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
DECEMBER 19, 1995
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(Date of Earliest Event Reported)
NEW ENGLAND COMMUNITY BANCORP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation or organization)
0-14550 06-1116165
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(Commission File Number) (IRS Employer Identification No.)
POST OFFICE BOX 130, OLD WINDSOR MALL, WINDSOR, CONNECTICUT 06095
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(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (860) 688-5251
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Form 8-K, Current Report
New England Community Bancorp, Inc.
Commission File No. 0-14550
The total number of Pages in this Report (excluding exhibits) is 3 and including
exhibits is 66.
Item 5. OTHER MATTERS
On December 19, 1995, the Boards of Directors of New England Community
Bancorp, Inc., ("New England") a Delaware corporation with its principal place
of business in Windsor, Connecticut, its wholly owned subsidiary, New England
Bank and Trust Company, a Connecticut chartered commercial bank with its
principal place of business in Windsor, Connecticut and Manchester State Bank, a
Connecticut chartered commercial bank with its principal place of business in
Manchester, Connecticut, executed a Plan and Agreement of Reorganization (the
"Agreement").
Pursuant to the Agreement, upon consummation of the transaction, it is
anticipated that shareholders of Manchester State Bank will exchange each share
of common stock of Manchester State Bank for the Reorganization consideration
consisting of $35.20 payable in cash and 5.493 shares of New England's common
stock. The Agreement is subject to conditions such as shareholder and regulatory
approvals.
The parties anticipate consummating the transactions contemplated by
the Agreement in mid 1996.
In connection with the execution of the Agreement, each director of
Manchester State Bank entered into a shareholder's agreement (the "Shareholder's
Agreement") in the form required pursuant to Section 1.11 of the Agreement.
Item 7. EXHIBITS
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EXHIBIT NO. DESCRIPTION
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2 Plan and Agreement of Reorganization dated December 19, 1995
by and among New England Community Bancorp, Inc., New
England Bank and Trust Company and Manchester State Bank.
99.1 Copy of the press release, dated December 20, 1995, issued
by New England Community Bancorp, Inc.
99.2 Form of Shareholder Agreement required pursuant to Section
1.11 of the Plan and Agreement of Reorganization dated
December 19, 1995 by and among New England Community
Bancorp, Inc., New England Bank and Trust Company and
Manchester State Bank.
Dated: January 11, 1996 NEW ENGLAND COMMUNITY BANCORP,
INC.
BY /S/ David A. Lentini
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David A. Lentini, President
and Chief Executive Officer
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION PAGE
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2 Plan and Agreement 4
of Reorganization dated
December 19, 1995 by and among
New England Community Bancorp,
Inc., New England Bank and
Trust Company and Manchester State
Bank.
99.1 Copy of the press release, 59
dated December 20, 1995, issued by
New England Community Bancorp, Inc.
99.2 Form of Shareholder Agreement 62
required pursuant to Section 1.11
of the Plan and Agreement of
Reorganization dated December 19, 1995 by
and among New England Community Bancorp,
Inc., New England Bank and Trust Company
and Manchester State Bank.
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EXHIBIT 2
Plan and Agreement of Reorganization dated December 19, 1995
by and among New England Community Bancorp, Inc.,
New England Bank and Trust Company and Manchester State Bank.
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PLAN AND AGREEMENT OF REORGANIZATION
By and Among
New England Community Bancorp, Inc.
New England Bank & Trust Company
and
Manchester State Bank
Dated as of December 19, 1995
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PLAN AND AGREEMENT OF REORGANIZATION
PLAN AND AGREEMENT OF REORGANIZATION, dated as of December 19, 1995, by
and among New England Community Bancorp, Inc., a Delaware corporation (the
"Company"), New England Bank & Trust Company, a Connecticut-chartered commercial
bank and a wholly-owned subsidiary of the Company (the "Bank"), and Manchester
State Bank, a Connecticut-chartered commercial bank ("Manchester State Bank").
WHEREAS, the Boards of Directors of the Company, the Bank and
Manchester State Bank have determined that it is in the best interests of their
respective institutions and shareholders to consummate the business combination
transaction provided for herein in which Manchester State Bank will, subject to
the terms and conditions set forth herein, merge with and into the Bank, with
the Bank being the surviving corporation in the Reorganization (the
"Reorganization"); and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Reorganization and also to prescribe
certain conditions to the Reorganization.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE REORGANIZATION
1.01 THE REORGANIZATION. In accordance with the provisions of this
Agreement and of the banking laws of Connecticut, including Section 36a-125 of
the Connecticut General Statutes ("C.G.S."), at the Effective Time as defined by
Section 1.02, Manchester State Bank shall be merged with and into the Bank, the
separate corporate existence of Manchester State Bank shall cease, and the Bank
shall continue its corporate existence as the resulting corporation in the
Reorganization (the "Resulting Corporation") as a Connecticut-chartered
commercial bank under the name "New England Bank & Trust Company" with all of
the powers provided to such banks under the laws of the State of Connecticut.
Also at the Effective Time, all the outstanding shares of common stock, $10.00
par value, of Manchester State Bank ("Manchester State Bank Common Stock")
(except for (i) shares held by Manchester State Bank as treasury shares, (ii)
shares owned by any direct or indirect subsidiary of Manchester State Bank,
(iii) shares held by the Company or the Bank other than in a fiduciary or trust
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capacity for the benefit of third parties, and (iv) shares as to which
dissenters' rights have been perfected) will be converted into the right to
receive consideration in cash and shares of the Class A common stock, $.10 par
value, of the Company ("Company Common Stock"), without interest, in the manner
specified in Section 1.04 and Article II hereof, and each outstanding share of
common stock, $5.00 par value, of the Bank ("Bank Common Stock") and Company
Common Stock, respectively, shall remain outstanding and continue to be one
fully paid and nonassessable share of Common Stock of the Resulting Corporation
and of the Company, respectively.
1.02 EFFECTIVE TIME. The Reorganization shall become effective on the
last day of the month in which the filing of a certified copy of this Agreement
by the Banking Commissioner of the State of Connecticut (the "Commissioner"),
along with his approval of the Reorganization, are filed with the Secretary of
State of the State of Connecticut (the "Secretary").
1.03 EFFECT OF THE REORGANIZATION. At and after the Effective Time and
by virtue of the Reorganization, the Resulting Corporation shall possess all the
rights, privileges, powers and franchises of Manchester State Bank and the
entire assets, business and franchises of Manchester State Bank shall be vested
in the Resulting Corporation without any deed or transfer, provided the parties
may execute such deeds or instruments of conveyance as may be convenient to
confirm the same. The Resulting Corporation shall assume and be liable for all
debts, accounts, undertakings, contractual obligations and liabilities of
Manchester State Bank and shall exercise and be subject to all the duties,
relations, obligations, and trusts of Manchester State Bank, whether as debtor,
depository, registrar, transfer agent, executor, administrator, trustee or
otherwise, and shall be liable to pay and discharge all such debts and
liabilities, to perform such duties and to administer all such trusts in the
same manner and to the same extent as if the Resulting Corporation had itself
incurred the obligation or liability or assumed the duty, relation or trust, and
all rights of creditors and all liens upon the property of Manchester State Bank
shall be preserved unimpaired and the Resulting Corporation shall be entitled to
receive, accept, collect, hold and enjoy any and all gifts, bequests, devises,
conveyances, trusts and appointments in favor of or in the name of Manchester
State Bank whether made or created to take effect prior to or after the
Reorganization and the same shall inure to and vest in the Resulting
Corporation. In addition to the foregoing, the Reorganization shall have such
other effects as may be provided under the laws of the State of Connecticut.
1.04 CONVERSION OF MANCHESTER STATE BANK COMMON STOCK.
(a) At the Effective Time, each share of the common stock, par
value $10.00 per share, of Manchester State Bank ("Manchester State Bank Common
Stock") issued and outstanding immediately prior to the Effective Time (except
for (i) shares held by Manchester State Bank as treasury shares, (ii) shares
owned by any direct or indirect subsidiary of Manchester State Bank, (iii)
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shares held by the Company, or the Bank other than in a fiduciary or trust
capacity for the benefit of third parties, and (iv) shares as to which
dissenters' rights have been perfected) shall, by virtue of this Agreement and
without any action on the part of the holder thereof, be converted into and
exchangeable for Reorganization consideration ("Per Share Reorganization
Consideration") consisting of $35.20 payable in cash (the "Cash Portion") and
5.493 shares of Company Common Stock.
(b) At the Effective Time, all of the shares of Manchester
State Bank Common Stock converted into cash and Company Common Stock pursuant to
Article I shall no longer be outstanding and shall automatically be cancelled
and shall cease to exist, and each certificate (each a "Certificate") previously
representing any such shares of Manchester State Bank Common Stock shall
thereafter represent the right to receive the Per Share Reorganization
Consideration into which the share of Manchester State Bank Common Stock
represented by such Certificate has been converted pursuant to this Section 1.04
and Section 2.02(d) hereof. Certificates previously representing shares of
Manchester State Bank Common Stock shall be exchanged for certificates
representing whole shares of Company Common Stock and cash in lieu of fractional
shares issued in consideration therefor upon the surrender of such Certificates
in accordance with Section 2.02 hereof, without any interest thereon. If prior
to the Effective Time the Company should split or combine its common stock, or
pay a stock dividend or other distribution in such common stock, then the
Exchange Ratio (including, if applicable, the Minimum Exchange Ratio, the
Maximum Exchange Ratio, and the Adjusted Maximum Exchange Ratio) shall be
appropriately adjusted to reflect such split, combination, dividend or
distribution.
(c) At the Effective Time, (i) all shares of Manchester State
Bank Common Stock that are owned by Manchester State Bank as treasury shares,
(ii) all shares of Manchester State Bank Common Stock that are owned directly or
indirectly by any subsidiary of Manchester State Bank, and (iii) shares of
Manchester State Bank Common Stock held by the Company or the Bank other than in
a fiduciary or trust capacity for the benefit of third parties shall be
cancelled and shall cease to exist and no stock of the Company or other
consideration shall be delivered in exchange therefor.
1.05 DISSENTERS' RIGHTS. Notwithstanding anything in this Agreement to
the contrary and unless otherwise provided by applicable law, shares of
Manchester State Bank Common Stock which are issued and outstanding immediately
prior to the Effective Time and which are owned by shareholders who: (a)
pursuant to applicable law, deliver to Manchester State Bank, before the taking
of the vote of Manchester State Bank's shareholders on the Reorganization,
written demand for the appraisal of their shares, if the Reorganization is
effected; and (b) whose shares are not voted in favor of the Reorganization, nor
consented thereto in writing (the "Dissenting Shares"), shall not be converted
into Reorganization consideration as provided in Section 1.04, unless and until
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such holders shall have failed to perfect or shall have effectively withdrawn or
lost their right of appraisal and payment under applicable law. If any such
holder shall have failed to perfect or shall have effectively withdrawn or lost
such right of appraisal, Manchester State Bank Common Stock of such holder shall
thereupon be deemed to have been converted into the right to receive and become
exchangeable for, at the Effective Time, Reorganization consideration determined
pursuant to Section 1.04 and Section 2.02(d) hereof.
1.06 OPTIONS. [RESERVED]
1.07 OTHER MATTERS. At and after the Effective Time: (i) the Resulting
Corporation's main office shall continue to be located in Windsor, Connecticut,
(ii) except as provided in Section 1.08 hereof, the Directors and officers of
the Bank who are holding office immediately prior to the Effective Time shall
continue to be the Resulting Corporation's Directors and officers, (iii) the
Certificate of Incorporation and Bylaws of the Bank existing immediately prior
to the Effective Time shall continue to be the Certificate of Incorporation and
Bylaws of the Resulting Corporation, (iv) the authorized capital stock of the
Resulting Corporation at the Effective Time shall consist of 350,000 shares of
common stock, $5.00 par value per share, and no shares of preferred stock, as
provided in the Certificate of Incorporation of the Bank, and (v) the minimum
and maximum number of Directors of the Resulting Corporation shall be as set
forth in the Certificate of Incorporation and Bylaws of the Resulting
Corporation.
1.08 DIRECTORS. At the Effective Time, the Company shall offer (i)
Nathan G. Agostinelli currently an officer and Director of Manchester State
Bank, to be elected as a Director of the Resulting Corporation and to serve as
an officer of the resulting Corporation pursuant to an agreement in the form of
SCHEDULE 6.07(c) , and (ii) Andrew Ansaldi, Jr. currently a Director of
Manchester State Bank, to be elected as a Director of the Resulting Corporation.
1.09 ACCOUNTHOLDER ACCOUNTS. Upon the Effective Time, subject to any
contractual provisions in effect between Manchester State Bank and its
accountholders, the Resulting Corporation shall provide to each accountholder of
Manchester State Bank, without charge, an account or accounts in the Resulting
Corporation which shall be equal in value to the withdrawal account or accounts
held by such accountholder in Manchester State Bank at such time. To the extent
practicable, but without requiring that the Resulting Corporation establish any
new types of accounts, or to change the terms of the types of accounts which the
Bank had established prior to the Effective Time, the accounts provided by the
Resulting Corporation to the accountholders of Manchester State Bank shall be
selected from among the types of accounts which were made available by the Bank
to its depositors prior to the Effective Time with a view toward ensuring that
the accounts provided by the Resulting Corporation to the accountholders of
Manchester State Bank shall be comparable to the withdrawal accounts which were
held by such accountholders in Manchester State Bank prior to the
Reorganization.
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1.10 TAX CONSEQUENCES. It is intended that the Reorganization shall
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and that this Agreement shall
constitute a tax-free "plan of reorganization" for the purposes of Section 368
of the Code.
1.11 CERTAIN AGREEMENTS. In order to protect the integrity of this
Agreement, as of the date of this Agreement (a) the Company and certain
shareholders of Manchester State Bank are entering into agreements (the
"Shareholder Agreements") whereby such shareholders agree to take or refrain
from certain actions and (b) Manchester State Bank agrees to reflect on its
financial statements for December 31, 1995 and the year then ending appropriate
adjustments to the satisfaction of its independent accountants and independent
accountants of the Company and the Bank to reflect the anticipated payment by
Manchester State Bank to each "Founding Director" eligible to participate in the
Manchester State Bank plan for compensating "Founding Directors" in the event of
a change in control.
ARTICLE II
EXCHANGE OF SHARES
2.01 THE COMPANY TO MAKE REORGANIZATION CONSIDERATION AVAILABLE. At or
prior to the Effective Time, the Company shall deposit, or shall cause to be
deposited, with a bank or trust company selected by the Company (the "Exchange
Agent"), for the benefit of the holders of Certificates, for exchange in
accordance with this Article II, certificates representing the shares of Company
Common Stock and cash sufficient to pay the Reorganization consideration
provided for in Sections 1.04 and 2.02(c) (the"Reorganization Consideration")
(such cash and certificates for shares of Company Common Stock, together with
any dividends or distributions with respect thereto, being hereinafter referred
to as the "Exchange Fund") to be issued and paid pursuant to Section 1.04 and
paid pursuant to Section 2.02(a) in exchange for outstanding shares of
Manchester State Bank Common Stock. The cash portion of the Exchange Fund shall
be invested by the Exchange Agent, as directed by the Company in writing, (i)
solely in U.S. Treasury obligations, or (ii) a mutual fund or similar investment
pool which invests its assets substantially in U.S. Treasury obligations, or
which invests its assets in repurchase agreements which are collateralized or
secured by U.S. Treasury obligations, and any net earnings with respect thereto
shall be paid to the Company as and when requested by the Company. If for any
reason (including losses) the Exchange Fund is inadequate to pay the amounts to
which holders of shares of Manchester State Bank Common Stock shall be entitled
under this Agreement, the Company shall be liable for the payment thereof.
