwise
permitted by this Agreement;
(f) Sell, purchase, open, close or relocate any banking office
except as described at Section 5.6.1(f) of the Seller Disclosure Schedule;
(g) Except as otherwise provided herein, pay any dividend, acquire
any of its capital stock (by repurchase, tender, redemption or otherwise) or
make any other capital
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distribution, except for quarterly cash dividends on the Seller Stock in
accordance with past practice not exceeding $0.14 per share per quarter and
except for cash dividends on the capital stock of the NFS Banks consistent with
past practices;
(h) Engage in any securities or other trading activity, except in
the ordinary course of business and consistent with past practice, or acquire
any securities with a final maturity of more than two years, or engage in
transactions involving structured notes, forwards, futures, options on futures,
swaps or other derivative instruments;
(i) Make any capital expenditure in excess of $50,000, except in
accordance with the budget terms supplied to Buyer by Seller before the date
hereof, or in accordance with budget terms supplied to Buyer by Seller
thereafter and specifically approved in writing by Buyer;
(j) Make any change in its capital stock by split, reverse split,
reclassification, reorganization, subdivision, or other similar action;
(k) Amend its certificate of incorporation or charter (as the case
may be) or by-laws;
(l) Merge, combine, or consolidate with or into, or permit the
merger into it of, any other corporation, association, trust, or entity or
change in any manner the character of its business;
(m) Change or modify in any way current accounting policy or
practice with respect to Seller's financial statements prepared in accordance
with GAAP except as may be required by GAAP or Governmental Authorities;
(n) Engage in any other transaction that is not consistent with
past practices and in the ordinary course of the business of Seller or such
Subsidiary, as the case may be; or
(o) Make any payment to any director, officer, employee or
independent contractor, in connection with or as a result of the transactions
contemplated by this Agreement, or otherwise, that is not deductible under
either Section 162(a)(1) or 404 of the IRC;
(p) Make any equity investment or commitment to make such an
investment in equity securities or in real estate or in any real estate
development project, other than in connection with foreclosures, settlements in
lieu of foreclosure or troubled loan or debt restructurings in the ordinary
course of business consistent with past practice;
(q) Take any action that is intended or reasonably can be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect as of any time to
and including the Closing Date, or any of the conditions to the Merger or the
other transactions contemplated by this Agreement set forth in Article VI not
being satisfied in any material respect, or in any material violation of any
provision of this Agreement or the Option Agreement, except, in each case, as
may be
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expressly permitted by this Agreement or as may be required by applicable law,
but only after reasonable consultation with Buyer;
(r) Foreclose upon or take a deed or title to any commercial real
estate without first conducting a Phase I environmental assessment of the
property or foreclose upon any commercial real estate if such environmental
assessment indicates the presence of Hazardous Material in amounts which, if
such foreclosure were to occur, would result in a Material Adverse Change; or
(s) Agree to do any of the foregoing or permit any of the foregoing
to occur.
5.6.2 AFFIRMATIVE COVENANTS. To the extent not otherwise restricted
or limited by the terms of this Agreement, Seller and each of its Subsidiaries
shall:
(a) carry on its business in all material respects in substantially
the same manner as heretofore conducted, except for changes approved in writing
by Buyer; and
(b) use its best efforts to preserve intact the business of Seller
and its Subsidiaries, to keep available their present officers and key
employees, to preserve the current relationships of customers and others having
business relationships with Sellers and its Subsidiaries, and to comply in all
material respects with applicable Laws; provided, however, that Buyer
acknowledges that Seller has not made any representation regarding the
continued service or employment of any director, officer or other employee of
Seller or any Subsidiary, and that the retention of any such person is not a
condition to Buyer's obligations to consummate the Merger.
(c) maintain in full force and effect from the date of this
Agreement through the Closing Date all insurance policies and bonds identified
in Section 4.1.12 of the Seller Disclosure Schedule as now being in force with
coverages and at least at levels now in force.
5.6.3 DISCLOSURE STATEMENTS. Prior to the Closing, Seller promptly
will supplement or amend the Seller Disclosure Schedule delivered pursuant
hereto with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to
be set forth or described in such Schedule or which is necessary to correct any
information in such Schedule which has been rendered materially inaccurate
thereby. No supplement or amendment to the Seller Disclosure Schedule shall
affect the conditions to Buyer's obligation to consummate the Merger.
5.7 INDEMNIFICATION AND INSURANCE.
5.7.1 CERTIFICATE AND BYLAWS. Buyer agrees that the rights to
indemnification provided to Seller's and each of the Subsidiary's directors and
officers by such entities' certificate of incorporation or charter or bylaws as
in effect on the date of this Agreement, and by applicable law and regulation
shall survive the Closing Date and continue in full force and effect at least
until and including the third anniversary of the Closing Date and as otherwise
specified therein.
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5.7.2 INSURANCE. Buyer shall use its best efforts to obtain and
maintain for a period of one year after the Closing Date an endorsement
extending the period in which claims may be made under Seller's directors' and
officers' liability insurance policy in effect on the date of this Agreement,
or a policy of such other responsible carrier as Buyer may elect, with respect
to causes of action that arise out of acts or omissions occurring on or before
the Closing Date, provided, however, that in no event shall the Buyer be
required to expend pursuant to this Section 5.7.2 more than an amount per year
equal to 125% of current annual premiums paid by the Seller for such insurance
(which premiums the Seller represents and warrants to be approximately $60,000
per annum in the aggregate).
5.8 EMPLOYEE BENEFITS MATTERS.
5.8.1 INSURANCE COVERAGES. (i) For the period from the Closing
through December 31, 1995, Buyer and Buyer Subsidiaries will continue to
provide the same or similar insurance coverages (medical, dental, life,
accidental death and dismemberment, short- term disability, and long-term
disability) to employees who were employees of Seller and/or its Subsidiaries
on the Closing Date as those covering employees of Seller and its Subsidiaries
on the date of this Agreement, except for increases in employee premiums
reflecting any increases charged by insurance carriers and any changes required
by applicable law. Effective as of January 1, 1996 or at any time thereafter,
the foregoing insurance coverages provided by Seller and/or its Subsidiaries
may at the option of Buyer be discontinued, in which case those employees who
had been employees of Seller and its Subsidiaries will become eligible for the
same insurance coverages generally available to the other employees of Buyer
and Buyer Subsidiaries, subject to the applicable terms and conditions of the
benefit plans providing such coverages.
5.8.2 PERSONNEL POLICIES. Except as otherwise provided in this
Agreement, all personnel policies and procedures of the Seller and/or its
Subsidiaries will be discontinued as of the Closing Date and employees of the
Seller and its Subsidiaries will become covered as of the Closing Date under
the human resources policies and procedures of Buyer. For all purposes of
applying the human resources policies and procedures of Buyer, the employees of
Seller and its Subsidiaries will be treated as new employees as of the
Effective Date.
5.8.3 QUALIFIED PLANS. Buyer will maintain the Seller's Qualified
Plans in effect through December 31, 1995. Thereafter Buyer will either
maintain Seller's Qualified Plans or permit employees of Seller and its
Subsidiaries to participate in Buyer's Savings, Profit Sharing and Stock
Ownership Plan ("Savings Plan") and Buyer's Retirement Plan ("Retirement Plan")
in accordance with their terms, as in effect from time to time, once such
employees have satisfied the eligibility requirements under each such plan. If
such employees are permitted to participate in Buyer's Savings Plan and
Retirement Plan, they will receive credit in accordance with each such plan's
terms for service with the Seller and its Subsidiaries for purposes of
eligibility and vesting, but not accrual of benefits under such plans.
In any plan year in which Buyer is maintaining a Qualified Plan of
Seller that is a profit-sharing plan, the percentage of compensation that is
contributed on behalf of
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participants in such profit sharing plan will not exceed the percentage of
compensation that Buyer contributes on behalf of its own employees for such
year under Buyer's Savings Plan.
Nothing in this Section 5.8 or elsewhere in this Agreement will
preclude Buyer from amending or terminating in its discretion any employee
benefit plan maintained by Buyer.
5.8.4 NO THIRD-PARTY BENEFICIARIES. This Section 5.8 reflects the
agreements of the parties but does not create any rights or obligations except
as among the parties to this Agreement, and it is specifically agreed that no
present or future employee of the Seller or its Subsidiaries will be treated as
a third-party beneficiary of the provisions of this Section 5.8. Nothing in
this Section 5.8 or elsewhere in this Agreement will preclude Seller or any of
its Subsidiaries from terminating the employment of any employee of Seller or
its Subsidiaries, or preclude Seller from amending or terminating in its
discretion any employee benefit plan maintained by Seller or any of its
Subsidiaries.
5.9 DIRECTORS, OFFICERS AND EMPLOYEES.
(a) Buyer will invite at least three of the current directors of
NFS Bank, and such additional number as it may determine after consultation
with the Board of Directors of such bank, to continue to serve as directors at
least until the annual meeting of such bank following the Closing Date.
(b) Buyer and the Buyer Subsidiaries shall offer employment, as
employees of Buyer or the Buyer Subsidiaries, immediately following the Closing
Date, to any persons who, immediately before the Closing Date, are full time
employees of Seller or any Seller Subsidiary. To the extent that the
employment of any full-time employee of Seller or any Seller Subsidiary with at
least three years of credited service (other than any employee who is party to
an employment agreement or a severance agreement) or any of the employees
listed at Section 5.9(b) of the Seller Disclosure Schedule (the "Scheduled
Employees") is involuntarily terminated within one year following the Closing
Date as a result of the elimination of a job position and such employee is not
offered another position with Buyer or the Buyer Subsidiaries, such employee
will be entitled to receive severance payments equal to two weeks of
then-current base pay for each year of service (as determined pursuant to the
Seller's retirement plan) at Seller or any Seller Subsidiary (including
credited years of service for employees of Plaistow), provided that such
severance shall not be less than two weeks or greater than six months of
then-current base pay and, in the case of the Scheduled Employees, shall be two
weeks.
(c) Except as otherwise agreed to by the parties, following the
Closing Date, Buyer shall assume all duties, liabilities and obligations of
Seller under any existing Employment and Severance Agreements described at
Section 5.9(c) of the Seller Disclosure Schedule. Seller shall cooperate with
Buyer and assist it in obtaining such amendments to the existing Employment and
Severance Agreements as Buyer may reasonably request to assure continuity of
management following the Merger.
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5.10 ACCESS TO INFORMATION.
