SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No....)
Shawmut National Corporation
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
820484 10 3
(CUSIP Number)
William C. Mutterperl
Senior Vice President and General Counsel
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, Rhode Island 02903
(401) 278-5880
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 20, 1995
(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(b)(3) or (4),
check the following box [].
Check the following box if a fee is being paid with this statement
[X].
<PAGE>
CUSIP No. 820484 10 3
1) NAMES OF REPORTING PERSONS
S.S. or I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Fleet Financial Group, Inc. E.I.N. 05-0341324
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
3) SEC USE ONLY
4) SOURCE OF FUNDS WC
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [X]
6) CITIZENSHIP OR PLACE OF ORGANIZATION Rhode Island
7) NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH SOLE VOTING POWER 30,017,492
8) NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH SHARED VOTING POWER 00
9) NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH SOLE DISPOSITIVE POWER 30,017,492
10) NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH SHARED DISPOSITIVE POWER 00
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
30,017,492
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES N/A
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 20.6%
14) TYPE OF REPORTING PERSON CO
<PAGE>
This statement is being filed to report the granting by Shawmut
National Corporation, a Delaware corporation (the "Company"), to
Fleet Financial Group, Inc., a Rhode Island corporation ("FFG"), of
an option (the "Option") to purchase up to 24,195,625 shares (the
"Option Shares") of the outstanding common stock, $0.01 par value,
of the Company, pursuant to a Stock Option Agreement (the "Stock
Option Agreement"), dated February 20, 1995, between the Company and
FFG. The Stock Option Agreement is attached hereto as Exhibit 1 and
is incorporated herein by reference. The exercise of the Option is
subject to the occurrence of certain events relating to attempts by
third parties to acquire the Company prior to the effective date of
the Merger (as hereinafter defined). The Company and FFG have also
entered into an Agreement and Plan of Merger dated as of February
20, 1995 (herein referred to as the "Agreement"), pursuant to which
the Company will merge with and into FFG (the "Merger"). The
Agreement is attached hereto as Exhibit 2 and is incorporated herein
by reference.
ITEM 1. SECURITY AND ISSUER
This statement relates to shares of common stock, $0.01 par
value, of the Company (the "Common Stock"). The principal executive
offices of the Company are located at 777 Main Street, Hartford,
Connecticut 06115 and One Federal Street, Boston, Massachusetts
02211.
ITEM 2. IDENTITY AND BACKGROUND
(a) This statement is being filed by FFG, a Rhode Island
corporation. The names and citizenship of the executive officers
and directors of FFG are set forth on Exhibit A attached hereto,
which Exhibit is incorporated herein by reference.
(b) The executive offices and principal place of business of
FFG is located at 50 Kennedy Plaza, Providence, Rhode Island 02903.
The business addresses of the executive officers and directors of FFG
are set forth on Exhibit A attached hereto, which Exhibit is
incorporated herein by reference.
(c) FFG is a diversified financial services company engaged in
a general commercial banking and trust business through its various
banking subsidiaries and a broad range of financial services through
its various non-banking subsidiaries. The present principal
occupations of the executive officers and directors of FFG are set
forth on Exhibit A attached hereto, which Exhibit is incorporated
herein by reference.
(d) During the last five years, neither FFG nor, to the best of
FFG's knowledge, any of FFG's directors or executive officers listed
on Exhibit A have been convicted in a criminal proceeding (excluding
traffic violations or other similar misdemeanors).
(e) Except for the consent decree dated August 14, 1991
described below, during the last five years, neither FFG nor, to the
best of FFG's knowledge, any of FFG's directors or executive
officers listed on Exhibit A has been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and,
as a result of such proceeding, was or is 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.
On August 14, 1991, FFG entered into an offer of settlement with
the Securities and Exchange Commission as a result of an
investigation of FFG's accounting for declines in the market value
of its marketable equity securities. In conjunction with this
settlement, FFG restated its 1990 results, taking additional
write-downs in its marketable equity securities portfolio. FFG
previously had reported a loss of $48.5 million for the year ended
December 31, 1990; FFG added $25.2 million to this figure,
increasing the annual loss to $73.3 million. As marketable equity
securities are carried at the lower of aggregate cost or market
value on FFG's balance sheet, this restatement of 1990 results had
no impact on stockholders' equity.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Company granted FFG the Option in consideration of FFG's
entering into the Agreement.
The Option Agreement provides that the consideration for the
Common Stock purchased upon exercise of the Option shall be payable
in immediately available funds. It is anticipated that any funds
used to purchase Option Shares will be provided by the general
working capital of FFG.
ITEM 4. PURPOSE OF THE TRANSACTION
Through the Merger, FFG is seeking to acquire the entire equity
interest of the Company. The Option Agreement is designed to, and
FFG requested such agreement because it believed that it would,
enhance the likelihood that the Merger would be successfully
consummated in accordance with the terms contemplated by the
Agreement.
On the effective date of the Merger, the issued and outstanding
shares of Common Stock (except for shares of Common Stock held by
the Company as treasury stock or shares held by FFG or any of its
subsidiaries, but including shares of Common Stock (i) held directly
or indirectly by the Company or FFG or any of their respective
subsidiaries in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially owned
by third parties and (ii) held by the Company or FFG or any of their
respective subsidiaries in respect of a debt previously contracted)
shall be automatically converted into the right to receive 0.8922
shares of the common stock, $1.00 par value, of FFG, including
preferred share purchase rights (the "FFG Common Stock"). Further,
(i) each share of preferred stock with cumulative and adjustable
dividends of the Company (the "Company Adjustable Preferred"),
except for shares of Company Adjustable Preferred as to which
appraisal rights are perfected, will be converted into the right to
receive one share of preferred stock with cumulative and adjustable
dividends of FFG ("the "FFG Adjustable Preferred"), (ii) each share
of 9.30% cumulative preferred stock of the Company (the "Company
9.30% Preferred") will be converted into the right to receive one
share of 9.30% preferred stock of FFG (the "FFG 9.30% Preferred")
and (iii) each share of 9.35% cumulative preferred stock of the
Company (the "Company 9.35% Preferred, and together with the Company
Adjustable Preferred and the Company 9.30% Preferred, collectively,
the "Company Preferred"), will be converted into the right to
receive one share of 9.35% cumulative preferred stock of FFG (the
"FFG 9.35% Preferred", and together with the FFG Adjustable
Preferred and the FFG 9.30% Preferred, collectively, the "FFG New
Preferred Stock"). The Company 9.30% Preferred is represented by
depositary shares, each representing 1/10 of a share of Company
9.30% Preferred (the "Company 9.30% Depositary Shares") and the
Company 9.35% Preferred is represented by depositary shares, each
representing 1/10 of a share of Company 9.35% Preferred (the
"Company 9.35% Depositary Shares" and together with the Company
9.30% Depositary Shares, the "Company Depositary Shares"). The
terms of the FFG New Preferred Stock will be substantially the same
as the terms of the Company Preferred.
No fractional shares of FFG Common Stock will be issued in the
Merger, and the Company's stockholders who otherwise would be
entitled to receive a fractional share of FFG Common Stock will
receive a cash payment in lieu thereof.
Pursuant to the Stock Option Agreement, the Company granted FFG
an option (the "Option") to purchase up to 24,195,625 authorized but
unissued shares (the "Option Shares") of Common Stock for $24.50 per
share. The Option will become exercisable in whole or in part at
any time prior to its expiration, if (i) the Company, without the
prior written consent of FFG, enters into an agreement with any
person (other than FFG) to effect (any of the following, an
"Acquisition Transaction") (a) a merger, consolidation or similar
transaction involving the Company or any of its Significant
Subsidiaries (as defined in Rule 1-02 of Regulation S-X promulgated
by the Securities and Exchange Commission) (other than mergers,
consolidations or similar transactions involving (x) the Company or
any of its Significant Subsidiaries in which the voting securities
of the Company immediately prior to such transaction continue to
represent at least 65% of the combined voting power of the voting
securities of the Company or the surviving entity outstanding
immediately after such transaction or (y) only the Company and its
subsidiaries), (b) the purchase, lease or other acquisition of all
or a substantial portion of the assets of the Company or any of its
Significant Subsidiaries, (c) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or
otherwise) of securities representing 20% or more of the voting
power of the Company or any of its subsidiaries or (d) any
substantially similar transaction, (ii) the Board of Directors of
the Company shall have recommended that the stockholders of the
Company approve or accept any Acquisition Transaction, or (iii) any
person (other than FFG) acquired beneficial ownership of 20% or more
of the then outstanding shares of Common Stock.
As more fully set forth in the Stock Option Agreement, FFG (or a
subsequent holder of the Option or Option Shares) has the right
under specified circumstances to require the Company to repurchase
the Option or Option Shares.
Upon consummation of the Merger, the Board of Directors of FFG
will consist of 20 persons, including Terrence Murray, the current
Chairman, Chief Executive Officer and President of FFG, who will
serve as Chief Executive Officer and President of FFG following the
Merger, and Joel B. Alvord, the current Chairman and Chief Executive
Officer of the Company, who will serve as Chairman of FFG following
the Merger, 11 additional persons who are not executive officers of
FFG or the Company to be named by Mr. Murray and the Board of
Directors of FFG and 7 additional persons who are not executive
officers of FFG or the Company to be named by Mr. Alvord and the
Board of Directors of the Company. The Merger is subject to, among
other things, approval of the holders of FFG Common Stock and the
Common Stock, respectively, and receipt of all necessary regulatory
approvals.
During the period from February 20, 1995 to the effective date
of the Merger, the Company has agreed that without the consent of
FFG it will not adjust, split, combine or reclassify any capital
stock; make, declare or pay any dividend or make any other
distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities
or obligations convertible into or exchangeable for any shares of
its capital stock, or grant any stock appreciation rights or grant
any individual, corporation or other entity any right to acquire any
shares of its capital stock (except for regular quarterly cash
dividends at a rate not in excess of $0.22 per share of Common
Stock, and, in the case of Company Preferred, for regular quarterly
or semiannual cash dividends thereon at the rates set forth in the
certificate of incorporation or certificate of designation for such
securities and except for dividends paid by any of the wholly-owned
subsidiaries of the Company to the Company or any of its
wholly-owned subsidiaries, respectively); or issue any additional
shares of capital stock except pursuant to (A) the exercise of stock
options or warrants outstanding as of February 20, 1995, (B) the
Stock Option Agreement, (C) the Company's Shareholder Rights
Agreement or (D) the Agreement and Plan of Merger dated June 11,
1994 between the Company and Northeast Federal Corporation.
If the Merger is consummated as contemplated, the Common Stock
and the Company Depositary Shares will cease to be listed on the New
York Stock Exchange and such securities will become eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934, as amended.
Other than as described above or in Item 5 below, FFG does not
have any plans or proposals which relate to or would result in any
of the matters listed in Items 4(a)-(j) of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
As of January 31, 1995, to the best of FFG's knowledge, there
were 121,586,053 shares of Common Stock issued and outstanding and
13,390 shares of Common Stock held in treasury.
(a) As of the date hereof, FFG and its subsidiaries own
5,811,900 shares of Common Stock, representing approximately 4.8% of
the outstanding Common Stock as of January 31, 1995 (the
"Beneficially Owned Shares"). Pursuant to the Stock Option
Agreement, FFG has the right to acquire up to 24,195,625 additional
shares of Common Stock, representing approximately 16.6% of the
outstanding Common Stock as of January 31, 1995, after giving effect
to the exercise of the Option. FFG may be deemed to be the
beneficial owner of the Common Stock subject to the Option
Agreement, but disclaims such beneficial ownership.
As of the date hereof, the following directors and executive
officers of FFG beneficially own shares of Common Stock (the "D&O
Shares"): Mr. Keeney, 2,400 shares; Mr. McQuade, 350 shares; Mr.
Moynihan, 200 shares; and Mr. Sarles, 7,000 shares. All such
amounts in the aggregate represent less than 1% of the outstanding
Common Stock as of January 31, 1995. In addition, Mr. Murray
beneficially owns 17 warrants to purchase shares of the Common Stock
(the "Warrants"). Each Warrant represents the right to acquire upon
exercise one share of Common Stock at an exercise price of $22.11.
The Warrants are currently exercisable and expire January 18, 1996.
Except as stated herein, neither FFG nor, to the best knowledge
of FFG, any executive officer or director of FFG identified on
Exhibit A attached hereto, is the beneficial owner of, or has the
right to acquire, directly or indirectly, any shares of Common Stock.
(b) FFG has sole voting and sole dispositive power as to the
Beneficially Owned Shares. Currently, FFG has no right to vote or
dispose of the Option Shares. FFG will not acquire the right to
vote or dispose of the Option Shares until such time as it exercises
the Option. The Option is not currently exercisable and will become
exercisable only upon the occurrence of certain events described in
the Stock Option Agreement relating to the acquisition, merger,
consolidation or similar extraordinary corporate transaction
involving the Company and a party other than FFG. All of the
directors and executive officers identified in Item 5(a) above have
sole voting and sole dispositive power with respect to the D&O
Shares. Mr. Murray has sole dispositive power as to the Warrants,
and will acquire sole voting and dispositive power as to the
underlying Common Stock only upon exercise of the Warrants.
(c) Mr. Moynihan purchased 200 shares of Common Stock on
February 22, 1995 in open market transactions at a price per share
of $25.75. Mr. Sarles purchased 2,000 shares of Common Stock on
February 22, 1995 in open market transactions at a price per share
of $25.375 and 5,000 shares of Common Stock on February 22, 1995 in
open market transactions at a price per share of $25.25 per share.
Mr. Murray acquired the Warrants on or about January 18, 1995 in
connection with a settlement entered into between the Company and
plaintiffs in certain purported class action and derivative
lawsuits. Other than as described herein, FFG has no knowledge of
any other transaction involving securities of the Company effected
within the past sixty days.
(d) So long as FFG has not purchased the Option Shares, FFG
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 Option Shares. FFG has, and the directors and officers
identified in Item 5(a) above have, the right to receive dividends
from, and the proceeds from the sale of, the Beneficially Owned
Shares and the D&O Shares, respectively. So long as Mr. Murray has
not exercised the Warrants, he 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 Common Stock issued upon such
exercise.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Except as described in the introductory statement hereto and
Item 5 of this Schedule 13D, which statement and Item are
incorporated herein by reference, neither FFG nor, to the best of
its knowledge, any of FFG's directors and executive officers has any
contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company, including the
transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding
of proxies.
Item 7. Material to be Filed as Exhibits.
1. Option Agreement dated as of February 20, 1995 between the
Company and FFG.
2. Agreement and Plan of Merger dated as of February 20, 1995
by and between FFG and the Company.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I hereby certify that the information set forth in this
statement is true, complete and correct.
Dated: March 2, 1995
FLEET FINANCIAL GROUP, INC.
By:/s/William C. Mutterperl
William C. Mutterperl
Senior Vice President,
Secretary and General
Counsel
<PAGE>
EXHIBIT A
FLEET FINANCIAL GROUP, INC.
DIRECTORS AND EXECUTIVE OFFICERS
1. William Barnet, III
Business Address: William Barnet & Son, Inc.
P.O. Box 131
(1300 Hayne Street)
Arcadia, SC 29320
Principal Occupation: President, William Barnet & Son, Inc.
Citizenship: USA
2. Bradford R. Boss
Business Address: A.T. Cross Company
One Albion Road
Lincoln, RI 02865
Principal Occupation: Chairman, A.T. Cross Company
Citizenship: USA
3. Paul J. Choquette, Jr.
Business Address: Gilbane Building Company
Seven Jackson Walkway
Providence, RI 02940
Principal Occupation: President, Gilbane Building Company
Citizenship: USA
4. James F. Hardymon
Business Address: Textron Inc.
40 Westminster Street
Providence, RI 02903
Principal Occupation: Chairman and Chief
Executive Officer,
Textron Inc.
Citizenship: USA
5. Robert M. Kavner
Business Address: Creative Artists Agency, Inc.
9830 Wilshire Blvd.
Beverly Hills, CA 90212
Principal Occupation: Executive, Creative
Artists Agency, Inc.
Citizenship: USA
6. Lafayette Keeney
Business Address: 41 Pettipaug Avenue
Old Saybrook, CT 06475
Principal Occupation: Consultant, Retired Chairman
and Chief Executive Officer,
Sage-Allen & Co., Inc.
Citizenship: USA
7. Raymond C. Kennedy
Business Address: Kendell Holdings, Inc.
745 Warren Street
Hudson, NY 12534
Principal Occupation: Chairman,
Kendell Holdings, Inc.
Citizenship: USA
8. Ruth R. McMullin
Business Address: 274 Beacon Street
Boston, MA 02116
Principal Occupation: Management Fellow, Yale School of
Management
Citizenship: USA
9. Arthur C. Milot
Business Address: 60 Walnut Street
Jamestown, RI 02835
Principal Occupation: Private Investor
Citizenship: USA
10. Terrence Murray
Business Address: Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Principal Occupation: Director, Chairman, President and
Chief Executive Officer,
Fleet Financial Group, Inc.
