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
March 14, 1997
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(Date of Earliest Event Reported)
PEMI BANCORP, INC.
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(Exact name of registrant as specified in its charter)
NEW HAMPSHIRE
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(State or other jurisdiction of incorporation or organization)
33-22807-B 02-0386832
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(Commission File Number) (IRS Employer Identification No.)
287 HIGHLAND STREET, PLYMOUTH, NEW HAMPSHIRE
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(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (603) 536-3339
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Form 8-K, Current Report
Pemi Bancorp, Inc.
Commission File No. 33-22807-B
The total number of Pages in this Report (excluding exhibits) is 3 and including
exhibits is 148.
Item 5. OTHER MATTERS
On March 14, 1997, the Boards of Directors of Pemi Bancorp, Inc. (the
"Pemi"), a New Hampshire corporation with its principal place of business in
Plymouth, New Hampshire, its wholly-owned subsidiary, Pemigewasset National
Bank, a national banking association with its principal place of business in
Plymouth, New Hampshire, The Berlin City Bank ("Berlin"), a New Hampshire
chartered commercial bank with its principal place of business in Berlin, New
Hampshire and Northway Financial, Inc. ("Northway"), a New Hampshire
corporation, which is being formed by Berlin to become a multi-bank holding
company for Berlin and Pemigewasset National Bank, executed a definitive
agreement and plan of merger (the "Agreement").
Pursuant to the terms of the Agreement, Northway will become the bank
holding company for Berlin in a transaction whereby each issued and outstanding
share of Berlin common stock will be exchanged for 16 shares of Northway common
stock (the "Northway Common Stock"). Thereafter, Northway will acquire the
common stock of Pemi in a transaction whereby each share of Pemi common stock
issued and outstanding prior to the effective time will be exchanged for 1.0419
shares of Northway Common Stock.
The transaction, which is subject to approval by state and federal bank
regulators and by the respective shareholders of each institution, has been
structured to be tax-free to the shareholders of each institution.
Upon consummation, the Board of Directors of Northway will consist of
six of the current directors of Berlin and four of the current directors of
Pemi. William J. Woodward, the current Chairman, President and Chief Executive
Officer of Berlin will serve as Chairman of the Board, President and Chief
Executive Officer of Northway. Fletcher W. Adams, the current President and
Chief Executive Officer of Pemi and Pemigewasset National Bank, will serve as
Vice Chairman of the Board of Directors of Northway.
The parties anticipate consummating the transactions contemplated by
the Agreement in the second half of 1997.
Item 7. EXHIBITS
Exhibit No. Description
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2 Agreement and Plan of Merger dated March 14, 1997 by and among
Pemi Bancorp, Inc., Pemigewasset National Bank, The Berlin
City Bank and Northway Financial, Inc.
-1-
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Exhibit No. Description
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99 Copy of the joint press release, dated March 14, 1997, issued
by Pemi Bancorp, Inc. and The Berlin City Bank.
Dated: March 17, 1997 PEMI BANCORP, INC.
By: /s/ Fletcher W. Adams
-------------------------
President, Treasurer and
Chief Executive Officer
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INDEX TO EXHIBITS
Exhibit Number Description Page
- -------------- ----------- ----
2 Definitive Agreement and Plan 4
of Merger dated March 14, 1997 ----
by and among Pemi Bancorp, Inc.,
The Pemigewasset National Bank,
The Berlin City Bank and
Northway Financial, Inc.
99 Copy of the joint press release, 145
dated March 14, 1997, issued by ----
Pemi Bancorp, Inc. and The Berlin City
Bank.
-3-
EXHIBIT 2
Definitive Agreement and Plan of Merger dated
March 14, 1997 by and among Pemi Bancorp, Inc.,
Pemigewasset National Bank, The Berlin City Bank and
Northway Financial, Inc.
-4-
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AGREEMENT AND PLAN OF MERGER
By and Among
THE BERLIN CITY BANK,
NORTHWAY FINANCIAL, INC.,
PEMIGEWASSET NATIONAL BANK
and
PEMI BANCORP, INC.
Dated as of March 14, 1997
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TABLE OF CONTENTS
ARTICLE I Page
THE MERGER..........................................................1
1.01 The Merger...............................................1
1.02 Plan of Merger...........................................1
1.03 Effective Time...........................................2
1.04 Effect of the Merger.....................................2
1.05 Conversion of Company Common Stock.......................2
1.06 Rights With Respect to Objecting Shares..................3
1.07 Articles of Incorporation................................4
1.08 By-Laws..................................................4
1.09 Directors and Officers of the Surviving Corporation......4
1.10 Articles; By-Laws; Directors; Officers of Purchaser......4
1.11 Articles; Bylaws; Directors; Officers of the Bank........5
1.12 Tax Consequences.........................................5
1.13 Voting Agreements........................................5
1.14 Trading Listing..........................................5
1.15 Additional Actions.......................................5
1.16 Possible Alternative Structure...........................6
ARTICLE II
EXCHANGE OF SHARES..................................................6
2.01 Parent to Make Shares Available..........................6
2.02 Exchange of Shares.......................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE BANK............................................................9
3.01 Corporate Organization...................................9
3.02 Capitalization..........................................10
3.03 Authority; No Violation.................................11
3.04 Consents and Approvals..................................12
3.05 Loan Portfolio; Reports.................................12
3.06 Financial Statements....................................14
3.07 Broker's Fees...........................................16
3.08 Absence of Certain Changes or Events....................16
3.09 Legal Proceedings.......................................17
(i)
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Page
3.10 Taxes and Tax Returns...................................18
3.11 Employee Benefit Plans..................................19
3.12 SEC Reports.............................................21
3.13 Company Information.....................................21
3.14 Compliance with Applicable Law..........................21
3.15 Certain Contracts.......................................22
3.16 Agreements with Regulatory Agencies.....................23
3.17 Investment Securities...................................23
3.18 Environmental Matters...................................23
3.19 Properties..............................................25
3.20 Administration of Fiduciary Accounts....................26
3.21 Insurance...............................................26
3.22 Transactions with Certain Persons.......................27
3.23 State Takeover Laws.....................................27
3.24 Disclosure..............................................27
3.25 Regulatory Approvals....................................27
3.26 Labor Matters...........................................28
3.27 Intellectual Property...................................28
3.28 Ownership of Purchaser Common Stock;
Affiliates and Associates.............................28
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER........................28
4.01 Corporate Organization..................................28
4.02 Capitalization..........................................29
4.03 Authority; No Violation.................................30
4.04 Consents and Approvals..................................31
4.05 Loan Portfolio; Reports.................................31
4.06 Financial Statements....................................33
4.07 Broker's Fees...........................................34
4.08 Absence of Certain Changes or Events....................34
4.09 Legal Proceedings.......................................35
4.10 FDIC Reports............................................35
4.11 Parent and Purchaser Information........................35
4.12 Compliance with Applicable Law..........................36
4.13 Agreements with Regulatory Agencies.....................36
4.14 Regulatory Approvals....................................36
4.15 Taxes and Tax Returns...................................36
4.16 Insurance...............................................38
4.17 Disclosure..............................................38
(ii)
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Page
4.18 Employee Benefit Plans..................................38
4.19 Certain Contracts.......................................40
4.20 Investment Securities...................................41
4.21 Environmental Matters...................................41
4.22 Properties..............................................43
4.23 Administration of Fiduciary Accounts....................44
4.24 Transactions with Certain Persons.......................44
4.25 State Takeover Laws.....................................44
4.26 Labor Matters...........................................44
4.27 Intellectual Property...................................45
4.28 Ownership of the Company Common Stock;
Affiliates and Associates.............................45
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS..........................45
5.01 Covenants of the Company and the Bank...................45
5.02 No Solicitation.........................................48
5.03 Covenants of Purchaser and Parent.......................49
5.04 Minimum Shareholders' Equity;
Allowance for Loan Losses.............................51
ARTICLE VI
ADDITIONAL AGREEMENTS..............................................52
6.01 Regulatory Matters......................................52
6.02 Securities Laws Matters.................................53
6.03 Shareholder Meetings....................................53
6.04 Access to Information...................................54
6.05 Legal Conditions to Merger..............................55
6.06 Restrictions on Sale of Parent Common Stock.............55
6.07 Employee Matters........................................56
6.08 Subsequent Interim and Annual Financial Statements......56
6.09 Additional Agreements...................................56
6.10 Disclosure Supplements..................................56
6.11 Current Information.....................................56
6.12 Parent..................................................57
6.13 No Inconsistent Actions.................................57
ARTICLE VII
CONDITIONS PRECEDENT...............................................57
(iii)
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Page
7.01 Conditions to Each Party's Obligation
to Effect the Merger...................................57
(a) Shareholder Approval..............................57
(b) Regulatory Approvals..............................58
(c) Securities Laws Matters...........................58
(d) No Injunctions or Restraints; Illegality..........58
7.02 Conditions to Obligations of Purchaser and Parent........58
(a) Representations and Warranties....................58
(b) Performance of Obligations of the Company
and the Bank....................................59
(c) No Burdensome Condition...........................59
(d) Consents Under Agreements.........................59
(e) Tax Opinion.......................................59
(f) Accountant's Letter...............................59
(g) Legal Opinion.....................................60
(h) Opinion of Financial Adviser......................60
(i) Cash Consideration................................60
7.03 Conditions to Obligations of the Company.................60
(a) Representations and Warranties....................60
(b) Performance of Obligations of
Purchaser and Parent............................60
(c) No Burdensome Condition...........................60
(d) Tax Opinion.......................................61
(e) Accountant's Letter...............................61
(f) Legal Opinion.....................................61
(g) Opinion of Financial Advisor......................61
ARTICLE VIII
TERMINATION AND AMENDMENT...........................................61
8.01 Termination..............................................61
8.02 Effect of Termination....................................63
8.03 Expenses; Termination Fee................................63
8.04 Amendment................................................64
8.05 Extension; Waiver........................................65
ARTICLE IX
GENERAL PROVISIONS..................................................65
9.01 Closing..................................................65
9.02 Non-Survival of Representations,
Warranties and Agreements..............................65
9.03 Notices..................................................65
9.04 Interpretation...........................................66
(iv)
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Page
9.05 Counterparts.............................................66
9.06 Entire Agreement.........................................66
9.07 Governing Law............................................67
9.08 Enforcement of Agreement.................................67
9.09 Severability.............................................67
9.10 Publicity................................................67
9.11 Assignment...............................................67
(v)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 14, 1997, by and among
The Berlin City Bank, a New Hampshire chartered commercial bank ("Purchaser"),
Northway Financial, Inc., a New Hampshire chartered corporation wholly owned by
Purchaser ("Parent"), Pemigewasset National Bank, a national bank with its
principal office in New Hampshire (the "Bank") and Pemi Bancorp, Inc., a New
Hampshire chartered corporation (the "Company").
