UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Evergreen Bancorp, Inc.
(Name of Issuer)
Common Stock, $3.33 1/3 par value per share
(Title of Class of Securities)
300182102
(CUSIP Number)
Thomas J. Pruitt
Executive Vice President
Banknorth Group, Inc.
300 Financial Plaza
Burlington, VT 05401
(802)860-5558
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
JULY 31, 1998
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e)(f) or (6), check the following
box [ ].
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the
liabilities of that section of the Exchange Act but shall be subject to all
other provisions of the Exchange Act.
CUSIP NO. 300182102
1. NAME OF REPORTING PERSON
Banknorth Group, Inc. I.R.S.# 03-0321189
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS WC, 00
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER
0 (1),(2) (See Item 5)
8. SHARED VOTING POWER
0 (1),(2) (See Item 5)
9. SOLE DISPOSITIVE POWER
0 (1),(2) (See Item 5)
10. SHARED DISPOSITIVE POWER
0 (1),(2) ( See Item 5)
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 (1),(2) (See Item 5)
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[X] (2)
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.9 % (3)
14. TYPE OF REPORTING PERSON
Banknorth Group, Inc.:
HC, CO
- --------------------
(1) Banknorth Group, Inc. ("Banknorth") and Evergreen Bancorp, Inc.
("Evergreen") have entered into a Stock Option Agreement pursuant to
which Banknorth has the right to purchase, under certain conditions,
the lesser of 1,888,923 shares of Evergreen's Common Stock, $3.33 1/3
par value per share (the "Evergreen Common Stock") or 19.9% of such
Common Stock issued and outstanding on the date of exercise, at a
purchase price of $27.75 per share (the "Option"). The number of
shares to which the Option relates and the purchase price are subject
to certain anti-dilution adjustments specified in the Stock Option
Agreement. Because exercisability of the Option is subject to
material contingencies outside the control of Banknorth, Banknorth
hereby disclaims beneficial ownership of all of the shares to which
the Option relates.
(2) Shares (if any) held in trust accounts, managed accounts or other
similar arrangements by one or more subsidiaries of the reporting
person are not included. Banknorth disclaims beneficial ownership of
such shares.
(3) The Option relates to up to 1,888,923 shares of Evergreen Common
Stock, which represents approximately 19.9% of the total shares of
Evergreen Common Stock issued and outstanding as of July 28, 1998 or
reserved for issuance pursuant to employee plans, without taking into
effect the shares issuable under the Option, or approximately 16.6% of
the total shares that would be issued and outstanding or reserved for
issuance pursuant to employee plans, after taking into effect the
shares issuable under the Option.
ITEM 1. SECURITY AND ISSUER
This statement relates to certain shares of common stock, $3.33 1/3
par value per share of Evergreen Bancorp, Inc., a corporation organized
under the laws of the State of Delaware. The principal executive office of
Evergreen is located at 237 Glen Street, Glens Falls, New York 12801.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) and (f) The name of the reporting person filing this
statement is Banknorth Group, Inc., a corporation organized under the laws
of the State of Delaware. The principal executive office of Banknorth is
located at 300 Financial Plaza, Burlington, VT 05401.
Banknorth is registered as a bank holding company under the federal
Bank Holding Company Act of 1956, as amended, and is principally engaged in
the business of managing and controlling banks and activities closely
related to banking. Banknorth through its subsidiaries presently operates
banking offices in the states of Vermont, New Hampshire and Massachusetts.
Banknorth also owns a trust and investment subsidiary and nonbank
subsidiaries that engage in mortgage banking and certain insurance
activities.
The names of the directors and executive officers of Banknorth and
their respective business addresses or residences, citizenship and present
principal occupations or employment, as well as the names, principal
businesses and addresses of any corporations or other organizations in which
such employment is conducted, are set forth in Schedule I to this Schedule
13D and are specifically incorporated herein by reference.
(d)-(e) During the last five years, neither Banknorth nor, to the
best of Banknorth's knowledge, any of the individuals named in Schedule I to
this Schedule 13D, has been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or (ii) a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person or entity was subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to the Stock Option Agreement described in Item 4, Evergreen
has granted to Banknorth the option to purchase up to the lesser of
1,888,923 shares of Evergreen Common Stock or 19.9% of the issued and
outstanding Common Stock on the date of exercise, at a price of $27.75 per
share, exercisable only upon the occurrence of certain events, none of which
has yet occurred (the "Option"). If Banknorth were to purchase shares of
Evergreen Common Stock pursuant to the Option Agreement, Banknorth presently
anticipates that such funds would be provided from Banknorth's working
capital, from borrowings and from other sources yet to be determined.
ITEM 4. PURPOSE OF TRANSACTION.
On July 31, 1998, Banknorth and Evergreen entered into an Affiliation
Agreement and Plan of Reorganization filed as Exhibit 1 to this Schedule and
incorporated herein by reference (together with the related Agreement and
Plan of Merger filed as Exhibit 2 to this Schedule and incorporated herein
by reference, the "Merger Agreement") pursuant to which Evergreen will be
merged with and into Banknorth (the "Merger"). Banknorth will be the
surviving corporation in the Merger and will continue its corporate
existence under the laws of the State of Delaware. The Certificate of
Incorporation and By-laws of the surviving corporation will be the
Certificate of Incorporation and By-laws of Banknorth in effect at the
effective time of the Merger.
Pursuant to the Merger Agreement, each share of Evergreen Common Stock
issued and outstanding immediately prior to the effective time of the Merger
(other than any such shares held directly or indirectly by Banknorth, except
in a fiduciary capacity or in satisfaction of a debt previously contracted,
and any such shares held as treasury stock by Evergreen), together with that
number of associated preferred share purchase rights issued pursuant to
Evergreen's Stockholder Rights Agreement, as amended, will become and be
converted into .90 shares of the common stock of Banknorth, par value $1.00
per share ("Banknorth Common Stock"), together with that number of
associated preferred share purchase rights issued pursuant to Banknorth's
Rights Agreement dated as of November 27, 1990, as amended. Banknorth has
the right under Section 8.01(f) of the Merger Agreement to increase the
number of Banknorth shares issuable to Evergreen's shareholders in the
Merger, in the event Evergreen seeks to terminate the Merger Agreement
should Banknorth's stock price fall below a specified floor, both in
absolute terms and relative to a specified index of bank stocks. A copy of
the Merger Agreement is attached as Exhibit 1 to this Schedule and is
incorporated herein by reference.
Consummation of the Merger is subject to certain conditions, including
but not limited to approval of Banknorth's and Evergreen's stockholders,
receipt of regulatory approvals, the effectiveness of a registration
statement relating to the shares of Banknorth Common Stock to be issued to
Evergreen's stockholders pursuant to the Merger, the absence of any order,
decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the Merger and the absence of
certain events relating to Evergreen's assets, financial condition, results
of operations or prospects.
In order to facilitate consummation of the Merger, simultaneously with
the execution of the Merger Agreement, on July 31, 1998, Banknorth and
Evergreen entered into a Stock Option Agreement (the "Stock Option
Agreement"), a copy of which is filed as Exhibit 3 to this Schedule and
incorporated herein by reference.
Pursuant to the Stock Option Agreement, Evergreen granted Banknorth an
option (the "Option") to purchase from Evergreen the lessor of 1,888,923
shares of Evergreen Common Stock, or 19.9% of the issued and outstanding
shares of Evergreen Common Stock at the time of exercise (the "Option
Shares"), for an exercise price of $27.75 per share. The Option becomes
exercisable in whole or in part, only after the occurrence of both an
Initial Triggering Event (as defined) and a Subsequent Triggering Event (as
defined), prior to the occurrence of an Exercise Termination Event (as
defined).
An "Initial Triggering Event" is defined in the Stock Option Agreement
as the occurrence of any of the following events:
(i) Without having received Banknorth's prior written consent,
(1) Evergreen or any subsidiary of Evergreen, shall have entered into
an agreement with any Person (as defined in Section 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934 and the rules and
regulations thereunder) other than Banknorth or any subsidiary of
Banknorth, providing for any of the following: (A) a merger or
consolidation, or any similar transaction, with Evergreen or any
Significant Subsidiary (as defined below) of Evergreen, or any
subsidiary of Evergreen which, after such transaction, would be a
Significant Subsidiary of Evergreen, (B) a purchase, lease or other
acquisition of all or substantially all of the assets of Evergreen or
any Significant Subsidiary of Evergreen or (C) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of securities representing ten percent (10%) or more of
the voting power of Evergreen or any Significant Subsidiary of
Evergreen (each of (A), (B) and (C) being an "Acquisition
Transaction"); or (2) the Board of Directors of Evergreen shall have
approved an Acquisition Transaction or recommended that the
shareholders of Evergreen approve or accept any Acquisition
Transaction other than as contemplated by the Merger Agreement;
(ii) The stockholders of Evergreen shall not have approved the
Merger Agreement at the meeting of such stockholders held for the
purpose of voting on the Merger Agreement, such meeting shall not have
been held or shall have been canceled prior to the termination of the
Merger Agreement, or Evergreen's Board of Directors shall have
withdrawn or modified in a manner adverse to Banknorth the
recommendation of Evergreen's Board of Directors with respect to the
Merger Agreement, in each case after; (A) any Person, other than
Banknorth or any subsidiary of Banknorth or Evergreen in a fiduciary
capacity, and other than a Schedule 13G Investor (as defined in the
Stock Option Agreement), shall have acquired beneficial ownership or
the right to acquire beneficial ownership of ten percent (10%) or more
of the outstanding shares of Evergreen Common Stock if such Person
owned beneficially less than ten percent (10%) of the outstanding
shares of Evergreen Common Stock on the date of the Stock Option
Agreement, or any Person shall have acquired beneficial ownership of
an additional three percent (3%) of the outstanding shares of
Evergreen Common Stock if such Person owned beneficially ten percent
(10%) or more of the outstanding shares of Evergreen Common Stock on
the date of the Stock Option Agreement; (B) any Person, other than
Banknorth or any subsidiary of Banknorth, shall have made a bona-
fide proposal to Evergreen or its shareholders to engage in an
Acquisition Transaction by public announcement or written
communication that shall be or become the subject of public
disclosure; or (C) any Person other than Banknorth or any subsidiary
of Banknorth, other than in connection with a transaction to which
Banknorth has given its prior written consent, shall have filed an
application or notice with the Federal Reserve Board or other federal
or state bank regulatory authority, which application or notice has
been accepted for processing, for approval to engage in an Acquisition
Transaction;
(iii) After any Person other than Banknorth or any subsidiary
of Banknorth has made a proposal to Evergreen or its shareholders to
engage in an Acquisition Transaction, Evergreen shall have breached
any covenant or obligation contained in the Merger Agreement and such
breach (A) would entitle Banknorth to terminate the Merger Agreement
and (B) shall not have been remedied prior to the date Banknorth
gives notice to Evergreen of its intention to exercise the Option; or
(iv) Any person (other than Banknorth or any subsidiary of
Banknorth) shall have commenced (as such term is defined in Rule 14d-2
under the Act) or shall have filed a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with
respect to a tender offer or exchange offer to purchase any shares of
Evergreen Common Stock such that, upon consummation of such offer,
such person would own or control 25% or more of the then outstanding
shares of Evergreen Common Stock.
A "Subsequent Triggering Event" is defined in the Stock Option
Agreement as:
(a) The acquisition by any Person (other than a Schedule 13G
Investor) of beneficial ownership of twenty-five percent (25%) or more
of the then outstanding Evergreen Common Stock; or
(b) The occurrence of an Initial Triggering Event of the kind
described in paragraph (i) above, except that the percentage
referenced in clause (i)(C) thereof shall be twenty-five percent (25%)
in lieu of ten percent (10%).
The Option Agreement contains anti-dilution provisions which provide
that the number of shares of Evergreen Common Stock issuable upon exercise
of the Option and the purchase price will be adjusted upon the happening of
certain events, including payment of stock dividends and changes in the
Evergreen Common Stock by means of split up, merger, recapitalization,
subdivision, conversion, combination, exchange of shares or similar
transaction.
The Stock Option Agreement also provides that Banknorth may require
Evergreen to repurchase the Option or shares acquired upon exercise of the
Option under certain circumstances. The Stock Option Agreement specifies the
procedures for exercise of the Option and of Banknorth put rights upon the
occurrence of such events. For purposes of the Stock Option Agreement, the
term "Significant Subsidiary" has the meaning ascribed to such term as in
Regulation S-X of the SEC. Evergreen Bank, N.A. is Evergreen's sole
Significant Subsidiary.
The Option will expire upon the first occurrence of an "Exercise
Termination Event", which is defined as any of the following:
(i) the effective time of the Merger,
(ii) the termination of the Merger Agreement if termination occurs
before an Initial Triggering Event (as defined in the Stock
Option Agreement) or
(iii) twelve months after the Merger Agreement is terminated if such
termination follows an Initial Triggering Event.
As more fully set forth in the Stock Option Agreement, (i) Evergreen
has a right of first refusal under specified circumstances with respect to
certain proposed dispositions by Banknorth of the Option Shares, (ii)
Evergreen has the right to purchase Option Shares held by Banknorth under
certain circumstances, and (iii) Banknorth (or a subsequent holder of the
Option or Option Shares) has the right under specified circumstances to
require Evergreen to repurchase the Option or Option Shares.
As further detailed in the Option Agreement, Grantee's Total Profit
(as defined in the Option Agreement) upon exercise of the Option may not
exceed $15,000,000 and the Option may be exercised for no more than that
number of shares of Evergreen common stock as would result in a Notional
Total Profit (as defined in the Option Agreement) to the Grantee of
$15,000,000. In addition, as further detailed in the Option Agreement, upon
the occurrence of certain events, at the request of any Holder within the
time specified in the Option Agreement, Evergreen shall repurchase the
Option from the Holder at a price equal to the greater of (1) $7,500,000 and
(2) the amount by which (A) the market/offer price as defined in the Option
Agreement exceeds (B) the Option price, multiplied by the number of shares
for which the Option may be then exercised, plus, to the extent not
previously reimbursed, the Grantee's reasonable out-of-pocket expenses
incurred in connection with the transactions contemplated by, and the
enforcement of Grantee's rights under, the Merger Agreement, including
without limitation, legal, accounting and investment banking fees.
Except as set forth in this Item 4, the Merger Agreement or the Stock
Option Agreement, neither Banknorth nor, to the best of Banknorth's
knowledge, any of the individuals named in Schedule I to this Schedule 13D,
has any plans or proposals which relate to or which would result in any of
the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a)-(b) Pursuant to the Option Agreement, Banknorth has the right,
exercisable only in certain circumstances, none of which has occurred as of
the date hereof, to acquire up to the lesser of 1,888,923 shares of
Evergreen Common Stock (subject to adjustment as described in Item 4), or
19.9% of the shares of Evergreen Common Stock issued and outstanding at the
time the Option is exercised (without taking into account the shares
issuable upon exercise of the Option). If Banknorth were to acquire such
shares, it would have sole voting and investment power with respect thereto.
Because of the limited circumstances in which the Option is exercisable,
Banknorth disclaims beneficial ownership of all shares of Evergreen Common
Stock to which the Option relates.
(c) Neither Banknorth nor, to the best of Banknorth's knowledge, any
of the individuals named in Schedule I hereto, has effected any transaction
in the Evergreen Common Stock during the past 60 days, excepting
transactions in a fiduciary capacity.
(d) So long as Banknorth has not purchased the Evergreen Common Stock
subject to the Option, Banknorth does not have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale
of, any of the Evergreen Common Stock.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Simultaneously with the execution of the Merger Agreement and the
Stock Option Agreement, on July 31, 1998, Banknorth and each director of
Evergreen entered into a letter agreement (the "Voting Agreement"), the form
of which is filed as Exhibit 4 to this Schedule 13D, pursuant to which each
such director agreed to vote or cause to be voted in favor of the Merger and
against competing proposals (if any) all of the shares of Evergreen Common
Stock over which he has or acquires sole voting power. Reference is made to
the proxy statement of Evergreen dated April 3, 1998 for the 1998 Annual
Meeting of Evergreen's shareholders held on May 7, 1998, previously filed
with the Commission, for information as to the shareholdings in Evergreen of
Evergreen's Directors.
In addition, the Merger Agreement contains certain customary
restrictions on the conduct of the business of Evergreen pending the Merger,
including certain customary restrictions relating to the Evergreen Common
Stock. Except as provided in the Merger Agreement, the Stock Option
Agreement, the Voting Agreement or as set forth herein, neither Banknorth
nor, to the best of Banknorth's knowledge, any of the individuals named in
Schedule I hereto, has any contracts, arrangements, understandings or
relationships (legal or otherwise) with any person with respect to any
securities of Evergreen, including, but not limited to, transfer or voting
of any securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profit or
losses, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Affiliation Agreement and Plan of Reorganization, dated
as of July 31, 1998, between Banknorth Group, Inc. and Evergreen Bancorp,
Inc.
Exhibit 2 Agreement and Plan of Merger dated as of July 31, 1998,
between Banknorth Group, Inc. and Evergreen Bancorp, Inc.
Exhibit 3 Stock Option Agreement, dated as of July 31, 1998,
between Banknorth Group, Inc. and Evergreen Bancorp, Inc.
Exhibit 4 Form of Letter Agreement, dated July 31, 1998, between
Banknorth Group, Inc. and each director of Evergreen Bancorp, Inc.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this Statement
is true, complete, and correct.
BANKNORTH GROUP, INC.
By: /s/ Thomas J. Pruitt
Thomas J. Pruitt
Executive Vice President
Dated: August 10, 1998
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
BANKNORTH GROUP, INC.
The names, business addresses and present principal occupations of the
directors and executive officers of Banknorth Group, Inc. ("Banknorth") are
set forth below. If no business address is given, the director's or
executive officer's business address is 300 Financial Plaza, P.O. Box 5420,
Burlington, Vermont 05401. The business address of each Banknorth director
is also the business address of such director's employer, if any. Unless
otherwise indicated, all directors and executive officers listed below are
citizens of the United States.
I. DIRECTORS:
Present Principal Occupation or Employment
Name and Business Address
- ---------------------- ------------------------------------------
Thomas J. Amidon, Esq. Attorney at Law
Box 1356
Stowe, VT 05672
Jacqueline D. Arthur President and Treasurer
American Training Solutions, LLC
175 Cabot Street
Lowell, MA 01854-3685
Robert A. Carrara Vice President and Treasurer
Joseph P. Carrara & Sons, Inc.
North Clarendon, VT 05759
William H. Chadwick President and Chief Executive Officer
BANKNORTH GROUP, INC.
Susan C. Crampton, CPA Principal
The Vermont Partnership
127 Tarbox Road
Jericho, VT 05465
Luther F. Hackett President
Hackett, Valine & MacDonald, Inc.
140 Kennedy Dr., PO Box 2127
South Burlington, VT 05407-2127
Kathleen Hoisington President
Hoisington Realty, Inc.
489 Main Street
Bennington, VT 05201
Douglas G. Hyde President
Green Mountain Energy Resources LLC
PO Box 2206 (55 Green Mtn Drive)
South Burlington, VT 05407-2206
Richard M. Narkewicz Retired Physician
CHP/Kaiser Permanente Northeast
Shelburne, VT
John B. Packard President
U.W. First LLC
3 Wentworth Road
Rye, NH 03870
R. Allan Paul, Esq. Of Counsel
Paul, Frank & Collins, Inc.
PO Box 1307 (One Church St)
Burlington, VT 05402-1307
Angelo Pizzagalli President
Pizzagalli Construction Company
PO Box 2009
South Burlington, VT 05407-2009
Thomas P. Salmon, Esq. Of Counsel
Salmon and Nostrand
PO Box 535
Bellows Falls, VT 05101-0535
Patrick E. Welch Chairman and Chief Executive Officer
National Life Insurance Company
National Life Road
Montpelier, VT 05604-0001
II. EXECUTIVE OFFICERS:
The Business Address for each of the Executive Officers listed below is:
Banknorth Group, Inc.
300 Financial Plaza, P.O. Box 5420
Burlington, VT 05401
William H. Chadwick President and Chief Executive Officer
Thomas J. Pruitt Executive Vice President and Chief Financial
Officer
Robert M. Gillis Executive Vice President
Richard J. Fitzpatrick Executive Vice President and Chief Banking
Officer
Owen H. Becker Executive Vice President -- Administration
John M. Keel Executive Vice President -- Chief Information
Officer
Neal E. Robinson Senior Vice President, Treasurer and Principal
Accounting Officer
INDEX TO EXHIBITS AND SCHEDULES
Exhibit 1 Affiliation Agreement and Plan of Reorganization,
dated as of July 31, 1998, between Banknorth Group, Inc.
and Evergreen Bancorp, Inc.
Exhibit 2 Agreement and Plan of Merger as of July 31, 1998,
between Banknorth Group, Inc. and Evergreen Bancorp, Inc.
Exhibit 3 Stock Option Agreement, dated as of July 31, 1998,
between Banknorth Group, Inc. and Evergreen Bancorp, Inc.
Exhibit 4 Form of Letter Agreement, dated July 31, 1998,
between Banknorth Group, Inc. and each director of
Evergreen Bancorp, Inc.
Schedule I Information Regarding the Officers and Directors of
Banknorth Group, Inc.
EXHIBIT 1
===========================================================================
AFFILIATION AGREEMENT AND
PLAN OF REORGANIZATION
dated as of July 31, 1998
between
BANKNORTH GROUP, INC.
and
EVERGREEN BANCORP, INC.
===========================================================================
Table of Contents
Page
ARTICLE I - DEFINITIONS 1
ARTICLE II - THE MERGER 6
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE BUYER 6
3.01 Corporate Organization 6
3.02 Capitalization 7
3.03 Authority; No Violation 8
3.04 Consents and Approvals 9
3.05 Financial Statements 9
3.06 Absence of Undisclosed Liabilities 10
3.07 Broker's Fees 10
3.08 Absence of Certain Changes or Events 10
3.09 Legal Proceedings 10
3.10 Reports 10
3.11 Buyer Common Stock 11
3.12 Ownership of Seller Common Stock 11
3.13 Taxes and Tax Returns 11
3.14 Employees 12
3.15 Agreements with Banking Authorities 12
3.16 Compliance with Applicable Law 13
3.17 Year 2000 Compliance 13
3.18 Environmental Matters 13
3.19 Regulatory Capital 15
3.20 CRA Rating 15
3.21 Buyer Information 15
3.22 Disclosure 15
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE SELLER 15
4.01 Corporate Organization 15
4.02 Capitalization 16
4.03 Authority; No Violation 17
4.04 Consents and Approvals 18
4.05 Financial Statements 18
4.06 Absence of Undisclosed Liabilities 19
4.07 Broker's Fees 19
4.08 Absence of Certain Changes or Events 19
4.09 Legal Proceedings 19
4.10 Taxes and Tax Returns 19
4.11 Employees 20
4.12 Agreements with Banking Authorities 21
4.13 Material Agreements 22
4.14 Ownership of Property 22
4.15 Reports 23
4.16 Compliance with Applicable Law 23
4.17 Year 2000 Compliance 23
4.18 Environmental Matters 24
4.19 Ownership of Buyer Common Stock 25
4.20 Insurance 25
4.21 Labor 25
4.22 Material Interests of Certain Persons 26
4.23 Absence of Registration Obligations 26
4.24 Loans 26
4.25 Regulatory Capital 26
4.26 CRA Rating 26
4.27 Seller Information 27
4.28 Disclosure 27
ARTICLE V - COVENANTS OF THE PARTIES 27
5.01 Conduct of the Business of Seller 27
5.02 Access to Properties and Records; Confidentiality 30
5.03 No Solicitation 31
5.04 Regulatory Matters; Consents 31
5.05 Approval of Stockholders 32
5.06 Agreements of Affiliates; Publication of Combined Financial
Results 32
5.07 Further Assurances 33
5.08 Public Announcements 33
5.09 Post-Closing Governance 33
5.10 Tax-Free Reorganization Treatment; Accounting 34
5.11 Stock Listing 34
5.12 Employment and Benefit Matters 34
5.13 Accountants' Letters 36
5.14 Directors' and Officers' Indemnification and Insurance 37
5.15 Conversion of Seller Stock Options 37
5.16 Maintenance of Records 37
5.17 Leases 37
5.18 Dividends 38
5.19 Notice of Change 38
5.20 Changes in Accounting 38
5.21 SEC Filings 38
5.22 Covenants of Buyer 38
5.23 Regulatory Reports 39
5.24 Registration of Shares 39
ARTICLE VI - CLOSING CONDITIONS 39
6.01 Conditions to Each Party's Obligations Under This Agreement 39
6.02 Conditions to the Obligations of the Buyer Under This
Agreement 40
6.03 Conditions to the Obligations of the Seller Under This
Agreement 41
ARTICLE VII - CLOSING 43
7.01 Time and Place 43
7.02 Deliveries at the Closing 43
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER 43
8.01 Termination 43
8.02 Effect of Termination 45
8.03 Amendment, Extension and Waiver 46
ARTICLE IX - MISCELLANEOUS 46
9.01 Expenses 46
9.02 Survival 46
9.03 Notices 47
9.04 Parties in Interest 48
9.05 Complete Agreement 48
9.06 Counterparts 48
9.07 Governing Law 48
9.08 Captions 48
9.09 Effect of Investigations 48
9.10 Severability 48
9.11 Specific Enforceability 48
9.12 Alternative Structure 49
EXHIBITS AND SCHEDULES
Exhibits
- --------
Exhibit A Agreement and Plan of Merger
Exhibit B-1 Buyer Affiliates Agreement
Exhibit B-2 Seller Affiliates Agreement
Exhibit C Seller Option Agreement
Exhibit D Stockholder Agreement
Exhibit E List of Index Companies with Weighted Averages
Schedules
- ---------
Buyer Disclosure Schedule
Seller Disclosure Schedule
AFFILIATION AGREEMENT AND PLAN OF REORGANIZATION
AFFILIATION AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"),
dated as of July 31, 1998 between BANKNORTH GROUP, INC., a Delaware
corporation (the "Buyer"), and EVERGREEN BANCORP, INC., a Delaware
corporation (the "Seller").
The Boards of Directors of the Buyer and the Seller deem it advisable
and in the best interests of their respective stockholders to consummate,
and have approved, the business combination transactions provided for
herein.
In consideration of the mutual covenants, representations, warranties
and agreements contained herein and in consideration of the Seller Option
Agreement (as hereinafter defined), pursuant to which the Seller has on this
day granted the Seller Option (as hereinafter defined) and in consideration
of the execution and delivery to the Buyer of the Stockholder Agreement (as
hereinafter defined), the parties agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein or as otherwise clearly required
by the context, the following terms shall have the respective meanings
indicated when used in this Agreement:
"AMEX" shall mean the American Stock Exchange.
"Acquisition Transaction" shall have the meaning ascribed thereto in
Section 5.03 hereof.
"Agreement" shall mean this Affiliation Agreement and Plan of
Reorganization by and between the Buyer and the Seller.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"Buyer" shall have the meaning ascribed thereto in the introductory
paragraph hereof.
"Buyer Affiliates" shall have the meaning ascribed thereto in Section
5.06(b) hereof.
"Buyer Affiliates Agreement" shall mean the form of written agreement
to be executed and delivered to the Seller prior to the Effective Time by
the Buyer Affiliates, substantially in the form attached hereto as Exhibit
B-1.
"Buyer Balance Sheet" shall have the meaning ascribed thereto in
Section 3.05 hereof.
"Buyer Common Stock" shall have the meaning ascribed thereto in
Section 3.02(a) hereof.
"Buyer Companies" shall have the meaning ascribed thereto in Section
3.13(a) hereof.
"Buyer Disclosure Schedule" shall have the meaning ascribed thereto in
Section 3.01(b) hereof
"Buyer Pension Plans" shall have the meaning ascribed thereto in
Section 3.14(a) hereof.
"Buyer Reports" shall have the meaning ascribed thereto in Section
3.10 hereof.
"Buyer Rights Agreement" shall mean that certain Rights Agreement
which was adopted by the Buyer on November 27, 1990, as amended February 13,
1996.
"Closing" shall mean the consummation of the Merger.
"Closing Date" shall mean the time and date specified pursuant to
Section 7.01 hereof as the time and date on which the parties hereto shall
consummate the Merger.
"CMPs" shall have the meaning ascribed thereto in Section 3.16 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Companies" shall have the meaning ascribed thereto in Section 4.10(a)
hereof.
"Confidential Information" shall have the meaning ascribed thereto in
Section 5.02(b) hereof.
"Confidentiality Agreement" shall mean that certain letter agreement
between the Buyer and the Seller dated July 27, 1998.
"Consents" shall have the meaning ascribed thereto in Section 6.01(b)
hereof.
"DCL" shall mean the Delaware General Corporation Law.
"Disclosure Schedules" shall mean the Buyer Disclosure Schedule and
the Seller Disclosure Schedule, considered together.
"D&O Insurance" shall have the meaning ascribed thereto in Section
5.14 hereof.
"Effective Time" shall mean the date and time at which the Merger has
become effective pursuant to the applicable laws of the State of Delaware.
"EPA" shall mean the United States Environmental Protection Agency.
"Equity Investment" shall have the meaning set forth for such term as
of the date hereof in the FDIC's rules and regulations regarding activities
and investments of insured state banks at 12 C.F.R. [Section Sign]362.2(k).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System or either of the Federal Reserve Bank of Boston or
New York, as applicable.
"Filed Tax Returns" shall mean, with respect to the Buyer Companies or
the Seller Companies, all Tax Returns that were required to be filed by any
member of such group of Companies on or prior to the date hereof.
"GAAP" shall mean generally accepted accounting principles and
practices in effect from time to time within the United States applied
consistently throughout the period involved.
"Hazardous Material" shall have the meaning ascribed thereto in
Section 4.18(i) hereof.
"Injunction" shall have the meaning ascribed thereto in Section
6.01(d) hereof.
"Joint Proxy Statement" shall have the meaning ascribed thereto in
Section 5.04(a) hereof.
"Proxy Statement" shall have the meaning ascribed thereto in Section
5.04(a) hereof.
"IRS" shall mean the United States Internal Revenue Service.
"Loans" shall have the meaning ascribed thereto in Section 4.24
hereof.
"Loan Property" shall have the meaning ascribed thereto in Section
4.18(i) hereof.
"Massachusetts Board" shall mean the Board of Bank Incorporation of
the Commonwealth of Massachusetts.
"Material Adverse Effect" shall mean, with respect to any Person, a
material adverse effect on the business, results of operations or financial
condition of such Person taken as a whole; provided that "Material Adverse
Effect" shall not be deemed to include the impact of (a) changes in laws and
regulations or interpretations thereof by courts or governmental authorities
(including changes in insurance deposit assessment rates and special
assessments with respect thereto), (b) changes in GAAP or regulatory
accounting principles generally applicable to financial institutions and
their holding companies, (c) actions and omissions of a party (or any of its
Subsidiaries) taken with the prior written consent of the other party, (d)
changes in economic conditions (including changes in the level of interest
rates) generally affecting financial institutions, and (e) the direct
effects of compliance with this Agreement on the operating performance of
the parties including expenses incurred by the parties hereto in
consummating the transactions contemplated by this Agreement and the
expenses associated with the termination of the Seller Benefit Plans as and
to the extent contemplated herein.
"Merger" shall have the meaning ascribed thereto in Article II hereof.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Nasdaq" shall mean the National Association of Securities Dealers
Automated Quotation system.
"NYS Department" shall mean the New York State Banking Department,
including, as applicable, the New York State Banking Board and the New York
State Banking Superintendent.
"NYSE" shall mean the New York Stock Exchange.
"OCC" shall mean the United States Office of the Comptroller of the
Currency.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Participation Facility" shall have the meaning ascribed thereto in
Section 4.18(i) hereof.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other legal
entity, or any governmental agency or political subdivision thereof.
"Plan of Merger" shall mean that certain Agreement and Plan of Merger
to be entered into by and among the Buyer, the Seller and the Merger
Subsidiary at or prior to the Effective Time, substantially in the form
attached hereto as Exhibit A.
"Public Announcement" shall mean a written press release, public
announcement or public information disclosure by the Seller or the Buyer or
any of their subsidiaries relating to the Merger or the other transactions
contemplated hereby.
"Records" means all records and original documents in the Seller's
possession which pertain to and are utilized by the Seller or any of its
Significant Subsidiaries to administer, reflect, monitor, evidence or record
information respecting its business and operations, including but not
limited to all records and documents relating to (a) corporate, regulatory,
supervisory and litigation matters, (b) Tax planning and payment of Taxes,
(c) personnel and employment matters, and (d) the business or conduct of the
business of the Seller or any of its Significant Subsidiaries.
"Representative(s)" shall have the meaning ascribed thereto in Section
5.02(b) hereof.
"Requisite Regulatory Approvals" shall have the meaning ascribed
thereto in Section 6.01(b) hereof.