Citizenship: USA
11. Thomas D. O'Connor
Business Address: Mohawk Paper Mills, Inc.
465 Saratoga Street
P.O. Box 497
Cohoes, NY 12047
<PAGE>
Principal Occupation: Chairman and President,
Mohawk Paper Mills, Inc.
Citizenship: USA
12. Michael B. Picotte
Business Address: The Picotte Companies
20 Corporate Woods Blvd.
Suite 600
Albany, NY 12211
Principal Occupation: Managing General Partner and Chief
Executive Officer, The Picotte
Companies
Citizenship: USA
13. John A. Reeves
Business Address: Mid-Continent Resources, Inc.
P.O. Box 500
1058 County Road 100
Carbondale, CO 81632
Principal Occupation: President, Mid-Continent
Resources, Inc.
Citizenship: USA
14. John R. Riedman
Business Address: Riedman Corporation
Riedman Tower
45 East Avenue
Rochester, NY 14604
Principal Occupation: Chairman, Riedman Corporation
Citizenship: USA
15. John S. Scott
Business Address: 1191 Smith Ridge Road
New Canaan, CT 06840
Principal Occupation: Retired Chairman,
Richardson-Vicks, Inc.
Citizenship: USA
16. Peter C. Fitts
Business Address: Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Principal Occupation: Senior Vice President,
Fleet Financial Group, Inc.
Citizenship: USA
17. Robert J. Higgins
Business Address: Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Principal Occupation: Vice Chairman, Fleet Financial
Group, Inc.
Citizenship: USA
18. Eugene M. McQuade
Business Address: Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Principal Occupation: Executive Vice President and Chief
Financial Officer, Fleet Financial
Group, Inc.
Citizenship: USA
19. Brian T. Moynihan
Business Address: Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Principal Occupation: Vice President, Fleet Financial
Group, Inc.
Citizenship: USA
20. William C. Mutterperl
Business Address: Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Principal Occupation: Senior Vice President, Secretary
and General Counsel, Fleet
Financial Group, Inc.
Citizenship: USA
21. John B. Robinson, Jr.
Business Address: Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Principal Occupation: Executive Vice President,
Fleet Financial Group, Inc.
Citizenship: USA
22. H. Jay Sarles
<PAGE>
Business Address: Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Principal Occupation: Vice Chairman,
Fleet Financial Group, Inc.
Citizenship: USA
23. Anne M. Slattery
Business Address: Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Principal Occupation: Senior Vice President, Fleet
Financial Group, Inc.
Citizenship: USA
24. M. Anne Szostak
Business Address: Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Principal Occupation: Senior Vice President,
Fleet Financial Group, Inc.
Citizenship: USA
25. Michael R. Zucchini
Business Address: Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Principal Occupation: Vice Chairman, Fleet Financial
Group, Inc.
Citizenship: USA
Exhibit 1
STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated February 20, 1995, between
SHAWMUT NATIONAL CORPORATION, a Delaware corporation
("Issuer"), and FLEET FINANCIAL GROUP, INC., a Rhode Island
corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement
and Plan of Merger of even date herewith (the "Merger
Agreement"), which agreement has been executed by the parties
hereto immediately prior to this Agreement; and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to
grant 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
Merger Agreement, the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 24,195,625 fully paid and nonassessable
shares of Issuer's Common Stock, par value $0.01 per share
("Common Stock"), at a price of $24.50 per share (the "Option
Price"); provided further that in no event shall the number of
shares of Common Stock for which this Option is exercisable
exceed 19.9% of the Issuer's issued and outstanding shares of
Common Stock. 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.
(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 this Agreement), 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 1(b) or
elsewhere in this Agreement shall be deemed to authorize Issuer
or Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or part, and from time to time, if, but only
if, both an Initial Triggering Event (as hereinafter defined)
and a Subsequent Triggering Event (as hereinafter defined)
shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the
Holder shall have sent the written notice of such exercise (as
provided in subsection (e) of this Section 2) within 90 days
following such Subsequent Triggering Event. Each of the
following shall be an Exercise Termination Event: (i) the
Effective Time of the Merger; (ii) termination of the Merger
Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of an Initial
Triggering Event except a termination by Grantee pursuant to
Section 8.1(d) of the Merger Agreement (unless the breach by
Issuer giving rise to such right of termination is
non-volitional); or (iii) the passage of twelve months after
termination of the Merger Agreement if such termination follows
the occurrence of an Initial Triggering Event or is a
termination by Grantee pursuant to Section 8.1(d) of the Merger
Agreement (unless the breach by Issuer giving rise to such
right of termination is non-volitional) (provided that if an
Initial Triggering Event continues or occurs beyond such
termination and prior to the passage of such twelve-month
period, the Exercise Termination Event shall be twelve months
from the expiration of the Last Triggering Event but in no
event more than 18 months after such termination). The "Last
Triggering Event" shall mean the last Initial Triggering Event
to expire. The term "Holder" shall mean the holder or holders
of the Option.
(b) The term "Initial Triggering Event" shall mean any of
the following events or transactions occurring after the date
hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior
written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as hereinafter
defined) 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 Securities Exchange
Act of 1934, as amended (the "1934 Act"), and the rules and
regulations thereunder) other than Grantee or any of its
Subsidiaries (each a "Grantee Subsidiary") or the Board of
Directors of Issuer shall have recommended that the
stockholders of Issuer approve or accept any Acquisition
Transaction. For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or
any similar transaction, involving Issuer or any
Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer, (x) a purchase, lease or
other acquisition of all or a substantial portion of the
assets of Issuer or any Significant Subsidiary of Issuer,
(y) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of
Issuer or any Significant Subsidiary of Issuer, or (z) any
substantially similar transaction; provided, however, that
in no event shall any (i) merger, consolidation or similar
transaction involving Issuer or any Significant Subsidiary
in which the voting securities of Issuer outstanding
immediately prior thereto continue to represent (by either
remaining outstanding or being converted into the voting
securities of the surviving entity of any such transaction)
at least 65% of the combined voting power of the voting
securities of the Issuer or the surviving entity
outstanding immediately after the consummation of such
merger, consolidation, or similar transaction, or (ii) any
merger, consolidation, purchase or similar transaction
involving only the Issuer and one or more of its
Subsidiaries or involving only any two or more of such
Subsidiaries, be deemed to be an Acquisition Transaction,
provided any such transaction is not entered into in
violation of the terms of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having
received Grantee's prior written consent, shall have
authorized, recommended, proposed or publicly announced its
intention to authorize, recommend or propose, to engage in
an Acquisition Transaction with any person other than
Grantee or a Grantee Subsidiary, or the Board of Directors
of Issuer shall have publicly withdrawn or modified, or
publicly announced its interest to withdraw or modify, in
any manner adverse to Grantee, its recommendation that the
stockholders of Issuer approve the transactions
contemplated by the Merger Agreement;
(iii) Any person other than Grantee, any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary
capacity in the ordinary course of its business shall have
acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding
shares of Common Stock (the term "beneficial ownership" for
purposes of this Option Agreement having the meaning
assigned thereto in Section 13(d) of the 1934 Act, and the
rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee
Subsidiary shall have made a bona fide proposal to Issuer
or its stockholders by public announcement or written
communication that is or becomes the subject of public
disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to
Issuer or its stockholders to engage in an Acquisition
Transaction, Issuer shall have breached any covenant or
obligation contained in the Merger Agreement and such
breach (x) would entitle Grantee to terminate the Merger
Agreement and (y) shall not have been cured prior to the
Notice Date (as defined below); or
(vi) Any person other than Grantee or any Grantee
Subsidiary, other than in connection with a transaction to
which 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.
(c) 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 of beneficial
ownership of 20% or more of the then outstanding Common
Stock; or
(ii) The occurrence of the Initial Triggering Event
described in clause (i) of subsection (b) of this Section
2, except that the percentage referred to in clause (y)
shall be 20%.
(d) Issuer shall notify 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 Issuer shall not
be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice
(the date of which being herein referred to as the "Notice
Date") specifying (i) the total number of shares it will
purchase pursuant to such exercise and (ii) a place and date
not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the
"Closing Date"); 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. Any exercise of the Option shall
be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate
purchase price for the shares of Common Stock purchased
pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a
bank account shall not preclude the Holder from exercising the
Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of
this Section 2, 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
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.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall
read substantially as follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of an
agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such
agreement is on file at the principal office of Issuer
and will be provided to the holder hereof without
charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended
(the "1933 Act"), in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if
the Holder shall have delivered to Issuer a copy of a letter
from the staff of the SEC, or an opinion of counsel, in form
and substance reasonably satisfactory to Issuer, to the effect
that such legend is not required for purposes of the 1933 Act;
(ii) the reference to the provisions to this Agreement in the
above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection
(e) of this Section 2 and the tender of the applicable purchase
price in immediately available funds, the 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 Issuer shall then be closed or that
certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. Issuer shall pay 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. Issuer agrees: (i) 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 additional authorization of Common Stock
after giving effect to all other options, warrants, convertible
securities and other rights to purchase Common Stock; (ii) 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 Issuer; (iii) promptly
to take all action as may from time to time be required
(including (x) complying with all premerger notification,
reporting and waiting period requirements specified in 15
U.S.C. 18a and regulations promulgated thereunder and (y) in
the event, under the Bank Holding Company Act of 1956, as
amended (the "BHCA"), or the Change in Bank Control Act of
1978, as amended, or any state banking law, prior approval of
or notice to the Federal Reserve Board or to any state
regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the
Federal Reserve Board or such state regulatory authority as
they may require) in order to permit the Holder to exercise the
Option and Issuer duly and effectively to issue shares of
Common Stock pursuant hereto; and (iv) promptly to take all
action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder,
upon presentation and surrender of this Agreement at the
principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof
to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same
number of shares of 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 Issuer of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Agreement, and
(in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any
such new Agreement executed and delivered shall constitute an
additional contractual obligation on the part of Issuer,
whether or not the 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 shares of
Common Stock that are purchasable upon exercise of the Option
pursuant to Section 1 of this Agreement, the number of shares
of Common Stock purchasable upon the exercise of the Option and
the Option Price shall be subject to adjustment from time to
time as provided in this Section 5. In the event of any change
in, or distributions in respect of, the Common Stock by reason
of stock dividends, split-ups, mergers, recapitalizations,
combinations, subdivisions, conversions, exchanges of shares,
distributions on or in respect of the Common Stock that would
be prohibited under the terms of the Merger Agreement, or the
like, the type and number of shares of Common Stock purchasable
upon exercise hereof and the Option Price shall be
appropriately adjusted in such manner as shall fully preserve
the economic benefits provided hereunder and proper provision
shall be made in any agreement governing any such transaction
to provide for such proper adjustment and the full satisfaction
of the Issuer's obligations hereunder.
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 90 days of such
Subsequent Triggering Event (whether on its own behalf or on
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 a shelf
registration statement under the 1933 Act covering this Option
and any shares issued and issuable pursuant to this Option and
shall use its reasonable best efforts to cause such
registration statement to become effective and remain current
in order to permit the sale or other disposition of this Option
and any shares of Common Stock issued upon total or partial
exercise of this Option ("Option Shares") in accordance with
any plan of disposition requested by Grantee. Issuer will use
its reasonable 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 such
sales or other dispositions. Grantee shall have the right to
demand two such registrations. 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 Holder's Option or Option Shares would
interfere with the successful marketing of the shares of Common
Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby
may be reduced; and provided, however, that after any such
required reduction the number of Option Shares to be included
in such offering for the account of the Holder shall constitute
at least 25% of the total number of shares to be sold by the
Holder and Issuer in the aggregate; and provided further,
however, that if such reduction occurs, then 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. Upon receiving any request under this Section 6 from
any Holder, Issuer agrees to send a copy thereof to any other
person known to Issuer to be entitled to registration rights
under this Section 6, in each case by promptly mailing the
same, postage prepaid, to the address of record of the persons
entitled to receive such copies. Notwithstanding anything to
the contrary contained herein, in no event shall Issuer be
obligated to effect more than two registrations pursuant to
this Section 6 by reason of the fact that there shall be more
than one Grantee as a result of any assignment or division of
this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase
Event (as defined below), (i) following a request of the
Holder, delivered prior to an Exercise Termination Event,
Issuer (or any successor thereto) shall repurchase the Option
from the Holder at a price (the "Option Repurchase Price")
equal to the amount by which (A) the market/offer price (as
defined below) exceeds (B) the Option Price, multiplied by the
number of shares for which this Option may then be exercised
and (ii) at the request of the owner of Option Shares from time
to time (the "Owner"), delivered within 90 days of such
occurrence (or such later period as provided in Section 10),
Issuer shall repurchase such number of the Option Shares from
the Owner as the Owner shall designate at a price (the "Option
Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The
term "market/offer price" shall mean the highest of (i) the
price per share of Common Stock at which a tender offer or
exchange offer therefor has been made, (ii) the price per share
of Common Stock to be paid by any third party pursuant to an
agreement with Issuer, (iii) the highest closing price for
shares of Common Stock within the six-month period immediately
preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the
required repurchase of Option Shares, as the case may be, or
(iv) in the event of a sale of all or a substantial portion of
Issuer's assets, the sum of the price paid in such sale for
such assets and the current market value of the remaining
assets of Issuer as determined by a nationally recognized
investment banking firm selected by the Holder or the Owner, as
the case may be, divided by the number of shares of Common
Stock of 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 the Holder or Owner, as the
case may be and reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may
exercise its right to require Issuer to repurchase the Option
and any Option Shares pursuant to this Section 7 by
surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option
Shares, as applicable, accompanied by a written notice or
notices stating that the Holder or the Owner, as the case may
be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this
Section 7. Within the latter to occur of (x) five business
days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or
notices relating thereto and (y) the time that is immediately
prior to the occurrence of a Repurchase Event, Issuer shall
deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof that Issuer is
not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation from repurchasing the Option and/or the
Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to the Holder and/ or the Owner,
as appropriate, the portion of the Option Repurchase Price and
the Option Share Repurchase Price, respectively, that it is no
longer prohibited from delivering, within five business days
after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of
a notice of repurchase pursuant to paragraph (b) of this
Section 7 is prohibited under applicable law or regulation from
delivering to the Holder and/or the Owner, as appropriate, the
Option Repurchase Price and the Option Share Repurchase Price,
respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as
practicable in order to accomplish such repurchase), the 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, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as
appropriate, that portion of the Option Repurchase Price or the
Option Share Repurchase Price that Issuer is not prohibited
from delivering; and (ii) deliver, as appropriate, either (A)
to the Holder, a new Stock Option Agreement evidencing the
right of the 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 the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall
be deemed to have occurred (i) upon the consummation of any
merger, consolidation or similar transaction involving Issuer
or any purchase, lease or other acquisition of all or a
substantial portion of the assets of Issuer, other than any
such transaction which would not constitute an Acquisition
Transaction pursuant to the proviso to Section 2(b)(i) hereof
or (ii) upon the acquisition by any person of beneficial
ownership of 50% or more of the then outstanding shares of
Common Stock, provided that no such event shall constitute a
Repurchase Event unless a Subsequent Triggering Event shall
have occurred prior to an Exercise Termination Event. The
parties hereto agree that Issuer's obligations to repurchase
the Option or Option Shares under this Section 7 shall not
terminate upon the occurrence of an Exercise Termination Event
unless no Subsequent Triggering Event shall have occurred prior
to the occurrence of an Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate
with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge
into Issuer and 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 50% of
the outstanding voting shares and voting share equivalents of
the merged company, or (iii) to sell or otherwise transfer all
or substantially all of its assets to any person, other than
Grantee or one of its 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 (x) the Acquiring Corporation (as
hereinafter defined) or (y) any person that controls the
Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or
merger with Issuer (if other than Issuer), (ii) Issuer in a
merger in which Issuer is the continuing or surviving
person, and (iii) the transferee of all or substantially
all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon
exercise of the Substitute Option.
(3) "Assigned Value" shall mean the market/ offer price,
as defined in Section 7.