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2.02 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, and in no
event later than three business days thereafter, the Exchange Agent shall mail
to each holder of record of a Certificate or Certificates a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for Reorganization Consideration into
which the shares of Manchester State Bank Common Stock represented by such
Certificate or Certificates shall have been converted pursuant to this
Agreement. Upon surrender of a Certificate for exchange and cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificates shall be entitled to receive in exchange therefor
(x) a certificate representing that number of whole shares of Company Common
Stock to which such holder of Manchester State Bank Common Stock shall have
become entitled pursuant to the provisions of Article I hereof and (y) a check
representing (i) the amount of cash to which such holder of Manchester State
Bank Common Stock shall have become entitled pursuant to the provisions of
Article I hereof and (ii) the amount of cash in lieu of fractional shares, if
any, which such holder has the right to receive in respect of the Certificate
surrendered pursuant to the provisions of this Article II, and the Certificate
so surrendered shall forthwith be cancelled. No interest will be paid or accrued
on any cash payable hereunder or on unpaid dividends and distributions, if any,
payable to holders of Certificates.
(b) At the Effective Time and until so surrendered and
exchanged, each such Certificate (other than Certificates representing
Dissenting Shares or shares held by Manchester State Bank, or any direct or
indirect subsidiary of Manchester State Bank) shall represent solely the right
to receive Reorganization Consideration as provided for in this Agreement. If
Reorganization Consideration (or any portion thereof) is to be delivered to any
person other than the person in whose name the certificate representing shares
of Manchester State Bank Common Stock surrendered in exchange therefor is
registered, it shall be a condition to such exchange that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such exchange shall pay to the Exchange
Agent any transfer or other taxes required by reason of the payment of
Reorganization Consideration to a person other than the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable.
(c) After the Effective Time, there shall be no transfers on
the stock transfer books of Manchester State Bank of the shares of Manchester
State Bank Common Stock which were issued and outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates representing such
shares are presented for transfer to the Exchange Agent, they shall be cancelled
and exchanged for Reorganization Consideration as provided in this Article II.
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(d) Notwithstanding anything to the contrary contained herein,
no certificates or scrip representing fractional shares of Company Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Company Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a shareholder. In
lieu of the issuance of any such fractional share, each former shareholder of
Manchester State Bank who otherwise would be entitled to receive a fractional
share of Company Common Stock shall be entitled to receive an amount in cash
determined by multiplying (i) the closing price of Company Common Stock as
quoted on the National Association of Securities Dealers Automatic Quotation
System, NASDAQ National Market System as reported by THE WALL STREET JOURNAL for
the trading day immediately preceding the date of the Effective Time by (ii) the
fraction of a share of Company Common Stock to which such holder would otherwise
be entitled to receive pursuant to Section 1.04 hereof.
(e) Any portion of the Exchange Fund that remains unclaimed by
the shareholders of Manchester State Bank for 12 months after the Effective Time
shall be paid to the Company. Any shareholders of Manchester State Bank who have
not theretofore complied with this Article II shall thereafter look only to the
Company for payment of Reorganization Consideration deliverable in respect of
each share of Manchester State Bank Common Stock such shareholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of the Company, Manchester State
Bank, the Exchange Agent or any other person shall be liable to any former
holder of shares of Manchester State Bank Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(f) In the event that any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Company, the posting by such person of a bond in such amount as the Company
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate, the Reorganization Consideration
deliverable in respect thereof pursuant to this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MANCHESTER STATE BANK
Manchester State Bank hereby represents and warrants to the Bank and
the Company as follows:
3.01 CORPORATE ORGANIZATION.
(a) Manchester State Bank is a state bank and trust company
duly organized, validly existing and in good standing under the laws of the
State of Connecticut. Manchester State Bank has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted. Manchester State Bank has all necessary
federal, state and local banking authorization to own or lease its properties
and assets and to carry on its business as it is being conducted. The accounts
of depositors of Manchester State Bank are insured by the Bank Insurance Fund
("BIF") of the Federal Deposit Insurance Corporation (the "FDIC") in accordance
with law and with the regulations of the FDIC and all premiums and assessments
required in connection therewith have been paid. The copies of Manchester State
Bank's Certificate of Incorporation and Bylaws, each certified by its Secretary
as of the date of this Agreement, which are being delivered to the Company
herewith, are complete and correct copies in effect as of the date of this
Agreement. Except as listed on the attached SCHEDULE 3.01(a), Manchester State
Bank does not have any wholly owned subsidiaries or capital stock or other
equity ownership interest in any corporation, partnership or other entity which
totals 5% or more of such entity's total equity.
(b) As used in this Agreement, the word "Subsidiary", when
used with respect to any party, means any corporation, partnership or other
organization, whether incorporated or unincorporated, which is consolidated with
such party for financial purposes. MSB, Inc. is the only subsidiary of
Manchester State Bank. MSB, Inc. is wholly owned by Manchester State Bank and is
duly organized, validly existing and in good standing under the laws of the
State of Connecticut and has all corporate power and authority required to own
or lease all of its properties and assets and to carry on its business as then
conducted. For purposes of this Agreement, all representations and warranties of
Manchester State Bank pertaining to its business, operations and financial
condition shall be deemed to include the business, operations and financial
condition of MSB, Inc. as a wholly-owned subsidiary of Manchester State Bank.
(c) Manchester State Bank's minute books contains complete and
accurate records of all meetings through December 14, 1995, and other corporate
actions of its shareholders and its Board of Directors (including committees of
its Board of Directors).
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3.02 CAPITALIZATION. The authorized capital stock of Manchester State
Bank consists solely of 100,000 shares of common stock, $10.00 par value
("Manchester State Bank Common Stock"). As of the date of this Agreement, there
were 100,000 shares of Manchester State Bank Common Stock issued and outstanding
and no shares held in Manchester State Bank's treasury or (except as described
below) reserved for issuance upon exercise of outstanding stock options. All
issued and outstanding shares of Manchester State Bank Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable.
Manchester State Bank does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Manchester State
Bank capital stock or any security representing the right to purchase or
otherwise receive any capital stock of Manchester State Bank. None of the shares
of capital stock of Manchester State Bank has been issued in violation of the
preemptive rights of any person. Except as provided for in this Agreement, there
are no agreements of record or of which Manchester State Bank is aware among any
of the Manchester State Bank shareholders relating to rights to own, vote or
dispose of Manchester State Bank Common Stock.
3.03 AUTHORITY; NO VIOLATION.
(a) Manchester State Bank has all necessary corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby including the proposal and settlement of
amounts to "Founding Directors" as set forth in the most recent proxy material
of Manchester State Bank and as founded in the Shareholder's Agreement referred
in Section 1.11 of this Agreement. The execution and delivery of this Agreement
by Manchester State Bank and the consummation by Manchester State Bank of the
transactions contemplated by this Agreement have been duly and validly approved
by the Board of Directors of Manchester State Bank and a certified copy of the
Board resolution reflecting such approval is attached hereto as SCHEDULE
3.03(a). The Board of Directors of Manchester State Bank has directed that this
Agreement and the transactions contemplated hereby be submitted to Manchester
State Bank's shareholders for consideration at a meeting of such shareholders
and, except for the adoption of this Agreement by the requisite vote of
Manchester State Bank's shareholders, no other corporate proceedings on the part
of Manchester State Bank are necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Manchester State Bank and (assuming
adoption of the Agreement by the requisite vote of Manchester State Bank's
shareholders and the due authorization, execution and delivery by the Bank and
the Company, and also subject to the receipt of the requisite regulatory
approvals) constitutes a valid and binding obligation of Manchester State Bank,
enforceable against Manchester State Bank in accordance with its terms, except
as enforcement may be limited by general principles of equity, whether applied
in a court of law or a court of equity, and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
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(b) Neither the execution and delivery of this Agreement by
Manchester State Bank, nor the consummation by Manchester State Bank of the
transactions contemplated hereby, nor compliance by Manchester State Bank with
any of the terms or provisions hereof, will (i) violate any provision of the
Certificate of Incorporation or Bylaws of Manchester State Bank or (ii) assuming
that the consents and approvals referred to in Section 3.04 hereof are duly
obtained, (x) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Manchester State Bank, or (y)
violate, result in a breach of any provision of, constitute a default under, or
result in the creation of any material lien, pledge, security interest, charge
or other encumbrance upon any of the properties or assets of Manchester State
Bank 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 Manchester State Bank is a party, or by which
it or any of its properties or assets may be bound or affected.
3.04 CONSENTS AND APPROVALS. Except for consents, approvals, filings
or registrations which may be required of or with the Commissioner, the FDIC,
any other applicable governmental authorities and the shareholders of Manchester
State Bank, no consents or approvals of or filings or registrations with any
third party or any public body or authority are necessary in connection with (a)
the execution and delivery by Manchester State Bank of this Agreement or (b) the
consummation of the Reorganization and the other transactions contemplated
hereby, insofar as they relate to any actions required of Manchester State Bank.
3.05 FINANCIAL STATEMENTS. Manchester State Bank has previously
delivered to the Company accurate and complete copies of (a) the balance sheets
of Manchester State Bank as of December 31 of each of the five fiscal years 1990
through 1994, inclusive, and the related statements of operations, statements of
shareholders' equity, and statements of cash flows for the periods then ended,
in each case accompanied by the report of Manchester State Bank's independent
certified public accountants, (b) all management letters from such accountants
delivered to Manchester State Bank since January 1, 1990, and (c) the unaudited
balance sheet of Manchester State Bank as of September 30, 1995 and the related
unaudited statements of operations, statements of shareholders' equity, and
statements of cash flows for the nine month period then ended. Each of the
financial statements referenced above ("Financial Statements") has been prepared
in accordance with generally accepted accounting principles applied on a basis
consistent with other periods, except as otherwise noted therein or in notes
thereto, and fairly presents in all material respects the financial condition or
income of Manchester State Bank as at the date thereof and for the period
covered thereby except, in the case of the interim statement, for normal year
end adjustments and year end accruals. Except as and to the extent reflected or
reserved in the balance sheets included in the Financial Statements or notes
thereto and except for liabilities involving the Shareholder's Agreements
referred to in Section 1.11 (which liability shall not exceed $600,000),
Manchester State Bank did not have, as of the dates of such balance sheets, any
material liabilities or obligations (absolute or contingent) of a nature
customarily reflected in balance sheets or notes thereto prepared in accordance
with generally accepted accounting principles ("GAAP"). The books and records of
Manchester State Bank have been, and are being, maintained in all material
respects in accordance with applicable legal and accounting requirements and
reflect only valid transactions.
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3.06 ABSENCE OF UNDISCLOSED LIABILITIES. Except for the transactions
contemplated by this Agreement including the liability provided for in Section
1.11 and the Shareholder's Agreements, pursuant thereto (which liability shall
not exceed $600,000), Manchester State Bank has not incurred any liability
(contingent or otherwise) that is material to Manchester State Bank or that,
when combined with all similar liabilities, would be material to Manchester
State Bank, except as disclosed in the notes to Manchester State Bank's December
31, 1994 balance sheet, and except for commitments and contingencies incurred in
the ordinary course of business.
3.07 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as set forth in SCHEDULE 3.07(a) or elsewhere in the
Schedules delivered by Manchester State Bank, since December 31, 1994,
there has not been:
(1) any material adverse change in the business, operations,
properties, assets or financial condition of Manchester State Bank and no
fact or condition exists which Manchester State Bank believes will cause
such a material adverse change in the future;
(2) any loss (for purposes of this subsection 3.07(a)(2), "loss" shall
not mean a loan loss), damage, destruction or other casualty materially and
adversely affecting any of the significant properties, assets or business
of Manchester State Bank (whether or not covered by insurance);
(3) any increase in the compensation payable by Manchester State Bank
to any of its employees whose total compensation after such increase was in
excess of $50,000 per annum, or to any of its Directors, officers, agents,
consultants, or any bonus, service award or other like benefit granted,
made or accrued to the credit of any such Director, officer, agent,
consultant or employee, or any welfare, pension, retirement, severance or
similar payment or arrangement made or agreed to by Manchester State Bank
for the benefit of any such Director, officer, agent, consultant or
employee;
(4) any change in any method of accounting or accounting practice of
Manchester State Bank;
(5) any rescheduling or having a moratorium on payments, or writing
off as uncollectible of any individual loan in excess of $10,000, or loans
in the aggregate in excess of $50,000, or any portion thereof; or
(6) any agreement or understanding, whether in writing or otherwise,
of Manchester State Bank to do any of the foregoing.
(b) Except as set forth in SCHEDULE 3.07(b), since December 31, 1994,
Manchester State Bank has not:
(1) issued or sold any promissory notes, stock, bonds or other
corporate securities of which it is the issuer;
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(2) discharged or satisfied any lien or encumbrance or paid or
satisfied any obligation or liabilities (whether absolute, accrued,
contingent or otherwise and whether due or to become due) in an amount
greater than $25,000, other than current liabilities shown on the December
31, 1994 balance sheet (the "1994 Balance Sheet") and current liabilities
incurred since December 31, 1994 in the ordinary course of business;
(3) declared, paid or set aside for payment any dividend or other
distribution (whether in cash, stock or property) in respect of its capital
stock;
(4) split, combined or reclassified any shares of its capital stock,
or redeemed, purchased or otherwise acquired any shares of its capital
stock or other securities;
(5) sold, assigned, or transferred any of its assets (real, personal
or mixed, tangible or intangible), cancelled any debts or claims or waived
any rights of substantial value, except, in each case, in the ordinary
course of business;
(6) sold, assigned, transferred or permitted to lapse any patents,
trademarks, trade names, copyrights or other similar assets, including
applications or licenses therefor;
(7) paid any amounts or incurred any liability to or in respect of, or
sold any properties or assets (real, personal or mixed, tangible or
intangible) to, or engaged in any transaction or entered into any agreement
or arrangement with, any corporation or business in which Manchester State
Bank or any of its officers or Directors, or any "affiliate" or "associate"
(as such terms are defined in the rules and regulations promulgated under
the Securities Act of 1933, as amended (the "Securities Act")) of any such
person, has any direct or indirect interest;
(8) entered into or amended any collective bargaining agreement or
suffered any material strike, work stoppage, slow down, or other labor
disturbance;
(9) amended its Certificate or Incorporation or Bylaws, or any
provision thereof, or proposed any such amendment;
(10) borrowed or agreed to borrow any funds or incurred, or become
subject to, any obligation or liability (absolute or contingent), except
for borrowings from the Federal Home Loan Bank of Boston or other
borrowings in the ordinary course of business;
(11) waived any rights of value which in the aggregate are material
considering the business of Manchester State Bank taken as a whole;
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(12) except in the ordinary course of business, made or permitted any
amendment or termination of any contract, agreement or license to which it
is a party if such amendment or termination would have a material adverse
effect on Manchester State Bank, or its business or operations taken as a
whole;
(13) made any material investment or commitment therefor in any
person, corporation, association, partnership, joint venture or other
entity;
(14) permitted the occurrence of any change or event within its
control which would render any of its representations and warranties
contained herein untrue in any material respect at and as of the Effective
Time;
(15) incurred any liability that has had, or to the knowledge of
Manchester State Bank, any liability that could reasonably be expected to
have, a material adverse effect on Manchester State Bank, or its business
or operations taken as a whole; or
(16) entered into any other transaction other than in the ordinary
course of business or in connection with the transactions contemplated by
this Agreement.