"SEC" shall mean the Securities and Exchange Commission.
"S-4" shall have the meaning ascribed thereto in Section 5.04(a)
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning ascribed thereto in the preamble to
this Agreement and, in addition, shall mean throughout this Agreement,
unless the context contemplates otherwise, the Seller and each of its
subsidiaries, considered separately and on a consolidated basis.
"Seller Affiliates" shall have the meaning ascribed thereto in Section
5.06(a) hereof.
"Seller Affiliates Agreement" shall mean the form of written agreement
to be executed and delivered to the Buyer prior to the Effective Time by the
Seller Affiliates, substantially in the form attached hereto as Exhibit B-2.
"Seller Balance Sheet" shall have the meaning ascribed thereto in
Section 4.05 hereof.
"Seller Benefit Plans" shall have the meaning ascribed thereto in
Section 4.11(a) hereof.
"Seller Common Stock" shall have the meaning ascribed thereto in
Section 4.02(a) hereof.
"Seller Companies" shall have the meaning ascribed thereto in Section
4.10(a) hereof.
"Seller Disclosure Schedule" shall have the meaning ascribed thereto
in Section 4.01(a) hereof.
"Seller Option" shall mean the option granted to the Buyer pursuant to
the Seller Option Agreement.
"Seller Option Agreement" shall mean that certain Stock Option
Agreement of even date herewith by and between the Seller and the Buyer in
the form attached hereto as Exhibit C.
"Seller Other Plans" shall have the meaning ascribed thereto in
Section 4.11(a) hereof.
"Seller Pension Plans" shall have the meaning ascribed thereto in
Section 4.11(a) hereof.
"Seller Reports" shall have the meaning ascribed thereto in Section
4.15 hereof.
"Seller Rights Agreement" shall mean that certain rights agreement
which was adopted by Seller on April 17, 1998 and amended on July 31, 1998.
"Stockholders Agreement" shall mean that certain Stockholders
Agreement dated as of the date hereof between the Buyer and the directors of
the Seller substantially in the form attached hereto as Exhibit D.
"Significant Subsidiary" shall mean, when used with reference to a
party, any "significant subsidiary" of such party as such term is defined in
Regulation S-X of the SEC, and with respect to the Seller, the term
"Significant Subsidiary" shall also mean Evergreen Bank, N.A.
"subsidiaries" shall mean, when used with reference to a party, any
corporation or other organization, whether incorporated or unincorporated,
of which such party or any other subsidiary of such party is a general
partner (excluding partnerships the general partnership interests of which
held by such party or any subsidiary of such party do not have a majority of
the voting interests in such partnership) or, with respect to such
corporation or other organization, at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar functions is
directly or indirectly owned or controlled by such party or by any one or
more of its subsidiaries, or by such party and one or more of its
subsidiaries.
"Tax" or "Taxes" means any federal, state, local or foreign income,
gross receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental,
customs, duties, real property, personal property, capital stock,
intangibles, social security, unemployment, disability, payroll, license,
employee or other tax or levy, of any kind whatsoever, including any
interest, penalties or additions to tax in respect of the foregoing.
"Tax Return" means any return, declaration, report, claim for refund,
information return or other document (including any related or supporting
estimates, elections, schedules, statements or information) filed or
required to be filed in connection with the determination, assessment or
collection of any Tax or the administration of any laws, regulations or
administrative requirements relating to any Tax.
"Termination Date" shall have the meaning ascribed thereto in Section
8.01(b) hereof.
"Transaction Documents" shall mean this Agreement, the Confidentiality
Agreement, the Plan of Merger, the Seller Option Agreement, the Stockholders
Agreement, and each other agreement, document or instrument executed in
connection herewith or therewith.
"Transferred Employee" shall have the meaning ascribed thereto in
Section 5.13(a) hereof.
"Trust Account Shares" shall have the meaning ascribed thereto in
Section 3.12 hereof.
ARTICLE II
THE MERGER
Subject to the terms and conditions of this Agreement and the Plan of
Merger, the Seller will merge with and into the Buyer (the "Merger"), with
the Buyer being the surviving corporation, pursuant to the provisions of,
and with the effect provided in, the DCL. The Plan of Merger provides for
the terms and conditions of the Merger, including but not limited to the
conversion and exchange of Seller Common Stock for Buyer Common Stock, all
of which are incorporated herein and made a part of this Agreement by
reference whether or not the Plan of Merger is executed on or subsequent to
the date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller as follows:
3.01 Corporate Organization.
(a) The Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. The
Buyer has all requisite corporate power and authority to own, lease or
operate all of its properties and assets and to carry on its business
as it is now being conducted. The Buyer is duly licensed or qualified
to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the
properties and assets owned, leased or operated by it makes such
licensing or qualification necessary, except where the failure to be
so licensed or qualified would not result in, with respect to the
Buyer, a Material Adverse Effect. The Buyer is a bank holding company
registered with the Federal Reserve Board under the BHCA.
(b) Except as set forth in Section 3.01 of the disclosure
schedule which is being delivered to the Seller together herewith (the
"Buyer Disclosure Schedule"), the Buyer has no subsidiaries and no
Equity Investments (other than its investments in such subsidiaries).
(c) Each Significant Subsidiary of the Buyer is duly organized,
validly existing and in corporate good standing under the laws of the
jurisdiction of its incorporation. Each Significant Subsidiary of the
Buyer has all requisite corporate power and authority to own, lease or
operate all of its properties and assets and to carry on its business
as it is now being conducted. Each Significant Subsidiary is duly
licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of
the properties and assets owned, leased, or operated by it makes such
licensing or qualification necessary, except where the failure to be
so licensed or qualified would neither individually nor in the
aggregate result in any Material Adverse Effect on the Buyer or such
Significant Subsidiary.
3.02 Capitalization.
(a) The authorized capital stock of the Buyer consists of
70,000,000 shares of common stock, par value $1.00 per share ("Buyer
Common Stock") and 500,000 shares of Preferred Stock, par value $0.01
per share ("Buyer Preferred Stock"). As of the close of business on
July 28, 1998, there were 15,239,296 shares of Buyer Common Stock
issued and outstanding. In addition, as of the close of business on
July 28, 1998, there were 903,351 shares of Buyer Common Stock
reserved for issuance upon exercise of outstanding stock options under
the Buyer's 1997 Equity Compensation Plan and 148,772 shares reserved
for issuance under the Buyer's Amended and Restated 1994 Deferred
Compensation Plan for Directors and Selected Executives of Banknorth
Group and Participating Affiliates. All issued and outstanding shares
of Buyer Common Stock have been duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Except for
rights issuable in accordance with the Buyer Rights Agreement or as
referred to in this Section 3.02 or reflected in Section 3.02(a) of
the Buyer Disclosure Schedule, the Buyer does not have and is not
bound by any outstanding subscriptions, options, warrants, calls,
commitments, rights agreements or agreements of any character calling
for the Buyer to issue, deliver or sell, or cause to be issued,
delivered or sold any shares of Buyer Common Stock or any other equity
security of the Buyer or any subsidiary of the Buyer or any securities
convertible into, exchangeable for or representing the right to
subscribe for, purchase or otherwise receive any shares of Buyer
Common Stock or any other equity security of the Buyer or any
subsidiary of the Buyer or obligating the Buyer to grant, extend or
enter into any such subscriptions, options, warrants, calls,
commitments, rights agreements or agreements. As of the date hereof
there are no outstanding contractual obligations of the Buyer to
repurchase, redeem or otherwise acquire any shares of capital stock of
the Buyer or any subsidiary of the Buyer.
(b) Section 3.02(b) of the Buyer Disclosure Schedule lists each
of the Significant Subsidiaries of the Buyer on the date of this
Agreement and indicates for each such subsidiary as of such date: (i)
the percentage and type of equity securities owned or controlled by
the Buyer; (ii) the jurisdiction of incorporation; and (iii) if the
subsidiary is a depository institution, whether it is a member of the
Federal Reserve System. Each of the subsidiaries of the Buyer that is
a depository institution is an "insured depository institution" as
defined in the FDIA and applicable regulations thereunder, and the
deposits of each such depository institution are insured by the Bank
Insurance Fund and the Savings Association Insurance Fund of the FDIC
in accordance with the FDIA, and each such depository institution has
paid all assessments and filed all reports required by the FDIA. As
of the date hereof, no proceedings for the revocation or termination
of such deposit insurance are pending or, to the knowledge of the
Buyer, threatened. No subsidiary of the Buyer has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for a subsidiary of the Buyer to
issue, deliver or sell, or cause to be issued, delivered or sold any
equity security of the Buyer or of any subsidiary of the Buyer or any
securities convertible into, exchangeable for or representing the
right to subscribe for, purchase or otherwise receive any such equity
security or obligating a subsidiary of the Buyer to grant, extend or
enter into any such subscriptions, options, warrants, calls,
commitments or agreements. As of the date hereof, there are no
outstanding contractual obligations of any subsidiary of the Buyer to
repurchase, redeem or otherwise acquire any shares of capital stock of
the Buyer or any subsidiary of the Buyer. Except as may be provided
under applicable law in the case of any subsidiary of the Buyer that
is a bank, all of the shares of capital stock of each of the
subsidiaries of the Buyer held by the Buyer are fully paid and
nonassessable and owned by the Buyer free and clear of any claim,
lien, encumbrance or agreement with respect thereto.
3.03 Authority; No Violation.
(a) The Buyer has all requisite corporate power and authority to
execute and deliver the Transaction Documents to which it is a party
and to consummate the transactions contemplated thereby. The
execution and delivery of this Agreement and the other Transaction
Documents to which the Buyer is a party and the consummation of the
transactions contemplated hereby and thereby have been duly and
validly approved by the Board of Directors of the Buyer. The Board of
Directors of the Buyer has directed that this Agreement and the Plan
of Merger and the transactions contemplated hereby and thereby be
submitted to the stockholders of the Buyer for approval at a meeting
of such stockholders, and except for the adoption of this Agreement
and the Plan of Merger by the Buyer's stockholders, no other corporate
proceedings on the part of the Buyer are necessary to consummate any
of the transactions so contemplated by the Transaction Documents.
This Agreement and the Seller Option Agreement have been, and the Plan
of Merger and the other Transaction Documents to be executed by the
Buyer will be, duly and validly executed and delivered by the Buyer
and (assuming due authorization, execution and delivery by the Seller)
the Agreement constitutes and the Plan of Merger and such other
Transaction Documents will constitute at the Closing, the valid and
binding obligations of the Buyer, enforceable against the Buyer in
accordance with their respective terms, except that enforcement
thereof may be limited by the receivership, conservatorship and
supervisory powers of bank regulatory agencies generally as well as
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of creditors' rights generally and except
that enforcement thereof may be subject to general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the availability of equitable
remedies.
(b) Neither the execution and delivery of any of the Transaction
Documents by the Buyer nor the consummation by the Buyer of the
transactions contemplated thereby, nor compliance by the Buyer with
any of the terms or provisions thereof, will (i) assuming that the
consents and approvals referred to in Section 3.04 hereof are duly
obtained, violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to the Buyer or
any of its subsidiaries or any of their respective properties or
assets, or (ii) violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in
the termination of, accelerate the performance required by, or result
in a right of termination or acceleration or the creation of any lien,
security interest, charge or other encumbrance upon any of the
respective properties or assets of the Buyer or any of its
subsidiaries under, any of the terms, conditions or provisions of (A)
the Certificate of Incorporation or other charter document of like
nature or By-Laws of the Buyer, or such subsidiary, as the case may
be, or (B) any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which
the Buyer or any of its subsidiaries is a party as issuer, guarantor
or obligor, or by which they or any of their respective properties or
assets may be bound or affected, except, in the case of clause (ii)(B)
above, for such violations, conflicts, breaches or defaults which
either individually or in the aggregate will not result, with respect
to the Buyer or any Significant Subsidiary of the Buyer, in a
Material Adverse Effect.
3.04 Consents and Approvals. Except for consents, waivers or
approvals of, or filings or registrations with, the Federal Reserve Board,
the NYS Department, the Massachusetts Board, the SEC, Nasdaq, the Secretary
of State of the State of Delaware, certain state "Blue Sky" or securities
commissioners and the stockholders of the Buyer, and except as set forth in
Section 3.04 of the Buyer Disclosure Schedule, no consents, waivers or
approvals of or filings or registrations with any public body or authority
are necessary, and no consents or approvals of any third parties (which term
does not include the Board of Directors of the Buyer) are necessary, in
connection with (a) the execution and delivery by the Buyer of the
Transaction Documents to which it is a party or (b) the consummation by the
Buyer of the transactions contemplated by said agreements. The affirmative
vote of holders of a majority of the outstanding shares of Buyer Common
Stock taken at a meeting called for the purpose of voting in the Plan of
Merger is the only vote of the holders of any class or series of capital
stock or other securities of the Buyer necessary to approve of the
Transaction Documents and the transactions contemplated thereby. Other than
as publicly disclosed, the Buyer has no knowledge of any fact or
circumstance relating to the Buyer or its subsidiaries that is reasonably
likely to materially impede or delay receipt of any Consents of regulatory
or governmental authorities or result in the imposition of a restriction or
condition of the type referenced in Section 6.02(g) herein.
3.05 Financial Statements. The Buyer has made available to the Seller
copies of (a) the consolidated balance sheets of the Buyer and its
subsidiaries as of December 31 for the fiscal years 1995 through 1997,
inclusive, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the fiscal years 1995 through 1997,
inclusive, as reported in the Annual Reports of the Buyer on Form 10-K for
each of the three fiscal years ended December 31, 1995 through December 31,
1997 which were filed with the SEC under the Exchange Act in each case
accompanied by the audit report of KPMG Peat Marwick LLP independent
accountants for the Buyer, and (b) the unaudited consolidated balance sheets
of the Buyer and its subsidiaries as of March 31, 1998 and March 31, 1997,
the related unaudited consolidated statements of income and changes in
stockholders' equity for the three months ended March 31, 1998 and March 31,
1997 and the related unaudited consolidated statements of cash flows for the
three months ended March 31, 1998 and March 31, 1997, all as reported in the
Buyer's Quarterly Report on Form 10-Q for the three months ended March 31,
1998 filed with the SEC under the Exchange Act. The December 31, 1997
consolidated balance sheet (the "Buyer Balance Sheet") of the Buyer
(including the related notes, where applicable) and the other financial
statements referred to herein (including the related notes, where
applicable) fairly present in all material respects, and the financial
statements to be included in any reports or statements (including reports on
Forms 10-Q and 10-K) to be filed by the Buyer with the SEC after the date
hereof will fairly present in all material respects, the consolidated
financial position and results of the consolidated operations and cash flows
and changes in shareholders' equity of the Buyer and its subsidiaries for
the respective fiscal periods or as of the respective dates therein set
forth; and each of such statements (including the related notes, where
applicable) has been and will be prepared in accordance with GAAP
consistently applied during the periods involved, except as otherwise set
forth in the notes thereto (subject, in the case of unaudited interim
statements, to normal year-end adjustments). Except as set forth in Section
3.05 of the Buyer Disclosure Schedule, the books and records of the Buyer
and its subsidiaries have been, and are being, maintained in accordance with
GAAP in all material respects and applicable legal and regulatory
requirements.
3.06 Absence of Undisclosed Liabilities. None of the Buyer or any of
its subsidiaries has any obligation or liability (contingent or otherwise)
that is material on a consolidated basis to the Buyer, or that when combined
with all similar obligations or liabilities would be material on a
consolidated basis to the Buyer or any of its Significant Subsidiaries,
except as disclosed or reflected in the Buyer Balance Sheet or any of the
other financial statements of the Buyer described in Section 3.05 above.
3.07 Broker's Fees. Neither the Buyer nor any of its officers,
directors, employees or agents has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection
with any of the transactions contemplated by this Agreement, except for the
fees incurred in connection with the engagement of Sandler O'Neill &
Partners L.P. and for legal, accounting and other professional fees payable
in connection with the Merger. The Buyer will be responsible for the
payment of all such fees.
3.08 Absence of Certain Changes or Events. Except as disclosed in the
Buyer's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998
or in any Current Reports of the Buyer on Form 8-K filed prior to the date
of this Agreement, since December 31, 1997, the Buyer and its subsidiaries
have not incurred any material liability, except in the ordinary course of
their business consistent with their past practices, nor has there been any
change in the business, assets, financial condition or results of operations
of the Buyer or any of its subsidiaries which has had, or is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on the Buyer or any Significant Subsidiary of the Buyer.
3.09 Legal Proceedings. There is no suit, action or proceeding
pending or, to the best knowledge of the Buyer, threatened, against the
Buyer or any subsidiary of the Buyer or challenging the validity or
propriety of the transactions contemplated by this Agreement or the Plan of
Merger, as to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, would, individually or in
the aggregate, have a Material Adverse Effect on the Buyer or any
Significant Subsidiary of the Buyer or otherwise materially adversely affect
the Buyer's ability to perform its obligations under this Agreement, nor is
there any judgment, decree, injunction, rule or order of any legal or
administrative body or arbitrator outstanding against the Buyer or any
subsidiary of the Buyer having, or which insofar as reasonably can be
foreseen, in the future could have, any such effect.
3.10 Reports. Since January 1, 1995, the Buyer and its subsidiaries
have filed, and subsequent to the date hereof will file, all reports,
registrations and statements, together with any amendments required to be
made with respect thereto, that were and are required to be filed with (a)
the SEC, including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K
and proxy statements (and all such reports, registrations and statements
have been or will be delivered by the Buyer to the Seller), (b) the Federal
Reserve Board, (c) the FDIC, and (d) any applicable state securities or
banking authorities (except, in the case of state securities authorities, no
such representation is made as to filings which are not material) (all such
reports and statements are collectively referred to herein as the "Buyer
Reports"). As of their respective dates, the Buyer Reports complied and,
with respect to filings made after the date of this Agreement, will at the
date of filing comply, in all material respects with all of the statutes,
rules and regulations enforced or promulgated by the regulatory authority
with which they were filed and did not contain and, with respect to filings
made after the date of this Agreement, will not at the date of filing
contain, any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
3.11 Buyer Common Stock. The Buyer Common Stock to be issued pursuant
to the Plan of Merger is duly authorized and, when issued at the Effective
Time, will be validly issued, fully paid and nonassessable and not subject
to preemptive rights, with no personal liability attaching thereto.
3.12 Ownership of Seller Common Stock. Neither the Buyer nor, to its
best knowledge, any of its affiliates or associates (as such terms are
defined under the Exchange Act) (a) beneficially own, directly or
indirectly, or (b) are parties to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of,
in each case, shares of capital stock of the Seller (other than shares in
trust accounts, managed accounts and the like that are beneficially owned by
third parties (any such shares, "Trust Account Shares") and shares acquired
in satisfaction of any debt previously contracted (any such shares, "DPC
Seller Shares")), which in the aggregate represent five percent (5%) or more
of the outstanding shares of capital stock of the Seller entitled to vote
generally in the election of directors.
3.13 Taxes and Tax Returns.
(a) Except where the failure to do so would not have a Material
Adverse Effect, the Buyer and each of its subsidiaries (referred to
for purposes of this Section 3.13, collectively, as the "Buyer
Companies") have, since December 31, 1991, timely filed in
substantially correct form all Filed Tax Returns.
(b) Except as set forth in Section 3.13(b) of the Buyer
Disclosure Schedule, the Buyer Companies have paid all Taxes shown as
being due on the Filed Tax Returns.
(c) Except as set forth in Section 3.13(c) of the Buyer
Disclosure Schedule, no assessment that has not been settled or
otherwise resolved has been made with respect to Taxes not shown on
the Filed Tax Returns, other than such additional Taxes as are being
contested in good faith and which if determined adversely to the Buyer
Companies would not have a Material Adverse Effect. No deficiency in
Taxes or other proposed adjustment that has not been settled or
otherwise resolved has been asserted in writing by any taxing
authority against any of the Buyer Companies, which if determined
adversely to the Buyer Companies would have a Material Adverse Effect.
No Tax Return of any of the Buyer Companies is now under examination
by any applicable taxing authority. There are no material liens for
Taxes (other than current Taxes not yet due and payable) on any of the
assets of any Buyer Company.
(d) Adequate provision has been made on the Buyer Balance Sheet
for all Taxes of the Buyer Companies in respect of all periods through
the date hereof.
(e) Except with respect to intra-Buyer Company agreements made
or required under the federal banking, bank holding company or
consolidated tax return regulations, and except as set forth in
Section 3.13(e) of the Buyer Disclosure Schedule, none of the Buyer
Companies is a party to or bound by any Tax indemnification, Tax
allocation or Tax sharing agreement with any person or entity or has
any current or potential contractual obligation to indemnify any other
person or entity with respect to Taxes.
(f) Except as set forth in Section 3.13(f) of the Buyer
Disclosure Schedule, none of the Buyer Companies has filed or been
included in a combined, consolidated or unitary income Tax Return
(including any consolidated federal income Tax Return) other than one
of which one of the Buyer Companies was the parent.
(g) Except as set forth in Section 3.13(g) of the Buyer
Disclosure Schedule, none of the Buyer Companies has made any
payments, is obligated to make any payments, or is a party to any
agreement that could obligate it to make any payments that will not be
deductible under Code Section 280G.
3.14 Employees.
(a) To the best knowledge of the Buyer, the current value of the
assets of each of the "employee pension benefit plans," as such term
is defined in Section 3 of ERISA, which is maintained or contributed
to by the Buyer (each a "Buyer Pension Plan"), and which is subject to
Title IV of ERISA, exceeds that plan's "Benefit Liabilities" as that
term is defined in Section 4001(a)(16) of ERISA, when determined under
actuarial factors that would apply if that plan terminated in
accordance with all applicable legal requirements.
(b) To the best knowledge of the Buyer, each of the Buyer
Pension Plans and each of the "employee welfare benefit plans" (the
"Buyer Benefit Plans"), as such term is defined in Section 3 of ERISA,
which is maintained or contributed to by the Buyer, has been
administered in compliance with its terms in all material respects and
is in compliance in all material respects with the applicable
provisions of ERISA (including, but not limited to, the funding and
prohibited transactions provisions thereof), the Code and other
applicable laws, except to the extent that non-compliance would not
have a Material Adverse Effect on the Buyer, taken as a whole.
(c) To the best knowledge of the Buyer, there has been no
reportable event within the meaning of Section 4043(b) of ERISA or any
waived funding deficiency within the meaning of Section 412(d)(3) (or
any predecessor section) of the Code with respect to any Buyer Pension
Plan.
(d) To the best knowledge of the Buyer, each of the Buyer
Pension Plans which is intended to be a qualified plan within the
meaning of Section 401(a) of the Code is so qualified, and the Buyer
is not aware of any fact or circumstance which would adversely affect
the qualified status of any such plan.
3.15 Agreements with Banking Authorities. Neither the Buyer nor any
of its subsidiaries is a party to any commitment, letter (other than letters
addressed to regulated depository institutions generally), written
agreement, memorandum of understanding or order to cease and desist with any
federal or state governmental entity charged with the supervision or
regulation of banks or bank holding companies or engaged in the insurance of
bank deposits which restricts materially the conduct of its business, or in
any manner relates to its capital adequacy, credit policies, management or
overall safety and soundness or such entity's ability to perform its
obligations hereunder, and neither the Buyer nor any of its subsidiaries has
received written notification from any such federal or state governmental
entity that any such Person may be requested to enter into, or otherwise be
subject to, any such commitment, letter, written agreement, memorandum of
understanding or cease and desist order.
3.16 Compliance with Applicable Law. Each of the Buyer and each
Significant Subsidiary thereof holds all licenses, franchises, permits and
authorizations necessary for the lawful conduct of its business, and each of
the Buyer and each Significant Subsidiary thereof has complied with, and is not
in violation of or default in any respect under any, applicable law, statute,
order, rule, regulation or policy of, or agreement with, any federal, state or
local governmental agency or authority relating to the Buyer or such
Significant Subsidiary (other than where such default or noncompliance will not
result in, or create the possibility of resulting in, a material limitation on
the conduct of the business of the Buyer, will not cause, or create the
possibility of causing, the Buyer or any Significant Subsidiary thereof to
incur any financial penalty in excess of $20,000 (including but not limited to
any civil money penalty or other monetary sanction under Section 8(i)(2) of the
FDIA, 12 U.S.C. [Section Sign] 1818(i)(2), or under any applicable state law
("CMPs")), and will not otherwise result, or create the possibility of
resulting in, any Material Adverse Effect on the Buyer or any Significant
Subsidiary of the Buyer), and neither the Buyer nor any Significant Subsidiary
of the Buyer has received any notice of any violation of any such law, statute,
order, rule, regulation, policy or agreement, or the commencement of any
proceeding in connection with any such violation (including but not limited to
any hearing or investigation relating to the imposition or contemplated
imposition of CMPs), and does not know of any violation of, any such law,
statute, order, rule, regulation, policy or agreement which would have such a
result.
3.17 Year 2000 Compliance. The Buyer and the Buyer's subsidiaries
have taken all reasonable steps necessary to address the software,
accounting and record keeping issues raised in order for the data processing
systems used in the business conducted by the Buyer and its subsidiaries to
be substantially Year 2000 compliant on or before the end of 1999 and in
conformity with applicable guidance from federal and state regulatory
agencies except to the extent that noncompliance therewith does not and is
not likely to result in a Material Adverse Effect with respect to Buyer or
any of its Significant Subsidiaries.
3.18 Environmental Matters.
(a) Except as set forth in Section 3.18(a) of the Buyer
Disclosure Schedule, the Buyer, each of its Significant Subsidiaries
and the Participation Facilities (as such term is hereinafter defined)
are and have been in material compliance with all applicable laws,
rules, regulations, standards and requirements of the EPA and of state
and local agencies with jurisdiction over pollution or protection of
the environment.
(b) Except as set forth in Section 3.18(b) of the Buyer
Disclosure Schedule, there is no suit, claim, action or proceeding now
pending or, to the best knowledge of the Buyer, threatened, before any
court, governmental agency or board or other forum in which the Buyer,
any of its Significant Subsidiaries or any Participation Facility has
been or, with respect to threatened proceedings, may be, named as a
defendant (i) for alleged noncompliance (including by any
predecessor), with any environmental law, rule or regulation or (ii)
relating to the release into the environment of any Hazardous Material
(as hereinafter defined) whether or not occurring at or on a site
owned, leased or operated by the Buyer, any of its Significant
Subsidiaries or any Participation Facility.
(c) Except as set forth in Section 3.18(c) of the Buyer
Disclosure Schedule, to the best knowledge of the Buyer, there is no
suit, claim, action or proceeding pending, or threatened, before any
court, governmental agency or board or other forum in which any Loan
Property (as hereinafter defined) has been or, with respect to
threatened proceedings, may be, named as a defendant or involved (i)
for alleged noncompliance (including by any predecessor) with any
environmental law, rule or regulation or (ii) relating to the release
into the environment of any Hazardous Material whether or not
occurring at or on a site owned, leased, operated or involving a Loan
Property.
(d) Except as set forth in Sections 3.18(a), (b) and (c) of the
Buyer Disclosure Schedule, to the best knowledge of the Buyer's
management, there is no reasonable basis for any suit, claim, action
or proceeding as described in subsection (b) or (c) of this Section
3.18.
(e) Except as set forth in Section 3.18(e) of the Buyer Disclosure
Schedule, during and, to the best knowledge of the Buyer, prior to the
period of (i) the ownership or operation by the Buyer or any of its
Significant Subsidiaries of any of their current properties, or (ii) the
participation by the Buyer or any of its Significant Subsidiaries in the
management of any Participation Facility, there has been no release of
Hazardous Material in, on, under or affecting such properties, that would
subject the Buyer or such Significant Subsidiary to any liability which
would result in a Material Adverse Effect with respect to the Buyer or
such Significant Subsidiary. Except as set forth in Section 3.18(e) of
the Buyer Disclosure Schedule, to the best knowledge of the Buyer, none
of the branch offices of any subsidiary or any other real property owned,
operated or leased by the Buyer was at any time the site of any gas
station, manufacturing plant or industrial business or activity or was at
any time a site on which any Hazardous Material, was stored, produced or
otherwise located.
(f) The Buyer and its Significant Subsidiaries have asked for
representations from borrowers and/or have conducted due diligence with
respect to each of the Loan Properties in a manner consistent with
industry practice at the time the loan was granted for secured loan
transactions of the size and type of the loan for which such Loan
Property was granted as security, and in the course thereof, or
subsequent thereto, nothing has come to the attention of the Buyer or any
of its Significant Subsidiaries which could be reasonably likely to
prevent the Buyer or such Significant Subsidiary from exercising its
right to foreclose on its security interest therein.
(g) To the best knowledge of the Buyer, none of the disclosures set
forth in Section 3.18 of the Buyer Disclosure Schedule is reasonably
likely to result in the closure of any of the branch offices of any of
the Significant Subsidiaries of the Buyer or in a Material Adverse Effect
with respect to the Buyer or any Significant Subsidiary.
(h) To the best knowledge of the Buyer, the transactions
contemplated herein are not subject to the provisions of any applicable
environmental restrictive transfer law.
(i) The following definitions apply for purposes of this Section
3.18: (i) "Loan Property" means any property in which the Buyer or any of
its Significant Subsidiaries holds a security interest, and, where
required by the context, said term means the owner or operator of such
property; (ii) "Participation Facility" means any facility in which the
Buyer or any of its Significant Subsidiaries participates in the
management and, where required by the context, said term means the owner
or operator of such property; (iii) "Hazardous Material" means any
pollutant, contaminant, hazardous material, hazardous waste, or hazardous
substance as defined under the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. [Section Sign]9601 et seq., or
the Resource Conservation and Recovery Act, 42 U.S.C. [Double Section
Sign] 6901 et seq., the Clean Water Act, 33 U.S.C. [Section Sign]1321, et
seq., or any other federal, state or local law relating to safety,
health, or environmental protection or any regulations promulgated under
any of the foregoing, and specifically includes oil and any other
petroleum derived products, asbestos, polychlorinated biphenyls (PCB's)
and, with respect to any residential property, lead paint and radon.
3.19 Regulatory Capital. As of the date hereof, without giving effect to
the transactions contemplated hereby, the subsidiaries of the Buyer which are
"insured depository institutions" (a) are "well capitalized," as defined in the
FDIA, and (b) meet all capital requirements, standards and ratios required by
each state or federal bank regulator with jurisdiction over such Persons. No
such regulator has indicated that it will condition any of the regulatory
approvals upon an increase in any such Person's capital or compliance with any
special capital requirement, standard or ratio.
3.20 CRA Rating. Each subsidiary of the Buyer which is an "insured
depository institution" was rated "Satisfactory" or better following its most
recent Community Reinvestment Act examination by the regulatory agency
responsible for its supervision. Neither the Buyer nor any of such subsidiaries
has received any notice of and none of such Persons has any knowledge of any
planned or threatened objection by any community group to the transactions
contemplated hereby.
3.21 Buyer Information. The information relating to the Buyer and its
subsidiaries to be contained in the Joint Proxy Statement and the S-4, as
described in Section 5.04 hereof, and any other documents filed with the SEC or
any regulatory agency in connection herewith, to the extent such information is
provided in writing by the Buyer, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make such
information not misleading.
3.22 Disclosure. To the best knowledge of the Buyer, all information
material to the Merger and the transactions contemplated by this Agreement, or
which is necessary to make the representations and warranties herein contained,
taken as a whole, not misleading, has been disclosed in writing to the Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer as follows:
4.01 Corporate Organization.
(a) The Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. The Seller
has all requisite corporate power and authority to own, lease or operate
all of its properties and assets and to carry on its business as it is
now being conducted. The Seller is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets
owned, leased or operated by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified would
not result in, with respect to the Seller, any Material Adverse Effect.
The Seller is a bank holding company registered with the Federal Reserve
Board under the BHCA.
(b) Except as set forth in Section 4.01 of the disclosure schedule
delivered to the Buyer together herewith (the "Seller Disclosure
Schedule"), the Seller has no subsidiaries and no Equity Investments
(other than its investments in such subsidiaries).
(c) Each Significant Subsidiary of the Seller is duly organized,
validly existing and in corporate good standing under the laws of the
jurisdiction of its incorporation. Each Significant Subsidiary of the
Seller has all requisite corporate power and authority to own, lease or
operate all of its properties and assets and to carry on its business as
it is now being conducted. Each Significant Subsidiary is duly licensed
or qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the
properties and assets owned, leased or operated by it makes such
licensing or qualification necessary, except where the failure to be so
licensed or qualified would, neither individually nor in the aggregate,
result in any Material Adverse Effect on the Seller or such Significant
Subsidiary.
(d) The minute books of the Seller contain complete and accurate
records of all corporate actions taken since January 1, 1996 to date by
the stockholders and Board of Directors of the Seller.