(4) "Average Price" shall mean the average closing price
of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of
the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer
is the issuer of the Substitute Option, the Average Price
shall be computed with respect to a share of common stock
issued by the person merging into Issuer or by any company
which controls or is controlled by 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 be as similar as possible and in no event less
advantageous to the Holder. 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 Substitute Common Stock as is equal to the
Assigned Value multiplied by the number of shares of Common
Stock for which the Option is then exercisable, divided by the
Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the
Option Price multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock for which the
Option is then exercisable and the denominator of which shall
be the number of shares of 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 shares of Substitute Common Stock outstanding
prior to exercise of 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 clause (e), the issuer of the Substitute
Option (the "Substitute Option Issuer") shall make a cash
payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in
this clause (e) over (ii) the value of the Substitute Option
after giving effect to the limitation in this clause (e). This
difference in value shall be determined by a nationally
recognized investment banking firm selected by the Holder or
the Owner, as the case may be, and reasonably acceptable to the
Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring
Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the 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 (x) 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
Substitute Common Stock for which the Substitute Option may
then be exercised plus (y) Grantee's Out-of-Pocket Expenses (to
the extent not previously reimbursed), and at the request of
the owner (the "Substitute Share Owner") of shares of
Substitute Common Stock (the "Substitute Shares"), the
Substitute Option Issuer shall repurchase the Substitute Shares
at a price (the "Substitute Share Repurchase Price") equal to
(x) the Highest Closing Price multiplied by the number of
Substitute Shares so designated plus (y) Grantee's
Out-of-Pocket Expenses (to the extent not previously
reimbursed). The term "Highest Closing Price" shall mean the
highest closing price for shares of Substitute Common Stock
within the six-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) The Substitute Option Holder and the 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 the
Substitute Option Holder or the Substitute Share Owner, as the
case may be, 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 business
days after the surrender of the Substitute Option and/or
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 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 from repurchasing
the Substitute Option and/or the Substitute Shares in part or
in full, the Substitute Option Issuer shall immediately so
notify the 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 the
Substitute Share Owner, as appropriate, the portion of the
Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within five 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 subsection (b) of this Section 9
prohibited under applicable law or regulation 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
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, in the latter case, 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 90-day period for exercise of certain rights under
Sections 2, 6, 7 and 13 shall be extended: (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 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) 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 Issuer and no other
corporate proceedings on the part of Issuer are necessary
to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly
and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all
times from the date hereof through the termination of this
Agreement in accordance with its terms will have reserved
for issuance upon the exercise of the Option, that number
of shares of 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, encumbrance and security
interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including if required
redeeming all of the Rights or amending or terminating the
Rights Agreement) so that the entering into of this Option
Agreement, the acquisition of shares of Common Stock
hereunder and the other transactions contemplated hereby do
not and will not result in the grant of any rights to any
person under the Rights Agreement or enable or require the
Rights to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by
Grantee.
(b) The Option is not being, and any shares of Common
Stock or other securities acquired by Grantee upon exercise
of the Option will not be, acquired with a view to the
public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
<PAGE>
13. 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, 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, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights
and obligations hereunder within 90 days following such
Subsequent Triggering Event (or such later period as provided
in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves
an application by Grantee under the BHCA to acquire the shares
of Common Stock subject to the Option, Grantee may not assign
its rights under the Option except in (i) a widely dispersed
public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the
voting shares of Issuer, (iii) an assignment to a single party
(e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's
behalf, or (iv) any other manner approved by the Federal
Reserve Board.
14. Each of Grantee and Issuer will use its best 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 making application to
list the shares of Common Stock issuable hereunder on the New
York Stock Exchange upon official notice of issuance and
applying to the Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but Grantee
shall not be obligated to apply to state banking authorities
for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to
do so.
15. 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.
16. 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 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 Section 1(b) or 5 hereof), it is the express
intention of Issuer to allow the Holder to acquire or to
require Issuer to repurchase such lesser number of shares as
may be permissible, without any amendment or modification
hereof.
17. 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 Merger Agreement.
18. This Agreement shall be governed by and construed in
accordance with the laws of the State of Rhode Island,
regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
19. 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.
20. 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.
21. Except as otherwise expressly provided herein or in the
Merger Agreement, this Agreement contains the entire agreement
between the parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The
terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective
successors except as assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as
expressly provided herein.
22. Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned thereto in the Merger
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers
thereunto duly authorized, all as of the date first above
written.
SHAWMUT NATIONAL CORPORATION
By:/s/Joel B. Alvord
FLEET FINANCIAL GROUP, INC.
By:/s/Terrence Murray
Exhibit 2
AGREEMENT AND PLAN OF MERGER
between
FLEET FINANCIAL GROUP, INC.
and
SHAWMUT NATIONAL CORPORATION
Dated as of February 20, 1995
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 20, 1995,
by and among Fleet Financial Group, Inc., a Rhode Island
corporation ("Parent") and Shawmut National Corporation, a
Delaware corporation ("Subject Company").
WHEREAS, the Boards of Directors of Parent and Subject
Company have determined that it is in the best interests of
their respective companies and their stockholders to consummate
the business combination transaction provided for herein in
which Subject Company will, subject to the terms and conditions
set forth herein, merge (the "Merger") with and into Parent, so
that Parent is the surviving corporation in the Merger; and
WHEREAS, as a condition to, and immediately after the
execution of, this Agreement, Parent and Subject Company are
entering into a Parent Stock Option Agreement (the "Parent
Option Agreement") attached hereto as Exhibit A; and
WHEREAS, as a condition to, and immediately after the
execution of, this Agreement, Parent and Subject Company are
entering into a Subject Company Stock Option Agreement (the
"Subject Company Option Agreement"; and together with the
Parent Option Agreement, the "Option Agreements") attached
hereto as Exhibit B; and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and
also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein,
and intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Delaware General Corporation
Law (the "DGCL") and the Rhode Island Business Corporation Act
(the "RIBCA"), at the Effective Time (as defined in Section 1.2
hereof), Subject Company shall merge with and into Parent.
Parent shall be the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") in the Merger,
and shall continue its corporate existence under the laws of
the State of Rhode Island. Upon consummation of the Merger,
the separate corporate existence of Subject Company shall
terminate.
1.2 Effective Time. The Merger shall become effective as
set forth in the certificate of merger (the "Certificate of
Merger") which shall be filed with the Secretary of State of
the State of Delaware (the "Delaware Secretary") and the
articles of merger (the "Articles of Merger") which shall be
filed with the Secretary of State of the State of Rhode Island
(the "Rhode Island Secretary"), in each case, on the Closing
Date (as defined in Section 9.1 hereof). The term "Effective
Time" shall be the date and time when the Merger becomes
effective, as set forth in the Certificate of Merger and the
Articles of Merger.
1.3 Effects of the Merger. At and after the Effective Time,
the Merger shall have the effects set forth in Section 261 of
the DGCL and Section 7-1.1-69 of the RIBCA.
1.4 Conversion of Subject Company Common Stock; Subject
Company Preferred Stock. At the Effective Time, in each case,
subject to Section 2.2(e) hereof, by virtue of the Merger and
without any action on the part of Parent, Subject Company or
the holder of any of the following securities:
(a) Each share of the common stock, par value $0.01 per
share, of Subject Company (the "Subject Company Common Stock";
the Subject Company Common Stock and the Subject Company
Preferred Stock, as defined below, being referred to herein as,
the "Subject Company Capital Stock") issued and outstanding
immediately prior to the Effective Time (other than shares of
Subject Company Common Stock held (x) in Subject Company's
treasury or (y) directly or indirectly by Parent or Subject
Company or any of their respective Subsidiaries (as defined
below) (except for Trust Account Shares and DPC shares, as such
terms are defined below)) shall be converted into the right to
receive 0.8922 shares (the "Common Exchange Ratio") of the
common stock, par value $1.00 per share, of Parent ("Parent
Common Stock"; the Parent Common Stock and the Parent New
Preferred, as defined below, being referred to herein as, the
"Parent Capital Stock") (together with the number of parent
rights ("Parent Rights") issued pursuant to the Parent Rights
Agreement (as defined in Section 4.2 hereof) associated
therewith).
(b) Each share of preferred stock with cumulative and
adjustable dividends, stated value $50.00 per share, of Subject
Company (the "Subject Company Adjustable Preferred") issued and
outstanding immediately prior to the Effective Time (other than
Dissenting Preferred Shares (as defined below)) shall be
converted into the right to receive one share of preferred
stock with cumulative and adjustable dividends of Parent (the
"Parent Adjustable Preferred"). The terms of the Parent
Adjustable Preferred shall be substantially the same as the
terms of the Subject Company Adjustable Preferred.
(c) Each share of 9.30% cumulative preferred stock, stated
value of $250 per share, of Subject Company (the "Subject
Company 9.30% Preferred") issued and outstanding immediately
prior to the Effective Time shall be converted into the right
to receive one share of 9.30% preferred stock of Parent (the
"Parent 9.30% Preferred"). The terms of the Parent 9.30%
Preferred shall be substantially the same as the terms of the
Subject Company 9.30% Preferred.
(d) Each share of 9.35% cumulative preferred stock of
Subject Company (the "Subject Company 9.35% Cumulative
Preferred"; and together with the Subject Company Adjustable
Preferred and the Subject Company 9.30% Preferred, the "Subject
Company Preferred") issued and outstanding immediately prior to
the Effective Time shall be converted into the right to receive
one share of 9.35% cumulative preferred stock of Parent (the
"Parent 9.35% Cumulative Preferred"; and together with the
Parent Adjustable Preferred and the Parent 9.30% Preferred, the
"Parent New Preferred"). The terms of the Parent 9.35%
Cumulative Preferred shall be substantially the same as the
terms of the Subject Company 9.35% Cumulative Preferred.
(e) All of the shares of Subject Company Common Stock
converted into Parent Common Stock pursuant to this Article I
shall no longer be outstanding and shall automatically be
cancelled and shall cease to exist as of the Effective Time,
and each certificate (each a "Common Certificate") previously
representing any such shares of Subject Company Common Stock
shall thereafter represent the right to receive (i) a
certificate representing the number of whole shares of Parent
Common Stock and (ii) cash in lieu of fractional shares into
which the shares of Subject Company Common Stock represented by
such Common Certificate have been converted pursuant to this
Section 1.4 and Section 2.2(e) hereof. Common Certificates
previously representing shares of Subject Company Common Stock
shall be exchanged for certificates representing whole shares
of Parent Common Stock and cash in lieu of fractional shares
issued in consideration therefor upon the surrender of such
Common Certificates in accordance with Section 2.2 hereof,
without any interest thereon. If prior to the Effective Time
the outstanding shares of Parent Common Stock shall have been
increased, decreased, changed into or exchanged for a different
number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other similar
change in Parent's capitalization, then an appropriate and
proportionate adjustment shall be made to the Common Exchange
Ratio.
(f) All of the shares of Subject Company Preferred Stock
converted into Parent New Preferred Stock pursuant to this
Article I shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist as of the
Effective Time, and each certificate (each a "Preferred
Certificate"; and together with a Common Certificate, a
"Certificate") previously representing any such shares of
Subject Company Preferred Stock shall thereafter represent the
right to receive a certificate representing the number of whole
shares of corresponding Parent New Preferred into which the
shares of Subject Company Preferred Stock represented by such
Preferred Certificate have been converted pursuant to this
Section 1.4. Preferred Certificates previously representing
shares of Subject Company Preferred Stock shall be exchanged
for certificates representing whole shares of corresponding
Parent New Preferred issued in consideration therefor upon the
surrender of such Preferred Certificates in accordance with
Section 2.2 hereof, without any interest thereon.
(g) At the Effective Time, all shares of Subject Company
Capital Stock that are owned by Subject Company as treasury
stock and all shares of Subject Company Capital Stock that are
owned directly or indirectly by Parent or Subject Company or
any of their respective Subsidiaries (other than shares of
Subject Company Capital Stock held directly or indirectly in
trust accounts, managed accounts and the like or otherwise held
in a fiduciary capacity that are beneficially owned by third
parties (any such shares, and shares of Parent Common Stock
which are similarly held, whether held directly or indirectly
by Parent or Subject Company, as the case may be, being
referred to herein as "Trust Account Shares") and other than
any shares of Subject Company Capital Stock held by Parent or
Subject Company or any of their respective Subsidiaries in
respect of a debt previously contracted (any such shares of
Subject Company Capital Stock, and shares of Parent Common
Stock which are similarly held, whether held directly or
indirectly by Parent or Subject Company or any of their
respective Subsidiaries, being referred to herein as "DPC
Shares")) shall be cancelled and shall cease to exist and no
stock of Parent or other consideration shall be delivered in
exchange therefor. All shares of Parent Common Stock that are
owned by Subject Company or any of its Subsidiaries (other than
Trust Account Shares and DPC Shares) shall become treasury
stock of Parent.
(h) Notwithstanding anything in this Agreement to the
contrary, shares of Subject Company Adjustable Preferred which
are outstanding immediately prior to the Effective Time, the
holders of which shall have delivered to Subject Company a
written demand for appraisal of such shares in the manner
provided in Section 262 of the DGCL ("Dissenting Preferred
Shares "), shall not be converted into the right to receive, or
be exchangeable for, the shares of Parent Adjustable Preferred
otherwise issuable in exchange for such shares of Subject
Company Adjustable Preferred pursuant to this Section 1.4 but,
instead, the holders thereof shall be entitled to payment of
the appraised value of such Dissenting Preferred Adjustable
Shares in accordance with the provisions of Section 262 of the
DGCL; provided, however, that (i) if any holder of Dissenting
Preferred Shares shall subsequently deliver a written
withdrawal of his demand for appraisal of such shares (with the
written approval of the Surviving Corporation, if such
withdrawal is not tendered within 60 days after the Effective
Time), or (ii) if any holder fails to establish his entitlement
to appraisal rights as provided in such Section 262 of the
DGCL, or (iii) if neither any holder of Dissenting Preferred
Shares nor the Surviving Corporation has filed a petition
demanding a determination of the value of all Dissenting
Preferred Shares within the time provided in Section 262 of the
DGCL, such holder or holders (as the case may be) shall forfeit
the right to appraisal of such shares of Subject Company
Adjustable Preferred and each of such shares shall thereupon be
deemed to have been converted into the right to receive, and to
have become exchangeable for, as of the Effective Time, the
shares of Parent Adjustable Preferred otherwise issuable in
exchange for such shares of Subject Company Adjustable
Preferred pursuant to this Section 1.4, without any interest
thereon.
1.5 Parent Common Stock; Parent Preferred Stock. At and
after the Effective Time, each share of Parent Common Stock and
each share of Parent Preferred Stock issued and outstanding
immediately prior to the Closing Date shall remain an issued
and outstanding share of common stock or preferred stock, as
the case may be, of the Surviving Corporation and shall not be
affected by the Merger.
1.6 Options and Warrants. (a) At the Effective Time, each
option and warrant granted by Subject Company to purchase
shares of Subject Company Common Stock which is outstanding and
unexercised immediately prior thereto shall cease to represent
a right to acquire shares of Subject Company Common Stock and
shall be converted automatically into an option or warrant, as
the case may be, to purchase shares of Parent Common Stock in
an amount and at an exercise price determined as provided below
(and otherwise, in the case of options, subject to the terms of
the Subject Company Stock Option and Restricted Stock Award
Plan, the Subject Company Secondary Stock Option and Restricted
Stock Award Plan and the Subject Company 1989 Nonemployee
Directors' Restricted Stock Plan (collectively, the "Subject
Company Stock Plans") and the agreements evidencing grants
thereunder or, in the case of warrants, otherwise subject to
the terms of the Stock Warrants, each dated January 18, 1994,
of Subject Company (the "Subject Company Warrants")):
(1) The number of shares of Parent Common Stock to
be subject to the new option or warrant shall be equal
to the product of the number of shares of Subject
Company Common Stock subject to the original option or
warrant and the Common Exchange Ratio, provided that
any fractional shares of Parent Common Stock resulting
from such multi plication shall be rounded down to the
nearest share; and
(2) The exercise price per share of Parent Common
Stock under the new option or warrant shall be equal
to the exercise price per share of Subject Company
Common Stock under the original option or warrant, as
the case may be, divided by the Common Exchange Ratio,
provided that such exercise price shall be rounded up
to the nearest cent.
The adjustment provided herein with respect to any options
which are "incentive stock options" (as defined in Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"))
shall be and is intended to be effected in a manner which is
consistent with Section 424(a) of the Code. The duration and
other terms of the new option or warrant shall be the same as
the original option or warrant, as the case may be, except that
all references to Subject Company shall be deemed to be
references to Parent.
1.7 Articles of Incorporation. At the Effective Time, the
Articles of Incorporation of Parent, as in effect at the
Effective Time, shall be the Articles of Incorporation of the
Surviving Corporation.
1.8 Bylaws. At the Effective Time, the Bylaws of Parent, as
in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Corporation until thereafter amended in
accordance with applicable law.
1.9 Tax Consequences. It is intended that the Merger shall
constitute a reorganization within the meaning of Section
368(a) of the Code, and that this Agreement shall constitute a
"plan of reorganization" for the purposes of Section 368 of the
Code.
1.10 Board of Directors. From and after the Effective Time,
the Board of Directors of Parent shall consist of 20 persons,
including Mr. Alvord, who shall serve as the Chairman of Parent
from and after the Effective Time, and Mr. Murray, who shall
serve as the Chief Executive Officer and President of Parent
from and after the Effective Time, 11 additional persons who
are not executive officers of Parent or Subject Company to be
named by Mr. Murray and the Board of Directors of Parent and 7
additional persons who are not executive officers of Parent or
Subject Company to be named by Mr. Alvord and the Board of
Directors of Subject Company. The representatives selected by
Parent and Subject Company, respectively, shall be divided as
equally as practicable among the three classes of directors in
proportion to the aggregate representation set forth above.