3.08 LOAN PORTFOLIO. Except as set forth in SCHEDULE 3.08, all
evidences of indebtedness reflected as assets of Manchester State Bank in
Manchester State Bank's Financial Statements are in all respects binding
obligations of the respective primary obligors named therein and no material
amount thereof is subject to any defenses known to Manchester State Bank which
may be asserted against Manchester State Bank. Except as set forth on SCHEDULE
3.08, Manchester State Bank has delivered to the Company a true and complete
list in all material respects and brief description of all real property in
which Manchester State Bank has an interest as creditor or mortgagee securing an
amount or amounts greater than $250,000 to one borrower, or a series of related
borrowers. Except as set forth in such list, (a) there are no outstanding loans
held by Manchester State Bank with an unpaid balance of $50,000 or more in which
a default has occurred and is continuing, and (b) Manchester State Bank has no
loans reflected as assets in such Financial Statements which have principal
balances in excess of $25,000, except for fully secured mortgage loans. For the
purposes hereof, "default" shall include but not be limited to a failure of an
obligor to make any payments with respect to any loans for 30 days or more past
the due date for such payment. SCHEDULE 3.08 sets forth all of the loans in the
original principal amount in excess of $100,000 of Manchester State Bank that as
of the date of this Agreement are classified by Manchester State Bank or any
bank regulatory examiner as "Special Mention," "Substandard," "Doubtful," "Loss"
or "Classified," together with the aggregate principal amount of and accrued and
unpaid interest on such loans by category. Except for normal examinations
conducted by (i) the FDIC, and (ii) the Commissioner, in the regular course of
the business of Manchester State Bank, and except for the Stipulation and
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Consent to the Issuance of an Order to Cease and Desist issued by the FDIC and
consented to by the Commissioner, which became effective January 22, 1993 and
which was terminated October 19, 1995 and the Resolutions adopted by the Board
of Directors of Manchester State Bank on December 14, 1995, no agency has
initiated any proceeding into the business or operations of Manchester State
Bank since December 31, 1990. The amount established by Manchester State Bank as
a reserve for loan losses on the date hereof is sufficient in all material
respects to cover losses in Manchester State Bank's loan portfolio as it now
exists.
3.09 INVESTMENTS.
(a) Except as set forth in SCHEDULE 3.09, Manchester State
Bank has no subsidiaries other than Manchester State Bank, Inc. and no equity
interest or other investment, direct or indirect, in any corporation,
partnership, joint venture or other entity other than interests that have been
pledged to Manchester State Bank as collateral for loans or obligations made by
Manchester State Bank in the ordinary course of its lending business. To the
extent any such interest has been foreclosed or otherwise thereafter become
owned by Manchester State Bank, no filing with any regulatory authority is
necessary.
(b) Except as disclosed in the notes to Manchester State
Bank's December 31, 1994 balance sheet and on SCHEDULE 3.09 and except for
pledges to secure public funds or for other purposes required by law, none of
the investments reflected under the heading "Investment Securities" in
Manchester State Bank's 1994 Balance Sheet which are owned by Manchester State
Bank at the Effective Time and none of the investments made by Manchester State
Bank since December 31, 1994 are subject to any investment or other restriction,
whether contractual or statutory, which materially impairs the ability of the
holder freely to dispose thereof in the open market at any time.
(c) SCHEDULE 3.09 sets forth the book and market value as of
September 30, 1995 of the investment securities, mortgage backed securities and
securities held for sale of Manchester State Bank.
3.10 TITLE TO PROPERTIES. Except as set forth in SCHEDULE 3.10,
Manchester State Bank has good, valid and marketable title to, (a) all its owned
real properties, and (b) all other properties and assets reflected in the 1994
Balance Sheet or acquired since December 31, 1994, other than any of such
properties or assets which have been sold or otherwise disposed of since
December 31, 1994 in the ordinary course of business and consistent with past
practice. Except as set forth in SCHEDULE 3.10, and except for Manchester State
Bank's loans which are described in Section 3.08 all of such properties and
assets are free and clear of title defects and obligations, mortgages, pledges,
liens, claims, charges, security interests or other encumbrances of any nature
whatsoever, including, without limitation, leases, options to purchase,
conditional sales contracts, collateral security arrangements and other title or
interest retention arrangements, and are not, in the case of owned real
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property, subject to any easements, building use restrictions, exceptions,
reservations or limitations of any nature whatsoever except those having no
material adverse effect upon the operations of Manchester State Bank or which
would involve no material expense to correct or remove. All personal property
material to the business, operations or financial condition of Manchester State
Bank, and all buildings, structures and fixtures used by Manchester State Bank
in the conduct of its business, are in good operating condition and have been
properly maintained. Except as set forth in SCHEDULE 3.10, Manchester State Bank
has not received any notification of any violation (which has not been cured) of
any building, zoning or other law, ordinance or regulation in respect of such
property or structures or Manchester State Bank's use thereof.
3.11 LEASES. Manchester State Bank owns no real property used in the
operation of its business, except as listed in SCHEDULE 3.11, and Manchester
State Bank has delivered to the Company an accurate and complete list of all
leases pursuant to which Manchester State Bank, as lessee, leases real or
personal property, including, without limitation, all leases of computer or
computer services and all arrangements for time-sharing or other data processing
services, describing for each lease Manchester State Bank's financial
obligations under such lease, its expiration date and renewal terms. Except as
set forth in SCHEDULE 3.11, (a) all such leases are valid and binding and are
enforceable in accordance with their terms, and (b) there exists on the part of
Manchester State Bank no event of default or event, occurrence, condition or act
which with the giving of notice, the lapse of time or the happening of any
further event or condition would become a default under any such lease.
3.12 TRADEMARKS; TRADE NAMES. To the best knowledge of Manchester State
Bank, set forth in SCHEDULE 3.12 is an accurate and complete list and brief
description of all trademarks (either registered or common law), trade names and
copyrights (and all applications and licenses therefor) owned by Manchester
State Bank or in which it has any interest. Manchester State Bank owns, or has
the right to use, all trademarks, trade names and copyrights used in or
necessary for the ordinary conduct of its existing business as heretofore
conducted, and the consummation of the transactions contemplated hereby will not
alter or impair any such rights. Except as set forth in SCHEDULE 3.12, no claims
are pending by any person for the use of any trademarks, trade names or
copyrights or challenging or questioning the validity or effectiveness of any
license or agreement relating to the same, nor, to the best knowledge of
Manchester State Bank, is there any valid basis for any such claim, challenge or
question, and use of such trademarks, trade names and copyrights by Manchester
State Bank does not infringe on the rights of any person.
3.13 LEGAL PROCEEDINGS. Except as set forth in the attached SCHEDULE
3.13, Manchester State Bank is not a party to any, and there are no, pending or,
to the best knowledge of Manchester State Bank's management, threatened legal,
administrative, arbitration or other proceedings, claims, actions, suits or
governmental investigations of any nature involving, affecting or relating to
Manchester State Bank other than such matters arising in the ordinary course of
Manchester State Bank's business which, individually and in the aggregate, are
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not material, or challenging the validity or propriety of the transactions
contemplated in this Agreement; and there is not known to Manchester State Bank
any reasonable basis for any such proceedings, claim, action or governmental
investigation. Manchester State Bank is not a party to any order, judgment or
decree which will, or might reasonably be expected to, affect its business,
operations, properties, assets, financial condition, prospects or results of
operations or its ability to acquire any property or conduct business in any,
area in which it presently does business.
3.14 COMPLIANCE WITH APPLICABLE LAWS. Manchester State Bank holds, and
has at all times held, all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of its business under and
pursuant to all, and has complied in all materials respects with and is not in
default in any material respect under, any applicable law, statute, order, rule,
regulation, policy or guideline of any federal, state or local governmental
authority relating to it, and which may materially affect the business,
operations or financial condition of Manchester State Bank, and has not received
notice of violation of, and does not know of any violations of, any of the
above. To the best knowledge of Manchester State Bank, no suspension or
cancellation of any material license, franchise, permit or authorization is
threatened.
3.15 ABSENCE OF QUESTIONABLE PAYMENTS. Manchester State Bank has not,
nor has any Director, officer, agent, employee, consultant or other person
associated with, or acting on behalf of, Manchester State Bank, (a) used any
Manchester State Bank corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, or (b)
made any direct or indirect unlawful payments to government officials from any
Manchester State Bank corporate funds, or established or maintained any unlawful
or unrecorded accounts with funds received from Manchester State Bank. The
payment of funds by Manchester State Bank pursuant to the Plan to compensate
"Founding Directors" in the event of a change in control of Manchester State
Bank has been properly approved by all corporate action and the requisite vote
of Shareholders and will not violate applicable laws. Attached as SCHEDULE 3.15
is a list of eligible "Founding Directors" and each eligible Founding Director
has signed a Shareholder's Agreement pursuant to Section 1.11 of this Agreement.
3.16 TAXES. Manchester State Bank properly and accurately completed and
duly filed in correct form all federal, state and local information and tax
returns required to be filed by it (all such returns being accurate and complete
in all material respects) and has duly paid or made provisions for the payment
of all taxes and other charges which have been incurred or are due or claimed to
be due from it by federal, state or local taxing authorities (including, without
limitation, those due in respect of its properties, income, business, capital
stock, deposits, franchises, licenses, sales and payrolls). The amounts set up
as reserves for taxes on the 1994 Balance Sheet are, to the best of Manchester
State Bank's knowledge, sufficient in the aggregate for the payment of all
unpaid federal, state and local taxes (including any interest or penalties
thereon and including reserves for local real estate or other property taxes in
an amount which is at least as great as the amount of such taxes paid in any
prior year), whether or not disputed, accrued or applicable for the period ended
December 31, 1994 or for any year or period prior thereto, and for which
Manchester State Bank may be liable in its own right or as transferee of the
assets of, or successor to, any corporation, person, association, partnership,
joint venture or other entity. The federal and state income tax returns of
Manchester State Bank have never been examined by the Internal Revenue Service.
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To the best of Manchester State Bank's knowledge, there are no pending questions
relating to, or claims asserted for, taxes or assessments upon Manchester State
Bank nor has Manchester State Bank been requested to give any waivers extending
the statutory period of limitation applicable to any federal, state or local
income tax return for any period. Proper and accurate amounts have been withheld
by Manchester State Bank from its employees for all prior periods in compliance
with the tax withholding provisions of applicable federal, state and local laws;
federal, state and local returns, accurate and complete in all material
respects, have been filed by Manchester State Bank for all periods for which
returns were due with respect to income tax withholding, Social Security,
property, sales, retirement plan and unemployment taxes; and the amounts shown
on such returns to be due and payable have been paid in full or adequate
provision therefor has been included by Manchester State Bank in its financial
statements as of December 31, 1994.
3.17 EMPLOYEE BENEFIT AND OTHER PLANS. Except as set forth in SCHEDULE
3.17, Manchester State Bank neither maintains nor contributes to any "employee
pension benefit plan" or " employee welfare benefit plan," as such terms are
defined in Section 3 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). With respect to any such plan listed on SCHEDULE 3.17,
Manchester State Bank is in compliance with, and such plans comply with, ERISA.
In this connection, (i) no "reportable event" has occurred and is continuing
with respect to any such plans; (ii) the statements of assets and liabilities of
such plans as of the close of the most recent plan year for which financial
statements are available, and the statements of changes in fund balance and in
financial position, or the statements of changes in net assets available for
each plan's benefits, for the plan year then ended, fairly present the financial
condition of such plan for such plan year; (iii) except as disclosed in the
annual reports of the plans, no "prohibited transaction" (as defined in Section
406 of ERISA) resulting in material liability of Manchester State Bank has
occurred with respect to the plans; (iv) no breach of fiduciary responsibility
under Part 4 of Title I of ERISA resulting in material liability of Manchester
State Bank has occurred with respect to the plans; (v) all contributions
required to be made to the plans have been made; (vi) no waiver of the minimum
funding standards under ERISA or the Code is in effect or has been applied for
with respect to the plans; (vii) as of the latest valuation date, the present
value of the assets of Manchester State Bank's plans listed on the attached
SCHEDULE 3.17 which are subject to Title IV of ERISA (other than "Multiemployer
Plans," as defined in Section 3 of ERISA), exceeds the present value of all
vested accrued benefits under such plans, based upon actuarial assumptions
currently utilized for such plans; (viii) Manchester State Bank does not
currently maintain or contribute to a Multiemployer Plan; (ix) each of
Manchester State Bank's plans listed on the attached SCHEDULE 3.17 which is
intended to be a qualified plan within the meaning of Section 401(a) of the Code
has been determined by the Internal Revenue Service to be so qualified to the
extent required under current law, and Manchester State Bank is not aware of any
fact or circumstance which would adversely affect the qualified status of any
such plan; and (x) no liability under Title IV of ERISA has been incurred by
Manchester State Bank that has not been satisfied in full.
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3.18 CONTRACTS AND COMMITMENTS; NO DEFAULTS.
(a) Set forth in or attached to SCHEDULE 3.18 are true and
correct copies of the following documents or summary descriptions of the
following information relating to Manchester State Bank:
(1) subject to applicable law, any bank regulatory agency
reports or other communication relating to the examination of
Manchester State Bank which have been made available to Manchester
State Bank;
(2) the name of each bank with which Manchester State Bank has
an account or safekeeping or custodial arrangement or correspondent
relationship and the names of all persons who are authorized with
respect thereto;
(3) all mortgages, indentures, promissory notes, deeds of
trust, loan or credit agreements or similar instruments under which
Manchester State Bank is indebted in an amount greater than $100,000
for borrowed money or the price of purchased property, accompanied by
copies thereof including all amendments or modifications of any
thereof;
(4) any loans or other credit arrangements by Manchester State
Bank to, with or for the benefit of any holder of 5 % or more of
Manchester State Bank Common Stock, any of Manchester State Bank's
Directors or officers, or, to the best of Manchester State Bank's
knowledge, any members of the immediate families of any of such persons
or any corporation, firm or other entity in which any of such Directors
or officers has a financial interest; and
(5) any pending application, including any documents or
materials relating thereto, which has been filed by Manchester State
Bank with any bank regulatory authority in order to obtain the approval
of such bank regulatory authority for the establishment of a new branch
bank or for any other purpose.
