SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 27, 1996
VERMONT FINANCIAL SERVICES CORP.
(Exact name of registrant as specified in its charter)
Delaware 0-11012 03-0284445
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
100 Main Street
Brattleboro, Vermont 05301
(Addresses, including zip codes, of principal executive office)
(802) 257-7151
(Registrant's telephone number, including area code)
The index for exhibits is on page 4
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Item 5 Other Events
On February 27, 1996, Vermont National Bank ("Buyer"), a national
banking association and wholly-owned subsidiary of Vermont Financial Services
Corp., entered into a Stock Purchase Agreement (the "Agreement") with Arrow
Financial Corporation ("AFC"), a New York business corporation, Arrow Vermont
Corporation ("AVC"), a Vermont business corporation and wholly-owned subsidiary
of AFC, and Green Mountain Bank ("GMB" and, together with AFC and AVC,
"Seller"), a Vermont-chartered banking corporation and wholly-owned subsidiary
of AVC, pursuant to which Buyer will acquire substantially all of the trust
business of GMB (the "Business"). The Agreement provides that Seller shall
organize a trust subsidiary as a wholly owned direct or indirect subsidiary of
AFC (the "Trust Subsidiary") and transfer to such subsidiary the Business. Upon
satisfaction of certain conditions precedent, Buyer shall pay Seller the sum of
$3,230,000 in exchange for all of the issued and outstanding shares of capital
stock of the Trust Subsidiary. In addition to said sum, Buyer shall pay Seller
an additional "Supplemental Payment" (as defined in the Agreement) of up to
$570,000 if "Annual Revenue" (as defined in the Agreement) attributable
generally to the Business as acquired by Buyer is at least $1,600,000 as
determined in accordance with the Agreement as of the first month-end day
following the ninetieth day after the date on which Buyer's acquisition of the
Trust Subsidiary is completed (such post-closing month-end date being referred
to as the "Measurement Date"). Buyer may also make certain "Adjustment Payments"
(as defined in the Agreement) to Seller equal to a certain percentage of
revenues received by Buyer during each of the first four consecutive three-month
periods immediately following the Measurement Date attributable to certain trust
business acquired by Buyer as a result of its acquisition of the Business but
not otherwise included in the calculation of Annual Revenue as of the
Measurement Date; provided, however, that under no circumstances will the sum of
the Supplemental Payment plus all Adjustment Payments exceed $570,000.
Consummation of Buyer's acquisition of the Business is subject to
various conditions, including: (i) Buyer and Seller shall have entered into a
trust operation service agreement pursuant to which Buyer will continue to
provide AFC and its affiliates certain fiduciary services similar in type and
quality to the fiduciary services currently being provided by GMB to AFC and its
affiliates; (ii) Buyer and Seller shall have entered into a lease agreement
pursuant to which Buyer will lease from Seller on a short-term basis certain
office space currently occupied by the trust department of GMB; (iii) "Closing
Annual Revenue" (as defined in the Agreement) shall be not less than $1,500,000;
(iv) Buyer and Seller shall have received all regulatory approvals from the
appropriate Federal and state regulatory authorities; (v) the conveyance of the
Business to the Trust Subsidiary shall have been completed in accordance with
the terms of the Agreement; and (vi) certain other conditions customary in
transaction of this nature shall have been satisfied.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(i) Exhibits.
The exhibits listed in the Exhibit Index are filed as part of this
Current Report on Form 8- K and are incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VERMONT FINANCIAL SERVICES CORP.
(Registrant)
Date: March 13, 1996 By: /s/ John D. Hashagen, Jr.
John D. Hashagen, Jr.
President
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INDEX TO EXHIBITS
Sequential
Exhibit Page No.
2. Stock Purchase Agreement, dated as of 5
February 27, 1996, among Arrow Financial
Corporation, Arrow Vermont Corporation,
Green Mountain Bank and Vermont National
Bank.
99. Press release of Vermont Financial Services, 50
Corporation dated February 27, 1996.
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EXHIBIT 2
TO FORM 8-K
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") made as of this 27th
day of February, 1996, between Arrow Financial Corporation ("AFC"), a New York
business corporation having its principal office at 250 Glen Street, Glens
Falls, New York, Arrow Vermont Corporation ("AVC"), a Vermont business
corporation having its principal office at 80 West Street, Rutland, Vermont, and
Green Mountain Bank ("GMB"), a Vermont-chartered banking corporation with its
principal offices at 80 West Street, Rutland, Vermont (the foregoing entities
sometimes collectively referred to as the "Seller"), and Vermont National Bank
("Buyer"), a national banking association having its principal office at 100
Main Street, Brattleboro, Vermont.
WHEREAS, AFC is a bank holding company which owns all of the capital
stock of AVC, which in turn owns all of the capital stock of GMB;
WHEREAS, the Seller intends to organize a trust subsidiary as a wholly
owned direct or indirect subsidiary of AFC in accordance with Chapter 62 of
Title 8 of the Vermont Statutes (the "Trust Subsidiary"), and to sell, transfer
and convey substantially all of the trust business of GMB as presently conducted
thereby, including, without limitation, substantially all of the assets, rights,
liabilities, interests, appointments and responsibilities of GMB in its
fiduciary, custodial or agency capacity associated therewith (the "Business"),
to the Trust Subsidiary, all as authorized and provided for in said Chapter 62;
and
WHEREAS, it is the parties' intention that the Seller sell, transfer
and convey the Business to Buyer by means of a sale and transfer by the Seller
of all of the issued and outstanding capital stock of the Trust Subsidiary to
Buyer;
NOW, THEREFORE, in consideration for the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
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ARTICLE 1
ESTABLISHMENT OF TRUST SUBSIDIARY
1.01 Organization of Trust Subsidiary.
Promptly following the date of this Agreement, the Seller shall take or
cause to be taken all necessary and appropriate actions to (i) duly incorporate
and organize the Trust Subsidiary as a wholly owned direct or indirect
subsidiary of AFC in accordance with Chapter 62 of Title 8 of the Vermont
Statutes ("Chapter 62") and all other applicable laws and regulations, (ii)
cause the directors and stockholder(s) of the Trust Subsidiary to take all
necessary and appropriate corporate actions to approve and adopt this Agreement
and the transactions contemplated hereby and (iii) cause the Trust Subsidiary to
execute and deliver an appropriate instrument of accession to this Agreement,
whereupon the Trust Subsidiary shall become a party to and be bound by this
Agreement. The legal name of the Trust Subsidiary shall be mutually agreed upon
by the parties. On and as of the date the Trust Subsidiary becomes a party to
this Agreement, the Seller will be deemed to have represented and warranted, for
all purposes of this Agreement, to Buyer as follows:
(a) The Trust Subsidiary is a trust company duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, all of the outstanding capital stock of which is owned directly or
indirectly by AFC free and clear of any lien, charge or other encumbrance. Since
the date of its incorporation, the Trust Subsidiary has not engaged in any
activities other than in connection with or as contemplated by this Agreement.
(b) The Trust Subsidiary has the corporate power and authority
to enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement by the Trust Subsidiary
and its consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of the Trust Subsidiary. This Agreement is a valid and binding obligation
of the Trust Subsidiary, enforceable in accordance with its terms.
(c) The authorized capital stock of the Trust Subsidiary
consists solely of a specified number of shares of common stock, with a
specified par value per share (which specific number of shares and per share par
value will be stated and confirmed on the Closing Date in a certificate to be
executed and delivered by Seller), all of which are duly issued and validly
outstanding, fully paid and nonassessable . The Trust Subsidiary is not bound by
any outstanding subscriptions, options, warrants, calls commitments or
agreements of any character calling for the Trust Subsidiary to issue, deliver
or sell any equity security of the Trust Subsidiary or any securities
convertible into, exchangeable for or representing the right to subscribe for,
purchase or otherwise receive any such equity security or obligating the Trust
Subsidiary to grant, extend or enter into any such subscriptions, options,
warrants, calls, commitments or agreements. There are no outstanding contractual
obligations of the Trust Subsidiary to repurchase, redeem or otherwise acquire
any shares of its capital stock.
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(d) Immediately prior to the Closing (as defined in Section
1.02), the Trust Subsidiary will have and own no assets other than the Purchased
Assets (as defined in Section 2.01), an amount in cash or immediately available
funds equal to the Minimum Capitalization Amount (as defined in Section 3.02)
and such rights as are otherwise possessed by the Trust Subsidiary as a result
of this Agreement, and will have and be subject to no liabilities other than the
Assumed Liabilities (as defined in Section 2.03) and such liabilities and
obligations as are otherwise incurred by the Trust Subsidiary as a result of
this Agreement.
1.02 Transfer of the Business to Trust Subsidiary.
Following the lawful incorporation and organization of the Trust
Subsidiary, as contemplated by Section 1.01 above, and immediately prior to the
sale and transfer of all of the issued and outstanding shares of the capital
stock of the Trust Subsidiary from Seller to Buyer as provided for in Article 3
below (the completion of such sale and transfer being referred to as the
"Closing" and the date on which the Closing occurs being referred to as the
"Closing Date"), the Seller shall take or cause to be taken all necessary and
appropriate actions to sell, transfer and convey all of the Business from GMB to
the Trust Subsidiary in accordance with all applicable requirements of Chapter
62 and all other applicable laws and regulations and all as further set forth in
Article 2 of this Agreement (the completion of the transfer of the Business from
GMB to the Trust Subsidiary as provided for in Article 2 of this Agreement being
referred to as the "Asset Closing"). The Asset Closing shall be a condition to,
and shall be completed on the same day as and immediately prior to, the Closing.
ARTICLE 2
TRANSFER OF THE BUSINESS FROM GMB TO TRUST SUBSIDIARY
2.01 Purchase and Sale.
Subject to the terms, provisions and conditions set forth herein, the
Seller hereby agrees to sell, assign, transfer and convey to the Trust
Subsidiary, and the Seller shall cause the Trust Subsidiary to purchase, acquire
and accept from the Seller, the Business, including all of the assets of every
kind and description used by the Seller in the Business, but excluding the
Retained Business Assets (as such term is defined in Section 2.02 below). The
assets to be purchased hereunder (the "Purchased Assets") shall include all
assets owned by GMB and held by it solely as a part of the Business as of the
date hereof and all assets acquired by GMB in the ordinary course of the
Business prior to the Asset Closing, but excluding assets disposed of in the
ordinary course of the Business prior to the Asset Closing or retained by GMB
pursuant to Section 2.02 below, and shall specifically include, without
limitation:
(a) Any and all fixtures, machinery, installations, equipment,
furniture, supplies and other tangible personal property owned by GMB and used
solely in conjunction with the operations of the Business and separable from the
Seller's other businesses, all as described on Schedule 2.01(a) hereto (the
"Personal Property");
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(b) All of the Seller's title to, interest in and rights under
the leases of personal property used solely in the Business and described on
Schedule 2.01(b) hereto (the "Personal Property Leases");
(c) Except as otherwise set forth in Section 2.02 hereof, all
rights and interest of GMB, including without limitation any rights for which
consents, filings or other actions may be required, in and to its contracts with
customers relating to the Business, including without limitation, any and all
rights of every kind and description in connection with any and all fiduciary,
custodial and agency contracts, including appointments under wills, trust
instruments or other agreements and agreements for GMB to provide trust
correspondent computer processing services to other institutions, in all cases
entered into or accepted by GMB in a fiduciary, custodial or agency capacity
with such customers ("Customers") in the ordinary course of the Business, all as
set forth on Schedule 2.01(c) attached hereto (such contracts, wills,
instruments and other agreements to be referred to collectively hereafter as the
"Trust Agreements");
(d) (i) Copies of the Seller's accounting books, records,
ledgers, client lists and will files relating to the Business and copies of all
documents and records relating to the Purchased Assets and the Business, in each
case in each such form in which the same currently is being maintained by GMB,
including where applicable in the form of databases or other computer records,
and in each case in such other form or format as may be reasonably requested by
Buyer and that can be accommodated without material incremental expense to
Seller, and (ii) originals of the Trust Agreements and the Contracts (as such
term is defined in Section 2.01(i) below) (all such books, records, files, data
and documents included within clauses (i) and (ii) hereof being referred to as
the "Business Documents");
(e) All rights of the Seller which by their terms are
transferable and which arise under or pursuant to warranties, representations,
indemnifications, contribution agreements, reimbursement agreements, or
guarantees in favor of the Seller made by or for the benefit of Customers,
predecessors in interest, suppliers, vendors, or affiliates of any of the
foregoing, and which relate to the Purchased Assets or the Assumed Liabilities
(as such term is defined in Section 2.03 below) with respect to the period
following the Asset Closing, but excluding those rights which constitute
Retained Business Assets;
(f) All rights to insurance proceeds which may become payable
under insurance policies held by the Seller covering any claims against the
Trust Subsidiary and/or Buyer for which the Trust Subsidiary and/or Buyer is
entitled to indemnity by the Seller hereunder or covering any claims by Buyer or
the Trust Subsidiary relating to matters occurring after the Asset Closing;
(g) All of GMB's interest in the funds, cash, securities,
instruments and other property of any type or description held by GMB as agent,
custodian or fiduciary pursuant to the Trust Agreements, together with records
to support the calculation of such amounts and other records relating thereto,
except the following: (i) cash held in the Business which is subject to
escheatment as of the date on which the Asset Closing is completed and (ii) cash
covering outstanding checks relating to the Business and on accounts maintained
in the name of Seller; provided, however, that within six months after the
Closing, the Seller shall transfer to the Trust Subsidiary any such cash
covering checks which have not been presented within six months of issuance;
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(h) All of the Seller's title to, interest in and rights under
the computer software and programs and other intellectual property, both
tangible and intangible, licensed to the Seller and used solely in conjunction
with the operation of the Business, all as described on Schedule 2.01(h) hereto
(the "Software Contracts");
(i) All of the Seller's title to, interest in and rights under
the miscellaneous contracts of the Seller relating solely to the Business and
listed on Schedule 2.01(i) hereto (the "Miscellaneous Contracts" and together
with the Personal Property Leases and the Software Contracts, the "Contracts");
and
(j) All prepaid Customer fees and expenses allocable to the
period from and after the Asset Closing, all as described on Schedule 2.01(j)
hereto.