WHEREAS, the Boards of Directors of Purchaser and Parent have
determined that it is in the best interests of their respective companies and
their shareholders for Purchaser to become a wholly owned subsidiary of Parent,
in a transaction (the "Holding Company Reorganization") in which the
shareholders of Purchaser will receive 16 shares of the common stock, par value
$1.00 per share, of Parent ("Parent Common Stock") for each share of the common
stock, par value $5.00 per share, of Purchaser ("Purchaser Common Stock") (the
ratio of the number of shares of Parent Common Stock received in exchange for
each share of Purchaser Common Stock shall be hereinafter referred to as the
"Holding Company Exchange Ratio").
WHEREAS, the Boards of Directors of Purchaser, Parent, the Company and
the Bank have determined that it is in the best interests of their respective
companies and their shareholders to consummate the business combination
transaction provided for herein in which the Company will, subject to the terms
and conditions set forth herein, merge with and into Parent (the "Merger")
immediately following the Holding Company Reorganization; and
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.01 THE MERGER. Subject to the terms and conditions of this Agreement,
in accordance with the New Hampshire Revised Statutes Annotated, at the
Effective Time (as hereinafter defined), the Company shall merge with and into
Parent. Parent shall become the surviving corporation (hereinafter sometimes
called the "Surviving Corporation") in the Merger, and shall continue its
corporate existence under the laws of the State of New Hampshire. The name of
the Surviving Corporation shall be Northway Financial, Inc. Upon consummation of
the Merger, the separate corporate existence of the Company shall terminate.
1.02 PLAN OF MERGER. This Agreement shall constitute a plan of merger
for purposes of the New Hampshire Business Corporation Act.
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1.03 EFFECTIVE TIME. As promptly as practicable after all of the
conditions set forth in Article VII shall have been satisfied or, if
permissible, waived by the party entitled to the benefit of the same, the
Company and Parent shall duly execute and file articles of merger (the "Articles
of Merger") with the Secretary of State of New Hampshire (the "Secretary") in
accordance with Section 293-A:11.05 of the New Hampshire Revised Statutes
Annotated (the "New Hampshire Business Corporation Act"). The Merger shall
become effective on the date (the "Effective Date") and at such time (the
"Effective Time") as the Articles of Merger are filed with the Secretary or at
such later date and time as is specified in the Articles of Merger.
1.04 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided herein and as set forth in Section 293-A.11:06 of
the New Hampshire Business Corporation Act. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the property,
rights, privileges, powers and franchises of the Company and Parent shall vest
in the Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of the Company and Parent shall become the
debts, liabilities, obligations, restrictions, disabilities and duties of the
Surviving Corporation.
1.05 CONVERSION OF COMPANY COMMON STOCK.
(a) At the Effective Time, subject to Section 2.02(c) hereof, each
share of the common stock, par value $1.00 per share, of the Company (the
"Company Common Stock") issued and outstanding immediately prior to the
Effective Time (other than (i) shares of Company Common Stock held in the
Company's treasury or directly or indirectly by Parent, Purchaser, the Company
or the Bank (except for Trust Account Shares and DPC Shares (as such terms are
defined in Section 1.05(b) hereof) and (ii) Objecting Shares (as such term is
defined in Section 1.06 hereof)) shall, by virtue of this Agreement and without
any action on the part of the holder thereof, be converted into and exchangeable
for 1.0419 shares of Parent Common Stock rounded to the nearest ten thousandth
of a share, it being understood that the foregoing Exchange Ratio is applicable
only after giving effect to the Holding Company Reorganization. All of the
shares of Company Common Stock converted into Parent Common Stock pursuant to
this Article I shall no longer be outstanding and shall automatically be
canceled and shall cease to exist, and each certificate (each a "Certificate")
previously representing any such shares of Company Common Stock shall thereafter
represent the right to receive (i) the number of whole shares of Parent Common
Stock and (ii) cash in lieu of fractional shares into which the shares of
Company Common Stock represented by such Certificate have been converted
pursuant to this Section 1.05(a) and Section 2.02(c) hereof (the "Merger
Consideration"). Certificates previously representing shares of Company Common
Stock shall be exchanged for certificates representing whole shares of Parent
Common Stock and cash in lieu of fractional shares issued in consideration
therefor upon the surrender of such Certificates in accordance with Section 2.02
hereof, without any interest thereon. If prior to the Effective Time Purchaser
or Parent should split or combine its common stock, or pay a special cash or
stock dividend or other distribution in such common stock other than the
exchange of stock contemplated to occur as a result of the Holding Company
Reorganization which is already reflected in the Exchange Ratio, then the
Exchange Ratio shall be appropriately adjusted to reflect such split,
combination, dividend or distribution.
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(b) At the Effective Time, all shares of Company Common Stock that
are owned by the Company as treasury stock and all shares of Company Common
Stock that are owned directly or indirectly by Parent, Purchaser, the Company or
the Bank (other than (i) shares of Company Common Stock held directly or
indirectly in trust accounts, managed accounts and the like or otherwise held in
a fiduciary capacity that are beneficially owned by third parties (any such
shares, and shares of Parent Common Stock which are similarly held, whether held
directly or indirectly by Parent or the Company, as the case may be, being
referred to herein as "Trust Account Shares") and (ii) any shares of Company
Common Stock held by Parent, Purchaser, the Company or the Bank in respect of a
debt previously contracted (any such shares of Company Common Stock, and shares
of Parent Common Stock which are similarly held, whether held directly or
indirectly by Parent or the Company, being referred to herein as "DPC Shares"))
shall be canceled and shall cease to exist and no stock of Parent or other
consideration shall be delivered in exchange therefor. All shares of Parent
Common Stock that are owned by the Company or the Bank (other than Trust Account
Shares and DPC Shares) shall become treasury stock of Parent.
1.06 RIGHTS WITH RESPECT TO OBJECTING SHARES.
(a) Notwithstanding anything in this Agreement to the contrary and
unless otherwise provided by applicable law, shares of Company Common Stock that
are issued and outstanding immediately prior to the Effective Time and that are
owned by shareholders who have properly exercised and perfected their rights of
appraisal within the meaning of Chapter 293-A:13 of the New Hampshire Business
Corporation Act (the "Objecting Shares"), shall not be converted into the right
to receive the Merger Consideration, unless and until such shareholders shall
have failed to perfect or shall have effectively withdrawn or lost their right
of appraisal and payment under applicable law. If any such shareholder shall
have failed to perfect or shall have effectively withdrawn or lost such right of
appraisal, each share of Company Common Stock held by such shareholder shall
thereupon be deemed to have been converted into the right to receive and become
exchangeable for, at the Effective Time, the Merger Consideration pursuant to
Section 1.05(a) hereof.
(b) The Company shall give Purchaser (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands, and
any other instruments served in connection with such demands pursuant to the New
Hampshire Business Corporation Act and received by the Company and (ii) the
opportunity to participate with the Company in all negotiations and proceedings
with respect to demands for appraisal under the New Hampshire Business
Corporation Act consistent with the obligations of the Company thereunder. The
Company shall not, except with the prior written consent of Purchaser, (x) make
any payment with respect to any demands for appraisal, (y) offer to settle or
settle any such demands, or (z) waive any failure to timely deliver a written
demand for appraisal in accordance with the New Hampshire Business Corporation
Act.
1.07 ARTICLES OF INCORPORATION. Unless otherwise agreed to by the
parties prior to the Effective Time, at and after the Effective Time, the
Articles of Incorporation of the Surviving Corporation shall be in the form
appended hereto as EXHIBIT I, until thereafter amended as provided by law and
such Articles of Incorporation. The parties have agreed that the Articles of
3
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Incorporation of the Surviving Corporation shall require any merger or
consolidation involving the Bank within three years after the Effective Time to
be approved by a vote of two-thirds of the directors of the Surviving
Corporation and shall further provide that this provision of the Articles of
Incorporation cannot be amended except by a vote of two-thirds of such
directors. To effect the foregoing, Purchaser agrees that immediately prior to
the Effective Time, Purchaser will file with the New Hampshire Secretary of
State Amended and Restated Articles of Incorporation of Parent to conform the
Articles of Incorporation of Parent to Exhibit I.
1.08 BY-LAWS. Unless otherwise agreed to by the parties prior to the
Effective Time, at and after the Effective Time, the By-Laws of the Surviving
Corporation shall be substantially in the form appended hereto as EXHIBIT II,
until thereafter amended as provided by law, the Articles of Incorporation of
the Surviving Corporation and such Bylaws.
1.09 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. As of the
Effective Time, the board of directors of the Surviving Corporation shall
consist of ten members, of whom four will be designated, after consultation with
the Purchaser and prior to the Effective Time, in writing by the Company and six
of whom will be designated, after consultation with the Company and prior to the
Effective Time, in writing by Purchaser. The Company shall designate in writing
prior to the Effective Time two of its Board designees to serve a one-year term,
one of its Board designees to serve a two-year term and one of its Board
designees to serve a three-year term on the surviving Corporation's board of
directors. Purchaser shall designate in writing prior to the Effective Time two
of its Board designees to serve a one-year term, two of its Board designees to
serve two-year terms and two of its Board designees to serve three-year terms on
the Surviving Corporation's board of directors. Each of the directors so
designated shall hold office in accordance with the Articles of Incorporation
and By-Laws of the Surviving Corporation until their respective successors are
duly elected or appointed and qualified. The Surviving Corporation shall enter
into employment agreements with William J. Woodward, who will serve as Chairman,
President and Chief Executive Officer of the Surviving Corporation, and Fletcher
W. Adams, who will serve as Vice Chairman of the Surviving Corporation, in the
forms attached as EXHIBITS III AND IV, respectively. The board of directors of
the Surviving Corporation shall elect the other officers of the Surviving
Corporation.