(b) Except as set forth in SCHEDULE 3.18, Manchester State
Bank is not a party to or bound by, nor have any bids or proposals been made by
or to Manchester State Bank with respect to, any written or oral, express or, to
the best of Manchester State Bank's knowledge, implied:
(1) contract relating to the matters referred to in paragraph
(a) above;
(2) contract with or arrangement for Directors, officers,
employees, former employees, agents or consultants with respect to
salaries, bonuses, percentage compensation, pensions, deferred
compensation or retirement payments, or any profit sharing, stock
option, stock purchase or other employee benefit plan or arrangement;
(3) collective bargaining or union contract or agreement;
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(4) contract, commitment or arrangement for the borrowing of
money or for obtaining a line of credit (except for federal funds
purchases);
(5) contract or agreement for the future purchase by it of any
materials, equipment, services, or supplies, which continues for a
period of more than 12 months (including periods covered by any option
to renew by either party), or which provides for a price in excess of
the prevailing market price or is in excess of normal operating
requirements over its remaining term;
(6) contract containing covenants purporting to limit its
freedom to compete;
(7) contract or commitment for the acquisition, construction
or refurbishment of any owned real property, branch or significant
equipment;
(8) contract or commitment upon which its total business is
substantially dependent;
(9) contract or commitment to which present or former
Directors or officers of Manchester State Bank or any of their
"affiliates" or "associates" (as such terms are defined in the rules
and regulations promulgated under the Securities Act) are parties;
(10) agreement or arrangement for the sale of any of
Manchester State Bank stock, tangible assets, or rights or for the
grant of any preferential rights to purchase any of Manchester State
Bank stock, tangible assets, or rights or which requires the consent of
any third party to the transfer and assignment of any of Manchester
State Bank stock, significant tangible assets, or rights; or
(11) contract, agreement, arrangement or commitment not
elsewhere specifically disclosed pursuant to this Agreement, involving
the payment or receipt by Manchester State Bank of more than $50,000.
(c) Manchester State Bank has not committed a default with
respect to any material contract, agreement or commitment to which it is a
party, and Manchester State Bank has not received notice of any such default,
nor has Manchester State Bank knowledge of any facts or circumstances which
would reasonably indicate that Manchester State Bank will be or may be in such
default under any such contract, agreement, arrangement, commitment or other
instrument subsequent to the date hereof.
3.19 MANCHESTER STATE BANK REPORTS. Manchester State Bank has
previously delivered or will deliver to, or made or will make available for
inspection by, the Company an accurate and complete copy of each final offering
circular, registration statement, prospectus, report and definitive proxy
statement filed by Manchester State Bank with the FDIC, pursuant to the Exchange
Act since January 1, 1990, and each communication concerning the financial
condition of Manchester State Bank mailed by Manchester State Bank to its
shareholders or its depositors since January 1, 1990, and each annual report on
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Form F-2 for and since the year ended December 31, 1990, if any. The most
recently mailed offering circular, report, communication and proxy statement did
not contain, and no other such offering circular, report, proxy statement or
communication has contained, any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading.
3.20 ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 3.20:
(a) Manchester State Bank is in compliance, and has in the
last three years been in compliance, with all applicable laws, rules,
regulations, standards and requirements adopted or enforced by the United States
Environmental Protection Agency (the "EPA") and of state and local agencies with
jurisdiction over pollution or protection of the environment, except where such
noncompliance or violations could not reasonably be expected to have a material
adverse effect on Manchester State Bank taken as a whole; and
(b) There is no suit, claim, action or proceeding pending
before any court or governmental entity (and, to the best of Manchester State
Bank's knowledge, no basis exists for the assertion or commencement thereof) in
which Manchester State Bank has been named as a defendant (x) for alleged
noncompliance with any environmental law, rule or regulation or (y) relating to
the release into the environment of any Hazardous Material (as hereinafter
defined) or oil at or on a site presently or formerly owned, leased, or operated
by Manchester State Bank or to Manchester State Bank's knowledge, on a site with
respect to which Manchester State Bank has made a commercial real estate loan
and has a mortgage or security interest in, except where such noncompliance or
release would not have a material adverse effect on Manchester State Bank taken
as a whole. "Hazardous Material" means any pollutant, contaminant, or hazardous
substance under the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq., or any similar state law.
3.21 MANCHESTER STATE BANK INFORMATION. No representation or warranty
contained in this Agreement, and no Statement or information contained in any
certificate, list or other writing furnished to the Company by Manchester State
Bank pursuant to the provisions hereof, including without limitation for
inclusion in the S-4 (as defined in Section 6.01(a)) or any regulatory
application, filing or report, contains or will contain any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements herein or therein not misleading. No information material to the
Reorganization and which is necessary to make the representations and warranties
herein contained not misleading, has been withheld from, or has not been
delivered in writing to, the Company.
3.22 INSURANCE. Set forth in SCHEDULE 3.22 is an accurate and complete
list in all material respects, of all policies of insurance, including the
amounts thereof, owned by Manchester State Bank or in which Manchester State
Bank is named as the insured party. All such policies are valid, outstanding and
enforceable.
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3.23 POWERS OF ATTORNEY; GUARANTEES. Manchester State Bank does not
have any power of attorney outstanding, nor any obligation or liability, either
actual, accruing or contingent, as guarantor, surety, co-signer, endorser,
co-maker or indemnitor in respect of the obligation of any person, corporation,
partnership, joint venture, association, organization or other entity, except
for letters of credit issued in the ordinary course of business which are listed
in SCHEDULE 3.23.
3.24 BROKER'S FEES. Neither Manchester State Bank nor any of its
officers, Directors or employees has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with the transactions contemplated herein, except as disclosed in SCHEDULE 3.24.
3.25 AGREEMENTS WITH REGULATORY AGENCIES. Except as set forth in
SCHEDULE 3.25, Manchester State Bank is not subject to any cease and desist or
other order issued by, or is a party to any written agreement, consent agreement
or memorandum of understanding (each a "Regulatory Agreement"), with any
regulatory agency or other governmental entity that restricts in any material
respect the conduct of its business or that relates to its capital adequacy, its
credit policies or its management, nor has Manchester State Bank been notified
by any regulatory agency or other governmental entity that it is considering
issuing or requesting any Regulatory Agreement.
3.26 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as set forth in
SCHEDULE 3.26, no officer or Director of Manchester State Bank, or any
"associate" (as such term is defined in Rule 14a-1 under the Exchange Act) of
any such officer or Director, has any material interest in any material contract
or property (real or personal), tangible or intangible, used in or pertaining to
the business of Manchester State Bank that would be required to be disclosed in
a proxy statement to shareholders under Regulation 14A of the Exchange Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and Bank hereby represent and warrant to Manchester State
Bank as follows:
4.01 CORPORATE ORGANIZATION.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. The Company is duly registered as a bank holding
company under the Bank Holding Company Act (the "BHC Act"). The Certificate of
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Incorporation and Bylaws of the Company, copies of which have previously been
made available to Manchester State Bank, are true and complete copies of such
documents as in effect as of the date of this Agreement. Except for the Bank and
The Equity Bank, which is a Connecticut-chartered commercial bank duly
organized, validly existing and in good standing under the laws of the State of
Connecticut and which became a subsidiary of the Company November 30, 1995, the
Company does not have any wholly-owned subsidiaries or capital stock or other
equity ownership interest in any corporation, partnership or other entity which
totals 5% or more of such entity's total equity.
(b) The Bank is a Connecticut-chartered commercial bank duly
organized, validly existing and in good standing under the laws of the State of
Connecticut. The Bank has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted. The Bank has all necessary federal, state and local banking
authorization to own or lease its properties and assets and to carry on its
business as it is being conducted. The Bank is a Subsidiary of the Company. The
accounts of depositors of the Bank are insured by BIF of the FDIC in accordance
with law and with the regulations of the FDIC and all premiums and assessments
required in connection therewith have been paid. The copies of the Bank's
Certificate of Incorporation and Bylaws, each certified by its Secretary as of
the date of this Agreement, which are being delivered to Manchester State Bank
herewith, are complete and correct copies in effect as of the date of this
Agreement. Except as listed on the attached SCHEDULE 4.01(b), the Bank does not
have any wholly-owned subsidiaries or capital stock or other equity ownership
interest in any corporation, partnership or other entity which totals 5 % or
more of such entity's total equity.
4.02 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
10,200,000 shares, consisting of 10,000,000 shares of Company Class A Common
Stock, $.10 par value and 200,000 shares of preferred stock, $.10 par value
("Preferred Stock"). As of the date of this Agreement, there are approximately
3,084,309 shares of Company Common Stock issued and outstanding, no shares held
in the Company's treasury, and (except as described below in SCHEDULE 4.02) no
shares reserved for issuance upon exercise of outstanding stock options. At the
date of this Agreement, no shares of preferred stock are outstanding and no
shares of Company preferred stock have heretofore been issued or are
outstanding. All issued and outstanding shares of Company Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable. Except
for 64,000 shares of Company Common Stock reserved for issuance upon exercise of
outstanding stock options that have been granted to certain of the Bank's and
the Company's Executive Officers. The Company does not have and is not bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of Company capital stock or any security representing the right to purchase or
otherwise receive any capital stock of the Company. None of the shares of
capital stock of the Company has been issued in violation of the preemptive
rights of any person.
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(b) The authorized capital stock of the Bank consists of
350,000 shares, shares of common stock, $5.00 par value ("Bank Common Stock").
As of the date of this Agreement, one share of Bank Common Stock issued and
outstanding, all of which are held by the Company, and no shares held in the
Bank's treasury or reserved for issuance. At the date of this Agreement, no
shares of preferred stock are outstanding or reserved for issuance and no shares
of Bank preferred stock have heretofore been issued or are outstanding. All
issued and outstanding shares of Bank Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable.
4.03 AUTHORITY; NO VIOLATION.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of the Company, a certified copy of the Board Resolution reflecting
such approval is attached hereto as SCHEDULE 4.03(a), and no other corporate
proceedings on the part of the Company are necessary to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and (assuming due authorization, execution
and delivery by Manchester State Bank) constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(b) The Bank has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. Upon the due and valid approval of this Agreement by the Company as the
sole shareholder of the Bank, no other corporate proceedings on the part of the
Bank will be necessary to consummate the transactions contemplated thereby. This
Agreement has been duly and validly executed and delivered by the Bank and will
(assuming due authorization, execution and delivery by Manchester State Bank)
constitute a valid and binding obligation of the Bank, enforceable against the
Bank in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(c) Neither the execution and delivery of this Agreement by
the Company or the Bank, nor the consummation by the Company or the Bank, as the
case may be, of the transactions contemplated hereby, nor compliance by the
Company or the Bank with any of the terms or provisions hereof, will (i) violate
any provision of the Certificate of Incorporation or Bylaws of the Company or
the Bank, as the case may be, or (ii) assuming that the consents and approvals
referred to in Section 4.04 are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
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applicable to the Company or any of its Subsidiaries, or (y) violate, result in
a breach of any provision of, constitute a default under, or result in the
creation of any material lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of the Company or
any of its Subsidiaries under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party, or by which they or any of their respective properties or assets may
be bound or affected.
4.04 CONSENTS AND APPROVALS. Except for (i) the filing of applications
and notices, as applicable, with the FDIC under the Bank Merger Act and with the
Board of Governors of the Federal Reserve System under the Bank Holding Company
Act and approval of such applications and notices, (ii) the filing of
applications with the Commissioner under Section 36a-125 and potentially 36a-180
of the Connecticut General Statutes and approvals of such applications, (iii)
the filing with the SEC of the Proxy Statement and the S-4, (iv) the filing of
this Agreement by the Commissioner, with his approval thereon, with the
Secretary, (v) such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Company Common Stock pursuant to this Agreement, (vi)
the approval of this Agreement by the Company as the sole shareholder of the
Bank, and (vii) the approval of this Agreement by the shareholders of the
Company (viii) such filings, authorizations or approvals as may be set forth in
SCHEDULE 4.04, no consents or approvals of or filings or registrations with any
governmental entity or with any third party are necessary in connection with the
execution and delivery by the Company and the Bank of this Agreement and the
consummation by the Company and the Bank of the Reorganization and the other
transactions contemplated hereby, except where the failure to obtain such
consents or approvals, or to make such filings or registrations, would not
prevent or delay the Reorganization or otherwise prevent the Company from
performing its obligations under this Agreement. The affirmative vote of the
holders of the outstanding shares of Company Common Stock is not required to
approve this Agreement or the transactions contemplated hereby.
4.05 FINANCIAL STATEMENTS. The Company has previously made available to
Manchester State Bank accurate and complete copies of (a) the consolidated
balance sheets of the Company and its Subsidiaries as of December 31 for the
fiscal years 1990 through 1994 and the related consolidated statements of
income, changes in shareholders' equity and cash flows for the fiscal years 1990
through 1994, inclusive, as reported in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 filed with the SEC under the
Exchange Act, and (b) the unaudited consolidated balance sheet of the Company
and its Subsidiaries as of September 30, 1995 and the related unaudited
consolidated statement of income, changes in shareholders' equity and cash flows
for the nine month periods then ended as reported in the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1995 filed with the SEC
under the Exchange Act. The December 31, 1994 consolidated balance sheet of the
Company (including the related notes, where applicable) fairly presents in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of the date thereof, and the other financial statements referred
to in this Section 4.05 (including the related notes where applicable) fairly
present in all material respects the results of the consolidated operations and
changes in shareholders' equity and consolidated financial position of the
Company and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth and each of such statements (including the
related notes, where applicable) has been prepared in accordance with GAAP
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consistently applied during the periods involved, except as indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form
10-Q. Without limiting the generality of the foregoing, the financial statements
as of, and for, the nine month period ending September 30, 1994, were prepared
on a basis consistent with the Company's audited financials for the year ended
December 31, 1994. The books and records of the Company and of its Subsidiaries
have been, and are being, maintained in all material respects in accordance with
applicable legal and accounting requirements and reflect only valid
transactions.
4.06 BROKER'S FEES. Neither the Company nor the Bank nor any Company
Subsidiary, nor any of their respective officers, Directors, or employees has
employed any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement except as disclosed in SCHEDULE 4.06.
4.07 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except for the transactions contemplated by this Agreement
or as a result of the consummation of its Plan and Agreement of Reorganization
with The Equity Bank, which became effective November 30, 1995, the Company has
not incurred any liability (contingent or otherwise) that is material to Company
or that, when combined with all similar liabilities, would be material to
Company, except as disclosed in the notes to Company's December 31, 1994 balance
sheet, and except for commitments and contingencies incurred in the ordinary
course of business.
(b) Except as a result of the consumation of its Plan and
Agreement of Reorganization with The Equity Bank, which became effective
November 30, 1995, and except as may be set forth in SCHEDULE 4.07, since
December 31, 1994:
(i) there has not been any material adverse change in the
Company, its loan portfolio, and its Subsidiaries, their businesses or
operations taken as a whole, and no fact or condition exists which the
Company believes will cause such a material adverse change;
(ii) there has not been any occurrence by the Company of any
liability that has had, or to the knowledge of the Company, could
reasonably be expected to have, a material adverse effect on the
Company and its Subsidiaries taken as a whole;
(iii) there has not been any change in any of the accounting
methods or practices of the Company or any of its Subsidiaries other
than changes required by applicable law or generally accepted
accounting principles;
(iv) there has not been any agreement or understanding,
whether in writing or otherwise, of the Company of any of its
Subsidiaries to do any of the foregoing; and
(v) there has not been any loss, damage, destruction or other
casualty, materially and adversely affecting any of the significant
properties, assets or business of the Company of any of its
Subsidiaries.
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(c) For purposes of this Section 4.07, no transaction, event
or condition or series or combination of transactions, events or conditions
shall be materially adverse with respect to the Company or the Bank if the net
adverse effect thereof, on the capital of the Company and the Bank is not in
excess of $1,500,000.