2.02 Retained Assets.
Notwithstanding any of the foregoing, the Seller is not transferring to
the Trust Subsidiary and neither the Trust Subsidiary nor Buyer is acquiring
from Seller under this Agreement, and the term "Purchased Assets" shall not
include:
(a) any of the following assets related to the Business (the
"Retained Business Assets"):
(i) All Individual Retirement Accounts and Keogh Accounts,
as to which, as of the Asset Closing, (1) GMB is serving either as trustee or
custodian, and (2) all of the funds associated therewith are then invested in
one or more certificates of deposit or deposit accounts maintained by GMB
(collectively, the "Trusteed Deposit Accounts"), as listed on Schedule
2.02(a)(i) hereto, together with all rights and interest of GMB under the
agreements or contracts with Customers relating to such Trusteed Deposit
Accounts and all assets contained in such Trusteed Deposit Accounts;
(ii) Any cash held by GMB as of the Asset Closing, whether
previously generated by or used in connection with the Business, except for cash
covering outstanding checks as of the Asset Closing as described in Section
2.01(g) (ii) above, which shall be retained only to the extent and for the time
provided in Section 2.01(g) (ii);
(iii) Any accounts receivable relating to the Business and
allocable to the period prior to the Asset Closing;
(iv) Any of the Seller's trade names, or any stationery,
office supplies, business forms, manuals or similar property bearing the
Seller's trademarks, trade names, service marks, logos or similar corporate
identification, unless such trademarks, trade names, service marks, logos or
similar corporate identification have been redacted therefrom (there being no
obligation on the part of the Seller to effect any such redaction);
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(v) Any fixed assets used by the Seller exclusively in the
Business which are damaged or inoperative and any right to any proceeds of
insurance received with respect to any such damaged or inoperative assets;
(vi) Any income tax refunds or claims therefor relating to
the Business which the Seller may be entitled to receive from any federal,
state, or local authorities;
(vii) Any assets of the Seller not used solely in the
Business;
(viii) Any insurance policies of the Seller relating to or
covering the Business and rights to any proceeds thereunder, except as set forth
in Section 2.01(f);
(ix) Any rights of the Seller under any of the Trust
Agreements or Contracts or with respect to any of the Purchased Assets to fees,
indemnification or reimbursements, or any other claims or rights of the Seller
thereunder or with respect thereto, in each case relating to the conduct of the
Business prior to the Asset Closing;
(x) Any rights to any security deposits or other amounts
deposited by Seller with any state or other jurisdiction or regulatory authority
in connection with the qualification, certification, licensing or permitting of
the Seller in connection with the conduct of the Business; and
(xi) Subject to Section 8.01(h) below, all rights and
interests of GMB in and to any Trust Agreement that is expressly excluded from
GMB's transfer of the Business to the Trust Subsidiary, and which is therefore
excluded from the Asset Closing, as a result of or pursuant to any order,
request or directive of the Vermont Department of Banking, Insurance and
Securities (the "Vermont Department") or of any court or other governmental
agency or authority of competent jurisdiction (all such Trust Agreements, if
any, being referred to in this Agreement as the "Retained Trust Agreements").
(b) Any assets of GMB not related to or used in connection with
the Business (the "Retained Nonbusiness Assets" and together with the Related
Business Assets, the "Retained Assets").
2.03 Assumed Liabilities.
At the Asset Closing, the Trust Subsidiary shall assume and agree to
pay, perform and discharge those liabilities and obligations of GMB which relate
to the Business as set forth below (the "Assumed Liabilities"), and from and
after the Asset Closing, the Trust Subsidiary and any successor thereto shall
pay, perform and discharge the Assumed Liabilities as they become due. The Trust
Subsidiary's administration of the various accounts assigned to it by the Seller
hereunder will be in accordance with the respective Trust Agreements and
applicable law pertaining to the performance of such responsibilities in
accordance with sound fiduciary, custodial and agency practices. The Assumed
Liabilities shall consist only of the following:
(a) All liabilities and obligations under each of the Trust
Agreements, in each case arising after the Asset Closing;
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(b) All other liabilities and obligations relating to the
Contracts and the Purchased Assets and arising after the Asset Closing or
otherwise relating to or arising out of the operation of the Business from and
after the Asset Closing, including liabilities and obligations arising under
applicable law and regulation.
2.04 Retained Liabilities.
Notwithstanding anything to the contrary set forth in this Agreement,
the Trust Subsidiary will not assume, pay or discharge, and Buyer will not
assume, pay or discharge, by virtue of the terms of this Agreement or otherwise,
any debts, liabilities, obligations, contracts, loans, commitments, or
undertakings of the Seller, whether fixed, liquidated, contingent or otherwise,
and whether related to the Business or otherwise, except, with respect to the
Trust Subsidiary, for those Assumed Liabilities expressly described or referred
to in Section 2.03. All liabilities, debts, obligations, contracts, loans,
commitments or undertakings of Seller not so assumed by the Trust Subsidiary
shall be retained by the Seller and shall be hereinafter referred to as the
"Retained Liabilities" and shall include, without limitation, the following:
(a) All liabilities of the Seller arising solely out of or
relating solely to the Retained Assets at any time;
(b) All liabilities of Seller incurred in connection with the
Purchased Assets and relating to the period prior to the Asset Closing;
(c) All liabilities of the Seller for federal, state or foreign
income, sales, use, payroll, excise or franchise taxes relating to or arising
out of the operation of the Business for the period prior to the Asset Closing;
(d) All liabilities of the Seller for all environmental,
ecological, accident, health or other claims pertaining to or arising out of the
operation of the Business or the Purchased Assets and relating to the period
prior to the Asset Closing;
(e) All liabilities of the Seller to all of the Employees (as
such term is defined in Section 4.08 below), including the Transferred Employees
(as such term is defined in Section 7.04 below), arising at any time, including,
without limitation, any liabilities or indebtedness of the Seller in respect of
any wages, back pay or other payroll-related items or taxes, any liabilities of
the Seller in connection with employee benefits or arising under any Employee
Contract or Employee Plan (as such terms are defined in Section 4.08 below) or
any liabilities of the Seller resulting from any termination-related or
discrimination claims of any Employee whether or not arising under any Employee
Plan.
(f) All liabilities of the Seller relating to the period prior
to the Asset Closing and arising out of or in connection with the Seller's
services, actions, omissions or warranties, including, without limitation, any
violation, breach, or default by the Seller under or in respect of any Trust
Agreement or any Contract;
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(g) All liabilities (contingent or otherwise) with respect to
trust accounts which have been terminated prior to the Asset Closing;
(h) All liabilities and obligations arising under the Trusteed
Deposit Accounts;
(i) All liabilities of the Seller arising in connection with its
business and operations unrelated to the Business;
(j) Any liability or obligation incurred by the Seller in
connection with the negotiation, execution or performance of this Agreement
including, without limitation, all legal, accounting, brokers', finders' and
other professional fees and expenses;
(k) All liabilities and obligations incurred in taking or
failing to take the steps necessary to accomplish the appointment of the Trust
Subsidiary as successor under the Trust Agreements, including without
limitation, in the making or failing to make of any filings or notices or in
obtaining or failing to obtain any consents, permits or approvals required for
the completion of the Asset Closing; and
(l) Any liability, obligation, penalty, termination fee or other
cost or expense arising out of the assertion by any party to a Trust Agreement
that the transfer to the Trust Subsidiary of the Seller's rights and interests
thereunder pursuant to the terms of this Agreement constitutes a breach or
default by the Seller under such Trust Agreement.
2.05 Updated Schedules.
The Seller shall update all of the Schedules referred to in this
Article 2 and Section 4.04(c) below and attached to this Agreement to the extent
necessary to reflect any changes in the information disclosable therein
occurring prior to the Asset Closing or, with respect to Schedule 4.04(c), the
Closing as a result of (i) the conduct of the Business by Seller as permitted to
be conducted by Seller under this Agreement, (ii) the retention by Seller of any
Retained Trust Agreements, (iii) changes in the list of Defaulted Trust
Agreements (as such term is defined in Section 4.04(c) below) as is set forth in
Schedule 4.04(c) or (iv) any other changes in any such Schedules as may be
agreed upon in writing by the parties hereto. The Seller shall deliver to Buyer
such updated Schedules (the "Updated Schedules") on or prior to the Asset
Closing or, with respect to any update of Schedule 4.04(c), the Closing, subject
in all cases to further non-material adjustments on or prior to the fifth
business day after the Closing Date (the "Adjustment Date"), and any such
Updated Schedule as adjusted shall be deemed to be the definitive Schedule with
regard to the information contained therein for all purposes of this Agreement,
including, without limitation, the specification of the assets and accounts
intended to be transferred from the Seller to the Trust Subsidiary under the
terms of this Article 2. Seller's obligation to prepare and deliver to Buyer the
Updated Schedules, and its preparation and delivery thereof to Buyer, does not
affect or otherwise cause a waiver of any of the conditions to Buyer's
obligations under this Agreement, including without limitation the conditions
contained in Section 8.01(h) and 10.02 below.
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2.06 Asset Closing; Consideration.
(a) The Asset Closing shall occur immediately prior to the
Closing on the Closing Date.
(b) In consideration of the transfer of the Business by the
Seller to the Trust Subsidiary hereunder, the Trust Subsidiary agrees to assume
the Assumed Liabilities.
2.07 Bank Sale Transactions.
(a) Nothing in this Agreement shall preclude the Seller from
negotiating and entering into an agreement or agreements with one or more
parties unaffiliated with the Seller or the Buyer (any such unaffiliated party,
a "Counterparty") involving (i) the sale by the Seller to the Counterparty of
any assets of AVC or GMB other than the Purchased Assets or any Retained Trust
Agreements (including any sale to a Counterparty of any of the Retained Business
Assets other than Retained Trust Agreements) and/or the assumption by the
Counterparty from the Seller of any liabilities of AVC or GMB other than the
Assumed Liabilities or (ii) the sale to the Counterparty of all or substantially
all the stock of GMB or AVC or (iii) a merger or consolidation of GMB or AVC
with or into the Counterparty or an affiliate thereof (any such transaction, a
"Bank Sale Transaction"); provided, however, that (x) the Seller shall not enter
into an agreement for any such Bank Sale Transaction or consummate any such Bank
Sale Transaction if doing so would in any way adversely affect the ability of
the parties to this Agreement to consummate the transactions provided for herein
under the terms and conditions provided for herein in a timely manner, or would
otherwise in any way decrease the likelihood that the transactions provided for
herein will be completed in accordance with the terms and conditions of this
Agreement; (y) on and after consummation of any such Bank Sale Transaction, all
the obligations, covenants, agreements, representations, warranties and
indemnifications incurred or given by the Seller and its affiliates in and under
this Agreement shall continue to be the obligations, covenants, agreements,
representations, warranties and indemnifications of AFC and its continuing
subsidiaries and affiliates, regardless of whether the Counterparty in such Bank
Sale Transaction succeeds, as a matter of law or contract, to any of the
foregoing upon consummation of such transaction; and (z) on and after
consummation of any such Bank Sale Transaction, all the rights obtained by the
Buyer and its affiliates in and under this Agreement as against the Seller and
its affiliates shall continue to be rights possessed by the Buyer and its
affiliates as against AFC and its continuing subsidiaries and affiliates,
regardless of whether such rights also may then be asserted by the Buyer and its
affiliates, as a matter of law or contract, against the Counterparty in such
Bank Sale Transaction. It is expressly understood and agreed by the parties
hereto that the Seller is presently contemplating entering into a Bank Sale
Transaction on or about the date of this Agreement involving certain of the
Retained Assets and Retained Liabilities (specifically including, without
limitation, the Trusteed Deposit Accounts), and that the Seller may desire to
consummate such Bank Sale Transaction at or around the time of the Closing under
this Agreement, to the extent provided in Section 3.03(b) below.
(b) Seller shall include in the definitive agreement for any
Bank Sale Transaction (the "Bank Sale Agreement") a provision under which each
Counterparty thereto (A) agrees, from the execution of such Bank Sale Agreement
until the date that is three years after the last principal transaction provided
for therein, not to use to its own advantage, and to ensure that none of its
affiliates uses to its advantage, any non-public information relating to Seller,
specifically including GMB, obtained by such Counterparty directly or indirectly
from Seller or its current or former employees that does not reasonably relate
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to the business or assets being acquired by such Counterparty in the Bank Sale
Transaction ("Counterparty Restricted Information"), whether such Counterparty
Restricted Information may have been or may be obtained by the Counterparty, its
affiliates, representatives, or agents, or employees of any of the foregoing
(collectively, the "Counterparty Group"), in the course of negotiations or
investigations leading to execution or consummation of the Bank Sale Agreement
or may be obtained by any of the Counterparty Group after such consummation from
former employees of Seller, which provisions shall specifically reference,
without limiting the generality of the foregoing, that information related to
the Business is Counterparty Restricted Information, and shall further
specifically reference as a prohibited usage of Counterparty Restricted
Information thereunder, any solicitation by such Counterparty or its affiliates
of any Business from the Customers, to the extent that such Customers may have
been or may be specifically identified by the Counterparty or its affiliates as
a result of information obtained by any one or more of the Counterparty Group
from Seller or its employees in the course of negotiation or investigations
leading to execution or consummation of the Bank Sale Agreement or after
consummation thereof from former employees of Seller, and (B) agrees to return
to Seller all such Counterparty Restricted Information taking the form of
documents, books, records or tapes and to destroy any electronic records in its
possession containing such Counterparty Restricted Information.
(c) Without limiting the foregoing, and for a period of three
years after the Closing Date hereunder, Seller will not disclose or make
available to any Counterparty in any Bank Sale Transaction (except for any
required disclosure under regulatory applications) any of the nonpublic
information directly or indirectly related to any of the Business being acquired
or assumed by Buyer hereunder, except for any such information (non-customer
specific, in any event) which is also directly related to the business being
acquired by the Counterparty or Counterparties under the Bank Sale Agreement and
is necessary to be disclosed to the Counterparty or Counterparties thereunder,
provided that Seller will in no event disclose during such period to any
Counterparty in any Bank Sale Transaction or any person proposed to be a
Counterparty in any such transaction the identity of the Customers.