4.02 Capitalization.
(a) The authorized capital stock of the Seller consists of
20,000,000 shares of common stock, par value $3.33 1/3 per share ("Seller
Common Stock"). As of the close of business on July 28, 1998, there were
8,784,976 shares of Seller Common Stock issued and outstanding. In
addition, as of the close of business on July 28, 1998, there were
553,925 shares of Seller Common Stock reserved for issuance upon the
exercise of outstanding stock options and incentive plans and 150,000
shares of Seller Common Stock reserved for issuance under the Seller's
Employee Stock Purchase Plan. All issued and outstanding shares of Seller
Common Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. Except for rights issuable
in accordance with the Seller Rights Agreement, the Seller Option
Agreement, or as referred to in this Section 4.02, the Seller does not
have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments, rights agreements or agreements of any
character calling for the Seller to issue, deliver or sell, or cause to
be issued, delivered or sold any shares of Seller Common Stock or any
other equity security of the Seller or any subsidiary of the Seller or
any securities convertible into, exchangeable for or representing the
right to subscribe for, purchase or otherwise receive any shares of
Seller Common Stock or any other equity security of the Seller or any
subsidiary of the Seller or obligating the Seller to grant, extend or
enter into any such subscriptions, options, warrants, calls, commitments,
rights agreements or agreements. As of the date hereof, there are no
outstanding contractual obligations of the Seller to repurchase, redeem
or otherwise acquire any shares of capital stock of the Seller or any
subsidiary of the Seller. In addition, Section 4.02(a) of the Seller
Disclosure Schedule sets forth, as of the date hereof, the number of
shares of Seller Common Stock subject to outstanding stock options, the
various dates on which such options were granted, the various exercise
prices for such options, the number of shares subject to such options
that are currently vested and the vesting schedule for the balance of
shares subject to such options that are not currently vested.
(b) Section 4.02(b) of the Seller Disclosure Schedule lists each of
the Significant Subsidiaries of the Seller as of the date of this
Agreement and indicates for each such subsidiary as of such date: (i) the
percentage and type of equity securities owned or controlled by the
Seller; (ii) the jurisdiction of incorporation; and (iii) if the
subsidiary is a depository institution, whether it is a member of the
Federal Reserve System. Each of the subsidiaries of the Seller that is a
depository institution is an "insured depository institution" as defined
in the FDIA and applicable regulations thereunder, and the deposits of
each such depository institution are insured by the Bank Insurance Fund
of the FDIC in accordance with the FDIA. Each such depository institution
has paid all assessments and filed all reports required by the FDIA. As
of the date hereof no proceedings for the revocation or termination of
such deposit insurance are pending or to the knowledge of the Seller,
threatened. Except as to the 12% Series A Preferred Stock of Evergreen
Realty Funding Corp., a subsidiary of Evergreen Bank, N.A., no subsidiary
of the Seller has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for a
subsidiary of the Seller to issue, deliver or sell, or cause to be
issued, delivered or sold, any equity security of the Seller or of any
subsidiary of the Seller or any securities convertible into, exchangeable
for or representing the right to subscribe for, purchase or otherwise
receive any such equity security or obligating a subsidiary of the Seller
to grant, extend or enter into any such subscriptions, options, warrants,
calls, commitments or agreements. As of the date hereof, there are no
outstanding contractual obligations of any subsidiary of the Seller to
repurchase, redeem or otherwise acquire any shares of capital stock of
the Seller or any subsidiary of the Seller. Except as may be provided
under applicable law in the case of any subsidiary of the Seller that is
a bank, all of the shares of capital stock of each of the subsidiaries
held by the Seller are fully paid and nonassessable and owned by the
Seller free and clear of any claim, lien, encumbrance or agreement with
respect thereto.
4.03 Authority; No Violation.
(a) The Seller has full corporate power and authority to execute
and deliver the Transaction Documents to which it is a party and to
consummate the transactions contemplated thereby. The execution and
delivery of this Agreement and the other Transaction Documents to which
the Seller is a party and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by
the Board of Directors of the Seller. The Board of Directors of the
Seller has directed that this Agreement and the Plan of Merger and the
transactions contemplated hereby and thereby be submitted to the
stockholders of the Seller for approval at a meeting of such stockholders
and, except for the adoption of this Agreement and the Plan of Merger by
its stockholders, no other corporate proceedings on the part of the
Seller are necessary to consummate any of the transactions so
contemplated by the Transaction Documents. This Agreement and the Seller
Option Agreement have been, and the Plan of Merger and the other
Transaction Documents to be executed by the Seller will be, prior to the
Closing Date, duly and validly executed and delivered by the Seller and
(assuming due authorization, execution and delivery by the Buyer) the
Agreement constitutes and the Plan of Merger and such other Transaction
Documents will constitute at the Closing, the valid and binding
obligations of the Seller, enforceable against the Seller in accordance
with their respective terms, except that enforcement thereof may be
limited by the receivership, conservatorship and supervisory powers of
bank regulatory agencies generally as well as bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement of
creditors' rights generally and except that enforcement thereof may be
subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and the
availability of equitable remedies.
(b) Neither the execution and delivery of any of the Transaction
Documents by the Seller, nor the consummation by the Seller of the
transactions contemplated thereby, nor compliance by the Seller with any
of the terms or provisions thereof, will (i) assuming that the consents
and approvals referred to in Section 4.04 are duly obtained, violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree
or injunction applicable to the Seller or any of its subsidiaries or any
of their respective properties or assets, or (ii) violate, conflict with,
result in a breach of any provisions of, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in a right of termination or acceleration or the
creation of any lien, security interest, charge or other encumbrance upon
any of the respective properties or assets of the Seller or any of its
subsidiaries under, any of the terms, conditions or provisions of (A) the
Certificate of Incorporation or other charter document of like nature or
By-Laws of the Seller or such subsidiary, as the case may be, or (B) any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which the Seller or any of its
subsidiaries is a party as issuer, guarantor or obligor, or by which they
or any of their respective properties or assets may be bound or affected,
except, in the case of clause (ii)(B) above, for such violations,
conflicts, breaches or defaults which either individually or in the
aggregate will not result, with respect to the Seller or any Significant
Subsidiary of the Seller, in any Material Adverse Effect.
4.04 Consents and Approvals. Except as set forth in Section 4.04 of the
Seller Disclosure Schedule and except for consents, waivers, approvals of, or
filings or registrations with, the Federal Reserve Board, the NYS Department,
the SEC, the Secretary of State of the State of Delaware, Nasdaq, certain state
"Blue Sky" or securities commissioners and the stockholders of the Seller, and
except as set forth in Section 4.04 of the Seller Disclosure Schedule, no
consents, waivers or approvals of or filings or registrations with any public
body or authority are necessary, and no consents or approvals of any third
parties (which term does not include the Board of Directors of the Seller or
any subsidiary of the Seller) are necessary, in connection with (a) the
execution and delivery by the Seller of the Transaction Documents to which it
is a party or (b) the consummation by the Seller of the transactions
contemplated by such agreements. The affirmative vote of holders of a majority
of the outstanding shares of Seller Common Stock taken at a meeting called for
the purpose of voting on the Plan of Merger is the only vote of the holders of
any class or series of capital stock or other securities of the Seller
necessary to approve of the Transaction Documents and the transactions
contemplated thereby. Other than as publicly disclosed, the Seller has no
knowledge of any fact or circumstance relating to the Seller or its
subsidiaries that is reasonably likely to materially impede or delay receipt of
any Consents of regulatory or governmental authorities or result in the
imposition of a restriction or condition of the type referenced in Section
6.02(g) herein.
4.05 Financial Statements. The Seller has made available to the Buyer
copies of (a) the consolidated balance sheets of the Seller and its
subsidiaries as of December 31 for the fiscal years 1995 through 1997,
inclusive, and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for the fiscal years 1995 through 1997,
inclusive, as reported in the Annual Reports of the Seller on Form 10-K for
each of the three fiscal years ended December 31, 1995 through December 31,
1997 which were filed with the SEC under the Exchange Act, in each case
accompanied by the audit report of KPMG Peat Marwick LLP, independent
accountants for the Seller, and (b) the unaudited consolidated balance
sheets of the Seller and its subsidiaries as of March 31, 1998, the related
unaudited consolidated statements of operations and changes in stockholders'
equity for the three months ended March 31, 1998 and March 31, 1997 and
the related unaudited consolidated statements of cash flows for the
three months ended March 31, 1998 and March 31, 1997, all as reported in the
Seller's Quarterly Report on Form 10-Q for the three months ended March 31,
1998 filed with the SEC under the Exchange Act. The December 31, 1997
consolidated balance sheet (the "Seller Balance Sheet") of the Seller
(including the related notes, where applicable) and the other financial
statements referred to herein (including the related notes, where applicable)
fairly present, and the financial statements to be included in any reports or
statements (including reports in all material respects on Forms 10-Q and 10-K)
to be filed by the Seller with the SEC after the date hereof will fairly
present, the consolidated financial position and results of the consolidated
operations and cash flows and changes in shareholders' equity of the Seller and
its subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth; and each of such statements (including the related
notes, where applicable) has been and will be prepared in accordance with GAAP
in all material respects during the periods involved, except as otherwise set
forth in the notes thereto (subject, in the case of unaudited interim
statements, to normal year-end adjustments). Except as set forth in Section
4.05 of the Seller Disclosure Schedule, the books and records of the Seller and
its subsidiaries have been, and are being, maintained in accordance with GAAP
and applicable legal and regulatory requirements.
4.06 Absence of Undisclosed Liabilities. None of the Seller or any of its
subsidiaries has any obligation or liability (contingent or otherwise) that is
material on a consolidated basis to the Seller, or that when combined with all
similar obligations or liabilities would be material on a consolidated basis to
the Seller or any of its Significant Subsidiaries, except as disclosed or
reflected in the Seller Balance Sheet or any of the other financial statements
described in Section 4.05 above.
4.07 Broker's Fees. Neither the Seller nor any of its officers,
directors, employees or agents has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection
with any of the transactions contemplated by this Agreement, except for the
fees incurred in connection with the engagement of Keefe Bruyette & Woods, Inc.
and except for legal, accounting and other professional fees payable in
connection with the Merger. The Seller will be responsible for the payment of
all such fees.
4.08 Absence of Certain Changes or Events. Except as disclosed in the
Seller's Quarterly Report on Form 10-Q for the three (3) months ended March 31,
1998 or in any Current Reports of the Seller on Form 8-K filed prior to the
date of this Agreement, since December 31, 1997, the Seller and its
subsidiaries have not incurred any material liability, except in the ordinary
course of their business consistent with their past practices, nor has there
been any change in the business, assets, financial condition or results of
operations of the Seller or any of its subsidiaries which has had, or is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Seller or any Significant Subsidiary of the Seller.
4.09 Legal Proceedings. Except as set forth in Section 4.09 of the Seller
Disclosure Schedule, there is no suit, action or proceeding pending or, to the
best knowledge of the Seller, threatened, against the Seller or any subsidiary
of the Seller or challenging the validity or propriety of the transactions
contemplated by this Agreement or the Plan of Merger, as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have a Material Adverse
Effect on the Seller or any Significant Subsidiary of the Seller or otherwise
materially adversely affect the Seller's ability to perform its obligations
under this Agreement, nor is there any judgment, decree, injunction, rule or
order of any legal or administrative body or arbitrator outstanding against the
Seller or any subsidiary of the Seller having, or which insofar as reasonably
can be foreseen, in the future could have, any such effect.
4.10 Taxes and Tax Returns.
(a) Except where the failure to do so would not have a Material
Adverse Effect, the Seller and each of its subsidiaries (referred to for
purposes of this Section 4.10, collectively, as the "Seller Companies")
have, since December 31, 1991, timely filed in substantially correct form
all Filed Tax Returns.
(b) The Seller Companies have paid all Taxes shown as being due on
the Filed Tax Returns.
(c) No assessment that has not been settled or otherwise resolved
has been made with respect to Taxes not shown on the Filed Tax Returns,
other than such additional Taxes as are being contested in good faith and
which if determined adversely to the Seller Companies would not have a
Material Adverse Effect. No deficiency in Taxes or other proposed
adjustment that has not been settled or otherwise resolved has been
asserted in writing by any taxing authority against any of the Seller
Companies, which if determined adversely to the Seller Companies would
have a Material Adverse Effect. Except as set forth in Section 4.10(c) of
the Seller Disclosure Schedule, no Tax Return of any of the Seller
Companies is now under examination by any applicable taxing authority.
There are no material liens for Taxes (other than current Taxes not yet
due and payable) on any of the assets of any Seller Company.
(d) Adequate provision has been made on the Seller Balance Sheet
for all Taxes of the Seller Companies in respect of all periods through
the date hereof.
(e)Except with respect to intra-Seller Company agreements made or
required under the federal banking, bank holding company, or consolidated
tax return regulations, none of the Seller Companies is a party to or
bound by any Tax indemnification, Tax allocation or Tax sharing agreement
with any person or entity or has any current or potential contractual
obligation to indemnify any other person or entity with respect to Taxes.
(f) None of the Seller Companies has filed or been included in a
combined, consolidated or unitary income Tax Return (including any
consolidated federal income Tax Return) other than one of which one of
the Seller Companies was the parent.
(g) Except as set forth in Section 4.10(g) of the Seller Disclosure
Schedule, none of the Seller Companies has made any payments, is
obligated to make any payments, or is a party to any agreement that could
obligate it to make any payments that will not be deductible under Code
Section 280G.
4.11 Employees.
(a) Except as set forth in Section 4.11(a) of the Seller Disclosure
Schedule, neither the Seller nor any of its subsidiaries maintains or
contributes to any "employee pension benefit plan," as such term is
defined in Section 3 of ERISA (the "Seller Pension Plans"), "employee
welfare benefit plan," as such term is defined in Section 3 of ERISA (the
"Seller Benefit Plans"), stock option plan, stock purchase plan, deferred
compensation plan, other employee benefit plan for employees of the
Seller or any subsidiary thereof, or any other plan, program or
arrangement of the same or similar nature that provides benefits to
non-employee directors of the Seller or any subsidiary thereof
(collectively, the "Seller Other Plans").
(b) Prior to the date hereof, the Seller has made available to the
Buyer a complete and accurate copy of each of the following with respect
to each of the Seller Pension Plans, the Seller Benefit Plans and the
Seller Other Plans: (i) plan document; (ii) trust agreement or insurance
contract, if any; (iii) most recent IRS determination letter, if any;
(iv) most recent actuarial report, if any; and (v) most recent annual
report on Form 5500.
(c) To the best knowledge of the Seller, the value of the assets of
each of the Seller Pension Plans subject to Title IV of ERISA will exceed
as of the Effective Time that plan's "Benefit Liabilities" as that term
is defined in Section 4001(a)(16) of ERISA, when determined under
actuarial factors used in the most recent actuarial valuation for each
such plan.
(d) To the best knowledge of the Seller, each of the Seller Pension
Plans and each of the Seller Benefit Plans has been administered in
compliance with its terms in all material respects and is in compliance
in all material respects with the applicable provisions of ERISA
(including, but not limited to, the funding and prohibited transactions
provisions thereof), the Code and other applicable laws, except to the
extent that non-compliance would not have a Material Adverse Effect on
the Seller, taken as a whole.
(e) To the best knowledge of the Seller, there has been no
reportable event within the meaning of Section 4043(b) of ERISA or any
waived funding deficiency within the meaning of Section 412(d)(3) (or any
predecessor section) of the Code with respect to any Seller Pension Plan.
The Seller and its subsidiaries have made or provided for all
contributions to the Seller Pension Plans required thereunder or by
Section 412 of the Code.
(f) Other than as set forth in Section 4.11(g) of the Seller
Disclosure Schedule, neither the Seller nor any of its subsidiaries
contributes or has contributed to any multiple employer pension plan, any
plan described in Section 4063(a) of ERISA, or to any "Multiemployer
Plan," as such term is defined in Section 3(37) of ERISA.
(g) To the best knowledge of the Seller, each of the Seller Pension
Plans which is intended to be a qualified plan within the meaning of
Section 401(a) of the Code is so qualified, and the Seller is not aware
of any fact or circumstance which would adversely affect the qualified
status of any such plan.
(h) Except as set forth in Section 4.11(i) of the Seller Disclosure
Schedule, neither the Seller nor any of its subsidiaries is party to or
maintains any contract or other arrangement with any employee or group of
employees, providing severance payments, stock or stock-equivalent
payments or post- employment benefits of any kind or providing that any
otherwise disclosed plan, program or arrangement will irrevocably
continue, with respect to any or all of its participants, for any period
of time.
4.12 Agreements with Banking Authorities. Neither the Seller nor any of
its subsidiaries is a party to any commitment, letter (other than letters
addressed to regulated depository institutions generally), written agreement,
memorandum of understanding or order to cease and desist with any federal or
state governmental entity charged with the supervision or regulation of banks
or bank holding companies or engaged in the insurance of bank deposits which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, credit policies, management or overall safety and
soundness or such entity's ability to perform its obligations hereunder, and
neither the Seller nor any of its subsidiaries has received written
notification from any such federal or state governmental entity that any such
Person may be requested to enter into, or otherwise be subject to, any such
commitment, letter, written agreement, memorandum of understanding or cease and
desist order.
4.13 Material Agreements. Except as set forth in any of the Seller
Disclosure Schedules or the index of exhibits in the Seller's Annual Report on
Form 10-K for the year ended December 31, 1997, as of the date of this
Agreement, except for this Agreement and the other Transaction Documents,
neither the Seller nor any of its subsidiaries is a party to or is bound by (a)
any agreement, arrangement, or commitment that is material to the financial
condition, results of operations or business of the Seller or any Significant
Subsidiary of the Seller, except those entered into in the ordinary course of
business; (b) any written (or oral, if material) agreement, arrangement, or
commitment relating to the employment of any person or the election or
retention in office or severance of any present or former director or officer
of the Seller or any of its subsidiaries; (c) any contract, agreement, or
understanding with any labor union; (d) any agreement by and among the Seller,
its subsidiaries and/or any affiliate thereof, or (e) any contract or agreement
or amendment thereto that would be required to be filed as an Exhibit to a Form
10-K filed by the Seller as of the date hereof that has not been filed as an
Exhibit to the Form 10-K filed by it for 1997.
4.14 Ownership of Property. Section 4.14 of the Seller Disclosure
Schedule sets forth a true and complete list of all real property owned, leased
or operated by the Seller or its subsidiaries (including all of the branches of
the Seller's subsidiary bank and all of the Seller's properties acquired by
foreclosure proceedings in the ordinary course of business but excluding any
specific listing of any real property carried at nominal value, for which only
a generic description will be included on such schedule) as of the date hereof.
The Seller directly or indirectly through its subsidiaries has good and
marketable title to all assets and properties, whether real or personal,
tangible or intangible, including, without limitation, the capital stock of its
subsidiaries and all other assets and properties reflected in its consolidated
balance sheet as of March 31, 1998, or acquired subsequent thereto subject to
no encumbrances, customary utility easements, liens, mortgages, security
interests or pledges, except (a) those items that secure liabilities that are
reflected in said balance sheet or the notes thereto or incurred in the
ordinary course of business after the date of such balance sheet and not
otherwise prohibited by the terms hereof, (b) dispositions for adequate
consideration in the ordinary course of business or as expressly permitted by
the terms hereof, (c) statutory liens for amounts not yet delinquent or which
are being contested in good faith, (d) those items that secure public or
statutory obligations or any discount with, borrowing from, or other
obligations to, any Federal Reserve Bank or Federal Home Loan Bank, inter-bank
credit facilities, or any transaction by a subsidiary acting in a fiduciary
capacity, and (e) such encumbrances, liens, mortgages, security interests, and
pledges that are not material in character, amount or extent. Neither the
Seller nor any of its subsidiaries has received any notice of violation of any
applicable zoning or environmental regulation, ordinance or other law, order,
regulation, or requirement relating to its properties, except as set forth in
Section 4.14 of the Seller Disclosure Schedule. The Seller and its subsidiaries
as lessees have the right under valid and existing leases to occupy, use,
possess and control all property leased by the Seller and its subsidiaries as
presently occupied, used, possessed and controlled by the Seller and its
subsidiaries. Neither the Seller nor any of its subsidiaries is in default, and
there has not occurred any event that with the lapse of time or giving of
notice or both would constitute a default, under any leases pursuant to which
the Seller or any of its subsidiaries leases any real property, except for such
defaults which, individually or in the aggregate, would not result in the
forfeiture of the use or occupancy of the property covered by any such lease or
would not result in a material liability to the Seller or any Significant
Subsidiary of the Seller which is not reflected on the consolidated balance
sheet of the Seller dated as of June 30, 1998. All such leases constitute
legal, valid and binding obligations of the Seller or its subsidiaries and, to
the knowledge of the Seller, the other party thereto, enforceable by the Seller
or such subsidiary in accordance with their respective terms, except that
enforcement thereof may be limited by the receivership, conservatorship and
supervisory powers of bank regulatory agencies generally as well as bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
enforcement of creditors' rights generally and except that enforcement thereof
may be subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and the
availability of equitable remedies. Section 4.14 of the Seller Disclosure
Schedule sets forth the expiration date and renewal terms of each such lease.
Neither the Seller nor any of its subsidiaries has received notice of, or made
a claim with respect to, any breach or default under any leases pursuant to
which the Seller or any of its subsidiaries lease any real property.
4.15 Reports. Since January 1, 1995, the Seller and its subsidiaries have
filed, and subsequent to the date hereof will file, all reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that were and are required to be filed with (a) the SEC, including,
but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K and proxy statements (and
all such reports, registrations and statements have been or will be delivered
by the Seller to the Buyer), (b) the Federal Reserve Board, (c) the FDIC or
OCC, as applicable, and (d) any applicable state securities or banking
authorities (except, in the case of state securities authorities, no such
representation is made as to filings which are not material) (all such reports
and statements are collectively referred to herein as the "Seller Reports"). As
of their respective dates, the Seller Reports complied and, with respect to
filings made after the date of this Agreement, will at the date of filing
comply, in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the regulatory authority with which they
were filed and did not contain and, with respect to filings made after the date
of this Agreement, will not at the date of filing contain, any untrue statement
of a material fact.
4.16 Compliance with Applicable Law. Each of the Seller and each
Significant Subsidiary thereof holds all licenses, franchises, permits and
authorizations necessary for the lawful conduct of its business, and each of
the Seller and each Significant Subsidiary thereof has complied with, and is
not in violation of or default in any respect under any, applicable law,
statute, order, rule, regulation or policy of, or agreement with, any federal,
state or local governmental agency or authority relating to the Seller or such
Significant Subsidiary (other than where such default or noncompliance will not
result in, or create the possibility of resulting in, a material limitation on
the conduct of the business of the Seller) will not cause, or create the
possibility of causing, or create the possibility of resulting in any Material
Adverse Effect on the Seller or any Significant Subsidiary of the Seller), and
neither the Seller nor any Significant Subsidiary of the Seller has received
any notice of any violation of any such law, statute, order, rule, regulation,
policy or agreement, or the commencement of any proceeding in connection with
any such violation (including but not limited to any hearing or investigation
relating to the imposition or contemplated imposition of CMPs), and does not
know of any violation of, any such law, statute, order, rule, regulation,
policy or agreement which would have such a result.
4.17 Year 2000 Compliance. The Seller and the Seller's subsidiaries have
taken all reasonable steps necessary to address the software, accounting and
record keeping issues raised in order for the data processing systems used in
the business conducted by the Seller and its subsidiaries to be substantially
Year 2000 compliant on or before the end of 1999 and in conformity with
applicable guidance from federal and state regulatory agencies except to the
extent that noncompliance therewith does not and is not likely to result in a
Material Adverse Effect with respect to Seller or any of its Significant
Subsidiaries.
4.18 Environmental Matters.
(a) Except as set forth in Section 4.18(a) of the Seller Disclosure
Schedule, the Seller, each of its Significant Subsidiaries and the
Participation Facilities (as such term is hereinafter defined) are and
have been in material compliance with all applicable laws, rules,
regulations, standards and requirements of the EPA and of state and local
agencies with jurisdiction over pollution or protection of the
environment.
(b) Except as set forth in Section 4.18(b) of the Seller Disclosure
Schedule, there is no suit, claim, action or proceeding now pending or,
to the best knowledge of the Seller, threatened, before any court,
governmental agency or board or other forum in which the Seller, any of
its Significant Subsidiaries or any Participation Facility has been or,
with respect to threatened proceedings, may be, named as a defendant (i)
for alleged noncompliance (including by any predecessor), with any
environmental law, rule or regulation or (ii) relating to the release
into the environment of any Hazardous Material (as hereinafter defined)
whether or not occurring at or on a site owned, leased or operated by the
Seller, any of its Significant Subsidiaries or any Participation
Facility.
(c) Except as set forth in Section 4.18(c) of the Seller Disclosure
Schedule, to the best knowledge of the Seller, there is no suit, claim,
action or proceeding pending, or threatened, before any court,
governmental agency or board or other forum in which any Loan Property
(as hereinafter defined) has been or, with respect to threatened
proceedings, may be, named as a defendant or involved (i) for alleged
noncompliance (including by any predecessor) with any environmental law,
rule or regulation or (ii) relating to the release into the environment
of any Hazardous Material whether or not occurring at or on a site owned,
leased, operated or involving a Loan Property.
(d) Except as set forth in Sections 4.18(a), (b) and (c) of the
Seller Disclosure Schedule, to the best knowledge of the Seller's
management, there is no reasonable basis for any suit, claim, action or
proceeding as described in subsection (b) or (c) of this Section 4.18.
(e) Except as set forth in Section 4.18(e) of the Seller Disclosure
Schedule, during and, to the best knowledge of the Seller, prior to the
period of (i) the ownership or operation by the Seller or any of its
Significant Subsidiaries of any of their current properties, or (ii) the
participation by the Seller or any of its Significant Subsidiaries in the
management of any Participation Facility, there has been no release of
Hazardous Material in, on, under or affecting such properties, that would
subject the Seller or such Significant Subsidiary to any liability which
would result in a Material Adverse Effect with respect to the Seller or
such Significant Subsidiary. Except as set forth in Section 4.18(e) of
the Seller Disclosure Schedule, to the best knowledge of the Seller, none
of the branch offices of any subsidiary or any other real property owned,
operated or leased by the Seller was at any time the site of any gas
station, manufacturing plant or industrial business or activity or was at
any time a site on which any Hazardous Material, was stored, produced or
otherwise located.
(f) The Seller and its Significant Subsidiaries have asked for
representations from borrowers and/or have conducted due diligence with
respect to each of the Loan Properties in a manner consistent with
industry practice at the time the loan was granted for secured loan
transactions of the size and type of the loan for which such Loan
Property was granted as security, and in the course thereof, or
subsequent thereto, nothing has come to the attention of the Seller or
any of its Significant Subsidiaries which could be reasonably likely to
prevent the Seller or such Significant Subsidiary from exercising its
right to foreclose on its security interest therein.
(g) To the best knowledge of the Seller, none of the disclosures
set forth in Section 4.18 of the Seller Disclosure Schedule is reasonably
likely to result in the closure of any of the branch offices of any of
the Significant Subsidiaries of the Seller or in a Material Adverse
Effect with respect to the Seller or any Significant Subsidiary.
(h) To the best knowledge of the Seller, the transactions
contemplated herein are not subject to the provisions of any applicable
environmental restrictive transfer law.
(i) The following definitions apply for purposes of this Section
4.18: (i) "Loan Property" means any property in which the Seller or any
of its Significant Subsidiaries holds a security interest, and, where
required by the context, said term means the owner or operator of such
property; (ii) "Participation Facility" means any facility in which the
Seller or any of its Significant Subsidiaries participates in the
management and, where required by the context, said term means the owner
or operator of such property; (iii) "Hazardous Material" means any
pollutant, contaminant, hazardous material, hazardous waste, or hazardous
substance as defined under the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. [Section Sign] 9601 et seq.,
or the Resource Conservation and Recovery Act, 42 U.S.C. [Double Section
Sign] 6901 et seq., the Clean Water Act, 33 U.S.C. [Section Sign] 1321,
et seq., or any other federal, state or local law relating to safety,
health, or environmental protection or any regulations promulgated under
any of the foregoing, and specifically includes oil and any other
petroleum derived products, asbestos, polychlorinated biphenyls (PCB's)
and, with respect to any residential property, lead paint and radon.
4.19 Ownership of Buyer Common Stock. As of the date hereof, neither the
Seller nor, to its best knowledge, any of its affiliates or associates (as such
terms are defined under the Exchange Act), (a) beneficially own, directly or
indirectly, or (b) are parties to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of, in each case,
shares of capital stock of the Buyer (other than Trust Account Shares and
shares acquired in satisfaction of any debt previously contracted (any such
shares, "DPC Buyer Shares")), which in the aggregate represent five percent
(5%) or more of the outstanding shares of capital stock of the Buyer entitled
to vote generally in the election of directors.
4.20 Insurance. The Seller and its subsidiaries maintain the insurance
coverages set forth in Section 4.20 of the Seller Disclosure Schedule. The
Seller has made available to the Buyer copies of policies relating to insurance
maintained by the Seller or its subsidiaries with respect to their properties
and the conduct of their respective businesses.
4.21 Labor. No work stoppage involving the Seller or any of its
subsidiaries is pending or, to the best knowledge of the Seller, threatened.
Neither the Seller nor any of its subsidiaries is involved in, or, to the best
knowledge of the Seller, threatened with or affected by, any dispute,
arbitration, lawsuit or administrative proceeding relating to labor or
employment matters which might reasonably be expected to result in a Material
Adverse Effect with respect to the Seller or any of its Significant
Subsidiaries. No employees of the Seller or any of its subsidiaries are
represented by any labor union, and, to the best knowledge of the Seller, no
labor union is attempting to organize employees of the Seller or any of its
subsidiaries.
4.22 Material Interests of Certain Persons. Except as disclosed in
Section 4.22 of the Seller Disclosure Schedule, no officer or director of the
Seller, or any "associate" (as such term is defined in Rule 14a-1 under the
Exchange Act) of any such officer or director, has any material interest in any
material contract or property (real or personal), tangible or intangible, used
in or pertaining to the business of the Seller or any of its subsidiaries.
4.23 Absence of Registration Obligations. Neither the Seller nor any of
its subsidiaries is under any obligation, contingent or otherwise, by reason of
any agreement to register any of its securities under the Securities Act which
will survive the Merger.
4.24 Loans. All currently outstanding loans of, or current extensions of
credit by, the Seller or any of its Significant Subsidiaries (individually, a
"Loan," and collectively, the "Loans") were solicited, originated and currently
exist in material compliance with all applicable requirements of federal and
state law and regulations promulgated thereunder and applicable loan policies
of the Person extending the same, except for such changes to the circumstances
of the obligor thereunder or the collateral occurring subsequent to the
origination thereof and over which the Seller or such subsidiary had no
control, and except where noncompliance would not result in a Material Adverse
Effect with respect to Seller or any of its Significant Subsidiaries. The Loans
are adequately documented and, to the best knowledge of the Seller, each note
evidencing a Loan or loan or credit agreement or security instrument related to
the Loans constitutes a valid, legal and binding obligation of the obligor
thereunder, enforceable in accordance with the terms thereof, except where the
failure thereof, individually or in the aggregate, would not have a Material
Adverse Effect with respect to the Seller or any of its Significant
Subsidiaries. There are no oral modifications or amendments or additional
agreements related to the Loans that are not reflected in the records of the
Seller or such subsidiary, and no claims of defense as to the enforcement of
any Loan has been asserted and the Seller is aware of no acts or omissions
which would give rise to any claim or right of rescission, set-off,
counterclaim or defense, except where such modifications, amendments,
additional agreements, claims of defense, or acts or omissions would not have,
either individually or in the aggregate, a Material Adverse Effect with respect
to the Seller or any of its Significant Subsidiaries. The Seller and its
Significant Subsidiaries currently maintain, and shall continue to maintain, an
allowance for loan losses allocable to the Loans which, in Seller's reasonable
judgment, is adequate to provide for all known and reasonably estimable losses,
net of any recoveries relating to such extensions of credit previously charged
off, on the Loans, such allowance for loan losses complying in all material
respects with all applicable loan loss reserve requirements established in
accordance with GAAP and by any governmental authorities having jurisdiction
with respect to the Seller or any such subsidiary. Except as set forth in
Section 4.24 of the Seller Disclosure Schedule, none of the Loans are presently
serviced by third parties and, other than pursuant to obligations in accordance
with sales contracts entered into in the ordinary course of business and
consistent with past practice, there is no obligation which could result in any
Loan becoming subject to any third party servicing.
4.25 Capitalization. As of the date hereof, without giving effect to the
transactions contemplated hereby, the subsidiaries of the Seller which are
"insured depository institutions" (a) are "well capitalized," as defined in the
FDIA, and (b) meet all capital requirements, standards and ratios required by
each state or federal bank regulator with jurisdiction over such Persons. No
such regulator has indicated that it will condition any of the regulatory
approvals upon an increase in any such Person's capital or compliance with any
special capital requirement, standard or ratio.