4.08 LEGAL PROCEEDINGS. There are no pending or to the knowledge of
the Company, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature against the Company
or any Subsidiary of the Company, as to which there is, in the judgment of the
Company, a reasonable likelihood of adverse determination and which if adversely
determined, would, individually or in the aggregate, (i) have a material adverse
effect on the Company and its Subsidiaries, or their business or operations
taken as a whole, or (ii) as of the date hereof, prevent or materially and
adversely affect the Company's ability to consummate the transactions
contemplated hereby. Set forth in SCHEDULE 4.08 hereto is a list of any pending
or to the knowledge of the Company, threatened, legal, administrative, arbitral
or other proceeding, claim, action or governmental investigation of any nature
against the Company or any Subsidiary of the Company which involves a claim of
$1,500,000 or more or a series of claims which in the aggregate equal $1,500,000
or more. Set forth in SCHEDULE 4.08 hereto is also a listing of any and all
class actions or shareholders' actions pending or, to the best knowledge of the
Company, threatened against the Company or any of its Subsidiaries, regardless
of the amount in controversy.
4.09 SEC REPORTS. The Company has previously made available to
Manchester State Bank a true and complete, in all material respects, copy of
each (a) final registration statement, prospectus, report, schedule and
definitive proxy statement filed since January 1, 1994 by the Company with the
SEC pursuant to the Securities Act or the Exchange Act (the"Company Reports")
and (b) communication mailed by the Company to its shareholders since January 1,
1994, and, as of their respective dates, no such Company Reports contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
4.10 COMPANY INFORMATION. No representation or warranty contained
in this Agreement, and no statement or information contained in any certificate,
list or other writing furnished to Manchester State Bank pursuant to the
provisions hereof, including without limitation for inclusion in the Proxy
Statement and the S-4 (as defined in Section 6.01(a)) or any regulatory
application, filing or report, contains or will contain any untrue statement of
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a material fact or omits to state a material fact necessary in order to make the
statements herein or therein not misleading. No information material to the
Reorganization and which is necessary to make the representations and warranties
herein contained not misleading, has been withheld from, or has not been
delivered in writing to, Manchester State Bank.
4.11 COMPLIANCE WITH APPLICABLE LAW. The Company and each of its
Subsidiaries holds, and have at all times held, all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and are
not in default under any, applicable law, statute, order, rule, regulation,
policy or guideline of any governmental entity relating to the Company or any of
its Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default would not have a
material adverse effect on the Company, and neither the Company nor any of its
Subsidiaries has received notice of any material violation of, or knows of any
material violation of, any of the above.
4.12 AGREEMENTS WITH REGULATORY AGENCIES. Neither the Company nor
any of its Subsidiaries is subject to any cease and desist or other order issued
by, or is a party to any written agreement, consent agreement or memorandum of
understanding (each a "Company Regulatory Agreement"), with any regulatory
agency or other governmental entity that restricts in any material respect the
conduct of its business or that relates in any manner to its capital adequacy,
its credit policies or its management, nor has the Company or any of its
Subsidiaries been notified by any regulatory agency of other governmental entity
that it is considering issuing or requesting any Regulatory Agreement.
4.13 REGULATORY APPROVALS. The Company is not, as of the date
hereof, aware of any reason why the regulatory approvals required to be obtained
by it or any of its Subsidiaries to consummate the Reorganization would not be
satisfied within the time frame customary for transactions of the nature
contemplated thereby.
4.14 ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 4.14:
(a) The Company and the Bank are in compliance, and have in
the last three years been in compliance, with all applicable laws, rules,
regulations, standards and requirements adopted or enforced by the EPA and of
state and local agencies with jurisdiction over pollution or protection of the
environment, except where such noncompliance or violations could not reasonably
be expected to have a material adverse effect on the Company;
(b) There is no suit, claim, action or proceeding pending
before any court or governmental entity (and, to the best of the Company's
knowledge, no basis exists for the assertion or commencement thereof) in which
the Company or any of its Subsidiaries has been named as a defendant (x) for
alleged noncompliance with any environmental law, rule or regulation or (y)
relating to the release into the environment of any Hazardous Material (as
defined in Section 3.20(b)) or oil at or on a site presently or formerly owned,
leased, or operated by the Company or any of its Subsidiaries or to the
Company's knowledge, on a site with respect to which the Company or any of its
Subsidiaries has made a commercial real estate loan and has a mortgage or
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security interest in, except where such noncompliance or release would not have
a material adverse effect on the Company and its Subsidiaries taken as a whole.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.01 COVENANTS OF MANCHESTER STATE BANK. During the period from the
date of this Agreement to the Effective Time, Manchester State Bank will conduct
its business only in the ordinary course and consistent with prudent banking
practice, will use all reasonable efforts to preserve Manchester State Bank's
properties wherever located, and will comply in all material respects with all
laws applicable to Manchester State Bank to the conduct of its business, and to
the transactions contemplated by this Agreement. Manchester State Bank will use
all reasonable efforts to preserve its business organization intact, to keep
available the present services of its employees, and to preserve the goodwill of
its customers and others with whom business relationships exist. Manchester
State Bank will, from the date hereof until at least through the consummation of
the transactions contemplated by this Agreement, keep all insurance policies set
forth in SCHEDULE 3.22 in full force and effect. In addition, Manchester State
Bank agrees that from the date hereof to the consummation of the Reorganization,
and except as otherwise consented to or approved by a duly authorized officer of
the Company in writing, which consent shall not be unreasonably withheld, or as
permitted or required by this Agreement, Manchester State Bank will not:
(a) enter into or amend any contract of the nature required to
be set forth in SCHEDULE 3.18;
(b) change any provision of its Certificate of Incorporation
or Bylaws or similar governing documents;
(c) change the number of issued shares of its capital stock,
or issue or grant any option, warrant, call, commitment, subscription, right to
purchase or agreement of any character relating to its authorized or issued
capital stock, or any securities convertible into shares of such stock, or
split, combine or reclassify any shares of its capital stock, declare, set aside
or pay any dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock or redeem or otherwise
acquire any shares of its capital stock;
(d) make unsecured loans in excess of $10,000 for any
individual loan or in excess of $25,000 in the aggregate to any borrower or
group of borrowers, other than renewals in the ordinary course of business and
not involving any change in terms;
(e) (i) make any loan or loans described as an "Undesirable"
or "Prohibited" Loan on SCHEDULE 5.01; (ii) make any secured loan or loans,
other than residential mortgage loans with a loan to value of in excess of 80%,
in an aggregate amount to any one borrower (including members of his/her
immediate family or affiliates of such borrower) in excess of $250,000, except
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for loans sold to investors and renewals in the ordinary course of business and
not involving any change in terms; (iii) make any junior mortgage loan in excess
of $100,000 behind first mortgages if the resulting loan to value ratio of the
combined mortgages would exceed 70% or if prior mortgage loans are in excess of
$250,000; (iv) make any commercial loan or loans in excess of $100,000 unless
fully secured by readily marketable collateral or real estate with a maximum
loan to value ratio of 80%; or (v) honor or extend any overdraft in excess of
$5,000 unless fully secured by readily marketable collateral.
(f) make any new loans to any Director or employee of
Manchester State Bank, or any member or affiliate of their respective families;
(g) other than with respect to residential mortgage loans,
renew or otherwise reinstate any loan that has been in default for a period of
30 days or more which, when added to any loans outstanding to the families or
affiliates of any maker or surety of the defaulted loans (whether or not such
other loans are in default) has a balance outstanding in excess of $20,000,
except that Manchester State Bank may accept payments for the purpose of
bringing loans current, so long as there is no amendment or restructuring of the
loans;
(h) offer rates on deposits that are set in deviation from
past practice and procedure employed by Manchester State Bank or are materially
higher than those of its competitors in the local market, or offer loan pricing
which is materially different relative to its competitors in the local market.
(i) hire or retain any new employees, consultants or
contractors, or increase the compensation of current employees, consultants or
contractors, except that Manchester State Bank may hire replacements for current
employees who are not officers or managers if such employees cease to be
employees of Manchester State Bank;
(j) make any capital expenditures in excess of $10,000;
(k) enter into any real property lease or any lease of
personal property or extend or modify any existing lease of real or personal
property;
(l) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire any assets, other than in connection in with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings in
the ordinary course of business, which would be material to Manchester State
Bank;
(m) take any action that is intended or would result in any of
its representations and warranties set forth in this Agreement being or becoming
untrue in any material respect, or in any of the conditions to the
Reorganization set forth in Article VII not being satisfied, or in a violation
of any provision of this Agreement except, in every case, as may be required by
applicable law;
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(n) change its methods of accounting in effect at December 31,
1994, except as required by changes in GAAP or regulatory accounting principles
as concurred to by Manchester State Bank's independent auditors;
(o) take or cause to be taken any action which would
disqualify the Reorganization as a tax-free reorganization under Section 368 of
the Code;
(p) take or cause to be taken any action which would, or may
reasonably be expected to, significantly delay or otherwise adversely affect the
regulatory approvals required to consummate the Reorganization;
(q) other than activities in the ordinary course of business
consistent with prior practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose of,
any of its material assets, properties or other rights or agreements;
(r) other than in the ordinary course of business consistent
with past practice, incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity;
(s) file any application to open, relocate or terminate the
operations of any banking office;
(t) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructurings in the ordinary course of business;
(u) purchase or sell loans in bulk;
(v) foreclose upon or take deed or title to any commercial
real estate without first conducting a Phase I environmental assessment of the
property; and shall not foreclosure upon such commercial real estate if such
environmental assessment indicates the presence of hazardous material;
(w) terminate the employment of, or decrease in any material
respect, the duties, obligations, responsibilities, or position of any senior
officer of Manchester State Bank; or
(x) agree to do any of the foregoing.
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5.02 COVENANTS OF THE COMPANY. During the period from the date of this
Agreement to the Effective Time, except as expressly contemplated or permitted
by this Agreement or with the prior written consent of Manchester State Bank,
which should not be unreasonably withheld, the Company and its Subsidiaries
shall carry on their respective businesses in the ordinary course consistent
with past practice and use all reasonable efforts to preserve intact their
present business organizations and relationships. Without limiting the
generality of the foregoing and as otherwise contemplated by this Agreement or
consented to in writing by Manchester State Bank, which shall not be
unreasonably withheld, the Company shall not, and shall not permit any of its
Subsidiaries to:
(a) take any action that is intended or would result in any of
its representations and warranties set forth in this Agreement being or becoming
untrue in any material respect, or in any of the conditions to the
Reorganization set forth in Article VII not being satisfied, or in a violation
of any provision of this Agreement, except, in every case, as may be required by
applicable law;
(b) change its methods of accounting in effect at December 31,
1994, except in accordance with changes in GAAP or regulatory accounting
principles as concurred to by the Company's independent certified public
accountants;
(c) take or cause to be taken any action which would
disqualify the Reorganization as a tax-free reorganization under Section 368 of
the Code;
(d) take or cause to be taken any action which would, or may
reasonably be expected to, significantly delay or otherwise adversely affect the
regulatory approvals required to consummate the Reorganization; or
(e) agree to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 REGULATORY MATTERS.
(a) Following the review by the Company and Manchester State
Bank of all information and material provided to each in accordance with this
Agreement, Manchester State Bank shall promptly prepare and file with the FDIC a
proxy statement for the meeting of its shareholders called for the purpose of
approving this Agreement (the 'Proxy Statement") and the Company shall promptly
prepare and file with the SEC a registration statement on Form S-4 with respect
to the shares of Company Common Stock to be issued in the Reorganization (the
"S-4"), in which the Proxy Statement will be included as a prospectus. Each of
the Company and Manchester State Bank shall use their best efforts to have the
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S-4 declared effective under the Securities Act as promptly as practicable after
such filing, and Manchester State Bank shall thereafter promptly mail the Proxy
Statement to its shareholders. The Company shall also use its best efforts to
obtain all necessary state securities law or "Blue Sky" permits and approvals
required to carry out the transactions contemplated by this Agreement, and
Manchester State Bank shall furnish all information concerning Manchester State
Bank and the holders of Manchester State Bank Common Stock as may be reasonably
requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use
their best efforts to prepare and file promptly all necessary documentation, to
effect all applications, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and authorizations of
all third parties and governmental entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement including without
limitation, approval of the Reorganization by the FDIC pursuant to the Bank
Merger Act, and approval of the Reorganization by the Commissioner of the
Connecticut General Statutes and approval by the Board of Governors of the
Federal Reserve System if it wishes to exercise jurisdiction. The parties hereto
agree that they will consult with each other with respect to the obtaining of
all permits, consents, approvals and authorizations of all third parties and
governmental entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other apprised of
the status of matters relating to completion of the transactions contemplated
herein.
(c) The Company and Manchester State Bank shall, upon request,
furnish each other with all information concerning themselves, their respective
Subsidiaries, directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with the Proxy Statement, the
S-4 or any other statement, filing, notice or application made by or on behalf
of the Company, Manchester State Bank or any of their respective Subsidiaries to
any governmental entity in connection with the Reorganization and the other
transactions contemplated hereby.
(d) The Company and Manchester State Bank shall promptly
furnish each other with copies of written communications received by the Company
or Manchester State Bank, as the case may be, or any of their respective
Subsidiaries from, or delivered by any of the foregoing to, any governmental
entity in respect of the transactions contemplated hereby.
6.02 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable laws
relating to the exchange of information and so as not to unreasonably interfere
with the ordinary proper conduct of its business, Manchester State Bank shall
afford to the officers, employees, accountants, counsel and other
representatives of the Company, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records relating to the ownership, operation, obligations and
liabilities of Manchester State Bank, including, but not limited to, its books
of account (including its general ledger), tax records, minute books of
Directors' and shareholders' meetings, Certificate of Incorporation, Bylaws,
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contracts and agreements, public filings with any regulatory authority,
examination reports of any regulatory authority, including preliminary and
partial reports received in connection with the regulatory examination currently
in progress (subject to applicable law), plans affecting its employees, and any
other business activities or prospects in which the Company may have a
reasonable interest. During such period, Manchester State Bank shall make
available to the Company (i) a copy of each report, schedule, and other document
filed or received by it during such period pursuant to the requirements of
federal securities laws or federal or state banking laws and (ii) all other
information concerning its business, properties and personnel as the Company may
reasonably request (other than information which Manchester State Bank is not
permitted to disclose under applicable law). As to information which Manchester
State Bank is not permitted by law to disclose, Manchester State Bank will, upon
request from the Company, use all reasonable efforts to obtain any consent,
approval or waiver that may be required for such disclosure.
(b) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, the Company shall, and shall cause its
Subsidiaries to, afford to the officers, employees, accountants, counsel and
other representatives of Manchester State Bank, access, during normal business
hours during the period prior to the Effective Time, to such information
regarding the Company and its Subsidiaries as shall be reasonably necessary for
Manchester State Bank to fulfill its obligations pursuant to this Agreement to
prepare the Proxy Statement or which may be reasonably necessary for Manchester
State Bank to confirm that the representations and warranties of the Company
contained herein are true and correct and that the covenants of the Company
contained herein have been performed in all material respects, including, but
not limited to, any regulatory information, including FDIC examination reports
and any other reports from regulatory agencies concerning the Company,
information concerning the Company's liabilities, all financial reports and
statements, information concerning the Company's business plans, all external
audit reports concerning the Company or the Bank, and, during the thirty (30)
days following the date of execution of this Agreement and continuing until the
Effective Time, all information regarding (i) the Company's loan portfolio,
including its watch list, reserves, and non-performing loans, (ii) the Company's
investments and (iii) the federal, state and local tax returns and tax
obligations of the Company and its Subsidiaries. As to information which the
Company is not permitted by law to disclose, the Company will, upon request from
Manchester State Bank, use all reasonable efforts to obtain any consent,
approval or waiver that may be required for such disclosure.