(a) From the date hereof until the Closing, and subject to legal
requirements and fiduciary and commercial privacy rights and obligations,
Seller and the Subsidiaries will authorize and permit Buyer, its
representatives, accountants and counsel, to have access to all of the
operations and activities of Seller and the Subsidiaries. From the date hereof
until the Closing, Seller shall furnish to Buyer and its authorized
representatives, upon reasonable notice and during ordinary business hours,
access to all of its respective books, records and properties. Such
examination shall be made in a manner that will not unreasonably interfere with
the conduct of the business of the entity being examined and shall not affect
or limit in any way any of the representations and warranties hereunder.
(b) Simultaneously with the filing of any reports under the
Exchange Act, Seller and Buyer shall furnish a copy thereof to each other.
Seller shall likewise promptly furnish to Buyer copies of all of its and any of
its Subsidiaries quarterly and annual financial reports filed with federal or
state regulatory authorities, including, but not limited to, the OTS, the FDIC
and the SEC, as well as access to any examination or similar reports received
from such authorities, to the extent permitted by applicable law.
(c) Seller shall provide to Buyer complete and correct copies of
all reports presented to Seller or any of its Subsidiaries by their independent
accountants after the date hereof and for any preceding fiscal years with
respect to internal accounting controls. Seller represents and warrants that
all recommendations made in such prior reports have been implemented.
(d) To the extent permitted by Law, Seller shall provide Buyer, or
its agents, counsel, and representatives access to (i) all examination reports
of Seller or any Subsidiary, by the OTS or the FDIC from the date hereof
through the Closing Date; (ii) any correspondence relating to such examination
reports during such period; and (iii) any written agreements, arrangements or
understandings entered into as a result of matters raised in such examination
reports or correspondence;
5.11 CONFIDENTIALITY. Any and all commercial, financial, technical,
or other information regarding Seller, Buyer or their respective subsidiaries
or their respective businesses, properties, and personnel, or that of their
respective officers, directors, control persons, or affiliates, including such
information obtained in accordance with Section 5.11 above (the "Confidential
Information"), which is derived or results from access by such party (or their
authorized agents and representatives) to the properties, books, contracts,
commitments, and records of the other party or its subsidiaries pursuant to the
provisions of this Agreement, whether obtained before or after the execution of
this Agreement, shall be held in strict confidence; and the party in possession
of the Confidential Information shall exercise the same degree of care with
respect thereto, that it uses to preserve and safeguard its own confidential
proprietary information. Such Confidential Information shall not directly or
indirectly be divulged, disclosed or communicated to any other person or entity
or used for any purposes other than those expressly contemplated by this
Agreement, except as otherwise required by judicial or regulatory authorities
having jurisdiction in respect thereof. Each party shall cause its authorized
agents and representatives to maintain the confidentiality of Confidential
Information. In the event the transactions contemplated by
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this Agreement are not consummated for any reason, the confidentiality of such
Confidential Information shall be maintained by such party and its authorized
agents and representatives (except to the extent that such Confidential
Information can be shown to be previously known to such party or later
acquired by it from legitimate sources or otherwise available to the public).
Seller and Buyer acknowledge and agree that any prior agreements regarding the
confidentiality of Confidential Information shall not merge into and shall
survive the execution and delivery of this Agreement, except that to the extent
that the terms and provisions of this Section impose more stringent
restrictions and limitations on the parties, the terms and provisions of this
Section shall supersede the previously executed and delivered confidentiality
agreements.
5.12 PUBLIC ANNOUNCEMENTS. Neither Buyer nor Seller shall make any
press releases, announcements and other public disclosures relating to this
Agreement, the termination of this Agreement, Regulatory Approvals or otherwise
relating to any of the transactions contemplated by this Agreement without the
prior consent of the other party, which consent shall not be unreasonably
withheld, delayed or conditioned, provided that the foregoing shall not require
Buyer to obtain Seller's consent for discussions with financial analysts in the
ordinary course. Each party shall consult with the other regarding the form,
substance, timing and method of distribution, and cooperate with each other in
good faith in the development and distribution of all such public disclosure.
Nothing contained in this Section shall prohibit any party from making any
public disclosure which Buyer or Seller deems necessary in order to fulfill its
respective disclosure obligations imposed by Law; provided, however, that the
legal obligation to make such disclosure shall not relieve such party from its
obligations under this Section to cooperate, consult with and seek the consent
of the other party.
5.13 NO SOLICITATIONS. From the date of this Agreement, through the
Closing Date, neither Seller nor any Subsidiary, nor any of its or their
directors, officers, advisers or other representatives shall, directly or
indirectly, without the prior written consent of Buyer, solicit or encourage
the solicitation from, or, subject to the conditions set forth below, engage in
negotiations with any third party concerning any possible proposal regarding
the issuance or sale of Seller Stock or other equity securities of Seller or a
merger, consolidation, sale of substantial assets or other similar transaction
involving Seller or any of the Subsidiaries. Notwithstanding the preceding
sentence, Seller shall be permitted to engage in such negotiations with any
third party provided such action is, based upon the written advice of Seller's
counsel, required in accordance with the fiduciary duties of Seller's board of
directors. Seller shall notify Buyer promptly in writing and in reasonable
detail if any such proposal or offer, or inquiry or contact with respect
thereto, is made or if any such negotiations occur. Seller agrees not to
release any third party from, or waive any provision of, any confidentiality or
standstill agreement to which Seller is a party.
5.14 AFFILIATE LETTER. Seller shall use its best efforts to cause
each director, executive officer and other person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act) of Seller (each an "Affiliate")
to deliver to Buyer, as soon as practicable after the date of this Agreement,
and prior to the date of the Stockholders Meeting, a written agreement, in
substantially the form of Exhibit B hereto.
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5.15 CONDUCT OF BUYER AND BUYER SUBSIDIARIES. To the extent not
otherwise restricted or limited by the terms of this Agreement, Buyer and each
of the Buyer Subsidiaries shall:
(a) Not take any affirmative action which would cause to not be
true as of the Closing Date any of the representations and warranties of Buyer;
and
(b) Promptly notify Seller in writing of the existence or happening
of any Material Adverse Change in Buyer, Default, or any event or matter that,
with notice or passage of time, would constitute a Default.
5.16 BEST EFFORTS. Each party hereto agrees to use such party's
best efforts to cause the conditions within its control to be satisfied and to
effect the Merger. Buyer, as the sole stockholder of Acquisition Company,
shall cause Acquisition Company to take all such actions as may be required to
effect the transactions contemplated by this Agreement.
5.17 LIAISON. During the period from the date of this Agreement to
the Closing Date, Seller will cause one or more of its designated
representatives (i) to confer on a regular and frequent basis (not less than
monthly) with representatives of Buyer to report on the general status of the
ongoing operations of Seller and its Subsidiaries and (ii) to cooperate and
communicate fully with respect to the manner in which the business of Seller
will be operated after the Closing Date, the type and mix of products and
services, personnel matters, branch alignment, the granting of credit, and
problem loan management, reserve adequacy and accounting. In order to
facilitate the foregoing, Seller and Buyer shall promptly establish a liaison
committee (the "Committee") which will be chaired by representatives of Buyer
and Seller and which will meet on a regular basis to discuss these matters and
may establish sub-committees from time-to-time to pursue various issues.
During the period from the date of this Agreement to the Closing Date, Seller
shall provide Buyer with timely and sufficient information to review new
extensions of credit, renewals, and restructurings, securities, transactions
and information detailing overall asset quality and risk, including interest
rate risk.
5.18 SYSTEM CONVERSIONS. From and after the date hereof, Buyer and
Seller and its Subsidiaries shall meet on a regular basis to discuss and plan
for the conversion of the Seller's data processing and related electronic
informational systems to those used by Buyer and Buyer Subsidiaries, which
planning shall include, but not be limited to, discussion of the possible
termination by Seller and its Subsidiaries of third-party service provider
arrangements effective at the Closing Date or at a date thereafter, non-
renewal of personal property leases and software licenses used by Seller and
its Subsidiaries in connection with its systems operations and outsourcing, as
appropriate, of proprietary or self-provided system services, it being
understood that Seller and its Subsidiaries shall not be obligated to take any
such action and, unless Seller otherwise agrees, no conversion shall in fact
take place prior to the Closing Date. In the event that Buyer so requests in
writing, and Seller or any of its Subsidiaries determines to take, and so
takes, any action relative to third parties to facilitate the conversion that
results in the imposition of any termination fees or charges, Buyer shall
indemnify Seller and such Subsidiary on terms reasonably satisfactory to Seller
for any such fees and expenses, and the costs of reversing the conversion
process, if for any reason the Closing does not occur in accordance with the
terms of this Agreement.
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ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO OBLIGATIONS OF ALL PARTIES. The obligations of
each party to consummate the transactions contemplated by this Agreement are
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions precedent:
6.1.1 TERMINATION. This Agreement shall not have been terminated in
accordance with its terms.
6.1.2 REGULATORY APPROVALS. All Regulatory Approvals shall have been
obtained; no Regulatory Approval shall contain any condition that would require
any material modification or nonperformance of the terms of this Agreement or
shall include any non- customary condition or requirement that, in the
reasonable opinion of Buyer, would so materially and adversely affect the
economic or business benefit to Buyer of the transactions contemplated by this
Agreement as to render inadvisable the consummation of the Merger; all
Regulatory Approvals shall remain in full force and effect and all conditions
and requirements set forth in any Regulatory Approvals that are required to be
satisfied on or before the Closing Date, including the expiration of any
waiting periods, shall have been satisfied or properly waived.
6.1.3 STOCKHOLDER APPROVAL. This Agreement and the Merger shall have
been approved by the requisite vote of Seller's stockholders in accordance with
applicable Laws and Seller's certificate of incorporation and bylaws.
6.1.4 MATTERS REGARDING BUYER STOCK.
(a) REGISTRATION STATEMENT. The Registration Statement shall have
been declared effective by the SEC, shall remain effective and shall not be
subject to a stop order or any threatened stop order.
(b) LISTING. The shares of Buyer Stock to be issued as part of the
Merger Consideration shall be approved for listing quotation on Nasdaq NNM.
(c) BLUE SKY. The shares of Buyer Stock to be issued in exchange
for Seller Stock as part of the Merger Consideration shall have been qualified
or registered for offering and sale under the securities or "Blue Sky" Laws of
each jurisdiction within the United States in which stockholders of Seller
reside, and such qualification or registration is necessary, no order
suspending the sale of such shares of Buyer Stock in any such jurisdiction
shall have been issued on or before the Closing Date, such qualification or
registration shall remain in effect and no proceedings to suspend the sale of
such shares shall have been instituted or, to the Knowledge of any of Buyer's
directors and officers, shall be contemplated.