1.10 ARTICLES; BY-LAWS; DIRECTORS; OFFICERS OF PURCHASER. The Articles
of Agreement and By-Laws of Purchaser shall continue as in effect immediately
prior to the Effective Time except to the extent amended to implement the
provisions of this Section 1.10. The directors and officers of Purchaser in
office immediately prior to the Effective Time shall continue to hold office in
accordance with the Articles of Agreement and By-Laws of the Purchaser until
their respective successors are duly elected or appointed and qualified. In
addition, the Bank may nominate two members of the Bank's Board of Directors to
join the Board of Directors of Purchaser, each for a one-year term, to hold
office in accordance with the Articles of Agreement and By-Laws of Purchaser,
until their respective successors are duly elected or appointed and qualified.
1.11 ARTICLES; BYLAWS; DIRECTORS; OFFICERS OF THE BANK. The Articles of
Association and By-laws of the Bank shall continue as in effect immediately
prior to the Effective Time, except to the extent amended to implement the
4
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provisions of this Section 1.11. The directors and officers of the Bank in
office immediately prior to the Effective Time shall hold office in accordance
with the Articles of Association and By-laws of the Bank, until their respective
successors are duly elected or appointed and qualified. In addition, Purchaser
may nominate two members of Purchaser's Board of Directors to join the Board of
Directors of the Bank, each for a one-year term to hold office in accordance
with the Articles of Association and By-laws of the Bank, until their respective
successors are duly elected or appointed and qualified.
1.12 TAX CONSEQUENCES. It is intended that the Merger shall constitute
a reorganization within the meaning of Section 368(a) of the Code, and that this
Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code.
1.13 VOTING AGREEMENTS. As of the date of this Agreement, each of the
Company and Purchaser shall have delivered Voting Agreements executed by each of
the Company's and Purchaser's directors in the form appended hereto as EXHIBITS
V AND VI, respectively.
1.14 TRADING LISTING. Purchaser and Parent shall obtain a favorable
trading listing on the National Association of Securities Dealers Automated
Quotation National Market System ("NASDAQ/NMS") or the American Stock Exchange
for the Parent Common Stock at or before the Effective Time.
1.15 ADDITIONAL ACTIONS. If, at any time after the Effective Time,
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or any other acts are necessary or desirable (a) to vest,
perfect or confirm, of record or otherwise, in Surviving Corporation, title to
and possession of any property or right of the Company acquired or to be
acquired by reason of, or as a result of, the Merger, or (b) otherwise to carry
out the purposes of this Agreement, the Company and its proper officers and
directors shall be deemed to have granted to Surviving Corporation an
irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such property or rights in
Surviving Corporation and otherwise to carry out the purposes of this Agreement;
and the proper officers and directors of Surviving Corporation are fully
authorized in the name of the Company or otherwise to take any and all such
action.
1.16 POSSIBLE ALTERNATIVE STRUCTURE. Notwithstanding any other
provision of this Agreement to the contrary, to the extent necessary or
appropriate to assure fulfillment of the intentions of the parties that
Purchaser or an affiliate of Purchaser acquire a 100% ownership interest in the
Company and, indirectly, the Bank and to minimize any adverse tax or accounting
treatment, Purchaser, Parent, the Company and the Bank may jointly elect, at or
prior to the Effective Time, to substitute an alternative structure in lieu of
the structure described herein to accomplish the aforementioned intentions of
the parties.
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ARTICLE II
EXCHANGE OF SHARES
2.01 PARENT TO MAKE SHARES AVAILABLE. At least one business day prior
to the Effective Time, Parent shall deposit, or shall cause to be deposited,
with The First National Bank of Boston or such other bank or trust company
selected by Parent and reasonably acceptable to 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 Parent
Common Stock and the cash in lieu of fractional shares (such cash and
certificates for shares of Parent Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") to be issued pursuant to Section 1.05 and paid pursuant to
Section 2.02(a) in exchange for outstanding shares of Company Common Stock.
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 form letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing the
shares of Parent Common Stock and the cash in lieu of fractional shares into
which the shares of Company Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. The Company
shall have the right to review both the letter of transmittal and the
instructions three days prior to its mailing. 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 Parent Common Stock to which such holder of Company Common Stock
shall have become entitled pursuant to the provisions of Article I hereof and
(y) a check representing the amount of cash in lieu of fractional shares, if
any, which such holder has the right to receive in respect of the Certificate
surrendered pursuant to the provisions of this Article II, and the Certificate
so surrendered shall forthwith be canceled. No interest will be paid or accrued
on the cash in lieu of fractional shares, unpaid dividends and distributions, if
any, payable to holders of Certificates.
(b) After the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Company 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 canceled and exchanged for
certificates representing shares of Parent Common Stock as provided in this
Article II.
(c) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
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distribution with respect to Parent Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a shareholder of the
Company. In lieu of the issuance of any such fractional share, Parent shall pay
to each former shareholder of the Company who otherwise would be entitled to
receive a fractional share of Parent Common Stock, an amount in cash determined
by multiplying (i) $26.875 by (ii) the fraction of a share of Parent Common
Stock to which such holder would otherwise be entitled to receive pursuant to
Section 1.05 hereof, it being understood that the foregoing computation method
is applicable only after giving effect to the Holding Company Reorganization.
(d) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of the Company for twelve months after the Effective Time shall be
transferred to the Surviving Corporation. Any shareholders of the Company who
have not theretofore complied with this Article II shall thereafter look only to
the Surviving Corporation for payment of their shares of Parent Common Stock,
cash in lieu of fractional shares and unpaid dividends and distributions on the
Parent Common Stock deliverable in respect of each share of Company Common Stock
such shareholder holds as determined pursuant to this Agreement, in each case
without any interest thereon. Notwithstanding the foregoing, none of the
Surviving Corporation, Purchaser, the Company, the Bank, the Exchange Agent or
any other person shall be liable to any former holder of shares of Company
Common Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(e) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such person of a bond in such amount as Parent may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate, the shares of Parent Common Stock and cash in lieu of
fractional shares deliverable in respect thereof pursuant to this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE BANK
Each of the Company and the Bank hereby represents and warrants to
Purchaser and Parent as follows:
3.01 CORPORATE ORGANIZATION.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of New Hampshire. 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,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect (as defined below) on the Company or the Bank. As used
in this Agreement, the term "Material Adverse Effect" means, with respect to
Purchaser, Parent (or the Surviving Corporation), the Bank, or the Company, as
the case may be, any change or effect that is, or in the judgment of the parties
hereto, would be materially adverse to the business, properties, assets,
liabilities, financial condition, results of operations of such party and its
subsidiaries taken as a whole. As used in this Agreement, the word "Subsidiary"
means any corporation, partnership or other organization, whether incorporated
or unincorporated, which is or was consolidated with such party (or with which
such party is or was consolidated) for financial reporting purposes. The Company
is duly registered as a bank holding company under the Bank Holding Company Act
of 1956, as amended (the "BHC Act"). The Articles of Incorporation and By-Laws
of the Company, copies of which have previously been delivered to Purchaser, are
true and complete copies of such documents as in effect as of the date of this
Agreement.
(b) The Bank is a national bank duly organized, validly existing
and in good standing under the laws of the United States of America. The deposit
accounts of the Bank are insured by the Federal Deposit Insurance Corporation
(the "FDIC") through the Bank Insurance Fund (the "BIF"), to the fullest extent
permitted by law, and all premiums and assessments required in connection
therewith have been paid by the Bank. The Company's sole Subsidiary is the Bank.
The Bank has the 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 the location of the properties
and assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified, either
individually or in the aggregate, would not have a Material Adverse Effect on
the Bank. The Articles of Association and By-laws of the Bank, copies of which
have previously been delivered to Purchaser, are true, complete and correct
copies of such documents as in effect as of the date of this Agreement.
(c) The Company has no direct or indirect Subsidiaries other than
the Bank and the Bank has no direct or indirect Subsidiaries. Other than the
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Company's ownership of the Bank, neither the Company nor the Bank owns, controls
or holds with the power to vote, directly or indirectly of record, beneficially
or otherwise, any capital stock or any equity or ownership interest in any
corporation, partnership, association, joint venture or other entity, except as
set forth in Section 3.01 of the Company Disclosure Schedule and except for less
than five percent of any equity security registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(d) The minute books of each of the Company and the Bank contain
true, accurate and complete records of all meetings and other corporate actions
held or taken since January 1, 1992 of their respective shareholders and boards
of directors (including committees of their respective boards of directors).
3.02 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
2,000,000 shares of Company Common Stock. As of the date of this Agreement,
there are (x) 751,901 shares of Company Common Stock issued and outstanding and
61,500 shares of Company Common Stock held in the Company's treasury, and (y) no
shares of Company Common Stock reserved for issuance upon the exercise of
outstanding stock options or otherwise. All of the issued and outstanding shares
of Company Common Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights with no personal
liability attaching to the ownership thereof. 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 Common Stock or any other equity security of the
Company or any securities representing the right to purchase or otherwise
receive any shares of Company Common Stock, or any other equity security of the
Company. No options are outstanding to purchase shares of the Company Common
Stock.
(b) The Company's sole Subsidiary is the Bank. All of the issued
and outstanding shares of capital stock of the Bank and all of such shares of
capital stock or interests are duly authorized and validly issued and are fully
paid, nonassessable, except as provided in the National Bank Act, with no
personal liability attaching to the ownership thereof. The 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 capital stock or any other equity security of the Bank or any
securities representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of the Bank. At the Effective Time,
there will not be any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character by which the Company or the Bank will
be bound calling for the purchase or issuance of any shares of the capital stock
of the Company or the Bank.
(c) Except as contemplated herein, there are no agreements or
understandings, with respect to the voting of any shares of Company Common Stock
or the common stock of the Bank or which restrict the transfer of such shares,
to which the Company or the Bank is a party, and to the knowledge of the Company
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and the Bank, there are no such agreements or understandings to which the
Company or the Bank is not a party with respect to the voting of any such shares
or which restrict the transfer of such shares.
3.03 AUTHORITY; NO VIOLATION.
(a) The Company and the Bank each has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation by the Company of the transactions contemplated by this
Agreement have been duly and validly approved by the Board of Directors of each
of the Company and the Bank. The Board of Directors of the Company has directed
that this Agreement and the transactions contemplated hereby be submitted to the
Company's shareholders for approval at a meeting of such shareholders and has
voted to recommend to their shareholders approval thereof and, except for the
adoption of this Agreement by the requisite vote of the Company's shareholders,
no other corporate proceedings on the part of the Company or the 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 each of the Company and the Bank and (assuming the due
authorization, execution and delivery by Parent and Purchaser) constitutes a
valid and binding obligation of each of the Company and the Bank, enforceable
against the Company and the Bank in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by each
of the Company and 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, conflict with or result in a breach of any provision of the Articles of
Incorporation or By-Laws of the Company or the Articles of Association or
By-laws of the Bank, as the case may be (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 the Company, the Bank or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach of any
provisions of or the loss of any benefit under, constitute a default (or any
event, which, with notice or lapse of time, or both would constitute a default)
under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of the Company or the 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 the
Company or the Bank is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of clause (y)
above) for such violations, conflicts, breaches or defaults which, either
individually or in the aggregate will not have a Material Adverse Effect on the
Company or the Bank.