(c) Neither the Company nor any of its Subsidiaries, nor
Manchester State Bank, shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of the customers of such party, jeopardize the attorney-client privilege
of the institution in possession or control of such information or contravene
any law, rule, regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
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(d) All information furnished pursuant to this Agreement shall
be held in confidence to the extent required by, and in accordance with, the
provisions of the confidentiality agreements, dated December 7, 1995, among the
Company, the Bank and Manchester State Bank (the "Confidentiality Agreements").
6.03 SHAREHOLDER APPROVALS.
(a) The Company and Manchester State Bank shall each take all
steps necessary to duly call, give notice of, convene and hold a meeting of its
shareholders to be held as soon as is reasonably practicable after the date on
which the S-4 becomes effective for the purpose of voting upon the approval of
this Agreement. Manchester State Bank and the Company will, through its Board of
Directors, recommend to its shareholders approval of this Agreement and the
transactions contemplated hereby and such other matters as may be submitted to
its shareholders in connection with this Agreement.
(b) The Company, as sole shareholder of the Bank, shall take
all steps necessary to duly call, give notice of, convene and hold a meeting of
the shareholder(s) of the Bank (or take action by written consent) for the
purpose of voting upon the approval of this Agreement.
6.04 LEGAL CONDITIONS TO REORGANIZATION. Each of the Company and
Manchester State Bank shall, and the Company shall cause each of its
Subsidiaries to, use its best efforts (a) to take, or cause to be taken, all
actions necessary, proper or advisable to comply promptly with all legal
requirements which may be imposed on such party or its Subsidiaries with respect
to the Reorganization and, subject to the conditions set forth in Article VII
hereof, to consummate the transactions contemplated by this Agreement and (b) to
obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any governmental
entity and any other third party which is required to be obtained by Manchester
State Bank or the Company or any of the Company's Subsidiaries in connection
with the Reorganization and the other transactions contemplated by this
Agreement.
6.05 AFFILIATES. Manchester State Bank shall cause each Director,
executive officer and other person who is an "affiliate" (for purposes of Rule
145 under the Securities Act) of Manchester State Bank to deliver to the
Company, prior to the signing of this Agreement, a signed written agreement, in
the form of SCHEDULE 6.05 hereto, providing that such person will not sell,
pledge, transfer or otherwise dispose of any shares of Company Common Stock to
be received by such "affiliate" in the Reorganization except in compliance with
the applicable provisions of the Securities Act and the rules and regulations
thereunder, including without limitation, Rule 145.
6.06 STOCK LISTING. The Company shall cause the shares of Company
Common Stock to be issued in the Reorganization to be approved for inclusion for
quotation on the NASDAQ National Market System, subject to official notice of
issuance, prior to the Effective Time.
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6.07 EMPLOYEE MATTERS.
(a) From and after the Effective Time and subject to
applicable law, the Company shall provide the employees of Manchester State Bank
who are offered employment with the Company or any of its Subsidiaries, and who
accept such employment, with benefits comparable to those provided to its own
employees in similar positions and with comparable terms of service with the
Company or its Subsidiaries, as reasonably determined by the Company and its
Subsidiaries.
(b) There is no collective bargaining agreement applicable to
employees of the Company or the Bank.
(c) Nathan G. Agostinelli's employment and severance shall be
governed by the proposed employment agreement included as SCHEDULE 6.07(c).
6.08 FINANCIAL STATEMENTS.
(a) As soon as reasonably available, but in no event later
than 90 days after the end of the calendar year ending after the date of this
Agreement, the Company will deliver to Manchester State Bank and Manchester
State Bank will deliver to the Company their respective Annual Reports on Form
1O-K, or F-2, as appropriate, as filed with the SEC or the FDIC, as appropriate,
under the Exchange Act.
(b) As soon as reasonably available, but in no event later
than 45 days after the end of each fiscal quarter ending after the date of this
Agreement, the Company will deliver to Manchester State Bank and Manchester
State Bank will deliver to the Company their respective Quarterly Reports on
Form 1O-Q, or F-4, as appropriate, as filed with the SEC or the FDIC, as
appropriate, under the Exchange Act.
6.09 ADDITIONAL AGREEMENTS. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purpose of
this Agreement, or to vest the Resulting Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Reorganization, the proper officers and Directors of each party
to this Agreement and their respective Subsidiaries shall take all such
necessary action as may be reasonably requested by, and at the sole expense of,
the Company.
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6.10 DISCLOSURE SUPPLEMENTS. From time to time prior to the
Effective Time, each party will promptly supplement or amend the Schedules
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 Schedules or
which is necessary to correct any information in such Schedules which has been
rendered inaccurate thereby. No supplement or amendment to such Schedules shall
have any effect for the purposes of determining satisfaction of the conditions
set forth in Sections 7.02(a) or 7.03(a) hereof, as the case may be, or the
compliance by Manchester State Bank or the Company, as the case may be, with
the respective covenants set forth in Sections 5.01 and 5.02 hereof.
6.11 CURRENT INFORMATION.
(a) During the period from the date of this Agreement to the
Effective Time, Manchester State Bank will cause one or more of its designated
representatives to be available, upon the reasonable request of the Company, to
confer on a regular and frequent basis with representatives of the Company and
to report the general status of the ongoing operations of Manchester State Bank.
Manchester State Bank will promptly notify the Company of any significant change
in the normal course of business of Manchester State Bank or in the operation of
its properties, and of any governmental complaints, investigations or hearings
(or communications indicating that the same may be contemplated) or the
institution or the threat of any significant litigation involving Manchester
State Bank and will keep the Company reasonably informed of such events and
permit the Company access to all significant materials prepared in connection
therewith. With respect to the regulatory examination of Manchester State Bank
currently in progress, Manchester State Bank will keep the Company advised of
all reports, preliminary or otherwise, received from examiners, subject to
applicable disclosure laws, and will use all reasonable efforts to obtain any
consent, approval or waiver that may be required for such disclosure.
(b) The Company will promptly notify Manchester State Bank of
any material change in the normal course of business of the Company or any of
its Subsidiaries and of any governmental complaints, investigations or hearings,
or the institution or threat of significant litigation involving the Company or
any of its Subsidiaries, and will keep Manchester State Bank reasonably informed
of such events and permit Manchester State Bank access to all significant
materials for a reasonable period in connection therewith. With respect to the
regulatory examination of the Company currently in progress or just recently
ended, the Company will keep Manchester State Bank advised of all reports,
preliminary or otherwise, received from examiners, subject to applicable
disclosure laws, and will use all reasonable efforts to obtain any consent,
approval, or waiver that may be required for such disclosure.
6.12 ENVIRONMENTAL ASSESSMENT. Manchester State Bank agrees, to the
extent it is legally permitted, to allow the Company, its agents and
representatives, during the sixty days subsequent to execution of this Agreement
at the Company's expense, to conduct an environmental site assessment of any
real property owned (including assets held as other real estate owned) or leased
by Manchester State Bank, and agrees to cooperate in providing information and
other assistance to the Company, its agents and representatives in connection
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therewith, including, without limitation, providing access and entry onto such
real property for the purpose of making appropriate environmental and related
inspections, provided, however that Company agrees to enter into a
confidentiality agreement with the party(ies) conducting any environmental
testing that said party shall not disclose its findings to any third party
unless required by State or Federal law. Company agrees that it shall also be
bound by this restriction. An environmental site assessment may include sampling
and intrusive studies if the Company's representative deems them advisable in
light of the current standards. Manchester State Bank shall be entitled, as a
condition to its obligations hereunder, to notice within 60 days of signing this
Agreement of any material environmental problems identified by the Company and
to be indemnified to its reasonable satisfaction from and against any loss or
damage incurred from the conducting of any such site assessment (but not the
findings thereof). The Company shall contract for any site assessment desired by
it not later than 30 days after the later of the date hereof or, with respect to
property acquired after the date hereof, the date Manchester State Bank notified
the Company of such acquisition.
6.13 PUBLIC ANNOUNCEMENTS. Except to the extent required otherwise
by applicable state or federal securities laws or any applicable Connecticut or
federal banking laws, with respect to which Manchester State Bank and the
Company may act upon the advice of their respective legal counsel, neither
Manchester State Bank, nor the Company or any of its Subsidiaries, shall issue
any press release or otherwise make any public statement with respect to this
Agreement or any of the transactions contemplated hereby prior to the Effective
Time without obtaining the consent to or approval thereof from the other party,
which consent or approval shall not be unreasonably withheld.
ARTICLE VII
CONDITIONS PRECEDENT
7.01 CONDITIONS TO EACH PARTY'S OBLIGATIONS UNDER THIS AGREEMENT.
The respective obligations of each party under this Agreement shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions, none of which may be waived:
(a) This Agreement and the transactions contemplated hereby
shall have been approved and adopted by the affirmative vote of the holders of
at least two-thirds of the outstanding shares of Manchester State Bank Common
Stock and if legally required, by the requisite shareholder vote of Bank Common
Stock and Company Common Stock.
(b) This Agreement and the transactions contemplated hereby
shall have been approved by the Commissioner, by the FDIC and by the Board of
Governors of the Federal Reserve System unless it waives jurisdiction, and by
any other regulatory authority having appropriate jurisdiction, none of such
approvals shall contain any term or condition which would (i) have a material
adverse effect on the business, operations, properties, assets or financial
condition of Manchester State Bank or Resulting Corporation, or (ii) otherwise
materially impair the value of Manchester State Bank or Resulting Corporation,
and all appropriate waiting periods shall have expired.
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(c) Neither the Company nor Manchester State Bank shall be
subject to any order, decree or injunction of a court or agency of competent
jurisdiction which prevents or delays the consummation of the Reorganization.
(d) The shares of Company Common Stock which shall be issued
to the shareholders of Manchester State Bank upon consummation of the
Reorganization shall have been authorized for inclusion for quotation on the
NASDAQ National Market System, subject to official notice of issuance.
(e) The S-4 shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the S-4 shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
7.02 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY UNDER THIS
AGREEMENT. The obligations of the Company under this Agreement shall be further
subject to the satisfaction, at or prior to the Effective Time, of the following
conditions, any one or more of which may be waived by the Company:
(a) Each of the obligations of Manchester State Bank required
to be performed by it at or prior to the Effective Time pursuant to the terms of
this Agreement shall have been duly performed and complied with in all material
respects and the representations and warranties of Manchester State Bank
contained in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Effective Time as though made at
and as of the Effective Time (except as otherwise contemplated by this
Agreement), and the Company shall have received a certificate to that effect
signed by the President and by the Chief Financial Officer of Manchester State
Bank.
(b) All action required to be taken by, or on the part of,
Manchester State Bank to authorize the execution, delivery and performance of
this Agreement by Manchester State Bank and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the Board of
Directors of Manchester State Bank and Manchester State Bank shareholders and
the Company shall have received certified copies of the resolutions evidencing
such authorization.
(c) The Company shall have received certificates as of a day
as close as practicable to the date of the Effective Time from appropriate
authorities as to the good standing of, and of the payment of franchise taxes,
if any, in Connecticut by Manchester State Bank.
(d) Any and all permits and approvals of governmental bodies
and material consents (including all consents of landlords) and authorizations
of other third parties shall have been obtained by Manchester State Bank and the
Company which are required with respect to and are necessary in connection with
(i) the consummation of the Reorganization and the other transactions
contemplated hereby, (ii) the ownership by the Resulting Corporation of all of
the properties and assets of Manchester State Bank, or (iii) the conduct by the
Resulting Corporation of the business of Manchester State Bank as conducted by
Manchester State Bank at the Effective Time.
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(e) The Company shall have received an opinion, dated the date
of Closing, from counsel to Manchester State Bank, in form and substance
reasonably satisfactory to the Company, on the matters set forth on EXHIBIT
7.02(e) hereto.
(f) Manchester State Bank shall have caused to be delivered to
the Company a letter from Manchester State Bank's independent public accountants
with respect to Manchester State Bank, and dated the date of the Closing, and
addressed to the Company and Manchester State Bank, in form and substance
reasonably satisfactory to the Company to the effect that:
(1) they are independent public accountants with respect to
Manchester State Bank;
(2) in their opinion the audited financial statements of
Manchester State Bank examined by them comply as to form in all
material respects with the applicable published rules and regulations
of the FDIC with respect to proxy statements and of the SEC with
respect to registration statements; and
(3) at the request of Manchester State Bank they have carried
out procedures to a specified date not more than 10 business days prior
to the date of each such letter as follows: (i) read the unaudited
financial statements of Manchester State Bank for the period from the
date of the most recent audited financial statements ("Audit Date")
through the date of the most recent financial statements available in
the ordinary course of business; (ii) read the minutes of the meetings
of the Board of Directors of Manchester State Bank from the date of the
most recently audited financial statements to the date not more than 10
days prior to the date of each such letter, and (iii) consulted with
the Chief Financial Officer of Manchester State Bank as to whether
there has been an increase or decrease in total assets of $500,000 or
more, an increase in nonperforming loans of more than $500,000, an
increase in foreclosed real estate of more than $500,000, an increase
or decrease in total deposits of more than $500,000, and a decrease in
total shareholders' equity, each as compared to the audited financial
statements of Manchester State Bank as of the Audit Date and, based on
such procedures and except as disclosed in such letter, nothing has
come to their attention which would cause them to believe that said
financial statements and the financial statements referred to in (i)
above and the most recent unaudited financial statements are not
presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
financial statements of Manchester State Bank at the Audit Date.
(g) Holders of more than 85% of the outstanding shares of
Manchester State Bank shall have not exercised their statutory appraisal or
dissenters' rights.
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(h) Neither the Company nor Manchester State Bank shall be
subject to any order, decree or injunction of a court or agency of competent
jurisdiction which would impose limitations on the ability of the Resulting
Corporation to exercise full rights of ownership of the assets or business of
Manchester State Bank and no action, suit, proceeding or investigation shall be
pending or threatened which, in the opinion of counsel to the Company, is
reasonably likely to result in any such order, decree or injunction.
(i) Except as otherwise provided for in this Agreement, any
agreement to which Manchester State Bank is a party on the date hereof or
hereafter which takes effect upon, or which provides a payment or penalty
conditioned upon or related to, a change of control of Manchester State Bank,
shall have been duly terminated without cost or expense to Manchester State
Bank, the Resulting Corporation or the Company.
(j) The Company shall have received the results of any
environmental site assessment contracted for in accordance with Section 6.12
hereof, and based upon such environmental site assessment, not more than $25,000
shall be needed to be expended to correct any deficiency cited in such
assessment and, in the case of property used for Manchester State Bank bank
operations, it shall not be necessary to cease using the cited location for a
period in excess of 30 days in order to complete such corrections, provided,
that, as to any deficiency that can be corrected reasonably promptly and before
the Effective Time, Manchester State Bank shall have the option of correcting
such deficiency.
(k) The real property leases to which Manchester State Bank is
a party shall have remained in full force and effect as of the Effective Time
and shall not have been terminated by reason of the consummation of the
Reorganization.
(l) The Company shall have received, prior to the execution of
this Agreement and such opinion to be updated upon reasonable request by the
Company for inclusion in Registration/ Proxy Solicitation materials in form and
substance reasonably satisfactory to the Company, an opinion from HAS
Associates, Inc., or such other investment banker as may be selected by the
Company, that the terms of the Reorganization are fair to the Company from a
financial point of view.