6.1.5 NO ORDERS, INJUNCTIONS OR RESTRAINTS: ILLEGALITY. No
Governmental Authority or federal or state court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law, rule,
regulation, executive order, decree, injunction or other
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order (whether temporary, preliminary or permanent) which is then in effect and
has the effect of making the Merger illegal or otherwise restricting,
preventing or prohibiting consummation of the transactions contemplated by this
Agreement, including the Merger.
6.2 CONDITIONS TO THE OBLIGATIONS OF BUYER AND ACQUISITION COMPANY.
The obligations of Buyer and Acquisition Company to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before
the Closing Date, of each of the following conditions precedent, any one or
more of which may be waived by Buyer, in its sole and absolute discretion:
6.2.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement shall be true, correct and
complete in all material respects when made on the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date. Buyer shall have received a certificate signed on behalf of Seller by
the Chief Executive Officer and the Chief Financial Officer of Seller to the
foregoing effect.
6.2.2 OTHER APPROVALS. Except for such consents, approvals, permits
and other authorizations that, if not obtained, would not, individually or in
the aggregate, have a material adverse effect on the business, financial
condition, results of operations or prospects of Seller and the Subsidiaries,
taken as a whole, Seller shall have obtained (i) the consent or approval of
other persons in connection with any lease, agreement, processing contract or
other arrangement, the benefits of which cannot be retained upon consummation
of the transactions contemplated hereby without such consent or approval and
(ii) all permits or other authorizations other than Regulatory Approvals
required to consummate the transactions contemplated hereby.
6.2.3 NO MATERIAL ADVERSE CHANGE. As of the Closing Date, there
shall have been no Material Adverse Change in Seller from that which was
represented and warranted on the date of this Agreement pursuant to this
Agreement, it being understood that the update provided pursuant to Section
5.6.3 of this Agreement does not constitute a waiver or other consent to any
Material Adverse Change in Seller.
6.2.4 COMPLIANCE. Seller shall have in all material respects
performed all obligations and agreements and complied with all covenants
contained in this Agreement to be performed and complied with by Seller on or
prior to the Closing Date. There shall not exist a Default or matter that,
with notice and/or passage of time, would constitute a Default by Seller under
this Agreement.
6.2.5 ACCOUNTANT'S LETTER. Buyer shall have received from Peat
Marwick, independent accountants, a letter dated the date of the Proxy
Statement/Prospectus and the Closing Date (a) with respect to Seller's
consolidated financial position and results of operation, which letter shall be
based upon SAS 72 and certain agreed upon procedures to be specified by Buyer,
which procedures shall be consistent with applicable professional standards for
letters delivered by independent accountants in connection with comparable
transactions, and (b) to the effect that:
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(i) with respect to Seller, they are independent
accountants within the meaning of Rule 101 of the Code of Professional
Ethics of the American Institute of Certified Public Accountants and
applicable SEC requirements; and
(ii) it is their opinion that the audited financial
statements of Seller and the Subsidiaries included or incorporated by
reference in the Proxy Statement/Prospectus comply as to form in all
material respects with Regulation S-X and other applicable accounting
requirements.
6.2.6 LEGAL OPINION. Buyer shall have received the opinion of Hogan
& Hartson, L.L.P., counsel to Seller, dated the Closing Date, in a form that is
customary for transactions of this type. Such counsel may rely upon the
certificates of officers and directors of Seller and its Subsidiaries and of
public officials as to any matter in such opinion which involves matters of
fact, and upon opinions of local counsel, reasonably acceptable to Buyer.
6.2.7 DISSENTING SHARES. Immediately prior to the Closing not more
than 330,000 Shares of Seller Stock shall be Dissenting Shares.
6.2.8 SUBSIDIARY DIRECTORS. Buyer shall have received the
resignations of such of the directors of the Subsidiaries, including the NFS
Banks, as Buyer shall have requested.
6.2.9 KEY EMPLOYEES. Each of the key employees of Seller or its
Subsidiaries named at Section 6.2.9(a) of the Seller Disclosure Schedule and at
least three of the key employees of Seller or its Subsidiaries named in Section
6.2.9(b) of the Seller Disclosure Schedule shall have been from the date of
this Agreement through the Closing Date an employee of Seller or its
Subsidiaries, except as such employee's employment may have terminated as a
result of death or disability.
6.2.10 CORPORATE ACTIONS OF THE NFS BANKS. Any name change, charter
amendment, by-law amendment, charter conversion, or merger of the NFS Banks
requested by Buyer shall have been authorized by all necessary corporate action
and all necessary permits, consents, approvals and authorizations of third
parties and Governmental Authorities shall have been obtained so that such name
change, charter amendment, by-law amendment, conversion or merger may be
consummated in conjunction with consummation of the Merger.
6.3 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller
to consummate the transactions contemplated by this Agreement are subject to
the satisfaction, on or before the Closing Date, of each of the following
conditions precedent, any one or more which may be waived by Seller, at its
sole and absolute discretion:
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6.3.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement and as of the date of this
Agreement shall be true, correct and complete in all material respects when
made on the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date. Seller shall have received
a certificate signed on behalf of Buyer by the Chief Executive Officer or the
Chief Financial Officer of Buyer to the foregoing effect.
6.3.2 NO MATERIAL ADVERSE CHANGE. As of the Closing Date, there
shall have been no Material Adverse Change in Buyer from that which was
represented and warranted on the date of this Agreement pursuant to this
Agreement.
6.3.3 COMPLIANCE. Buyer and Acquisition Company shall have in all
material respects performed all obligations and agreements and complied with
all covenants contained in this Agreement to be performed and complied with by
Buyer and Acquisition Company on or prior to the Closing Date. There shall not
exist a Default or matter that, with notice and/or passage of time, would
constitute a Default by Buyer or Acquisition Company under this Agreement.
6.3.4 LEGAL OPINION. Seller shall have received the opinion of
Palmer & Dodge, counsel to Buyer, dated the Closing Date, in a form that is
customary for transactions of this type. Such counsel may rely upon the
certificates of officers and directors of Buyer and Buyer's Subsidiaries and of
public officials as to any matter in such opinion which involves matters of
fact, and upon opinions of local counsel, reasonably acceptable to Seller.
ARTICLE VII
CLOSING
7.1 TIME AND PLACE OF CLOSING. The Closing shall take place on the
Closing Date at 9:00 a.m. Boston, Massachusetts Time at Buyer's corporate
office, located at 175 Federal Street, Boston, Massachusetts, or at such other
time and place on the Closing Date as the parties may mutually agree.
7.2 BUYER DELIVERIES. On the Closing Date, Buyer shall deliver or
cause to be delivered to Seller or, in the case of the Merger Consideration, to
an exchange and payment agent, selected by Buyer and reasonably acceptable to
Seller (the "Agent"), with each instrument being dated as of the Closing Date
and fully executed, attested, notarized and acknowledged, as appropriate, as
follows:
7.2.1 The Merger Consideration shall be paid in accordance with the
provisions of Section 3.7.
7.2.2 Such certificates, executed by the Chief Executive Officer,
President or any Executive or Senior Vice President and attested by the Clerk
or any Assistant Clerk of Buyer,
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as may be reasonably necessary to evidence the satisfaction or waiver of the
Closing Conditions set forth in Section 6.2.
7.2.3 Photocopies of all Regulatory Approvals received by Buyer
and/or Acquisition Company certified as true, correct and complete by any
officer of Buyer.
7.2.4 A certificate of the Clerk or Secretary of each of Buyer and
Acquisition Company with respect to all resolutions of their respective Board
of Directors authorizing the execution, delivery and performance of this
Agreement and the Merger, the resolutions of Buyer as sole stockholder of
Acquisition Company approving this Agreement and the Merger, the incumbency and
specimen signatures of the persons executing on behalf of Buyer or Acquisition
Company any documents and instruments delivered pursuant to this Agreement, the
by-laws of Buyer and Acquisition Company and such other similar matters as
Seller or its counsel may reasonably request.
7.2.5 A certificate, executed by the Exchange Agent, as to such
matters as may be necessary to evidence the implementation of the Merger.
7.2.6 Evidence of the directors' and officers' liability insurance as
provided in Section 5.7.2.
7.2.7 The certificate as to representations and warranties as
required by Section 6.3.1 hereof.
7.2.8 Such other documents and instruments as Seller may deem
reasonably necessary to consummate the Merger and any other transactions
contemplated by this Agreement, provided that such documents and instruments
are consistent with the parties' intent as expressed in this Agreement.
7.3 SELLER DELIVERIES. On the Closing Date, Seller shall deliver
or cause to be delivered to Buyer and Acquisition Company, with each document
and instrument being dated as of the Closing Date and fully executed, attested,
notarized and acknowledged, as appropriate, the following:
7.3.1 Such certificates executed by the President, Chief Executive
Officer, or any Executive or Senior Vice President and attested by the
Secretary or any Assistant Secretary of Seller and the NFS Banks, as may be
reasonably necessary to evidence the satisfaction or waiver of the Closing
Conditions set forth in Section 6.3.
7.3.2 Photocopies of all Regulatory Approvals received by Seller,
certified as true, correct and complete by any officer of Seller.
7.3.3 A certificate of the Secretary of Seller, with respect to all
resolutions of its Board of Directors authorizing the execution, delivery and
performance of this Agreement, all resolutions of the stockholders of Seller
with respect to their approval of this Agreement and the Merger, the incumbency
and specimen signatures of the persons executing on behalf of Seller any
documents and instruments delivered pursuant to this Agreement, the
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by-laws of Seller and such other similar matters as Buyer or Acquisition
Company may reasonably request.
7.3.4 A certificate, executed by the Seller's transfer agent and in
form and substance reasonably satisfactory to Buyer, stating that, to such
transfer agent's knowledge, the stock transfer records of Seller are complete
and correct, reflect all issuances and transfers of the capital stock of Seller
and have been maintained in accordance with industry standards in the normal
course of such transfer agent's business, and stating such additional matters
as may be reasonable and necessary in connection with implementation of the
Plan of Merger. The Seller's transfer agent shall further certify that, with
respect to its duties and responsibilities as Seller's transfer agent, it is
not aware of any violation of applicable Laws.
7.3.5 The certificate as to representations and warranties as
required by Section 6.2.1 hereof.
7.3.6 Such other documents and instruments as Buyer or Acquisition
Company may deem reasonably necessary to consummate the Merger and any other
transactions contemplated by this Agreement, provided that such documents and
instruments are consistent with the parties' intent as expressed in this
Agreement.
7.4 FEES AND CLOSING COSTS.
7.4.1 Each party shall pay all fees and costs of its own attorneys,
accountants, financial advisers and other professionals incurred in connection
with the transactions contemplated by this Agreement, and Buyer and Acquisition
Company hereby expressly consent to the payment by Seller, before or
simultaneously with the Closing, of such fees and costs for which Seller is
responsible under this Section.