3.04 CONSENTS AND APPROVALS. Except for (a) the filing of applications
with the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") under the BHC Act and approval of such applications, (b) the filing of
an application with the FDIC under the Bank Merger Act and approval of such
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application, (c) filings with the New Hampshire Bank Commissioner (the
"Commissioner") and the New Hampshire Board of Trust Company Incorporation (the
"BTCI") (the "State Banking Approvals"), (d) the filing with the Securities and
Exchange Commission (the "SEC") of a proxy statement in definitive form relating
to the meeting of the Company's shareholders (the "Company Shareholder Meeting")
and the meeting of the Purchaser's shareholders (the "Purchaser Shareholder
Meeting") (collectively, the Company Shareholder Meeting and Purchaser
Shareholder Meeting shall be referred to as the "Shareholder Meetings") to be
held in connection with this Agreement and the transactions contemplated hereby
(the "Proxy Statement"), which Proxy Statement shall be part of and included in
a Registration Statement on Form S-4 (the "Registration Statement") filed with
the SEC by Parent to register the shares of Parent Common Stock to be issued
pursuant to the terms of this Agreement, (e) the approval of this Agreement by
the requisite vote of the shareholders of the Company, Purchaser and Parent and
the Board of Directors of Parent, (f) the filing of the Articles of Merger with
the Secretary pursuant to the New Hampshire Business Corporation Act, (g) such
filings, authorizations or approvals as may be set forth in Section 3.04 of the
Company Disclosure Schedule, and (h) 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 shares of Parent Common Stock pursuant to
this Agreement, no consents or approvals of or filings or registrations with any
court, administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity") or with any third party are
necessary in connection with the execution and delivery by the Company and the
Bank of this Agreement and the consummation of the Merger 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 the Company or the Bank from performing their respective obligations
under this Agreement.
3.05 LOAN PORTFOLIO; REPORTS.
(a) Except as set forth in Section 3.05 of the Company Disclosure
Schedule hereto, all of the mortgage loans having a principal amount in excess
of $50,000 (each a "Company Loan") reflected as assets on the Company's
consolidated balance sheet included in the financial statements for the fiscal
year ended December 31, 1996 or made or acquired by the Company and the Bank
since December 31, 1996, were validly and legally made, constitute valid and
binding agreements of the borrower enforceable in accordance with their terms
(subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the rights and remedies of creditors generally, and general principles
of equity), are properly perfected, represent valid mortgages on properties
described therein, are saleable in the ordinary course of the Bank's business
and no amount thereof is subject to any defenses which may be asserted against
the Company or the Bank. Neither the Company nor the Bank has entered into any
agreement which will result in a future waiver or negation of any material
rights or remedies presently available against the borrower or guarantor, if
any, on any such Company Loan. Except as set forth in Section 3.05 of the
Company Disclosure Schedule, each mortgage securing a Company Loan has been and
is evidenced by documentation of the types customarily employed by the Bank,
which are in compliance in all material respects with federal and state banking
laws and regulations and prudent banking standards, and complete copies thereof
have been maintained by the Bank in accordance with such requirement and
practices. Except with respect to participation loans described in Section 3.05
of the Company Disclosure Schedule, the Bank owns and holds the entire interest
in all mortgages free and clear of all liens, claims, equities, options,
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security interests, charges, encumbrances or restrictions of any kind or nature,
and no person has any interest therein.
(b) Except as disclosed in Section 3.05 of the Company Disclosure
Schedule, all of the Company Loans originated and presently held and, to the
best knowledge of the Company and the Bank after reasonable due diligence and
inquiry, all of the Company Loans purchased and presently held by the Company
(if any) and the Bank were solicited, originated and exist in material
compliance with all applicable loan policies and procedures of the Company (if
applicable) and the Bank and comply with all applicable laws, rules and
regulations, including, but not limited to, applicable usury statutes, the Truth
in Lending Act, the Equal Credit Opportunity Act, the Real Estate Settlement
Procedures Act, and other applicable consumer protection statutes and the
regulations thereunder.
(c) Except as disclosed in Section 3.05 of the Company Disclosure
Schedule, all Company Loans purchased or originated by the Company or the Bank
and subsequently sold have been sold without recourse to the Company or the Bank
and without any liability under any yield maintenance or similar obligation.
(d) Except as set forth in Section 3.05 of the Company Disclosure
Schedule, to the best knowledge of the Company and the Bank after reasonable due
diligence and inquiry, neither the Company nor the Bank is a party to any
written or oral loan agreement, note or borrowing arrangement (including without
limitation, leases, credit enhancements, commitments and interest-bearing
assets) under the terms of which the obligor is, as of the date of this
Agreement, over 30 days delinquent in payment of principal or interest or in
default under any other material provision. Section 3.05 of the Company
Disclosure Schedule sets forth (x) all of the Company Loans presently held by
the Company (if any) and the Bank that prior to the date of this Agreement have
been classified by any bank examiner or loan reviewer (whether regulatory,
internal, or independent contractor) as "Other Loans Specially Mentioned,"
"Special Mention," "Substandard," "Doubtful," "Loss," "Classified,"
"Criticized," "Credit Risk Assets," "Concerned Loans," "Watch List" or words of
similar import, together with the aggregate principal amount of and accrued and
unpaid interest on each such Company Loan and the identity of the borrower
thereunder, and (y) by category of Company Loan (i.e., commercial, consumer,
etc.), all of the other Company Loans presently held by the Company (if any) and
the Bank that prior to the date of this Agreement were classified as such,
together with the aggregate principal amount of and accrued and unpaid interest
on such Company Loans by category.
(e) The Company and the Bank each has timely filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that it was required to file since January 1, 1992 with
(i) the Federal Reserve Board, (ii) the FDIC, (iii) the Office of the
Comptroller of the Currency (the "OCC"), (iv) the Commissioner and any other
state banking or other state regulatory authority (each a "State Regulator") and
(v) any self-regulatory organization ((i)-(v) collectively referred to
hereinafter as "Regulatory Agencies"), and all other reports and statements
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required to be filed by it since January 1, 1992, including without limitation,
any report or statement required to be filed pursuant to the laws, rules or
regulations of the United States, the Federal Reserve Board, the FDIC, the OCC,
the Commissioner, any State Regulator or any self-regulatory organization, and
has paid all fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in the regular
course of the business of the Company and the Bank, no Regulatory Agency has
initiated any proceeding or, to the best knowledge of the Company or the Bank,
investigation into the business or operations of the Company and the Bank since
January 1, 1992. There is no violation, criticism or exception by any Regulatory
Agency with respect to any report or statement relating to any examination of
the Company or the Bank that (x) has not been addressed by the Bank in a written
response to the Regulatory Agency, (y) has been addressed by the Bank in a
written response to the Regulatory Agency, which response has been objected to
by the Regulatory Agency, or (z) is expected to result in any supervisory action
by such Regulatory Agency.
3.06 FINANCIAL STATEMENTS.
(a) The Company has previously delivered to Purchaser copies of
the audited consolidated balance sheets of the Company and the Bank as of
December 31 for the fiscal years 1995 and 1996, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
fiscal years 1994 through 1996, inclusive, to be included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 to be
filed with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The December 31, 1996 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 the Bank as of
the date thereof, and the other financial statements referred to in this Section
3.06 (including the related notes, where applicable) fairly present in all
material respects, and the financial statements referred to in Section 6.08
hereof will fairly present (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount) in all material
respects, the results of the consolidated operations and changes in
shareholders' equity and consolidated financial position of the Company and the
Bank for the respective fiscal periods or as of the respective dates therein set
forth and each of such statements (including the related notes, where
applicable) has been, and the financial statements referred to in Section 6.08
hereof will be, prepared in accordance with generally accepted accounting
principles ("GAAP") 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, (x)
the allowance for possible loan losses included in the consolidated financial
statements of the Company to be included in its Form 10-K for the period ended
December 31, 1996 was determined in accordance with GAAP to be adequate to
provide for losses relating to or inherent in the loan and lease portfolios of
the Company and the Bank (including without limitation commitments to extend
credit), and (y) the other real estate owned ("OREO") included in the
consolidated financial statements of the Company included in its Form 10-K for
the period ended December 31, 1996 was carried net of reserves at the lower of
cost or market value based on current independent appraisals and net of
estimated disposal costs. Such reserves for possible loan losses comply with all
loan loss reserve guidelines utilized by the Company and the Bank, which
guidelines have been acceptable to all regulatory agencies having jurisdiction
with respect thereto.
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(b) The Bank has furnished to Purchaser all Call Reports filed by
it with the FDIC with respect to any period subsequent to the year ended January
1, 1992, and except as set forth in Section 3.06 of the Company Disclosure
Schedule, such Call Reports do, and such Call Reports filed with respect to
periods ending after December 31, 1996 will, fairly present the financial
position of the Bank as of its date, and the other financial statements included
therein do, and will, fairly present the results of operations or other
information about the Bank included therein for the periods or as of the dates
therein set forth, subject to the notes thereto, in each case in accordance with
the requirements of the Federal Financial Institutions Examination Council
("FFIEC"), and do, or will, reflect all of the Bank's assets, liabilities and
accruals and all of its items of income and expense in accordance with such
standards consistently applied during the periods involved.
(c) The books and records of the Company and the Bank have been,
and are being, maintained in accordance with applicable legal and accounting
requirements, reflect only actual transactions and reflect all of their assets,
liabilities and accruals and all of their items of income and expense in
accordance with GAAP. All accounting ledgers and other books and records of the
Company and the Bank are located at the principal office of the Company and the
Bank, respectively, are true, complete and correct, and present fairly the
financial condition, results of operations and changes in financial position of
the Company and the Bank as of the date and for the periods indicated.
(d) Except for liabilities incurred since December 31, 1996 in the
ordinary course of business consistent with past practice, neither the Company
nor the Bank has any liabilities or obligations of any nature whatsoever
(whether absolute, accrued, contingent or otherwise) which are not adequately
reserved or reflected on the consolidated balance sheet of the Company to be
included in its Form 10-K for the period ending December 31, 1996, except for
liabilities or obligations which in the aggregate do not exceed $20,000, and
there do not exist any circumstances that, to the best knowledge of the Company
and the Bank, could reasonably be expected to result in any such liabilities or
obligations.