From and after the Effective Time, the representatives of
Parent and Subject Company shall also be represented in
proportion to the aggregate representation set forth above on
all committees of the Parent Board of Directors. Promptly
following the Effective Time, the Parent Board of Directors
shall establish and maintain for a period of 18 months an
Integration Committee to oversee the integration of the
operations of Parent, Subject Company and their respective
Subsidiaries, which committee shall be comprised of Messrs.
Murray and Alvord, two additional representatives of Parent and
two additional representatives of Subject Company.
1.11 Headquarters of Parent. Promptly following the
Effective Time, the headquarters and principal executive
offices of Parent shall be moved to Boston, Massachusetts.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available. At or prior to the
Effective Time, Parent shall deposit, or shall cause to be
deposited, with a bank or trust company selected by Parent and
reasonably acceptable to Subject Company (which may be a
Subsidiary of Parent) (the "Exchange Agent"), for the benefit
of the holders of Certificates, for exchange in accordance with
this Article II, certificates representing the shares of Parent
Common Stock and Parent New Preferred and the cash in lieu of
any fractional shares (such cash and certificates for shares of
Parent Common Stock and Parent New Preferred, together with any
dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund") to be issued
pursuant to Section 1.4 and paid pursuant to Section 2.2(a) in
exchange for outstanding shares of Subject Company Capital
Stock.
2.2 Exchange of Shares. (a) As soon as practicable after
the Effective Time, and in no event later than five business
days thereafter, the Exchange Agent shall mail to each holder
of record of a Certificate or Certificates a form letter of
transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange
Agent) and instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing, as
the case may be, the shares of Parent Common Stock or Parent
New Preferred and the cash in lieu of fractional shares, if
any, into which the shares of Subject Company Capital Stock
represented by such Certificate or Certificates shall have been
converted pursuant to this Agreement. Upon proper surrender of
a Certificate for exchange and cancellation to the Exchange
Agent, together with such properly completed letter of
transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor, as
applicable, (i) a certificate representing that number of whole
shares of Parent Common Stock to which such holder of Subject
Company Common Stock shall have become entitled pursuant to the
provisions of Article I hereof, (ii) a certificate representing
that number of whole shares of Parent Adjustable Preferred, if
any, to which such holder of Subject Company Adjustable
Preferred shall have become entitled pursuant to the provisions
of Article I hereof, (iii) a certificate representing that
number of whole shares of Parent 9.30% Preferred, if any, to
which such holder of Subject Company 9.30% Preferred shall have
become entitled pursuant to the provisions of Article I hereof,
(iv) a certificate representing that number of whole shares of
Parent 9.35% Preferred, if any, to which such holder of Subject
Company 9.35% Preferred shall have become entitled pursuant to
the provisions of Article I hereof, and (v) a check
representing the amount of cash in lieu of fractional shares,
if any, which such holder has the right to receive in respect
of the Certificate surrendered pursuant to the provisions of
this Article II, and the Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on
the cash in lieu of fractional shares and unpaid dividends and
distributions, if any, payable to holders of Certificates.
Notwithstanding anything to the contrary contained herein, no
certificate representing Parent Common Stock or Parent New
Preferred or cash in lieu of a fractional share interest shall
be delivered to a person who is an Affiliate (as defined in
Section 6.5) of Subject Company unless such Affiliate has
theretofore executed and delivered to Parent the agreement
referred to in Section 6.5.
(b) No dividends or other distributions declared after the
Effective Time with respect to Parent Common Stock or Parent
New Preferred shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such
Certificate in accordance with this Article II. After the
surrender of a Certificate in accordance with this Article II,
the record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of
Parent Common Stock or Parent New Preferred represented by such
Certificate.
(c) If any certificate representing shares of Parent Common
Stock or Parent New Preferred 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, and that
the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of Parent
Common Stock or Parent New Preferred 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.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of Subject Company of the shares of
Subject Company Capital Stock which were issued and outstanding
immediately prior to the Effective Time. If, after the
Effective Time, Certificates representing such shares are
presented for transfer to the Exchange Agent, they shall be
cancelled and exchanged for certificates representing shares of
Parent Capital Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares
of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, no dividend or distribution with
respect to Parent Common Stock shall be payable on or with
respect to any fractional share, and such fractional share
interests shall not entitle the owner thereof to vote or to any
other rights of a stockholder of Subject Company. In lieu of
the issuance of any such fractional share, Parent shall pay to
each former stockholder of Subject Company who otherwise would
be entitled to receive such fractional share an amount in cash
determined by multiplying (i) the average of the closing-sale
prices of Parent Common Stock on the New York Stock Exchange as
reported by The Wall Street Journal for the five trading days
immediately preceding the date of the Effective Time by (ii)
the fraction of a share of Parent Common Stock to which such
holder would otherwise be entitled to receive pursuant to
Section 1.4 hereto.
(f) Any portion of the Exchange Fund that remains unclaimed
by the stockholders of Subject Company for twelve months after
the Effective Time shall be paid to Parent. Any stockholders
of Subject Company who have not theretofore complied with this
Article II shall thereafter look only to Parent for payment of
the shares of Parent Common Stock or Parent New Preferred, cash
in lieu of any fractional shares and unpaid dividends and
distributions on the Parent Common Stock or Parent New
Preferred deliverable in respect of each share of Subject
Company Common Stock or Subject Company Preferred Stack, as the
case may be, such stockholder holds as determined pursuant to
this Agreement, in each case, without any interest thereon.
Notwithstanding the foregoing, none of Parent, Subject Company,
the Exchange Agent or any other person shall be liable to any
former holder of shares of Subject Company Common Stock or
Subject Company Preferred for any amount properly delivered to
a public official pursuant to applicable abandoned property,
escheat or similar laws.
(g) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen
or destroyed and, if required by Parent, the posting by such
person of a bond in such amount as Parent may determine is
reasonably necessary as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Parent Common Stock and cash in lieu
of fractional shares deliverable in respect thereof pursuant to
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY
Subject Company hereby represents and warrants to Parent as
follows:
3.1 Corporate Organization. (a) Subject Company is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Subject
Company has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified
to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the
properties and assets owned or leased by it makes such
licensing or qualification necessary, except where the failure
to be so licensed or qualified would not have a Material
Adverse Effect (as defined below) on Subject Company. As used
in this Agreement, the term "Material Adverse Effect" means,
with respect to Parent, Subject Company or the Surviving
Corporation, as the case may be, a material adverse effect on
the business, results of operations or financial condition of
such party and its Subsidiaries taken as a whole. As used in
this Agreement, the word "Subsidiary" when used with respect to
any party means any bank, corporation, partnership or other
organization, whether incorporated or unincorporated, which is
consolidated with such party for financial reporting purposes.
Subject Company is duly registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the
"BHC Act") and as a savings and loan holding company under the
Home Owners' Loan Act ("HOLA"). The Certificate of
Incorporation and Bylaws of Subject Company, copies of which
have previously been made available to Parent, are true,
complete and correct copies of such documents as in effect as
of the date of this Agreement.
(b) Each Subject Company Subsidiary is (i) duly organized
and validly existing as a bank, corporation or partnership
under the laws of its jurisdiction of organization, (ii) is
duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where
its ownership or leasing of property or the conduct of its
business requires it to be so qualified and in which the
failure to be so qualified would have a Material Adverse Effect
on Subject Company, and (iii) has all requisite corporate power
and authority to own or lease its properties and assets and to
carry on its business as now conducted.
(c) The minute books of Subject Company accurately reflect
in all material respects all corporate actions held or taken
since January 1, 1993 of its stockholders and Board of
Directors (including committees of the Board of Directors of
Subject Company).
3.2 Capitalization. (a) The authorized capital stock of
Subject Company consists of 300,000,000 shares of Subject
Company Common Stock and 10,000,000 shares of preferred stock,
no par value. At the close of business on January 31, 1995
there were 121,586,053 shares of Subject Company Common Stock
outstanding and 1,775,000 shares of Subject Company Preferred
Stock outstanding (comprised of 700,000 shares of Subject
Company Adjustable Preferred, 5,750,000 shares of Subject
Company Depositary Shares (each representing a one-tenth
interest in a share of Subject Company 9.30% Preferred and
5,000,000 shares of Subject Company Depositary Shares (each
representing a one-tenth interest in a share of Subject Company
9.35% Cumulative Preferred), and 13,390 shares of Subject
Company Common Stock held in Subject Company's treasury. On
January 31, 1995, no shares of Subject Company Common Stock or
Subject Company Preferred Stock were reserved for issuance,
except that (i) 10,314,108 shares of Subject Company Common
Stock were reserved for issuance pursuant to Subject Company's
dividend reinvestment and stock purchase plans, (ii) 9,409,380
shares of Subject Company Common Stock were reserved for
issuance upon the exercise of stock options pursuant to the
Subject Company Stock Plans, (iii) 1,329,115 shares of Subject
Company Common Stock were reserved for issuance upon the
exercise of the Subject Company Warrants, (iv) 8,023,915 shares
of Subject Company Common Stock were reserved for issuance upon
consummation of the merger of Northeast Federal Corp.
("Northeast") with a Subsidiary of Subject Company, pursuant to
the Agreement and Plan of Merger (the "Northeast Agreement"),
dated as of June 11, 1994, between Subject Company and
Northeast, (v) 3,000,000 shares of Subject Company Series A
Junior Participating Preferred Stock were reserved for issuance
upon exercise of the rights (the "Subject Company Rights")
distributed to holders of Subject Company Common Stock pursuant
to the Shareholder Rights Agreement, dated as of February 28,
1989, between Subject Company and Manufacturers Hanover Trust
Company, as Rights Agent (the "Subject Company Shareholder
Rights Agreement"), and (vi) the shares of Subject Company
Common Stock issuable pursuant to the Subject Company Option
Agreement. All of the issued and outstanding shares of Subject
Company Common Stock and Subject Company Preferred 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. As of the date
of this Agreement, except as set forth in Section 3.2(a) of the
Subject Company Disclosure Schedule and except for the Subject
Company Shareholder Rights Agreement and the Subject Company
Option Agreement, Subject Company does not have and is not
bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of Subject Company
Common Stock or Subject Company Preferred Stock or any other
equity securities of Subject Company or any securities
representing the right to purchase or otherwise receive any
shares of Subject Company Common Stock or Subject Company
Preferred Stock. Subject Company has previously provided
Parent with a list of the option holders, the date of each
option to purchase Subject Company Common Stock granted, the
number of shares subject to each such option, the expiration
date of each such option, and the price at which each such
option may be exercised under an applicable Subject Company
Stock Plan. Except as set forth in Section 3.2(a) of the
disclosure schedule of Subject Company delivered to Parent
concurrently herewith (the "Subject Company Disclosure
Schedule"), since January 31, 1995, Subject Company has not
issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital
stock, other than pursuant to the exercise of employee stock
options granted prior to such date and as disclosed in Section
3.2(a) of the Subject Company Disclosure Schedule, pursuant to
the Northeast Agreement in amounts not exceeding the amounts
disclosed in Section 3.2(a) of the Subject Company Disclosure
Schedule, pursuant to the exercise of any Subject Company
Warrants in amounts not exceeding the amounts disclosed in
Section 3.2(a) of the Subject Company Disclosure Schedule and
pursuant to the Subject Company Shareholder Rights Agreement.
(b) Except as set forth in Section 3.2(b) of the Subject
Company Disclosure Schedule, Subject Company owns, directly or
indirectly, all of the issued and outstanding shares of capital
stock of each of the Subject Company Subsidiaries, free and
clear of any liens, charges, encumbrances and security
interests whatsoever, and all of such shares are duly
authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Subject Company
Subsidiary has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of
capital stock or any other equity security of such Subsidiary
or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other
equity security of such Subsidiary. Assuming compliance by
Parent with Section 1.6 hereof, at the Effective Time, there
will not be any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character by which
Subject Company or any of its Subsidiaries will be bound
calling for the purchase or issuance of any shares of the
capital stock of Subject Company or any of its Subsidiaries.
3.3 Authority; No Violation. (a) Subject Company has full
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of Subject
Company. The Board of Directors of Subject Company has
directed that this Agreement and the transactions contemplated
hereby be submitted to Subject Company's stockholders for
approval at a meeting of such stockholders and, except for the
adoption of this Agreement by the affirmative vote of the
holders of a majority of the outstanding shares of Subject
Company Common Stock, no other corporate proceedings on the
part of Subject Company are necessary to approve this Agreement
and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by
Subject Company and (assuming due authorization, execution and
delivery by Parent) constitutes a valid and binding obligation
of Subject Company, enforceable against Subject Company in
accordance with its terms, except as enforcement may be limited
by general principles of equity whether applied in a court of
law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 3.3(b) of the Subject
Company Disclosure Schedule, neither the execution and delivery
of this Agreement by Subject Company nor the consummation by
Subject Company of the transactions contemplated hereby, nor
compliance by Subject Company with any of the terms or
provisions hereof, will (i) violate any provision of the
Certificate of Incorporation or Bylaws of Subject Company or
(ii) assuming that the consents and approvals referred to in
Section 3.4 are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Subject Company or any of its
Subsidiaries or any of their respective properties or assets,
or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, 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 or a right of termination or cancellation under,
accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or
other encumbrance upon any of the respective properties or
assets of Subject Company or any of its Subsidiaries under, any
of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which Subject Company or
any of its Subsidiaries is a party, or by which they or any of
their respective properties or assets may be bound or affected,
except (in the case of clause (y) above) for such violations,
conflicts, breaches or defaults which, either individually or
in the aggregate, will not have or be reasonably likely to have
a Material Adverse Effect on Subject Company.
3.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board") under the BHC Act and approval of such applications and
notices, (ii) the filing of applications with the Office of the
Thrift Supervision (the "OTS") under HOLA and approval of such
applications, (iii) the filing of any requisite applications
with the Office of the Comptroller of the Currency (the "OCC"),
(iv) the filing of any required applications or notices with
any state agencies and approval of such applications and
notices (the "State Approvals"), (v) the filing with the SEC of
a joint proxy statement in definitive form relating to the
meetings of Parent's and Subject Company's stockholders to be
held in connection with this Agreement and the transactions
contemplated hereby (the "Joint Proxy Statement") and the
registration statement on Form S-4 (the "S-4") in which the
Proxy Statement will be included as a prospectus, (vi) the
filing of the Certificate of Merger with the Delaware Secretary
pursuant to the DGCL, (vii) the Articles of Merger with the
Rhode Island Secretary pursuant to the RIBCA, (viii) such
filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in
connection with the issuance of the shares of Parent Common
Stock pursuant to this Agreement, (ix) the approval of this
Agreement by the requisite vote of the stockholders of Parent
and Subject Company, and (x) the consents and approvals set
forth in Section 3.4 of the Subject Company Disclosure
Schedule, no consents or approvals of or filings or
registrations with any court, administrative agency or
commission or other governmental authority or instrumentality
(each a "Governmental Entity") or with any third party are
necessary in connection with (A) the execution and delivery by
Subject Company of this Agreement and (B) the consummation by
Subject Company of the Merger and the other transactions
contemplated hereby.
3.5 Reports. Subject Company and each of its Subsidiaries
have timely filed all material reports, registrations and
statements, together with any amendments required to be made
with respect thereto, that they were required to file since
January 1, 1993 with (i) the Federal Reserve Board, (ii) the
OTS, (iii) any state regulatory authority (each a "State
Regulator"), (iv) the OCC and (v) any other self-regulatory
organization ("SRO") (collectively "Regulatory Agencies"), and
all other material reports and statements required to be filed
by them since January 1, 1993, including, without limitation,
any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, any state, the
Federal Reserve Board, the FDIC, the OCC, the OTS, any State
Regulator or any SRO, and have paid all fees and assessments
due and payable in connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the regular
course of the business of Subject Company and its Subsidiaries,
no Regulatory Agency has initiated any proceeding or, to the
best knowledge of Subject Company, investigation into the
business or operations of Subject Company or any of its
Subsidiaries since January 1, 1993. There is no material
unresolved violation, criticism, or exception by any Regulatory
Agency with respect to any report or statement relating to any
examinations of Subject Company or any of its Subsidiaries.