ARTICLE 3
PURCHASE AND SALE OF TRUST SUBSIDIARY STOCK
3.01 Purchase by Buyer.
Upon the terms and subject to the conditions set forth in this
Agreement, Buyer agrees to purchase or cause an affiliate of Buyer to purchase
all of the shares of the capital stock of the Trust Subsidiary issued and
outstanding on the Closing Date (the "Stock") from Seller, and Seller agrees to
sell or cause to be sold all of the Stock to Buyer.
3.02 Purchase Price.
On the Closing Date, Buyer shall pay to AVC or GMB, as AVC may
designate, in cash, an amount equal to Three Million Two Hundred Thirty Thousand
and 00/100 Dollars ($3,230,000.00) plus the "Minimum Capitalization Amount" (as
defined below) (such amount being referred to herein as the "Base Purchase
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Price"). The total purchase price to be paid by Buyer for its acquisition of the
Stock shall be subject to adjustment as provided for in Section 3.05 below. The
"Minimum Capitalization Amount" is the minimum amount of capital, if any,
required to be maintained in the Trust Subsidiary as of the Closing by any and
all bank regulatory authorities having jurisdiction over the Trust Subsidiary
and actually maintained therein at such time in the form of liquid funds held in
a separate deposit account of a bank located in the United States under the name
and only the name of the Trust Subsidiary or such other form or manner as may be
directed at such time by Buyer.
3.03 Closing Date.
(a) The purchase and sale of the Stock hereunder shall occur at
the offices of Sullivan & Worcester LLP, One Post Office Square, Boston,
Massachusetts, or at such other place as shall be mutually agreeable to the
parties, on a date to be mutually agreed upon by Buyer and AFC, which date shall
be within five (5) business days after the day on which the last of the
conditions precedent set forth in Articles 8, 9 and 10 hereof has been satisfied
or properly waived (the "Satisfaction Date"), subject to Section 3.03(b) below.
(b) If, as of the Satisfaction Date under Section 3.03 (a)
above, the Seller shall have entered into but not consummated a definitive
agreement or agreements for one or more Bank Sale Transactions pursuant to which
all or substantially all the capital stock of GMB or AFC or all or substantially
all the Retained Assets and Retained Liabilities (excluding the building
presently serving as GMB's main office and any Retained Trust Agreements) are to
be acquired and/or assumed by a Counterparty or pursuant to which GMB or AFC is
to merge with a Counterparty, and if, as of the Satisfaction Date, it appears to
the reasonable satisfaction of Buyer that the Seller will be able to consummate
such Bank Sale Transaction within 30 days of such Satisfaction Date, then, at
the request of the Seller, the Closing Date hereunder shall be postponed to a
date not more than 30 days after the Satisfaction Date, and in any case to a
date not later than the Termination Date (as such term is defined in Section
11.01 (d) below) in order that the Closing hereunder may occur at or about the
same time that such Bank Sale Transaction is consummated.
(c) On the Closing Date, the following actions shall be taken:
(i) Buyer shall pay the Base Purchase Price to AVC or GMB, as
AVC may designate, by wire transfer of immediately available federal funds to
such bank account in the United States of America as such payee shall designate
at least two (2) business days prior to the Closing Date;
(ii) Seller shall deliver or cause to be delivered one or more
certificates for the Stock to Buyer or an affiliate of Buyer designated thereby,
duly endorsed in blank or with stock powers duly endorsed in blank, together
with such other documents as Buyer may reasonably request to evidence the
transfer to Buyer or such affiliate of good and valid title in and to the Stock,
free and clear of any lien, security interest, pledge, charge, encumbrance,
restriction, right, option to purchase, call or commitment of any kind or
nature;
(iii) Buyer shall reimburse the Seller for all sales taxes, if
any, payable by Seller or the Trust Subsidiary with respect to any of the
Personal Property transferred by GMB to the Trust subsidiary as part of the
Asset Closing, and all other sales, transfer and other taxes, if any, payable in
connection with the Asset Closing shall be borne by Seller;
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(iv) Each party shall take such other actions, and shall execute
and deliver such other instruments, certificates or other documents, as shall be
required under Articles 8, 9 and 10 hereof, including without limitation as
shall be necessary or appropriate to evidence the completion of the Asset
Closing;
(v) Seller shall deliver a calculation of Annual Revenue (as
such term is defined in Section 3.05 below) as of the last day of the month
immediately preceding the month in which the Closing occurs, which calculation
shall be for the parties general information only and shall not be determinative
in any way with respect to the calculation to be undertaken in accordance with
Section 3.04; and
(vi) To the extent reasonably requested by Buyer prior to the
Closing Date, Seller shall deliver or cause to be delivered the Business
Documents to such location(s) at which Buyer shall conduct its Trust Services
business on and after the Closing Date.
3.04 Proration; Allocation.
(a) On or prior to the Asset Closing, subject to further
non-material adjustments on or prior to the Adjustment Date, Seller shall
deliver to Buyer (i) a Schedule 3.04(a)(i) which shall accurately reflect with
respect to the Trust Agreements (A) all fees and reimbursements for expenses
paid by Customers to the Seller prior to the Asset Closing relating to services
to be rendered to such Customers under the Trust Agreements ("Trust Services")
following the Asset Closing and (B) all fees and reimbursements for expenses
which relate to Trust Services rendered prior to the Asset Closing for which
payment is to be received from Customers following the Asset Closing and (ii) a
Schedule 3.04(a)(ii) which shall accurately reflect with respect to all other
fees and expenses relating to the Business (A) all fees, disbursements and
expenses paid to or by the Seller prior to the Asset Closing relating to
services (including, without limitation, services provided under any of the
Contracts), other than Trust Services, to be rendered to or by Seller relating
to the Business ("Business Services") following the Asset Closing and (B) all
fees, disbursements and expenses which relate to Business Services rendered by
or to the Seller prior to the Asset Closing for which payment is to be received
or made following the Asset Closing. All such fees, disbursements and expenses
for both Trust Services and Business Services shall be prorated as of the Asset
Closing to allocate the same to the periods of service to which they relate.
Seller shall pay to Buyer an amount equal to the total of all such fees,
disbursements and expenses (i) paid to the Seller prior to the Asset Closing but
allocable to Trust Services or Business Services to be provided during the
period following the Asset Closing and (ii) to be paid following the Asset
Closing but allocable to Business Services provided to Seller during the period
prior to the Asset Closing. Buyer shall pay to Seller an amount equal to the
total of all such fees, disbursements and expenses (i) paid following the Asset
Closing but allocable to Trust Services or Business Services provided by Seller
during the period prior to the Asset Closing and (ii) paid by Seller prior to
the Asset Closing but allocable to Business Services to be provided to the Trust
Subsidiary during the period following the Asset Closing. The payments of such
amounts shall be made in cash by cashier's check or wire transfer of immediately
available funds on the Adjustment Date. A single net payment may be made by the
Seller or Buyer as appropriate at such time.
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(b) To the extent any additional adjustment or payment of the
prorated amounts contemplated by Section 3.04(a) above is required after the
Adjustment Date, the parties shall make any such further adjustments promptly
and in good faith.
(c) The aggregate amount of (i) the Assumed Liabilities plus
(ii) the sum of (A) the amount paid by Buyer on the Closing Date and (B) the
amount of the Supplemental Payment, if any, paid by Buyer in accordance with
Section 3.05(a) below shall be allocated among the Purchased Assets in
accordance with a schedule to be mutually agreed upon by Seller and Buyer and to
be made a part of this Agreement not less than ten (10) days following the
parties' final determination of the amount of such Supplemental Payment, if any,
in accordance with Sections 3.05(a)-(c) below.
3.05 Supplemental Payment; Adjustment Payments.
(a) As promptly as practicable following the ninetieth day after
the Closing Date or, if such ninetieth day is not the last day of a calendar
month, the first month-end day following such ninetieth day (such ninetieth or
other month-end day being referred to as the "Measurement Date"), the Base
Purchase Price may be increased in accordance with this Section 3.05 by a
supplemental payment (the "Supplemental Payment"). The Supplemental Payment
shall equal $570,000 if the Annual Revenue (as such term is defined below)
attributable to (i) all of the Trust Agreements that have been effectively
transferred and assigned by Seller to the Trust Subsidiary as part of the Asset
Closing or have been otherwise effectively transferred and assigned by Seller to
the Trust Subsidiary or Buyer as of the Measurement Date (and any immediate
successor agreements or arrangements thereto) and (ii) any agreements or
contracts that would have constituted Trust Agreements if they had been in
effect between the Seller and the other party thereto on the Closing Date and
that have been entered into by Buyer with any Prospective Retail Trust Customer,
as such term is defined further below in this Section 3.05(a), or any
Prospective Computer Processing Customer, as such term is defined further below
in Section 3.05(e), at any time after the Closing Date up to and through the
Measurement Date, and all of which are in full force and effect as of the
Measurement Date, all determined as of the Measurement Date, is equal to or
greater than $1,600,000. Buyer shall reduce the Supplemental Payment by an
amount equal to $2.50 for each $1.00 that such Annual Revenue is less than
$1,600,000; provided, however, that the Supplemental Payment may not in any case
be less than $0; and provided further, however, that if and to the extent that
such Annual Revenue as of the Measurement Date is less than $1,600,000 as a
result of either (i) Buyer's modification of the fee structure for Trust
Services as in effect for GMB at the time of Closing or (ii) changes implemented
by Buyer to the structure of the trust accounts included in the Purchased
Assets, then the Supplemental Payment shall be reduced by only $1.00 for each
$1.00 by which such Annual Revenue is less than $1,600,000 as a result of the
foregoing. As soon as reasonably practicable following the Measurement Date,
Buyer will deliver to Seller its calculation of Annual Revenue as of the
Measurement Date and a copy of the Fee Projection Report (as such term is
defined below), together with copies of any reports of new or closed accounts as
required by 12 C.F.R. ss. 9.7 (a)(2) (exclusive of any account activity not
included as part of the Business as acquired by Buyer) covering the period
beginning with the Closing Date and ending on the Measurement Date, together
with a schedule listing any changes implemented by Buyer during such period in
the fee structure for Trust Services as compared to the fee structure in effect
at Closing (collectively, the "Supplemental Payment Documents"). The term
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"Annual Revenue" means, with respect to any date, the sum of (i) annualized
gross trust correspondent computer processing fees ("Computer Processing Fees"),
(ii) annualized preparation fees for various trust related tax services ("Tax
Services Fees"), (iii) annualized administrative fees for estate administration
("Administration Fees"), and (iv) the annualized gross sum of all other fees
received for all other Trust Services ("Other Fees"), each of the foregoing fees
as determined in accordance with the following sentence. For purposes of
calculating Annual Revenue as of any date: (i) Computer Processing Fees shall
equal the contractual gross monthly fee assessed for the services covered
thereby for all customers receiving such services on such date, as annualized on
a prospective basis commencing with the first day of the first calendar month
beginning after such date; (ii) Tax Services Fees shall equal [$88,500] (which
represents the sum of such fees billed during the 1995 calendar year); (iii)
Administration Fees shall equal (X) divided by (Y), where (X) equals the sum of
(a) the estimated amount of Administration Fees for those estates under
administration on such date, determined in a manner consistent with existing GMB
revenue recognition practices, for the twelve full calendar months commencing
with the first day of the first calendar month beginning after such date (the
"1- Year Projection") plus (b) the actual Administration Fees received by GMB
for the four calendar years ended December 31, 1995, and where (Y) equals five,
provided that if such calculation results in an amount that is either less than
50% or greater than 150% of the 1-Year Projection, then the amount for
Administration Fees to be used in calculating the Annual Revenue as of such date
shall be an amount that is mutually satisfactory to the parties; and (iv) Other
Fees shall equal (X) minus (Y), where (X) equals the total gross income
projected for the twelve full calendar months commencing with the first day of
the first calendar month beginning after such date, as reported on the National
Computer Services Series 11 Fee Projection Report (the "Fee Projection Report")
produced for such period, and where (Y) equals the portion of such total gross
income included in such Fee Projection Report attributable to any and all
accounts (the "Noticed Accounts") with respect to which (i) if such date is
prior to the Closing Date, the Customer associated therewith has expressed to
any of the Seller, the Buyer, the Vermont Department or any court or other
governmental agency or authority of competent jurisdiction any opposition to or
dissent against the transfer of the Business from GMB to the Trust Subsidiary or
Seller's sale and transfer of the Trust Subsidiary to the Buyer or otherwise
notified either Seller or Buyer of such Customer's intention to close his or its
account if the transactions contemplated by this Agreement shall occur (which
expression of opposition or dissent or other such notice, in the case of such
expression or notice to the Buyer, may be subject to reasonable verification by
Seller), and such opposition or dissent or other such notice has not been
expressly withdrawn or retracted by the Customer prior to the Closing Date or
(ii) if such date is after the Closing Date, either Seller or Buyer has received
notice (which, in the case of Buyer's receipt of notice, may be subject to
reasonable verification by Seller), which has not been subsequently withdrawn or
rescinded, on or prior to such date from the account holder thereof that such
holder intends to close the account within the ensuing twelve-month period (such
income amount determined under the immediately preceding clause (Y) to be
referred to as the "Noticed Account Total" and the income attributable to any
such Noticed Account to be a "Noticed Account Fee"). The term "Prospective
Retail Trust Customers" means those prospective retail trust customers of GMB,
if any, as identified on Schedule 3.05(a) attached hereto or, subject to Buyer's
review and reasonable verification, any amended or updated version of said
Schedule 3.05(a) as may be prepared by Seller and delivered to Buyer on or prior
to the fifteenth day prior to the Closing Date.
(b) Within ten (10) business days after Buyer's delivery of the
Supplemental Payment Documents to Seller, Seller may dispute all or any portion
of the Supplemental Payment Documents (to the extent that any such disputed
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calculation would affect the amount of any Supplemental Payment payable by Buyer
under this Section 3.05) by giving written notice (a "Notice of Disagreement")
to Buyer setting forth in reasonable detail the basis for any such dispute (any
such dispute being hereinafter referred to as a "Disagreement"). The parties
shall promptly commence good faith negotiations with a view to resolving all
such Disagreements. If the Seller does not give a Notice of Disagreement in
accordance with the provisions of the first sentence of this Section 3.05(b)
within the ten (10) business day period set forth therein, Seller shall be
deemed to have irrevocably accepted the Supplemental Payment Documents in the
form delivered to Seller by Buyer.