4.26 CRA Rating. Each subsidiary of the Seller which is an "insured
depository institution" was rated "Satisfactory" or better following its most
recent Community Reinvestment Act examination by the regulatory agency
responsible for its supervision. Neither the Seller nor any of such
subsidiaries has received any notice of and none of such Persons has any
knowledge of any planned or threatened objection by any community group to the
transactions contemplated hereby.
4.27 Seller Information. The information relating to the Seller and its
subsidiaries to be contained in the Joint Proxy Statement as described in
Section 5.04 hereof, and any other documents filed with the SEC or any
regulatory agency in connection herewith, to the extent such information is
provided in writing by the Seller, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make such
information not misleading.
4.28 Disclosure. To the best knowledge of the Seller, all information
material to the Merger and the transactions contemplated by this Agreement, or
which is necessary to make the representations and warranties herein contained,
taken as a whole, not misleading, has been disclosed in writing to the Buyer.
ARTICLE V
COVENANTS OF THE PARTIES
5.01 Conduct of the Business of
Seller. During the period from the date of this Agreement to
the earlier of the Effective Time or the date of termination of this
Agreement, the Seller:
(a) shall, and shall cause each of its subsidiaries to, conduct its
business and engage in transactions, only in the ordinary and usual
course of business consistent with past practices, which shall mean (i)
conducting its banking and other business in the ordinary and usual
course, (ii) refraining from any of the activities described in Section
5.01(b) below, (iii) not entering into any material transactions except
in the ordinary and usual course of business consistent with past
practices and (iv) complying with the following covenants:
(A) maintaining its corporate existence and good standing, except
where any failure to maintain such good standing does not or would not
have a Material Adverse Effect on the Seller or any of its Significant
Subsidiaries;
(B) using reasonable efforts to maintain and keep its properties in
as good repair and condition in all material respects as they presently
exist, except for ordinary wear and tear and damage due to casualty;
(C) using reasonable efforts to maintain in full force and effect
insurance generally comparable in amount and in scope of coverage to that
now maintained by it;
(D) complying with and performing in all material respects its
obligations and duties (y) under contracts, leases and documents relating
to or affecting its assets, properties and business and (z) imposed upon
it by all federal, state and local laws and all rules, regulations and
orders imposed by federal, state or local governmental authorities,
judicial orders, judgments, decrees and similar determinations; and
(E) using reasonable efforts to preserve its business organization
intact and the goodwill of those having business relationships with the
Seller or any of the Seller's subsidiaries, to keep available the
services of its officers and employees as a group and to maintain
satisfactory relationships with borrowers, depositors, other customers
and others having business relationships with it;
(b) shall not and shall not permit any of its subsidiaries to,
without the prior written consent of the Buyer, which shall not
unreasonably be withheld:
(i) engage or participate in any material transaction or
incur or sustain any material obligation or liability except in the
ordinary, regular and usual course of its businesses consistent
with past practices;
(ii) offer an interest rate with respect to any deposit that
would constitute such deposit a "brokered deposit" under C.F.R.
[Section Sign]337.6(a)(1)(ii);
(iii) except in the ordinary, regular and usual course of
business consistent with past practices, sell, lease, transfer,
assign, encumber or otherwise dispose of or enter into any
contract, agreement or understanding to lease, transfer, assign,
encumber or dispose of any of its assets; provided that the Seller
and its subsidiaries may acquire and dispose of loans and
investment securities in the ordinary course of business consistent
with past practice;
(iv) file any application to open, close or relocate any
branch office;
(v) open, close, relocate, or give any notice (written or
verbal) to customers or governmental authorities or agencies to
open, close or relocate the operations of any branch office; or
(vi) waive any material right, whether in equity or at law,
that it has with respect to any asset except in the ordinary,
regular and usual course of business consistent with past practice;
(c) shall, at the Buyer's request and expense, use its reasonable
best efforts to cooperate with the Buyer with respect to preparation for
the combination and integration as of the Effective Time of the
businesses, systems and operations of the Buyer and the Seller, and shall
confer on a regular and frequent basis with one or more representatives
of the Buyer to report on operational and related matters;
(d) shall not declare or pay any dividends on or make any other
distributions in respect of Seller Common Stock, except for regular
quarterly cash dividends on Seller Common Stock at a rate not in excess
of the Seller's current dividend rate and subject to the terms of Section
5.18 hereof;
(e) from and after June 30, 1998, shall not have adopted or amended
(other than amendments required by applicable law or amendments that
reduce amounts payable by it or its subsidiaries) in any material respect
any Seller Pension Plan, any Seller Benefit Plan or any Seller Other Plan
or entered (or permitted any of its subsidiaries to enter) into any
employment, retention, severance or similar contract with any person
(including, without limitation, contracts with management which might
require that payments be made upon the consummation of the transactions
contemplated hereby) or amended any such existing agreements, plans or
contracts to increase any amounts payable thereunder or benefits provided
thereunder, or granted or permitted any increase in compensation to its
or its subsidiaries' employees as a class or paid any bonus except as
provided in Section 5.12(f) hereof;
(f) except as permitted in Section 5.01(b)(iii), shall not, with
respect to itself or any of its subsidiaries, authorize, recommend,
propose or announce an intention to authorize, recommend or propose, or
enter into an agreement with respect to, any merger, consolidation,
purchase and assumption transaction or business combination (other than
the Merger), any acquisition of a material amount of assets or securities
or assumption of liabilities (including deposit liabilities), any
disposition of a material amount of assets or securities, or any release
or relinquishment of any material contract rights;
(g) shall not propose or adopt amendments to its or any of its
subsidiaries' Certificates of Incorporation or By-Laws;
(h) shall not issue, deliver or sell any shares (whether original
issuance or from treasury shares) of its capital stock or securities
convertible into or exercisable for shares of its capital stock (or
permit any of its subsidiaries to issue, deliver or sell any shares of
such subsidiaries' capital stock or securities convertible into or
exercisable for shares of such subsidiaries' capital stock), except for
the sale of up to 50,000 shares of Seller Common Stock pursuant to the
Seller's Employee Stock Purchase Plan and except upon exercise or
fulfillment of rights or options issued or existing pursuant to employee
benefit plans, programs or arrangements, dividend reinvestment plans, or
the terms of convertible securities, all to the extent outstanding or in
existence on the date hereof, and except upon exercise of the Seller
Option, as applicable, or effect any stock split, reverse stock split,
recapitalization, reclassification or similar transaction or otherwise
change its equity capitalization as it existed on June 30, 1998;
(i) shall not grant, confer or award any options, warrants,
conversion rights or other rights, not existing on the date hereof, to
acquire any shares of its capital stock;
(j) shall not purchase, redeem or otherwise acquire, or permit any
of its subsidiaries to purchase, redeem or otherwise acquire, any shares
of its capital stock or any securities convertible into or exercisable
for any shares of its capital stock, except in a fiduciary capacity or in
satisfaction of debts previously contracted;
(k) shall not impose, or suffer the imposition, on any share of
capital stock held by it or by any of its subsidiaries of any material
lien, charge, or encumbrance, or permit any such lien, charge, or
encumbrance to exist;
(l) shall not incur, or permit any of its subsidiaries to incur,
any additional debt obligation or other obligation for borrowed money, or
to guaranty any additional debt obligation or other obligation for
borrowed money, except in the ordinary course of business consistent with
past practices, which shall include but not necessarily be limited to
creation of deposit liabilities, Federal Home Loan Bank advances,
purchases of federal funds, sales of certificates of deposit and entry
into repurchase agreements or other similar arrangements commonly
employed by banks;
(m) except as set forth in Section 5.01(m) of the Seller Disclosure
Schedule, shall not incur or commit to any capital expenditures or any
obligations or liabilities in connection therewith, other than capital
expenditures and such related obligations or liabilities incurred or
committed to in the ordinary and usual course of business consistent with
past practices, and, in all cases, the Seller agrees to consult with the
Buyer with respect to capital expenditures that individually exceed
$50,000 or cumulatively exceed $200,000;
(n) shall not, except as expressly contemplated hereby, enter into
any contract with any affiliate except normal banking services and
continuations of existing contractual relationships which have been
disclosed to Buyer;
(o) shall not, except for transactions in the ordinary course of
business consistent with past practice, enter into or terminate any
material contract or agreement, or make any changes in any of its
material leases or contracts, other than renewals of contracts for less
than a two (2) year period and, subject to the provisions of Section 5.17
hereof, leases without material adverse change of terms;
(p) shall not, other than in prior consultation with the other
party to this Agreement or except in the ordinary course of business and
consistent with past practice, restructure or materially change its
investment securities portfolio or its "gap position" through purchases,
sales or otherwise, or the manner in which the portfolio is classified or
reported;
(q) shall not agree, in writing or otherwise, to take any of the
foregoing actions or any action which would make any of its
representations or warranties contained herein untrue or incorrect in any
material respect.
5.02 Access to Properties and Records; Confidentiality. The Seller shall
permit the Buyer reasonable access to its properties and those of its
subsidiaries, and shall disclose and make available to the Buyer all Records,
including all books, papers and records relating to the assets, stock
ownership, properties, operations, obligations and liabilities of the Seller
and its subsidiaries, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors and
stockholders meetings, organizational documents, By-Laws, material contracts
and agreements, filings with any regulatory authority, accountants' work papers
(to the extent consent from such accountants is obtained), litigation files,
plans affecting employees, and any other business activities or prospects in
which the Buyer may reasonably have an interest in light of the transactions
contemplated hereby. The Seller shall make arrangements with each third party
provider of services to the Seller to permit the Buyer reasonable access to all
of the Seller's Records held by each such third party. The Buyer shall permit
the Seller reasonable access to such properties and records of the Buyer and/or
its subsidiaries in which the Seller may reasonably have an interest in light
of the transactions contemplated hereby. Neither the Buyer nor the Seller nor
any of their respective subsidiaries shall be required to provide access to or
to disclose information where such access or disclosure would violate or
prejudice the rights of any customer, would jeopardize the attorney-client
privilege of the institution in possession or control of such information, or
would contravene any law, rule, regulation, order, judgment, decree or binding
agreement or, in the event of any litigation or threatened litigation between
the parties over the terms of this Agreement where access to information may be
adverse to the interests of such party. The parties will use all reasonable
efforts to make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply and
both parties hereunder shall continue to be subject to the provisions of the
Confidentiality Agreement.
5.03 No Solicitation. Unless and until this Agreement shall have been
properly terminated by either party pursuant to Section 8.01 hereof, neither
the Seller nor any of its subsidiaries shall (and the Seller and each of its
subsidiaries shall use its best efforts to cause its Representatives,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, initiate or participate in
any discussions or negotiations with, or, subject to the fiduciary obligations
of the Seller's Board of Directors (as determined in good faith in consultation
with outside counsel), provide any information to, any corporation,
partnership, person or other entity or group (other than the Buyer and its
affiliates or Representatives) concerning any merger, tender offer, sale of
substantial assets, sale of shares of capital stock or debt securities or
similar transaction involving the Seller or any of its subsidiaries (an
"Acquisition Transaction"), provided that in accordance with the fiduciary
obligations of the Seller's Board of Directors, the Seller may participate in
discussions in the event that the Seller did not solicit or initiate such
discussions with respect to Acquisition Transactions. Notwithstanding the
foregoing, nothing contained in this Section 5.03 shall prohibit the Seller or
its Board of Directors from taking and disclosing to the Seller's stockholders
a position with respect to a tender offer by a third party pursuant to Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act or from making such
disclosure to the Seller's stockholders which, in the judgment of the Board of
Directors determined in good faith in consultation with outside counsel, may be
required under applicable law. The Seller will immediately communicate to the
Buyer the terms of any proposal, discussion, negotiation or inquiry relating to
an Acquisition Transaction and the identity of the party making such proposal
or inquiry which it may receive in respect of any such transaction (which shall
mean that any such communication shall be delivered no less promptly than by
telephone within 24 hours of the Seller's receipt of any such proposal or
inquiry) or its receipt of any request for information from the Federal Reserve
Board, the OCC, the NYS Department, or any other governmental agency or
authority with respect to a proposed Acquisition Transaction.
5.04 Regulatory Matters; Consents.
(a) The Buyer and the Seller shall cooperate in the prompt
preparation and filing with the SEC of a joint proxy statement in
definitive form relating to the meetings of the Buyer's and the Seller's
stockholders to be held in connection with this Agreement and the
transactions contemplated hereby (the "Joint Proxy Statement") and the
Buyer shall promptly prepare and file with the SEC a registration
statement on Form S-4 (the "S-4") in which the Joint Proxy Statement will
be included as a prospectus. Each of the Buyer and the Seller shall use
all reasonable efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing, and the
Buyer and the Seller shall thereafter mail the Joint Proxy Statement to
their respective stockholders. The Buyer shall also use all reasonable
efforts to obtain all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions contemplated
by this Agreement, and the Buyer and the Seller shall each furnish to the
other all information concerning itself and the holders of its Common
Stock as may be reasonably requested in connection with any such action.
(b) The Seller and the Buyer shall have the right to review in
advance, and to the extent practicable each will consult the other on, in
each case subject to applicable laws relating to the exchange of
information, all the information relating to the Seller or the Buyer, as
the case may be, and any of their respective subsidiaries, which appear
in any filing made with, or written materials submitted to, any third
party or any government regulatory body, department, agency or authority
in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all
permits, consents, approvals and authorizations of all third parties and
government regulatory bodies, departments, agencies or authorities
necessary or advisable to consummate the transactions contemplated by
this Agreement, and each party will keep the other apprised of the status
of matters relating to completion of the transactions contemplated
herein.
(c) The Buyer and the Seller shall, upon request, furnish each
other with all information concerning themselves, their subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Joint Proxy
Statement, the S-4 or any other statement, filing, notice or application
made by or on behalf of the Buyer, the Seller or any of their respective
subsidiaries to any governmental regulatory body, department, agency or
authority in connection with the Merger and the other transactions
contemplated by this Agreement.
(d) The Seller and the Buyer shall promptly advise each other upon
receiving any communication from any government regulatory body,
department, agency or authority whose consent or approval is required for
consummation of the transactions contemplated by this Agreement which
causes such party to believe that there is a reasonable likelihood that
such requisite approval will not be obtained or that the receipt of such
approval will be materially delayed.
(e) Each of the Seller and the Buyer will cooperate with the other
and use all reasonable efforts to prepare all necessary documentation, to
obtain all necessary permits, consents, approvals and authorizations of
all third parties and governmental bodies necessary to consummate the
transactions contemplated by this Agreement.
(f) The Buyer shall prepare and file as soon as practicable and the
Seller shall cooperate in the preparation and, where appropriate, filing
of, applications requesting the Consents (as contemplated in Section
6.01(b) herein), from all required governmental or regulatory authorities
or agencies. The Buyer shall provide the Seller and its counsel with
copies of such applications for comment prior to the filing thereof. The
parties shall immediately upon receipt deliver to each other copies of
all filings, correspondence and orders to and from such governmental or
regulatory authorities or agencies transmitted or received in connection
with the transactions contemplated hereby.
5.05 Approval of Stockholders. Each party hereto will (a) as promptly as
practicable, take all steps necessary to duly call, give notice of, convene and
hold a meeting of its stockholders for the purpose of approving this Agreement
and the Merger, and for such other purposes as may be necessary or desirable,
(b) recommend to its stockholders the approval of the aforementioned matters to
be submitted by it to its stockholders (subject to compliance with their
fiduciary duties as determined in good faith in consultation with outside
counsel), and (c) cooperate and consult with the other with respect to each of
the foregoing matters.
5.06 Agreements of Affiliates; Publication of Combined Financial Results.
(a) The Seller shall identify in a letter to the Buyer, after
consultation with counsel, all Persons who, at the time of the meeting of
its stockholders referred to in Section 5.05 hereof, it believes may be
deemed to be "affiliates" of the Seller, as that term is defined for
purposes of paragraphs (c) and (d) of Rule 145 under the Securities Act
and SEC Accounting Series Releases 130 and 135 (the "Seller Affiliates").
The Seller shall use all reasonable efforts to cause each Person who is
identified as a Seller Affiliate in the letter referred to above to
deliver to the Buyer at least forty (40) days prior to the Effective Time
an executed copy of the Seller Affiliates Agreement. Prior to the
Effective Time, the Seller shall amend and supplement such letter and use
all reasonable efforts to cause each additional person who is identified
as a Seller Affiliate to execute a copy of the Seller Affiliates
Agreement.
(b) The Buyer shall identify in a letter to the Seller, after
consultation with counsel, all Persons who, at the time of the meeting of
its stockholders referred to in Section 5.05 hereof, it believes may be
deemed to be "affiliates" of the Buyer, as that term is defined for
purposes of SEC Accounting Series Releases 130 and 135 (the "Buyer
Affiliates"). The Buyer shall use all reasonable efforts to cause each
Person who is identified as a Buyer Affiliate in the letter referred to
above to deliver to the Seller at least forty (40) days prior to the
Effective Time an executed copy of the Buyer Affiliates Agreement. Prior
to the Effective Time, the Buyer shall amend and supplement such letter
and use all reasonable efforts to cause each additional person who is
identified as a Buyer Affiliate to execute a copy of the Buyer Affiliates
Agreement.
(c) The Buyer shall use its best efforts to publish, no later than
thirty (30) days after the end of the first month after the Effective
Time in which there are at least thirty (30) days of post-Merger combined
operations (which month may be the month in which the Effective Time
occurs), combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135.
5.07 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to,
as promptly as practicable, take, or cause to be taken, all action and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement or to vest the Buyer with full title to all
properties, assets, rights, approvals, immunities and franchises of the Seller.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement or to vest the Buyer with
full title to all properties, assets, rights, approvals, immunities and
franchises of the Seller, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
5.08 Public Announcements. From the date of this Agreement to the Closing
Date, neither of the parties hereto shall make or send a Public Announcement
unless the other party shall have first been afforded reasonable opportunity to
review and comment on the text of such Public Announcement prior to the
delivery of the same; provided, however, that nothing in this Section shall
prohibit any party hereto from making any Public Announcement which its legal
counsel deems necessary under law, if it makes a good faith effort to obtain
the other party's comments on the text of the Public Announcement before making
it public.
5.09 Post-Closing Governance. From and after the Effective Time, the
Board of Directors of the Buyer shall be expanded by three members and Mr.
George W. Dougan and two (2) additional individuals selected by the Seller and
approved of by the Buyer in its reasonable business judgment prior to the
Effective Time shall be appointed as directors of the Buyer and shall resign
any offices they may hold at any subsidiary of the Seller. The directors
selected by the Seller to serve as directors of the Buyer shall be divided
equally among the three classes of directors of the Buyer, with Mr. Dougan to
be appointed vice chairman of the Board and to serve in the class of directors
whose term comes up for reelection in the year 2001. At the Effective Time, the
Board of Directors of the subsidiary of the Seller which is a depository
institution shall consist of those pre-existing directors of such subsidiary
who are not appointed directors of Buyer under this Section subsidiary which
the Buyer has selected to serve as directors of such subsidiary and such
additional persons as shall be designated by the Buyer prior to the Effective
Time. At the Effective Time, the President and Chief Executive Officer of such
subsidiary shall be a person selected by the Seller and approved by the Buyer
in its reasonable business judgment from among the senior executive officers of
such subsidiary and such person shall become a member of the Board of Directors
of such subsidiary and of the Buyer's Presidents' Council. At such time, the
Chairman of the Board of Directors of such subsidiary shall be an outside
director designated by the Buyer.
5.10 Tax-Free Reorganization Treatment; Accounting.
(a) Neither the Buyer nor the Seller shall intentionally take or
cause to be taken any action, whether before or after the Effective Time,
which would disqualify the Merger as a "reorganization" within the
meaning of Section 368(a) of the Code; provided, however, that nothing
herein shall limit the ability of the Buyer to exercise its rights under
the Seller Option Agreement.
(b) Neither the Buyer nor the Seller shall intentionally take or
cause to be taken any action, whether before or after the Effective Time,
which would prevent the Merger from qualifying for pooling of interests
accounting treatment.
5.11 Stock Listing. Buyer shall use all reasonable efforts to cause the
shares of Buyer Common Stock to be issued in connection with the Merger to be
approved for listing on Nasdaq, subject to official notice of issuance, as of
or prior to the Effective Time.
5.12 Employment and Benefit Matters.
(a) Service Credit. With respect to each employee of the Seller or
its affiliates who becomes an employee of the Buyer or any affiliate of
the Buyer (each such employee, a "Transferred Employee"), the Buyer shall
cause each employee benefit plan, program or arrangement maintained or
contributed to by the Buyer or its affiliates that is applicable to the
Transferred Employee to treat the prior service of such Transferred
Employee with the Seller or its affiliates as service rendered to the
Buyer or its affiliate, as the case may be, for purposes of eligibility
to participate and vesting under such plan, program or arrangement of the
Buyer, and for purposes of determining the amount of vacation and
severance benefits to which the Transferred Employee is entitled, but not
for purposes of benefit accrual. From and after the Effective Time, the
Buyer will provide the Transferred Employees with the types and levels of
employee benefits maintained by the Buyer for similarly situated
employees of the Buyer and will provide the directors and employees of
subsidiaries of Seller the levels and types of benefits maintained by
Buyer for persons holding equivalent positions at other subsidiaries of
the Buyer of comparable size and category. The Buyer shall cause its
medical, dental and other welfare benefit plans and policies applicable
to the Transferred Employees after the Closing to (i) waive with respect
to the Transferred Employees any waiting periods and restrictions and
limitations for preexisting conditions or insurability, and (ii) credit
the Transferred Employees with any deductible, co-payment, co-insurance,
or maximum out-of-pocket payments made by such Transferred Employees
under the Seller's medical, dental, and other welfare benefit plans and
policies so as to reduce the amount of any deductible, co-payment,
co-insurance, or maximum out-of-pocket payments payable by the
Transferred Employees under the Buyer's medical, dental, and other
welfare benefit plans and policies.
(b) Severance Obligations. For a period of one (1) year after the
Closing Date, the Buyer will provide Transferred Employees a severance
plan with provisions which are at least as favorable in the aggregate to
any terminating Transferred Employee as the severance plan maintained as
of June 30, 1998 by the Seller for such employee. Unless otherwise
required by law, Transferred Employees who are eligible for benefits
under the Seller's change-in-control plan and whose employment is
terminated within one (1) year after the Effective Time, may elect to
receive benefits under either the change-in-control plan of the Seller or
the severance plan provided by the Buyer under this section, but not
both. Any employee of the Seller or its affiliates who is not a
Transferred Employee whose position is terminated on or prior to the
Effective Time shall be entitled to severance benefits in accordance with
the severance plan, if any, maintained by the Seller for such employee on
June 30, 1998.
(c) Terminated Plans. The Seller shall take such actions as may
reasonably be requested by the Buyer to cause any of the Seller Benefit
Plans to terminate effective as of the Effective Time.
(d) Employment Agreement. As of the Effective Time, the existing
Employment Agreement between the Seller and Mr. Dougan shall be
terminated and Mr. Dougan shall, subject to the provisions thereof, be
entitled to the payment and benefits determined pursuant to Section 13(c)
of such agreement as in effect on June 30, 1998, such payments to be made
no later than the Effective Time. From and after the Effective Time, the
Buyer shall honor the Supplemental Executive Retirement Plan of the
Seller with respect to Mr. Dougan.
(e) For purposes of any employment benefit and compensation plans,
agreements and arrangements (including, but not limited to, any severance
agreements or arrangements) of the Seller, the Buyer acknowledges that
the consummation of the Merger will constitute a "change in control" of
the Seller.
(f) As reflected in the Seller Disclosure Schedule, Seller and its
subsidiaries maintain an annual bonus plan (the "Bonus Plan") pursuant to
which certain employees of Seller and its subsidiaries would be granted
cash bonus awards for 1998 in the ordinary course. The Seller and its
subsidiaries will maintain the Bonus Plan through the Effective Time. If
the Effective Time is prior to January 1, 1999, the Seller and its
subsidiaries will pay cash bonus awards for 1998 in the ordinary course
and consistent with its past practice and the Bonus Plan, including any
performance criteria thereof, but without regard under such criteria to
expenses properly allocable to the Merger, not more than three business
days before the Effective Time, and such cash bonus awards for 1998 under
the Bonus Plan shall in the aggregate not exceed an amount equal to
$600,000 multiplied by a fraction, the numerator of which is the number
of days in 1998 prior to the Effective Time and the denominator of which
is 365. If the Effective Time is after December 31, 1998, the Seller and
the subsidiaries may pay the cash bonus amounts for 1998 described in the
preceding sentence and continue the Bonus Plan through the Effective Time
and pay cash bonus awards for 1999 thereunder not more than three
business days before the Effective Time, in the ordinary course and
consistent with its past practice and the Plan, including any performance
criteria thereof, but without regard under such criteria to expenses
properly allocable to the Merger, in an aggregate amount which shall not
in any event exceed an amount equal to $600,000 multiplied by a fraction,
the numerator of which is the number of days in 1999 prior to the
Effective Time and the denominator of which is 365.
(g) If the Effective Time is before January 1, 1999, the Seller and
its subsidiaries in the ordinary course and consistent with past practice
and the Employees' Profit Sharing and Salary Reduction Plan of the Seller
(the "Seller Profit Sharing Plan"), may make a profit sharing
contribution for 1998 to the Seller Profit Sharing Plan not more than
three business days before the Effective Time, for the benefit of
eligible participants thereunder, not to exceed an aggregate amount equal
to $300,000 multiplied by a fraction, the numerator of which is the
number of days in 1998 prior to the Effective Time and the denominator of
which is 365. If the Effective Time is after December 31, 1998, Seller
and its Subsidiaries may make such profit sharing contribution for 1998
and, in the ordinary course and consistent with past practice and the
Seller Profit Sharing Plan, make a profit sharing contribution to the
Seller Profit Sharing Plan for 1999 not more than three business days
before the Effective Time, for the benefit of eligible participants
thereunder, in an aggregate amount not to exceed $300,000 multiplied by a
fraction, the numerator of which is the number of days in 1999 prior to
the Effective Time and the denominator of which is 365.
(h) Prior to the Effective Time, the Seller shall take all such
actions as may be necessary or appropriate so as to cause each Eligible
Window Employee (defined as those individuals listed in Section 5.12(h)
of the Seller Disclosure Schedule) who terminates employment within the
one year period beginning as of the Effective Time to be treated, as of
the date of the Eligible Window Employee's termination of employment and
for all purposes under the Employees' Retirement Plan of Evergreen
Bancorp, Inc. (the "Evergreen Retirement Plan"), as having the age and
years of service and credited service under the Evergreen Retirement Plan
as such Eligible Window Employee would have had upon termination of
employment if he terminated employment with the Buyer and its affiliates
(or any successors thereto) five years after the employee's actual date
of termination of employment, assuming the continuation of the Evergreen
Retirement Plan during such period.
5.13 Accountants' Letters.
(a) Comfort Letters. Each of the Buyer and the Seller (each, in
such capacity, the "Client") shall use all reasonable efforts to cause to
be delivered to the other party (each, in such capacity, the "Recipient")
a letter from KPMG Peat Marwick LLP, in form and substance reasonably
acceptable to the Recipient, stating that (a) they are independent public
accountants with respect to Client within the meaning of the 1933 Act and
the published rules and regulations thereunder, (b) in their opinion the
consolidated financial statements of Client included in the Registration
Statement comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the published rules and
regulations thereunder, and (c) a reading of the latest available
unaudited consolidated financial statements of Client and its
subsidiaries and inquiries of certain officials of Client and its
subsidiaries responsible for financial and accounting matters as to
transactions and events since the date of the most recent consolidated
statement of condition included in their most recent audit report with
respect to Client did not cause them to believe that (i) such latest
available unaudited consolidated financial statements of Client are not
stated on a basis consistent with that followed in Client's audited
consolidated financial statements; or (ii) except as disclosed in the
letter, at a specified date not more than five business days prior to the
date of such letter, there was any change in Client's capital stock or
any change in consolidated long-term debt or any decrease in the
consolidated net assets of Client or the consolidated allowance for loan
and lease losses of Client as compared with the respective amounts shown
in the most recent Client audited consolidated financial statements. Each
such letter shall also cover such other matters pertaining to Client's
and its subsidiaries' financial data and statistical information included
in the Registration Statement as may be reasonably requested by Recipient
and as are customarily covered in such letters in transactions of the
type contemplated hereby..
(b) Pooling Letters. Each of the Buyer and the Seller (each, in
such capacity, the "Client") shall use all reasonable efforts to cause to
be delivered to such Client a letter from KPMG Peat Marwick LLP, in form
and substance reasonably acceptable to the Buyer, dated the date of or
shortly prior to each of the mailing date of the proxy statement (the
"Proxy Statement") and other proxy materials to the shareholders of the
Buyer, and the Effective Time, stating the opinion of KPMG that the
reorganization contemplated by this Agreement shall qualify for
pooling-of-interest accounting treatment (provided, that the Pooling
Letter delivered at the date of mailing of the Proxy Statement may assume
no changes in relevant facts between the date of such letter and an
assumed Effective Time.
5.14 Directors' and Officers' Indemnification and Insurance.
(a) After the Effective Time, the Buyer shall honor the
indemnification provisions for officers and directors currently set forth
in the Certificate of Incorporation (or charter or other organizational
documents) and By-Laws of the Seller and its subsidiaries with respect to
acts and omissions taken prior to the Effective Time by such officers and
directors, but only to the extent permitted by federal and Delaware law
and regulations.
(b) The Buyer shall maintain the Seller's (including its
subsidiaries') existing directors' and officers' liability insurance (the
"D&O Insurance") covering persons who are currently covered by the
Seller's D&O Insurance for a period of six (6) years after the Effective
Time on terms no less favorable than those in effect on the date hereof,
provided, however, that the Buyer may substitute therefor policies
providing at least comparable coverage and containing terms and
conditions no less favorable than those in effect on the date hereof.
5.15 Conversion of Seller Stock Options. At the Effective Time, all
rights with respect to Seller Common Stock pursuant to stock options granted by
the Seller under any currently existing stock option plans of the Seller shall
be converted into corresponding rights to purchase shares of Buyer Common Stock
in accordance with the applicable provisions of the Plan of Merger.
5.16 Maintenance of Records. Through the Effective Time, each of the
Buyer and the Seller will maintain the Records in the same manner and with the
same care that the Records have been maintained prior to the execution of this
Agreement. The Buyer may, at its own expense, make such copies of and excerpts
from the Records as it may deem desirable. All Records, whether held by the
Buyer or the Seller, shall be maintained for such periods as are required by
law, unless the parties shall, applicable law permitting, agree in writing to a
different period. From and after the Effective Time, the Buyer shall be solely
responsible for continuing maintenance of the Records.
5.17 Leases. The Seller shall use all reasonable efforts to renew or
extend on a month-to-month basis or for such term as requested by the Buyer,
any lease of a branch office of any subsidiary, other lease of real property or
lease relating to furniture, fixtures or equipment that is currently in effect
but that would otherwise expire on or prior to the Effective Time. The Seller
shall not cancel, terminate or take other action that is likely to result in
any cancellation or termination of any such lease without prior written notice
to the Buyer.
5.18 Dividends. After the date of this Agreement, each of the Seller and
the Buyer shall coordinate with the other the declaration of any dividends in
respect of Seller Common Stock and Buyer Common Stock and the record dates and
payment dates relating thereto, it being the intention of the parties hereto
that holders of Seller Common Stock or Buyer Common Stock shall not receive two
dividends, or fail to receive one dividend, for any single calendar quarter
with respect to their shares of Seller Common Stock and/or Buyer Common Stock
and any share of Buyer Common Stock any such holder received in exchange
therefor in the Merger.
5.19 Notice of Change. Each of the parties hereto shall, subject to any
restrictions under applicable law or regulation, promptly notify the other of
any emergency or other change in the normal course of its or its subsidiaries'
businesses or in the operation of its or its subsidiaries' properties and of
any governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated) if such emergency, change,
complaint, investigation or hearing would be material to the business, results
of operations, financial condition or prospects of such Person on a
consolidated basis or any of its Significant Subsidiaries considered
independently. Further, each party agrees to give written notice promptly to
the other party upon becoming aware of the occurrence or impending occurrence
of any event or circumstance relating to it or any of its subsidiaries which
(i) is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on it or (ii) would cause or constitute a material breach of any
of its representations, warranties, or covenants contained herein, and to use
its reasonable efforts to prevent or promptly to remedy the same.