3.6 Financial Statements. Subject Company has previously
delivered to Parent copies of (a) the consolidated balance
sheets of Subject Company and its Subsidiaries as of December
31, for the fiscal years 1992 and 1993, and the related
consolidated statements of income, changes in stockholders'
equity and cash flows for the fiscal years 1991 through 1993,
inclusive, as reported in Subject Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993 filed
with the SEC under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in each case accompanied by the
audit report of Price Waterhouse, independent public
accountants with respect to Subject Company, (b) the unaudited
consolidated balance sheet of Subject Company and its
Subsidiaries as of December 31, 1994, and the related
consolidated statements of income and changes in stockholders'
equity for the fiscal year 1994, substantially in the form that
is proposed to be reported in Subject Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 (the
"Subject Company Delivered December 1994 Financials"), and (c)
the unaudited consolidated balance sheet of Subject Company and
its Subsidiaries as of September 30, 1993 and September 30,
1994 and the related unaudited consolidated statements of
income, cash flows and changes in stockholders' equity for the
nine month periods then ended as reported in Subject Company's
Quarterly Report on Form 10-Q for the period ended September
30, 1994 filed with the SEC under the Exchange Act. The
December 31, 1994 consolidated balance sheet of Subject Company
(including the related notes, where applicable) fairly presents
the consolidated financial position of Subject Company and its
Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 3.6 (including the
related notes, where applicable) fairly present (subject, in
the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount), the results of the
consolidated operations and changes in stockholders' equity and
consolidated financial position of Subject Company and its
Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth; each of such statements
(including the related notes, where applicable) comply in all
material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with
respect thereto and each of such statements (including the
related notes, where applicable) has been prepared in
accordance with generally accepted accounting principles
("GAAP") consistently applied during the periods involved,
except in each case as indicated in such statements or in the
notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of Subject
Company and its Subsidiaries have been, and are being,
maintained in all material respects in accordance with GAAP and
any other applicable legal and accounting requirements and
reflect only actual transactions.
3.7 Broker's Fees. Except as set forth in Section 3.7 of
the Subject Company Disclosure Schedule, neither Subject
Company nor any Subject Company Subsidiary nor any of their
respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement or the Option
Agreements.
3.8 Absence of Certain Changes or Events. (a) Except as
publicly disclosed in Subject Company Reports (as defined
below) filed prior to the date hereof, since December 31, 1994,
(i) neither Subject Company nor any of its Subsidiaries has
incurred any material liability, except in the ordinary course
of their business consistent with their past practices, and
(ii) no event has occurred which has had, individually or in
the aggregate, a Material Adverse Effect on Subject Company.
(b) Except as publicly disclosed in Subject Company Reports
filed prior to the date hereof, and except as set forth in
Section 3.8(b) of the Subject Company Disclosure Schedule,
since December 31, 1994, Subject Company and its Subsidiaries
have carried on their respective businesses in the ordinary and
usual course consistent with their past practices.
(c) Except as set forth in Section 3.8(c) of the Subject
Company Disclosure Schedule, since December 31, 1994, neither
Subject Company nor any of its Subsidiaries has (i) except for
normal increases in the ordinary course of business consistent
with past practice or except as required by applicable law,
increased the wages, salaries, compensation, pension, or other
fringe benefits or perquisites payable to any executive
officer, employee, or director from the amount thereof in
effect as of December 31, 1994, granted any severance or
termination pay, entered into any contract to make or grant any
severance or termination pay, or paid any bonus other than
customary year-end bonuses for fiscal 1993 and 1994 or (ii)
suffered any strike, work stoppage, slow-down, or other labor
disturbance.
3.9 Legal Proceedings. (a) Neither Subject Company nor any
of its Subsidiaries is a party to any, and there are no pending
or, to the best of Subject Company's knowledge, threatened,
material legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of
any nature against Subject Company or any of its Subsidiaries
or challenging the validity or propriety of the transactions
contemplated by this Agreement or the Subject Company Option
Agreement as to which there is a reasonable probability of an
adverse determination and which, if adversely determined,
would, individually or in the aggregate, have a Material
Adverse Effect on Subject Company.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Subject Company, any of its
Subsidiaries or the assets of Subject Company or any of its
Subsidiaries which has had, or might reasonably be expected to
have, a Material Adverse Effect on Subject Company.
<PAGE>
3.10 Taxes and Tax Returns. (a) Each of Subject Company
and its Subsidiaries has duly filed all material Federal, state
and, to the best of Subject Company's knowledge, material local
information returns and tax returns required to be filed by it
on or prior to the date hereof (all such returns being accurate
and complete in all material respects) and has duly paid or
made provisions for the payment of all material Taxes (as
defined below) and other governmental charges which have been
incurred or are due or claimed to be due from it by Federal,
state, county or local taxing authorities on or prior to the
date of this Agreement (including, without limitation, if and
to the extent applicable, those due in respect of its
properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than Taxes or
other charges (1) which are not yet delinquent or are being
contested in good faith and (2) have not been finally
determined. The income tax returns of Subject Company and its
Subsidiaries have been examined by the Internal Revenue Service
(the "IRS") and any liability with respect thereto has been
satisfied for all years to and including 1987, and no material
deficiencies were asserted as a result of such examination or
all such deficiencies were satisfied. To the best of Subject
Company's knowledge, there are no material disputes pending, or
claims asserted for, Taxes or assessments upon Subject Company
or any of its Subsidiaries, nor has Subject Company or any of
its Subsidiaries been requested to give any currently effective
waivers extending the statutory period of limitation applicable
to any Federal, state, county or local income tax return for
any period. In addition, (i) proper and accurate amounts have
been withheld by Subject Company and its Subsidiaries from
their employees for all prior periods in compliance in all
material respects with the tax withholding provisions of
applicable Federal, state and local laws, except where failure
to do so would not have a Material Adverse Effect on Subject
Company, (ii) Federal, state, county and local returns which
are accurate and complete in all material respects have been
filed by Subject Company and its Subsidiaries for all periods
for which returns were due with respect to income tax
withholding, Social Security and unemployment taxes, except
where failure to do so would not have a Material Adverse Effect
on Subject Company, (iii) the amounts shown on such Federal,
state, local or county returns to be due and payable have been
paid in full or adequate provision therefor has been included
by Subject Company in its consolidated financial statements as
of December 31, 1994, except where failure to do so would not
have a Material Adverse Effect on Subject Company and (iv)
there are no Tax liens upon any property or assets of the
Subject Company or its Subsidiaries except liens for current
taxes not yet due. To the knowledge of Subject Company, no
property of Subject Company or any of its Subsidiaries is
property that Subject Company or any of its Subsidiaries is or
will be required to treat as being owned by another person
pursuant to the provisions of Section 168(f)(8) of the Code (as
in effect prior to its amendment by the Tax Reform Act of 1986)
or is "tax-exempt use property" within the meaning of Section
169(h) of the Code. Neither Subject Company nor any of its
Subsidiaries has been required to include in income any
adjustment pursuant to Section 481 of the Code by reason of a
voluntary change in accounting method initiated by Subject
Company or any of its Subsidiaries, and the Internal Revenue
Service has not initiated or proposed any such adjustment or
change in accounting method. Except as set forth in the
financial statements described in Section 3.6 hereof, neither
Subject Company nor any of its Subsidiaries has entered into a
transaction which is being accounted for as an installment
obligation under Section 453 of the Code, which would be
reasonably likely to have a Material Adverse Effect on Subject
Company.
(b) As used in this Agreement, the term "Tax" or "Taxes"
means all federal, state, county, local, and foreign income,
excise, gross receipts, ad valorem, profits, gains, property,
sales, transfer, use, payroll, employment, severance,
withholding, duties, intangibles, franchise, and other taxes,
charges, levies or like assessments together with all penalties
and additions to tax and interest thereon.
(c) Except as set forth in Section 3.10(c) of the Subject
Company Disclosure Schedule, any amount that could be received
(whether in cash or property or the vesting of property) as a
result of any of the transactions contemplated by this
Agreement by any employee, officer or director of Subject
Company or any of its affiliates who is a "Disqualified
Individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangement or
Subject Company Benefit Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code).
(d) No disallowance of a deduction under Section 162(m) of
the Code for employee remuneration of any amount paid or
payable by Subject Company or any Subsidiary of Subject Company
under any contract, plan, program, arrangement or understanding
would be reasonably likely to have a Material Adverse Effect on
Subject Company.
3.11 Employees. (a) Section 3.11(a) of the Subject Company
Disclosure Schedule sets forth a true and complete list of each
material employee benefit plan, arrangement or agreement that
is maintained as of the date of this Agreement (the "Plans") by
Subject Company or any of its Subsidiaries or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"),
all of which together with Subject Company would be deemed a
"single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(b) Subject Company has heretofore delivered to Parent true
and complete copies of each of the Plans and all related
documents, including but not limited to (i) the actuarial
report for such Plan (if applicable) for each of the last two
years, and (ii) the most recent determination letter from the
Internal Revenue Service (if applicable) for such Plan.
(c) Except as set forth in Section 3.11(c) of the Disclosure
Schedule, (i) each of the Plans has been operated and
administered in all material respects with applicable laws,
including but not limited to ERISA and the Code, (ii) each of
the Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified, (iii) with respect
to each Plan which is subject to Title IV of ERISA, the present
value of accrued benefits under such Plan, based upon the
actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such Plan's actuary with
respect to such Plan, did not, as of its latest valuation date,
exceed the then current value of the assets of such Plan
allocable to such accrued benefits, (iv) no Plan provides
benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or
former employees of Subject Company, its Subsidiaries or any
ERISA Affiliate beyond their retirement or other termination of
service, other than (w) coverage mandated by applicable law,
(x) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of
ERISA, (y) deferred compensation benefits accrued as
liabilities on the books of Subject Company, its Subsidiaries
or the ERISA Affiliates or (z) benefits the full cost of which
is borne by the current or former employee (or his
beneficiary), (v) no liability under Title IV of ERISA has been
incurred by Subject Company, its Subsidiaries or any ERISA
Affiliate that has not been satisfied in full, and no condition
exists that presents a material risk to Subject Company, its
Subsidiaries or any ERISA Affiliate of incurring a material
liability thereunder, (vi) no Plan is a "multiemployer pension
plan," as such term is defined in Section 3(37) of ERISA, (vii)
all contributions or other amounts payable by Subject Company
or its Subsidiaries as of the Effective Time with respect to
each Plan in respect of current or prior plan years have been
paid or accrued in accordance with generally accepted
accounting practices and Section 412 of the Code, (viii)
neither Subject Company, its Subsidiaries nor any ERISA
Affiliate has engaged in a transaction in connection with which
Subject Company, its Subsidiaries or any ERISA Affiliate could
be subject to either a material civil penalty assessed pursuant
to Section 409 or 502(i) of ERISA or a material tax imposed
pursuant to Section 4975 or 4976 of the Code, and (ix) to the
best knowledge of Subject Company there are no pending,
threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Plans or any
trusts related thereto.
(d) Except as set forth in Section 3.11(d) of the Subject
Company Disclosure Schedule, neither the execution and delivery
of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any material payment
(including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to
any director or any employee of Subject Company or any of its
affiliates from Subject Company or any of its affiliates under
any Subject Company Benefit Plan or otherwise, (ii) materially
increase any benefits otherwise payable under any Subject
Company Benefit Plan or (iii) result in any acceleration of the
time of payment or vesting of any such benefits to any material
extent.
3.12 SEC Reports. Subject Company has previously made
available to Parent an accurate and complete copy of each (a)
final registration statement, prospectus, report, schedule and
definitive proxy statement filed since January 1, 1993 by
Subject Company with the SEC pursuant to the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act
(the "Subject Company Reports") and prior to the date hereof
and (b) communication mailed by Subject Company to its
stockholders since January 1, 1993 and prior to the date
hereof, and no such registration statement, prospectus, report,
schedule, proxy statement or communication contained any untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in
which they were made, not misleading, except that information
as of a later date shall be deemed to modify information as of
an earlier date. Subject Company has timely filed all Subject
Company Reports and other documents required to be filed by it
under the Securities Act and the Exchange Act, and, as of their
respective dates, all Subject Company Reports complied in all
material respects with the published rules and regulations of
the SEC with respect thereto.
3.13 Compliance with Applicable Law. Except as disclosed in
Section 3.13 of the Subject Company Disclosure Schedule,
Subject Company and each of its Subsidiaries hold, and have at
all times held, all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have
complied with and are not in default in any material respect
under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to
Subject Company or any of its Subsidiaries, except where the
failure to hold such license, franchise, permit or
authorization or such noncompliance or default would not,
individually or in the aggregate, have a Material Adverse
Effect on Subject Company, and neither Subject Company nor any
of its Subsidiaries knows of, or has received notice of, any
material violations of any of the above.
3.14 Certain Contracts. (a) Except as set forth in Section
3.14(a) of the Subject Company Disclosure Schedule, neither
Subject Company nor any of its Subsidiaries is a party to or
bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of
any directors, officers, employees or consultants, (ii) which,
upon the consummation of the transactions contemplated by this
Agreement will (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from Parent, Subject
Company, the Surviving Corporation, or any of their respective
Subsidiaries to any officer or employee thereof, (iii) which is
a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of
this Agreement that has not been filed or incorporated by
reference in the Subject Company Reports, (iv) which materially
restricts the conduct of any line of business by Subject
Company, (v) with or to a labor union or guild (including any
collective bargaining agreement) or (vi) (including any stock
option plan, stock appreciation rights plan, restricted stock
plan or stock purchase plan) any of the benefits of which will
be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement. Subject Company
has previously delivered to Parent true and correct copies of
all employment, consulting and deferred compensation agreements
which are in writing and to which Subject Company or any of its
Subsidiaries is a party. Each contract, arrangement,
commitment or understanding of the type described in this
Section 3.14(a), whether or not set forth in Section 3.14(a) of
the Subject Company Disclosure Schedule, is referred to herein
as a "Subject Company Contract", and neither Subject Company
nor any of its Subsidiaries knows of, or has received notice
of, any violation of the above by any of the other parties
thereto which, individually or in the aggregate, would have a
Material Adverse Effect on Subject Company.
(b) (i) Each Subject Company Contract is valid and binding
and in full force and effect, (ii) Subject Company and each of
its Subsidiaries has in all material respects performed all
obligations required to be performed by it to date under each
Subject Company Contract, except where such noncompliance,
individually or in the aggregate, would not have a Material
Adverse Effect on Subject Company, and (iii) no event or
condition exists which constitutes or, after notice or lapse of
time or both, would constitute, a material default on the part
of Subject Company or any of its Subsidiaries under any such
Subject Company Contract, except where such default,
individually or in the aggregate, would not have a Material
Adverse Effect on Subject Company.
3.15 Agreements with Regulatory Agencies. Except as set
forth in Section 3.15 of the Subject Company Disclosure
Schedule, neither Subject Company nor any of its Subsidiaries
is subject to any cease-and-desist or other order issued by, or
is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to
any order or directive by, or is a recipient of any
extraordinary supervisory letter from, or has adopted any board
resolutions at the request of (each, whether or not set forth
in Section 3.15 of the Subject Company Disclosure Schedule, a
"Regulatory Agreement"), any Regulatory Agency or other
Governmental Entity that restricts the conduct of its business
or that in any manner relates to its capital adequacy, its
credit policies, its management or its business, nor has
Subject Company or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
3.16 Undisclosed Liabilities. Except for those liabilities
that are fully reflected or reserved against on the
consolidated balance sheet of Subject Company included in the
Subject Company Delivered December 1994 Financials and for
liabilities incurred in the ordinary course of business
consistent with past practice, since December 31, 1994, neither
Subject Company nor any of its Subsidiaries has incurred any
liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due) that,
either alone or when combined with all similar liabilities, has
had, or could reasonably be expected to have, a Material
Adverse Effect on Subject Company.
3.17 State Takeover Laws. The Board of Directors of Subject
Company has approved the transactions contemplated by this
Agreement and the Option Agreements such that the provisions of
Section 203 of the DGCL and Article Sixth of Subject Company's
Certificate of Incorporation will not apply to this Agreement
or the Option Agreements or any of the transactions
contemplated hereby or thereby.
3.18 Rights Agreement. Subject Company has taken all
action (including, if required, redeeming all of the
outstanding preferred stock purchase rights issued pursuant to
the Subject Company Rights Agreement or amending or terminating
the Subject Company Rights Agreement) so that the entering into
of this Agreement and the Option Agreements, the Merger, the
acquisition of shares pursuant to the Option Agreements and the
other transactions contemplated hereby and thereby do not and
will not result in the grant of any rights to any person under
the Subject Company Rights Agreement or enable or require the
Subject Company Rights to be exercised, distributed or
triggered.
3.19 Pooling of Interests. As of the date of this
Agreement, Subject Company has no reason to believe that the
Merger will not qualify as a pooling of interests for
accounting purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent hereby represents and warrants to Subject Company as
follows:
4.1 Corporate Organization. (a) Parent is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Rhode Island. Parent has the corporate
power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets
owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect on Parent.
Parent is duly registered as a bank holding company under the
BHC Act. The Articles of Incorporation and Bylaws of Parent,
copies of which have previously been made available to Subject
Company, are true, complete and correct copies of such
documents as in effect as of the date of this Agreement.
(b) Each Parent Subsidiary is (i) duly organized and validly
existing as a bank, corporation or partnership under the laws
of its jurisdiction of organization, (ii) is duly qualified to
do business and in good standing in all jurisdictions (whether
federal, state, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it
to be so qualified and in which the failure to be so qualified
would have a Material Adverse Effect on Parent, and (iii) has
all requisite corporate power and authority to own or lease its
properties and assets and to carry on its business as now
conducted.
(c) The minute books of Parent accurately reflect in all
material respects all corporate actions held or taken since
January 1, 1993 of its stockholders and Board of Directors
(including committees of the Board of Directors of Parent).