(c) If Seller shall deliver a Notice of Disagreement and Buyer
shall not dispute all or any portion of such Notice of Disagreement by giving
written notice to Seller setting forth in reasonable detail the basis for such
dispute within five (5) business days following the delivery of such Notice of
Disagreement, Buyer shall be deemed to have irrevocably accepted the
Supplemental Payment Documents as modified in the manner described in the Notice
of Disagreement. If Buyer disputes all or any portion of the Notice of
Disagreement within the five (5) business day period described in the previous
sentence, and within five (5) business days following Buyer's delivery to Seller
of the notice of such dispute Seller and Buyer do not resolve the Disagreement,
such Disagreement shall be referred to an Independent Accounting Firm (as such
term is defined further below) mutually selected by Seller and Buyer for a
resolution of such Disagreement in accordance with the terms of this Agreement.
If Seller and Buyer do not immediately agree on the selection of an Independent
Accounting Firm, their respective independent public accountants shall
immediately select such firm. The determinations of such firm with respect to
any Disagreement shall be final and binding upon the parties and the amount so
determined shall be used to complete the final Supplemental Payment Documents.
The Independent Accounting Firm will render its determination as soon as
practicable after referral of the Disagreement to such firm, and each of the
parties shall cooperate with such firm and provide such firm with reasonable
access to the books, records, personnel and representatives of it and its
subsidiaries and such other information as such firm may require in order to
render its determination. All of the fees and expenses of any Independent
Accounting Firm retained pursuant to this Section 3.05(c) shall be paid by
Seller, if the Independent Accounting Firm agrees with the position asserted by
Buyer; shall be paid by Buyer, if the Independent Accounting Firm agrees with
the position asserted by Seller; or shall be split evenly by Seller and Buyer if
the Independent Accounting Firm does not agree with either Seller or Buyer. For
purposes of this Agreement, the term "Independent Accounting Firm" means any
"Big Six" accounting firm or its successor (other than the respective
independent public accountants of each of Seller and Buyer).
(d) Following Buyer's delivery and Seller's acceptance of the
final calculation of the Annual Revenue as of the Measurement Date, in
accordance with the provisions of Sections 3.05(a)-3.05(c) above, Buyer shall
promptly pay to GMB or AVC, as directed by AVC, the Supplemental Payment, if
any, required by Section 3.05(a) above, such payment to be made in immediately
available federal funds to such bank account in the United States of America as
the payee shall designate.
(e) As soon as practicable following the last day of each of the
first four consecutive three-month periods immediately following the Measurement
Date (each, individually, an "Adjustment Period" and collectively, the
"Adjustment Periods"), Buyer shall remit to AVC or the payee designated by AVC,
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in immediately available federal funds to such bank account in the United States
of America as the payee shall designate, the amount of any Adjustment Payment
(as defined below) due to Seller for such Adjustment Period, calculated on the
basis of any Computer Processing Fees Credit and Noticed Account Fees Credit
allocable to such Adjustment Period, determined as provided below.
(i) If during any such Adjustment Period, any one or more of
the Prospective Computer Processing Customers, as defined below, shall have
entered into a trust computer processing contract or agreement with Buyer that
calls for services to be rendered by Buyer for at least one (1) year, Buyer
shall extend to Seller for such Adjustment Period a credit (a "Computer
Processing Fees Credit") equal to (X) multiplied by (Y), where (X) equals the
total amount of annualized trust computer processing fees receivable by Buyer
from such Prospective Computer Processing Customer or Customers for the first
twelve-month period under the particular contract or agreement entered into with
each, and where (Y) equals (a) 2.5, if such contract or agreement calls for
services to be rendered by Buyer for a period of at least five (5) years; (b)
2.0, if such contract or agreement calls for services to be rendered by Buyer
for a period of at least four (4) but less than five (5) years; (c) 1.5, if such
contract or agreement calls for services to be rendered by Buyer for at least
three (3) but less than four (4) years; and (d) 0.5, in the case of any other
such contract or agreement. The "Prospective Computer Processing Customers"
shall be those prospective customers of GMB as identified on Schedule 3.05 (e)
attached hereto or, subject to Buyer's review and reasonable verification, any
amended or updated version of said Schedule 3.05(e) as may be prepared by Seller
and delivered to Buyer on or prior to the fifteenth day prior to the Closing
Date.
(ii) For each of the Adjustment Periods, Buyer shall extend
to Seller a credit (the "Noticed Account Fees Credit"), determined as soon as
practicable after the last day of such Adjustment Period, which shall equal, (a)
for each of the first three Adjustment Periods, 50% of the total gross income
received by Buyer during such Adjustment Period from all Noticed Accounts, and
(b) for the last Adjustment Period, an amount equal to the lesser of (X) or (Y),
where (X) equals 50% of the total gross income received by Buyer during such
Adjustment Period from all Noticed Accounts, and where (Y) equals (1) minus (2),
with (1) equaling 250% of the total amount of Noticed Account Fees included in
the Noticed Account Total under Section 3.05(a) above attributable to Noticed
Accounts that continue to be accounts of Buyer as of the last day of such fourth
Adjustment Period and with (2) equaling the sum of all Noticed Account Fees
Credits extended by Buyer to Seller in the first three Adjustment Periods.
Notwithstanding anything in this Agreement that may be to the contrary,
the "Adjustment Payment" due from Buyer to Seller for any Adjustment Period
shall be the lesser of (X) or (Y), where (X) equals the sum of any Computer
Processing Fees Credit and any Noticed Account Fee Credit for such Adjustment
Period, and where (Y) equals $570,000 minus the sum of (a) the Supplemental
Payment and (b) all Adjustment Payments for prior Adjustment Periods.
(f) As soon as practicable after the last day of each month
beginning after the Closing Date and ending at least 15 days prior to the
Measurement Date, Buyer shall provide to Seller a copy of the Fee Projection
Report as of such month end for the Trust Agreements transferred to and still
held by Buyer as of such month end, together with a list of any and all accounts
that become Noticed Accounts during such month. During the period extending from
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the Measurement Date until the last day of the final Adjustment Period, but only
for so long during such period as the obligation of Buyer to pay any Adjustment
Payment may continue under the terms of Section 3.05(e), Buyer will notify
Seller promptly if it enters into any trust computer processing contract or
agreement with any Prospective Computer Processing Customer.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to Buyer as of the date of
this Agreement and as of the Closing Date as follows:
4.01 Corporate Organization; Powers and Authority; Records.
(a) AFC is a business corporation, duly organized, validly
existing and in good standing under the laws of the State of New York. AVC is a
business corporation, duly organized, validly existing and in good standing
under the laws of the State of Vermont. Each of AFC and AVC is a bank holding
company, duly registered and in good standing with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") under the Bank Holding
Company Act of 1956, as amended. GMB is a banking corporation, duly organized,
validly existing and in good standing under the laws of the State of Vermont.
GMB is an "insured depository institution" as such term is defined in Section
3(c) of the Federal Deposit Insurance Act, as amended (the "FDIA"); provided,
however, that if GMB consummates one or more Bank Sale Transactions prior to the
Closing that involve the sale by GMB to one or more third parties of all or
substantially all of the Nonbusiness Assets and the assumption by one or more
third parties from GMB of all or substantially all of the Nonbusiness
Liabilities, GMB may cease to be an "insured depository institution" under the
FDIA or a banking corporation under the laws of the State of Vermont, but shall
in all events remain possessed of all required charters, authorities and
licenses, state and federal, required for the continuing operation by it of the
Business at all times prior to the Closing. GMB has the corporate power and
authority to own or lease all of its properties, and each of AFC, AVC and GMB
has the corporate power and authority to execute and deliver this Agreement and
to complete the transactions contemplated by this Agreement and to carry on its
business as presently conducted.
(b) GMB 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 the 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, either individually or in the aggregate, would not
have a Material Adverse Effect on the Seller. As used in this Agreement, the
term "Material Adverse Effect" when used for the Seller means any change or
effect that is or may reasonably be expected to be materially adverse to the
conduct, operations, or result of operations of the Business or to the value of
the Purchased Assets or to the Seller's ability to fulfill its obligations under
this Agreement, and when used for Buyer means any change or effect that is or
may reasonably be expected to be materially adverse to Buyer's ability to
fulfill its obligations under this Agreement.
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(c) 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 each of AFC, AVC and the GMB and no other
corporate proceedings on the part of AFC, AVC or GMB are necessary to approve
this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by AFC, AVC and GMB
and constitutes a valid and binding obligation of AFC, AVC and GMB, enforceable
against AFC, AVC and GMB in accordance with its terms.
(d) With respect to account records reflecting the Business and
the Purchased Assets, the books and records of GMB have been, and are being,
maintained in accordance with applicable legal and accounting requirements,
reflect only actual transactions and reflect all of such assets, liabilities and
accruals and all of such items of income and expense in accordance with
generally accepted accounting principles consistently applied. All accounting
ledgers and other books and records of GMB relating to the Business and the
Purchased Assets are located at the principal office of GMB in Rutland, Vermont
or the principal office of AFC in Glens Falls, New York, and have been made
available to Buyer, and are true, complete and correct in all material respects,
and present fairly the financial condition, results of operations and changes in
financial position of the Seller with respect to the Business and the Purchased
Assets as of the dates and for the periods indicated therein.
4.02 No Violation.
(a) Neither the execution and delivery of this Agreement by AFC,
AVC or GMB, nor the consummation by AFC, AVC or GMB of the transactions
contemplated hereby, nor compliance by AFC, AVC or GMB with any of the terms or
provisions hereof, will (i) violate, conflict with or result in a breach of any
provision of the Charter, Articles of Incorporation or Bylaws of AFC, AVC or
GMB, or (ii) assuming that the consents and approvals referred to in Section
4.03 hereof are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to AFC, AVC
or GMB, or any of its properties or assets, or (y) violate, conflict with,
result in a breach of any provisions 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 AFC, AVC or GMB
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 AFC, AVC or GMB 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, would not have a Material Adverse
Effect on the Seller.
4.03 Consents and Approvals.
Except for (i) the filing of applications and notices with, and the
obtaining of required consents and approvals of, as applicable, federal and
state regulatory authorities, including the Vermont Department and perhaps,
depending upon the structure of Seller's ownership of the Trust Subsidiary prior
to the Closing, the Federal Reserve Board, (ii) the filings, approvals and
notices required by Section 1476 of Chapter 62 and (iii) the consents or
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approvals of, or prior notices to, any nongovernmental third parties required in
connection with the Seller's assignments of its rights and interests under the
Contracts, all of which required third-party consents, approvals and notices are
disclosed in Schedule 4.03 hereto, none of AFC, AVC or GMB is required to obtain
the consent or approval of, or give notice to, any third party in connection
with the execution and delivery by AFC, AVC and GMB of this Agreement and the
consummation of the transactions contemplated hereby.
4.04 Title to Personal Property; Encumbrances; and Leases.
(a) Except as set forth on Schedule 4.04 (a) hereto, GMB has
good and marketable title to all of the Personal Property and owns such property
free and clear of any and all encumbrances, liens, mortgages, security interests
or pledges, except such encumbrances, liens, mortgages, security interests and
pledges that do not affect the value of such property in a materially adverse
manner and will not interfere with the use of such property as currently used or
contemplated to be used by Seller prior to the Asset Closing or the Trust
Subsidiary's conduct of the Business after the Asset Closing.
(b) Except as may be set forth in Schedule 4.04 (b) hereto, none
of AFC, AVC or GMB has received any notice of violation of any applicable zoning
or environmental regulation, ordinance or other law, order, regulation or
requirement relating to the conduct of the Business or otherwise affecting any
of the Purchased Assets and to the Seller's knowledge, there is no such
violation of a material nature.
(c) Each of the Trust Agreements that takes the form of an
agreement or contract and each of the Contracts is valid and binding on the
Seller and, to the Seller's knowledge, valid and binding on and enforceable
against all other respective parties thereto in accordance with their respective
terms (subject to bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting the rights and remedies of creditors generally and general
principles of equity). Each of the Trust Agreements constituting or containing a
currently effective appointment under will or other instrument is valid and
lawful. Except as may be set forth in Schedule 4.04 (c) hereto, GMB has not
received notice or otherwise become aware of, or provided notice or made a claim
with respect to, any breach or default by any other party to any of the Trust
Agreements or Contracts (all Trust Agreements with respect to which any other
parties are in breach or default being referred to in this Agreement as the
"Defaulted Trust Agreements"). There are not under any of the Contracts, any
existing breaches, defaults or events of default by GMB, or events which with
notice and/or lapse of time would constitute a breach, default or event of
default by GMB thereunder. GMB enjoys quiet and peaceful possession of all
properties subject to a Personal Property Lease.
(d) To the Seller's knowledge, all of the Personal Property is
in good maintenance, repair, and operating condition, ordinary wear and tear
excepted, and is adequate for the purposes for which it is now being or is
anticipated to be used, and is free from any material defects.
4.05 Absence of Certain Changes or Events.
Except as may be set forth on Schedule 4.05 hereto:
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(a) to the knowledge of the Seller, no fact or condition exists
which will, or could reasonably be expected to, result in a Material Adverse
Effect on the Seller in the future;
(b) since January 1, 1992, GMB has carried on the Business only
in the ordinary course and consistent with prior and prudent fiduciary and
business practice;
(c) the Seller has not entered into any agreement, contract,
commitment or transaction relating to or affecting the Business or the Purchased
Assets, except for those in the ordinary course of business (none of which,
individually or in the aggregate, has had, or could reasonably be expected to
have, a Material Adverse Effect on the Seller);
(d) GMB has not suffered any strike, work stoppage, slowdown, or
other labor disturbance affecting its conduct of the Business;
(e) since September 30, 1995, there has not been any change in
any of the accounting methods or practices or the policies, procedures or
practices of the Seller with respect to or otherwise affecting the Business or
any change in the value at which Purchased Assets are carried on the
consolidated or consolidating balance sheets of the Seller other than changes
that are reflected in their respective profit and loss statements;
(f) since September 30, 1995, there has not been any notice or
indication of intention from any person or entity to terminate any material
Contract with GMB affecting the Business or any notice or indication of
intention from any Customer(s) accounting for more than ten percent (10%) of the
Business individually or in the aggregate or third party vendor of GMB to cease
doing business with, materially change the price or other terms on which
business is transacted with or materially reduce the business transacted with
GMB, to the extent any such third party action would relate to or otherwise
affect the Business; and
(g) all suspense accounts of GMB maintained in connection with
the Business have been reconciled monthly, and no differences over $500 exist.