3.07 BROKER'S FEES. Neither the Company nor the Bank, nor any of their
respective officers or directors, has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement, except that the
Company has engaged, and will pay a fee or commission to HAS Associates, Inc.
(the "Investment Banker") in accordance with the terms of a letter agreement
dated December 6, 1996 between the Investment Banker and the Company, a true and
complete copy of which has heretofore been furnished to Purchaser. The Company
has previously received the opinion of the Investment Banker to the effect that,
as of the date of such opinion, the Merger Consideration to be received by the
shareholders of the Company pursuant to the Merger is fair to such shareholders
from a financial point of view, and such opinion has not been amended or
rescinded as of the date of this Agreement.
3.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as may be set forth
in Section 3.08 of the Company Disclosure Schedule, since December 31, 1996:
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(a) there has not been any Material Adverse Effect on the Company
or the Bank and, to the best knowledge of the Company and the Bank, no fact or
condition exists which will, or is reasonably likely to, cause such a Material
Adverse Effect on the Company or the Bank in the future, including without
limitation any material loss of deposits or material decline in the value of the
assets held in the portfolios of the Company or the Bank;
(b) the Company and the Bank have carried on their respective
businesses in the ordinary and usual course consistent with their past
practices;
(c) neither the Company nor the Bank has (i) incurred any
obligations or liabilities, whether absolute, accrued, contingent or otherwise
(including without limiting the generality of the foregoing, liabilities as
guarantor under any guarantees or liabilities for taxes), other than those
obligations and liabilities (x) incurred in the ordinary course of its business
consistent with past practice, or (y) incurred under the contracts and
commitments referred to in Section 3.15 hereof; (ii) mortgaged, pledged, or
subjected to any lien or lease any of its assets, tangible or intangible, or
permitted or suffered any such asset to be subjected to any lien or lease,
except in the ordinary course of business consistent with past practice; or
(iii) acquired or disposed of any assets or properties, or entered into any
contract for any such acquisition or disposition, except acquisitions and
dispositions in the ordinary course of business consistent with past practice;
(d) neither the Company nor the Bank has declared, paid, or set
apart any sum or property for any special dividend or other distribution or paid
or transferred any funds or property to the shareholders of the Company, other
than the Company's regular semi-annual dividend to the extent permitted to be
paid pursuant to Section 5.01(a) hereof, or, directly or indirectly, redeemed or
otherwise acquired any of its capital stock;
(e) except for normal employee raises consistent with its past
practices, neither the Company nor the Bank has increased the wages, salaries,
compensation, pensions, or other fringe benefits or perquisites payable to any
executive officer, employee or director from the amount thereof in effect as of
December 31, 1996 (which amounts have been previously disclosed to Purchaser),
granted any severance or termination pay, entered into any contract to make or
grant any severance or termination pay, or paid any bonus other than year-end
bonuses for fiscal 1996 as listed in Section 3.08 of the Company Disclosure
Schedule;
(f) neither the Company nor the Bank has forgiven or canceled any
indebtedness or contractual obligation other than in the ordinary course of
business;
(g) neither the Company nor the Bank has entered into any
transaction other than in the ordinary course of business;
(h) neither the Company nor the Bank has suffered any strike, work
stoppage, slowdown, or other labor disturbance;
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(i) neither the Company nor the Bank has entered into any lease of
real or personal property, except in the ordinary course of business;
(j) there has not been any change in any of the accounting methods
or practices or the loan policies or procedures of the Company or the Bank or
any change in the value at which assets are carried on the consolidated or
unconsolidated balance sheets of the Company or the Bank other than changes that
are reflected in their respective balance sheets or income statements; and
(k) there has not been any notice or indication of the intention
of any person or entity to terminate any material agreement with the Company or
the Bank or any notice or indication from any material depositor, customer or
supplier of the Company or the Bank of any intention to cease doing business
with, materially change the price or other terms on which business is transacted
with or materially reduce the business transacted with the Company or the Bank.
3.09 LEGAL PROCEEDINGS. Except as set forth in Section 3.09 of the
Company Disclosure Schedule, there are no pending or to the best knowledge of
the Company and the Bank, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against or affecting the Company or the Bank or any property or asset of
the Company or the Bank, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign, which would,
either individually or in the aggregate, have a Material Adverse Effect and no
facts or circumstances have come to the Company's or the Bank's attention which
have caused either of them to believe that a claim, action, proceeding or
investigation against or affecting the Company or the Bank could reasonably be
expected to occur. Neither the Company nor the Bank, nor any property or asset
of the Company or the Bank, is subject to any order, writ, judgment, injunction,
decree, determination or award which restricts its ability to conduct business
in any area in which it presently does business or has or could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.
3.10 TAXES AND TAX RETURNS.
(a) The Company and the Bank each has duly filed in correct form
all federal, state, county and local information returns and tax returns
required to be filed by it on or prior to the date hereof (all such returns
being true and complete in all material respects) and has duly paid, discharged
or made provisions for the payment of all material Taxes (as hereinafter
defined) and other governmental charges which have been incurred or are due or
claimed to be due from it by federal, state, county or local taxing authorities
on or prior to the date hereof (including without limitation, if and to the
extent applicable, those due in respect of its properties, income, business,
capital stock, deposits, franchises, licenses, sales and payrolls, and any net
worth tax), other than Taxes or other charges that are not yet delinquent or are
being contested in good faith and have not been finally determined. The amounts
set up as reserves for Taxes on the consolidated balance sheet of the Company
and the Bank to be included in its Annual Report on Form 10-K for the period
ended December 31, 1996 and in the Bank's Call Report for the period ended
December 31, 1996 are reasonably sufficient in the aggregate for the payment of
all unpaid federal, state, county and local Taxes (including any interest or
penalties thereon), whether or not disputed, accrued or applicable, for the
period ended December 31, 1996 and all prior periods covered by such returns,
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and for which the Company or the Bank is 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 income tax
returns of the Company and the Bank have not in the five years prior to the date
of this Agreement, been examined by the Internal Revenue Service ("IRS"). State
of New Hampshire tax returns of the Company and the Bank have not, in the five
years prior to the date of this Agreement, been examined by the Department of
Revenue of the State of New Hampshire. There are no disputes pending or claims
asserted for Taxes or assessments upon the Company or the Bank, nor has the
Company or the Bank been requested to give any currently effective waivers
extending the statutory period of limitation applicable to any federal, state,
county or local income tax return for any period. In addition, (a) proper and
accurate amounts have been withheld by the Company and the Bank from their
employees for all prior periods in compliance with the tax withholding
provisions of applicable federal, state, county and local laws; (b) federal,
state, county and local returns which are accurate and complete have been filed
by the Company and the Bank for all periods for which returns were due with
respect to income tax withholding, Social Security and unemployment taxes; and
(c) the amounts shown on such returns to be due and payable have been paid in
full or adequate provision therefor has been included by the Company in its
consolidated financial statements to be included in its Annual Report on Form
10-K for the period ended December 31, 1996.
(b) No property of the Company or the Bank is property that the
Company or the Bank is or will be required to treat as being owned by another
person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code (as in effect prior to its amendment by the Tax Reform Act of 1986) or is
"tax-exempt use property" within the meaning of Section 168(h) of the Internal
Revenue Code of 1986, as amended (the "Code"). Neither the Company nor the Bank
has been required to include in income any adjustment pursuant to Section 481 of
the Code by reason of a voluntary change in accounting method initiated by the
Company or the Bank, and the IRS has not initiated or proposed any such
adjustment or change in accounting method. Neither the Company nor the Bank is a
party to any agreement, contract or arrangement that would, individually or in
the aggregate, upon consummation of the transactions contemplated hereby, result
in the payment of an "excess parachute payment" within the meaning of Section
280G of the Code or that would result in payments that would be nondeductible
pursuant to Section 162(m) of the Code. Neither the Company nor the Bank has
taken or will take any action which would result in a recapture of all or any
portion of their respective tax bad debt reserves.
(c) As used in this Agreement, the term "Taxes" means all federal,
state, county, local and foreign income, excise, gross receipts, ad valorem,
profits, gains, property, sales, transfer, use, payroll, employment, severance,
withholding, duties, intangibles, franchise and other taxes, charges, levies or
like assessments, including any net worth tax, or other tax of any kind
whatsoever together with all penalties and additions to tax and interest
thereon.
3.11 EMPLOYEE BENEFIT PLANS.
(a) Section 3.11 of the Company Disclosure Schedule sets forth a
true and complete list of all Plans maintained or contributed to by the Company
or the Bank during the three years preceding this Agreement. The term "Plans"
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for purposes of this Article III means all employee benefit plans, arrangements
or agreements that are maintained or contributed to, or that were maintained or
contributed to at any time during the three years preceding the date of this
Agreement, by the Company, the Bank or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), all of which together with the Company
would be deemed a "single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) The Company has heretofore delivered to Purchaser true and
complete copies of each of the Plans and all related documents, including but
not limited to (i) all required Forms 5500 and all related schedules for such
Plans (if applicable) for each of the last two years, (ii) the actuarial report
for such Plan (if applicable) for each of the last two years, and (iii) the most
recent determination letter from the IRS (if applicable) for such Plan.