7.4.2 Except as provided in Section 7.4.1 above, expenses in
connection with obtaining approval of the transactions contemplated hereby by
the stockholders of Seller, including, without limitation, expenses in
connection with the printing and mailing of the Proxy Statement/Prospectus
shall be paid by Seller.
7.4.3 Expenses in connection with obtaining the Regulatory Approvals
shall be paid by Buyer.
7.4.4 Expenses in connection with the registration, quotation and
"Blue Sky" registration and approvals of the Buyer Stock shall be paid by
Buyer.
7.4.5 All other fees and expenses incurred in connection with the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
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ARTICLE VIII
TERMINATION
8.1 MUTUAL CONSENT. The parties may terminate this Agreement at
any time by mutual written agreement.
8.2 OTHER TERMINATION. Provided that there does not then exist any
Default by the party or parties giving such notice, Seller, on the one hand, or
Buyer, on the other, may terminate this Agreement by giving notice (a
"Termination Notice") to the other at the time designated in this Section or,
in the absence of such designation, at any time up to and including the Closing
Date, if any one or more of the following shall have occurred and be
continuing:
8.2.1 TERMINATION BY ANY PARTY. Any party may terminate this
Agreement under any one or more of the following circumstances:
(a) At any time after December 31, 1995, if the Closing shall not
have occurred for any reason other than a Default by the party giving such
notice;
(b) This Agreement is not approved by the requisite vote
of Seller's stockholders at the Stockholders Meeting referred to in Section 5.3
(including any adjournment thereof);
(c) Any Application for Regulatory Approval is denied or withdrawn
and 90 days shall have passed without a petition for rehearing, a request for
reconsideration or an amended application being filed with the appropriate
Governmental Authority; or
(d) A court or other Governmental Authority of competent
jurisdiction shall have issued an order, writ, injunction or decree or shall
have taken any other action permanently restraining or otherwise prohibiting
the Merger and such order, writ, injunction, decree or other action shall have
become final and nonappealable.
8.2.2 TERMINATION BY BUYER. Buyer may terminate this Agreement under
any one or more of the following circumstances:
(a) At any time if there shall have occurred a Default by Seller;
(b) On the Closing Date, if any Closing Condition set forth in
Section 6.1 or Section 6.2 shall not have been satisfied; or
(c) At any time if a Material Adverse Change in Seller has
occurred.
8.2.3 TERMINATION BY SELLER. Seller may terminate this Agreement
under any one or more of the following circumstances:
(a) At any time if there shall have occurred a Default by Buyer or
Acquisition Company;
- 42 -
<PAGE> 48
(b) On the Closing Date, if any Closing condition set forth in
Section 6.1 or Section 6.3 shall not have been satisfied;
(c) At any time if a Material Adverse Change in Buyer has occurred;
or
(d) Prior to the Closing Date, by notice to Buyer if the Closing
Market Value of Buyer Stock shall be less than $43.50; PROVIDED that Buyer may
negate such termination by notifying Seller prior to 5:00 p.m., Boston,
Massachusetts time, on the Closing Date of its election to adjust the Merger
Consideration as provided in Section 3.2.2 (any notice under this clause to be
given by personal delivery in writing or by telephone communication confirmed
by receipted facsimile).
8.3 TERMINATION FEE. In order to induce Buyer to enter into this
Agreement and to reimburse Buyer for incurring the costs and expenses related
to entering into this Agreement and consummating the transactions contemplated
by this Agreement, the Seller will make a cash payment to Buyer of $900,000
(the "TERMINATION FEE") if and only if:
(a) (i) Buyer or Seller has terminated this Agreement
pursuant to Section 8.2.1(b) or (ii) Buyer has
terminated this Agreement pursuant to Section
8.2.2(a), and
(b) (i) within twelve (12) months of any such termination,
(A) the Seller shall have entered into an agreement to
engage in an Acquisition Transaction with any person
other than Buyer or any Buyer Subsidiary or (B) the
Board of Directors of the Seller shall have approved an
Acquisition Transaction or recommended that
shareholders of the Seller approve or accept any
Acquisition Transaction with any person other than
Buyer or any Buyer Subsidiary, or (ii) in the case of a
termination pursuant to Section 8.2.1(b), at the time
of such termination it shall have been publicly
announced that any person (other than Buyer or any
Buyer Subsidiary) shall have (x) made, or disclosed an
intention to make, a proposal to engage in an
Acquisition Transaction or (y) filed an application or
notice in draft or final form with the OTS, the Board
of Governors of the Federal Reserve System or any other
regulatory authority identified in the "Regulatory
Approvals" definition of this Agreement, for approval
or clearance to engage in an Acquisition Transaction.
Any payment required by the previous sentence will be payable by Seller to
Buyer (by wire transfer of immediately available funds to an account designated
by Buyer) within five business days after demand by Buyer. In the event of a
termination under circumstances that would trigger a payment under this Section
8.3, the standstill provisions contained in the Confidentiality Agreement shall
terminate.
For purposes of this Agreement, "ACQUISITION TRANSACTION" shall mean
(i) a merger, consolidation or other similar transaction with Seller or any of
it Subsidiaries, (ii) any sale, lease or other disposition of 15% or more of
the consolidated assets of Seller and its Subsidiaries, taken as a whole, in a
single transaction or series of transactions, or (iii) any
- 43 -
<PAGE> 49
issuance, sale, transfer, exchange or other disposition of (including by way of
merger, consolidation, share exchange, acceptance of a tender or exchange
offer or any similar transaction) securities representing 15% or more of the
voting power of Seller or any Subsidiary.
8.4 EFFECT OF TERMINATION. Except as expressly provided otherwise
herein, termination of this Agreement pursuant to this Article shall not
relieve any party of any liability for a Default or other breach, default or
nonperformance under this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 NOTICES. Unless expressly provided otherwise in this
Agreement, any notice, request, demand or other communication required to be
given under this Agreement shall be in writing, shall be deemed to be given or
delivered (a) on the date of personal delivery of the notice, request, demand
or other communication at or before 5:00 p.m. Boston, Massachusetts Time, (b)
on the third Business Day after the day of mailing of such notice, request,
demand or other communication by United States Registered Mail or United States
Certified Mail, postage prepaid, or (c) on the next Business Day after mailing
of such notice, request, demand or other communication by express courier,
freight charges prepaid, to the parties (including any person or entity
designated for receipt of a photocopy thereof) at the following addresses or at
such other address as any of the parties may hereafter specify in the
aforementioned manner:
If to Buyer and/or Acquisition Company:
BayBanks, Inc.
175 Federal Street
Boston, Massachusetts 02110
Attention: Michael W. Vasily,
Executive Vice President
With a copy to: Palmer & Dodge
One Beacon Street
Boston, Massachusetts 02108
Attention: Jerry V. Klima, Esq.
If to Seller: NFS Financial Corp.
157 Main Street
Nashua, New Hampshire 03060
Attention: James H. Adams, President
With a copy to: Hogan & Hartson, L.L.P.
Columbia Square
555 Thirteenth Street N.W.
Washington, D.C. 20004-1109
Attention: David B. H. Martin, Jr., Esq.
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<PAGE> 50
9.2 ENTIRE AGREEMENT. Except as expressly provided otherwise in
this Agreement, this Agreement, together with the Option Agreement constitutes
the entire agreement of the parties hereto with respect to the matters
addressed herein and therein and, except as expressly set forth herein,
supersedes all prior or contemporaneous contracts, covenants, agreements,
representations, warranties and statements, whether written or oral, with
respect to such matters.
9.3 AMENDMENT. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized
by their respective Boards of Directors, at any time before or after approval
of the matters presented in connection with the Merger by Seller's
stockholders; provided, however, that after any approval of the transactions
contemplated by this Agreement by Seller's stockholders, there may not be,
without further approval of such stockholders, any amendment of this Agreement
which reduces the amount or changes the form of the Merger Consideration other
than as contemplated by this Agreement. This Agreement may not be amended,
changed, modified or terminated, except by written instrument executed by all
parties to this Agreement.
9.4 WAIVER. Except as expressly provided herein, no waiver by any
party of any failure or refusal of any other party to comply with its
obligations under this Agreement shall be deemed a waiver of any other or
subsequent failure or refusal to so comply by such other party. No waiver
shall be valid unless in writing signed by the party to be charged and only to
the extent therein set forth.
9.5 SEVERABILITY. If any term or provision of this Agreement or
application thereof to any person or circumstances shall, to any extent, be
found by a court of competent jurisdiction to be invalid or unenforceable, the
remainder of this Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each other term or provision
of this Agreement shall be valid and be enforced to the fullest extent
permitted by law unless, as a result, the intent of the parties as expressed in
this Agreement would be violated.
9.6 CAPTIONS. The title of this Agreement and the headings of the
various paragraphs of this Agreement have been inserted only for the purposes
of convenience, and are not part of this Agreement and shall not be deemed in
any manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
9.7 GOVERNING LAW. This Agreement shall be construed and enforced
according to the laws of the State of Delaware applicable to agreements made
and entirely to be performed within such jurisdiction except to the extent
federal law may be applicable, unless and to the extent that the laws of the
United States govern the performance of this Agreement.
9.8 NO THIRD PARTY BENEFICIARIES. Except as expressly provided
herein, this Agreement is made and entered into for the sole protection and
benefit of the parties hereto, and no other person or entity shall have any
right of action hereon, right to claim any right or benefit from the terms
contained herein or be deemed a third party beneficiary hereunder.
- 45 -
<PAGE> 51
9.9 ASSIGNABILITY. All terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto, and their
respective transferees, successors and assigns; PROVIDED, HOWEVER, that neither
this Agreement nor any rights, privileges, duties and obligations of the
parties hereto may be assigned or delegated by any party hereto without the
prior written consent of all the parties to this Agreement and any such
purported or attempted assignment shall be null and void AB INITIO and of no
force or effect.
9.10 PARTIES NOT PARTNERS. Nothing contained in this Agreement
shall constitute any party as a partner with, agent for or principal of any one
or more of the other parties or their successors and assigns.
9.11 NO SURVIVAL. None of the representations, warranties,
covenants or agreements contained herein shall survive the Closing, except to
the extent that performance thereof is to occur subsequent to Closing Date. No
investigation by either of the parties or their respective representatives
shall affect the representations and warranties of the other set forth in this
Agreement.