4.06 Legal Proceedings.
Except as set forth on Schedule 4.06 hereto, the Seller is not a party
to any, and there are no pending or, to the Seller's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against or affecting AVC
or GMB or challenging the validity or propriety of the transactions contemplated
by this Agreement, and there is no reasonable basis for any such proceeding,
claim, action or governmental or regulatory investigation. There is no
injunction, order, judgment, decree, or regulatory restriction imposed upon the
Seller or the assets of the Seller which, either individually or in the
aggregate, has had, or could reasonably be expected to have, a Material Adverse
Effect on the Seller. To the knowledge of the Seller, there are no facts,
circumstances or conditions affecting the Business which would indicate or
suggest the possibility of any unrecognized future loss caused by defalcation,
embezzlement or other employee malfeasance or by payments made or accepted in
violation of any law or regulation.
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4.07 Taxes and Tax Returns.
Each of AFC, AVC and GMB has duly filed in correct form all federal,
state, county and 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) and has duly paid or made provisions for the payment of all Taxes (as
hereafter defined) 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 hereof (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, and
any business profits, business enterprise or other tax), other than Taxes or
other charges that are not yet delinquent or are being contested in good faith
and have not been finally determined or that are not, individually or in the
aggregate, material in amount.
As used in this Agreement, the term "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.
4.08 Officers and Employees.
Schedule 4.08 hereto sets forth (i) a true, complete and correct list
of the name and address of each and every officer and employee currently
employed by GMB in connection with the Business (the "Employees"), the position
of each such Employee, and the current salary or wage of each such Employee,
(ii) a list of all individualized employment or severance agreements, contracts
or arrangements covering any such Employee (the "Employee Contracts"), and (iii)
a list and brief description of each pension, retirement, profit sharing, bonus,
thrift, stock option, restricted stock, deferred compensation, severance,
collective bargaining or other plan, agreement, trust, fund, policy or
arrangement that is maintained or contributed to, or within the past three years
has been maintained or contributed to, by the Seller that covers or affects any
two or more Employees (the "Employee Plans").
4.09 Other Statements and Reports.
AVC and GMB 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, 1995 with (i) the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
(ii) the FDIC, (iii) the Vermont Department of Banking, Insurance and Securities
and any other state banking commissions or any other state regulatory authority
(each a "State Regulator") and (iv) any self-regulatory organization or other
regulatory agency and all other material reports and statements required to be
filed by them since January 1, 1995, including without limitation, any report or
statement required to be filed pursuant to the laws, rules or regulations of the
United States, the Federal Reserve Board, the FDIC, any State Regulator or any
self-regulatory organization, and have paid all fees and assessments due and
payable in connection therewith. Except as set forth on Schedule 4.09 hereto,
there is no material unresolved violation, criticism or exception pertaining in
any way to the Business or any of the Purchased Assets which has been previously
cited by any regulatory agency in any report or statement relating to any
examination of AFC, AVC or GMB.
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4.10 Agreements with Regulatory Agencies.
None of AFC, AVC or GMB is now subject to any cease-and-desist or other
order issued by, or is now a party to any written agreement, consent agreement
or memorandum of understanding with, or is now a party to any commitment letter
or similar understanding to, nor now subject to any order or directive by, nor
now a recipient of any extraordinary supervisory letter from, nor has it adopted
any board resolution that is currently in effect at the request of, any
regulatory agency that restricts the conduct of the Business or that in any
manner relates to the Business or the management thereof by AFC, AVC or GMB (any
of the foregoing, a "Seller Regulatory Agreement"), nor has any of AFC, AVC or
GMB been advised by any regulatory agency that it is considering issuing or
requesting any Seller Regulatory Agreement.
4.11 Environmental Matters.
Except as set forth on Schedule 4.11 hereto:
(a) To the knowledge of the Seller, any real property held by
GMB in a fiduciary capacity (a "Trust Property") is, and has been, in material
compliance with all applicable environmental laws and with all rules,
regulations, standards and requirements of the United States Environmental
Protection Agency (the "EPA") and of state and local agencies with jurisdiction
over pollution or protection of the environment.
(b) To the knowledge of the Seller, there is no suit, claim,
action or proceeding pending or threatened, before any governmental entity or
other forum in which the Seller has been or, with respect to threatened
proceedings, may be, named as a defendant (i) for alleged noncompliance
(including by any predecessor), with any environmental law, rule, regulation,
standard or requirement or (ii) relating to the release into or presence in the
Environment (as hereinafter defined) of any Hazardous Materials (as hereinafter
defined) or Oil (as hereinafter defined) occurring at or on, or otherwise
affecting, any Trust Property.
(c) To the knowledge of the Seller, there are no facts or
circumstances which would provide a reasonable basis for any suit, claim, action
or proceeding as described in paragraph (b) of this Section 4.11.
(d) To the knowledge of the Seller, during the period of GMB's
ownership or operation of any Trust Property, there has been no release of
Hazardous Material or Oil in, on, under or affecting such property. To the
knowledge of the Seller, prior to the period of GMB's ownership or operation of
any Trust Property, there was no release of Hazardous Material or Oil in, on,
under or affecting such property. To the knowledge of the Seller, without any
independent inquiry or examination, both during and prior to the period of GMB's
ownership or operation of any Trust Property, there was not nor has there been
any presence of Hazardous Material or Oil discovered in, on, under or affecting
such property.
(e) The following definitions apply for purposes of this Section
4.11: (i) "Hazardous Material" means any pollutant, contaminant, or hazardous
substance or hazardous material as defined in or pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act, the Resource
Conservation and Recovery Act of 1976, Title 10, Chapter 159, Section 6602 of
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the Vermont Statutes or any other federal, state, or local environmental law,
regulation, or requirement, all as may be amended from time to time; (ii) "Oil"
means any insoluble or partially soluble oil of any kind or origin or in any
form, as defined in or pursuant to Title 10, Chapter 59, Section 1922 of the
Vermont Statutes or any other federal, state, or local environmental law,
regulation, or requirement, all as may be amended from time to time; and (iii)
"Environment" means any soil, surface waters, groundwaters, stream sediments,
surface or subsurface strata, and ambient air, and any other environmental
medium.
4.12 Insurance.
All of the policies relating to insurance maintained by the Seller with
respect to the Business and the Purchased Assets (or any comparable policies
entered into as a replacement therefor) are in full force and effect and the
Seller has not received any notice of cancellation with respect thereto.
4.13 Transactions with Certain Persons.
No Customer who is an officer or director of AFC, AVC or GMB or
greater-than-5% stockholder of AFC or an affiliate (as defined in Rule 144(a)(1)
of the Securities Act) of any such officer, director or stockholder (any such
person, an "Interested Person"), has entered into any Trust Agreement or
maintains any Customer account or relationship with or receives any trust or
fiduciary services from GMB other than Trust Agreements, accounts or services
entered into, maintained or provided in the ordinary course of business on terms
substantially the same as those prevailing at the time for comparable
transactions with other, unaffiliated persons, and which did not and do not
involve any unusual risk or other features unfavorable to GMB. Schedule 4.13
hereto contains a full description of all outstanding Trust Agreements with
Interested Persons.
4.14 Trust Agreements.
(a) Schedule 2.01(c) attached hereto sets forth as of the date
hereof, and shall be amended as necessary in accordance with Section 2.05 above
to set forth as of the Asset Closing, (i) a complete and correct list of all the
Trust Agreements, (ii) information as to the capacities of GMB under each such
Trust Agreement, and (iii) current annual fees, fee schedules and fee
arrangements with Customers and arrangements regarding payment of expenses by
Customers. Except as set forth on Schedule 2.01(c), to the Seller's knowledge,
GMB has been acting as the validly-appointed fiduciary, custodian or agent under
each Trust Agreement for all periods during which, based on a reasonable reading
of such Trust Agreement, it should have been acting as a validly-appointed
fiduciary, custodian or agent. The Seller believes that each Trust Agreement is
in full force and effect on the date hereof. There are no material oral
modifications in effect with respect to any of the Trust Agreements.
(b) GMB is not in breach or non-compliance, nor, to the
knowledge of Seller, is GMB considered to be in breach or non-compliance by the
other party thereto, of any term of any Trust Agreement, except in any such case
for any breaches that singly or in the aggregate would not have a Material
Adverse Effect on the Seller.
(c) Without limiting the foregoing, to the Seller's knowledge,
GMB has (i) complied with all applicable laws and regulations in the conduct of
the Business, including, without limitation, all laws concerning tax
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withholding, and has filed all necessary returns, reports or schedules in
connection with any such withholding as required under the Trust Agreements;
(ii) prepared and filed all income tax returns required to be prepared or filed
by it as grantor trustee or otherwise; (iii) kept all necessary records as
required by the terms of the Trust Agreements; (iv) except for the escheat
obligations of GMB which shall have been fulfilled as of the Asset Closing,
fulfilled all of its payment and escheat obligations; (v) paid all liabilities
required to be paid by it under the Trust Agreements; (vi) not made any
overpayments or over-advances under the Trust Agreements; (vii) not waived,
amended or modified any provision of any Trust Agreement except in accordance
with the provisions of such Trust Agreement and as shown in the records
maintained by the Seller that are part of the Business Documents; (viii) no
current disputes with co-agents or others as to amounts payable by or to any
such person; and (ix) to the extent required by law or by the applicable Trust
Agreements, taken all action to maintain for the benefit of the holders or other
beneficiaries or obligees under the Trust Agreements all interests in collateral
granted or pledged to secure obligations thereunder, including, without
limitation, the making of governmental or other filings to effect, perfect or
continue such interests in such collateral, except to the extent that GMB's
failure to comply with or perform any of the foregoing clauses (i)-(ix) would
not have a Material Adverse Effect on the Seller.
(d) As of the Asset Closing, all requirements and conditions to
the succession of the Trust Subsidiary as successor to GMB under each of the
Trust Agreements, other than any Retained Trust Agreements, shall have been
fulfilled, and no consents of third parties to such succession that have not
been obtained shall be required.
4.15 Disclosure.
All material facts relating to the business, operations, properties,
assets, liabilities, results of operations and financial condition of GMB
affecting the Business have been disclosed to Buyer in this Agreement and the
Schedules furnished hereto. No representation or warranty contained in this
Agreement, and no statement contained in any certificate, list or other writing
furnished to Buyer pursuant to the provisions hereof, to the knowledge of the
Seller, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein, in
light of the circumstances in which they are made, not misleading. No
information material to the Agreement and which is necessary to make the
representations and warranties contained herein not misleading, to the knowledge
of the Seller, has been withheld from, or has not been delivered in writing to,
Buyer. For purposes of this Agreement, "to the knowledge of the Seller" means
any fact, condition or circumstance actually known by any senior officer of the
Seller engaged in the Business, including any vice president or above in the
trust department of GMB and any other senior officer of the Seller, including
any senior vice president or above, and any fact, condition or circumstance that
should have been known by any such senior officer in the reasonable exercise of
such officer's duties in accordance with prevailing banking and trust practices
and procedures.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to each of AFC, AVC and GMB as
follows:
5.01 Corporate Organization, Powers and Authority.
(a) Buyer is a national banking association, duly organized,
validly existing and in good standing under the laws of the United States of
America. Buyer is an "insured depository institution" as such term is defined in
Section 3(c) of the FDIA. Buyer has the corporate power and authority to own or
lease its properties, to execute and deliver this Agreement and to complete the
transactions contemplated by this Agreement and carry on its business as
presently conducted.
(b) Buyer is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or the 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, either individually or in the aggregate, would not
have a Material Adverse Effect on Buyer.
(c) 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 Buyer. No other corporate proceedings on
the part of Buyer are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Buyer and constitutes a valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms.
5.02 No Violation.
(a) Neither the execution and delivery of this Agreement by
Buyer, nor the consummation by Buyer of the transaction contemplated hereby, nor
compliance by Buyer with any of the terms or provisions hereof, will (i)
violate, conflict with or result in a breach of any provision of the Articles of
Association or Bylaws of Buyer, or (ii) assuming that the consents and approvals
referred to in Section 5.03 hereof are duly obtained, (x) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Buyer, or any of its properties or assets, or (y) violate,
conflict with, result in a breach of any provisions 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
Buyer 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 Buyer 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, would not have a Material
Adverse Effect on Buyer.
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5.03 Consents and Approvals.
Except for the filing of applications and notices with, and the
required consents and approvals of, as applicable, federal and state bank
regulatory authorities, including the Vermont Department and perhaps, depending
upon the structure of the ownership of the Trust Subsidiary by Buyer's parent
holding company, Vermont Financial Services Corporation ("VFSC"), following the
Closing, the Federal Reserve Board, neither Buyer nor any of its affiliates is
required to obtain the consent or approval of, or give notice to, any third
party in connection with the execution and delivery by Buyer of this Agreement
and the consummation of the transactions contemplated hereby.
5.04 Absence of Certain Changes or Events.
To the knowledge of Buyer, no fact or condition exists which will, or
could reasonably be expected to, result in a Material Adverse Effect on Buyer in
the future.
5.05 Legal Proceedings.
Buyer is not a party to any, and there are no pending or, to Buyer's
knowledge, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against or affecting Buyer or challenging the validity or propriety of the
transactions contemplated by this Agreement, and there is no reasonable basis
for any other proceeding, claim, action or governmental or regulatory
investigation against Buyer. There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Buyer or the assets of Buyer which, either
individually or in the aggregate, has had, or could reasonably be expected to
have, a Material Adverse Effect on Buyer.
5.06 Agreements with Regulatory Agencies.
Buyer is not subject to any cease-and-desist or other order issued by,
is not a party to any written agreement, consent agreement or memorandum of
understanding with, is not a party to any commitment letter or similar
understanding to, is not subject to any order or directive by, is not a
recipient of any extraordinary supervisory letter from, and is not subject to
any board resolution adopted at the request of, any regulatory agency that
restricts the conduct of its business or that in any manner relates to its
management or its business (any of the foregoing, a "Buyer Regulatory
Agreement"), nor has Buyer been advised by any regulatory agency that it is
considering issuing or requesting any Buyer Regulatory Agreement.