4.2 Capitalization. (a) The authorized capital stock of
Parent consists of (i) 300,000,000 shares of Parent Common
Stock, of which as of January 31, 1995, 141,563,067 shares were
issued and outstanding and held in treasury, (ii) 16,000,000
shares of Preferred Stock, par value $1.00 per share, ("Parent
Preferred Stock"), of which as of January 31, 1995, (A) with
respect to Cumulative and Adjustable Dividends, 1,000,000
shares were designated and no shares were issued and
outstanding, (B) 12,553 shares were designated and no shares
were issued and outstanding as Series I 12% Cumulative
Convertible Preferred Stock ("Parent Series I Preferred
Stock"), (C) 96,000 shares were designated and no shares were
issued and outstanding as Series II 6 1/2% Cumulative
Convertible Preferred Stock, (D) 1,100,000 shares were
designated and 519,758 shares were issued and outstanding as
Series III 10.12% Perpetual Preferred Stock ("Parent Series III
Preferred Stock"), (E) 1,000,000 shares were designated and
478,838 shares were issued and outstanding as Series IV 9.375%
Preferred Stock ("Parent Series IV Preferred Stock"), (F)
1,500,000 shares were designated and no shares were issued and
outstanding as Cumulative Participating Junior Preferred Stock
pursuant to the Parent Rights Agreement, as amended ("Parent
Rights Agreement"), and (G) 1,415,000 shares were designated
and outstanding as Dual Convertible Preferred Stock ("Parent
DCP Stock") and (iii) 1,500,000 shares of Preferred Stock with
Cumulative and Adjustable Dividends, par value $20.00 (the
"Parent $20 Par Value Preferred Stock"), of which at such date,
no shares were issued and outstanding. All of the issued and
outstanding shares of Parent Common Stock and Parent Preferred
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. As
of the date of this Agreement, except as set forth in Section
4.2(a) of the disclosure schedule of Parent delivered to
Subject Company concurrently herewith (the "Parent Disclosure
Schedule"), and except for the Parent Shareholder Rights
Agreement and the Parent Option Agreement, Parent does not have
and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character
calling for the purchase or issuance of any shares of Parent
Common Stock or Parent Preferred Stock or any other equity
securities of Parent or any securities representing the right
to purchase or otherwise receive any shares of Parent Common
Stock or Parent Preferred Stock. As of January 31, 1995,
41,598,590 shares of Parent Common Stock were reserved for
issuance pursuant to outstanding warrants, rights, options and
the employee benefit plans set forth in Section 4.11(a) of the
Parent Disclosure Schedule and no shares of Parent Preferred
Stock were reserved for issuance. Since January 31, 1995,
Subject Company has not issued any shares of its capital stock
or any securities convertible into or exercisable for any
shares of its capital stock, other than pursuant to the
exercise of employee stock options granted prior to such date
and as disclosed in Section 4.2(a) of the Parent Disclosure
Schedule. The shares of Parent Capital Stock to be issued
pursuant to the Merger will be duly authorized and validly
issued and, at the Effective Time, all such shares will be
fully paid, nonassessable and free of preemptive rights, with
no personal liability attaching to the ownership thereof.
(b) Except as set forth in Section 4.2(b) of the Parent
Disclosure Schedule, Parent owns, directly or indirectly, all
of the issued and outstanding shares of capital stock of each
of the Parent Subsidiaries, free and clear of any liens,
charges, encumbrances and security interests whatsoever, and
all of such shares are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof.
No Parent Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
4.3 Authority; No Violation. (a) Parent has full corporate
power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Parent. The
Board of Directors of Parent has directed that this Agreement
and the transactions contemplated hereby be submitted to
Parent's stockholders for approval at a meeting of such
stockholders and except for the adoption of this Agreement by
the affirmative vote of the holders of a majority of the
outstanding shares of Parent Common Stock, no other corporate
proceedings on the part of Parent are necessary to approve this
Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by Parent and (assuming due authorization, execution
and delivery by Subject Company) constitutes a valid and
binding obligation of Parent, enforceable against Parent in
accordance with its terms, except as enforcement may be limited
by general principles of equity whether applied in a court of
law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 4.3(b) of the Parent
Disclosure Schedule, neither the execution and delivery of this
Agreement by Parent, nor the consummation by Parent of the
transactions contemplated hereby, nor compliance by Parent with
any of the terms or provisions hereof, will (i) violate any
provision of the Articles of Incorporation or Bylaws of Parent
or (ii) assuming that the consents and approvals referred to in
Section 4.4 are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Parent or any of its Subsidiaries or
any of their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or the
loss of any benefit under, 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 or a right of
termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the
respective properties or assets of Parent or any of its
Subsidiaries under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which
Parent or any of its Subsidiaries is a party, or by which they
or any of their respective properties or assets may be bound or
affected, except (in the case of clause (y) above) for such
violations, conflicts, breaches or defaults which either
individually or in the aggregate will not have or be reasonably
likely to have a Material Adverse Effect on Parent.
4.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Federal
Reserve Board under the BHC Act and approval of such
applications and notices, (ii) the filing of applications with
the OTS under HOLA and approval of such applications, (iii) the
filing of any requisite applications with the OCC, (iv) the
filing of the State Approvals, (v) the filing with the SEC of
the Joint Proxy Statement and the S-4, (vi) the filing of the
Certificate of Merger with the Delaware Secretary pursuant to
the DGCL, (vii) the filing of the Articles of Merger with the
Rhode Island Secretary pursuant to the RIBCA, (viii) such
filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in
connection with the issuance of the shares of Parent Common
Stock pursuant to this Agreement, and (ix) the approval of this
Agreement by the requisite vote of the stockholders of Parent
and Subject Company, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third
party are necessary in connection with (A) the execution and
delivery by Parent of this Agreement and (B) the consummation
by Parent of the Merger and the other transactions contemplated
hereby.
4.5 Reports. Parent and each of its Subsidiaries have
timely filed all material reports, registrations and
statements, together with any amendments required to be made
with respect thereto, that they were required to file since
January 1, 1993 with the Regulatory Agencies, and all other
material reports and statements required to be filed by them
since January 1, 1993, including, without limitation, any
report or statement required to be filed pursuant to the laws,
rules or regulations of the United States, any state, the
Federal Reserve Board, the FDIC, the OCC, the OTS, any State
Regulator or any SRO, and have paid all fees and assessments
due and payable in connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the regular
course of the business of Parent and its Subsidiaries, no
Regulatory Agency has initiated any proceeding or, to the best
knowledge of Parent, investigation into the business or
operations of Parent or any of its Subsidiaries since January
1, 1993. There is no material unresolved violation, criticism,
or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of Parent or
any of its Subsidiaries.
4.6 Financial Statements. Parent has previously delivered
to Subject Company copies of (a) the consolidated balance
sheets of Parent and its Subsidiaries as of December 31, for
the fiscal years 1992 and 1993, and the related consolidated
statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1991 through 1993, inclusive, as
reported in Parent's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 filed with the SEC under the
Exchange Act, in each case accompanied by the audit report of
KPMG Peat Marwick, independent public accountants with respect
to Parent, (b) the unaudited consolidated balance sheet of
Parent and its Subsidiaries as of December 31, 1994, and the
related consolidated statements of income and changes in
stockholders' equity for the fiscal year 1994, substantially in
the form that is proposed to be reported in Parent's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994
(the "Parent Delivered December 1994 Financials"), and (c) the
unaudited consolidated balance sheet of Parent and its
Subsidiaries as of September 30, 1993 and September 30, 1994
and the related unaudited consolidated statements of income,
cash flows and changes in stockholders' equity for the nine
month periods then ended as reported in Parent's Quarterly
Report on Form 10-Q for the period ended September 30, 1994
filed with the SEC under the Exchange Act. The December 31,
1994 consolidated balance sheet of Parent (including the
related notes, where applicable) fairly presents the
consolidated financial position of Parent and its Subsidiaries
as of the date thereof, and the other financial statements
referred to in this Section 4.6 (including the related notes,
where applicable) fairly present (subject, in the case of the
unaudited statements, to recurring audit adjustments normal in
nature and amount), the results of the consolidated operations
and changes in stockholders' equity and consolidated financial
position of Parent and its Subsidiaries for the respective
fiscal periods or as of the respective dates therein set forth;
each of such statements (including the related notes, where
applicable) comply in all material respects with applicable
accounting requirements and with the published rules and
regulations of the SEC with respect thereto; and each of such
statements (including the related notes, where applicable) has
been prepared in accordance with GAAP consistently applied
during the periods involved, except in each case as indicated
in such statements or in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. The books and
records of Parent and its Subsidiaries have been, and are
being, maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements
and reflect only actual transactions.
4.7 Broker's Fees. Except as set forth in Section 4.7 of
the Parent Disclosure Schedule, neither Parent nor any Parent
Subsidiary nor any of their respective officers or directors
has employed any broker or finder or incurred any liability for
any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement or
the Option Agreements.
4.8 Absence of Certain Changes or Events. (a) Except as
publicly disclosed in Parent Reports (as defined below) filed
prior to the date hereof, since December 31, 1994, (i) neither
Parent nor any of its Subsidiaries has incurred any material
liability, except in the ordinary course of their business
consistent with their past practices, and (ii) no event has
occurred which has had, individually or in the aggregate, a
Material Adverse Effect on Parent.
(b) Except as publicly disclosed in Parent Reports filed
prior to the date hereof, and except as set forth in Section
4.8(b) of the Parent Disclosure Schedule, since December 31,
1994, Parent and its Subsidiaries have carried on their
respective businesses in the ordinary and usual course
consistent with their past practices.
(c) Except as set forth in Section 4.8(c) of the Parent
Disclosure Schedule, since December 31, 1994, neither Parent
nor any of its Subsidiaries has (i) except for normal increases
in the ordinary course of business consistent with past
practice or except as required by applicable law, increased the
wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any executive officer,
employee, or director from the amount thereof in effect as of
December 31, 1994, granted any severance or termination pay,
entered into any contract to make or grant any severance or
termination pay, or paid any bonus other than customary yearend
bonuses for fiscal 1993 and 1994 or (ii) suffered any strike,
work stoppage, slow-down, or other labor disturbance.
4.9 Legal Proceedings. (a) Neither Parent nor any of its
Subsidiaries is a party to any and there are no pending or, to
the best of Parent's knowledge, threatened, material legal,
administrative, arbitral or other proceedings, claims, actions
or governmental or regulatory investigations of any nature
against Parent or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this
Agreement or the Parent Option Agreement as to which there is a
reasonable probability of an adverse determination and which,
if adversely determined, would, individually or in the
aggregate, have a Material Adverse Effect on Parent.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Parent, any of its
Subsidiaries or the assets of Parent or any of its Subsidiaries
which has had, or might reasonably be expected to have, a
Material Adverse Effect on Parent or the Surviving Corporation.
4.10 Taxes and Tax Returns. (a) Each of Parent and its
Subsidiaries has duly filed all material Federal, state and, to
the best of Parent's knowledge, material local information
returns and tax returns required to be filed by it on or prior
to the date hereof (all such returns being accurate and
complete in all material respects) and has duly paid or made
provisions for the payment of all material Taxes (as defined
below) and other governmental charges which have been incurred
or are due or claimed to be due from it by Federal, state,
county or local taxing authorities on or prior to the date of
this Agreement (including, without limitation, if and to the
extent applicable, those due in respect of its properties,
income, business, capital stock, deposits, franchises,
licenses, sales and payrolls) other than Taxes or other charges
(1) which are not yet delinquent or are being contested in good
faith and (2) have not been finally determined. The income tax
returns of Parent and its Subsidiaries have been examined by
the Internal Revenue Service (the "IRS") and any liability with
respect thereto has been satisfied for all years to and
including 1989, and no material deficiencies were asserted as a
result of such examination or all such deficiencies were
satisfied. To the best of Parent's knowledge, there are no
material disputes pending, or claims asserted for, Taxes or
assessments upon Parent or any of its Subsidiaries, nor has
Parent or any of its Subsidiaries been requested to give any
currently effective waivers extending the statutory period of
limitation applicable to any Federal, state, county or local
income tax return for any period. In addition, (i) proper and
accurate amounts have been withheld by Parent and its
Subsidiaries from their employees for all prior periods in
compliance in all material respects with the tax withholding
provisions of applicable Federal, state and local laws, except
where failure to do so would not have a Material Adverse Effect
on Parent, (ii) Federal, state, county and local returns which
are accurate and complete in all material respects have been
filed by Parent and its Subsidiaries for all periods for which
returns were due with respect to income tax withholding, Social
Security and unemployment taxes, except where failure to do so
would not have a Material Adverse Effect on Parent, (iii) the
amounts shown on such Federal, state, local or county returns
to be due and payable have been paid in full or adequate
provision therefor has been included by Parent in its
consolidated financial statements as of December 31, 1994,
except where failure to do so would not have a Material Adverse
Effect on Parent and (iv) there are no Tax liens upon any
property or assets of the Parent or its Subsidiaries except
liens for current taxes not yet due. To the knowledge of
Parent, no property of Parent or any of its Subsidiaries is
property that Parent or any of its Subsidiaries is or will be
required to treat as being owned by another person pursuant to
the provisions of Section 168(f)(8) of the Code (as in effect
prior to its amendment by the Tax Reform Act of 1986) or is
"tax-exempt use property" within the meaning of Section 169(h)
of the Code. Neither Parent nor any of its Subsidiaries has
been required to include in income any adjustment pursuant to
Section 481 of the Code by reason of a voluntary change in
accounting method initiated by Parent or any of its
Subsidiaries, and the Internal Revenue Service has not
initiated or proposed any such adjustment or change in
accounting method. Except as set forth in the financial
statements described in Section 4.6 hereof, neither Parent nor
any of its Subsidiaries has entered into a transaction which is
being accounted for as an installment obligation under Section
453 of the Code, which would be reasonably likely to have a
Material Adverse Effect on Parent.
(b) Any amount that could be received (whether in cash or
property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee,
officer or director of Parent or any of its affiliates who is a
"Disqualified Individual" (as such term is defined in proposed
Treasury Regulation Section 1.280G-1) under any employment,
severance or termination agreement, other compensation
arrangement or Parent Benefit Plan currently in effect would
not be characterized as an "excess parachute payment" (as such
term is defined in Section 280G(b)(1) of the Code).
(c) No disallowance of a deduction under Section 162(m) of
the Code for employee remuneration of any amount paid or
payable by Parent or any Subsidiary of Subject Company under
any contract, plan, program, arrangement or understanding would
be reasonably likely to have a Material Adverse Effect on
Parent.
4.11 Employees. (a) Section 4.11(a) of the Parent
Disclosure Schedule sets forth a true and complete list of each
material employee benefit plan, arrangement or agreement that
is maintained as of the date of this Agreement (the "Parent
Plans") by Parent, any of its Subsidiaries or by any trade or
business; whether or not incorporated (a "Parent ERISA
Affiliate"), all of which together with Parent would be deemed
a "single employer" within the meaning of Section 4001 of ERISA.
(b) Parent has heretofore delivered to Subject Company true
and complete copies of each of the Parent Plans and all related
documents, including but not limited to (i) the actuarial
report for such Parent Plan (if applicable) for each of the
last two years, and (ii) the most recent determination letter
from the Internal Revenue Service (if applicable) for such
Parent Plan.
(c) Except as set forth in Section 4.11(c) of the Parent
Disclosure Schedule, (i) each of the Parent Plans has been
operated and administered in all material respects with
applicable laws, including but not limited to ERISA and the
Code, (ii) each of the Parent Plans intended to be "qualified"
within the meaning of Section 401 (a) of the Code is so
qualified, (iii) with respect to each Parent Plan which is
subject to Title IV of ERISA, the present value of accrued
benefits under such Parent Plan, based upon the actuarial
assumptions used for funding purposes in the most recent
actuarial report prepared by such Parent Plan's actuary with
respect to such Parent Plan, did not, as of its latest
valuation date, exceed the then current value of the assets of
such Parent Plan allocable to such accrued benefits, (iv) no
Parent Plan provides benefits, including without limitation
death or medical benefits (whether or not insured), with
respect to current or former employees of Parent, its
Subsidiaries or any Parent ERISA Affiliate beyond their
retirement or other termination of service, other than (w)
coverage mandated by applicable law, (x) death benefits or
retirement benefits under any "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits accrued as liabilities on the books of
Parent, its Subsidiaries or the Parent ERISA Affiliates or (z)
benefits the full cost of which is borne by the current or
former employee (or his beneficiary), (v) no liability under
Title IV of ERISA has been incurred by Parent, its Subsidiaries
or any Parent ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to
Parent, its Subsidiaries or any Parent ERISA Affiliate of
incurring a material liability thereunder, (vi) no Parent Plan
is a "multiemployer pension plan", as such term is defined in
Section 3(37) of ERISA, (vii) all contributions or other
amounts payable by Parent or its Subsidiaries as of the
Effective Time with respect to each Parent Plan in respect of
current or prior plan years have been paid or accrued in
accordance with generally accepted accounting practices and
Section 412 of the Code, (viii) neither Parent, its
Subsidiaries nor any Parent ERISA Affiliate has engaged in a
transaction in connection with which Parent, its Subsidiaries
or any Parent ERISA Affiliate could be subject to either a
material civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a material tax imposed pursuant to Section
4975 or 4976 of the Code, and (ix) to the best knowledge of
Parent there are no pending, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or
against any of the Parent Plans or any trusts related thereto.