5.20 Changes in Accounting. Except with the prior consent of the other
party which shall not be unreasonably withheld, between the date hereof and the
Closing Date, neither of the parties hereto shall change its methods of
accounting as in effect at December 31, 1997, except as may be required by
changes in GAAP, tax, or regulatory accounting requirements, as concurred in by
such party's independent auditors, nor shall they change their respective
fiscal years.
5.21 SEC Filings. Each of the parties hereto shall file all reports,
applications and other documents required to be filed by it with the SEC or any
other governmental entity between the date of this Agreement and the Effective
Time and shall make available to the other copies of all such reports promptly
after the same are filed. If financial statements are contained in any such
reports filed with the SEC, such financial statements will fairly present the
consolidated financial position of the entity filing such statements as of the
dates indicated and the consolidated results of operations, changes in
shareholders' equity, and cash flows for the periods then ended in accordance
with GAAP (subject in the case of interim financial statements to normal
recurring year-end adjustments that are not material). As of their respective
dates, such reports filed with the SEC will comply in all material respects
with applicable securities laws and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5.22 Covenants of Buyer. From the date of this Agreement until the
earlier of the Effective Time or the date of termination of this Agreement, the
Buyer covenants and agrees that it shall take no action which would (a)
materially adversely affect the ability of any party to obtain any Consents
required for consummation of the transactions contemplated hereby without the
imposition of a condition or restriction of the type referred to in Section
6.02(g) of this Agreement, (b) materially adversely affect the ability of any
party to perform its covenants and agreements under this Agreement, or (c)
result in the Buyer entering into an agreement with respect to an acquisition
proposed with a third party which would result in the Merger not being
consummated. Nothing in this Agreement shall prevent the Buyer from issuing or
reissuing to third parties such number of shares of Buyer Common Stock at or
prior to the Effective Time as the Buyer may reasonably determine to be
necessary to qualify the transactions contemplated herein for "pooling of
interests" accounting treatment
5.23 Regulatory Reports. Each party and its subsidiaries shall file all
reports required to be filed by it with regulatory authorities between the date
of this Agreement and the Effective Time and, to the extent permitted by law,
shall deliver to the other party copies of all such reports promptly after the
same are filed.
5.24 Registration of Shares. On or prior to the Effective Time, the Buyer
shall file a registration statement on Form S-3 or Form S-8, as the case may be
(or any successor or other appropriate form), with respect to the shares of
Buyer Common Stock subject to the stock options of the Seller to be assumed by
the Buyer pursuant to Section 2.04 of the Plan of Merger and the Buyer shall
use its reasonable efforts to maintain the effectiveness of such registration
statement (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding.
ARTICLE VI
CLOSING CONDITIONS
6.01 Conditions to Each Party's Obligations Under This Agreement. The
respective obligations of each party under this Agreement shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions,
none of which may be waived:
(a) Stockholders' Approval. This Agreement and the Plan of Merger
and the transactions contemplated hereby and thereby shall have been
approved by the affirmative vote of the holders of at least a majority of
the outstanding shares of Seller Common Stock and at least a majority of
the outstanding shares of Buyer Common Stock, in each case in accordance
with applicable law.
(b) Governmental Consents. All authorizations, consents, orders or
approvals of, or declarations or filings with, and all expirations of
waiting periods imposed by, any governmental or regulatory authority or
agency (all of the foregoing being referred to as "Consents") which are
necessary for the consummation of the Merger, other than Consents the
failure of which to obtain would neither make it impossible to consummate
the Merger nor result in a Material Adverse Effect on the Buyer (on a
consolidated basis with the Seller) after the Merger, shall have been
filed, occurred or been obtained (all such authorizations, orders,
declarations, approvals, filings and consents and the lapse of all such
waiting periods being referred to as the "Requisite Regulatory
Approvals") and all such Requisite Regulatory Approvals shall be in full
force and effect. In addition, the Buyer shall have received all state
securities or blue sky permits and other authorizations necessary to
issue Buyer Common Stock pursuant to the Merger in accordance with all
applicable state securities or Blue Sky laws.
(c) S-4. The S-4 shall have become effective under the Securities
Act and shall not be subject to a stop order or a threatened stop order.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in
effect.
(e) Accounting Treatment. The Buyer and the Seller shall each have
received letters (the "Pooling Letters") from KPMG Peat Marwick LLP, the
independent auditing firm of each of them, dated the date of or shortly
prior to each of the mailing date of the proxy statement (the "Proxy
Statement") and other proxy materials to the shareholders of the Buyer,
and the Effective Time, stating the opinion of KPMG that the
reorganization contemplated by this Agreement shall qualify for
pooling-of-interest accounting treatment (provided, that the Pooling
Letter delivered at the date of mailing of the Proxy Statement may assume
no changes in relevant facts between the date of such letter and an
assumed Effective Time); provided, that such delivery of the Pooling
Letters shall not be a condition to the obligations of a party hereunder
if KPMG is unable to deliver the Pooling Letters as a result of (a) any
affirmative act on the part of such party or any of its affiliates, or
(b) any event or circumstance or failure to act which constitutes a
breach by such party of any of its representations, warranties, covenants
or agreements under this Agreement.
6.02 Conditions to the Obligations of the Buyer Under This Agreement. The
obligations of the Buyer under this Agreement shall be further subject to the
satisfaction or waiver by the Buyer, at or prior to the Effective Time, of the
following conditions:
(a) Absence of Material Adverse Changes. There shall not have
occurred any change in the business, assets, financial condition, or
results of operations of the Seller or any of its subsidiaries which has
had, or is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on the Seller taken as a whole.
(b) Representations and Warranties; Performance of Obligations. (i)
The obligations of the Seller required to be performed by it at or prior
to the Closing pursuant to the terms of this Agreement shall have been
duly performed and complied with in all material respects and (ii) the
representations and warranties of the Seller contained in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and as of the Effective Time as though made at and as of the
Effective Time (except as otherwise specifically contemplated by this
Agreement and except as to any representation or warranty which
specifically relates to an earlier date); provided, however, that for
purposes of determining the satisfaction of the conditions contained in
clause (ii) of this paragraph (b), no effect shall be given to any
exception in such representations and warranties relating to materiality
or the existence of a Material Adverse Effect and, provided further,
however, that for purposes of clause (ii) of this paragraph (b), such
representations and warranties shall be deemed to be true and correct in
all material respects unless the failure or failures of such
representations and warranties to be so true and correct, in the
aggregate, represents a material adverse change in the business, assets,
financial condition or results of operations of the Seller on a
consolidated basis. The Buyer shall have received a certificate to the
foregoing effect signed by the chairman or president and the chief
financial officer or chief accounting officer of the Seller.
(c) Third-Party Approvals. Any and all permits, consents, waivers,
clearances, approvals and authorizations of all non-governmental and
non-regulatory third parties which are necessary in connection with the
consummation of the transactions contemplated by this Agreement and are
required to be received or obtained by the Seller, shall have been
obtained by the Seller, other than permits, consents, waivers,
clearances, approvals and authorizations the failure of which to obtain
would neither make it impossible to consummate the Merger nor result in
any Material Adverse Effect with respect to the Buyer (on a consolidated
basis with the Seller).
(d) Tax Opinion. The Buyer shall have received an opinion, dated
the date of the Closing from its tax advisor, KPMG Peat Marwick LLP, or
other tax advisor acceptable to the Buyer and the Seller, substantially
to the effect that, on the basis of facts and representations set forth
therein, or set forth in writing elsewhere and referred to therein, for
federal income tax purposes the Merger constitutes a reorganization as
described in Section 368(a) of the Code and addressing such other
substantial federal income tax effects of the Merger as the Buyer may
reasonably require and which are customary in transactions of a like
character. In rendering any such opinion, such counsel may rely, to the
extent they deem necessary or appropriate, upon opinions of other counsel
and upon representations of an officer or officers of the Seller and the
Buyer or any of their affiliates.
(e) Seller Affiliates Agreements. The Seller shall have delivered
to the Buyer the letter pertaining to the Seller Affiliates, as
contemplated under Section 5.06 above, and each of the executed Seller
Affiliates Agreements that have been received by the Seller as of the
Effective Time.
(f) Termination of Certain Benefit Plans. If and to the extent
reasonably requested by the Buyer, the Seller shall have terminated one
or more of the Seller Benefit Plans effective prior to or as of the
Closing.
(g) Burdensome Condition. There shall not be any action taken by
any federal or state governmental agency or authority which, in
connection with the granting of any Consent or Requisite Regulatory
Approval necessary to consummate the Merger or otherwise, imposes any
condition or restriction upon the Buyer, any subsidiary of the Buyer or
the Seller after the Merger (including, without limitation, requirements
relating to the disposition of assets or limitations on interest rates),
which would so materially adversely impact the economic or business
benefits of the transactions contemplated by this Agreement as to render
inadvisable in the reasonable judgment of the Buyer the consummation of
the Merger.
6.03 Conditions to the Obligations of the Seller Under This Agreement.
The obligations of the Seller under this Agreement shall be further subject to
the satisfaction or waiver by the Seller, at or prior to the Effective Time, of
the following conditions:
(a) Absence of Material Adverse Changes. There shall not have
occurred any change in the business, assets, financial condition or
results of operations of the Buyer or any of its subsidiaries which has
had, or is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on the Buyer taken as a whole with its
subsidiaries.
(b) Representations and Warranties; Performance of Obligations. (i)
The obligations of the Buyer required to be performed by it at or prior
to the Closing pursuant to the terms of this Agreement shall have been
duly performed and complied with in all material respects and (ii) the
representations and warranties of the Buyer contained in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and as of the Effective Time as though made at and as of the
Effective Time (except as otherwise specifically contemplated by this
Agreement and except as to any representation or warranty which
specifically relates to an earlier date); provided, however, that for
purposes of determining the satisfaction of the conditions contained in
clause (ii) of this paragraph (b), no effect shall be given to any
exception in such representations and warranties relating to materiality
or the existence of a Material Adverse Effect and, provided further,
however, that for purposes of clause (ii) of this paragraph (b), such
representations and warranties shall be deemed to be true and correct in
all material respects unless the failure or failures of such
representations and warranties to be so true and correct, in the
aggregate, represents a material adverse change in the business, assets,
financial condition or results of operations of the Buyer on a
consolidated basis. The Seller shall have received a certificate to the
foregoing effect signed by the chairman or president and the chief
financial officer or chief accounting officer of the Buyer.
(c) Third-Party Approvals. Any and all permits, consents, waivers,
clearances, approvals and authorizations of all non-governmental and
non-regulatory third parties which are necessary in connection with the
consummation of the transactions contemplated by this Agreement and are
required to be received or obtained by the Buyer, shall have been
obtained by the Buyer, other than permits, consents, waivers, clearances,
approvals and authorizations the failure of which to obtain would neither
make it impossible to consummate the Merger nor result in a Material
Adverse Effect on the Buyer (on a consolidated basis with the Seller)
after the Merger.
(d) Tax Opinion. The Seller shall have received an opinion, dated
the dates of the Proxy Statement and the Closing from its tax advisor,
Arnold & Porter, or other tax advisor acceptable to the Buyer and the
Seller, substantially to the effect that, on the basis of facts and
representations set forth therein, or set forth in writing elsewhere and
referred to therein, for federal income tax purposes the Merger
constitutes a reorganization as described in Section 368(a) of the Code
and that no gain or loss will be recognized by the stockholders of the
Seller upon the receipt, pursuant to this Agreement, of Buyer Common
Stock solely in exchange for Seller Common Stock (it being understood
that such opinion will not extend to cash received in lieu of fractional
share interests or cash received by dissenters, if any) and in respect of
such other substantial federal income tax effects of the Merger as the
Seller may reasonably require and which are customary in transactions of
a like character. In rendering any such opinion, such advisor may rely,
to the extent they deem necessary or appropriate, upon opinions of other
advisors and upon representations of an officer or officers of the Seller
and the Buyer or any of their affiliates.
(e) Buyer Affiliates Agreements. The Buyer shall have delivered to
the Seller the letter pertaining to the Buyer Affiliates, as contemplated
under Section 5.06 above, and each of the executed Buyer Affiliates
Agreements that have been received by the Buyer as of the Effective Time.
(f) Nasdaq Listing. The shares of Buyer Common Stock issuable to
Seller's stockholders pursuant to this Agreement and the Plan of Merger
shall have been authorized for listing on the Nasdaq upon official notice
of issuance.
(g) Exchange Agent Certification. The Exchange Agent (as defined in
the Plan of Merger) shall have delivered to the Seller a certificate,
dated as of the Effective Time, to the effect that the Exchange Agent has
received from the Buyer appropriate instructions and authorization for
the Exchange Agent to issue a sufficient number of shares of Buyer Common
Stock in exchange for all outstanding shares of Seller Common Stock and
has deposited with the Exchange Agent sufficient funds to pay a
reasonable estimate of the cash payments necessary to pay for fractional
share interests.
ARTICLE VII
CLOSING
7.01 Time and Place. Subject to the provisions of Articles VI and VIII
hereof, the Closing of the transactions contemplated hereby shall take place at
the Boston, Massachusetts offices of the law firm of Peabody & Brown, at 10:00
A.M., local time, on the first business day after the date on which all of the
conditions contained in Sections 6.01(a), (b) and (c) hereof are satisfied or
waived; or at such other place, at such other time, or on such other date as
the Seller and the Buyer may mutually agree upon for the Closing to take place.
7.02 Deliveries at the Closing. Subject to the provisions of Articles VI
and VIII hereof, at the Closing there shall be delivered to the Seller and the
Buyer, the opinions, certificates, and other documents and instruments required
to be delivered under Article VI hereof.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of this Agreement and the
Plan of Merger and the transactions contemplated hereby and thereby by the
Seller's and the Buyer's stockholders:
(a) by mutual written consent of the Seller and the Buyer
authorized by their respective Boards of Directors; or
(b) by the Seller or the Buyer if the Effective Time shall not have
occurred on or prior to May 31, 1999 (the "Termination Date") or such
later date as shall have been agreed to in writing by the Buyer and the
Seller; or
(c) by the Buyer or the Seller if any governmental or regulatory
authority or agency, or court of competent jurisdiction, shall have
issued a final permanent order or Injunction enjoining, denying approval
of, or otherwise prohibiting the consummation of the Merger and the time
for appeal or petition for reconsideration of such order or Injunction
shall have expired without such appeal or petition being granted; or
(d) by the Buyer or the Seller (provided that the terminating party
is not then in material breach of any representation, warranty or
covenant or other agreement contained herein or in the Seller Option
Agreement) if the approval of such Person's stockholders specified in
Section 5.05 shall not have been obtained by reason of the failure to
obtain the required vote at a duly held meeting of such stockholders or
at any adjournment thereof; or
(e) by the Buyer or the Seller (provided that the terminating party
is not then in material breach of any representation, warranty, covenant
or other agreement contained herein pursuant to the standard set forth in
Section 6.02(b) or 6.03(b), as may be applicable or in the Seller Option
Agreement), in the event of a material breach by the other party of any
representation, warranty, covenant or other agreement contained herein
pursuant to the standard set forth in Section 6.02(b) or 6.03(b), as may
be applicable or in the Seller Option Agreement which breach is not cured
after forty-five (45) days written notice thereof is given to the party
committing such breach; or
(f) by the Seller, by action of its Board of Directors, whether
before or after approval of the Merger by the stockholders of the Seller,
by giving written notice of such election to the Buyer in the event that
both of the following conditions are satisfied:
(i) the average per share last sale prices of Buyer Common
Stock as reported on Nasdaq over the ten (10) consecutive trading
day period immediately preceding the date of the last Requisite
Regulatory Approval to be received, in this case without regard to
any waiting period attached to the effectiveness thereof (such
period being hereinafter referred to as the "Determination Period,"
and the price so obtained being referred to as, the "Closing
Price") is less than $29.46; and
(ii) the number obtained by dividing the Closing Price by
$36.84 is less than the number obtained by subtracting (A) 0.15
from (B) the quotient obtained by dividing the Final Index Price
(as defined below) by the Initial Index Price (as defined below).
For the purposes hereof the following terms shall have the
following meanings:
"Final Index Price" shall mean the Weighted Average of the average
of the closing prices of the Index Companies as reported on the NYSE,
Nasdaq or AMEX for the Determination Period.
"Index Companies" shall mean the companies listed on Exhibit E
hereto.
"Initial Index" shall mean the Weighted Average of the closing
prices of the Index Companies as reported on the NYSE, Nasdaq or AMEX on
the trading day immediately preceding execution of this Agreement.
"Weighted Average" shall mean the average determined by giving the
average of the closing prices for each of the Index Companies the
corresponding weight listed on Exhibit E hereto.
If the Buyer or any company listed on Exhibit E declares a stock
dividend or effects a reclassification, recapitalization, split-up,
combination, or subdivision of its common stock between the trading day
immediately preceding execution of this Agreement and the date of the
last Requisite Regulatory Approval to be received (without regard to any
waiting period attached to the effectiveness thereof), the closing prices
for such common stock shall be appropriately adjusted for the purposes of
the definitions above so as to be comparable to the price on the date
immediately preceding execution of this Agreement. There shall be
excluded from the list of companies on Exhibit E any company as to which
there is pending at any time during the Determination Period any publicly
announced proposal for such company to be acquired by another company in
exchange for its stock.
Notwithstanding the foregoing, during the ten (10) business day
period commencing with the Buyer's receipt of the Seller's notice of
termination pursuant to this Section 8.01(f), the Buyer shall have the
option to increase the consideration to be received by the holders of
Seller Common Stock under the Plan of Merger by adjusting the Conversion
Number (hereinafter, as such term is defined in the Plan of Merger) to
equal the lesser of (i) a number (calculated to the nearest
one-thousandth) obtained by dividing (x) $29.46 by (y) the Closing Price
or (ii) a number obtained by dividing (x) said Conversion Number by (y)
the number obtained by subtracting (A) 0.15 from (B) the quotient
obtained by dividing the Final Index Price (as defined below) by the
Initial Index Price (as defined below). If the Buyer so elects within
such ten-day period, it shall give prompt written notice to the Seller of
such election and the revised Conversion Number, whereupon no termination
shall have occurred pursuant to this Section 8.01(f) and the Agreement
shall remain in effect in accordance with its terms (except as the
Conversion Number shall have been so modified); or
(g) By either party (provided that the terminating party is not
then in breach of any representation or warranty, covenant or other
agreement contained in this Agreement or in the Seller Option Agreement)
in the event that any of the conditions precedent to the obligations of
such party to consummate the Merger cannot be satisfied or fulfilled by
the date specified in Section 8.01(b) of this Agreement.
(h) By the Seller upon the execution of a definitive agreement
relating to a proposal of the type contemplated by Section 5.03 hereof,
provided that (i) the Seller shall have complied with its obligations
under Section 5.03 hereof, (ii) the Board of Directors of the Seller
shall have determined, after having received the advice of outside legal
counsel to the Seller and the advice of the Seller's financial advisor,
that such action is necessary for the Board of Directors to act in a
manner consistent with its fiduciary duties under applicable law and
(iii) concurrent with its notification of termination, the Seller shall
have made an irrevocable and unconditional offer to the Buyer in writing
to repurchase the Option, as defined in the Seller Option Agreement, from
the Buyer at any time, within 30 days following the date of such offer,
at a price equal to the amount by which (A) the Market/Offer Price (as
defined below) exceeds (B) the Option Price (as defined in the Seller
Option Agreement, multiplied by the number of shares for which the Option
may then be exercised (subject to the limitation set forth in Section 15
of the Seller Option Agreement), with an undertaking to effect such
purchase by wire transfer of immediately available funds to an account
designated by the Buyer within two business days following receipt of
written notice from the Buyer pursuant to this paragraph (h) of its
intention to tender the Option to the Seller for repurchase and the
applicable repurchase price. The term "Market/Offer Price" shall mean the
highest of (i) the price per share of the Seller Common Stock at which a
tender has been, (ii) the price per share of the Seller Common Stock to
be paid by any third party pursuant to an agreement with the Seller,
(iii) the highest closing price for shares of the Seller Common Stock
within the six- month period immediately preceding the date the Buyer
gives notice of the required repurchase in accordance with this paragraph
(h), or (iv) in the event of a sale of all or a substantial portion of
the Seller's assets, the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of the Seller
as determined by a nationally recognized investment banking firm selected
by the Buyer, and reasonably acceptable to the Seller, divided by the
number of shares of the Seller Common Stock outstanding at the time of
such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally
recognized investment banking firm selected by the Buyer and reasonably
acceptable to the Seller.
8.02 Effect of Termination. In the event of termination of this Agreement
by either the Seller or the Buyer as provided above, this Agreement shall
forthwith become null and void (other than Section 9.01 hereof, which shall
remain in full force and effect) and there shall be no further liability on the
part of the Seller or the Buyer or their respective officers or directors to
the other, except (i) any liability of the Seller and the Buyer under said
Section 9.01, (ii) that the Seller Option Agreement shall be governed by its
own terms as to termination, (iii) the Confidentiality Agreement shall survive
in accordance with its terms and (iv) in the event of a willful breach of any
representation, warranty, covenant or agreement contained in this Agreement, in
which case, the breaching party shall remain liable for any and all damages,
costs and expenses, including all reasonable attorneys' fees, sustained or
incurred by the non-breaching party as a result thereof or in connection
therewith or with the enforcement of its rights hereunder.
8.03 Amendment, Extension and Waiver. Subject to applicable law and as
may be authorized by their respective Boards of Directors, at any time prior to
the consummation of the transactions contemplated by this Agreement or
termination of this Agreement in accordance with the provisions of Section 8.01
hereof, whether before or after approval thereof by the stockholders of the
Seller and the Buyer, the Buyer and the Seller may, (a) amend this Agreement,
(b) extend the time for the performance of any of the obligations or other acts
of any other party hereto, (c) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto,
or (d) waive compliance with any of the agreements or conditions contained in
Articles V and VI (other than Section 6.01) hereof, provided, however, that
after any approval of the transactions contemplated by this Agreement by the
Seller's or the Buyer's stockholders, respectively, there may not be, without
further approval of such stockholders, any amendment, extension or waiver of
this Agreement which (1) alters or changes the amount or kind of shares,
securities, cash, property and/or rights to be received in exchange for or on
conversion of all or any of the shares of any class or series thereof of such
corporation, (2) alters or changes any term of the certificate of incorporation
of the surviving corporation to be effected by the merger or consolidation, or
(3) alters or changes any of the terms and conditions of the Agreement if such
alteration or change would adversely affect the holder of any class or series
thereof of such corporation. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. Any
agreement on the part of a party hereto to any extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party, but such waiver or failure to insist on strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
MISCELLANEOUS
9.01 Expenses. Except as may otherwise be agreed to hereunder or in other
writing by the parties, all legal and other costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses; provided, however, that
all such costs and expenses incurred in connection with the printing and
mailing of the S-4 and the Proxy Statement shall be borne equally by the Buyer
and the Seller.
9.02 Survival. None of the representations, warranties, covenants and
agreements of the Seller or the Buyer shall survive after the Effective Time,
except for the agreements and covenants contained or referred to in Article II,
Section 5.02(b), the last sentence of Section 5.07, and Sections 5.09, 5.10,
5.12 and 5.14 hereof, and the agreements of the "affiliates" of the Seller
delivered pursuant to Section 5.06, which agreements and covenants shall
survive the Effective Time.
9.03 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by prepaid
registered or certified mail (return receipt requested) or by telecopy, cable,
telegram or telex addressed as follows:
(a) If to the Seller, to:
Evergreen Bancorp, Inc.
237 Glen Street
Glens Falls, NY 12801
Attention: Mr. George W.Dougan,
Chairman and Chief Executive Officer
Facsimile No. (518) 792-4837
with a required copy to:
Evergreen Bancorp, Inc.
237 Glen Street
Glens Falls, NY 12801
Attention: Paul A. Cardinal, Esq.,
General Counsel
Facsimile No.: (518) 792-4837
and
Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004
Attention: Steven Kaplan, Esq.
Facsimile No. (202) 942-5999
(b) If to the Buyer, to:
Banknorth Group, Inc.
300 Financial Plaza
P. O. Box 5420
Burlington, VT 05401
Attention: Mr. William H. Chadwick,
President and Chief Executive Officer
Facsimile No.: (802) 860-5437
with a required copy to:
Peabody & Brown
101 Federal Street
Boston, Massachusetts 02110
Attention: Kevin J. Handly, Esq.
Facsimile No.: (617) 345-1300
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the
date so mailed.
9.04 Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other parties, and that nothing in
this Agreement is intended to confer, expressly or by implication, upon any
other person any rights or remedies under or by reason of this Agreement except
as reflected in Sections 5.09, 5.12(d) and 5.14.
9.05 Complete Agreement. This Agreement, including the documents and
other writings referred to herein or delivered pursuant hereto, including the
Confidentiality Agreement, the Plan of Merger, the Stock Option Agreement and
the other Transaction Documents, contains the entire agreement and
understanding of the parties with respect to its subject matter. Except as set
forth in the Transaction Documents or in the Disclosure Schedules, there are no
restrictions, agreements, promises, warranties, covenants or undertakings
between the parties other than those expressly set forth herein or therein.
This Agreement supersedes all prior agreements (other than the Confidentiality
Agreement) and understandings between the parties, both written and oral, with
respect to its subject matter.
9.06 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and each of which shall be
deemed to be an original and shall become effective when a counterpart has been
signed by each of the parties and delivered to each of the other parties.
9.07 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, without giving effect to the principles of conflicts of laws
thereof.
9.08 Captions. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.09 Effect of Investigations. No investigation by the parties hereto
made heretofore or hereafter, whether pursuant to this Agreement or otherwise
shall affect the representations and warranties of the parties which are
contained herein and each such representation and warranty shall survive such
investigation, subject, however, to Section 9.02 hereof.
9.10 Severability. In the event that any one or more provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, by any court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement and
the parties shall use their best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the purposes
and intents of this Agreement.
9.11 Specific Enforceability. The parties recognize and hereby
acknowledge that it is impossible to measure in money the damages that would
result to a party by reason of the failure of either of the parties to perform
any of the obligations imposed on it by this Agreement. Accordingly, if any
party should institute an action or proceeding seeking specific enforcement of
the provisions hereof, each party against which such action or proceeding is
brought hereby waives the claim or defense that the party instituting such
action or proceeding has an adequate remedy at law and hereby agrees not to
assert in any such action or proceeding the claim or defense that such a remedy
at law exists.
9.12 Alternative Structure. Notwithstanding any provision of this
Agreement to the contrary, the Buyer may, with the written consent of the
Seller, which shall not be unreasonably withheld, elect, subject to the filing
of all necessary applications and the receipt of all required regulatory
approvals, to modify the structure of the acquisition of the Seller and its
subsidiaries set forth herein provided that (i) the federal income tax
consequences of any transactions created by such modification shall not be
other than those set forth in Section 6.02(d) hereof, (ii) any such
modification will not jeopardize pooling of interests accounting treatment,
(iii) the consideration to be paid to the holders of the Seller Common Stock is
not thereby changed in kind or reduced in amount as a result of such
modification and(iii) such modification will not materially delay or jeopardize
receipt of any required regulatory approvals or any other condition to the
obligations of the Buyer set forth in Sections 6.01 and 6.02 hereof.
IN WITNESS WHEREOF, the Seller and the Buyer have caused this
Agreement to be executed as a sealed instrument by their duly authorized
officers as of the day and year first above written.
BANKNORTH GROUP, INC.
By: /s/ WILLIAM H. CHADWICK
----------------------------------------
Name: William H. Chadwick
--------------------------------------
Title: President and Chief Executive Officer
[SEAL]
EVERGREEN BANCORP, INC.
By: /s/ GEORGE W. DOUGAN
----------------------------------------
Name: George W. Dougan
--------------------------------------
Title: Chairman of the Board,
President and Chief Executive Officer
[SEAL]
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 31, 1998 (this "Plan of
Merger") by and among BANKNORTH GROUP, INC., a Delaware corporation (the
"Buyer"), and EVERGREEN BANCORP, INC., a Delaware corporation (the "Seller").
This Plan of Merger is being entered into pursuant to an Affiliation
Agreement and Plan of Reorganization, dated as of July 31,, 1998 (as amended
and in effect from time to time, the "Agreement"), between the Buyer and the
Seller.
All capitalized terms used herein without definition are used with the
meanings ascribed thereto in the Agreement.
In consideration of the premises, and the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
----------
1.01 Surviving Corporation. In accordance with the provisions of this
Plan of Merger and the Delaware General Corporation Law ("DCL"), at the
Effective Time (as hereinafter defined), the Seller shall be merged with and
into the Buyer (the "Merger"), and the separate corporate existence of the
Seller shall cease. The Buyer shall be the surviving corporation in the Merger
(hereinafter sometimes referred to as the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Delaware.
1.02 Purposes of Surviving Corporation. As of the Effective Time, the
purposes of the Surviving Corporation shall be as stated in the Certificate of
Incorporation of the Buyer immediately prior to the Effective Time.
1.03 Authorized Capital Stock of Surviving Corporation. As of the
Effective Time, the Surviving Corporation shall be authorized to issue that
number of shares of $1.00 par value voting common stock which the Buyer is
authorized to issue immediately prior to the Effective Time.
1.04 Description of Classes of Stock. As of the Effective Time, each
class or series of capital stock of the Surviving Corporation shall have the
same preferences, voting powers, qualifications, special or relative rights or
privileges as such class or series of capital stock of the Buyer possessed
immediately prior to the Effective Time.
1.05 Effect of the Merger.
(a) Upon the Effective Time, the separate existence of the Seller
shall cease and the Seller shall be merged into the Surviving
Corporation, and the Surviving Corporation shall thenceforth possess all
the rights, privileges, powers and franchises as well of a public as of a
private nature, and shall be subject to all the restrictions,
disabilities and duties of each of the Buyer and the Seller; and all and
singular, the rights, privileges, power and franchises of each of the
Buyer and the Seller, and all property, real, personal and mixed, and all
debts due to either the Buyer or the Seller on whatever account, as well
for stock subscriptions as all other things in action or belonging to
each of the Buyer and the Seller shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and franchises,
and all and every other interest shall be thereafter as effectually the
property of the Surviving Corporation as they were of the Buyer or the
Seller, and the title to any real estate vested by deed or otherwise in
either of the Buyer or the Seller shall not revert or be in any way
impaired by reason of the Merger; but all rights of creditors and all
liens upon any property of either of the Buyer or the Seller shall be
preserved unimpaired, and all debts, liabilities and duties of each of
the Buyer and the Seller respectively shall thenceforth attach to the
Surviving Corporation, and may be enforced against the Surviving
Corporation to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it.
(b) Upon the Effective Time, any action or proceeding, whether
civil, criminal or administrative, pending by or against the Buyer of the
Seller shall be prosecuted as if the Merger had not taken place, or the
Surviving Corporation may be substituted in such action or proceeding.
1.06 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Seller acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or to otherwise
carry out this Plan of Merger, the officers and directors of the Surviving
Corporation shall and will be authorized to execute and deliver, in the name
and on behalf of the Seller or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of the
Seller or otherwise, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in the Surviving Corporation or
to otherwise carry out this Plan of Merger.
1.07 Certificate of Incorporation.. At the Effective Time, the
Certificate of Incorporation of the Buyer, as in effect at the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation and the
By-Laws of the Buyer, as in effect at the Effective Time, shall be the By-Laws
of the Surviving Corporation and shall thereafter continue to be its
Certificate of Incorporation and By-Laws until amended as provided therein or
by law.
1.08 Directors and Officers. At the Effective Time, the Board of
Directors of the Surviving Corporation shall consist of those persons
comprising the Board of Directors of the Buyer prior to the Effective Time and
those individuals named in Section 5.09 of the Agreement, each to hold office
in accordance with Section 5.09 of the Agreement and the Certificate of
Incorporation and By-Laws of the Surviving Corporation. The officers of the
Buyer immediately prior to the Effective Time shall be the officers of the
Surviving Corporation from and after the Effective Time, each to hold office in
accordance with the Certificate of Incorporation and By-Laws of the Surviving
Corporation.
1.09 Effective Time; Conditions. If all of the conditions precedent set
forth in Article VI of the Agreement have been satisfied or waived, and this
Plan of Merger is not terminated under Section 3.01 hereof, Certificate of
Merger with respect to the Merger shall be prepared by the Buyer and the Seller
and filed and recorded pursuant to Section 251 of the DCL (the "Certificate of
Merger"). The Merger shall become effective at, and the Effective Time shall
be, the date and time specified in the Certificate of Merger which shall be not
later than the next business day after the filing of the Certificate of Merger
(such date and time is herein referred to as the "Effective Time").