(c) (i) Except as may be provided in Section 3.11 of the Company
Disclosure Schedule and footnote 10 of the Consolidated Financial Statements of
the Company for the period ending December 31, 1996, each of the Plans has been
operated and administered in all material respects in accordance with applicable
laws, including but not limited to ERISA and the Code, (ii) each of the Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code has
been maintained so as to qualify from the effective date of such Plan to the
Effective Time, (iii) with respect to each Plan which is subject to Title IV of
ERISA, the present value of "benefit liabilities" (within the meaning of Section
4001(a)(16) of ERISA) under such Plan, based upon the actuarial assumptions
currently used by the Plan for IRS funding purposes did not, as of its latest
valuation date, exceed the then current value of the assets of such Plan
allocable to such accrued benefits, and there has been no "accumulated funding
deficiency" (whether or not waived), (iv) no Plan provides benefits, including
without limitation death, medical or other benefits (whether or not insured),
with respect to current or former employees of the Company, the Bank or any
ERISA Affiliate beyond their retirement or other termination of service, other
than (u) coverage mandated by applicable law, (v) life insurance death benefits
payable in the event of the death of a covered employee, (w) disability benefits
payable to disabled former employees, (x) death benefits or retirement benefits
under any "employee pension plan," as that term is defined in Section 3(2) of
ERISA, (y) deferred compensation benefits accrued as liabilities on the books of
the Company or the Bank or any ERISA Affiliate or (z) benefits the full cost of
which is borne by the current or former employee (or his beneficiary), (v) with
respect to each Plan subject to Title IV of ERISA, no liability under Title IV
of ERISA has been incurred by the Company, the Bank or any ERISA Affiliate that
has not been satisfied in full, no condition exists that presents a material
risk to the Company, the Bank or any ERISA Affiliate of incurring a material
liability to or on account of such Plan, and there has been no "reportable
event" (within the meaning of Section 4043 of ERISA and the regulations
thereunder), (vi) neither the Company, nor the Bank nor any ERISA Affiliate has
ever maintained or contributed to a "multiemployer pension plan," as such term
is defined in Section 3(37) of ERISA, (vii) all contributions or other amounts
payable by the Company or the Bank as of the Effective Time with respect to each
Plan in respect of current or prior plan years have been paid or accrued in
accordance with GAAP and Section 412 of the Code, (viii) neither the Company,
the Bank nor any ERISA Affiliate has engaged in a transaction in connection with
which the Company, the Bank or any ERISA Affiliate has any material liability
for either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA
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or a tax imposed pursuant to Section 4975 or 4976 of the Code, (ix) consummation
of the transactions contemplated hereby will not cause any amounts payable under
any of the Plans to fail to be deductible for federal income tax purposes under
Sections 280G or 162(m) of the Code, (x) there are no pending or, to the best
knowledge of the Company or the Bank, threatened or anticipated claims (other
than routine claims for benefits) by, on behalf of or against any of the Plans
or any trusts related thereto.
(d) With respect to any Plan that is a welfare plan (within the
meaning of Section 3(1) of ERISA) (i) no such Plan is funded through a "welfare
benefit fund," as such term is defined in Section 419(a) of the Code, and (ii)
each such Plan complies in all material respects with the applicable
requirements of Section 4980B(f) of the Code, Part 6 of Subtitle B of Title I of
ERISA and any applicable state continuation coverage requirements ("COBRA").
(e) Except as prohibited by law (including Section 411(d)(6) of
the Code), each Plan may be amended, terminated, modified or otherwise revised
by the Company, its Subsidiaries or its ERISA Affiliates as of the Effective
Time to eliminate, without material effect, any and all future benefit accruals
under any Plan (except claims incurred under any welfare plan).
3.12 SEC REPORTS. The Company has previously delivered to Purchaser an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1992 by
the Company with the SEC pursuant to the Exchange Act or the Securities Act of
1933, as amended (the "Securities Act") (collectively, the "SEC Reports") and
(b) communication mailed by the Company to its shareholders since January 1,
1992, and no such SEC Reports or communications 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. The Company has timely
filed all SEC Reports and other documents required to be filed by it under the
Securities Act and the Exchange Act, and as of their respective dates, all SEC
Reports complied with all of the rules and regulations of the SEC with respect
thereto. As of their respective dates, no such SEC 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. The Company has
made available to Purchaser true and complete copies of all amendments and
modifications to all agreements, documents and other instruments which
previously had been filed with the SEC by the Company and which are currently in
effect.
3.13 COMPANY INFORMATION. The information supplied by the Company and
the Bank contained in the Proxy Statement to be sent to the shareholders of the
Company and Purchaser in connection with the Shareholder Meetings, or in any
other document filed with any other regulatory agency in connection herewith,
will not contain, on the date of mailing of the Proxy Statement and on the date
of the Shareholder Meetings, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they are
made, not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
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Shareholders' Meeting which shall have become false or misleading. The Proxy
Statement will comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder and the rules and
regulations of the OCC or SEC with respect thereto.
3.14 COMPLIANCE WITH APPLICABLE LAW. The Company and the Bank each hold
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 conflict with, or in default or violation of
any (a) statute, code, ordinance, law, rule, regulation, order, writ, judgment,
injunction or decree, published policies and guidelines of any Governmental
Entity, applicable to the Company or the Bank or by which any property or asset
of the Company or the Bank is bound or affected or (b) any note, bond, mortgage,
indenture, deed of trust, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which the Company or the Bank is a party or
by which the Company or the Bank or any property or asset of the Company or the
Bank is bound or affected, except for any such non-compliance, conflicts,
defaults or violations that would not, individually or in the aggregate, have a
Material Adverse Effect; and neither the Company nor the Bank knows of, or has
received notice of, any material violations of any of the above. Without
limiting the generality of the foregoing, neither the Company nor the Bank has
been advised of the existence of any facts or circumstances which would cause
the Bank to be deemed not to be in satisfactory compliance with the Community
Reinvestment Act of 1977, as amended (the "CRA"), and the regulations
promulgated thereunder.
3.15 CERTAIN CONTRACTS.
(a) Except as set forth in Section 3.15 of the Company Disclosure
Schedule and in the SEC Reports filed prior to the date of this Agreement,
neither the Company nor the Bank is a party to or bound by any contract,
arrangement, commitment or understanding (whether written or oral): (i) with
respect to the employment of any director, officer or employee, or with respect
to the employment of any consultant which cannot be terminated with a payment of
less than $5,000, (ii) which, upon the consummation of the transactions
contemplated by this Agreement, will result in any payment (whether of severance
pay or otherwise) becoming due from the Company or the Bank to any officer or
employee thereof, (iii) which is a material contract (as defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in the SEC
Reports, (iv) which is a consulting or other agreement (including agreements
entered into in the ordinary course and data processing, software programming
and licensing contracts) not terminable on 90 days or less notice involving the
payment of less than $10,000 per annum, (v) which restricts the conduct of any
line of business by the Company or the Bank, (vi) with or to a labor union or
guild (including any collective bargaining agreement), or (vii) (including any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement, or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. The Company has previously delivered to
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Purchaser true and complete copies of all employment, consulting and deferred
compensation agreements which are in writing and to which the Company or the
Bank is a party. Each contract, arrangement, commitment or understanding of the
type described in this Section, whether or not set forth in Section 3.15 of the
Company Disclosure Schedule, is referred to herein as a "Company Contract".
(b) (i) Each Company Contract is legal, valid and binding upon the
Company or the Bank, as the case may be, assuming due authorization of the other
party or parties thereto, and in full force and effect, (ii) the Company and the
Bank each has in all material respects performed all obligations required to be
performed by it to date under each such Company Contract, and (iii) no event or
condition exists which constitutes or, after notice or lapse of time or both,
would constitute, a default on the part of the Company or the Bank under any
such Company Contract.
3.16 AGREEMENTS WITH REGULATORY AGENCIES. Neither the Company nor the
Bank 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,
commitment letter or similar undertaking (each a "Regulatory Agreement"), with
any Regulatory Agency or other Governmental Entity that restricts the conduct of
its business or that relates to its capital adequacy, its credit policies or its
management, nor has the Company or the Bank been notified by any Regulatory
Agency or other Governmental Entity that it is considering issuing or requesting
any Regulatory Agreement. Neither the Company nor the Bank is a party to any
agreement or arrangement entered into in connection with the consummation of a
federally assisted acquisition of a depository institution pursuant to which the
Company or the Bank is entitled to receive financial assistance or
indemnification from any governmental agency.
3.17 INVESTMENT SECURITIES. Section 3.17(a) of the Company Disclosure
Schedule sets forth the book value as of December 31, 1996 of the investment
securities, mortgage backed securities and securities held for sale by the
Company and the Bank. Section 3.17(b) of the Company Disclosure Schedule sets
forth the names of all the joint ventures in which the Company or the Bank has
an investment (whether or not such joint ventures remain active). Except for
pledges to secure public and trust deposits, Federal Reserve borrowings,
repurchase agreements and reverse repurchase agreements entered into in
arms'-length transactions pursuant to normal commercial terms and conditions and
other pledges required by law, none of the investments reflected in the
consolidated balance sheets of the Company and the Bank to be included in its
Annual Report on Form 10-K for the period ended December 31, 1996, and none of
the investments made by the Bank since December 31, 1996, (i) is subject to any
restriction (contractual, statutory or otherwise) that would impair the ability
of the entity holding such investment freely to dispose of such investment at
any time, or (ii) has suffered or incurred any extraordinary loss nor is
management of the Company or the Bank aware of any event (or events in the
aggregate) which may occur in the future that could reasonably be expected to
result in such an extraordinary loss.
3.18 ENVIRONMENTAL MATTERS.
(a) Each of the Company and the Bank and, to the best knowledge of
the Company and the Bank, their Participation Facilities and Loan Properties
(each as hereinafter defined), are, and have been, in material compliance with
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all applicable environmental laws and with all rules, regulations, standards and
requirements of the United States Environmental Protection Agency (the "EPA")
and of state and local agencies with jurisdiction over pollution or protection
of the environment.
(b) There is no suit, claim, action or proceeding pending or, to
the best knowledge of the Company or the Bank, threatened, before any
Governmental Entity or other forum in which the Company or the Bank or any of
their Participation Facilities has been or, with respect to threatened
proceedings, may be, named as a defendant, responsible party or potentially
responsible party (i) for alleged noncompliance (including by any predecessor),
with any environmental law, rule, regulation, standard or requirement or (ii)
relating to the release into or presence in the Environment (as hereinafter
defined) of any Hazardous Materials (as hereinafter defined) or Oil (as
hereinafter defined) whether or not occurring at or on a site owned, leased or
operated by the Company or the Bank or any of their Participation Facilities.
(c) To the best knowledge of the Company or the Bank, there is no
suit, claim, action or proceeding pending or threatened before any Governmental
Entity or other forum in which any Loan Property of the Company or the Bank has
been or, with respect to threatened proceedings, may be, named as a defendant,
responsible party or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any environmental law, rule, regulation,
standard or requirement or (ii) relating to the release into or presence in the
Environment of any Hazardous Material or Oil whether or not occurring at or on a
site owned, leased or operated by a Loan Property of the Company or the Bank.
(d) Neither the Company, nor the Bank, nor to their best
knowledge, any of their Participation Facilities or Loan Properties, has
received any notice regarding a matter on which a suit, claim, action or
proceeding as described in subsection (b) or (c) of this Section 3.18 could
reasonably be based. No facts or circumstances have come to the Company's or the
Bank's attention which have caused either to believe that a material suit,
claim, action or proceeding as described in subsection (b) or (c) of this
Section 3.18 could reasonably be expected to occur.