(d) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will
(i) result in any material payment (including, without
limitation, severance, unemployment compensation, golden
parachute or otherwise) becoming due to any director or any
employee of Parent or any of its affiliates from Parent or any
of its affiliates under any Parent Benefit Plan or otherwise,
(ii) materially increase any benefits otherwise payable under
any Parent Benefit Plan or (iii) result in any acceleration of
the time of payment or vesting of any such benefits to any
material extent.
4.12 SEC Reports. Parent has previously made available to
Subject Company an accurate and complete copy of each (a) final
registration statement, prospectus, report, schedule and
definitive proxy statement filed since January 1, 1993 by
Parent with the SEC pursuant to the Securities Act or the
Exchange Act (the "Parent Reports") and prior to the date
hereof and (b) communication mailed by Parent to its
stockholders since January 1, 1993 and prior to the date
hereof, and no such registration statement, prospectus, report,
schedule, proxy statement or communication contained any untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in
which they were made, not misleading, except that information
as of a later date shall be deemed to modify information as of
an earlier date. Parent has timely filed all Parent Reports and
other documents required to be filed by it under the Securities
Act and the Exchange Act, and, as of their respective dates,
all Parent Reports complied in all material respects with the
published rules and regulations of the SEC with respect thereto.
4.13 Compliance with Applicable Law. Except as disclosed in
Section 4.13 of the Parent Disclosure Schedule, Parent and each
of its Subsidiaries hold, and have at all times held, all
material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses
under and pursuant to all, and have complied with and are not
in default in any material respect under any, applicable law,
statute, order, rule, regulation, policy and/or guideline of
any Governmental Entity relating to Parent or any of its
Subsidiaries, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or
default would not, individually or in the aggregate, have a
Material Adverse Effect on Parent, and neither Parent nor any
of its Subsidiaries knows of, or has received notice of, any
material violations of any of the above.
4.14 Certain Contracts. (a) Except as set forth in Section
4.14(a) of the Parent Disclosure Schedule, neither Parent nor
any of its Subsidiaries is a party to or bound by any contract,
arrangement, commitment or understanding (whether written or
oral) (i) with respect to the employment of any directors,
officers, employees or consultants, (ii) which, upon the
consummation of the transactions contemplated by this Agreement
will (either alone or upon the occurrence of any additional
acts or events) result in any payment (whether of severance pay
or otherwise) becoming due from Parent, Subject Company, the
Surviving Corporation, or any of their respective Subsidiaries
to any officer or employee thereof, (iii) which is a material
contract (as defined in Item 601(b)(10) of Regulation S-K of
the SEC) to be performed after the date of this Agreement that
has not been filed or incorporated by reference in the Parent
Reports, (iv) which materially restricts the conduct of any
line of business by Parent, (v) with or to a labor union or
guild (including any collective bargaining agreement) or (vi)
(including any stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan) any of the
benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this
Agreement. Parent has previously delivered to Subject Company
true correct copies of all employment, consulting and deferred
compensation agreements which are in writing and to which
Parent or any of its Subsidiaries is a party. Each contract,
arrangement, commitment or understanding of the type described
in this Section 4.14(a), whether or not set forth in Section
4.14(a) of the Parent Disclosure Schedule, is referred to
herein as a "Parent Contract", and neither Parent nor any of
its Subsidiaries knows of, or has received notice of, any
violation of the above by any of the other parties thereto
which, individually or in the aggregate, would have a Material
Adverse Effect on Parent.
(b) (i) Each Parent Contract is valid and binding and in
full force and effect, (ii) Parent and each of its Subsidiaries
has in all material respects performed all obligations required
to be performed by it to date under each Parent Contract,
except where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect on Parent,
and (iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, would constitute, a
material default on the part of Parent or any of its
Subsidiaries under any such Parent Contract, except where such
default, individually or in the aggregate, would not have a
Material Adverse Effect on Parent.
4.15 Agreements with Regulatory Agencies. Except as set
forth in Section 4.15 of the Parent Disclosure Schedule,
neither Parent nor any of its Subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any
written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive
by, or is a recipient of any extraordinary supervisory letter
from, or has adopted any board resolutions at the request of
(each, whether or not set forth in Section 4.15 of the Parent
Disclosure Schedule, a "Parent Regulatory Agreement"), any
Regulatory Agency or other Governmental Entity that restricts
the conduct of its business or that in any manner relates to
its capital adequacy, its credit policies, its management or
its business, nor has Parent or any of its Subsidiaries been
advised by any Regulatory Agency or other Governmental Entity
that it is considering issuing or requesting any Regulatory
Agreement.
4.16 Undisclosed Liabilities. Except for those liabilities
that are fully reflected or reserved against on the
consolidated balance sheet of Parent included in the Parent
Delivered December 1994 Financials and for liabilities incurred
in the ordinary course of business consistent with past
practice, since December 31, 1994, neither Parent nor any of
its Subsidiaries has incurred any liability of any nature
whatsoever (whether absolute, accrued, contingent or otherwise
and whether due or to become due) that, either alone or when
combined with all similar liabilities, has had, or could
reasonably be expected to have, a Material Adverse Effect on
Parent.
4.17 State Takeover Laws. The Board of Directors of Parent
has approved the transactions contemplated by this Agreement
and the Option Agreements such that the provisions of the
Business Combination Act of Rhode Island and Article Ninth of
Parent's Articles of Incorporation will not apply to this
Agreement or the Option Agreements or any of the transactions
contemplated hereby or thereby.
4.18 Rights Agreement. Parent has taken all action
(including, if required, redeeming all of the outstanding
preferred stock purchase rights issued pursuant to the Parent
Rights Agreement or amending or terminating the Parent Rights
Agreement) so that the entering into of this Agreement and the
Option Agreements, the Merger, the acquisition of shares
pursuant to the Option Agreements and the other transactions
contemplated hereby and thereby do not and will not result in
the grant of any rights to any person under the Parent Rights
Agreement or enable or require the Parent Rights to be
exercised, distributed or triggered.
4.19 Pooling of Interests. As of the date of this
Agreement, Parent has no reason to believe that the Merger will
not qualify as a pooling of interests for accounting purposes.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time.
During the period from the date of this Agreement to the
Effective Time, except as expressly contemplated or permitted
by this Agreement or the Option Agreements, each of Parent and
Subject Company shall, and shall cause each of their respective
Subsidiaries to, (i) conduct its business in the usual, regular
and ordinary course consistent with past practice, (ii) use
reasonable best efforts to maintain and preserve intact its
business organization, employees and advantageous business
relationships and retain the services of its officers and key
employees and (iii) take no action which would adversely affect
or delay the ability of either Parent or Subject Company to
obtain any necessary approvals of any Regulatory Agency or
other governmental authority required for the transactions
contemplated hereby or to perform its covenants and agreements
under this Agreement or the Option Agreements.
5.2 Forbearances. During the period from the date of this
Agreement to the Effective Time, except as set forth in Section
5.2 of the Parent Disclosure Schedule or Section 5.2 of the
Subject Company Disclosure Schedule, as the case may be, and,
except as expressly contemplated or permitted by this Agreement
or the Option Agreements, neither Parent nor Subject Company
shall, and neither Parent nor Subject Company shall permit any
of their respective Subsidiaries to, without the prior written
consent of the other:
(a) other than in the ordinary course of business
consistent with past practice, incur any indebtedness
for borrowed money (other than short-term indebtedness
incurred to refinance short-term indebtedness and
indebtedness of Subject Company or any of its
Subsidiaries to Subject Company or any of its
Subsidiaries, on the one hand, or of Parent or any of
its Subsidiaries to Parent or any of its Subsidiaries,
on the other hand; it being understood and agreed that
incurrence of indebtedness in the ordinary course of
business shall include, without limitation, the
creation of deposit liabilities, purchases of federal
funds, sales of certificates of deposit and entering
into repurchase agreements), assume, guarantee,
endorse or otherwise as an accommodation become
responsible for the obligations of any other
individual, corporation or other entity, or make any
loan or advance;
(b) adjust, split, combine or reclassify any
capital stock; make, declare or pay any dividend or
make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or
obligations convertible into or exchangeable for any
shares of its capital stock, or grant any stock
appreciation rights or grant any individual,
corporation or other entity any right to acquire any
shares of its capital stock (except, in the case of
Subject Company, for regular quarterly cash dividends
at a rate not in excess of $0.22 per share of Subject
Company Common Stock, and in the case of Parent, for
regular quarterly cash dividends on Parent Common
Stock at a rate not in excess of $0.50 per share of
Parent Common Stock, and, in the case of Subject
Company Preferred Stock and Parent Preferred Stock,
for regular quarterly or semiannual cash dividends
thereon at the rates set forth in the applicable
certificate of incorporation or certificate of
designation for such securities and except for
dividends paid by any of the wholly owned Subsidiaries
of each of Parent and Subject Company to Parent or
Subject Company or any of their wholly owned
Subsidiaries, respectively); or issue any additional
shares of capital stock except pursuant to (A) the
exercise of stock options or warrants outstanding as
of the date hereof, (B) the conversion of shares of
the Parent Series I Preferred Stock or the Parent DCP
Stock or (C) the Option Agreements, (D) the Subject
Company Shareholder Rights Agreement, (E) the Parent
Shareholder Rights Agreement; (F) the Northeast
Agreement or (G) the Option Agreements;
(c) sell, transfer, mortgage, encumber or
otherwise dispose of any of its properties or assets
to any individual, corporation or other entity other
than a direct or indirect wholly owned Subsidiary, or
cancel, release or assign any indebtedness to any such
person or any claims held by any such person, except
in the ordinary course of business consistent with
past practice or pursuant to contracts or agreements
in force at the date of this Agreement;
(d) except for transactions in the ordinary course
of business consistent with past practice, make any
material investment either by purchase of stock or
securities, contributions to capital, property
transfers, or purchase of any property or assets of
any other individual, corporation or other entity
other than a wholly owned Subsidiary thereof;
<PAGE>
(e) 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 change in any of its material leases or
contracts, other than renewals of contracts and leases
without material adverse changes of terms;
(f) increase in any manner the compensation or
fringe benefits of any of its employees or pay any
pension or retirement allowance not required by any
existing plan or agreement to any such employees or
become a party to, amend or commit itself to any
pension, retirement, profitsharing or welfare benefit
plan or agreement or employment agreement with or for
the benefit of any employee other than in the ordinary
course of business consistent with past practice or
accelerate the vesting of any stock options or other
stock-based compensation;
(g) solicit, encourage or authorize any
individual, corporation or other entity to solicit
from any third party any inquiries or proposals
relating to the disposition of its business or assets,
or the acquisition of its voting securities, or the
merger of it or any of its Subsidiaries with any
corporation or other entity other than as provided by
this Agreement (and each party shall promptly notify
the other of all of the relevant details relating to
all inquiries and proposals which it may receive
relating to any of such matters);
(h) settle any claim, action or proceeding
involving money damages, except in the ordinary course
of business consistent with past practice;
(i) take any action that would prevent or impede
the Merger from qualifying (i) for pooling of
interests accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of
the Code; provided, however, that nothing contained
herein shall limit the ability of Parent or Subject
Company to exercise its rights under the Subject
Company Option Agreement or the Parent Option
Agreement, as the case may be;
(j) amend its certificate of incorporation or
articles of incorporation, as the case maybe, or its
bylaws; or
(k) other than in prior consultation with the
other party to this Agreement, 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;
(l) take any action that is intended or may
reasonably be expected to result in any of its
representations and warranties set forth in this
Agreement being or becoming untrue in any material
respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in
Article VII not being satisfied or in a violation of
any provision of this Agreement, except, in every
case, as may be required by applicable law; or
(m) agree to, or make any commitment to, take any
of the actions prohibited by this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) Parent and Subject Company
shall promptly prepare and file with the SEC the Joint Proxy
Statement and Parent shall promptly prepare and file with the
SEC the S-4, in which the Joint Proxy Statement will be
included as a prospectus. Each of Parent and Subject Company
shall use all reasonable efforts to have the S-4 declared
effective under the Securities Act as promptly as practicable
after such filing, and Parent and Subject Company shall
thereafter mail the Joint Proxy Statement to their respective
stockholders. Parent 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 Subject Company shall
furnish all information concerning Subject Company and the
holders of Subject Company Capital Stock as may be reasonably
requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and
use their best efforts to promptly prepare and file all
necessary documentation, to effect all applications, notices,
petitions and filings, to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or
advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Merger), and to
comply with the terms and conditions of all such permits,
consents, approvals and authorizations of all such Governmental
Entities. Parent and Subject Company 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 Subject Company or Parent, 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 Governmental Entity 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 Governmental Entities
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) Parent and Subject Company 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 Parent, Subject Company or any of their respective
Subsidiaries to any Governmental Entity in connection with the
Merger and the other transactions contemplated by this
Agreement.
(d) Parent and Subject Company shall promptly advise each
other upon receiving any communication from any Governmental
Entity 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 any Requisite Regulatory Approval will not be obtained or
that the receipt of any such approval will be materially
delayed.
6.2 Access to Information. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of
information, each of Parent and Subject Company shall, and
shall cause each of their respective Subsidiaries to, afford to
the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal
business hours during the period prior to the Effective Time,
to all its properties, books, contracts, commitments and
records and, during such period, each of Parent and Subject
Company shall, and shall cause their respective Subsidiaries
to, make available to the other party (i) a copy of each
report, schedule, registration statement and other document
filed or received by it during such period pursuant to the
requirements of Federal securities laws or Federal or state
banking laws, savings and loan or savings association laws
(other than reports or documents which Parent or Subject
Company, as the case may be, is not permitted to disclose under
applicable law) and (ii) all other information concerning its
business, properties and personnel as such party may reasonably
request. Neither Parent nor Subject Company 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 Parent's or Subject
Company's, as the case may be, customers, jeopardize the
attorney-client privilege of the institution in possession or
control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement.
The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of
the preceding sentence apply.
(b) Each of Parent and Subject Company shall hold all
information furnished by the other party or any of such party's
Subsidiaries or representatives pursuant to Section 6.2(a) in
confidence to the extent required by, and in accordance with,
the provisions of the confidentiality agreement, dated February
13, 1995 between Parent and Subject Company (the
"Confidentiality Agreement").
(c) No investigation by either of the parties or their
respective representatives shall affect the representations and
warranties of the other set forth herein.
6.3 Stockholders' Approvals. Each of Parent and Subject
Company shall call a meeting of its stockholders to be held as
soon as practicable for the purpose of voting upon the
requisite stockholder approvals required in connection with
this Agreement and the Merger, and each shall use its best
efforts to cause such meetings to occur on the same date.
6.4 Legal Conditions to Merger. Each of Parent and Subject
Company shall, and shall cause its Subsidiaries to, use their
best efforts (a) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger or the Subsidiary
Merger and, subject to the conditions set forth in Article VII
hereof, to consummate the transactions contemplated by this
Agreement and (b) to obtain (and to cooperate with the other
party to obtain) any consent, authorization, order or approval
of, or any exemption by, any Governmental Entity and any other
third party which is required to be obtained by Subject Company
or Parent or any of their respective Subsidiaries in connection
with the Merger and the Subsidiary Merger and the other
transactions contemplated by this Agreement.
6.5 Affiliates; Publication of Combined Financial Results.
(a) Each of Parent and Subject Company shall use its best
efforts to cause each director, executive officer and other
person who is an "affiliate" (for purposes of Rule 145 under
the Securities Act and for purposes of qualifying the Merger
for "pooling-of-interests" accounting treatment) of such party
to deliver to the other party hereto, as soon as practicable
after the date of this Agreement, and prior to the date of the
stockholders meetings called by Parent and Subject Company to
approve this Agreement, a written agreement, in the form of
Exhibit 6.5(a) hereto, providing that such person will not
sell, pledge, transfer or otherwise dispose of any shares of
Parent Capital Stock or Subject Company Capital Stock held by
such "affiliate" and, in the case of the "affiliates" of
Subject Company, the shares of Parent Capital Stock to be
received by such "affiliate" in the Merger: (1) in the case of
shares of Parent Capital Stock to be received by "affiliates"
of Subject Company in the Merger, except in compliance with the
applicable provisions of the Securities Act and the rules and
regulations thereunder; and (2) during the period commencing 30
days prior to the Merger and ending at the time of the
publication of financial results covering at least 30 days of
combined operations of Parent and Subject Company.
(b) Parent shall use its best efforts to publish no later
than ninety (90) 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.