5.07 Disclosure.
All material facts relating to the financial condition of Buyer and its
ability to consummate the transaction provided for herein have been disclosed to
the Seller. No representation or warranty contained in this Agreement, and no
statement contained in any certificate, list or other writing furnished to AFC,
AVC or GMB pursuant to the provisions hereof, to the knowledge of Buyer,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein, in light of
the circumstances in which they are made, not misleading. No information
material to the Agreement and which is necessary to make the representations and
warranties contained herein not misleading, to the knowledge of Buyer, has been
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withheld from, or has not been delivered in writing to, the Seller. For purposes
of this Agreement, "to the knowledge of the Buyer" means any fact, condition or
circumstance actually known by any senior officer of Buyer, including any vice
president or above, and any fact, condition or circumstance that should have
been known by any such senior officer in the reasonable exercise of such
officer's duties in accordance with prevailing banking practices and procedures.
ARTICLE 6
CONDUCT OF BUSINESS PENDING THE CLOSING
During the period from the date of this Agreement and continuing until
the Closing, and except as expressly contemplated or permitted by this Agreement
or otherwise consented to in writing by the party hereto whom such provision is
intended to benefit:
6.01 Conduct of the Business.
(a) The Seller (which reference, for purposes of this Article 6,
includes the Trust Subsidiary from and after the time it is organized and
becomes a party to this Agreement) will carry on the Business diligently and
substantially in the same manner as heretofore, and the Seller will not, with
regard to the Business, engage in any one or more activities or transactions
which shall be outside of the usual, regular and ordinary course of the Business
as conducted as of the date hereof except for activities or transactions
expressly contemplated by this Agreement, including any Bank Sale Transaction as
described under Section 2.07 above; and
(b) The Seller will use its best efforts to preserve the value
of the Business. The Seller further agrees to use its best efforts to preserve
for Buyer the goodwill of the Customers and others having relations with GMB
through the conduct of the Business, and to cooperate with and assist Buyer in
assuring the orderly transition of such business, as will be conducted through
the Trust Subsidiary, from GMB to Buyer. Nothing in this paragraph shall be
construed as requiring Seller to engage in any activities or efforts outside of
the ordinary course of business as presently conducted, except as otherwise
expressly provided for in this Agreement. Without limiting the generality of the
foregoing, and except as set forth on Schedule 6.01 hereto or as otherwise
expressly provided for by this Agreement or as consented to in writing by Buyer,
the Seller shall not:
(i) amend, revise or otherwise change the current fee
schedules and arrangements with Customers as such are disclosed in Schedule
2.01(c) of this Agreement;
(ii) enter into any new line of business or offer any new
product in connection with its conduct of the Business;
(iii) change its methods, policies or procedures of
accounting for or relating to or including the Business in effect at January 1,
1995, except as required by changes in generally accepted accounting procedures;
(iv) except as required by applicable law or under an
existing Employee Contract or Employee Plan , (a) increase in any manner the
compensation or fringe benefits of any Transferred Employee or pay any special
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benefit to such person, other than in the ordinary course of business in normal
amounts at normal times, or (b) enter into, modify or renew any Employee
Contract with any Transferred Employee, or establish, adopt, enter into or amend
any Employee Plan covering or providing for any benefit to any Transferred
Employee;
(v) sell, lease, pledge, encumber, assign or otherwise
dispose of any material Purchased Asset, Personal Property, Contract or Trust
Agreement (other than any Retained Trust Agreement) or take any action which
would have a material adverse effect on the value of any of the foregoing;
(vi) with respect to the Business or any of the Purchased
Assets, incur any debt, liability or obligation (whether absolute or contingent,
whether primary or secondary or whether directly by way of guaranty) or make any
loan or advance, other than in any case in the ordinary course of business
consistent with past practice;
(vii) undertake, enter into or renew, amend or terminate, or
give notice of a proposed renewal, amendment or termination of any commitment
with respect to, (a) any Contract, Trust Agreement (other than any Retained
Trust Agreement) or any of the Purchased Assets other than in the ordinary
course of business consistent with past practice or (b) any capital improvement
related to the Business or any Purchased Asset, except as provided in the 1996
capital budget as previously disclosed to Buyer;
(viii) commit any act or omission which constitutes a
material breach or default by the Seller under any Seller Regulatory Agreement,
Trust Agreement (other than any Retained Trust Agreement) or Contract;
(ix) since September 30, 1995, change the procedures or
practices relating to the Business other than as required by law;
(x) establish any new trust account other than pursuant to
GMB's policies and procedures in effect on June 30, 1995, as previously
disclosed to Buyer, and in accordance with customary terms, conditions and
standards and applicable law and consistent with prudent fiduciary and business
practices;
(xi) waive any material right, whether in equity or at law,
that it has with respect to any Trust Agreement or Contract, except in the
ordinary course of business consistent with prudent fiduciary and business
practices;
(xii) authorize, recommend, propose or announce an intention
to authorize, recommend or propose, or enter into an agreement with respect to,
(a) any merger, consolidation, purchase and assumption transaction or business
combination (other than as contemplated by this Agreement), (b) any acquisition
of a material amount of assets or securities or assumption of liabilities or (c)
any disposition of a material amount of assets or securities, which with respect
to any of the foregoing would in any way relate to or affect the Business or any
of the Purchased Assets or Assumed Liabilities, it being expressly agreed by the
parties hereto that any agreement entered into by the Seller for or relating to
a Bank Sale Transaction as described in Section 2.07 above shall not be
prohibited by this Section 6.01 (b) (xi); or
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(xiii) 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.
6.02 No Solicitation.
The Seller will immediately cease and cause to be terminated any
activities, discussions or negotiations conducted with any parties other than
Buyer with respect to the sale or transfer of all or any portion of the Business
to be sold and transferred to the Buyer pursuant to this Agreement, and will not
solicit, initiate, encourage, respond to or participate in any discussions
regarding any inquiry or proposal from any third party relating to any such sale
or transfer while this Agreement is in effect.
6.03 Access to Information.
Upon reasonable notice and subject to applicable laws relating to the
provision of information, the Seller shall afford the officers, employees,
accountants, counsel and other representatives of Buyer, access, during normal
business hours during the period prior to the Closing, to all of the Seller's
properties, books, contracts, commitments and records relating to the Purchased
Assets and Assumed Liabilities subject to this Agreement and, during such
period, the Seller shall make available to Buyer (i) copies of applicable
periodic reports to senior management of GMB involving the Business and all
materials furnished to the Board of Directors of GMB relating to the conduct of
the Business generally, and (ii) all other information concerning the Seller's
business, properties, assets and personnel reasonably relevant to the Business
or the completion of the transactions provided for in this Agreement as Buyer
may reasonably request. The Seller shall not be required to provide such access
or to disclose such information where such access or disclosure would contravene
any law, rule, regulation, order, judgment, decree or fiduciary duty or any
binding agreement entered into prior to the date of this Agreement, but in any
such case the parties hereto will attempt in good faith to make appropriate
substitute disclosure arrangements.
6.04 Advice of Changes.
Prior to the Closing, each of the Seller and the Buyer will promptly
advise the other of (i) any change or the occurrence or nonoccurrence of any
event having a Material Adverse Effect on such party or which would be
reasonably likely to cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate in any material respect
and (ii) any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement if such failure is not or cannot be cured within 30 days of
discovery. From time to time prior to the Closing, each party will promptly
supplement or amend any Schedule delivered in connection with the execution of
this Agreement to reflect any matter which, if existing, occurring or known at
the date of this Agreement, would have been required to be set forth or
described in such Schedule or which is necessary to correct any information in
such Schedule which has been rendered inaccurate thereby. Neither the delivery
of any such notice nor any supplement or amendment to such Schedule shall limit
or otherwise affect the remedies available hereunder to the party receiving such
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notice, supplement or amendment nor have any effect for the purposes of
determining satisfaction of the conditions set forth in this Agreement;
provided, however, that the election by the party receiving any such notice,
amendment or supplement prior to the Closing relating to any representation,
warranty, agreement or covenant of the other party to proceed with the Closing
shall constitute the irrevocable waiver by such party, as of the Closing, of any
claim that such party might otherwise have had against the other party for any
damages, satisfaction, compensation, specific performance or other remedy, at
law or in equity, arising out of or relating to any breach, failure or
nonfulfillment of the representation, warranty or covenant to which such notice,
amendment or supplement relates.
6.05 Current Information.
(a) During the period from the date of this Agreement to the
Closing Date, the Seller will cause one or more of its designated
representatives to confer on a regular and frequent basis (not less than
monthly) with representatives of Buyer to report on the general status of the
ongoing operations of the Business and the status of the Purchased Assets and to
cooperate and communicate fully with respect to the manner in which the Business
is proposed to be conducted before and after the Closing, including without
limitation the type and mix of products and services, personnel matters,
accounting, and the making of any capital improvement related to the Business or
any of the Purchased Assets.
(b) Each of the Seller and the Buyer will promptly notify the
other party of any Material Adverse Effect on such party and of any governmental
complaints, investigations or hearings that may relate or otherwise affect,
directly or indirectly, the Business or the transaction contemplated by this
Agreement (or communications indicating that the same may be contemplated) or
the institution or the threatened institution of significant litigation relating
to or otherwise affecting, directly or indirectly, the Business, and will keep
such other party reasonably informed of such events.
6.06 Failure to Fulfill Conditions.
In the event that a party hereto determines that a condition to its
obligation to complete the transactions contemplated by this Agreement cannot be
fulfilled and will not be waived, it will promptly notify the other party.
ARTICLE 7
OBLIGATIONS OF PARTIES PRIOR TO AND AFTER THE CLOSING
7.01 Regulatory and Other Approvals.
Each party (i) shall, as soon as practicable after the date hereof,
prepare and file, and shall assist and cooperate in a timely fashion with the
other party in its preparation and filing of, applications with the appropriate
federal and/or state regulatory authorities for all approvals required by law or
regulation to effect the transactions contemplated by this Agreement, and the
parties hereto shall, if required, publish appropriate notice of such
applications, and (ii) shall, as soon as practicable after the date hereof, seek
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to obtain, and shall assist and cooperate in a timely fashion with the other
party in its attempts to obtain, all other consents and approvals necessary to
effect such transactions, including the approval or consent of nongovernmental
third parties of the assignment of the Seller's rights and interests under the
Contracts, if and as required. The parties agree to use their respective best
efforts to cooperate and obtain any and all such regulatory and other approvals
at the earliest practicable time, and to satisfy any reasonable conditions
imposed by the regulators or other parties whose consent or approval is
required.
7.02 Further Assurance.
Each party will use its best efforts to perform its obligations under
this Agreement and to take such actions as are necessary or advisable to satisfy
the conditions set forth herein. In connection with the foregoing, to the extent
any one or more Customers shall object to the Chapter 62 proceeding relating to
Seller's transfer of the Business to the Trust Subsidiary or otherwise object to
the transfer of such Customer's account to the Trust Subsidiary or Buyer, Seller
shall use its best efforts to persuade such Customer(s) to withdraw such
objection or, to the extent such efforts are unsuccessful or would be
inappropriate if continued, shall use its best efforts to transfer the
trusteeship of each such Customer's account(s) to a suitable successor trustee.
Each party hereby agrees to execute and deliver such instruments and take such
other actions as the other party may reasonably require in order to carry out
the intent of this Agreement. In connection with the Asset Closing, Seller
agrees to give the Trust Subsidiary such bills of sale, assignments and other
instruments of conveyance and transfer as, in the reasonable judgment of Buyer,
shall be necessary and appropriate to vest in the Trust Subsidiary the legal and
equitable title to the Purchased Assets, free and clear of all liens and
encumbrances. Seller further agrees to use its best efforts to obtain all
necessary and appropriate consents from third parties to effect the substitution
of Buyer or the Trust Subsidiary in place of GMB with respect to any fiduciary,
custodial or agency appointments of GMB included within the Purchased Assets or
otherwise relating to the Business that have not been effectively transferred to
the Trust Subsidiary, whether in accordance with Chapter 62 or otherwise, at any
time from and after the Closing Date; provided, however, that Seller shall not
be required to incur substantial additional costs or expenses in fulfillment of
its obligation contained in this sentence.
7.03 Limitations on the Seller's Fiduciary Services Business
Activities.
AFC and its subsidiaries and affiliates will not, directly or
indirectly, solicit to provide or provide, by any means including, without
limitation, personal contact, mail or telephone, any form or manner of Fiduciary
Services (as such term is defined below) to any of the Customers for a period of
three years after the Closing Date. As used in this Agreement, the term
"Fiduciary Services" means services provided primarily for the benefit of others
in the capacity as investment manager, trustee, custodian, agent, executor,
administrator, guardian of estates, assignee, receiver or committee of estates
of lunatics. Nothing in this Section 7.03 shall prevent the subsidiary banks or
other affiliates of AFC after the Closing from providing any services, including
without limitation Fiduciary Services, to any person or entity if the subsidiary
bank or affiliate providing such services is initially approached without any
prior solicitation of any kind by such person or entity regarding such services.
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7.04 Officers and Employees.
Buyer intends to offer employment, through the Trust Subsidiary, to
such number of the Employees who meet Buyer's qualifications and remain in good
standing as Employees prior to the Closing Date, as it requires to conduct the
Business after the Closing Date. Buyer shall provide to AFC at least 30 days
prior to the Closing Date a list of the Employees to whom Buyer intends to offer
employment after the Closing (such specified Employees being referred to as the
"Transferred Employees"), which list may be amended from time to time by Buyer
prior to the Closing Date. Buyer shall offer to the Transferred Employees the
same benefits as are maintained by Buyer from time to time for the benefit of
its employees similarly situated. Buyer shall cause its employee benefit plans,
programs or arrangements, other than any employee pension plan, to treat the
prior service of each Transferred Employee with GMB or its affiliates, to the
extent such prior service is recognized under any comparable plan, program or
arrangement of the Seller, as service rendered to Buyer or its affiliates, as
the case may be, for purposes of eligibility to participate, vesting and
eligibility for special benefits under each such plan, program or arrangement of
Buyer, but not for benefit accrual attributable to any period before the Closing
Date. Buyer shall have no obligations or liabilities whatsoever, relating to
severance benefits or otherwise, to any Employee other than those persons who
are included among the Transferred Employees and, in any case, Buyer shall have
no obligations or liabilities to any of the Employees, including the Transferred
Employees, with respect to or under the terms or conditions of any Employee
Contract or Employee Plan.