(e) During the period of (i) the Company's or the Bank's ownership
or operation of any of their respective current properties, (ii) the Company's
or the Bank's participation in the management of any of their Participation
Facilities, or (iii) the Company's or any of the Bank's holding of a security
interest in any of their Loan Properties, there has been no release or presence
in the Environment of Hazardous Material or Oil in, on, under or affecting such
property or, to the best knowledge of the Company or the Bank such Participation
Facility or Loan Property. To the best knowledge of the Company and the Bank
prior to the period of (x) the Company's or the Bank's ownership or operation of
any of their respective current properties or any previously owned or operated
properties, (y) the Company's or the Bank's participation in the management of
any of their Participation Facilities, or (z) the Company's or the Bank's
holding of a security interest in any of its Loan Properties, there was no
release or presence in the Environment of Hazardous Material or Oil in, on,
under or affecting any such property, Participation Facility or Loan Property.
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(f) The following definitions apply for purposes of this Section
3.18: (i) "Loan Property" means any property in which the Company or the Bank
holds a security interest, and, where required by the context, said term means
the owner or operator of such property; (ii) "Participation Facility" means any
facility in which the Company or the Bank participates or has participated in
the management and, where required by the context, said term means the owner or
operator of such property; (iii) "Hazardous Material" means any pollutant,
contaminant, or hazardous substance or hazardous material as defined in or
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. ss. 9601 ET SEQ., or any other federal, state, or local
environmental law, regulation, or requirement; (iv) "Oil" means oil or petroleum
of any kind or origin or in any form, as defined in or pursuant to the Federal
Clean Water Act, 33 U.S.C. ss. 1251 et seq., or any other federal, state, or
local environmental law, regulation, or requirement; and (v) "Environment" means
any soil, surface waters, groundwaters, stream sediments, surface or subsurface
strata, and ambient air, and any other environmental medium.
3.19 PROPERTIES.
(a) Section 3.19 of the Company Disclosure Schedule contains a
true, complete and correct list and a brief description (including carrying
value) of all real properties, including properties acquired by foreclosure or
deed in lieu thereof, owned or leased to the Company and the Bank. Except as set
forth in Section 3.19 of the Company Disclosure Schedule, the Company and the
Bank each has good and marketable title to all the real property and all other
property owned by it and included in the consolidated balance sheet of the
Company and the Bank for the period ended December 31, 1996, and owns such
property subject to no encumbrances, liens, mortgages, security interests or
pledges, except such encumbrances, liens, mortgages, security interests and
pledges that do not have a Material Adverse Effect on the Company or the Bank or
which do not and will not interfere with the use of the property as currently
used or contemplated to be used by the Company or the Bank, or the conduct of
the business of the Company or the Bank.
(b) Neither the Company nor the Bank has received any notice of
violation of any applicable zoning or environmental regulation, ordinance or
other law, order, regulation or requirement relating to its operations or its
properties and to the knowledge of the Company and the Bank, there is no such
violation of a material nature. Except as set forth in Section 3.19 to the
Company Disclosure Schedule, all buildings and structures used by the Company or
the Bank conform in all material respects with all applicable ordinances, codes
and regulations, or are not required to conform due to grandfathering clauses
contained in such ordinances, codes or regulations, except to the extent such
noncompliance does not and will not have a Material Adverse Effect on the
Company or the Bank and which does not or will not interfere with the use of any
property as currently used or contemplated to be used by the Company or the
Bank, or the conduct of the business of the Company or the Bank.
(c) Section 3.19 to the Company Disclosure Schedule contains a
true, complete and correct list of all leases pursuant to which the Company or
the Bank lease any real or personal property, either as lessee or as lessor (the
"Company Leases"). Assuming due authorization of the other party of parties
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thereto, each of the Company Leases is valid and binding on the Company or the
Bank, as the case may be, and valid and binding on and enforceable against all
other respective parties to such leases in accordance with their respective
terms (subject to bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting the rights and remedies of creditors generally and general
principles of equity). There are not under such Company Leases any existing
breaches, defaults, events of default by the Company or the Bank, or events
which with notice and/or lapse of time would constitute a breach, default or
event of default by the Company or the Bank, nor has the Company or the Bank
received notice of, or made a claim with respect to, any breach or default by
any other party to such Company Leases. The Company and the Bank each enjoy
quiet and peaceful possession of all such leased properties occupied by it as
lessee.
(d) All of the real properties, leasehold improvements and items
of equipment and other material personal property owned, leased, or licensed by
the Company or the Bank, or in which any of those parties hold an interest, are
in good maintenance, repair, and operating condition, ordinary wear and tear
excepted, are adequate for the purposes for which they are now being or are
anticipated to be used, and are free from any material defects.
3.20 ADMINISTRATION OF FIDUCIARY ACCOUNTS. Each of the Company and the
Bank has properly administered all accounts for which it acts as a fiduciary,
including but not limited to accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents and applicable law. The
accountings for each such fiduciary account are true and correct and accurately
reflect the assets of such fiduciary account. Neither the Company, nor the Bank,
nor, to the best knowledge of the Company and the Bank, their respective
officers, directors or employees has committed any breach of trust with respect
to any fiduciary account.
3.21 INSURANCE. The Company has made available to Purchaser true and
complete copies of all material policies of insurance of the Company and the
Bank currently in effect. All of the policies relating to insurance maintained
by the Company or the Bank with respect to its material properties and the
conduct of its business in any material respect (or any comparable policies
entered into as a replacement therefor) are in full force and effect and neither
the Company nor the Bank has received any notice of cancellation with respect
thereto. All life insurance policies on the lives of any of the current and
former officers of the Company or the Bank which are maintained by the Company
or the Bank or which are otherwise included as assets on the books of the
Company or the Bank (i) are, or will at the Effective Time be, owned by the
Company or the Bank, free and clear of any claims thereon by the officers or
members of their families, except with respect to the death benefits thereunder,
as to which the Company and the Bank each agrees that there will not be an
amendment prior to the Effective Time without the consent of Purchaser, and (ii)
are accounted for properly as assets on the books of the Company or the Bank, as
the case may be, in accordance with GAAP. Neither the Company nor the Bank has
any material liability for unpaid premiums or premium adjustments not properly
reflected on the Company's consolidated financial statements contained in the
SEC Reports. Each of the Company and the Bank has been and is adequately insured
with respect to its property and the conduct of its business in such amounts and
against such risks as are substantially similar in kind and amount to that
customarily carried by parties similarly situated who own properties and engaged
in businesses substantially similar to that of the Company and the Bank
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(including without limitation liability insurance and blanket bond insurance).
All claims under any policy or bond have been duly and timely filed.
3.22 TRANSACTIONS WITH CERTAIN PERSONS. Neither the Company nor the
Bank has any outstanding loan, deposit or other relationship or other
transaction with any officer, director or greater-than-5% shareholder of the
Company or the Bank or any "associate" (as defined in Rule 14a-1 under the
Exchange Act of any such officer or director) affiliates (as defined in Rule
144(a)(1) of the Securities Act) of any such officer, director or shareholder
(individually, an "Interested Person"), other than deposit or loan transactions
in the ordinary course of business on terms substantially the same as those
prevailing at the time for comparable transactions with other, unaffiliated
persons, and which did not and do not involve any unusual risk (including of
non-collectibility) or other features unfavorable to the Company or the Bank.
Section 3.22 of the Company Disclosure Schedule hereto contains a full
description of all outstanding loans by the Company or the Bank to an Interested
Person which, either individually or in the aggregate, have current outstanding
balances of $5,000 or more (including in the outstanding balance all amounts
which the Company or the Bank is obligated to advance but not including loans
secured by cash collateral). All deposit relationships of the Company or the
Bank with an Interested Person with aggregate balances in excess of $10,000 are
fully described in Section 3.22 of the Company Disclosure Schedule. Except as
otherwise set forth in Section 3.22 of the Company Disclosure Schedule, neither
the Company nor the Bank has entered into any contractual or other business
relationship with any Interested Person.
3.23 STATE TAKEOVER LAWS. The transactions contemplated by this
Agreement are not subject to any applicable state takeover laws in effect on the
date hereof. The Board of Directors of the Company has taken all necessary
action prior to the date of this Agreement in connection with the approval of
the execution, delivery and performance of this Agreement, any purchase or other
transaction respecting the Company Common Stock provided for herein or therein,
and the other transactions contemplated hereby and thereby, including without
limitation approval by the affirmative vote of at least two-thirds of the
members of the Board of Directors of the Company who are not affiliated with or
shareholders of Purchaser or Parent. Based upon the approval of this Agreement
by greater than two-thirds of the Company's directors who are neither affiliated
with nor shareholders of Purchaser, the Company's Articles of Incorporation do
not require more than a majority of the holders of the Company Common Stock to
approve the Merger as currently structured.
3.24 DISCLOSURE. No representation or warranty contained in this
Agreement, and no statement contained in any certificate, list or other writing
furnished to Purchaser pursuant to the provisions hereof, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances in
which they are made, not misleading. No information material to the Merger 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
Purchaser.
3.25 REGULATORY APPROVALS. Neither the Company nor the Bank is, as of
the date hereof, aware of any reason why the regulatory approvals required to be
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obtained by the Company or the Bank to consummate the Merger would not be
satisfied within the time frame customary for transactions of the nature
contemplated thereby.
3.26. LABOR MATTERS. Neither the Company nor the Bank is a party to any
collective bargaining or other labor union or guild contract. There is no
pending or, to the best knowledge of the Company, threatened, labor dispute,
strike or work stoppage against the Company or the Bank which may interfere with
the respective business activities of the Company or the Bank. Neither the
Company nor the Bank, nor, their respective representatives or employees, has
committed any unfair labor practices in connection with the operation of the
respective businesses of the Company or the Bank, and there is no pending or, to
the best knowledge of the Company or the Bank, threatened, charge or complaint
against the Company or the Bank by the National Labor Relations Board or any
comparable state agency.
3.27. INTELLECTUAL PROPERTY. The Company and the Bank each owns or
possesses valid and binding licenses and other rights to use without payment of
any material amount all material patents, copyrights, trade secrets, trade
names, service marks and trademarks used in its businesses, PROVIDED, that
neither the Company nor the Bank claims to have sole or exclusive right to use
all of the trade names and service marks used by it; neither the Company nor the
Bank has received any notice of conflict with respect thereto that asserts the
right of others. The Company and the Bank each has performed in all material
respects all the obligations required to be performed by them and are not in
default under any contract, agreement, arrangement or commitment relating to any
of the foregoing.