(m) Rulings from the Internal Revenue Service, in form and
substance satisfactory to counsel for the Company and the Bank, or an opinion of
counsel for the Company and the Bank, shall have been received to the effect
that, for federal income tax purposes, (i) the transactions described in this
Agreement will qualify for treatment as a tax-free reorganization under Section
368 of the Code; (ii) except to the extent of cash consideration received, no
gain or loss will be recognized by the Company or the Bank upon the
Reorganization; (iii) no gain or loss will be recognized by the shareholders of
the Company upon consummation of the Reorganization; and (iv) such other matters
as the Company or the Bank deems appropriate and necessary.
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(n) Manchester State Bank and each "Founding Director" of
Manchester State Bank shall have executed and delivered to the Company, prior to
the execution of this Agreement, the Shareholder Agreements described in Section
1. 11, in form and substance reasonably satisfactory to the Company, and no
material breach or threatened breach of such Shareholder Agreements shall exist.
Manchester State Bank will furnish the Company with such
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 7.02 as the Company may
reasonably request.
7.03 CONDITIONS TO THE OBLIGATIONS OF MANCHESTER STATE BANK UNDER
THIS AGREEMENT. The obligations of Manchester State Bank under this Agreement
shall be further subject to the satisfaction, at or prior to the Effective Time,
of the following conditions, any one or more of which may be waived by
Manchester State Bank:
(a) Each of the obligations of the Company and the Bank
required to be performed by them at or prior to the Effective Time shall have
been duly performed and complied with and the representations and warranties of
the Company contained in this Agreement shall be true and correct in all
respects as of the date of this Agreement and as of the Effective Time as though
made at and as of the Effective Time (except as otherwise contemplated by this
Agreement), and Manchester State Bank shall have received a certificate to that
effect signed by the President and Chief Financial Officer of the Company.
(b) All action required to be taken by, or on the part of, the
Company and the Bank to authorize the execution, delivery and performance of
this Agreement by the Company and the Bank and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by the
Board of Directors of the Company and the Bank, and by the Company as sole
shareholder of the Bank, and Manchester State Bank shall have received certified
copies of the resolutions evidencing such authorization.
(c) The conditions in Section 7.02(d) shall have been
satisfied.
(d) Manchester State Bank shall have received from First
Albany, or such other investment banker as may be selected by Manchester State
Bank, prior to execution of this Agreement an opinion to be updated for
inclusion in Registration and Proxy Solicitation materials, in form and
substance reasonably satisfactory to Manchester State Bank, that the terms of
the Reorganization are fair to Manchester State Bank and its shareholders from a
financial point of view.
(e) Manchester State Bank shall have received an opinion,
dated the date of Closing, from counsel to the Company, in form and substance
reasonably satisfactory to Manchester State Bank, on the matters set forth on
EXHIBIT 7.03(e) hereof.
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(f) Rulings from the Internal Revenue Service, in form and
substance satisfactory to counsel for Manchester State Bank, or an opinion of
counsel for Manchester State Bank or the Company, shall have been received,
rendered on the basis of facts, representations, and assumptions set forth in
such opinions or in writing elsewhere and referred to therein, substantially to
the effect that for federal income tax purposes (i) the Reorganization
constitutes a reorganization within the meaning of Section 368(a) of the Code,
and (ii) accordingly no gain or loss will be recognized by shareholders of
Manchester State Bank with respect to Company Common Stock received solely in
exchange for Manchester State Bank Common Stock pursuant to this Agreement
(noting, however, that non-taxability does not extend to cash received as the
cash portion of the Reorganization Consideration, or in lieu of a fractional
share interest in Company Common Stock, or by dissenters, if any). In rendering
any such opinion, such counsel may require and, to the extent they deem
necessary or appropriate may rely upon, opinions of other counsel and upon
representations made in certificates of officers of Manchester State Bank, the
Company, affiliates of the foregoing, and others.
The Company will furnish Manchester State Bank with such
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 7.03 as Manchester State
Bank may reasonably request.
ARTICLE VIII
CLOSING
8.01 TIME AND PLACE. Subject to the satisfaction of the conditions of
Article VII hereof, the closing (the "Closing") of the transactions contemplated
hereby shall take place at the offices of Cranmore, FitzGerald & Meaney, 49
Wethersfield Avenue, Hartford, Connecticut at 10:00 A.M., on the third business
day after the date on which all of the conditions contained in Article VII, to
the extent not waived, are satisfied; or at such other place, at such other
time, or on such other date as the Company and Manchester State Bank may
mutually agree upon for the Closing to take place.
8.02 DELIVERIES AT THE CLOSING. At the Closing, there shall be
delivered to the Company and Manchester State Bank the opinions, certificates,
and other documents and instruments required to be delivered under Articles VI
and VII hereof.
ARTICLE IX
TERMINATION AND AMENDMENT
9.01 TERMINATION. Notwithstanding any other provision of this
Agreement, this Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the matters presented in connection
with the Reorganization by the shareholders of Manchester State Bank and the
Company:
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(a) by mutual consent of the Company and Manchester State Bank
in a written instrument, if the Board of Directors of each so determines by a
vote of a majority of the members of its entire Board;
(b) by either the Company or Manchester State Bank upon
written notice to the other party 90 days after the date on which any request or
application for a regulatory approval required to consummate the Reorganization
shall have been denied or withdrawn at the request or recommendation of the
governmental entity which must grant such requisite regulatory approval, unless
within the 90 day period following such denial or withdrawal a petition for
rehearing or an amended application has been filed with the applicable
governmental entity; provided, however, that no party shall have the right to
terminate this Agreement pursuant to this Section 9.01(b) if such denial or
request or recommendation for withdrawal shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein;
(c) by either the Company or Manchester State Bank if the
Reorganization shall not have been consummated on or before December 31, 1996,
unless the failure of the Closing to occur by such date shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
in any material respect the covenants and agreements of such party set forth
herein;
(d) by either the Company or Manchester State Bank (provided,
that the terminating party is not in material breach of any of its obligations
under this Agreement) if any approval of the shareholders of either party
required for the consummation of the Reorganization shall not have been obtained
by reason of the failure to obtain the required vote at a duly held meeting of
shareholders or at any adjournment or postponement thereof;
(e) by either the Company or Manchester State Bank (provided,
that the terminating party is not in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach is not cured within 45
days following written notice to the party committing such breach, or which
breach, by its nature, cannot be cured prior to the Closing;
(f) by the Company or Manchester State Bank, if it shall have
determined that the Reorganization has become imprudent by reason of the
institution by any governmental agency of any litigation or proceeding to
restrain or prohibit the consummation of the Reorganization;
(g) by the Company if at the time of such termination there
shall have been a material adverse change in Manchester State Bank's financial
condition from that set forth in Manchester State Bank's financial statements
referred to in Section 3.05 unless such change shall have resulted from
conditions affecting the banking industry generally;
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(h) by Manchester State Bank if at the time of such
termination there shall have been a material adverse change in the Company's
financial condition unless such change shall have resulted from conditions
affecting the banking industry generally. For purposes of this Section 9.01(h),
(1) no bulk sale of non-performing assets by the Company or the Bank approved by
the Board of Directors of the Company or the Bank, and made in all material
respects in accordance with such approval after the date of this Agreement,
shall be counted except to the extent the net adverse effect thereof (after
considering any tax benefits) on the capital of the Company exceeds $1,500,000,
and (2) no other transaction, event or condition, or series or combination of
transactions, events or conditions shall be considered as resulting in a
material adverse change with respect to the Company if the net adverse effect
thereof, together with any net adverse effect counted under (1), on the capital
of the Company is not in excess of $1,500,000;
(i) by the Company if the results, preliminary or other, of
any regulatory examination of Manchester State Bank indicates (1) any action or
actions the net effect of which is likely to result in a reduction in Manchester
State Bank's capital of 5 % or more below levels disclosed to the Company prior
to execution of this Agreement, or (2) any other action that is likely to result
in a significant restriction on Manchester State Bank, its business or
operations, unless such reduction or restriction has been requested in writing
by the Company;
(j) by the Company if, in order to obtain any required permit,
consent, approval or authorization of any governmental authority having
jurisdiction, the Company or Resulting Corporation will be required to agree to,
or will be subjected to, a limitation upon its activities following the
Effective Time which the Company or the Bank reasonably regards as materially
adverse; or
9.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Manchester State Bank as provided in Section
9.01, this Agreement shall forthwith become void and have no further effect
except (i) Sections 6.02(d), 9.02, 10.01 and 10.02, shall survive any
termination of this Agreement, and (ii) notwithstanding anything to the contrary
contained in this Agreement, no party shall be relieved or released from any
liabilities or damages arising out of its breach of any representation,
warranty, or other provision of this Agreement.
9.03 AMENDMENT. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Reorganization by the shareholders
of Manchester State Bank; provided, however, that after any approval of the
transactions contemplated by this Agreement by Manchester State Bank's or the
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Company's shareholders, there may not be, without further approval of such
shareholders, any amendment of this Agreement which reduces the amount or
changes the form of the consideration to be delivered to such shareholders
hereunder in any material respect other than as contemplated by this Agreement.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
9.04 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein (other than Section
7.01). Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party, but such extension or waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
ARTICLE X
MISCELLANEOUS
10.01 EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall, except to the
extent and under the circumstances set forth in Section 10.02 below to the
contrary, be paid by the party incurring such costs and expenses.
10.02 FEES AND EXPENSES UNDER CERTAIN CIRCUMSTANCES.
(a) Manchester State Bank and its Directors shall vote for the
Reorganization and recommend this Reorganization to the Shareholders of
Manchester State Bank and shall not solicit, approve or recommend to its
shareholders, or undertake or enter into with or without shareholder approval,
either as the surviving or disappearing or the acquiring or acquired
corporation, any other reorganization, consolidation, assets acquisition, tender
offer or other takeover transaction, or furnish or cause to be furnished any
information concerning its business, properties or assets to any person or
entity, other than the Company, interested in any such transaction (except for
Directors and executive officers of Manchester State Bank and such other persons
as may be required by law), and Manchester State Bank will not authorize or
permit any officer, Director, employee, investment banker or other
representative directly or indirectly to, solicit, encourage or support any
offer from any person or entity (other than the Company) to acquire
substantially all of the assets of Manchester State Bank, to acquire 10% or more
of the outstanding stock of Manchester State Bank, to enter into an agreement to
merge with Manchester State Bank, or to take any other action that would have
substantially the same effect as the foregoing, without the written consent of
the Company (any such solicitation, approval, undertaking, authorization,
permission or other action referred to in this sentence being sometimes referred
to as an "unauthorized action"). If the Reorganization is not consummated in
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accordance with the terms hereof because of any action or omission by Manchester
State Bank, as set forth above in this Section then Manchester State Bank shall
on demand pay to the Company the sum of (a) the out-of-pocket expenses,
including without limitation, reasonable attorney, accountant and investment
banker fees and expenses, incurred by the Company in connection with the
proposed Reorganization and the transactions provided for in this Agreement,
plus (b) $500,000, as liquidated damages.
(b) If either Manchester State Bank or the Company fails to
perform any material covenant or agreement in this Agreement, or if any
representation or warranty by Manchester State Bank or the Company is determined
to be materially untrue (the party which fails to perform or which makes the
untrue representation or warranty being referred to as a "Breaching Party"), and
if at the time of the failure or untrue representation or warranty by the
Breaching Party, the other party is not a Breaching Party (the "Non-Breaching
Party"), and if the Agreement is thereafter terminated prior to the Effective
Time, then the Breaching Party shall on demand pay to the Non-Breaching Party
the out-of-pocket expenses, including without limitation, reasonable attorney,
accountant and investment banker fees and expenses, incurred by the NonBreaching
Party in connection with the proposed Reorganization and the transactions
provided for in this Agreement; provided, however, that the amount payable under
this Section 10.02(b) shall not exceed $250,000.
(c) If Manchester State Bank does not take any unauthorized
action, if Manchester State Bank shareholders do not approve the Reorganization,
and if the Company does not breach this Agreement and if an agreement to acquire
or merge with Manchester State Bank at $88.00 of value per share or more to the
Manchester State Bank shareholders is executed on or before December 1, 1997
with an entity that makes an offer during the term of the Agreement, Manchester
State Bank shall pay to the Company upon execution of such agreement the sum of
all out-of-pocket expenses, including without limitation, reasonable attorney,
accountant and investment banker fees and expenses, incurred by the Company in
connection with the proposed Reorganization and the transactions provided for in
the Agreement; provided that if the transaction agreed to with such other entity
shall not close, the Company shall thereupon promptly repay such amount to
Manchester State Bank.
10.03 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of the Company and Manchester State Bank
contained in this Agreement or in any instrument or certificate delivered
pursuant hereto by the Company or Manchester State Bank shall expire on and be
terminated and extinguished at the Effective Time; provided, however, that after
the Effective Time, any such representation or warranty of the Company or
Manchester State Bank shall not be deemed to be terminated or extinguished so as
to deprive the Company of any defense at law or in equity which it would
otherwise have to any claim against it by any person, firm, corporation or other
legal entity, including, without limitation, any shareholder or former
shareholder of Manchester State Bank.
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10.04 NOTIFICATION OF CERTAIN MATTERS.
(a) Manchester State Bank shall give prompt notice to the
Company and the Company shall give prompt notice to Manchester State Bank, of
(i) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof to the Effective Time, and (ii) any material failure of
Manchester State Bank or the Company, as the case may be, or of any officer,
Director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder,
provided, however, that no such notifications shall affect the representations
or warranties of the parties or the conditions to the obligations of the parties
hereunder,
(b) Manchester State Bank agrees to notify the Company by
telephone within 24 hours of receipt of any inquiry with respect to a proposed
Reorganization, consolidation, assets acquisition, tender offer or other
takeover transaction with another person or receipt of a request for information
from the FDIC, the Commissioner, or other governmental authority with respect to
a proposed acquisition of Manchester State Bank by another party. Manchester
State Bank will promptly communicate to the Company the terms of any such
proposal, discussion, negotiation, or inquiry, including the identity of the
party making such proposal or inquiry.
10.05 NOTICES. All notices or other communications hereunder shall
be in writing and shall be deemed given if delivered personally or mailed by
prepaid certified first class mail (return receipt requested) or by recognized
overnight delivery service addressed as follows:
(a) If to the Company or the Bank, to:
New England Community Bancorp, Inc. and
New England Bank and Trust Company
P. O. Box 130
Old Windsor Mall
Windsor, CT 06095
Attention: David A. Lentini
President and Chief
Executive Officer
Copy to:
Cranmore, FitzGerald & Meaney
49 Wethersfield Avenue
Hartford, CT 06114
Attention: J. J. Cranmore
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(b) If to Manchester State Bank, to:
Manchester State Bank
1041 Main Street
Manchester, CT 06045-1440
Attention: Nathan G. Agostinelli
President and Treasurer
Copy to:
Jacobs, Walker, Rice & Basche, P.C.
146 Main Street
P.O. Box 480
Manchester, CT 06045
Attention: Ronald K. Jacobs
or such other address as shall be furnished in writing by either party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
10.06 DELIVERY OF SCHEDULES. [ RESERVED]
10.07 PARTIES IN INTEREST. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by either party
hereto without the prior written consent of the other party, and that nothing in
this Agreement is intended to confer, expressly or by implication, upon any
other person any rights or remedies under or by reason of this Agreement.