6.6 Stock Exchange Listing. Parent shall cause the shares
of Parent Common Stock to be issued in the Merger to be
approved for listing on the New York Stock Exchange, Inc. (the
"NYSE"), subject to official notice of issuance, prior to the
Effective Time and shall use its best efforts to cause the
shares of Parent 9.30% Preferred and Parent 9.35% Cumulative
Preferred to be so approved.
6.7 Employee Benefit Plans. (a) From and after the
Effective Time, and subject to applicable law, Parent shall
provide to the employees of Parent and its Subsidiaries who
formerly were employees of Subject Company and its Subsidiaries
employee benefits, including but not limited to pension plans,
thrift plans, management incentive plans, group life plans,
accidental death and dismemberment plans, travel accident
plans, medical and hospitalization plans and long term
disability plans, substantially the same as those provided to
similarly situated employees of Parent and its Subsidiaries.
From and after the Effective Time, employees of Parent or its
Subsidiaries who were employees of the Subject Company and its
Subsidiaries immediately prior to the Effective Time shall
receive full credit for all purposes under such plans, except
the accrual of benefits, for their years of service prior to
the Effective Time with the Subject Company or any of its
Subsidiaries (and any predecessors thereto).
(b) Parent agrees to honor in accordance with their terms
(i) all Plans and (ii) all contracts, arrangements,
commitments, or understandings described in Section 3.14(a)(i)
disclosed on the Subject Company Disclosure Schedule and (iii)
all benefits vested thereunder as of the Effective Time;
provided, however, that nothing in this sentence shall be
interpreted as preventing Parent from amending, modifying or
terminating any Plans, contracts, arrangements, commitments or
understandings, in accordance with their terms. The provisions
of this Section 6.7(b) are intended to be for the benefit for,
and enforceable by, each of the persons set forth in Section
6.7(b) of the Subject Company Disclosure Schedule and their
heirs and representatives.
(c) Subject Company shall take all actions necessary,
including securing the consent of optionees, to amend the terms
of the Subject Company Stock Option Plans and any severance or
other agreements that provide for the surrender of stock
options issued under the Subject Company Stock Option Plans in
exchange for a cash payment ("LSARs") to provide that such
LSARs shall be settled in stock with a fair market value equal
to the cash that would otherwise have been payable thereunder.
(d) Parent and Subject Company acknowledge and agree that
awards under the Subject Company's Performance Equity Plan
("PEP") are subject to Section 11(f) of the Subject Company
Stock Option and Restricted Stock Award Plan.
6.8 Indemnification; Directors' and Officers' Insurance. (a)
In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim,
action, suit, proceeding or investigation in which any person
who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a
director or officer or employee of Subject Company or any of
its Subsidiaries (the "Indemnified Parties") is, or is
threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the
fact that he is or was a director, officer or employee of
Subject Company, any of the Subject Company Subsidiaries or any
of their respective predecessors or (ii) this Agreement, the
Option Agreements or any of the transactions contemplated
hereby or thereby, whether in any case asserted or arising
before or after the Effective Time, the parties hereto agree to
cooperate and use their best efforts to defend against and
respond thereto. It is understood and agreed that after the
Effective Time, Parent shall indemnify and hold harmless, as
and to the fullest extent permitted by law, each such
Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's
fees and expenses in advance of the final disposition of any
claim, suit, proceeding or investigation to each Indemnified
Party to the fullest extent permitted by law upon receipt of
any undertaking required by applicable law), judgments, fines
and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding or
investigation, and in the event of any such threatened or
actual claim, action, suit, proceeding or investigation
(whether asserted of arising before or after the Effective
Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Parent; provided,
however, that (1) Parent shall have the right to assume the
defense thereof and upon such assumption Parent shall not be
liable to any Indemnified Party for any legal expenses of other
counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof,
except that if Parent elects not to assume such defense or
counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are issues which raise conflicts
of interest between Parent and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory
to them after consultation with Parent, and Parent shall pay
the reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Parent shall be obligated pursuant to
this paragraph to pay for only one firm of counsel for all
Indemnified Parties, (3) Parent shall not be liable for any
settlement effected without its prior written consent (which
consent shall not be unreasonably withheld) and (4) Parent
shall have no obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable
law. Any Indemnified Party wishing to claim Indemnification
under this Section 6.8, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify Parent
thereof, provided that the failure to so notify shall not
affect the obligations of Parent under this Section 6.8 except
to the extent such failure to notify materially prejudices
Parent. Parent's obligations under this Section 6.8 continue in
full force and effect for a period of six (6) years from the
Effective Time; provided, however, that all rights to
indemnification in respect of any claim (a "Claim") asserted or
made within such period shall continue until the final
disposition of such Claim.
(b) Parent shall use its best efforts to cause the persons
serving as officers and directors of Subject Company
immediately prior to the Effective Time to be covered for a
period of six (6) years from the Effective Time by the
directors' and officers' liability insurance policy maintained
by Subject Company (provided that Parent may substitute
therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous
than such policy) with respect to acts or omissions occurring
prior to the Effective Time which were committed by such
officers and directors in their capacity as such; provided,
however, that in no event shall Parent be required to expend
more than 200% of the current amount expended by Subject
Company (the "Insurance Amount") to maintain or procure
insurance coverage pursuant hereto and further provided that if
Parent is unable to maintain or obtain the insurance called for
by this Section 6.8(b), Parent shall use its best efforts to
obtain as much comparable insurance as available for the
Insurance Amount.
(c) In the event Parent or any of its successors or assigns
(i) consolidates with or merges into any other person and shall
not be the continuing or surviving corporation or entity of
such consolidation or merger, or (ii) transfers or conveys all
or substantially all of its properties and assets to any
person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and
assigns of Parent assume the obligations set forth in this
section.
(d) The provisions of this Section 6.8 are intended to be
for the benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
6.9 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement (including, without
limitation, any merger between a Subsidiary of Parent and a
Subsidiary of Subject Company) or to vest the Surviving
Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to
the Merger, the proper officers and directors of each party to
this Agreement and their respective Subsidiaries shall take all
such necessary action as may be reasonably requested by, and at
the sole expense of, Parent.
6.10 Advice of Changes. Parent and Subject Company shall
promptly advise the other party of any change or event having a
Material Adverse Effect on it or which it believes would or
would be reasonably likely to cause or constitute a material
breach of any of its representations, warranties or covenants
contained herein.
6.11 Dividends. After the date of this Agreement, each of
Parent and Subject Company shall coordinate with the other the
declaration of any dividends in respect of Parent Common Stock
and Subject Company Common Stock and the record dates and
payment dates relating thereto, it being the intention of the
parties hereto that holders of Parent Common Stock or Subject
Company Common Stock shall not receive two dividends, or fail
to receive one dividend, for any single calendar quarter with
respect to their shares of Parent Common Stock and/or Subject
Company Common Stock and any shares of Parent Common Stock any
such holder receives in exchange therefor in the Merger.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the
Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been
approved and adopted by the respective requisite
affirmative votes of the holders of Subject Company
Common Stock and Parent Common Stock entitled to vote
thereon.
(b) NYSE Listing. The shares of Parent Common
Stock which shall be issued to the stockholders of
Subject Company upon consummation of the Merger shall
have been authorized for listing on the NYSE, subject
to official notice of issuance.
(c) Other Approvals. All regulatory approvals
required to consummate the transactions contemplated
hereby shall have been obtained and shall remain in
full force and effect and all statutory waiting
periods in respect thereof shall have expired (all
such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite
Regulatory Approvals").
(d) S-4. The S-4 shall have become effective
under the Securities Act and no stop order suspending
the effectiveness of the S-4 shall have been issued
and no proceedings for that purpose shall have been
initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No
order, injunction or decree issued by any court or
agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing
the consummation of the Merger or any of the other
transactions contemplated by this Agreement shall be
in effect. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity
which prohibits, restricts or makes illegal
consummation of the Merger.
(f) Federal Tax Opinion. Parent shall have
received an opinion of Wachtell, Lipton, Rosen & Katz,
counsel to Parent, and Subject Company shall have
received an opinion of Skadden, Arps, Slate, Meagher &
Flom, counsel to Subject Company, in form and
substance reasonably satisfactory to Parent and
Subject Company, dated as of the Effective Time,
substantially to the effect that, on the basis of
facts, representations and assumptions set forth in
such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will
be treated for Federal income tax purposes as part of
one or more reorganizations within the meaning of
Section 368 of the Code and that accordingly:
(i) No gain or loss will be recognized by Parent
or Subject Company as a result of the Merger;
(ii) No gain or loss will be recognized by the
stockholders of Subject Company who exchange their
Subject Company Capital Stock solely for Parent
Capital Stock pursuant to the Merger (except with
respect to cash received in lieu of a fractional share
interest in Parent Capital Stock); and
(iii) The tax basis of the Parent Capital Stock
received by stockholders who exchange all of their
Subject Company Capital Stock solely for Parent
Capital Stock in the Merger will be the same as the
tax basis of the Subject Company Capital Stock
surrendered in exchange therefor (reduced by any
amount allocable to a fractional share interest for
which cash is received).
In rendering such opinion, counsel may require and rely upon
representations contained in certificates of officers of
Parent, Subject Company and others.
(g) Pooling of Interests. Parent and Subject Company shall
each have received a letter from KPMG Peat Marwick addressed to
Subject Company and Parent, to the effect that the Merger will
qualify for "pooling of interests" accounting treatment.
7.2 Conditions to Obligations of Parent. The obligation of
Parent to effect the Merger is also subject to the satisfaction
or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Subject Company set forth in this Agreement shall
be true and correct in all material respects as of the date of
this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date. Parent
shall have received a certificate signed on behalf of Subject
Company by the Chief Executive Officer and the Chief Financial
Officer of Subject Company to the foregoing effect.
(b) Performance of Obligations of Subject Company. Subject
Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement
at or prior to the Closing Date, and Parent shall have received
a certificate signed on behalf of Subject Company by the Chief
Executive Officer and the Chief Financial Officer of Subject
Company to such effect.
(c) Subject Company Rights Agreement. The rights issued
pursuant to the Subject Company Rights Agreement shall not have
become nonredeemable, exercisable, distributed or triggered
pursuant to the terms of such agreement.
7.3 Conditions to Obligations of Subject Company. The
obligation of Subject Company to effect the Merger is also
subject to the satisfaction or waiver by Subject Company at or
prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement shall be true
and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date
as though made on and as of the Closing Date. Subject Company
shall have received a certificate signed on behalf of Parent by
the Chief Executive Officer and the Chief Financial Officer of
Parent to the foregoing effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the
Closing Date, and Subject Company shall have received a
certificate signed on behalf of Parent by the Chief Executive
Officer and the Chief Financial Officer of Parent to such
effect.
(c) Parent Rights Agreement. The rights issued pursuant to
the Parent Rights Agreement shall not have become
nonredeemable, exercisable, distributed or triggered pursuant
to the terms of such agreement.
8. ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger
by the stockholders of Subject Company:
(a) by mutual consent of Parent and Subject Company in a
written instrument, if the Board of Directors of each so
determines by a vote of a majority of the members of its entire
Board;
(b) by either the Board of Directors of Parent or the Board
of Directors of Subject Company if any Governmental Entity
which must grant a Requisite Regulatory Approval has denied
approval of the Merger and such denial has become final and
nonappealable or (ii) any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order
enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement;
<PAGE>
(c) by either the Board of Directors of Parent or the Board
of Directors of Subject Company if the Merger shall not have
been consummated on or before February 20, 1996, unless the
failure of the Closing to occur by such date shall be due to
the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party
set forth herein;
(d) by either the Board of Directors of Parent or the Board
of Directors of Subject Company (provided that the terminating
party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if
there shall have been a material breach of any of the covenants
or agreements or any of the representations or warranties set
forth in this Agreement on the part of the other party, which
breach is not cured within forty-five (45) days following
written notice to the party committing such breach, or which
breach, by its nature, cannot be cured prior to the Closing; or
(e) by either Parent or the Subject Company if any approval
of the stockholders of Parent or the Subject Company required
for the consummation of the Merger shall not have been obtained
by reason of the failure to obtain the required vote at a duly
held meeting of stockholders or at any adjournment or
postponement thereof.
8.2 Effect of Termination. In the event of termination of
this Agreement by either Parent or Subject Company as provided
in Section 8.1, this Agreement shall forthwith become void and
have no effect, and none of Parent, Subject Company, any of
their respective Subsidiaries or any of the officers or
directors of any of them shall have any liability of any nature
whatsoever hereunder, or in connection with the transactions
contemplated hereby, except (i) Sections 6.2(b), 8.2, 9.2 and
9.3, shall survive any termination of this Agreement, and (ii)
notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor Subject Company shall be relieved
or released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
8.3 Amendment. Subject to compliance with applicable law,
this Agreement may be amended by the parties hereto, by action
taken or authorized by their respective Boards of Directors, at
any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Subject
Company; provided, however, that after any approval of the
transactions contemplated by this Agreement by Subject
Company's stockholders, there may not be, without further
approval of such stockholders, any amendment of this Agreement
which reduces the amount or changes the form of the
consideration to be delivered to the Subject Company
stockholders hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.
8.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by
their respective Board of Directors, may, to the extent legally
allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b)
waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any of the agreements or
conditions contained herein; provided, however, that after any
approval of the transactions contemplated by this Agreement by
Subject Company's stockholders, there may not be, without
further approval of such stockholders, any extension or waiver
of this Agreement or any portion thereof which reduces the
amount or changes the form of the consideration to be delivered
to the Subject Company stockholders hereunder other than as
contemplated by this Agreement. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid
only if set forth in a written instrument signed on behalf of
such party, but such extension or waiver or failure to insist
on strict compliance with an obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
9. ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this
Agreement and the Merger Agreement, the closing of the Merger
(the "Closing") will take place at 10:00 a.m. on a date to be
specified by the parties, which shall be no later than two
business days after the satisfaction or waiver (subject to
applicable law) of the latest to occur of the conditions set
forth in Article VII hereof (the "Closing Date").
9.2 Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants
and agreements in this Agreement or in any instrument delivered
pursuant to this Agreement (other than pursuant to the Option
Agreements, which shall terminate in accordance with its terms)
shall survive the Effective Time, except for those covenants
and agreements contained herein and therein which by their
terms apply in whole or in part after the Effective Time.
9.3 Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such expense, provided,
however, that the costs and expenses of printing and mailing
the Joint Proxy Statement, and all filing and other fees paid
to the SEC in connection with the Merger, shall be borne
equally by Parent and Subject Company.
9.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered
personally, telecopied (with confirmation), mailed by
registered or certified mail (return receipt requested) or
delivered by an express courier (with confirmation) to the
parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Parent, to:
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, Rhode Island 02903
Fax: (401) 278-5527
Attn: William C. Mutterperl, Esq.
with a copy to each of:
Edwards & Angell
2700 Hospital Trust Tower
Providence, Rhode Island 02903
Fax: (401) 276-6611
Attn: V. Duncan Johnson, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd
New York, New York 10019
Fax: (212) 402-2000
Attn: Edward D. Herlihy, Esq.
and
(b) if to Subject Company, to:
Shawmut National Corporation
777 Main Street
Hartford, Connecticut 06115
Fax: (203) 728-4205
Attn: J. Michael Shepherd, Esq.
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Fax: (212) 735-2000
Attn: William S. Rubenstein, Esq.
9.5 Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference
shall be to a Section of or Exhibit or Schedule to this
Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation". No provision of this Agreement shall be
construed to require Subject Company, Parent or any of their
respective Subsidiaries or affiliates to take any action which
would violate any applicable law, rule or regulation.
9.6 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have
been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the
same counterpart.
9.7 Entire Agreement. This Agreement (including the
documents and the instruments referred to herein) constitutes
the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof other than the Option
Agreements and the Confidentiality Agreement.
9.8 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Rhode
Island, without regard to any applicable conflicts of law.
9.9 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of
the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad
as to be unenforceable, the provision shall be interpreted to
be only so broad as is enforceable.
9.10 Publicity. Except as otherwise required by applicable
law or the rules of the NYSE, neither Parent nor Subject
Company shall, or shall permit any of its Subsidiaries to,
issue or cause the publication of any press release or other
public announcement with respect to, or otherwise make any
public statement concerning, the transactions contemplated by
this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
9.11 Assignment. Neither this Agreement nor any of the
rights, interests or obligations shall be assigned by any of
the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns. Except as
otherwise specifically provided in Section 6.7(b) and Section
6.8 hereof, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon
any person other than the parties hereto any rights or remedies
hereunder.
IN WITNESS WHEREOF, Parent and Subject Company have caused
this Agreement to be executed by their respective officers
thereunto duly authorized as of the date first above written.
FLEET FINANCIAL GROUP, INC.
By:/s/Terrence Murray
Name: Terrence Murray
Title: Chairman, Chief
Executive Officer
and President
SHAWMUT NATIONAL CORPORATION
By:/s/Joel B. Alvord
Name: Joel B. Alvord
Title: Chairman and Chief
Executive Officer