ARTICLE II
CONVERSION OF SHARES
--------------------
2.01 Effect on Outstanding Shares.
(a) Seller Common Stock. (i) By virtue of the Merger,
automatically and without any action on the part of the holder thereof,
each share of common stock of the Seller, par value $3.33 1/3 per share
("Seller Common Stock"), issued and outstanding immediately prior to the
Effective Time (other than any such shares held directly or indirectly by
the Buyer, except in a fiduciary capacity or in satisfaction of a debt
previously contracted, and any such shares held as treasury stock by the
Seller) together with that number of Seller rights issued pursuant to the
Seller Rights Agreement associated therewith, shall become and be
converted into 0.90 shares of the common stock of the Buyer, par value
$1.00 per share ("Buyer Common Stock"), together with that number of
Buyer rights issued pursuant to the Buyer Rights Agreement associated
therewith; provided, however, that in the event that the Buyer has
exercised its option to deliver additional shares of its Common Stock
pursuant to the last paragraph of Section 8.01(f) of the Agreement,
Seller's Common Stock shall be converted into such number of shares of
the Common Stock of the Buyer, par value $1.00 per share, as provided in
said Section of the Agreement. The number of shares of Buyer Common Stock
into which each share of Seller Common Stock shall be converted is
hereinafter called the "Conversion Number."
(ii) As of the Effective Time, each share of Seller Common Stock
held either directly or indirectly by the Buyer (other than in a
fiduciary capacity) or as treasury stock of the Seller shall be
cancelled, retired and cease to exist, and no payment shall be made with
respect thereto. Each certificate which immediately prior to the
Effective Time represented outstanding shares of Seller Common Stock
shall on and after the Effective Time be deemed for all purposes to
represent the number of shares of Buyer Common Stock into which the
shares of Seller Common Stock represented by such certificate shall have
been converted pursuant to this Section 2.01.
2.02 Anti-Dilution. In the event that, subsequent to the date of this
Plan of Merger but prior to the Effective Time, the outstanding shares of Buyer
Common Stock or Seller Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or kind of shares or
securities through reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other like changes in the
Buyer's or the Seller's capitalization, other than pursuant to the Agreement,
as the case may be (a "Recapitalization"), then an appropriate and
proportionate adjustment shall be made to the Conversion Number so that each
holder of Seller Common Stock shall receive under Section 2.01 hereof the
number of shares of Buyer Common Stock (except for fractional shares) that such
holder would have held immediately following the Recapitalization if the Merger
had occurred immediately prior to the Recapitalization or the record date
therefor, as applicable. For purposes of this Section 2.02, in no event shall
the issuance of shares or securities by the Buyer in connection with the Buyer
acquiring directly or indirectly the stock or assets of any corporation, bank
or other entity be deemed to be a "Recapitalization. "
2.03 Procedures.
(a) Certificates which represent shares of Seller Common Stock
that are outstanding immediately prior to the Effective Time (a
"Certificate") and are converted into shares of Buyer Common Stock
pursuant to this Article II shall, after the Effective Time, be deemed to
represent shares of Buyer Common Stock into which such shares have been
converted and shall be exchangeable by the holders thereof in the manner
provided in the transmittal materials described below for new
certificates representing the shares of Buyer Common Stock into which
such shares have been converted.
(b) As promptly as practicable after the Effective Time, the
Exchange Agent shall send to each holder of record of shares of Seller
Common Stock outstanding at the Effective Time transmittal materials
(which shall be reviewed with the Seller's counsel prior to the Effective
Time) for use in exchanging the Certificates for such shares for
certificates for shares of Buyer Common Stock into which such shares of
Seller Common Stock have been converted pursuant to this Article II. Upon
surrender of a Certificate, together with a duly executed letter of
transmittal and any other required documents, the holder of such
Certificate shall be entitled to receive, in exchange therefor, a
certificate for the number of Shares of Buyer Common Stock to which such
holder is entitled pursuant to Section 2.01(b) hereof, and such
Certificate shall forthwith be cancelled. No dividend or other
distribution payable after the Effective Time with respect to Buyer
Common Stock shall be paid to the holder of any unsurrendered Certificate
until the holder thereof surrenders such Certificate, at which time such
holder shall receive all dividends and distributions, without interest
thereon, previously payable but withheld from such holder pursuant
hereto. After the Effective Time, there shall be no transfers on the
stock transfer books of the Seller of shares of Seller Common Stock which
were issued and outstanding at the Effective Time and converted pursuant
to the provisions of this Article II. If, after the Effective Time,
Certificates are presented for transfer to the Seller, they shall be
cancelled and exchanged for the shares of Buyer Common Stock deliverable
in respect thereof as determined in accordance with the provisions and
procedures set forth in this Article II.
(c) In lieu of the issuance of fractional shares of Buyer Common
Stock pursuant to Sections 2.01 of this Plan of Merger, cash adjustments,
without interest, will be paid to the holders of Seller Common Stock in
respect of any fractional share that would otherwise be issuable and the
amount of such cash adjustment shall be equal to an amount in cash
determined by multiplying such holder's fractional interest by the
"Average Price" of a share of Buyer Common Stock (rounded up to the
nearest cent). The "Average Price" of a share of Buyer Common Stock shall
be the average of the last sale prices thereof as reported on the
National Association of Securities Dealers Automated Quotation system
over the ten (10) consecutive trading day period immediately preceding
the date on which the Effective Time occurs. For purposes of determining
whether, and in what amounts, a particular holder of Seller Common Stock
would be entitled to receive cash adjustments under this Section 2.03(c),
shares of record held by such holder and represented by two or more
Certificates shall be aggregated.
(d) After the Effective Time, holders of Certificates of Seller
Common Stock shall cease to be, and shall have no rights as, stockholders
of the Seller, other than to receive shares of Buyer Common Stock into
which such shares have been converted and, if applicable, fractional
share payments pursuant to the provisions hereof.
(e) Notwithstanding the foregoing, neither the Buyer nor the
Seller nor any other person shall be liable to any former holder of
shares of Seller Common Stock for any shares or any dividends or
distributions with respect thereto properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar
laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon receipt of appropriate evidence as to such loss, theft or
destruction and to the ownership of such Certificate by the person
claiming such Certificate to be lost, stolen or destroyed, and the
receipt by the Buyer of appropriate and customary indemnification, the
Buyer will issue in exchange for such lost, stolen or destroyed
Certificate shares of Buyer Common Stock and the fractional share
payment, if any, deliverable in respect thereof as determined in
accordance with this Article II.
(g) If any certificate representing shares of Buyer Common Stock
is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered; it shall be a condition
of the issuance thereof that the Certificate so surrendered shall be
properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer (including, but not
limited to, that the signature of the transferor shall be properly
guaranteed by a commercial bank, trust company, member firm of the NASD
or other eligible guarantor institution), and that the person requesting
such exchange shall pay to the Exchange Agent (as such term is defined in
Section 4.01 hereof) in advance any transfer or other taxes required by
reason of the issuance of a certificate representing shares of Buyer
Common Stock in any name other than that of the registered holder of the
Certificate surrendered, or required for any other reason, or shall
establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
2.04 Conversion of Options. Each stock option (other than the Seller
Option) issued by the Seller to a third party, whether or not currently
exercisable, which entitles such third party to purchase Seller Common Stock,
and which is outstanding and unexercised immediately prior to the Effective
Time, shall be converted into an option to purchase shares of Buyer Common
Stock, and the Buyer shall assume each such option in accordance with the terms
of the Seller stock option plan under which it was granted and the stock option
or other agreement by which it is evidenced, with the following terms:
(a) The number of shares of Buyer Common Stock shall be equal to
the product of the number of shares of Seller Common Stock previously
subject thereto and the Conversion Number, rounded down to the nearest
whole share; and
(b) The exercise price per share of Buyer Common Stock shall be
equal to the exercise price per share of Seller Common Stock previously
subject thereto divided by the Conversion Number, rounded up to the
nearest cent; and
(c) The duration and other terms of such Stock Option shall be
unchanged except that all references to the Seller shall be deemed to be
references to the Buyer; and
(d) The Buyer shall assume the option as contemplated by Section
424(a) of the Code; and
(e) With respect to any stock option on Seller's Common Stock
which is an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended, the Buyer shall take such
actions (other than delaying the date the options on Buyer Common Stock
become exercisable beyond the date on which such options would otherwise
become exercisable pursuant to the relevant Seller Stock Plan) as may be
necessary or appropriate to cause such option, upon being converted to an
option on Buyer Common Stock, to remain such an incentive stock option.
ARTICLE III
AMENDMENT AND TERMINATION
-------------------------
3.01 Termination. Notwithstanding the approval and adoption of this Plan
of Merger by the stockholders of the Seller, the Buyer and the Merger
Subsidiary, this Plan of Merger shall terminate forthwith in the event that the
Agreement shall be terminated as therein provided. In the event of the
termination of this Plan of Merger as provided above, this Plan of Merger shall
forthwith become null and void and there shall be no liability on the part of
any of the parties hereto except as otherwise provided in the Agreement.
3.02 Amendment. This Plan of Merger shall not be amended except by an
instrument in writing signed on behalf of each of the parties hereto pursuant
to an amendment to the Agreement approved in the manner therein provided. If
any such amendment to the Agreement is so approved, any amendment to this Plan
of Merger required by such amendment to the Agreement shall be effected by the
parties hereto by action taken by their respective Boards of Directors.
ARTICLE IV
MISCELLANEOUS
-------------
4.01 Exchange Agent. Prior to the Effective Time, the Buyer shall
appoint an agent for the purpose of exchanging certificates representing shares
of Buyer Common Stock for Certificates representing shares of Seller Common
Stock (the "Exchange Agent"), and the Buyer shall issue and deliver to the
Exchange Agent certificates representing shares of Buyer Common Stock and shall
pay to the Exchange Agent such amounts of cash as shall be required to be
delivered to holders of shares of Seller Common Stock in lieu of fractional
shares of Buyer Common Stock, pursuant to Article II of this Plan of Merger.
4.02 Counterparts. This Plan of Merger may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to each of the other parties.
4.03 Governing Law. This Plan of Merger shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of laws thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger to
be duly executed and delivered as a sealed instrument as of the date first
above written.
BANKNORTH GROUP, INC.
By:
------------------------------------
President
By:
------------------------------------
Treasurer
EVERGREEN BANCORP, INC.
By:
------------------------------------
President
By:
------------------------------------
Treasurer
EXHIBIT B-1
Form of Buyer Affiliate Letter Addressed to Seller
July 31, 1998
Evergreen Bancorp, Inc.
237 Glen Street
Glens Falls, NY 12801
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be
an "affiliate" of BANKNORTH GROUP, INC., a Delaware corporation ("Buyer"),
as the term "affiliate" is used in and for purposes of Accounting Series
Releases 130 and 135, as amended, of the Securities and Exchange Commission
(the "Commission"). I have been further advised that pursuant to the terms
of the Affiliation Agreement and Plan of Reorganization and Agreement and
Plan of Merger dated as of July 31, 1998 (together, the "Merger Agreement"),
between Buyer and EVERGREEN BANCORP, INC., a Delaware corporation
("Seller"), Seller will be merged with and into Buyer.
I represent to and covenant with Buyer that from the date that is
thirty (30) days prior to the Effective Time (as defined in the Merger
Agreement) I will not sell, transfer or otherwise dispose of, or reduce the
risk of ownership with respect to, shares of Buyer Common Stock (as defined
in the Merger Agreement) held by me until after such time as results
covering at least thirty (30) days of combined operations of Buyer and
Seller have been published by Buyer, in the form of a quarterly earnings
report, an effective registration statement filed with the Commission, a
report to the Commission on Form 10-K, 10-Q, or 8-K, or any other public
filing or announcement which includes the results of at least 30 days of
combined operations.
Very truly yours,
By:
----------------------------------
Name:
Accepted this ____ day of
____________, 199__, by
EVERGREEN BANCORP, INC.
By:
--------------------------------
Name:
Title:
EXHIBIT B-2
Form of Seller Affiliate Letter Addressed to Buyer
July 31, 1998
Banknorth Group, Inc.
300 Financial Plaza
Burlington, VT 05401
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be
an "affiliate" of EVERGREEN BANCORP, INC., a Delaware corporation
("Seller"), as the term "affiliate" is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"),
and/or (ii) used in and for purposes of Accounting Series Releases 130 and
135, as amended, of the Commission. I have been further advised that
pursuant to the terms of the Affiliation Agreement and Plan of
Reorganization and Agreement and Plan of Merger dated as of July 31, 1998
(together, the "Merger Agreement"), between BANKNORTH GROUP, INC., a
Delaware corporation ("Buyer") and Seller, Seller will be merged with and
into Buyer (the "Merger"), and that as a result of the Merger, I may receive
shares of Buyer Common Stock (as defined in the Merger Agreement) in
exchange for shares of Seller Common Stock (as defined in the Merger
Agreement), owned by me.
I represent, warrant and covenant to Buyer that in the event I receive
any Buyer Common Stock pursuant to the Merger:
1. I shall not make any sale, transfer or other disposition of the
Buyer Common Stock in violation of the Act or the Rules and Regulations.
2. I have carefully read this letter and the Agreement and discussed
its requirements and other applicable limitations upon my ability to sell,
transfer or otherwise dispose of Buyer Common Stock to the extent I believed
necessary, with my counsel or counsel for Seller.
3. I have been advised that the issuance of Buyer Common Stock to me
pursuant to the Merger has been or will be registered with the Commission
under the Act on a Registration Statement on Form S-4. However, I have also
been advised that, at the time the Merger is or was submitted for a vote of
the stockholders of Buyer, I may be deemed to be or to have been an
affiliate of Seller and the distribution by me of the Buyer Common Stock
will not have been registered under the Act. I agree that I will not sell,
transfer or otherwise dispose of Buyer Common Stock issued to me in the
Merger unless (i) such sale, transfer or other disposition has been
registered under the Act, (ii) such sale, transfer or other disposition is
made in conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, or (iii) in the opinion of
counsel reasonably acceptable to Buyer, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
4. I understand that Buyer is under no obligation to register the
sale, transfer or other disposition of the Buyer Common Stock by me or on my
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
5. I also understand that stop transfer instructions will be given to
Buyer's transfer agents with respect to the Buyer Common Stock and that
there will be placed on the certificates for the Buyer Common Stock issued
to me, or any substitutions therefor, a legend stating in substance:
"The securities represented by this certificate have
been issued in a transaction to which Rule 145
promulgated under the Securities Act of 1933 applies and
may be sold or otherwise transferred only in compliance
with the requirements of Rule 145 or pursuant to a
registration statement under said act or an exemption
from such registration."
6. I also understand that unless the transfer by me of my Buyer
Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Buyer reserves the right to put
the following legend on the certificates issued to my transferee:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and
were acquired from a person who received such shares in
a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares have been
acquired by the holder not with a view to, or for resale
in connection with, any distribution thereof within the
meaning of Securities Act of 1933 and may not be sold,
pledged or otherwise transferred except in accordance
with an exemption from the registration requirements of
the Securities Act of 1933."
It is understood and agreed that this letter agreement shall terminate
and be of no further force and effect and the legend set forth in paragraphs
5 or 6, as the case may be, above shall be removed by delivery of substitute
certificates without such legend, and the related stop transfer of
restrictions shall be lifted forthwith, if (i) any such shares of Buyer
Common Stock shall have been registered under the Securities Act for sale,
transfer or other disposition by me or on my behalf and are sold,
transferred or otherwise disposed of, or (ii) any such shares of Buyer
Common Stock are sold in accordance with the provisions of paragraphs (c),
(e), (f) and (g) of Rule 144 promulgated under the Securities Act, or (iii)
I am not at the time an affiliate of Buyer and have been the beneficial
owner of the Buyer Common Stock for at least two years (or such other period
as may be prescribed by the Securities Act and the rules and regulations
promulgated thereunder), and Buyer has filed with the Commission all of the
reports it is required to file under the Securities Exchange Act of 1934, as
amended, during the preceding twelve months, or (iv) I am not and have not
been for at least three months an affiliate of Buyer and have been the
beneficial owner of the Buyer Common Stock for at least three years (or such
period as may be prescribed by the Securities Act and the rules and
regulations promulgated thereunder), or (v) Buyer shall have received a
letter from the staff of the Commission, or an opinion of counsel reasonably
acceptable to Buyer, to the effect that the stock transfer restrictions and
the legend are not required.
I further represent to and covenant with Buyer that from the date that
is thirty (30) days prior to the Effective Time (as defined in the Merger
Agreement) I will not sell, transfer or otherwise dispose of, or reduce the
risk of ownership with respect to, shares of Seller Common Stock held by me
and that I will not sell, transfer or otherwise dispose of, or reduce the
risk of ownership with respect to, any shares of Buyer Common Stock received
by me in the Merger or other shares of Buyer Common Stock until after such
time as results covering at least thirty (30) days of combined operations of
Buyer and Seller have been published by Buyer, in the form of a quarterly
earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or any
other public filing or announcement which includes the results of at least
30 days of combined operations.
Very truly yours,
By:
----------------------------------
Name:
Accepted this ___ day of
________________, 199__, by
BANKNORTH GROUP, INC.
By:
--------------------------------
Name:
Title:
EXHIBIT C
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 31, 1998, between EVERGREEN
BANCORP, INC., a Delaware corporation (the "Issuer") and BANKNORTH GROUP, INC.,
a Delaware corporation (the "Grantee").
WHEREAS, the Grantee and the Issuer are entering into an Affiliation
Agreement and Plan of Reorganization of even date herewith (as amended and in
effect from time to time, the "Acquisition Agreement"), which agreement is
being executed by the parties thereto simultaneously with this Agreement; and
WHEREAS, as a condition to the Grantee's entry into the Acquisition
Agreement and in consideration for such entry, the Issuer has agreed to grant
the Grantee the Option (as hereinafter defined);
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:
1. (a) The Issuer hereby grants to the Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 1,888,923 fully paid and nonassessable shares (the "Option Shares") of
common stock, par value $3.33 1/3 per share, of the Issuer ("Common Stock") at
a price of $27.75 per share (the "Option Price"). The number of shares of
Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth provided that in no
event shall the number of shares for which this Option is exercisable exceed
19.9% of the Issuer's issued and outstanding shares of Common Stock (without
giving effect to any shares of Common Stock issued pursuant to the Option) less
the number of shares previously issued pursuant to exercise of the Option.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to exercise of the Option pursuant to this Agreement or as
contemplated by Section 5(a) of this Agreement), including, without limitation,
pursuant to stock option or other employee plans or as a result of the exercise
of conversion rights, the number of shares of Common Stock subject to the
Option shall be increased so that, after such issuance, it equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section l(b) or elsewhere in this Agreement shall be deemed
to authorize the Issuer or the Grantee to breach any provision of the
Acquisition Agreement.
2. (a) The Holder (as such term is defined in paragraph (c) below) may
exercise the Option, in whole or part, if, but only if, both an Initial
Triggering Event (as defined in paragraph (e) below) and a Subsequent
Triggering Event (as defined in paragraph (f) below) shall have occurred prior
to the occurrence of an Exercise Termination Event (as defined in paragraph (b)
below), provided that the Holder shall have sent the written notice of such
exercise (as provided in paragraph (h) of this Section 2) within thirty (30)
days following such Subsequent Triggering Event and prior to the Exercise
Termination Event.
(b) The term "Exercise Termination Event" shall mean the earliest of
(i) the Effective Time of the Merger, (ii) any termination of the Acquisition
Agreement in accordance with the provisions thereof if such termination occurs
prior to the occurrence of an Initial Triggering Event, and (iii) in the event
of any termination of the Acquisition Agreement in accordance with the
provisions thereof after the occurrence of an Initial Triggering Event, the
passage of twelve (12) months after such termination. Notwithstanding the
termination of the Option, the Grantee shall be entitled to purchase those
Option Shares with respect to which it has exercised the Option in whole or in
part prior to the termination of the Option.
(c) The term "Holder" shall mean the holder or holders of the Option.
(d) The term "Schedule 13G Investor" shall mean any person holding
voting securities of the Issuer eligible to report the beneficial ownership of
such securities on Schedule 13G pursuant to the provisions of Rule 13d-1 under
the Exchange Act.
(e) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The Issuer or any subsidiary of the Issuer, without having
received the Grantee's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction with any Person (the
term "person" for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Exchange Act and the
rules and regulations thereunder), other than the Grantee or any
subsidiary of the Grantee, or, without the consent of the Grantee the
Board of Directors of the Issuer shall have approved an Acquisition
Transaction or recommended that the shareholders of the Issuer approve or
accept any Acquisition Transaction other than as contemplated by the
Acquisition Agreement. For purposes of this Agreement, the term
"Acquisition Transaction" shall mean (A) a merger or consolidation, or
any similar transaction, with the Issuer or any Significant Subsidiary of
the Issuer, or any subsidiary of the Issuer which, after such
transaction, would be a Significant Subsidiary of the Issuer, (B) a
purchase, lease or other acquisition of all or substantially all of the
assets of the Issuer or any Significant Subsidiary of the Issuer or (C) a
purchase or other acquisition (including by way of merger, consolidation,
share exchange or otherwise) of securities representing ten percent (10%)
or more of the voting power of the Issuer or any Significant Subsidiary
of the Issuer;
(ii) The stockholders of the Issuer shall not have approved the
Acquisition Agreement at the meeting of such stockholders held for the
purpose of voting on the Acquisition Agreement, such meeting shall not
have been held or shall have been canceled prior to the termination of
the Acquisition Agreement, or the Issuer's Board of Directors shall have
withdrawn or modified in a manner adverse to the Grantee the
recommendation of the Issuer's Board of Directors with respect to the
Acquisition Agreement, in each case after (A), any Person, other than the
Grantee or any subsidiary of the Grantee or the Issuer in a fiduciary
capacity, and other than a Schedule 13G Investor, shall have acquired
beneficial ownership (as hereinafter defined) or the right to acquire
beneficial ownership of ten percent (10%) or more of the outstanding
shares of Common Stock if such Person owned beneficially less than ten
percent (10%) of the outstanding shares of Common Stock on the date of
this Agreement, or any Person shall have acquired beneficial ownership of
an additional three percent (3%) of the outstanding shares of Common
Stock if such Person owned beneficially ten percent (10%) or more of the
outstanding shares of Common Stock on the date of this Agreement (the
term "beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the Exchange Act, and in the
rules and regulations thereunder); (B), any Person, other than the
Grantee or any subsidiary of the Grantee, shall have made a bona-fide
proposal to the Issuer or its shareholders to engage in an Acquisition
Transaction by public announcement or written communication that shall be
or become the subject of public disclosure; or (C), any Person other than
the Grantee or any Subsidiary of the Grantee, other than in connection
with a transaction to which the Grantee has given its prior written
consent, shall have filed an application or notice with the Federal
Reserve Board or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction;
(iii) After any Person other than the Grantee or any subsidiary
of the Grantee has made a proposal to the Issuer or its shareholders to
engage in an Acquisition Transaction, the Issuer shall have breached any
covenant or obligation contained in the Acquisition Agreement and such
breach (A) would entitle the Grantee to terminate the Acquisition
Agreement and (B) shall not have been remedied prior to the Notice Date
(as defined in paragraph (h) below); or
(iv) Any person (other than Grantee or any Subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act) or shall have filed a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), 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 own or control 25% 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).
(f) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any Person (other than a Schedule 13G
Investor) of beneficial ownership of twenty-five percent (25%) or more of
the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
subparagraph (i) of paragraph (e) of this Section 2, except that the
percentage referenced in clause (C) thereof shall be twenty-five percent
(25%) in lieu of ten percent (10%).
(g) The Issuer shall notify the Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by the Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(h) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to the Issuer a written notice (the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares of Common Stock it will purchase pursuant to such exercise, and (ii) a
place and date not earlier than three (3) business days nor later than sixty
(60) business days from the Notice Date for the closing of such purchase (the
"Closing"); provided that if prior notification to or approval of the Federal
Reserve Board or any other regulatory agency is required in connection with
such purchase, the Holder shall promptly file the required notice or
application for approval and shall expeditiously process the same and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification periods have expired
or been terminated or such approvals have been obtained and any requisite
waiting period or periods shall have passed. The term "business day" for
purposes of this Agreement means any day, excluding Saturdays, Sundays and any
other day that is a legal holiday in the State of New York or a day on which
banking institutions in the State of New York are authorized by law or
executive order to close.
(i) At the Closing, the Holder shall pay to the Issuer the aggregate
purchase price for the shares of Common Stock purchased pursuant to the
exercise of the Option in immediately available funds by a wire transfer to a
bank account designated by the Issuer, provided that failure or refusal of the
Issuer to designate such a bank account shall not preclude the Holder from
exercising the Option.
(j) At such Closing, simultaneously with the delivery of immediately
available funds as provided in paragraph (i) above, the Issuer shall deliver to
the Holder a certificate or certificates representing the number of shares of
Common Stock purchased by the Holder and, if the Option should be exercised in
part only, a new Option evidencing the rights of the Holder thereof to purchase
the balance of the shares purchasable hereunder, and the Holder shall deliver
to the Issuer a copy of this Agreement and a letter agreeing that the Holder
will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Agreement.
(k) Certificates for the Common Stock delivered at a Closing hereunder
may (in the sole discretion of the Issuer) be endorsed with a restrictive
legend that shall read substantially as follows:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO RESTRICTION PURSUANT TO THE TERMS OF A STOCK
OPTION AGREEMENT DATED AS OF JULY 31, 1998 A COPY OF WHICH
AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFOR."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificates without such legend 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 legend. In addition,
such certificates shall bear any other legend as may be required by law.
(l) Upon the giving by the Holder to the Issuer of the written notice of
exercise of the Option provided for under paragraph (h) above, the tender of
the applicable purchase price in immediately available funds and the tender of
a copy of this Agreement to the Issuer, such Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Issuer shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. The Issuer shall pay any and all
expenses, and any and all United States federal, state and local taxes and
other charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder
or its assignee, transferee or designee.
3. The Issuer agrees (a) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without requiring the Issuer's
stockholders to approve an increase in the number of authorized shares of
Common Stock after giving effect to all other options, warrants, convertible
securities and other rights to purchase Common Stock, (b) that it will not, by
charter amendment 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 the Issuer, (c) promptly to take all
action as may from time to time be required (including without limitation (A)
complying with all premerger notification, reporting and waiting period
requirements and (B) cooperating fully with any Holders in preparing any
applications or notices required under the Bank Holding Company Act of 1956, as
amended, or the Change in Bank Control Act of 1978, as amended, or any state
banking law), in order to permit such Holders to exercise the Option and the
Issuer duly and effectively to issue shares of Common Stock pursuant hereto,
and (d) promptly to take all action provided herein to protect the rights of
any Holders against dilution.
4. This Agreement (and the Option granted hereby) is exchangeable,
without expense, at the option of each Holder, upon presentation and surrender
of this Agreement at the principal office of the 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 Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any Stock Option Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by the
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, the Issuer will execute and
deliver a new Agreement of like tenor and date. Any such new Agreement executed
and delivered shall constitute for all purposes and under all circumstances a
contractual obligation on the part of the Issuer, whether or not this Agreement
so lost, stolen, destroyed or mutilated shall at any time be enforceable by
anyone.
5. In addition to the adjustment in the number of Option Shares pursuant
to Section 1 of this Agreement, the number of Option Shares shall be subject to
adjustment from time to time as provided in this Section 5.
(a) (i) In the event of any change in the shares of Common Stock
by reason of stock dividend, split up, merger, recapitalization,
subdivision, conversion, combination, exchange of shares or similar
transaction, the type and number of Option Shares, and the Option Price
therefor, shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that the Grantee
shall receive upon exercise of the Option the number and class of shares
or other securities or property that the Grantee would have held
immediately after such event if the Option had been exercised immediately
prior to such event, or the record date therefor, as applicable.
(ii) The Issuer may make such increases in the number of Option
Shares, in addition to those required under subparagraph (a)(i) above, as
shall be determined by its Board of Directors to be advisable in order to
avoid taxation, so far as practicable, of any dividend of stock or stock
rights or any event treated as such for federal income tax purposes to
the recipients.
(b) Whenever the number of Option Shares (or other securities)
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 is equal to the number of Option
Shares prior to the adjustment and the denominator of which is equal to
the number of Option Shares (or other securities) purchasable after the
adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within thirty (30) days of such Subsequent Triggering Event (whether
on the Grantor's own behalf or on the behalf of any subsequent Holder of this
Option (or part thereof) or any of the shares of Common Stock issued pursuant
hereto), promptly prepare, file and keep current, with respect to the Option
and the Option Shares, a "shelf" registration statement under Rule 415 of the
Securities Act or any successor provision, and Issuer shall use its best
efforts to qualify such shares under any applicable state securities laws.
Issuer will use its best efforts to cause such registration statement first to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect sales or other
dispositions of Option Shares. Grantee shall have the right to demand two such
registrations. Any registration statement prepared and filed under this Section
6, and any sales covered thereby, shall be at Issuer's expense, except for
underwriting discounts or commissions, broker's fees and expenses and the fees
and disbursements of Grantee's counsel related thereto. The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
the Option or Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering of shares of Common Stock, and 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 or Option Shares would interfere with the successful
marketing of the shares represented by the Option the number of Option Shares
otherwise to be covered in the registration statement contemplated hereby may
be reduced; provided, however, that if such reduction occurs, the Issuer shall
file a registration statement for the balance as promptly as practical and no
reduction shall thereafter occur. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Issuer shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in such underwriting agreements for the
Issuer.
7. (a) Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, (i) at the request of any Holder,
delivered within thirty (30) days following such occurrence (or such later
period as provided in Section 10), the Issuer shall repurchase the Option from
the Holder at a price (the "Option Repurchase Price") equal to the greater of
(1) $7,500,000 and (2) 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 this Option may then be exercised, plus, to the extent not previously
reimbursed, the Grantee's reasonable out-of-pocket expenses incurred in
connection with the transactions contemplated by, and the enforcement of the
Grantee's rights under, the Acquisition Agreement, including without limitation
legal, accounting and investment banking fees (the "Grantee's Out-of-Pocket
Expenses"), and (ii) at the request of any owner of Option Shares from time to
time (the "Owner"), delivered within thirty (30) days following such occurrence
(or such later period as provided in Section 10), the Issuer shall repurchase
such number of the Option Shares from such Owner as the Owner shall designate
at a price per share ("Option Share Repurchase Price") equal to the greater of
(A) the market/offer price and (B) the average exercise price per share paid by
the Owner for the Option Shares so designated, plus, to the extent not
previously reimbursed, the Grantee's Out-of-Pocket Expenses. The term
"market/offer price" shall mean the highest of (w) the price per share of the
Common Stock at which a tender offer or exchange offer therefor has been made,
(x) the price per share of the Common Stock to be paid by any Person, other
than the Grantee or a subsidiary of the Grantee, pursuant to an agreement with
the Issuer, (y) the highest closing price for shares of Common Stock within the
six (6) month period immediately preceding the required repurchase of Options
or Option Shares, as the case may be, or (z) in the event of a sale of all or
substantially all of the 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
the Issuer as determined by a nationally recognized investment banking firm
selected by a majority in the interest of the Holders or the Owners, as the
case may be, and reasonably acceptable to the Issuer, divided by the number of
shares of Common Stock of the Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by a majority in interest of the Holders or the Owners, as the case may be, and
reasonably acceptable to the Issuer.
(b) Each Holder and Owner, as the case may be, may exercise its right to
require the Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to the 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 such Holder
or Owner elects to require the Issuer to repurchase this Option and/or Option
Shares in accordance with the provisions of this Section 7. As promptly as
practicable, and in any event within ten (10) business days after the surrender
of the Option and/or certificates representing Option Shares and the receipt of
such notice or notices relating thereto, the Issuer shall deliver or cause to
be delivered to each Holder the Option Repurchase Price and/or to each Owner
the Option Share Repurchase Price therefor or the portion thereof that the
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, or as a result of a
written agreement or other binding obligation with a governmental or regulatory
body or agency, from repurchasing the Option and/or the Option Shares in full,
the Issuer shall immediately so notify each Holder and/or each Owner and
thereafter deliver or cause to be delivered, from time to time, to such Holder
and/or 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 ten (10) business days after the date on
which the Issuer is no longer so prohibited; provided, however, that if the
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to
any Holder and/or Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in part or in full (and the Issuer
hereby undertakes to use its best efforts to receive any required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), such Holder or Owner may revoke its
notice of repurchase of the Option or the Option Shares either in whole or to
the extent of the prohibition, whereupon the Issuer shall promptly (i) deliver
to such Holder and/or Owner, as appropriate, that portion of the Option
Purchase Price or the Option Share Repurchase Price that the Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to
such Holder, a new Stock Option Agreement evidencing the right of such Holder
to purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase
by a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of
which is the Option Repurchase Price, or (B) to such Owner, a certificate for
the Option Shares it is then so prohibited from repurchasing.