7.05 Systems Conversion.
From and after the date hereof, the Seller shall meet with Buyer on a
regular basis to discuss and plan for the conversion of GMB data processing and
related electronic informational systems relating to the Business to those used
by Buyer. Buyer shall use its best efforts to complete the systems conversion as
soon as is reasonably practicable following the Closing Date. Until such time as
the conversion is completed, the Seller shall assist Buyer by providing access
to the Seller's computer software and computer and data processing services
relating to or otherwise affecting the Business. Each party shall be responsible
for its own costs and expenses associated with the systems conversion.
7.06 Public Announcements; Confidentiality; No Misuse of Seller
Information; Restricted Names.
(a) Except as otherwise required by law or the rules of the
NASDAQ Stock Market, the Seller and Buyer will cooperate with each other in the
development and distribution of all news releases and other public information
disclosures with respect to this Agreement or any of the transactions
contemplated hereby. Each of the Buyer and the Seller will hold all non-public
information relating to the other party received by it from the other party,
directly or through agents or representatives, under this Agreement or in the
course of any discussions and negotiations leading to this Agreement in
strictest confidence and shall not disclose, and shall take all appropriate
steps to ensure that its employees, agents and representatives having access to
such information do not disclose, any such information to any third parties, to
the public generally, or to any of its own employees, agents or representatives
who have no need to know such information, unless and until such information
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shall otherwise have become publicly known; provided, however, that non-public
information relating to the Business shall be deemed non-public information of
the Buyer after the Closing.
(b) Buyer and its affiliates will not, directly or indirectly,
solicit to provide or provide, by any means including, without limitation,
personal contact, mail or telephone, any form or manner of Fiduciary Services to
any customer of Seller whose account is serviced by Buyer in accordance with the
Servicing Agreement (as such term is defined in Section 7.07 below) for so long
as such customer's account is serviced by Buyer under the Servicing Agreement.
For a period of three years after the Closing Date, Buyer and its affiliates
will not use to its or their advantage any Restricted Information (as such term
is defined below), including without limitation soliciting to provide or
providing any form of Individual Retirement Accounts or Keogh Accounts to former
customers of GMB whose Trusteed Deposit Accounts have been transferred to a
Counterparty in any Bank Sale Transaction, to the extent that Buyer or its
affiliates shall have identified such customers by use of any such Restricted
Information. As used in this Section 7.06(b), the term "Restricted Information"
means any of the information of or relating to GMB or its business, operations
or customers obtained by Buyer from Seller under this Agreement or in
negotiations or investigations leading up to the parties' execution and delivery
of this Agreement and consummation of the transactions contemplated hereby or
obtained by Buyer after Closing from former employees of Seller, including
without limitation information relating to the Trusteed Deposit Accounts or the
loan or deposit operations or business of GMB; provided, however, that
Restricted Information shall not in any event include any of the following: (i)
information that relates to the Business and is necessary to Buyer after the
Closing in the continued operation and further development of the trust,
fiduciary, custodial, agency and other business constituting the Business; (ii)
information that is or becomes generally available to the public other than as
result of a disclosure by Buyer or any affiliate or representative of Buyer, or
(iii) information that was previously known or available to Buyer or its
affiliates or representatives on a nonconfidential basis prior to its disclosure
to Buyer by Seller, its affiliates or representatives. Buyer agrees to return to
Seller all of such Restricted Information taking the form of documents, books,
records or tapes and to destroy any electronic records in its possession
containing such Restricted Information. Nothing contained in this Section
7.06(b) or elsewhere in this Agreement shall be deemed to prohibit Buyer or any
of its affiliates from engaging in general marketing and/or soliciting
activities in any area of business conducted through customary mass media
sources, including without limitation print media, television and radio, which
are not intended to specifically target persons who are customers of Seller
whose accounts are serviced by Buyer in accordance with the Servicing Agreement
or persons who are former GMB customers whose Trusteed Deposit Accounts have
been transferred to a Counterparty in a Bank Sale Transaction.
(c) Nothing in this Section 7.06 shall prevent the subsidiary
banks or other affiliates of VFSC after the Closing from providing any services,
including without limitation Fiduciary Services or services pertaining to
Individual Retirement Accounts or Keogh Accounts, to any person or entity if the
subsidiary bank or affiliate providing such services is initially approached
without any prior solicitation of any kind by such person or entity regarding
such services.
(d) Buyer shall not use or permit any successor to use the names
"Green Mountain Bank," "First Twin State Bank," "Proctor Bank" or "United
Vermont Bancorporation."
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7.07 Servicing Arrangements.
On the Closing Date, AFC and Buyer shall enter into a servicing
agreement in substantially the form included as Exhibit A hereto (the "Servicing
Agreement"), which shall provide for the continued provision by Buyer after the
Closing Date to AFC and its affiliates of fiduciary services similar in type and
quality to the fiduciary services currently being provided by GMB to AFC and its
affiliates.
7.08 Lease Arrangements.
On the Closing Date, the Seller and Buyer shall enter into a lease
agreement in substantially the form included as Exhibit B hereto (the "Lease
Agreement"), pursuant to which Buyer shall lease for the period from the Closing
Date through November 30, 1996 that space of approximately 2,083 square feet
located in 80 West Street, Rutland, Vermont currently occupied by the trust
department of GMB, at a per annum rate of Eight and 00/100 Dollars ($8.00) per
square foot.
7.09 Section 338(h)(10) Election.
If Buyer so elects, as evidenced by written notice given to AFC not
later than the Closing Date, Buyer and AFC will join in making an election under
Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (a "Section
338(h)(10) Election"). Buyer will be responsible for preparing and filing all
documents and materials necessary in connection with making the Section
338(h)(10) Election, and AFC agrees to cooperate with Buyer in connection
therewith (including, without limitation, signing and returning to Buyer after
the Closing Date, completed Internal Revenue Service Forms 8023-A and any other
documents sent to it for its signature in connection therewith (to the extent
such documents are consistent therewith) within fifteen (15) days of its receipt
of such documents and filing any such documents with its tax returns as
necessary). The fair market value of the Purchased Assets shall be determined in
a manner consistent with the allocation of values contemplated by Section
3.04(c) above. Buyer and AFC will file all tax returns in a manner consistent
with the Section 338(h)(10) Election and the valuation of the Purchased Assets
as so determined.
7.10 Alternative Structure.
Notwithstanding anything to the contrary contained in this Agreement,
at any time prior to the Closing Date, Buyer shall be entitled to revise the
structure of its acquisition of the Business as contemplated by this Agreement,
so long as the transactions comprising such revised structure shall (i) be
capable of consummation in as timely a manner as the structure contemplated
herein and (ii) not otherwise have a material adverse impact on the Seller,
including on the financial benefits reasonably expected to be derived by the
Seller from the transactions provided for herein or the costs likely to be
incurred by Seller in effecting such transactions. This Agreement and any
related documents shall be appropriately amended in order to reflect any such
revised structure.
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ARTICLE 8
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer under this Agreement to be performed
on or before the Closing Date shall be subject to the satisfaction by or on
behalf of the Seller, on or before the Closing Date, of the following
conditions, unless such satisfaction is waived by the Buyer:
8.01 Representations and Warranties True; Obligations Performed.
(a) The representations and warranties made by the Seller in
this Agreement, including any that may be contained in any Schedule hereto,
shall be true at and as of the Closing Date as though such representations and
warranties were made at and as of such time, except for any changes consented to
by Buyer or otherwise expressly permitted in this Agreement.
(b) The Seller shall have performed and complied with all
obligations and agreements required by this Agreement to be performed or
complied with by it prior to or at the Closing Date.
(c) From the date of this Agreement until the Closing Date,
there shall have been no Material Adverse Effect, not cured, on the Seller;
provided, however, that the updating of Schedule 4.04(c), as contemplated by
Sections 2.05 and 4.04(c) above, to amend and revise the list of Defaulted Trust
Agreements contained in said Schedule 4.04(c) and/or the aggregate amount of the
fees payable to Seller under the Defaulted Trust Agreements, including any
increase thereof from the date of this Agreement up to and including the Closing
Date, shall not on their own constitute the occurrence of a Material Adverse
Effect for purposes of this Section 8.01(c), subject in all cases, however, to
the continuing effect and applicability of Section 8.01(h) below.
(d) On the Closing Date, no action, suit or proceeding shall be
pending or threatened against the Seller which would reasonably be expected to
result in a Material Adverse Effect on the Seller.
(e) Each of the Servicing Agreement and the Lease Agreement
shall have been duly executed and delivered by Buyer and Seller and shall be in
full force and effect on the Closing Date.
(f) Buyer shall have received the opinion of Gallop, Johnson &
Neuman, L.C., counsel to the Seller, dated the Closing Date, such opinion to be
in substantially the form attached hereto as Exhibit C. In delivering such
opinion, said counsel may reasonably rely on the opinion of Vermont counsel,
such counsel and opinion to be reasonably satisfactory to Buyer and its counsel,
with regard to matters of Vermont law.
(g) Each of AFC, AVC and GMB shall have delivered to Buyer a
certificate signed by its President, Chief Financial Officer and senior officers
having responsibility for the management and operation of the Business, dated
the Closing Date, certifying to the fulfillment of all of the foregoing
conditions.
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(h) The Closing Annual Revenue (as such term is defined below)
shall be not less that $1,500,000.00. For purposes of this Section 8.01(h), the
"Closing Annual Revenue" shall equal (i) the Annual Revenue, determined in
accordance with Section 3.05(a), as of the most recent practicable date prior to
the Closing, minus (ii) the amount of such Annual Revenue attributable to any
and all Retained Trust Agreements, Defaulted Trust Agreements and any other
Trust Agreements that have not been effectively transferred and assigned by
Seller to the Trust Subsidiary as part of the Asset Closing, plus (iii) if, as
of the Closing Date, Buyer shall have received written commitment, in form and
substance satisfactory to Buyer, from any one or more Prospective Computer
Processing Customers for such Prospective Computer Processing Customer(s) to
purchase trust correspondent computer processing services from Buyer after the
Closing, the amount of Computer Processing Fees that would be attributable to
each such Prospective Computer Processing Customer if a contract for such
services had been in effect between Seller and such Prospective Computer
Processing Customer prior to the Asset Closing and had been effectively
transferred and assigned by Seller to the Trust Subsidiary as part of the Asset
Closing (provided that the amount added under this clause (iii) shall not exceed
the Notice Account Total, if any, deducted from gross income in computing Annual
Revenue in clause (i) above).
ARTICLE 9
CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS
Each and every obligation of the Seller under this Agreement to be
performed on or before the Closing Date shall be subject to the satisfaction by
or on behalf of the Buyer, on or before the Closing Date, of the following
conditions, unless such satisfaction is waived by the Seller:
9.01 Representations and Warranties True; Obligations Performed.
(a) The representations and warranties made by Buyer in this
Agreement shall be true at and as of the Closing Date as though such
representations and warranties were made at and as of such time, except for any
changes consented to by the Seller.
(b) Buyer shall have performed and complied with all obligations
and agreements required by this Agreement to be performed or complied with by it
prior to or at the Closing Date.
(c) From the date of this Agreement until the Closing Date,
there shall have been no Material Adverse Effect, not cured, on Buyer.
(d) On the Closing Date, no action, suit or proceeding shall be
pending or threatened against Buyer which would reasonably be expected to result
in a Material Adverse Effect on Buyer.
(e) The Seller shall have received the opinion of Sullivan &
Worcester LLP, counsel to Buyer, dated the Closing Date, such opinion to be in
substantially the form attached hereto as Exhibit D. In delivering such opinion,
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said counsel may reasonably rely on the opinion of Vermont counsel, such counsel
and opinion to be reasonably satisfactory to the Seller and its counsel, with
regard to matters of Vermont law.
(f) Buyer shall have delivered to the Seller a certificate of
its President and Chief Financial Officer, dated the Closing Date, certifying to
the fulfillment of all of the foregoing conditions.
ARTICLE 10
CONDITIONS PRECEDENT TO ALL PARTIES' OBLIGATIONS
Each and every obligation of the parties under this Agreement to be
performed on or before the Closing Date shall be subject to the satisfaction, on
or before the Closing Date, of the following conditions, unless such
satisfaction is mutually waived (to the extent legally permitted) by the
parties:
10.01 Approval of Regulatory Authorities.
All necessary approvals, authorizations and consents of all federal and
state regulatory authorities 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
or been terminated. No order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transaction contemplated by this Agreement shall be in
effect and no proceeding initiated by any regulatory authority seeking an
injunction shall be pending. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
regulatory or judicial authority which prohibits, restricts or makes illegal
consummation of the transaction contemplated by this Agreement.
10.02 Completion of Asset Closing.
Subject to Buyer's rights under Section 7.10 above to revise the
structure of its acquisition of the Business as contemplated by this Agreement,
the Asset Closing shall have been completed in accordance with the provisions of
Article 2 of this Agreement.
ARTICLE 11
TERMINATION
11.01 Methods of Termination.
This Agreement may be terminated:
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(a) At any time on or prior to the Termination Date (as such
term is defined below), if the Closing has not already then occurred, by mutual
written agreement of Buyer and the Seller; or
(b) At any time on or prior to the Termination Date, if the
Closing has not already then occurred, by either Buyer or the
Seller in writing, if (i) the other party has, in any material respect, breached
any covenant or agreement contained herein or (ii) any material representation
or warranty of the other party contained herein is or becomes inaccurate or
misleading (taking into account that Seller's updating of the list of Defaulted
Trust Agreements contained in Schedule 4.04(c) shall not on its own result in a
breach of Seller's representation and warranty contained in Section 4.04(c)),
and in either case if such breach or inaccuracy has not been cured or otherwise
corrected within forty-five (45) days after the date on which written notice of
such breach or inaccuracy is given to the party committing such breach and, in
the reasonable judgment of the party terminating this Agreement, cannot be cured
or otherwise corrected by the close of business on the Termination Date; or
(c) At any time prior to the Termination Date, by either Buyer
or the Seller in writing, if any of the requests or applications for prior
approval or consent referred to in Section 7.01 hereof is denied, and, to the
extent applicable, the time period for appeals and requests for reconsideration
has expired; or
(d) By either Buyer or the Seller in writing, if the Closing has
not occurred by the close of business on September 30, 1996 (the "Termination
Date").