9.12 FURTHER ASSURANCES. Subject to the terms and conditions of
this Agreement, each of the parties agrees to use its best efforts to take, or
cause to be taken, all action and do, or cause to be done, all things
necessary, proper or desirable to satisfy the Closing Conditions and to
consummate and make effective the Merger and the other transactions
contemplated by this Agreement. If, any time after the Closing Date, any
further action is necessary, proper or desirable to effect the purposes of this
Agreement, the proper officers and directors of each party of this Agreement
shall take all such further action.
9.13 ALTERNATIVE STRUCTURE. Notwithstanding anything to the
contrary contained in this Agreement, prior to the Closing, Buyer shall be
entitled to revise the structure of the Merger and related transactions
provided that each of the transactions comprising such revised structure shall
(i) not subject any of the stockholders to adverse tax consequences or change
the amount of Merger Consideration to be received by such stockholders and (ii)
be capable of consummation without material delay. This Agreement and any
related documents shall be appropriately amended in order to reflect any such
revised structure.
9.14 TIME OF ESSENCE. Time is of the essence of this Agreement.
9.15 COUNTERPARTS. This Agreement and the documents and instruments
to be executed and delivered pursuant to this Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one instrument.
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<PAGE> 52
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
BAYBANKS, INC.
By: /s/ Michael W. Vasily
------------------------
Its: Executive Vice President
------------------------
ATTEST
By: /s/ Jerry V. Klima
------------------------
Its: Assistant Clerk
------------------------
NFS FINANCIAL CORP.
By: /s/ James H. Adams
------------------------
Its: President / CEO
------------------------
ATTEST
By: /s/ Albert R. Rietheimer
-------------------------
Its: Treasurer / CFO
------------------------
- 47 -
<PAGE> 53
LIST OF EXHIBITS
----------------
EXHIBITS:
EXHIBIT A Option Agreement [included as Exhibit 2(b) to this
Form 8-K]
EXHIBIT B Affiliate Letter
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<PAGE> 54
EXHIBIT B
December 22, 1994
BayBanks, Inc.
175 Federal Street
Boston, Massachusetts 02110
Gentlemen:
Each of the undersigned (a "Stockholder") beneficially owns, with sole
voting and/or investment power, the number of shares of the common stock, $.01
par value per share (the "Shares"), of NFS Financial Corp. (the "Company")
indicated opposite such Stockholder's name below and/or may be considered an
"affiliate" of the Company as described below.
BayBanks, Inc. ("Buyer") and the Company are, simultaneously with the
execution of this letter agreement, entering into or have entered into an
Acquisition Agreement (the "Agreement") providing, among other things, for the
merger of a subsidiary of Buyer with the Company (the "Merger"). We understand
that Buyer has undertaken and will continue to undertake substantial expenses
in connection with the negotiation and execution of the Agreement and the
subsequent actions necessary to consummate the Merger and the other
transactions contemplated by the Agreement. We also understand that in
connection with the Merger we may receive shares of common stock, $2.00 par
value, of Buyer (such shares, together with any securities which may be paid as
a dividend or otherwise issued or delivered in exchange or substitution
therefor, hereinafter collectively referred to as the "Buyer Shares") in
exchange for the Shares owned by the undersigned in accordance with the
Agreement.
In consideration of, and as a condition to, Buyer's entering into the
Agreement, and in consideration of the expenses incurred and to be incurred by
Buyer in connection therewith, each Stockholder and Buyer agree as follows:
A. STOCKHOLDER AGREEMENTS REGARDING THE SHARES
1. Each Stockholder shall vote or cause to be voted for the
approval of the Agreement and the Merger, and shall vote or cause to be voted
against the approval of any other agreement providing for a merger,
consolidation, sale of assets or other business combination of the Company or
any of its subsidiaries with any person or entity other than Buyer and its
subsidiaries, all of the Shares that such Stockholder shall be entitled to so
vote or direct the voting of, whether such Shares are beneficially owned by
such Stockholder on the date of this letter agreement or are subsequently
acquired whether pursuant to the exercise of stock options or otherwise.
<PAGE> 55
2. Each Stockholder will not sell, assign, transfer or otherwise
dispose of (including, without limitation, by the creation of a Lien (as
defined in paragraph C.1. below)) or permit to be sold, assigned, transferred
or otherwise disposed of any Shares owned by such Stockholder or the
disposition of which is under the control of such Stockholder, whether such
Shares are benefically owned by such Stockholder on the date of this letter
agreement or are subsequently acquired, whether pursuant to the exercise of
stock options or otherwise, except (a) for transfers by will or by operation of
law (in which case this letter agreement shall bind the transferee), (b) for
transfers to any other Stockholders, and (c) as Buyer may otherwise agree in
writing.
3. The agreements contained herein are intended to restrict the
transferability of the Shares and to continue only for such time as may
reasonably be necessary to obtain Stockholder and regulatory approval of
Buyer's acquisition of the Shares pursuant to the Merger and thereafter to
consummate the Merger.
B. RULE 145 MATTERS
1. Each of the undersigned has been advised that as of the date
the Merger is submitted to stockholders of the Company for approval, the
undersigned may be an "affiliate" of the Company, as the term is defined for
purposes of paragraph (c) of Rule 145 of the Securities and Exchange Commission
(the "SEC") under the Securities Act of 1933, as amended (the "Act"), although
nothing contained herein shall be construed as an admission of such fact.
2. In connection therewith, each of the undersigned severally
represents warrants and agrees that:
(a) The undersigned shall not make any sale, transfer or other
disposition of the Buyer Shares in violation of the registration
requirements of the Act or the rules and regulations of the SEC thereunder.
(b) The undersigned has been advised that the issuance of the
Buyer Shares to the undersigned pursuant to the Merger will be registered
under the Act on a registration statement on Form S-4. However, the
undersigned has also been advised that if the undersigned is in fact an
"affiliate" of the Company at the time the Merger is submitted for a vote
of the stockholders of the Company and the distribution by the undersigned
of the Buyer Shares has not been registered under the Act, Rule 145 under
the Act will restrict the undersigned's sale of Buyer Shares received in
the Merger. The undersigned will not sell or otherwise dispose of any
Buyer Shares, except pursuant to Rule 145(d) under the Act, an effective
registration statement under the Act or exemption from the registration
requirements under the Act (provided that the undersigned may make bona
fide gifts or distributions) without consideration so long as the
recipients thereof agree not to sell, transfer or otherwise dispose of
Buyer Shares except as provided herein).
(c) The undersigned has carefully read this letter agreement and
the Agreement and has discussed the requirements of each and the
limitations upon the
- 2 -
<PAGE> 56
disposition of the Buyer Shares received by the undersigned, to the extent
deemed necessary, with the undersigned's counsel or with counsel for the
Company.
3. Each of the undersigned severally understands and agrees that:
(a) Buyer is under no further obligation to register the sale,
transfer or other disposition of the Buyer Shares to be received by the
undersigned or, except as provided in paragraph B.4.(a) below, to take any
action necessary in order to make an exemption from registration available.
(b) Stop transfer instructions will be given to the transfer agent
of Buyer with respect to the Buyer Shares the undersigned will receive, and
there will be placed on the certificate representing such stock, or any
certificates delivered in substitution therefor, a legend stating in
substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO
WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933 (THE "ACT") APPLIES. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH RULE 145(D) OR AN EFFECTIVE REGISTRATION STATEMENT OR EXEMPTION
FROM REGISTRATION UNDER THE ACT."
(c) Unless the transfer by the undersigned of the Buyer Shares is
a sale made in conformity with the provisions of Rule 145(d), or made
pursuant to a registration statement under the Act, Buyer reserves the
right to put an appropriate legend on the certificates issued to a
transferee.
(d) This agreement shall be binding upon and enforceable against
administrators, executors, representatives, heirs, legatees, devisees and
successors of the undersigned and any pledgee holding Buyer Shares as
collateral.
4. Buyer represents and agrees as follows:
(a) For so long as and to the extent necessary to permit the
undersigned to sell the Buyer Shares pursuant to Rule 145 and, to the
extent applicable, Rule 144 under the Act, Buyer shall use its best efforts
to file, on a timely basis, all reports and data required to be filed with
the SEC by it pursuant to Section 13 of the Securities Exchange Act of 1934
(the "1934 Act") so long as it is subject to such requirement, furnish to
the undersigned upon request a written statement as to whether Buyer has
complied with such reporting requirements during the 12 months preceding
any proposed sale under Rule 145, and otherwise use its reasonable best
efforts to permit such sales pursuant to Rule 145 and Rule 144. Buyer has
filed all reports required to be filed with the SEC under Section 13 of the
1934 Act during the preceding 12 months.
(b) Buyer agrees that the stop transfer instructions and legends
referred to above shall be terminated or removed if the undersigned shall
have delivered to Buyer
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<PAGE> 57
a copy of a letter from the staff of the SEC, an opinion of counsel in form
and substance satisfactory to Buyer or other evidence satisfactory to Buyer,
to the effect that such instructions and legends are no longer required for
the purposes of the Act.
C. GENERAL PROVISIONS
1. Each of the Stockholders severally represents that such
Stockholder has the complete and unrestricted power and the unqualified right
to enter into and perform the terms of this letter agreement. Each of the
Stockholders further severally represents that this letter agreement
constitutes a valid and binding agreement with respect to such party,
enforceable against such party in accordance with its terms. Each of the
Stockholders severally represents that such Stockholder beneficially owns the
number of Shares indicated opposite such Stockholder's name below, free and
clear of any liens, claims, charges or other encumbrances and restrictions of
any kind whatsoever ("Liens"), and has sole and unrestricted voting power with
respect to such Shares.
2. Notwithstanding anything herein to the contrary, the
agreements contained herein shall remain in full force and effect until the
earlier of (i) the consummation of the Merger and (ii) the termination of the
Agreement in accordance with Article 8 thereof.
3. Each of the Stockholders has signed this letter agreement
intending to be bound severally thereby and not to be bound as joint obligors.
4. This letter agreement is to be governed by the laws of the
State of Delaware, without giving effect to the principles of conflicts of laws
thereof. If any provision hereof is deemed unenforceable, the enforceability
of the other provisions hereof shall not be affected.
5. This letter agreement may be executed in any number of
counterparts.
Please confirm our agreement with you by signing a copy of this letter.
<TABLE>
Very truly yours,
<CAPTION>
Director or Number of
Executive Officer Shares Signatures
----------------- --------- ----------
<S> <C> <C>
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
</TABLE>
- 4 -
<PAGE> 58
<TABLE>
<S> <C> <C>
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
__________________________ ____________ ________________________
</TABLE>
- 5 -
<PAGE> 59
AGREED TO AND ACCEPTED
THIS 22nd DAY OF DECEMBER, 1994
BAYBANKS, INC.