8. (a) In the event that prior to an Exercise Termination Event, the
Issuer shall enter into an agreement (i) to consolidate with or merge into any
Person, other than the Grantee or one of the Grantee's subsidiaries, and the
Issuer shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any Person, other than the Grantee or
one of its subsidiaries, to merge into the Issuer and the Issuer shall be the
continuing or surviving corporation, but, in connection with such merger, the
then outstanding shares of 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 Common Stock shall, after such merger, represent
less than fifty percent (50%) of the 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 the Grantee or one of
the Grantee's subsidiaries, then, and in each such case, the agreement
governing such transaction shall make proper provision so that the Option shall
upon the consummation of any 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 the Holder, of either (A) the
Acquiring Corporation (as defined in paragraph (b) below) or (B) any Person
that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) The term "Acquiring Corporation" shall mean (A) the continuing
or surviving corporation of a consolidation or merger with the Issuer (if
other than the Issuer), (B) the Issuer in a merger in which the Issuer is
the continuing or surviving Person, and (C) the transferee of all or
substantially all of the Issuer's assets.
(ii) The term "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(iii) The term "Assigned Value" shall mean the "market/offer
price," as defined in paragraph (a) of Section 7 hereof.
(iv) The term "Average Price" shall mean the average closing price
of a share of the Substitute Common Stock for the one (1) year period
immediately preceding the consolidation, merger or sale in question, but
in no event higher than the closing price of the shares of the Substitute
Common Stock on the day preceding such consolidation, merger or sale,
provided that if the Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by the Person merging into the Issuer or by any company which
controls such Person, as the Holder may elect.
(c) The Substitute Option shall 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, to the extent legally permissible,
be as similar as possible to, and in no event less advantageous to the Holder
than, the terms of the Option. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of the Substitute Common Stock as is equal to (i) the product of (A) the
Assigned Value and (B) the number of shares of Common Stock for which the
Option is then exercisable, divided by (ii) the Average Price. The exercise
price of the Substitute Option per share of the Substitute Common Stock shall
then be equal to the Option Price multiplied by a fraction in which the
numerator is the number of Option Shares and the denominator is the number of
shares of the Substitute Common Stock for which the Substitute Option is
exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to exercise of the
Substitute Option (without giving effect to any shares of Substitute Common
Stock issued pursuant to the Substitute Option) less the number of shares
previously issued pursuant to the Substitute Option. In the event that the
Substitute Option would be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise but for this paragraph
(e), the issuer of the Substitute Option (the "Substitute Option Issuer") shall
make a cash payment to the Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this paragraph (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this paragraph (e). The difference in value shall be determined
by a nationally recognized investment banking firm selected by a majority in
interest of the Holders or the Owners, as the case may be.
(f) The Issuer shall not enter into any transaction described in
paragraph (a) of this Section 8 unless the Acquiring Corporation and any Person
that controls the Acquiring Corporation shall have assumed in writing all the
obligations of the Issuer hereunder.
9. (a) At the written request of the holder of the Substitute Option
(the "Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied
by the number of shares of the Substitute Common Stock for which the Substitute
Option may then be exercised, plus to the extent not previously reimbursed, the
Grantee's Out-of-Pocket Expenses, and at the request of each owner (the
"Substitute Share Owner") of shares of the Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price per share (the "Substitute Share Repurchase
Price") equal to the greater of (A) the Highest Closing Price and (B) the
average exercise price per share paid by the Substitute Share Owner for the
Substitute Shares so designated, plus, to the extent not previously reimbursed,
the Grantee's Out-of-Pocket Expenses. The term "Highest Closing Price" shall
mean the highest closing price for shares of the Substitute Common Stock within
the six (6) month period immediately preceding the date the Substitute Option
Holder gives notice of the required repurchase of the Substitute Option or the
Substitute Share Owner gives notice of the required repurchase of the
Substitute Shares, as applicable.
(b) Each Substitute Option Holder and Substitute Share Owner, as the
case may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant
to this Section 9 by surrendering for such purpose to the Substitute Option
Issuer, at its principal office, the agreement for such Substitute Option (or,
in the absence of such an agreement, a copy of this Agreement) and certificates
for Substitute Shares accompanied by a written notice or notices stating that
such Substitute Option Holder or Substitute Share Owner elects to require the
Substitute Option Issuer to repurchase the Substitute Option and/or the
Substitute Shares in accordance with the provisions of this Section 9. As
promptly as practicable, and in any event within five (5) business days after
the surrender of the Substitute Option and/or the certificates representing
Substitute Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor, or the
portion(s) thereof which the Substitute Option Issuer is not then prohibited
under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from repurchasing the Substitute
Option and/or the Substitute Shares in full, the Substitute Option Issuer shall
immediately so notify each Substitute Option Holder and/or the Substitute Share
Owner and thereafter deliver or cause to be delivered, from time to time, to
the Substitute Option Holder and/or Substitute Share Owner, as appropriate,
that portion of the Substitute Option Repurchase Price and the Substitute Share
Repurchase Price, respectively, which it is no longer prohibited from
delivering, within five (5) business days after the date on which the
Substitute Option Issuer is no longer so prohibited, provided, however, that if
the Substitute Option Issuer is, at any time after delivery of a notice of
repurchase pursuant to paragraph (b) of this Section 9 prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from delivering to the Substitute
Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase Price,
respectively, in part or in full (and the Substitute Option Issuer shall use
its best efforts to receive all required regulatory and legal approvals as
promptly as practicable in order to accomplish such repurchase), the Substitute
Option Holder or Substitute Share Owner may revoke its notice of repurchase of
the Substitute Option or the Substitute Shares either in whole or to the extent
of the prohibition, whereupon the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Option Shares it is then so prohibited
from repurchasing.
10. The thirty (30) day period for exercise of certain rights under
Sections 2, 6, 7 and 12 hereof shall be extended in each such case: (i) to the
extent necessary to obtain all regulatory approvals for the exercise of such
rights and for the expiration of all statutory waiting periods; and (ii) to the
extent necessary to avoid liability under Section 16(b) of the Exchange Act by
reason of such exercise, provided that notice of intent to exercise such rights
shall be given to the Issuer within the requisite thirty (30) day period and
the Grantee and the Holders shall use their best efforts to promptly obtain all
requisite approvals and cause the expiration of all requisite waiting periods.
11. The Issuer hereby represents and warrants to the Grantee as follows:
(a) The Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of the Issuer and no other corporate proceedings on the part
of the Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by the Issuer. This Agreement is the valid and legally binding
obligation of the Issuer, enforceable against the Issuer in accordance with its
respective terms, except that enforcement thereof may be limited by the
receivership, conservatorship and supervisory powers of bank regulatory
agencies generally as well as bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors rights
generally and except that enforcement thereof may be subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the availability of equitable remedies.
(b) The 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 Common Stock equal to the maximum number of shares of 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,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other Person, whether by operation of law or otherwise, without the express
written consent of the other party, except that in the event a Subsequent
Triggering Event shall have occurred prior to an Exercise Termination Event,
the Grantee may, subject to the right of first refusal set forth in Section 13,
assign, transfer or sell in whole or in part its rights and obligations
hereunder within thirty (30) days following such Subsequent Triggering Event
(or such later period as provided in Section 10); provided, however, that in
the event the Grantee sells, assigns or transfers all or a portion of the
Option to other Holders as permitted by this Agreement, the Grantee may
exercise its rights hereunder on behalf of itself and such Holders.
13. If at any time after the occurrence of a Subsequent Triggering Event
and, with respect to shares of Common Stock or other securities acquired by the
Grantee pursuant to an exercise of the Option, prior to the expiration of
twenty-four (24) months after the expiration of the Option pursuant to Section
2(b), the Grantee shall desire to sell, assign, transfer or otherwise dispose
of the Option, in whole or in part, or all or any of the shares of Common Stock
or other securities acquired by the Grantee pursuant to the Option, the Grantee
shall give the Issuer written notice of the proposed transaction (an "Offeror's
Notice"), identifying the proposed transferee, accompanied by a copy of a
binding offer to purchase the Option or such shares or other securities signed
by such transferee and setting forth the terms of the proposed transaction. An
Offeror's Notice shall be deemed an offer by the Grantee to the Issuer, which
may be accepted within ten (10) business days of the receipt of such Offeror's
Notice, on the same terms and conditions and at the same price at which the
Grantee is proposing to transfer the Option or such shares or other securities
to such transferee. The purchase of the Option or such shares or other
securities by the Issuer shall be settled within five (5) business days of the
date of the acceptance of the offer and the purchase price shall be paid to the
Grantee in immediately available funds, provided that, if prior notification to
or approval, consent or waiver of the Federal Reserve Board or any other
regulatory authority is required in connection with such purchase, the Issuer
shall promptly file the required notice or application for approval, consent or
waiver and shall expeditiously process the same (and the Grantee shall
cooperate with the Issuer in the filing of any such notice or application and
the obtaining of any such approval) and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which, as the
case may be, (a) the required notification period has expired or been
terminated or (b) such approval has been obtained and, in either event, any
requisite waiting period shall have passed. In the event of the failure or
refusal of the Issuer to purchase the Option or the shares or other securities,
as the case may be, covered by an Offeror's Notice or if the Federal Reserve
Board or any other regulatory authority disapproves the Issuer's proposed
purchase of the Option or such shares or other securities, the Grantee may,
within sixty (60) days following the date of the Offeror's Notice (subject to
any necessary extension for regulatory notification, approval, or waiting
periods), sell all, but not less than all, of the portion of the Option (which
may be one hundred percent (100%)) or such shares or other securities, as the
case may be, proposed to be transferred to the proposed transferee identified
in the Offeror's Notice at no less than the price specified and on terms no
more favorable to the proposed transferee than those set forth in the Offeror's
Notice. The requirements of this Section 13 shall not apply to (i) any
disposition of the Option or any shares of Common Stock or other securities by
a Person to whom the Grantee has assigned its rights under the Option with the
prior written consent of the Issuer, (ii) any sale by means of a public
offering in which steps are taken to reasonably ensure that no purchaser will
acquire securities representing more than two percent (2%) of the outstanding
shares of Common Stock of the Issuer or (iii) any transfer to a direct or
indirect wholly-owned subsidiary of the Grantee which agrees in writing to be
bound by the terms hereof.
14. Each of the Grantee and the Issuer will use all 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
Federal Reserve Board under the Bank Holding Company Act of 1956, as amended,
for approval to acquire the shares issuable hereunder.
15. (a) Notwithstanding any other provision of this Agreement, in no
event shall the Grantee's Total Profit (as hereinafter defined) exceed
$15,000,000 million and, if it otherwise would exceed such amount, the Grantee,
at its sole election, shall either (i) reduce the number of shares of Common
Stock subject to this Option, (ii) deliver to the Issuer for cancellation
Option Shares previously purchased by the Grantee, (iii) pay cash to the
Issuer, or (iv) any combination thereof, so that the Grantee's actually
realized Total Profit shall not exceed $15,000,000 million after taking into
account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this Option
may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below) of more than
$15,000,000 million; provided, that nothing in this sentence shall restrict any
exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of (i)(x) the net cash amounts receive by the Grantee
pursuant to the sale of shares of Common Stock purchased pursuant to the
exercise of the Option (or any other securities into which such shares are
converted or exchanged) to any unaffiliated party, less (y) the Grantee's
purchase price of such shares, plus (ii) any amounts received by the Grantee on
the transfer of the Option (or any portion thereof) to any unaffiliated party.
(d) As used herein, the term "Notional Total Profit" with respect to any
number of shares as to which the Grantee may propose to exercise this Option
shall be the Total Profit determined as of the date of such proposed exercise
assuming that this were exercised on such date for such number of shares and
assuming that such shares, together with all other shares of Common Stock
purchased pursuant to the Option and held by the Grantee and its affiliates as
of such date, were sold for cash at the closing market price for the Common
Stock as of the close of business on the preceding trading day (less customary
brokerage commissions).
16. Notwithstanding anything to the contrary herein, in the event that
the Holder or the Owner or any Related Person thereof (as hereinafter defined)
is a Person making an offer or proposal to engage in an Acquisition Transaction
(other than the transaction contemplated by the Acquisition Agreement), then
(a) in the case of a Holder or any Related Person thereof, the Option held by
it shall immediately terminate and be of no further force or effect, and (b) in
the case of an Owner or any Related Person thereof, the Option Shares held by
it shall be immediately repurchasable by the Issuer at the Option Price. For
purposes of this Agreement, a "Related Person" of a Holder or Owner means any
Affiliate (as defined in Rule 12b-2 of the rules and regulations under the
Exchange Act) of the Holder or the Owner and any Person that is required to
file a Schedule 13D with the Holder or the Owner with respect to shares of
Common Stock or options to acquire the Common Stock.
17. 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.
18. 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 the Holder is not permitted to acquire, or the Issuer is
not permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Sections
1(b) or 5 hereof), it is the express intention of the Issuer to allow the
Holder to acquire or to require the Issuer to repurchase such lesser number of
shares as may be permissible, without any amendment or modification hereof.
19. 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.
20. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
21. 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.
22. 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, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
23. Except as otherwise expressly provided herein, 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, express or implied, is intended to confer upon any party, other than
the parties hereto, and their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
24. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Acquisition Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed [as a sealed instrument] on its behalf by its officers thereunder duly
authorized, all as of the day and year first above written.
EVERGREEN BANCORP, INC.
By:
------------------------------------
Name:
Title:
BANKNORTH GROUP, INC.
By:
------------------------------------
Name:
Title:
EXHIBIT D
July 31, 1998
William H. Chadwick
President and Chief Executive Officer
Banknorth Group, Inc.
300 Financial Plaza
Burlington, VT 05401
Dear Mr. Chadwick:
The undersigned (the "Stockholder") owns and has sole voting power
with respect to the number of shares of the common stock, par value $3.33
1/3 per share (the "Shares"), of Evergreen Bancorp, Inc., a Delaware
corporation (the "Seller"), indicated opposite the Stockholder's name on
Schedule 1 attached hereto.
Simultaneously with the execution of this letter agreement, Banknorth
Group, Inc.. (the "Buyer") and the Seller are entering into an Affiliation
Agreement and Plan of Reorganization (as amended and in effect from time to
time, the "Acquisition Agreement") providing, among other things, for the
acquisition of the Seller by the Buyer (the "Acquisition").
In consideration of, and as a condition to, the Buyer's entering into
the Acquisition Agreement, the Stockholder and the Buyer agree as follows:
1. The Stockholder, while this letter agreement is in effect, shall
vote or cause to be voted all of the Shares, as well as any other shares of
common stock of Seller of which the Stockholder acquires beneficial
ownership and sole voting power, whether pursuant to the exercise of stock
options or otherwise, as long as such shares are owned by the Stockholder as
of the record date for the special meeting of the Seller's stockholders to
be called and held following the date hereof, for the approval of the
Acquisition Agreement and the Acquisition and shall vote or cause to be
voted all such shares, at such special meeting or any other meeting of the
Seller's stockholders following the date hereof, against the approval of any
other agreement providing for a merger, acquisition, consolidation, sale of
a material amount of assets or other business combination of the Seller or
any of its subsidiaries with any person or entity other than the Buyer, or
any subsidiary of the Buyer.
2. The agreements contained herein are intended to relate to
restrictions on voting and to continue only for such time as may reasonably
be necessary to obtain all necessary approvals, including shareholder
approval and all necessary governmental approvals, of the Acquisition and
all other transactions contemplated by the Acquisition Agreement.
3. Notwithstanding anything herein to the contrary, the agreements
contained herein shall remain in full force and effect until the earlier of
(a) the consummation of the Acquisition or (b) the termination of the
Acquisition Agreement in accordance with Article VIII thereof.
4. The Stockholder has signed this letter agreement intending to be
bound thereby. The Stockholder expressly agrees that this letter agreement
shall be specifically enforceable in any court of competent jurisdiction in
accordance with its terms against the Stockholder. All of the covenants and
agreements contained in this letter agreement shall be binding upon, and
inure to the benefit of, the respective parties and their permitted
successors, assigns, heirs, executors, administrators and other legal
representatives, as the case may be.
5. This letter agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which
together shall constitute one and the same instrument.
6. This letter agreement is deemed to be signed as a sealed
instrument and 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.
If the foregoing accurately reflects your understanding of the subject
matter intended to be contained herein, please confirm our agreement by
signing this letter where indicated below.
Very truly yours,
------------------------------------
------------------------------------
AGREED TO AND ACCEPTED AS
OF THE DATE FIRST ABOVE WRITTEN
BANKNORTH GROUP, INC.
By:
-------------------------------------
William H. Chadwick
President and Chief Executive Officer
Schedule 1
----------
Number of Shares
Name of Stockholder Owned with Sole Voting Power
------------------- ----------------------------
EXHIBIT E
List of Index Companies with Weighted Averages
Market Cap
Institution State (in millions) Weighting
- -------------------------------------------------------------------------------
FirstMerit Corporation OH $ 1,834 11.70%
Keystone Financial, Inc. PA $ 1,729 11.03%
Westamerica Bancorporation CA $ 1,350 8.62%
Webster Financial Corp. CT $ 1,217 7.76%
One Valley Bancorp, Inc. WV $ 1,142 7.28%
HUBCO, Inc. NJ $ 962 6.13%
Washington Trust Bancorp Inc. RI $ 899 5.74%
Suffolk Bancorp NY $ 868 5.54%
Susquehanna Bancshares Inc. PA $ 812 5.18%
UST Corp. MA $ 785 5.00%
TrustCo Bank Corp. of NY NY $ 679 4.33%
Chittenden Corp. VT $ 505 3.22%
Vermont Financial Services VT $ 351 2.24%
USBANCORP Inc. PA $ 350 2.23%
Commonwealth Bancorp Inc. NY $ 328 2.09%
First Source Bancorp Inc. NJ $ 317 2.02%
Dime Community Bancshares Inc. NY $ 297 1.89%
NBT Bancorp, Inc. NY $ 289 1.84%
BSB Bancorp, Inc. NY $ 276 1.76%
Washington Trust Bancorp RI $ 255 1.63%
Community Bank System, Inc. NY $ 244 1.56%
Arrow Financial Corp. NY $ 187 1.20%
- -------------------------------------------------------------------------------
TOTAL $15,675 100.00%
- -------------------------------------------------------------------------------
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 31, 1998 (this "Plan of
Merger") by and among BANKNORTH GROUP, INC., a Delaware corporation (the
"Buyer"), and EVERGREEN BANCORP, INC., a Delaware corporation (the "Seller").
This Plan of Merger is being entered into pursuant to an Affiliation
Agreement and Plan of Reorganization, dated as of July 31,, 1998 (as amended
and in effect from time to time, the "Agreement"), between the Buyer and the
Seller.
All capitalized terms used herein without definition are used with the
meanings ascribed thereto in the Agreement.
In consideration of the premises, and the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
----------
1.01 Surviving Corporation. In accordance with the provisions of this
Plan of Merger and the Delaware General Corporation Law ("DCL"), at the
Effective Time (as hereinafter defined), the Seller shall be merged with and
into the Buyer (the "Merger"), and the separate corporate existence of the
Seller shall cease. The Buyer shall be the surviving corporation in the Merger
(hereinafter sometimes referred to as the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Delaware.
1.02 Purposes of Surviving Corporation. As of the Effective Time, the
purposes of the Surviving Corporation shall be as stated in the Certificate of
Incorporation of the Buyer immediately prior to the Effective Time.
1.03 Authorized Capital Stock of Surviving Corporation. As of the
Effective Time, the Surviving Corporation shall be authorized to issue that
number of shares of $1.00 par value voting common stock which the Buyer is
authorized to issue immediately prior to the Effective Time.
1.04 Description of Classes of Stock. As of the Effective Time, each
class or series of capital stock of the Surviving Corporation shall have the
same preferences, voting powers, qualifications, special or relative rights or
privileges as such class or series of capital stock of the Buyer possessed
immediately prior to the Effective Time.
1.05 Effect of the Merger.
(a) Upon the Effective Time, the separate existence of the Seller
shall cease and the Seller shall be merged into the Surviving
Corporation, and the Surviving Corporation shall thenceforth possess all
the rights, privileges, powers and franchises as well of a public as of a
private nature, and shall be subject to all the restrictions,
disabilities and duties of each of the Buyer and the Seller; and all and
singular, the rights, privileges, power and franchises of each of the
Buyer and the Seller, and all property, real, personal and mixed, and all
debts due to either the Buyer or the Seller on whatever account, as well
for stock subscriptions as all other things in action or belonging to
each of the Buyer and the Seller shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and franchises,
and all and every other interest shall be thereafter as effectually the
property of the Surviving Corporation as they were of the Buyer or the
Seller, and the title to any real estate vested by deed or otherwise in
either of the Buyer or the Seller shall not revert or be in any way
impaired by reason of the Merger; but all rights of creditors and all
liens upon any property of either of the Buyer or the Seller shall be
preserved unimpaired, and all debts, liabilities and duties of each of
the Buyer and the Seller respectively shall thenceforth attach to the
Surviving Corporation, and may be enforced against the Surviving
Corporation to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it.
(b) Upon the Effective Time, any action or proceeding, whether
civil, criminal or administrative, pending by or against the Buyer of the
Seller shall be prosecuted as if the Merger had not taken place, or the
Surviving Corporation may be substituted in such action or proceeding.
1.06 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Seller acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or to otherwise
carry out this Plan of Merger, the officers and directors of the Surviving
Corporation shall and will be authorized to execute and deliver, in the name
and on behalf of the Seller or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of the
Seller or otherwise, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in the Surviving Corporation or
to otherwise carry out this Plan of Merger.
1.07 Certificate of Incorporation.. At the Effective Time, the
Certificate of Incorporation of the Buyer, as in effect at the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation and the
By-Laws of the Buyer, as in effect at the Effective Time, shall be the By-Laws
of the Surviving Corporation and shall thereafter continue to be its
Certificate of Incorporation and By-Laws until amended as provided therein or
by law.
1.08 Directors and Officers. At the Effective Time, the Board of
Directors of the Surviving Corporation shall consist of those persons
comprising the Board of Directors of the Buyer prior to the Effective Time and
those individuals named in Section 5.09 of the Agreement, each to hold office
in accordance with Section 5.09 of the Agreement and the Certificate of
Incorporation and By-Laws of the Surviving Corporation. The officers of the
Buyer immediately prior to the Effective Time shall be the officers of the
Surviving Corporation from and after the Effective Time, each to hold office in
accordance with the Certificate of Incorporation and By-Laws of the Surviving
Corporation.
1.09 Effective Time; Conditions. If all of the conditions precedent set
forth in Article VI of the Agreement have been satisfied or waived, and this
Plan of Merger is not terminated under Section 3.01 hereof, Certificate of
Merger with respect to the Merger shall be prepared by the Buyer and the Seller
and filed and recorded pursuant to Section 251 of the DCL (the "Certificate of
Merger"). The Merger shall become effective at, and the Effective Time shall
be, the date and time specified in the Certificate of Merger which shall be not
later than the next business day after the filing of the Certificate of Merger
(such date and time is herein referred to as the "Effective Time").
ARTICLE II
CONVERSION OF SHARES
--------------------
2.01 Effect on Outstanding Shares.
(a) Seller Common Stock. (i) By virtue of the Merger,
automatically and without any action on the part of the holder thereof,
each share of common stock of the Seller, par value $3.33 1/3 per share
("Seller Common Stock"), issued and outstanding immediately prior to the
Effective Time (other than any such shares held directly or indirectly by
the Buyer, except in a fiduciary capacity or in satisfaction of a debt
previously contracted, and any such shares held as treasury stock by the
Seller) together with that number of Seller rights issued pursuant to the
Seller Rights Agreement associated therewith, shall become and be
converted into 0.90 shares of the common stock of the Buyer, par value
$1.00 per share ("Buyer Common Stock"), together with that number of
Buyer rights issued pursuant to the Buyer Rights Agreement associated
therewith; provided, however, that in the event that the Buyer has
exercised its option to deliver additional shares of its Common Stock
pursuant to the last paragraph of Section 8.01(f) of the Agreement,
Seller's Common Stock shall be converted into such number of shares of
the Common Stock of the Buyer, par value $1.00 per share, as provided in
said Section of the Agreement. The number of shares of Buyer Common Stock
into which each share of Seller Common Stock shall be converted is
hereinafter called the "Conversion Number."
(ii) As of the Effective Time, each share of Seller Common Stock
held either directly or indirectly by the Buyer (other than in a
fiduciary capacity) or as treasury stock of the Seller shall be
cancelled, retired and cease to exist, and no payment shall be made with
respect thereto. Each certificate which immediately prior to the
Effective Time represented outstanding shares of Seller Common Stock
shall on and after the Effective Time be deemed for all purposes to
represent the number of shares of Buyer Common Stock into which the
shares of Seller Common Stock represented by such certificate shall have
been converted pursuant to this Section 2.01.
2.02 Anti-Dilution. In the event that, subsequent to the date of this
Plan of Merger but prior to the Effective Time, the outstanding shares of Buyer
Common Stock or Seller Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or kind of shares or
securities through reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other like changes in the
Buyer's or the Seller's capitalization, other than pursuant to the Agreement,
as the case may be (a "Recapitalization"), then an appropriate and
proportionate adjustment shall be made to the Conversion Number so that each
holder of Seller Common Stock shall receive under Section 2.01 hereof the
number of shares of Buyer Common Stock (except for fractional shares) that such
holder would have held immediately following the Recapitalization if the Merger
had occurred immediately prior to the Recapitalization or the record date
therefor, as applicable. For purposes of this Section 2.02, in no event shall
the issuance of shares or securities by the Buyer in connection with the Buyer
acquiring directly or indirectly the stock or assets of any corporation, bank
or other entity be deemed to be a "Recapitalization. "
2.03 Procedures.
(a) Certificates which represent shares of Seller Common Stock
that are outstanding immediately prior to the Effective Time (a
"Certificate") and are converted into shares of Buyer Common Stock
pursuant to this Article II shall, after the Effective Time, be deemed to
represent shares of Buyer Common Stock into which such shares have been
converted and shall be exchangeable by the holders thereof in the manner
provided in the transmittal materials described below for new
certificates representing the shares of Buyer Common Stock into which
such shares have been converted.
(b) As promptly as practicable after the Effective Time, the
Exchange Agent shall send to each holder of record of shares of Seller
Common Stock outstanding at the Effective Time transmittal materials
(which shall be reviewed with the Seller's counsel prior to the Effective
Time) for use in exchanging the Certificates for such shares for
certificates for shares of Buyer Common Stock into which such shares of
Seller Common Stock have been converted pursuant to this Article II. Upon
surrender of a Certificate, together with a duly executed letter of
transmittal and any other required documents, the holder of such
Certificate shall be entitled to receive, in exchange therefor, a
certificate for the number of Shares of Buyer Common Stock to which such
holder is entitled pursuant to Section 2.01(b) hereof, and such
Certificate shall forthwith be cancelled. No dividend or other
distribution payable after the Effective Time with respect to Buyer
Common Stock shall be paid to the holder of any unsurrendered Certificate
until the holder thereof surrenders such Certificate, at which time such
holder shall receive all dividends and distributions, without interest
thereon, previously payable but withheld from such holder pursuant
hereto. After the Effective Time, there shall be no transfers on the
stock transfer books of the Seller of shares of Seller Common Stock which
were issued and outstanding at the Effective Time and converted pursuant
to the provisions of this Article II. If, after the Effective Time,
Certificates are presented for transfer to the Seller, they shall be
cancelled and exchanged for the shares of Buyer Common Stock deliverable
in respect thereof as determined in accordance with the provisions and
procedures set forth in this Article II.
(c) In lieu of the issuance of fractional shares of Buyer Common
Stock pursuant to Sections 2.01 of this Plan of Merger, cash adjustments,
without interest, will be paid to the holders of Seller Common Stock in
respect of any fractional share that would otherwise be issuable and the
amount of such cash adjustment shall be equal to an amount in cash
determined by multiplying such holder's fractional interest by the
"Average Price" of a share of Buyer Common Stock (rounded up to the
nearest cent). The "Average Price" of a share of Buyer Common Stock shall
be the average of the last sale prices thereof as reported on the
National Association of Securities Dealers Automated Quotation system
over the ten (10) consecutive trading day period immediately preceding
the date on which the Effective Time occurs. For purposes of determining
whether, and in what amounts, a particular holder of Seller Common Stock
would be entitled to receive cash adjustments under this Section 2.03(c),
shares of record held by such holder and represented by two or more
Certificates shall be aggregated.
(d) After the Effective Time, holders of Certificates of Seller
Common Stock shall cease to be, and shall have no rights as, stockholders
of the Seller, other than to receive shares of Buyer Common Stock into
which such shares have been converted and, if applicable, fractional
share payments pursuant to the provisions hereof.
(e) Notwithstanding the foregoing, neither the Buyer nor the
Seller nor any other person shall be liable to any former holder of
shares of Seller Common Stock for any shares or any dividends or
distributions with respect thereto properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar
laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon receipt of appropriate evidence as to such loss, theft or
destruction and to the ownership of such Certificate by the person
claiming such Certificate to be lost, stolen or destroyed, and the
receipt by the Buyer of appropriate and customary indemnification, the
Buyer will issue in exchange for such lost, stolen or destroyed
Certificate shares of Buyer Common Stock and the fractional share
payment, if any, deliverable in respect thereof as determined in
accordance with this Article II.
(g) If any certificate representing shares of Buyer Common Stock
is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered; it shall be a condition
of the issuance thereof that the Certificate so surrendered shall be
properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer (including, but not
limited to, that the signature of the transferor shall be properly
guaranteed by a commercial bank, trust company, member firm of the NASD
or other eligible guarantor institution), and that the person requesting
such exchange shall pay to the Exchange Agent (as such term is defined in
Section 4.01 hereof) in advance any transfer or other taxes required by
reason of the issuance of a certificate representing shares of Buyer
Common Stock in any name other than that of the registered holder of the
Certificate surrendered, or required for any other reason, or shall
establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
2.04 Conversion of Options. Each stock option (other than the Seller
Option) issued by the Seller to a third party, whether or not currently
exercisable, which entitles such third party to purchase Seller Common Stock,
and which is outstanding and unexercised immediately prior to the Effective
Time, shall be converted into an option to purchase shares of Buyer Common
Stock, and the Buyer shall assume each such option in accordance with the terms
of the Seller stock option plan under which it was granted and the stock option
or other agreement by which it is evidenced, with the following terms:
(a) The number of shares of Buyer Common Stock shall be equal to
the product of the number of shares of Seller Common Stock previously
subject thereto and the Conversion Number, rounded down to the nearest
whole share; and
(b) The exercise price per share of Buyer Common Stock shall be
equal to the exercise price per share of Seller Common Stock previously
subject thereto divided by the Conversion Number, rounded up to the
nearest cent; and
(c) The duration and other terms of such Stock Option shall be
unchanged except that all references to the Seller shall be deemed to be
references to the Buyer; and
(d) The Buyer shall assume the option as contemplated by Section
424(a) of the Code; and
(e) With respect to any stock option on Seller's Common Stock
which is an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended, the Buyer shall take such
actions (other than delaying the date the options on Buyer Common Stock
become exercisable beyond the date on which such options would otherwise
become exercisable pursuant to the relevant Seller Stock Plan) as may be
necessary or appropriate to cause such option, upon being converted to an
option on Buyer Common Stock, to remain such an incentive stock option.
ARTICLE III
AMENDMENT AND TERMINATION
-------------------------
3.01 Termination. Notwithstanding the approval and adoption of this Plan
of Merger by the stockholders of the Seller, the Buyer and the Merger
Subsidiary, this Plan of Merger shall terminate forthwith in the event that the
Agreement shall be terminated as therein provided. In the event of the
termination of this Plan of Merger as provided above, this Plan of Merger shall
forthwith become null and void and there shall be no liability on the part of
any of the parties hereto except as otherwise provided in the Agreement.
3.02 Amendment. This Plan of Merger shall not be amended except by an
instrument in writing signed on behalf of each of the parties hereto pursuant
to an amendment to the Agreement approved in the manner therein provided. If
any such amendment to the Agreement is so approved, any amendment to this Plan
of Merger required by such amendment to the Agreement shall be effected by the
parties hereto by action taken by their respective Boards of Directors.
ARTICLE IV
MISCELLANEOUS
-------------
4.01 Exchange Agent. Prior to the Effective Time, the Buyer shall
appoint an agent for the purpose of exchanging certificates representing shares
of Buyer Common Stock for Certificates representing shares of Seller Common
Stock (the "Exchange Agent"), and the Buyer shall issue and deliver to the
Exchange Agent certificates representing shares of Buyer Common Stock and shall
pay to the Exchange Agent such amounts of cash as shall be required to be
delivered to holders of shares of Seller Common Stock in lieu of fractional
shares of Buyer Common Stock, pursuant to Article II of this Plan of Merger.
4.02 Counterparts. This Plan of Merger may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to each of the other parties.
4.03 Governing Law. This Plan of Merger shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of laws thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger to
be duly executed and delivered as a sealed instrument as of the date first
above written.
BANKNORTH GROUP, INC.