11.02 Procedure Upon Termination.
In the event of termination pursuant to Section 11.01 hereof,
written notice thereof shall forthwith be given to the other party, and this
Agreement shall terminate upon receipt of such notice, immediately unless an
extension is consented to by the party having the right to terminate.
If this Agreement is terminated as provided herein:
(a) Each party will redeliver all documents, work papers and
other material of the other party relating to this transaction, whether so
obtained before or after the execution hereof, to the party furnishing the same.
(b) All information received by either party hereto with respect
to the business of the other party (other than information which is a matter of
public knowledge or which has heretofore been or is hereafter published in any
publication for public distribution or filed as public information with any
regulatory authority) shall not at any time be used for business advantage by
such party or disclosed by such party to third persons.
(c) Nothing contained in this Article 11 shall be deemed to
excuse either party for a breach of any of its obligations or agreements
undertaken or made in this Agreement.
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11.03 Effect of Termination
If this Agreement shall be terminated as a result of the Seller's
breach of its covenant under Section 6.02 or as a result of the willful breach
of this Agreement by either Buyer or the Seller, the other party shall be
entitled to be paid an amount equal to $150,000 to compensate it for its
out-of-pocket expenses and the time and effort of its management in working on
the transaction. In addition, if the Seller enters into an agreement with any
other party for the sale and transfer of the Business during a 12 month period
following Buyer's termination of this Agreement due to the Seller's committing
such a breach or willful breach as provided in the foregoing sentence, Buyer
shall be entitled to be paid an additional $200,000. Notwithstanding the
foregoing, and subject to the last clause of Section 6.04 above, either party
may pursue any remedy at law or in equity for damages or equitable relief if the
other party shall breach the terms of this Agreement, and the prevailing party
shall be entitled to be paid all out-of-pocket expenses, including attorneys'
fees and court costs, in enforcing its rights hereunder.
ARTICLE 12
INDEMNIFICATION
12.01 Trust Indemnification.
(a) The Seller hereby agrees to indemnify and hold harmless
Buyer and the Trust Subsidiary from and against any and all losses, claims,
liabilities and damages, including, without limitation, any and all
investigation, legal and other expenses reasonably incurred by either Buyer or
the Trust Subsidiary in connection with, and any amount paid by either Buyer or
the Trust Subsidiary in settlement of, any action, suit or proceeding brought
against the Seller or either Buyer or the Trust Subsidiary, or any claim
asserted against the Seller or either Buyer or the Trust Subsidiary, arising out
of any act or omission of the Seller with respect to any Trust Agreement or
related to the conduct of the Business, the ownership, possession or use of any
Purchased Asset or the payment or performance of any Assumed Liability, in each
case where such act or omission of the Seller occurred during the period prior
to the Closing.
(b) Buyer hereby agrees to indemnify and hold harmless the
Seller from and against any and all losses, claims, damages and liabilities,
including, without limitation, any and all investigation, legal and other
expenses reasonably incurred by the Seller in connection with, and any amount
paid by the Seller in settlement of, any action, suit or proceeding brought
against the Seller or either Buyer or the Trust Subsidiary, arising out of any
act or omission of Buyer or the Trust Subsidiary with respect to any Trust
Agreement or related to the conduct of the Business, the ownership, possession
or use of the Purchased Assets or the payment or performance of the Assumed
Liabilities, in each case where such act or omission occurred during the period
after the Closing, but in no event shall such indemnification relate to actions
or omissions of the Trust Subsidiary or Seller or Buyer during the period prior
to the Closing.
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12.02 General Indemnification.
Except as otherwise provided in Section 12.01 hereof, each party hereto
hereby agrees to indemnify, defend, save and hold harmless the other from and
against any and all damage, liability, loss, expense, assessment, judgment or
deficiency of any nature whatsoever (including, without limitation, reasonable
attorneys' fees and other costs and expenses incident to any suit, action or
proceeding) incurred or sustained by such other party which shall arise out of,
result from or constitute any breach by such party of any representation,
warranty or covenant under this agreement or non-fulfillment by it of any
obligation under this Agreement.
12.03 Claims.
(a) In case any claim shall be made or action brought with
respect to a matter referred to in Sections 12.01 or 12.02 hereof, the party
entitled to indemnification (the "Indemnified Party") shall promptly notify the
party liable therefor hereunder (the "Indemnifying Party") in writing, setting
forth the particulars of such claim or action, and the Indemnifying Party shall
assume the defense thereof, including, without limitation, the employment of
counsel mutually satisfactory to it and the Indemnified Party. No such claim or
action shall be settled by the Indemnifying Party without the Indemnified
Party's prior written consent, which shall not be unreasonably withheld;
provided, however, that no consent of the Indemnified Party is required in any
case if (i) such proposed settlement involves only the payment of money by the
Indemnifying Party, (ii) the Indemnifying Party is able to pay the amount of
such settlement and all related expenses, and (iii) the terms of such settlement
are to remain confidential by agreement of all parties to such action other than
the Indemnified Party. If the Indemnifying Party shall not have employed counsel
within a reasonable time after receiving notice of commencement of any such
action, or if the Indemnified Party shall have concluded that there may be
defenses available to it which are different from or additional to those
available to the Indemnifying Party, then the Indemnified Party may take actions
separately in its own defense and employ separate counsel and all legal and
other expenses, including, without limitation, the reasonable fees and expenses
of such counsel, incurred by the Indemnified Party shall be borne by the
Indemnified Party.
(b) Notwithstanding any other provisions of this Agreement, no
claim for indemnification shall be brought pursuant to Section 12.01 hereof more
than three (3) years after the Closing Date and no claim for indemnification
shall be brought pursuant to Section 12.02 hereof more than thirteen (13) months
after the later of the Closing Date or the date on which any covenant or
obligation in question was required to have been performed, except that with
respect to the Seller's representations and warranties contained in Section 4.07
above a claim for indemnification may be brought pursuant to Section 12.02
hereof at any time prior to the lapse of time within which federal, state or
local taxing authorities are entitled to assert any tax liability on the part of
the Seller for tax periods ending at or prior to the Closing Date.
(c) If an Indemnified Party receives any payment from any third
party (including any insurer) as compensation for any claim by the Indemnified
Party after the Indemnifying Party has made any payment under Section 12.01 or
Section 12.02 above to the Indemnified Party on account of such claim by the
Indemnified Party, then the Indemnified Party shall promptly pay the dollar
amount of all such prior indemnification payments to the Indemnifying Party,
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without demand or notice of any kind made by the Indemnifying Party, to the
extent of all such third-party payments received by the Indemnified Party.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.01 Amendment and Modification.
The parties hereto may amend, modify and supplement this Agreement in
such manner as may be agreed upon by them in writing. Any corporation, bank or
other entity organized by a party hereto to facilitate the consummation of the
transactions herein contemplated shall join in this Agreement, become a party
hereto and agree to be bound by its provisions by executing a written instrument
signifying such intent at such time as it is legally capable of doing so, but no
party shall be relieved of any obligation hereunder by the addition of such
party.
13.02 Assignment; Parties in Interest.
This Agreement and all of the provisions hereof shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the parties
hereto without the prior written consent of the other. Nothing in this
Agreement, including without limitation Section 7.04 above, is intended to
confer, expressly or by implication, upon any other person any rights or
remedies under or by reason of this Agreement.
13.03 Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.04 Headings.
The headings of the Sections and Articles of this Agreement are
inserted for convenience only and shall not constitute a part hereof.
13.05 Waiver.
Any condition to a party's obligation hereunder may be waived by the
other party.
13.06 Payment of Expenses.
Each party herein shall pay for its own expenses and costs in
connection with the carrying out of this Agreement except as expressly provided
otherwise herein.
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13.07 Governing Law, etc.
This Agreement shall be governed by the laws of the State of Vermont.
The representations, warranties, covenants and obligations of the parties
hereunder shall survive the Closing Date, subject to the provisions of Article
12 hereof.
13.08 Addresses for Notice, etc.
All notices, requests, demands and other communications provided for
hereunder shall be in writing (including telecopy communication) and mailed (by
registered or certified mail) or delivered by telecopy to the applicable party
at the address for such party indicated below or such other address as shall be
furnished in writing by any party, and any such notice, request, demand or other
communication shall be deemed to have been given as of the date received by the
recipient party, and copies of any such notices, requests, demands or other
communications shall be provided as follows: (i) if to Buyer, copies to Sullivan
& Worcester LLP, One Post Office Square, Boston, Massachusetts 02109, Telecopy
No. (617) 338-2880, Attention: Christopher Cabot, Esq. and Stephen J. Coukos,
Esq.; and (ii) if to Seller, a copy to Gallop, Johnson & Neuman, L.C., Interco
Corporate Tower, 101 South Hanley, St. Louis, Missouri 63105, Telecopy No. (314)
862-1219, Attention: Thomas B. Kinsock, Esq.
[Remainder of Page Intentionally Blank]
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed on its behalf by its duly authorized officers and its corporate seal
to be affixed hereto, as of the first date written above.
VERMONT NATIONAL BANK
By: /s/ John D. Hashagen, Jr.
John D. Hashagen, Jr.
President
100 Main Street
Brattleboro, Vermont 05302
Telecopy No.: 802-258-4097
ARROW FINANCIAL CORPORATION
By: /s/ Michael F. Massiano
Michael F. Massiano
President
250 Glen Street
Glens Falls, New York 12801
Telecopy No.: 518-745-5513
ARROW VERMONT CORPORATION
By: /s/ Michael F. Massiano
Michael F. Massiano
President
80 West Street
Rutland, Vermont 05702
Telecopy No.: 802-775-3696
GREEN MOUNTAIN BANK
By: /s/ John J. Murphy
John J. Murphy
Treasurer/Chief Financial Officer
80 West Street
Rutland, Vermont 05702
Telecopy No.: 802-775-3696
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<PAGE>
List of Schedules and Exhibits to Stock Purchase Agreement
Schedule 2.01(a): List of Personal Property.
Schedule 2.01(b): List of Personal Property Leases.
Schedule 2.01(c): List of Trust Agreements.
Schedule 2.01(h): List of Software Contracts.
Schedule 2.01(i): List of Miscellaneous Contracts.
Schedule 2.01(j): List of prepaid Customer fees and
expenses allocable to the period from and
after the Asset Closing.
Schedule 2.02(a)(i): List of Trusteed Deposit Accounts.
Schedule 3.04(a)(i): List of (i) all fees and reimbursements for
expenses paid by Customers to Seller prior
to the Asset Closing related to Trust
Services rendered after the Asset Closing
and (ii) all fees and reimbursements for
expenses which relate to Trust Services
rendered prior to the Asset Closing for
which payment is to be received from
Customers following the Asset Closing.
Schedule 3.04(a)(ii): List of (i) all fees, disbursements and
expenses paid to or by Seller prior to the
Asset Closing relating to Business Services
to be rendered to or by Seller following
the Asset Closing and (ii) all fees,
disbursements and expenses which relate to
Business Services rendered by or to Seller
prior to the Asset Closing for which payment
is to be received or made following the
Asset Closing.
Schedule 3.05(a): List of Prospective Retail Trust Customers.
Schedule 3.05(e): List of Prospective Computer Processing
Customers.
Schedule 4.03: List of third party consents,
approvals and notices required in connection
with Seller's assignment of its rights under
the Contracts.
Schedule 4.04(a): List of all encumbrances on the Personal
Property.
Schedule 4.04(b): List of any violations of law by AFC, AVC
and GMB relating to the Business.
Schedule 4.04(c): List of any breaches or defaults under the
Trust Agreements and Contracts.
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Schedule 4.05: List of certain changes and events with
regard to Seller.
Schedule 4.06: List of legal proceedings affecting Seller.
Schedule 4.08: List of all officers and employees employed
by GMB in connection with the Business.
Schedule 4.09: List of any violations, criticisms and
exceptions pertaining to the Business or the
Purchased Assets which has been previously
cited by any regulatory agency in any report
or statement relating to any examination of
AFC, AVC or GMB.
Schedule 4.11: Certain environmental disclosures with
regard to Seller.
Schedule 4.13: List of all outstanding Trust Agreements
with Interested Persons.
Schedule 6.01: Certain changes in Seller's conduct of the
Business.
Exhibit A: Form of Servicing Agreement.
Exhibit B: Form of Lease Agreement.
Exhibit C: Form of opinion of Seller's counsel.
Exhibit D: Form of opinion of Buyer's counsel.
Page 49 of 50
EXHIBIT 99
TO FORM 8-K
VERMONT NATIONAL BANK ANNOUNCES ACQUISITION OF
GREEN MOUNTAIN BANK TRUST DEPARTMENT
Brattleboro, Vermont, February 27, 1996 . . . . John D. Hashagen, Jr., President
and Chief Executive Officer of Vermont Financial Services Corp., announced today
that its wholly owned Vermont banking subsidiary, Vermont National Bank, has
entered into a definitive agreement with Arrow Financial Corporation and its
wholly owned Vermont banking subsidiary, Green Mountain Bank of Rutland,
Vermont, to purchase Green Mountain Bank's trust department business. The
agreement is subject to regulatory approvals. Pending these approvals, the
transaction is expected to close around mid-year.
Commenting on the transaction, Mr. Hashagen stated, "We are very pleased to be
acquiring the Green Mountain Bank trust business. Our existing trust business is
one of our most important business lines, currently generating over $3 million
in annual revenues. The addition of the Green Mountain Bank trust business
should give us approximately 800 new trust clients, additional trust revenues of
approximately $1.6 million per year and some experienced and capable trust
personnel. We plan to service these new clients through expanded trust
facilities and staff at our Rutland regional trust center. By combining the
trust department employees of the Green Mountain Bank with Vermont National
Bank's current staff we believe we will have the most experienced trust officers
and support personnel in the state of Vermont, servicing trust customers
throughout the state."
Vermont Financial Services Corp. is a two-bank holding company headquartered in
Brattleboro, Vermont. Its banking subsidiaries are Vermont National Bank, a
commercial bank with 31 banking offices throughout Vermont, and United Bank, a
savings bank headquartered in Greenfield, Massachusetts with 7 banking offices
in western Massachusetts.
Vermont Financial Services Corp. common stock is listed on NASDAQ with a trading
symbol of VFSC.
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