By:_________________________
Title:_______________________
- 6 -
<PAGE> 1
Exhibit 2(b) to Form 8-K
------------------------
THE TRANSFER OF THE OPTION GRANTED
----------------------------------
BY THIS AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS
---------------------------------------------------
OPTION AGREEMENT
OPTION AGREEMENT, dated as of December 22, 1994 (this
"Agreement"), between NFS FINANCIAL CORP., a Delaware corporation ("Issuer"),
and BayBanks, Inc., a Massachusetts corporation ("Grantee").
WITNESSETH:
WHEREAS, Issuer, and Grantee have entered into an Acquisition
Agreement, dated as of December __, 1994 (the "Acquisition Agreement"), which
was executed by the parties hereto prior to the execution of this Agreement;
and
WHEREAS, as a condition and inducement to Grantee's entering
into the Acquisition Agreement and in consideration therefor, Issuer has agreed
to grant Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Acquisition
Agreement, the parties hereto agree as follows:
SECTION 1. Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 274,266 fully paid and non-assessable shares of common stock, par value $.01
per share of Issuer ("Issuer Common Stock") (which number of shares is equal to
9.9% of the number of outstanding shares of Issuer Common Stock on the date
hereof), at a price of $21.50 per share (the "Initial Price"); PROVIDED,
HOWEVER, that in the event Issuer issues or agrees to issue any additional
shares of Issuer Common Stock at a price less than the Initial Price (other
than up to 204,286 shares pursuant to existing stock options), as adjusted
pursuant to Section 5(b) hereof, such price shall be equal to such lesser price
(such price, as adjusted, is hereinafter referred to as the "Option Price").
The number of shares of Issuer Common Stock that may be received upon the
exercise of the Option and the Option Price are subject to adjustment as herein
set forth.
SECTION 2. (a) Grantee may exercise the Option, in whole or
part, at any time and from time to time following the occurrence of a Purchase
Event (as defined below); PROVIDED that the Option shall terminate and be of no
further force and effect upon the earliest to occur of (i) the time immediately
prior to the effective time of the Merger pursuant to Section 8.1 of the
Acquisition Agreement, (ii) 12 months after the first occurrence of a Purchase
Event, (iii) 12 months after the termination of the Acquisition Agreement
following the occurrence of a Preliminary Purchase Event (as defined below),
(iv) upon the termination of the Acquisition Agreement in accordance with the
terms thereof prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event (other than a termination of the Acquisition Agreement by
Grantee pursuant to Sections 8.2.1(b), 8.2.2(a) or 8.2.2(c) thereof), (v) 12
months after the termination of the Acquisition
<PAGE> 2
Agreement by Grantee pursuant to Sections 8.2.1(b), 8.2.2(a) or 8.2.2(c)
thereof as a result of any material breach of the Acquisition Agreement by
Issuer, if such breach was not a willful or intentional breach of the
Acquisition Agreement by Issuer, or (vi) 18 months after the termination of the
Acquisition Agreement by Grantee pursuant to Sections 8.2.1(b), 8.2.2(a)
or 8.2.2(c) thereof as a result of any material breach of the Acquisition
Agreement by Issuer, if such breach was a willful or intentional breach of the
Acquisition Agreement by Issuer; provided, however, that if within the period
specified in either clause (v) or (vi), whichever is applicable, a Preliminary
Purchase Event shall occur then, notwithstanding anything to the contrary
contained herein, the Option shall terminate on the later of 12 months after
the occurrence of such Preliminary Purchase Event or the termination date
specified in clause (v) or (vi), as applicable. The events described in
clauses (i) - (vi) in the preceding sentence are hereinafter collectively
referred to as an "Exercise Termination Event."
(b) The term "Preliminary Purchase Event" shall mean any of the
following events or transactions occurring on or after the date hereof and
prior to an Exercise Termination Event, and which are not in violation of
Issuer's certificate of incorporation:
(i) Issuer without having received Grantee's prior
written consent, shall have entered into any letter of intent or
definitive agreement to engage in an Acquisition Transaction (as
defined below) with any person (as defined below) other than Grantee
or any of its subsidiaries (each a "Grantee Subsidiary") or the Board
of Directors of Issuer shall have recommended that the shareholders of
Issuer approve or accept any Acquisition Transaction with any Person
(as the term "person" is defined in Section 3(a)9 and 13(d)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations thereunder) other than Grantee or any Grantee Subsidiary.
For purposes of this Agreement, "Acquisition Transaction" shall mean
(x) a merger, consolidation or other business combination involving
Issuer or either of the NFS Banks (as defined in the Acquisition
Agreement), (y) a purchase, lease or other acquisition of more than
25% of the consolidated assets of Issuer and NFS Banks, in a single
transaction or series of transactions, or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of Beneficial Ownership (as the term "beneficial
ownership" is defined in Regulation 13d-3(a) of the Exchange Act,
except that for purposes of this Agreement such term shall not include
voting stock held by a reporting person meeting the requirements for a
filing under Schedule 13G of the Exchange Act) of securities
representing 10% or more of the voting power of Issuer or either of
the NFS Banks;
(ii) Any Person (other than Grantee or any Grantee
Subsidiary) shall have acquired Beneficial Ownership of 15% or more of
the outstanding shares of Issuer Common Stock or the voting stock of
either of the NFS Banks ("Bank Stock");
(iii) Any Person (other than Grantee or any Grantee
Subsidiary) shall have made a BONA FIDE proposal to Issuer or, by a
public announcement or
- 2 -
<PAGE> 3
written communication that is or becomes the subject of public
disclosure, to Issuer's shareholders to engage in an Acquisition
Transaction (including, without limitation, any situation in which any
Person other than Grantee or any Grantee Subsidiary shall have
commenced (as such term is defined in Rule 14d-2 under the Exchange
Act), or shall have made a filing under applicable securities laws,
with respect to a tender offer or exchange offer to purchase any
shares of Issuer Common Stock such that, upon consummation of such
offer, such person would have Beneficial Ownership of 15% or more of
the then outstanding shares of Issuer Common Stock (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer",
respectively));
(iv) There shall exist a Default (as defined in the
Acquisition Agreement) by Issuer and such Default would entitle
Grantee to terminate the Acquisition Agreement;
(v) The holders of Issuer Common Stock shall not have
approved the Acquisition Agreement at the meeting of such shareholders
held for the purpose of voting on the Acquisition Agreement, or such
meeting of shareholders shall not have been held or shall have been
canceled prior to termination of the Acquisition Agreement, or
Issuer's Board of Directors shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's Board of
Directors that Issuer's shareholders approve the Acquisition
Agreement; or
(vi) Any Person (other than Grantee or any Grantee
Subsidiary) shall have filed an application or notice in draft or
final form with the Office of Thrift Supervision ("OTS"), or the Board
of Governors of The Federal Reserve System ("FRB") for approval to
engage in an Acquisition Transaction.
(c) The term "Purchase Event" shall mean any of the
following events or transactions occurring on or after the date hereof and
prior to an Exercise Termination Event:
(i) The acquisition by any Person (other than Grantee or
any Grantee Subsidiary) of Beneficial Ownership (other than on behalf
of the Issuer) of 20% or more of the then outstanding Issuer Common
Stock or Bank Stock; or
(ii) The occurrence of a Preliminary Purchase Event
described in Section 2(b)(i) except that the percentage referred to in
clause (z) thereof shall be 20%; or
(iii) The breach by Issuer of Section 7(d) or 8(a) hereof.
(d) Issuer shall notify Grantee promptly in writing of
the occurrence of any Preliminary Purchase Event or Purchase Event; PROVIDED,
HOWEVER, that the giving of such notice by Issuer shall not be a condition to
the right of Grantee to exercise the Option.
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<PAGE> 4
(e) In the event that Grantee is entitled to and wishes
to exercise the Option, it shall send to Issuer a written notice (the "Option
Notice" and the date of which being hereinafter referred to as the "Notice
Date") specifying (i) the total number of shares of Issuer Common Stock it will
purchase pursuant to such exercise and (ii) the time (which shall be on a
business day that is not less than three nor more than ten business days from
the Notice Date) on which the closing of such purchase shall take place (the
"Closing Date"); such closing to take place at the principal office of the
Issuer; PROVIDED, THAT, if prior notification to or approval of the OTS, the
FRB, the Federal Deposit Insurance Corporation ("FDIC") or any other
Governmental Authority is required in connection with such purchase (each, a
"Notification" or an "Approval," as the case may be), (a) Grantee shall
promptly file the required notice or application for approval
("Notice/Application"), (b) Grantee shall expeditiously process the
Notice/Application and (c) for the purpose of determining the Closing Date
pursuant to clause (ii) of this sentence, the period of time that otherwise
would run from the Notice Date shall instead run from the later of (x) in
connection with any Notification, the date on which any required notification
periods have expired or been terminated and (y) in connection with any
Approval, the date on which such approval has been obtained and any requisite
waiting period or periods shall have expired. For purposes of Section 2(a)
hereof, any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto. On or prior to the Closing Date, Grantee shall have the
right to revoke its exercise of the Option by written notice to the Issuer
given not less than three business days prior to the Closing Date.
(f) At the closing referred to in Section 2(e) hereof,
Grantee shall pay to Issuer the aggregate purchase price for the number of
shares of Issuer Common Stock specified in the Option Notice in immediately
available funds by wire transfer to a bank account designated by Issuer;
PROVIDED, HOWEVER, that failure or refusal of Issuer to designate such a bank
account shall not preclude Grantee from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(f) hereof, Issuer shall
deliver to Grantee a certificate or certificates representing the number of
shares of Issuer Common Stock specified in the Option Notice and, if the Option
should be exercised in part only, a new Option evidencing the rights of Grantee
thereof to purchase the balance of the shares of Issuer Common Stock
purchasable hereunder.
(h) Certificates for Issuer Common Stock delivered at a
closing hereunder shall be endorsed with a restrictive legend substantially as
follows:
The transfer of the shares represented by this certificate is
subject to resale restrictions arising under applicable federal and
state securities laws and to certain provisions of an Acquisition
Agreement by and between NFS Financial Corp. and BayBanks, Inc. dated
as of December 22, 1994. A copy of such agreement is on file at the
principal office of NFS Financial Corp. and will be provided to the
holder hereof without charge upon receipt by NFS Financial Corp. of a
written request therefor.