By: /s/ WILLIAM H. CHADWICK
------------------------------------
President
By: /s/ NEAL E. ROBINSON
------------------------------------
Treasurer
EVERGREEN BANCORP, INC.
By: /s/ GEORGE W. DOUGAN
------------------------------------
President
By: /s/ GEORGE FREDETTE
------------------------------------
Treasurer
EXHIBIT 3
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 31, 1998, between EVERGREEN
BANCORP, INC., a Delaware corporation (the "Issuer") and BANKNORTH GROUP, INC.,
a Delaware corporation (the "Grantee").
WHEREAS, the Grantee and the Issuer are entering into an Affiliation
Agreement and Plan of Reorganization of even date herewith (as amended and in
effect from time to time, the "Acquisition Agreement"), which agreement is
being executed by the parties thereto simultaneously with this Agreement; and
WHEREAS, as a condition to the Grantee's entry into the Acquisition
Agreement and in consideration for such entry, the Issuer has agreed to grant
the Grantee the Option (as hereinafter defined);
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:
1. (a) The Issuer hereby grants to the Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 1,888,923 fully paid and nonassessable shares (the "Option Shares") of
common stock, par value $3.33 1/3 per share, of the Issuer ("Common Stock") at
a price of $27.75 per share (the "Option Price"). The number of shares of
Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth provided that in no
event shall the number of shares for which this Option is exercisable exceed
19.9% of the Issuer's issued and outstanding shares of Common Stock (without
giving effect to any shares of Common Stock issued pursuant to the Option) less
the number of shares previously issued pursuant to exercise of the Option.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to exercise of the Option pursuant to this Agreement or as
contemplated by Section 5(a) of this Agreement), including, without limitation,
pursuant to stock option or other employee plans or as a result of the exercise
of conversion rights, the number of shares of Common Stock subject to the
Option shall be increased so that, after such issuance, it equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section l(b) or elsewhere in this Agreement shall be deemed
to authorize the Issuer or the Grantee to breach any provision of the
Acquisition Agreement.
2. (a) The Holder (as such term is defined in paragraph (c) below) may
exercise the Option, in whole or part, if, but only if, both an Initial
Triggering Event (as defined in paragraph (e) below) and a Subsequent
Triggering Event (as defined in paragraph (f) below) shall have occurred prior
to the occurrence of an Exercise Termination Event (as defined in paragraph (b)
below), provided that the Holder shall have sent the written notice of such
exercise (as provided in paragraph (h) of this Section 2) within thirty (30)
days following such Subsequent Triggering Event and prior to the Exercise
Termination Event.
(b) The term "Exercise Termination Event" shall mean the earliest of
(i) the Effective Time of the Merger, (ii) any termination of the Acquisition
Agreement in accordance with the provisions thereof if such termination occurs
prior to the occurrence of an Initial Triggering Event, and (iii) in the event
of any termination of the Acquisition Agreement in accordance with the
provisions thereof after the occurrence of an Initial Triggering Event, the
passage of twelve (12) months after such termination. Notwithstanding the
termination of the Option, the Grantee shall be entitled to purchase those
Option Shares with respect to which it has exercised the Option in whole or in
part prior to the termination of the Option.
(c) The term "Holder" shall mean the holder or holders of the Option.
(d) The term "Schedule 13G Investor" shall mean any person holding
voting securities of the Issuer eligible to report the beneficial ownership of
such securities on Schedule 13G pursuant to the provisions of Rule 13d-1 under
the Exchange Act.
(e) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The Issuer or any subsidiary of the Issuer, without having
received the Grantee's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction with any Person (the
term "person" for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Exchange Act and the
rules and regulations thereunder), other than the Grantee or any
subsidiary of the Grantee, or, without the consent of the Grantee the
Board of Directors of the Issuer shall have approved an Acquisition
Transaction or recommended that the shareholders of the Issuer approve or
accept any Acquisition Transaction other than as contemplated by the
Acquisition Agreement. For purposes of this Agreement, the term
"Acquisition Transaction" shall mean (A) a merger or consolidation, or
any similar transaction, with the Issuer or any Significant Subsidiary of
the Issuer, or any subsidiary of the Issuer which, after such
transaction, would be a Significant Subsidiary of the Issuer, (B) a
purchase, lease or other acquisition of all or substantially all of the
assets of the Issuer or any Significant Subsidiary of the Issuer or (C) a
purchase or other acquisition (including by way of merger, consolidation,
share exchange or otherwise) of securities representing ten percent (10%)
or more of the voting power of the Issuer or any Significant Subsidiary
of the Issuer;
(ii) The stockholders of the Issuer shall not have approved the
Acquisition Agreement at the meeting of such stockholders held for the
purpose of voting on the Acquisition Agreement, such meeting shall not
have been held or shall have been canceled prior to the termination of
the Acquisition Agreement, or the Issuer's Board of Directors shall have
withdrawn or modified in a manner adverse to the Grantee the
recommendation of the Issuer's Board of Directors with respect to the
Acquisition Agreement, in each case after (A), any Person, other than the
Grantee or any subsidiary of the Grantee or the Issuer in a fiduciary
capacity, and other than a Schedule 13G Investor, shall have acquired
beneficial ownership (as hereinafter defined) or the right to acquire
beneficial ownership of ten percent (10%) or more of the outstanding
shares of Common Stock if such Person owned beneficially less than ten
percent (10%) of the outstanding shares of Common Stock on the date of
this Agreement, or any Person shall have acquired beneficial ownership of
an additional three percent (3%) of the outstanding shares of Common
Stock if such Person owned beneficially ten percent (10%) or more of the
outstanding shares of Common Stock on the date of this Agreement (the
term "beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the Exchange Act, and in the
rules and regulations thereunder); (B), any Person, other than the
Grantee or any subsidiary of the Grantee, shall have made a bona-fide
proposal to the Issuer or its shareholders to engage in an Acquisition
Transaction by public announcement or written communication that shall be
or become the subject of public disclosure; or (C), any Person other than
the Grantee or any Subsidiary of the Grantee, other than in connection
with a transaction to which the Grantee has given its prior written
consent, shall have filed an application or notice with the Federal
Reserve Board or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction;
(iii) After any Person other than the Grantee or any subsidiary
of the Grantee has made a proposal to the Issuer or its shareholders to
engage in an Acquisition Transaction, the Issuer shall have breached any
covenant or obligation contained in the Acquisition Agreement and such
breach (A) would entitle the Grantee to terminate the Acquisition
Agreement and (B) shall not have been remedied prior to the Notice Date
(as defined in paragraph (h) below); or
(iv) Any person (other than Grantee or any Subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act) or shall have filed a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), 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 own or control 25% 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).
(f) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any Person (other than a Schedule 13G
Investor) of beneficial ownership of twenty-five percent (25%) or more of
the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
subparagraph (i) of paragraph (e) of this Section 2, except that the
percentage referenced in clause (C) thereof shall be twenty-five percent
(25%) in lieu of ten percent (10%).
(g) The Issuer shall notify the Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by the Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(h) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to the Issuer a written notice (the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares of Common Stock it will purchase pursuant to such exercise, and (ii) a
place and date not earlier than three (3) business days nor later than sixty
(60) business days from the Notice Date for the closing of such purchase (the
"Closing"); provided that if prior notification to or approval of the Federal
Reserve Board or any other regulatory agency is required in connection with
such purchase, the Holder shall promptly file the required notice or
application for approval and shall expeditiously process the same and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification periods have expired
or been terminated or such approvals have been obtained and any requisite
waiting period or periods shall have passed. The term "business day" for
purposes of this Agreement means any day, excluding Saturdays, Sundays and any
other day that is a legal holiday in the State of New York or a day on which
banking institutions in the State of New York are authorized by law or
executive order to close.
(i) At the Closing, the Holder shall pay to the Issuer the aggregate
purchase price for the shares of Common Stock purchased pursuant to the
exercise of the Option in immediately available funds by a wire transfer to a
bank account designated by the Issuer, provided that failure or refusal of the
Issuer to designate such a bank account shall not preclude the Holder from
exercising the Option.
(j) At such Closing, simultaneously with the delivery of immediately
available funds as provided in paragraph (i) above, the Issuer shall deliver to
the Holder a certificate or certificates representing the number of shares of
Common Stock purchased by the Holder and, if the Option should be exercised in
part only, a new Option evidencing the rights of the Holder thereof to purchase
the balance of the shares purchasable hereunder, and the Holder shall deliver
to the Issuer a copy of this Agreement and a letter agreeing that the Holder
will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Agreement.
(k) Certificates for the Common Stock delivered at a Closing hereunder
may (in the sole discretion of the Issuer) be endorsed with a restrictive
legend that shall read substantially as follows:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO RESTRICTION PURSUANT TO THE TERMS OF A STOCK
OPTION AGREEMENT DATED AS OF JULY 31, 1998 A COPY OF WHICH
AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFOR."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificates without such legend 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 legend. In addition,
such certificates shall bear any other legend as may be required by law.
(l) Upon the giving by the Holder to the Issuer of the written notice of
exercise of the Option provided for under paragraph (h) above, the tender of
the applicable purchase price in immediately available funds and the tender of
a copy of this Agreement to the Issuer, such Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Issuer shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. The Issuer shall pay any and all
expenses, and any and all United States federal, state and local taxes and
other charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder
or its assignee, transferee or designee.
3. The Issuer agrees (a) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without requiring the Issuer's
stockholders to approve an increase in the number of authorized shares of
Common Stock after giving effect to all other options, warrants, convertible
securities and other rights to purchase Common Stock, (b) that it will not, by
charter amendment 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 the Issuer, (c) promptly to take all
action as may from time to time be required (including without limitation (A)
complying with all premerger notification, reporting and waiting period
requirements and (B) cooperating fully with any Holders in preparing any
applications or notices required under the Bank Holding Company Act of 1956, as
amended, or the Change in Bank Control Act of 1978, as amended, or any state
banking law), in order to permit such Holders to exercise the Option and the
Issuer duly and effectively to issue shares of Common Stock pursuant hereto,
and (d) promptly to take all action provided herein to protect the rights of
any Holders against dilution.
4. This Agreement (and the Option granted hereby) is exchangeable,
without expense, at the option of each Holder, upon presentation and surrender
of this Agreement at the principal office of the 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 Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any Stock Option Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by the
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, the Issuer will execute and
deliver a new Agreement of like tenor and date. Any such new Agreement executed
and delivered shall constitute for all purposes and under all circumstances a
contractual obligation on the part of the Issuer, whether or not this Agreement
so lost, stolen, destroyed or mutilated shall at any time be enforceable by
anyone.
5. In addition to the adjustment in the number of Option Shares pursuant
to Section 1 of this Agreement, the number of Option Shares shall be subject to
adjustment from time to time as provided in this Section 5.
(a) (i) In the event of any change in the shares of Common Stock
by reason of stock dividend, split up, merger, recapitalization,
subdivision, conversion, combination, exchange of shares or similar
transaction, the type and number of Option Shares, and the Option Price
therefor, shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that the Grantee
shall receive upon exercise of the Option the number and class of shares
or other securities or property that the Grantee would have held
immediately after such event if the Option had been exercised immediately
prior to such event, or the record date therefor, as applicable.
(ii) The Issuer may make such increases in the number of Option
Shares, in addition to those required under subparagraph (a)(i) above, as
shall be determined by its Board of Directors to be advisable in order to
avoid taxation, so far as practicable, of any dividend of stock or stock
rights or any event treated as such for federal income tax purposes to
the recipients.
(b) Whenever the number of Option Shares (or other securities)
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 is equal to the number of Option
Shares prior to the adjustment and the denominator of which is equal to
the number of Option Shares (or other securities) purchasable after the
adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within thirty (30) days of such Subsequent Triggering Event (whether
on the Grantor's own behalf or on the behalf of any subsequent Holder of this
Option (or part thereof) or any of the shares of Common Stock issued pursuant
hereto), promptly prepare, file and keep current, with respect to the Option
and the Option Shares, a "shelf" registration statement under Rule 415 of the
Securities Act or any successor provision, and Issuer shall use its best
efforts to qualify such shares under any applicable state securities laws.
Issuer will use its best efforts to cause such registration statement first to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect sales or other
dispositions of Option Shares. Grantee shall have the right to demand two such
registrations. Any registration statement prepared and filed under this Section
6, and any sales covered thereby, shall be at Issuer's expense, except for
underwriting discounts or commissions, broker's fees and expenses and the fees
and disbursements of Grantee's counsel related thereto. The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
the Option or Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering of shares of Common Stock, and 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 or Option Shares would interfere with the successful
marketing of the shares represented by the Option the number of Option Shares
otherwise to be covered in the registration statement contemplated hereby may
be reduced; provided, however, that if such reduction occurs, the Issuer shall
file a registration statement for the balance as promptly as practical and no
reduction shall thereafter occur. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Issuer shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in such underwriting agreements for the
Issuer.
7. (a) Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, (i) at the request of any Holder,
delivered within thirty (30) days following such occurrence (or such later
period as provided in Section 10), the Issuer shall repurchase the Option from
the Holder at a price (the "Option Repurchase Price") equal to the greater of
(1) $7,500,000 and (2) 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 this Option may then be exercised, plus, to the extent not previously
reimbursed, the Grantee's reasonable out-of-pocket expenses incurred in
connection with the transactions contemplated by, and the enforcement of the
Grantee's rights under, the Acquisition Agreement, including without limitation
legal, accounting and investment banking fees (the "Grantee's Out-of-Pocket
Expenses"), and (ii) at the request of any owner of Option Shares from time to
time (the "Owner"), delivered within thirty (30) days following such occurrence
(or such later period as provided in Section 10), the Issuer shall repurchase
such number of the Option Shares from such Owner as the Owner shall designate
at a price per share ("Option Share Repurchase Price") equal to the greater of
(A) the market/offer price and (B) the average exercise price per share paid by
the Owner for the Option Shares so designated, plus, to the extent not
previously reimbursed, the Grantee's Out-of-Pocket Expenses. The term
"market/offer price" shall mean the highest of (w) the price per share of the
Common Stock at which a tender offer or exchange offer therefor has been made,
(x) the price per share of the Common Stock to be paid by any Person, other
than the Grantee or a subsidiary of the Grantee, pursuant to an agreement with
the Issuer, (y) the highest closing price for shares of Common Stock within the
six (6) month period immediately preceding the required repurchase of Options
or Option Shares, as the case may be, or (z) in the event of a sale of all or
substantially all of the 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
the Issuer as determined by a nationally recognized investment banking firm
selected by a majority in the interest of the Holders or the Owners, as the
case may be, and reasonably acceptable to the Issuer, divided by the number of
shares of Common Stock of the Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by a majority in interest of the Holders or the Owners, as the case may be, and
reasonably acceptable to the Issuer.
(b) Each Holder and Owner, as the case may be, may exercise its right to
require the Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to the 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 such Holder
or Owner elects to require the Issuer to repurchase this Option and/or Option
Shares in accordance with the provisions of this Section 7. As promptly as
practicable, and in any event within ten (10) business days after the surrender
of the Option and/or certificates representing Option Shares and the receipt of
such notice or notices relating thereto, the Issuer shall deliver or cause to
be delivered to each Holder the Option Repurchase Price and/or to each Owner
the Option Share Repurchase Price therefor or the portion thereof that the
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, or as a result of a
written agreement or other binding obligation with a governmental or regulatory
body or agency, from repurchasing the Option and/or the Option Shares in full,
the Issuer shall immediately so notify each Holder and/or each Owner and
thereafter deliver or cause to be delivered, from time to time, to such Holder
and/or 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 ten (10) business days after the date on
which the Issuer is no longer so prohibited; provided, however, that if the
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to
any Holder and/or Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in part or in full (and the Issuer
hereby undertakes to use its best efforts to receive any required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), such Holder or Owner may revoke its
notice of repurchase of the Option or the Option Shares either in whole or to
the extent of the prohibition, whereupon the Issuer shall promptly (i) deliver
to such Holder and/or Owner, as appropriate, that portion of the Option
Purchase Price or the Option Share Repurchase Price that the Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to
such Holder, a new Stock Option Agreement evidencing the right of such Holder
to purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase
by a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of
which is the Option Repurchase Price, or (B) to such Owner, a certificate for
the Option Shares it is then so prohibited from repurchasing.
8. (a) In the event that prior to an Exercise Termination Event, the
Issuer shall enter into an agreement (i) to consolidate with or merge into any
Person, other than the Grantee or one of the Grantee's subsidiaries, and the
Issuer shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any Person, other than the Grantee or
one of its subsidiaries, to merge into the Issuer and the Issuer shall be the
continuing or surviving corporation, but, in connection with such merger, the
then outstanding shares of 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 Common Stock shall, after such merger, represent
less than fifty percent (50%) of the 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 the Grantee or one of
the Grantee's subsidiaries, then, and in each such case, the agreement
governing such transaction shall make proper provision so that the Option shall
upon the consummation of any 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 the Holder, of either (A) the
Acquiring Corporation (as defined in paragraph (b) below) or (B) any Person
that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) The term "Acquiring Corporation" shall mean (A) the continuing
or surviving corporation of a consolidation or merger with the Issuer (if
other than the Issuer), (B) the Issuer in a merger in which the Issuer is
the continuing or surviving Person, and (C) the transferee of all or
substantially all of the Issuer's assets.
(ii) The term "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(iii) The term "Assigned Value" shall mean the "market/offer
price," as defined in paragraph (a) of Section 7 hereof.
(iv) The term "Average Price" shall mean the average closing price
of a share of the Substitute Common Stock for the one (1) year period
immediately preceding the consolidation, merger or sale in question, but
in no event higher than the closing price of the shares of the Substitute
Common Stock on the day preceding such consolidation, merger or sale,
provided that if the Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by the Person merging into the Issuer or by any company which
controls such Person, as the Holder may elect.
(c) The Substitute Option shall 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, to the extent legally permissible,
be as similar as possible to, and in no event less advantageous to the Holder
than, the terms of the Option. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of the Substitute Common Stock as is equal to (i) the product of (A) the
Assigned Value and (B) the number of shares of Common Stock for which the
Option is then exercisable, divided by (ii) the Average Price. The exercise
price of the Substitute Option per share of the Substitute Common Stock shall
then be equal to the Option Price multiplied by a fraction in which the
numerator is the number of Option Shares and the denominator is the number of
shares of the Substitute Common Stock for which the Substitute Option is
exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to exercise of the
Substitute Option (without giving effect to any shares of Substitute Common
Stock issued pursuant to the Substitute Option) less the number of shares
previously issued pursuant to the Substitute Option. In the event that the
Substitute Option would be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise but for this paragraph
(e), the issuer of the Substitute Option (the "Substitute Option Issuer") shall
make a cash payment to the Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this paragraph (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this paragraph (e). The difference in value shall be determined
by a nationally recognized investment banking firm selected by a majority in
interest of the Holders or the Owners, as the case may be.
(f) The Issuer shall not enter into any transaction described in
paragraph (a) of this Section 8 unless the Acquiring Corporation and any Person
that controls the Acquiring Corporation shall have assumed in writing all the
obligations of the Issuer hereunder.
9. (a) At the written request of the holder of the Substitute Option
(the "Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied
by the number of shares of the Substitute Common Stock for which the Substitute
Option may then be exercised, plus to the extent not previously reimbursed, the
Grantee's Out-of-Pocket Expenses, and at the request of each owner (the
"Substitute Share Owner") of shares of the Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price per share (the "Substitute Share Repurchase
Price") equal to the greater of (A) the Highest Closing Price and (B) the
average exercise price per share paid by the Substitute Share Owner for the
Substitute Shares so designated, plus, to the extent not previously reimbursed,
the Grantee's Out-of-Pocket Expenses. The term "Highest Closing Price" shall
mean the highest closing price for shares of the Substitute Common Stock within
the six (6) month period immediately preceding the date the Substitute Option
Holder gives notice of the required repurchase of the Substitute Option or the
Substitute Share Owner gives notice of the required repurchase of the
Substitute Shares, as applicable.
(b) Each Substitute Option Holder and Substitute Share Owner, as the
case may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant
to this Section 9 by surrendering for such purpose to the Substitute Option
Issuer, at its principal office, the agreement for such Substitute Option (or,
in the absence of such an agreement, a copy of this Agreement) and certificates
for Substitute Shares accompanied by a written notice or notices stating that
such Substitute Option Holder or Substitute Share Owner elects to require the
Substitute Option Issuer to repurchase the Substitute Option and/or the
Substitute Shares in accordance with the provisions of this Section 9. As
promptly as practicable, and in any event within five (5) business days after
the surrender of the Substitute Option and/or the certificates representing
Substitute Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor, or the
portion(s) thereof which the Substitute Option Issuer is not then prohibited
under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from repurchasing the Substitute
Option and/or the Substitute Shares in full, the Substitute Option Issuer shall
immediately so notify each Substitute Option Holder and/or the Substitute Share
Owner and thereafter deliver or cause to be delivered, from time to time, to
the Substitute Option Holder and/or Substitute Share Owner, as appropriate,
that portion of the Substitute Option Repurchase Price and the Substitute Share
Repurchase Price, respectively, which it is no longer prohibited from
delivering, within five (5) business days after the date on which the
Substitute Option Issuer is no longer so prohibited, provided, however, that if
the Substitute Option Issuer is, at any time after delivery of a notice of
repurchase pursuant to paragraph (b) of this Section 9 prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from delivering to the Substitute
Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase Price,
respectively, in part or in full (and the Substitute Option Issuer shall use
its best efforts to receive all required regulatory and legal approvals as
promptly as practicable in order to accomplish such repurchase), the Substitute
Option Holder or Substitute Share Owner may revoke its notice of repurchase of
the Substitute Option or the Substitute Shares either in whole or to the extent
of the prohibition, whereupon the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Option Shares it is then so prohibited
from repurchasing.
10. The thirty (30) day period for exercise of certain rights under
Sections 2, 6, 7 and 12 hereof shall be extended in each such case: (i) to the
extent necessary to obtain all regulatory approvals for the exercise of such
rights and for the expiration of all statutory waiting periods; and (ii) to the
extent necessary to avoid liability under Section 16(b) of the Exchange Act by
reason of such exercise, provided that notice of intent to exercise such rights
shall be given to the Issuer within the requisite thirty (30) day period and
the Grantee and the Holders shall use their best efforts to promptly obtain all
requisite approvals and cause the expiration of all requisite waiting periods.
11. The Issuer hereby represents and warrants to the Grantee as follows:
(a) The Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of the Issuer and no other corporate proceedings on the part
of the Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by the Issuer. This Agreement is the valid and legally binding
obligation of the Issuer, enforceable against the Issuer in accordance with its
respective terms, except that enforcement thereof may be limited by the
receivership, conservatorship and supervisory powers of bank regulatory
agencies generally as well as bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors rights
generally and except that enforcement thereof may be subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the availability of equitable remedies.
(b) The 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 Common Stock equal to the maximum number of shares of 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,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other Person, whether by operation of law or otherwise, without the express
written consent of the other party, except that in the event a Subsequent
Triggering Event shall have occurred prior to an Exercise Termination Event,
the Grantee may, subject to the right of first refusal set forth in Section 13,
assign, transfer or sell in whole or in part its rights and obligations
hereunder within thirty (30) days following such Subsequent Triggering Event
(or such later period as provided in Section 10); provided, however, that in
the event the Grantee sells, assigns or transfers all or a portion of the
Option to other Holders as permitted by this Agreement, the Grantee may
exercise its rights hereunder on behalf of itself and such Holders.
13. If at any time after the occurrence of a Subsequent Triggering Event
and, with respect to shares of Common Stock or other securities acquired by the
Grantee pursuant to an exercise of the Option, prior to the expiration of
twenty-four (24) months after the expiration of the Option pursuant to Section
2(b), the Grantee shall desire to sell, assign, transfer or otherwise dispose
of the Option, in whole or in part, or all or any of the shares of Common Stock
or other securities acquired by the Grantee pursuant to the Option, the Grantee
shall give the Issuer written notice of the proposed transaction (an "Offeror's
Notice"), identifying the proposed transferee, accompanied by a copy of a
binding offer to purchase the Option or such shares or other securities signed
by such transferee and setting forth the terms of the proposed transaction. An
Offeror's Notice shall be deemed an offer by the Grantee to the Issuer, which
may be accepted within ten (10) business days of the receipt of such Offeror's
Notice, on the same terms and conditions and at the same price at which the
Grantee is proposing to transfer the Option or such shares or other securities
to such transferee. The purchase of the Option or such shares or other
securities by the Issuer shall be settled within five (5) business days of the
date of the acceptance of the offer and the purchase price shall be paid to the
Grantee in immediately available funds, provided that, if prior notification to
or approval, consent or waiver of the Federal Reserve Board or any other
regulatory authority is required in connection with such purchase, the Issuer
shall promptly file the required notice or application for approval, consent or
waiver and shall expeditiously process the same (and the Grantee shall
cooperate with the Issuer in the filing of any such notice or application and
the obtaining of any such approval) and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which, as the
case may be, (a) the required notification period has expired or been
terminated or (b) such approval has been obtained and, in either event, any
requisite waiting period shall have passed. In the event of the failure or
refusal of the Issuer to purchase the Option or the shares or other securities,
as the case may be, covered by an Offeror's Notice or if the Federal Reserve
Board or any other regulatory authority disapproves the Issuer's proposed
purchase of the Option or such shares or other securities, the Grantee may,
within sixty (60) days following the date of the Offeror's Notice (subject to
any necessary extension for regulatory notification, approval, or waiting
periods), sell all, but not less than all, of the portion of the Option (which
may be one hundred percent (100%)) or such shares or other securities, as the
case may be, proposed to be transferred to the proposed transferee identified
in the Offeror's Notice at no less than the price specified and on terms no
more favorable to the proposed transferee than those set forth in the Offeror's
Notice. The requirements of this Section 13 shall not apply to (i) any
disposition of the Option or any shares of Common Stock or other securities by
a Person to whom the Grantee has assigned its rights under the Option with the
prior written consent of the Issuer, (ii) any sale by means of a public
offering in which steps are taken to reasonably ensure that no purchaser will
acquire securities representing more than two percent (2%) of the outstanding
shares of Common Stock of the Issuer or (iii) any transfer to a direct or
indirect wholly-owned subsidiary of the Grantee which agrees in writing to be
bound by the terms hereof.
14. Each of the Grantee and the Issuer will use all 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
Federal Reserve Board under the Bank Holding Company Act of 1956, as amended,
for approval to acquire the shares issuable hereunder.
15. (a) Notwithstanding any other provision of this Agreement, in no
event shall the Grantee's Total Profit (as hereinafter defined) exceed
$15,000,000 million and, if it otherwise would exceed such amount, the Grantee,
at its sole election, shall either (i) reduce the number of shares of Common
Stock subject to this Option, (ii) deliver to the Issuer for cancellation
Option Shares previously purchased by the Grantee, (iii) pay cash to the
Issuer, or (iv) any combination thereof, so that the Grantee's actually
realized Total Profit shall not exceed $15,000,000 million after taking into
account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this Option
may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below) of more than
$15,000,000 million; provided, that nothing in this sentence shall restrict any
exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of (i)(x) the net cash amounts receive by the Grantee
pursuant to the sale of shares of Common Stock purchased pursuant to the
exercise of the Option (or any other securities into which such shares are
converted or exchanged) to any unaffiliated party, less (y) the Grantee's
purchase price of such shares, plus (ii) any amounts received by the Grantee on
the transfer of the Option (or any portion thereof) to any unaffiliated party.
(d) As used herein, the term "Notional Total Profit" with respect to any
number of shares as to which the Grantee may propose to exercise this Option
shall be the Total Profit determined as of the date of such proposed exercise
assuming that this were exercised on such date for such number of shares and
assuming that such shares, together with all other shares of Common Stock
purchased pursuant to the Option and held by the Grantee and its affiliates as
of such date, were sold for cash at the closing market price for the Common
Stock as of the close of business on the preceding trading day (less customary
brokerage commissions).
16. Notwithstanding anything to the contrary herein, in the event that
the Holder or the Owner or any Related Person thereof (as hereinafter defined)
is a Person making an offer or proposal to engage in an Acquisition Transaction
(other than the transaction contemplated by the Acquisition Agreement), then
(a) in the case of a Holder or any Related Person thereof, the Option held by
it shall immediately terminate and be of no further force or effect, and (b) in
the case of an Owner or any Related Person thereof, the Option Shares held by
it shall be immediately repurchasable by the Issuer at the Option Price. For
purposes of this Agreement, a "Related Person" of a Holder or Owner means any
Affiliate (as defined in Rule 12b-2 of the rules and regulations under the
Exchange Act) of the Holder or the Owner and any Person that is required to
file a Schedule 13D with the Holder or the Owner with respect to shares of
Common Stock or options to acquire the Common Stock.
17. 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.
18. 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 the Holder is not permitted to acquire, or the Issuer is
not permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Sections
1(b) or 5 hereof), it is the express intention of the Issuer to allow the
Holder to acquire or to require the Issuer to repurchase such lesser number of
shares as may be permissible, without any amendment or modification hereof.
19. 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.
20. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
21. 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.
22. 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, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
23. Except as otherwise expressly provided herein, 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, express or implied, is intended to confer upon any party, other than
the parties hereto, and their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
24. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Acquisition Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed [as a sealed instrument] on its behalf by its officers thereunder duly
authorized, all as of the day and year first above written.
EVERGREEN BANCORP, INC.
By: /s/ GEORGE W. DOUGAN
---------------------------------------------
Name: George W. Dougan
Title: Chairman and Chief Executive Officer
BANKNORTH GROUP, INC.
By: /s/ WILLIAM H. CHADWICK
---------------------------------------------
Name: William H. Chadwick
Title: President and Chief Executive Officer
EXHIBIT 4
July 31, 1998
William H. Chadwick
President and Chief Executive Officer
Banknorth Group, Inc.
300 Financial Plaza
Burlington, VT 05401
Dear Mr. Chadwick:
The undersigned (the "Stockholder") owns and has sole voting power
with respect to the number of shares of the common stock, par value $3.33
1/3 per share (the "Shares"), of Evergreen Bancorp, Inc., a Delaware
corporation (the "Seller"), indicated opposite the Stockholder's name on
Schedule 1 attached hereto.
Simultaneously with the execution of this letter agreement, Banknorth
Group, Inc.. (the "Buyer") and the Seller are entering into an Affiliation
Agreement and Plan of Reorganization (as amended and in effect from time to
time, the "Acquisition Agreement") providing, among other things, for the
acquisition of the Seller by the Buyer (the "Acquisition").
In consideration of, and as a condition to, the Buyer's entering into
the Acquisition Agreement, the Stockholder and the Buyer agree as follows:
1. The Stockholder, while this letter agreement is in effect, shall
vote or cause to be voted all of the Shares, as well as any other shares of
common stock of Seller of which the Stockholder acquires beneficial
ownership and sole voting power, whether pursuant to the exercise of stock
options or otherwise, as long as such shares are owned by the Stockholder as
of the record date for the special meeting of the Seller's stockholders to
be called and held following the date hereof, for the approval of the
Acquisition Agreement and the Acquisition and shall vote or cause to be
voted all such shares, at such special meeting or any other meeting of the
Seller's stockholders following the date hereof, against the approval of any
other agreement providing for a merger, acquisition, consolidation, sale of
a material amount of assets or other business combination of the Seller or
any of its subsidiaries with any person or entity other than the Buyer, or
any subsidiary of the Buyer.
2. The agreements contained herein are intended to relate to
restrictions on voting and to continue only for such time as may reasonably
be necessary to obtain all necessary approvals, including shareholder
approval and all necessary governmental approvals, of the Acquisition and
all other transactions contemplated by the Acquisition Agreement.
3. Notwithstanding anything herein to the contrary, the agreements
contained herein shall remain in full force and effect until the earlier of
(a) the consummation of the Acquisition or (b) the termination of the
Acquisition Agreement in accordance with Article VIII thereof.
4. The Stockholder has signed this letter agreement intending to be
bound thereby. The Stockholder expressly agrees that this letter agreement
shall be specifically enforceable in any court of competent jurisdiction in
accordance with its terms against the Stockholder. All of the covenants and
agreements contained in this letter agreement shall be binding upon, and
inure to the benefit of, the respective parties and their permitted
successors, assigns, heirs, executors, administrators and other legal
representatives, as the case may be.
5. This letter agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which
together shall constitute one and the same instrument.
6. This letter agreement is deemed to be signed as a sealed
instrument and 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.
If the foregoing accurately reflects your understanding of the subject
matter intended to be contained herein, please confirm our agreement by
signing this letter where indicated below.
Very truly yours,
------------------------------------
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AGREED TO AND ACCEPTED AS
OF THE DATE FIRST ABOVE WRITTEN
BANKNORTH GROUP, INC.
By:
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William H. Chadwick
President and Chief Executive Officer
Schedule 1
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Number of Shares
Name of Stockholder Owned with Sole Voting Power
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