10.08 COMPLETE AGREEMENT. This Agreement, including the documents
and other writings referred to herein or delivered pursuant thereto, contains
the entire agreement and understanding of the parties with respect to its
subject matter, other than the Confidentiality Agreements. There are no
restrictions, agreements, premises, warranties, covenants or undertakings other
than those expressly set forth herein or therein. This Agreement supersedes all
prior agreements and understandings between the parties, both written and oral,
with respect to its subject matter. If any provision or part of this Agreement
is deemed unenforceable, the enforceability of the other provisions and parts
shall not be affected.
10.09 COUNTERPARTS. This Agreement may be executed in one or more
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
10.10 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Connecticut.
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10.11 HEADINGS. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, Manchester State Bank, the Company and the Bank
have caused this Agreement to be executed by their duly authorized officers as
of the day and year first above written.
NEW ENGLAND COMMUNITY BANCORP, INC.
By /S/ DAVID A. LENTINI
--------------------
Its President
Attest:
/S/ JOHN COCCOMO
- ----------------
Secretary
NEW ENGLAND BANK & TRUST COMPANY
By /S/ DAVID A. LENTINI
--------------------
Its President
Attest:
/S/ JOHN COCCOMO
- -----------------
Secretary
MANCHESTER STATE BANK
By /S/ NATHAN G. AGOSTINELLI
-------------------------
Its President
Attest:
/S/ RONALD K. JACOBS
- --------------------
Secretary
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DIRECTORS OF NEW ENGLAND COMMUNITY BANCORP, INC.
We hereby confirm, as of this 19th day of December, 1995, our approval
of the foregoing Agreement and Plan of Reorganization by and between New England
Community Bancorp, Inc., New England Bank & Trust Company and Manchester State
Bank
/S/ TADEUS J. BUCZKOWSKI /S/ JOHN C. CARMON
- ------------------------ ------------------
/S/ JOHN A. COCCOMO, SR. /S/ GEORGE A. COLLI, JR.
- ------------------------ ------------------------
/S/ GARY J. DENINO /S/ FRANK A. FALVO
- ------------------ ------------------
/S/ DOMINIC J. FERRAINA /S/ CHARLES D. GERSTEN
- ----------------------- ----------------------
/S/ JOHN R. HARVEY /S/ DAVID A. LENTINI
- ------------------ --------------------
/S/ ANGELINA MCGILLIVRAY /S/ EDWARD J. SZEWCZYK
- ------------------------ ----------------------
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DIRECTORS OF NEW ENGLAND BANK & TRUST COMPANY
We hereby confirm, as of this 19th day of December, 1995, our approval
of the foregoing Agreement and Plan of Reorganization by and between New England
Community Bancorp, Inc., New England Bank & Trust Company and Manchester State
Bank
/S/ TADEUS J. BUCZKOWSKI /S/ JOHN C. CARMON
- ------------------------ ------------------
/S/ JOHN A. COCCOMO, SR /S/ GEORGE A. COLLI, JR.
- ----------------------- ------------------------
/S/ LESTER R. DADDARIO /S/ DOMINIC J. FERRAINA
- ---------------------- -----------------------
/S/ RUSSELL A. FERRIGNO, D.D.S /S/ HURLBURT R. FREW
- ------------------------------ --------------------
/S/ DAVID A. LENTINI /S/ ANGELINA J. MCGILLIVRAY
- -------------------- ---------------------------
/S/ JOHN J. NARKIEWICZ /S/ EDWARD J. SZEWCZYK
- ---------------------- ----------------------
/S/ PAUL H. WABREK
- ------------------
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DIRECTORS OF MANCHESTER STATE BANK
We hereby confirm, as of this 19th day of December, 1995, our approval
of the foregoing Agreement and Plan of Reorganization by and between New England
Community Bancorp, Inc., New England Bank & Trust Company and Manchester State
Bank
/S/ PAUL ACETO /S/ NATHAN G. AGOSTINELLI
- -------------- -------------------------
/S/ ANDREW ANSALDI, JR. /S/ ANTHONY DZEN
- ----------------------- ----------------
/S/ RONALD JACOBS /S/ NICHOLAS LAPENTA
- ----------------- --------------------
/S/ ROXIE LEONE /S/ WILLIAM OLEKSINSKI
- --------------- ----------------------
/S/ SAMUEL PIERSON /S/ ED TOMKIEL
- ------------------ --------------
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EXHIBIT 99.1
Copy of the press release, dated December 20, 1995, issued by New
England Community Bancorp, Inc.
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
P.O. Box 130
Windsor, CT 06095
Release 12-20-95..8:30 AM
CONTACT: David A. Lentini Nathan G. Agostinelli
President & Chief Executive Officer President & Chief Executive Officer
New England Community Bancorp, Inc. Manchester State Bank
860-688-5251 860-646-4004
MANCHESTER STATE BANK TO MERGE WITH NEW ENGLAND BANK
WINDSOR, CT, December 20, 1995, At meetings held last evening, the directors of
New England Community Bancorp, Inc. (NASDAQ:NECB) and Manchester State Bank
(Manchester) agreed to merge Manchester with NECB's subsidiary, New England Bank
and Trust Company.
The terms of the Plan and Agreement of Reorganization provide that shareholders
of Manchester will receive $35.20 payable in cash and 5.493 shares of NECB
common stock for each share of Manchester State Bank Common Stock. Based upon
$9.66, the average price for NECB shares in the 20 days preceding today, the
transaction represents approximately $88.00 per share for holders of Manchester
stock.
Nathan G. Agostinelli, President and CEO of Manchester, remarked "We are excited
at the opportunity to join forces with New England. This is the right move at
the right time. The two banks operate in adjacent markets and by combining
resources, the customers of both banks will benefit from the larger network of
branches while Manchester's customers particularly will gain access to a wider
array of banking products and services."
Manchester is a Connecticut chartered commercial bank with three offices serving
the greater Manchester area with total assets of approximately $94 million. New
England Bank has eight offices throughout north central Connecticut.
NECB President and CEO David A. Lentini said that the move into Manchester was a
natural extension of New England Bank's market in north-central Connecticut. He
went on to say "We have put together a strong community banking organization to
successfully meet the competitive challenges ahead. Providing high quality
services to our customers is important to our goal of growing value for our
shareholders. We expect that the addition of Manchester will favorably impact
these objectives."
Mr. Agostinelli will continue as Executive Vice President and a Director of New
England Bank, with responsibility for business development in the Manchester
area. Andrew Ansaldi, Jr., Chairman of Manchester will also join the New England
board as a Director.
The merger requires the approvals of regulatory authorities and the shareholders
of Manchester. The transaction is expected to be completed by mid-year 1996.
<PAGE>
NECB with total assets in excess of $337 million, is a multibank holding company
with FDIC insured subsidiary banks New England Bank and Trust Company of
Windsor, Connecticut and The Equity Bank of Wethersfield, Connecticut.
Supplemental Data as of September 30, 1995
(Amount in thousands except per share data)
NECB MANCHESTER
Total Assets $337,543 $93,792
Total Loans 216,537 72,443
Allowance for Loan Losses 4,215 1,753
Total Deposits 307,456 86,278
Total Capital 30,087 6,727
Shares Outstanding 3,084 100
Book Value Per Share $9.75 $67.27
Equity /Assets 8.91% 7.17%
***end***
<PAGE>
EXHIBIT 99.2
Form of Shareholder Agreement required pursuant to
Section 1.11 of the Plan and Agreement
of Reorganization dated December 19, 1995
by and among New England Community Bancorp, Inc.,
New England Bank and Trust Company and Manchester State Bank.
<PAGE>
Shareholder's Agreement
(Section 1.11)
December 19, 1995
Boards of Directors
New England Community Bancorp, Inc. and
New England Bank & Trust Company
Board of Directors
Manchester State Bank
Gentlemen:
The undersigned beneficially owns and has sole voting power or shared
voting power with respect to the number of shares of common stock, $10.00 par
value per share (the "Shares"), of Manchester State Bank ("Manchester State
Bank") indicated on the signature page hereof.
Simultaneously with the execution of this letter agreement, New England
Community Bancorp, Inc., ("New England Community Bancorp, Inc.") and New England
Bank & Trust Company (the "Bank") (collectively the "Company") and Manchester
State Bank have entered into a Plan and Agreement of Reorganization (the
"Reorganization Agreement") dated as of the date hereof, providing for the
merger of Manchester State Bank into New England Bank & Trust Company, a
wholly-owned subsidiary of New England Community Bancorp, Inc. (the
"Reorganization"), pursuant to which New England Bank & Trust Company will be
the surviving corporation and all of the issued and outstanding Shares of
Manchester State Bank will be converted into the right to receive a
consideration on terms and conditions set forth in the Reorganization Agreement.
In consideration of the Company's entering into the Reorganization
Agreement and proceeding to use its best efforts to consummate the
Reorganization, and in consideration of the expenses incurred by the Company in
connection therewith, the undersigned agrees as follows:
1. The undersigned will vote the Shares, or cause the Shares to be
voted, for the approval of the Reorganization Agreement and the Reorganization,
and any other matters relating thereto presented for approval of the
shareholders of Manchester State Bank, and will vote the Shares, or cause the
Shares to be voted, against the approval of any other agreement providing for a
Reorganization, consolidation, sale of assets or other business combination of
Manchester State Bank with any person or entity other than the Company, or the
Bank.
2. The undersigned will not sell, assign, transfer or otherwise dispose
of, or permit to be sold, assigned, transfered or otherwise dispose of, any of
the Shares except (a) for transfers by will or by operation of law (in which
case this letter agreement shall bind the transferee) and (b) as the Company may
otherwise agree in writing.
<PAGE>
3. The undersigned will not:
(a) directly or indirectly solicit or encourage (including by way of
furnishing information), or initiate any communication with any
other person or entity with respect to, any proposal for a
Reorganization, consolidation, sale of assets or other business
combination involving Manchester State Bank or any Subsidiary (as
defined in the Reorganization Agreement) of Manchester State Bank or
for the acquisition of any capital stock of Manchester State Bank;
or
(b) encourage any person, firm, corporation, group or other entity
to engage in any of the actions covered by subparagraph (a) above.
4. If the Reorganization shall be consummated as provided in the
Reorganization Agreement, for a period of at least two (2) years after the
effective date of the Reorganization (the "Non-Compete Period"), the undersigned
shall, consistent with fiduciary duty, prudent business judgment and past
practices, use his reasonable best efforts to assist in the development and
growth of the business, prospects, and operations of the Company (as successor
to the business and operations of Manchester State Bank) ("Successor Entity") at
least at levels and in respects consistent with efforts and undertakings
heretofore made by the undersigned on behalf of Manchester State Bank and,
without limiting the generality of the foregoing, (a) the undersigned will,
consistent with fiduciary duty, prudent business judgment and past practices,
continue to provide his personal and business banking business to the Successor
Entity to substantially the same extent as heretofore provided to Manchester
State Bank, and encourage others to do so, (b) the undersigned will not,
consistent with fiduciary duty, prudent business judgment and past practices,
directly or indirectly, solicit business for, or encourage any person to provide
business to, any other banking or financial institution doing business in the
geographic area comprised of the Hartford and Tolland Counties, in the State of
Connecticut, (the "Area"), and (c) the undersigned will not serve as a member of
the governing board, or on any committee or advisory committee, or as an
organizer or incorporator of, any bank, bank holding company, or other financial
institution which competes with the Company or any of its Subsidiaries and
maintains its principal office in, or has 25% or more of its deposits or assets
in the Area.
5. The Company, the Bank, Manchester State Bank and the undersigned each
represents that it/he has the complete and unrestricted power and the
unqualified right to enter into and perform the terms of this letter agreement,
and that this letter agreement constitutes a valid and binding agreement with
respect to such party, enforceable in accordance with its terms.
6. Contingent upon the effectiveness of the Reorganization, the
undersigned hereby irrevocably and unconditionally releases and discharges
Manchester State Bank, and their respective successors and assigns, from any and
all claims, demands, agreements, promises, actions, causes of action, suits,
obligations, costs, expenses, damages, losses and liabilities, of whatever kind
or nature, at law or in equity or otherwise, whether known or unknown, which he
ever had, may have had, now has, or may have in the future, for or by reason of
any cause, thing, or matter whatsoever from the beginning of the world to the
Effective Time of the Reorganization, except only for any rights arising solely
under and by reason of the Reorganization Agreement.
<PAGE>
7. The undersigned acknowledges that irreparable damage would occur if
any of the provisions hereof were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, the undersigned agrees
that the Company shall be entitled to an injunction or injunctions to prevent
breaches or threatened breaches of the provisions hereof and to enforce
specifically the terms and provisions hereof in any court of competent
jurisdiction in the United States or any state thereof, in addition to any other
remedy to which the Company may be entitled at law or equity. The undersigned
acknowledges and agrees that by breaching the provisions of this Agreement the
undersigned waives and forfeits any rights which he may have to any compensation
and remuneration pursuant to the Manchester State Bank plan to compensate
"Founding Directors" in the event of a change in control. The undersigned
acknowledges and agrees that upon breaching the provisions hereof, the
undersigned, will be personally liable to Manchester State Bank and the Company
for their fees and expenses in connection with the Reorganization Agreement.
8. This letter agreement shall apply to any and all shares of common
stock of Manchester State Bank acquired in any manner by the undersigned after
the date hereof and, for purposes of this letter agreement, any and all such
after-acquired shares shall be deemed included in the term "Shares" as used
herein.
9. This letter agreement is to be governed by the laws of the State of
Connecticut, without giving effect to the principles of conflicts of laws
thereof. If any provision hereof is deemed unenforceable, the enforceability of
the other provisions hereof shall not be affected.
10. This letter agreement will terminate upon any termination of the
Reorganization Agreement effected in accordance with the terms thereof.
11. The undersigned, in consideration of the sum of ________ (1) of the
United States of America, and other lawful consideration to be paid by
Manchester State Bank, has remised, released and forever discharged, and by
these presents does remise, release and forever discharge Manchester State Bank,
the Company and the Bank of and from all debts, obligations, reckonings,
promises, covenants, controversies, suits, actions, causes of actions, damages,
claims or demands, arising from Releasors' service as an officer, director,
employee or agent of Manchester State Bank, and hereby agrees to indemnify the
Resulting Corporation for any liability which may arise by reason of Manchester
State Bank's payment pursuant to such Plan for "Founding Directors."
Please confirm our agreement with you by signing a copy of this letter.
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(1)It is further agreed that the consideration to be received by the undersigned
will be reduced to the extent necessary on a PRO RATA percentage basis along
with all of the other "Founding Directors" of Manchester State Bank if such
reduction is required by any regulatory agency acting with proper jurisdiction
or if in the opinion of the Internal Revenue Service or counsel to either
Manchester State Bank or the Company, such reductions are necessary to: enable
the qualification of the Reorganization as a tax-free "reorganization" within
the meaning of Section 368(a) of the Internal Revenue Code in order to obtain
the rulings or opinions provided pursuant to Sections 7.02(m) or 7.03(f) of the
Reorganization Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned releasor has signed and sealed this
instrument affixed this __ day of December, 1995.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF OR ATTESTED BY
_________________________________ _________________ Number of
SHARES
_________________________________ _________
STATE OF CONNECTICUT )
) ss.
COUNTY OF )
Personally Appeared _______________, signer of the foregoing
Instrument, and acknowledged the same to her free act and deed before me.
_______________________________
Notary/Public Commissioner of
the Superior Court
My Commission Expires _________
Confirmed and Agreed:
New England Community Bancorp, Inc.
By ___________________________________
President
New England Bank & Trust Company
By ___________________________________
President
Manchester State Bank
By ___________________________________