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<PAGE> 5
It is understood and agreed that: (i) the reference to the resale restrictions
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if Grantee shall have delivered to Issuer a copy of a
letter from the staff of the Securities and Exchange Commission or the
Governmental Authority responsible for administering any applicable state
securities laws or an opinion of counsel to the effect that such legend is not
required for purposes of applicable federal or state securities laws; (ii) the
reference to the provisions of this Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by Grantee to Issuer of an Option
Notice and the tender of the applicable purchase price in immediately available
funds on the Closing Date, unless prohibited by applicable law, Grantee shall
be deemed to be the holder of record of the number of shares of Issuer Common
Stock specified in the Option Notice, notwithstanding that the stock transfer
books of Issuer shall then be closed or that certificates representing such
shares of Issuer Common Stock shall not then actually be delivered to Grantee.
Issuer shall pay all expenses and other charges that may be payable in
connection with the preparation, issuance and delivery of stock certificates
under this Section 2 in the name of Grantee.
SECTION 3. Issuer agrees: (i) that it shall at all times
until the termination of this Agreement have reserved for issuance upon the
exercise of the Option that number of authorized and reserved shares of Issuer
Common Stock equal to the maximum number of shares of Issuer Common Stock at
any time and from time to time issuable hereunder, all of which shares will,
upon issuance pursuant hereto, be duly authorized, validly issued, fully paid,
non-assessable, and delivered free and clear of all claims, liens, encumbrances
and security interests and not subject to any preemptive rights; (ii) that it
will not, by amendment of its certificate of incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of
any of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all reasonable action as may from
time to time be requested by the Grantee, at Grantee's expense (including (x)
complying with all premerger notification, reporting and waiting period
requirements specified in 15 U.S.C. Section 18a and regulations promulgated
thereunder and (y) in the event prior approval of or notice to the OTS, the
FRB, the FDIC or any other Governmental Authority, under the Home Owners' Loan
Act of 1933, as amended, the Bank Holding Company Act of 1956, as amended, the
Change in Bank Control Act of 1978, as amended, or any other applicable federal
or state banking law, is necessary before the Option may be exercised,
cooperating with Grantee in preparing such applications or notices and
providing such information to each such Governmental Authority as it may
require in order to permit Grantee to exercise the Option and Issuer duly and
effectively to issue shares of Issuer Common Stock pursuant hereto; and (iv) to
take all action provided herein to protect the rights of Grantee against
dilution.
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<PAGE> 6
SECTION 4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling the
holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Issuer Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any agreements and related Options and options
for which this Agreement (and the Option granted hereby) may be exchanged.
Upon receipt by Issuer of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Agreement, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Agreement, if mutilated, Issuer will execute
and deliver a new Agreement of like tenor and date.
SECTION 5. The number of shares of Issuer Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment from
time to time as follows:
(a) In the event of any change in the Issuer Common Stock
by reason of stock dividends, split-ups, mergers, recapitalizations,
combinations, subdivisions, conversions, exchanges of shares or the
like, the type and number of shares of Issuer Common Stock purchasable
upon exercise hereof shall be appropriately adjusted and proper
provision shall be made so that, in the event that any additional
shares of Issuer Common Stock are to be issued or otherwise become
outstanding as a result of any such change (other than pursuant to an
exercise of the Option or pursuant to the exercise of options for up
to 204,286 shares of Issuer Common Stock pursuant to presently
outstanding stock options), the number of shares of Issuer Common
Stock that remain subject to the Option shall be increased so that,
after such issuance and together with shares of Issuer Common Stock
previously issued pursuant to the exercise of the Option (as adjusted
on account of any of the foregoing changes in the Issuer Common
Stock), it equals 9.9% of the number of shares of Issuer Common Stock
then issued and outstanding.
(b) Whenever the number of shares of Issuer Common Stock
purchasable upon exercise hereof is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the
Option Price by a fraction, the numerator of which shall be equal to
the number of shares of Issuer Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the number
of shares of Issuer Common Stock purchasable after the adjustment.
SECTION 6. (a) Following the occurrence of a Purchase Event
that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee (whether on its own behalf or on behalf of any subsequent
holder of the Option (or part thereof) or of any of the shares of Issuer Common
Stock issued pursuant hereto), promptly prepare, file and keep current a shelf
registration statement under the Securities Act covering any shares issued and
issuable pursuant to the Option and shall use its best efforts to cause such
registration statement to become effective, and to remain current and effective
for a period
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<PAGE> 7
not in excess of 180 days from the day such registration statement first
becomes effective, in order to permit the sale or other disposition of any
shares of Issuer Common Stock issued upon total or partial exercise of the
Option ("Option Shares") in accordance with any plan of disposition requested
by Grantee; PROVIDED, HOWEVER, that Issuer may postpone filing a registration
statement relating to a registration request by Grantee under this Section 6(a)
for a period of time (not in excess of 30 days) if in its judgment such filing
would require the disclosure of material information that Issuer has a BONA
FIDE business purpose for preserving as confidential. Grantee shall have the
right to obtain two such registrations. In addition to the foregoing, if, at
the time of any request by Grantee for registration of Option Shares as
provided above, Issuer is in the process of registration with respect to an
underwritten public offering of shares of Issuer Common Stock, Grantee shall
have the right to have the Option Shares included in the registration statement
with respect to such offering; PROVIDED, HOWEVER, that if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering, the inclusion of the Option
Shares in such registration would interfere materially with the successful
marketing of the shares of Issuer Common Stock offered by Issuer, the number of
Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; PROVIDED, HOWEVER, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of Grantee shall constitute at least 20% of the total number of
shares of Grantee and Issuer covered in such registration statement; PROVIDED
FURTHER, HOWEVER, that if such reduction occurs, then Issuer shall file a
registration statement for the balance as promptly as practicable thereafter as
to which no reduction pursuant to this Section 6(a) shall be permitted or occur
and the Grantee shall thereafter be entitled to one additional registration
statement. Grantee shall provide all information reasonably requested by
Issuer for inclusion in any registration statement to be filed hereunder. In
connection with any such registration, Issuer and Grantee shall provide each
other with representations, warranties, indemnities and other agreements
customarily given in connection with such registrations. If requested by
Grantee in connection with such registration, Issuer and Grantee shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating themselves in respect of representations,
warranties, indemnities and other agreements customarily included in such
underwriting agreements. Notwithstanding the foregoing, if Grantee revokes any
exercise notice or fails to exercise any Option with respect to any exercise
notice pursuant to Section 2(e) hereof, Issuer shall not be obligated to
continue any registration process with respect to the sale of Option Shares
issuable upon the exercise of such Option and Grantee shall not be deemed to
have demanded registration of Option Shares.
(b) In the event that Grantee requests Issuer to file a
registration statement following the failure to obtain any approval required to
exercise the Option as described in Section 9 hereof, the closing of the sale
or other disposition of the Issuer Common Stock or other securities pursuant to
such registration statement shall occur substantially simultaneously with the
exercise of the Option.
(c) Concurrently with the filing of a registration
statement under Section 6(a) hereof, Issuer shall also make all filings
required to comply with state securities laws in such states as Grantee may
reasonably request.
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<PAGE> 8
(d) The expenses of any registration or state securities
law compliance under this Section 6, except for underwriting discounts,
broker's fees and commissions and fees and disbursements of Grantee's counsel
related thereto, shall be borne by Issuer.
SECTION 7. (a) Following the occurrence of a Purchase Event
that occurs prior to an Exercise Termination Event, (i) at the request (the
date of such request being the "Option Repurchase Request Date") of Grantee,
Issuer shall repurchase the Option from Grantee at a price (the "Option
Repurchase Price") equal to the amount by which (A) the market/offer price (as
defined below) exceeds (B) the Option Price, multiplied by the number of shares
for which the Option may then be exercised and (ii) at the request (the date of
such request being the "Option Share Repurchase Request Date") of the owner of
Option Shares from time to time (the "Owner"), Issuer shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term
"market/offer price" shall mean the highest of (i) the price per share of
Issuer Common Stock at which a tender offer or exchange offer therefor has been
made after the date hereof and on or prior to the Option Repurchase Request
Date or the Option Share Repurchase Request Date, as the case may be, (ii) the
price per share of Issuer Common Stock paid or to be paid by any third party
pursuant to an agreement with Issuer (whether by way of a merger, consolidation
or otherwise), (iii) the average of the highest last sale prices for shares of
Issuer Common Stock as reported on the Nasdaq Stock Market for the 20-day
period ending on the Option Repurchase Request Date or the Option Share
Repurchase Request Date, as the case may be, and (iv) in the event of a sale of
all or substantially all of Issuer's assets, the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of
Issuer as determined by an investment banking firm selected by Grantee or the
Owner, as the case may be, and reasonably acceptable to Issuer, divided by the
number of shares of Issuer Common Stock outstanding at the time of such sale.
In determining the market/offer price, the value of consideration other than
cash shall be the value determined by an investment banking firm selected by
Grantee or the Owner, as the case may be, and reasonably acceptable to Issuer.
The investment banking firm's determination shall be conclusive and binding on
all parties.
(b) Grantee or the Owner, as the case may be, may
exercise its right to require Issuer to repurchase the Option and/or any Option
Shares pursuant to this Section 7 by surrendering for such purpose to Issuer,
at its principal office, a copy of this Agreement or certificates for Option
Shares, as applicable, accompanied by a written notice or notices stating that
Grantee or the Owner, as the case may be, elects to require Issuer to
repurchase the Option and/or the Option Shares in accordance with the
provisions of this Section 7. As promptly as practicable, and in any event
within 30 business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto, Issuer shall deliver or cause to be delivered to Grantee the Option
Repurchase Price or to the Owner the Option Share Repurchase Price or the
portion thereof that Issuer is not then prohibited from so delivering under
applicable law and regulation or as a consequence of administrative policy
(including policies relating to the maintenance of capital levels and a sound
financial condition).
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<PAGE> 9
(c) Issuer hereby undertakes to use its best efforts to
obtain all required regulatory, shareholder and legal approvals and to file any
required notices as promptly as practicable in order to accomplish any
repurchase contemplated by this Section 7. Nonetheless, to the extent that
Issuer is prohibited under applicable law or regulation, or as a consequence of
administrative policy (including policies relating to the maintenance of
capital levels and a sound financial condition), from repurchasing any Option
and/or any Option Shares in full, Issuer shall promptly so notify Grantee
and/or the Owner and thereafter deliver or cause to be delivered, from time to
time, to Grantee and/or the Owner, as appropriate, the portion of the Option
Repurchase Price and the Option Share Repurchase Price, respectively, that it
is no longer prohibited from delivering, within five business days after the
date on which Issuer is no longer so prohibited; PROVIDED, HOWEVER, that if
Issuer at any time after delivery of a notice of repurchase pursuant to Section
7(b) hereof is prohibited under applicable law or regulation, or as a
consequence of administrative policy (including policies relating to the
maintenance of capital levels and a sound financial condition), from delivering
to Grantee and/or the Owner, as appropriate, the Option Repurchase Price or the
Option Share Repurchase Price, respectively, in full, Grantee or the Owner, as
appropriate, may revoke its notice of repurchase of the Option or the Option
Shares either in whole or in part whereupon, in the case of a revocation in
part, Issuer shall promptly (i) deliver to Grantee and/or the Owner, as
appropriate, that portion of the Option Purchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering after taking
into account any such revocation and (ii) deliver, as appropriate, either (A)
to Grantee, a new Agreement evidencing the right of Grantee to purchase that
number of shares of Issuer Common Stock equal to the number of shares of Issuer
Common Stock purchasable immediately prior to the delivery of the notice of
repurchase less the number of shares of Issuer Common Stock covered by the
portion of the Option repurchased or (B) to the Owner, a certificate for the
number of Option Shares covered by the revocation.
(d) Issuer shall not enter into any agreement with any
Person (other than Grantee or a Grantee Subsidiary) for an Acquisition
Transaction unless the other Person assumes all the obligations of Issuer
pursuant to this Section 7 in the event that Grantee or the Owner elects, in
its sole discretion, to require such other Person to perform such obligations.
(e) Notwithstanding anything to the contrary in this
Section 7, the maximum aggregate Option Repurchase Price or Option Share
Repurchase Price to be paid by Issuer pursuant to this Section 7 shall be
$4,500,000.
SECTION 8. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into a letter of intent or definitive
agreement (i) to consolidate or merge with any Person (other than Grantee or a
Grantee Subsidiary), and Issuer shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any Person (other
than Grantee or a Grantee Subsidiary) to merge into Issuer, and Issuer shall be
the continuing or surviving corporation, but, in connection with such merger,
the then outstanding shares of Issuer Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any
other property or the then outstanding shares of Issuer Common Stock shall
after such merger represent less than 50% of the
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<PAGE> 10
outstanding shares and share equivalents of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any Person
(other than Grantee or a Grantee Subsidiary) then, and in each such case, such
letter of intent or definitive agreement governing such transaction shall make
proper provision so that the Option shall, upon the consummation of such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
Grantee, of either (x) the Acquiring Corporation (as defined below) or (y) any
person that controls the Acquiring Corporation (the Acquiring Corporation and
any such controlling person being hereinafter referred to as the "Substitute
Option Issuer").
(b) The Substitute Option shall be exercisable for such
number of shares of Substitute Common Stock (as is hereinafter defined) as is
equal to the market/offer price (as defined in Section 7 hereof) multiplied by
the number of shares of Issuer Common Stock for which the Option was
theretofore exercisable, divided by the Average Price (as hereinafter defined).
The exercise price of the Substitute Option per share of the Substitute Common
Stock (the "Substitute Purchase Price") shall then be equal to the Option Price
multiplied by a fraction in which the numerator is the number of shares of
Issuer Common Stock for which the Option was theretofore exercisable and the
denominator is the number of shares for which the Substitute Option is
exercisable.
(c) The Substitute Option shall otherwise have the same
terms as the Option, PROVIDED that if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms shall be as
similar as possible and in no event less advantageous to Grantee, PROVIDED
FURTHER that the terms of the Substitute Option shall include (by way of
example and not limitation) provisions for the repurchase of the Substitute
Option and Substitute Common Stock by the Substitute Option Issuer on the same
terms and conditions as provided in Section 7 hereof.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing
or surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving corporation, and (iii) the transferee of all
or any substantial part of Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute
Option.
(iii) "Average Price" shall mean the average closing price
of a share of Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of Substitute Common
Stock on the day preceding such consolidation, merger or sale;
provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of Issuer
Common Stock issued by Issuer, the corporation merging into Issuer
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<PAGE> 11
or by any company which controls or is controlled by such merging
corporation, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more than 9.9% of
the aggregate of the shares of Substitute Common Stock outstanding immediately
prior to the issuance of the Substitute Option. In the event that the
Substitute Option would be exercisable for more than 9.9% of the aggregate of
the shares of Substitute Common Stock but for this clause (e), the Substitute
Option Issuer shall make a cash payment to Grantee equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
this clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by
Grantee and the Substitute Option Issuer. In addition, the provisions of
Section 5(a) hereof shall not apply to the issuance of any Substitute Option
and for purposes of applying Section 5(a) hereof thereafter to any Substitute
Option the percentage referred to in Section 5(a) hereof shall thereafter equal
the percentage that the percentage of the shares of Substitute Common Stock
subject to the Substitute Option bears to the number of shares of Substitute
Common Stock outstanding.
SECTION 9. Notwithstanding Sections 2, 6 and 7 hereof, if
Grantee has given the notice referred to in one or more of such Sections, the
exercise of the rights specified in any such Section shall be extended (a) if
the exercise of such rights requires obtaining regulatory approvals (including
any required waiting periods) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and (b) to the extent necessary to
avoid liability under Section 16(b) of the Exchange Act by reason of such
exercise; PROVIDED that in no event shall any closing date occur more than 12
months after the related notice date, and, if the closing date shall not have
occurred within such period due to the failure to obtain any required approval
by the OTS, the FRB, the FDIC or any other Governmental Authority despite the
best efforts of Issuer or the Substitute Option Issuer, as the case may be, to
obtain such approvals, the exercise of the rights shall be deemed to have been
rescinded as of the related notice date. In the event (a) Grantee receives
official notice that an approval of the OTS, the FRB, the FDIC or any other
Governmental Authority required for the purchase and sale of the Option Shares
will not be issued or granted or (b) a closing date has not occurred within 12
months after the related notice date due to the failure to obtain any such
required approval, Grantee shall be entitled to exercise the Option in
connection with the concurrent resale of the Option Shares pursuant to a
registration statement as provided in Section 6 hereof. Nothing contained in
this Agreement shall restrict Grantee from specifying alternative means of
exercising rights pursuant to Sections 2, 6 or 7 hereof in the event that the
exercising of any such rights shall not have occurred due to the failure to
obtain any required approval referred to in this Section 9.
SECTION 10. Issuer hereby represents and warrants to Grantee
as follows:
(a) Issuer has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions
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<PAGE> 12
contemplated hereby have been duly approved by the Board of Directors of Issuer
and no other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly executed and delivered by, and constitutes a valid
and binding obligation of, Issuer, enforceable against Issuer in accordance
with its terms, subject to any required Governmental Approval, and except as
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Issuer Common Stock equal to the maximum number of shares of Issuer
Common Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, non-assessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
(c) The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated hereby will not, conflict
with or violate any provision of the certiticate of incorporation or By-laws of
Issuer or the equivalent organizational documents of any subsidiary of Issuer
or, subject to obtaining any of the Regulatory Approvals, violate, conflict
with or result in any breach of any provisions of, constitute a default (or an
event which with notice or lapse of time or both would constitute a default)
under, result in the termination of, accelerate the performance required by, or
result in the creation of any lien, security interest, charge or other
encumbrance upon any of the respective properties or assets of the Issuer or
any such subsidiary under any of the terms, conditions or provisions of any
note, bond, capital note, debenture, mortgage, indenture, deed of trust,
license, lease, agreement, obligation, instrument, permit, concession,
franchise, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Issuer or any such subsidiary or their respective properties or
assets.
SECTION 11. (a) Neither of the parties hereto may
assign any of its rights or delegate any of its obligations under this
Agreement or the Option created hereunder to any other Person without the
express written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Preliminary
Purchase Event. The term "Grantee" as used in this Agreement shall also be
deemed to refer to Grantee's permitted assigns.
(b) Any assignment of rights of Grantee to any permitted
assignee of Grantee hereunder shall bear the restrictive legend at the
beginning thereof substantially as follows:
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<PAGE> 13
The transfer of the option represented by this assignment and
the related option agreement is subject to resale restrictions arising
under applicable federal and state securities laws and to certain
provisions of an Acquisition Agreement by and between NFS Financial
Corp. and BayBanks, Inc. dated as of December 22, 1994. A copy of
such agreement is on file at the principal office of NFS Financial
Corp. and will be provided to any permitted assignee of the Option
without charge upon receipt of a written request therefor.
SECTION 12. Each of Grantee and Issuer will use its
reasonable efforts to make all filings with, and to obtain consents of, all
third parties and Governmental Authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
applying to the OTS, the FRB, the FDIC and any other Governmental Authority for
approval to acquire the shares issuable hereunder.
SECTION 13. The parties hereto acknowledge that damages would
be an inadequate remedy for a breach of this Agreement by either party hereto
and that the obligations of the parties hereto shall be enforceable by either
party hereto through injunctive or other equitable relief. Both parties
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such equitable relief and that this
provision is without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
SECTION 14. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that Grantee is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7 hereof, the full number of shares
of Issuer Common Stock provided in Section 1(a) hereof (as adjusted pursuant
hereto), it is the express intention of Issuer to allow Grantee to acquire or
to require Issuer to repurchase the greatest number of shares as may be
permissible, without any amendment or modification hereof.
SECTION 15. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Acquisition Agreement.
SECTION 16. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto shall be governed
by and construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
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<PAGE> 14
SECTION 17. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement and shall be effective at the time
of execution and delivery.
SECTION 18. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder.
SECTION 19. Except as otherwise expressly provided herein or
in the Acquisition Agreement, this Agreement contains the entire agreement
between the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereof,
written or oral. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors except as assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
SECTION 20. Capitalized terms used in this Agreement and not
defined herein but defined in the Acquisition Agreement shall have the meanings
assigned thereto in the Acquisition Agreement.
SECTION 21. Nothing contained in this Agreement shall be
deemed to authorize or require Issuer or Grantee to breach any provision of the
Acquisition Agreement or any provision of law applicable to the Grantee or
Issuer.
SECTION 22. In the event that any selection or determination
is to be made by Grantee or the Owner hereunder and at the time of such
selection or determination there is more than one Grantee or Owner, such
selection shall be made by a majority in interest of such Grantees or Owners.
SECTION 23. In the event of any exercise of the option by
Grantee, Issuer and such Grantee shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
SECTION 24. Except to the extent Grantee exercises the
Option, Grantee shall have no rights to vote or receive dividends or have any
other rights as a shareholder with respect to shares of Issuer Common Stock
covered hereby.
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<PAGE> 15
IN WITNESS WHEREOF, each of the parties has caused this Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
NFS FINANCIAL CORP.
By: /s/ James H. Adams
----------------------------
Name: James H. Adams
Title: President / CEO
BAYBANKS, INC.
By: /s/ Michael W. Vasily
----------------------------
Name: Michael W. Vasily
Title: Executive Vice President
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