3.28 OWNERSHIP OF PURCHASER COMMON STOCK; AFFILIATES AND ASSOCIATES.
Neither the Company nor the Bank, nor to the best knowledge of the Company and
the Bank, any of their affiliates or associates (as such terms are defined under
the Exchange Act), (i) beneficially own, directly or indirectly, or (ii) is a
party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, any shares of capital
stock of Purchaser (other than Trust Account Shares and DPC Shares). Neither the
Company, nor the Bank nor any of their directors, officers, or employees is an
"affiliate" or an "associate" of Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
4.01 Corporate Organization.
(a) Parent, on the date it becomes a party to this Agreement, will
be a corporation duly organized, validly existing and in good standing under the
laws of the State of New Hampshire. Parent, on the date it becomes a party to
the Agreement, will have the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it will then be
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conducted, and will be duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Parent. Prior
to the Effective Time, the Parent will have received approval to become a bank
holding company under the BHC Act and such approval will be effective at the
Effective Time. The Articles of Incorporation and By-Laws of Parent will be in
the forms attached to this Agreement as EXHIBITS I AND II.
(b) Purchaser is a commercial bank duly organized, validly
existing and in good standing under the laws of the State of New Hampshire. The
deposit accounts of Purchaser are insured by the FDIC through the BIF to the
fullest extent permitted by law, and all premiums and assessments required in
connection therewith have been paid by Purchaser. Purchaser has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified, either individually or
in the aggregate, would not have a Material Adverse Effect on Purchaser. The
Articles of Agreement and By-Laws of Purchaser, copies of which have previously
been delivered to the Company, are true, complete and correct copies of such
documents as in effect as of the date of this Agreement. Purchaser has no
Subsidiaries other than Parent.
(c) Purchaser has no direct or indirect Subsidiaries. Parent will
have no direct or indirect subsidiaries other than Purchaser at the Effective
Time and will be the sole shareholder of Purchaser at the Effective Time.
Purchaser does not own, control or hold with the power to vote, directly or
indirectly of record, beneficially or otherwise, any capital stock or any equity
or ownership interest in any corporation, partnership, association, joint
venture or other entity, except for less than five percent of any equity
security registered under the Exchange Act.
(d) The minute books of Purchaser contain true, complete and
accurate records of all meetings and other corporate actions held or taken since
January 1, 1992 of its shareholders and board of directors (including committees
thereof).
4.02 CAPITALIZATION.
(a) The authorized capital stock of Parent consists of 1,000
shares of Parent Common Stock. The shares of Parent Common Stock to be issued in
exchange for shares of the Company Common Stock upon consummation of the Merger
will have been duly authorized and when issued in accordance with the terms of
this Agreement, will be validly issued and fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership thereof
and will be identical in all material respects to the shares of Parent Common
Stock to be issued and outstanding immediately prior to the Merger. Parent does
not have and is not be bound by any subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Parent Common Stock or any other equity security of Parent or
any securities representing the right to purchase or otherwise receive any
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shares of Parent Common Stock or any other equity security of Parent, other than
as provided for in this Agreement or pursuant to the Holding Company
Reorganization.
(b) Except as contemplated herein, there are no agreements or
understandings, with respect to the voting of any shares of Parent Common Stock
or the common stock of Purchaser or which restrict the transfer of such shares,
to which Parent or Purchaser is a party, and to the knowledge of Parent and
Purchaser, there are no such agreements or understandings to which Parent or
Purchaser is not a party with respect to the voting of any such shares or which
restrict the transfer of such shares.
4.03 AUTHORITY; NO VIOLATION.
(a) Purchaser and Parent each has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Purchaser and the consummation by Purchaser and Parent of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of Purchaser and Parent. The Board of Directors of Purchaser has
directed that this Agreement and the transactions contemplated hereby be
submitted to Purchaser's shareholders for approval at a meeting of such
shareholders and has voted to recommend that its shareholders approve and adopt
this Agreement and the transactions contemplated thereby and, except for the
adoption of this Agreement by the requisite vote of Purchaser's shareholders, no
other corporate proceedings on the part of Purchaser or Parent are necessary to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Purchaser and Parent and (assuming the due
authorization, execution and delivery by the Company and the Bank) constitutes a
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement by each
of Purchaser and Parent, nor the consummation by either Purchaser or Parent, as
the case may be, of the transactions contemplated hereby, nor compliance by
either Purchaser or Parent with any of the terms or provisions hereof, will (i)
violate, conflict with or result in a breach of any provision of the Articles of
Incorporation or By-Laws of Parent, the Articles of Agreement or By-Laws of
Purchaser, or the articles of incorporation, by-laws or similar governing
documents of any of the Subsidiaries, 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 applicable to Parent, Purchaser or any of the Subsidiaries
or any of their respective properties or assets, or (y) violate, conflict with,
result in a breach of any provisions of or the loss of any benefit under,
constitute a default (or any event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Parent or
Purchaser under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Parent or Purchaser is a party, or by which
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they or any of their respective properties or assets may be bound or affected,
except (in the case of clause (y) above) for such violations, conflicts,
breaches or defaults which, either individually or in the aggregate, will not
have a Material Adverse Effect on Parent or Purchaser.
4.04 CONSENTS AND APPROVALS. Except for (a) the filing of applications
and notices, as applicable, with (i) the Federal Reserve Board under the BHC Act
(ii) the FDIC under the Bank Merger Act, (iii) the Commissioner, and (iv) the
BTCI, and the consent and approval of such applications and notices, (b) the
filing with the SEC and the FDIC of the Registration Statement, (c) the approval
of this Agreement by the requisite vote of the shareholders of Parent, the
Company and Purchaser and the board of directors of Parent, (d) the filing of
the Articles of Merger with the Secretary to effect the Merger pursuant to the
New Hampshire Business Corporation Act, (e) 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 shares of Parent Common Stock
pursuant to this Agreement, and (f) such filings, authorizations or approvals as
may be set forth in Section 4.04 of the Purchaser Disclosure Schedule, 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 Purchaser and Parent of this Agreement and the consummation by
Parent of the Merger 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 Parent or Purchaser from performing their
respective obligations under this Agreement.
4.05 LOAN PORTFOLIO; REPORTS.
(a) Except as set forth in Section 4.05 of the Purchaser
Disclosure Schedule hereto, all of the mortgage loans having a principal amount
in excess of $50,000 (each a "Purchaser Loan") reflected as assets on
Purchaser's consolidated balance sheet included in the financial statements for
the fiscal year ended December 31, 1996 or made or acquired by Purchaser or
Parent since December 31, 1996, were validly and legally made, constitute valid
and binding agreements of the borrower enforceable in accordance with their
terms (subject to bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting the rights and remedies of creditors generally, and general
principles of equity), are properly perfected, represent valid mortgages on
properties described therein, are saleable in the ordinary course of Purchaser's
business and no amount thereof is subject to any defenses which may be asserted
against Purchaser or Parent. Neither Purchaser nor Parent has entered into any
agreement which will result in a future waiver or negation of any material
rights or remedies presently available against the borrower or guarantor, if
any, on any such Purchaser Loan. Except as set forth in Section 4.05 of the
Purchaser Disclosure Schedule, each mortgage securing a Purchaser Loan has been
and is evidenced by documentation of the types customarily employed by
Purchaser, which are in compliance in all material respects with federal and
state banking laws and regulations and prudent banking standards, and complete
copies thereof have been maintained by Purchaser in accordance with such
requirement and practices. Except with respect to participation loans described
in Section 4.05 of the Purchaser Disclosure Schedule, Purchaser owns and holds
the entire interest in all mortgages free and clear of all liens, claims,
equities, options, security interests, charges, encumbrances or restrictions of
any kind or nature, and no person has any interest therein.
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(b) Except as disclosed in Section 4.05 of the Purchaser
Disclosure Schedule, all of the Purchaser Loans originated and presently held
and, to the best knowledge of Purchaser or Parent after reasonable due diligence
and inquiry, all of the Purchaser Loans purchased and presently held by Parent
(if any) and Purchaser were solicited, originated and exist in material
compliance with all applicable loan policies and procedures of Parent (if
applicable) and Purchaser and comply with all applicable laws, rules and
regulations, including, but not limited to, applicable usury statutes, the Truth
in Lending Act, the Equal Credit Opportunity Act, the Real Estate Settlement
Procedures Act, and other applicable consumer protection statutes and the
regulations thereunder.
(c) Except as disclosed in Section 4.05 of the Purchaser
Disclosure Schedule, all Purchaser Loans purchased or originated by Purchaser or
Parent and subsequently sold have been sold without recourse to Purchaser or
Parent and without any liability under any yield maintenance or similar
obligation.
(d) Except as set forth in Section 4.05 of the Purchaser
Disclosure Schedule, to the best knowledge of Purchaser and Parent after
reasonable due diligence and inquiry, neither Purchaser nor Parent is a party to
any written or oral loan agreement, note or borrowing arrangement (including
without limitation, leases, credit enhancements, commitments and
interest-bearing assets) under the terms of which the obligor is, as of the date
of this Agreement, over 30 days delinquent in payment of principal or interest
or in default under any other material provision. Section 4.05 of the Purchaser
Disclosure Schedule sets forth (x) all of the Purchaser Loans presently held by
Parent (if any) and Purchaser that prior to the date of this Agreement have been
classified by any bank examiner or loan reviewer (whether regulatory, internal,
or independent contractor) as "Other Loans Specially Mentioned," "Special
Mention," "Substandard," "Doubtful," "Loss," "Classified," "Criticized," "Credit
Risk Assets," "Concerned Loans," "Watch List" or words of similar import,
together with the aggregate principal amount of and accrued and unpaid interest
on each such Purchaser Loan and the identity of the borrower thereunder, and (y)
by category of Purchaser Loan (i.e., commercial, consumer, etc.), all of the
other Purchaser Loans presently held by Parent (if any) and Purchaser that prior
to the date of this Agreement were classified as such, together with the
aggregate principal amount of and accrued and unpaid interest on such Purchaser
Loans by category.
(e) Purchaser has timely filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that it was required to file since January 1, 1992 with the Regulatory
Agencies, and all other reports and statements required to be filed by them
since January 1, 1992, including without limitation, any report or statement
required to be filed pursuant to the laws, rules or regulations of the United
States, the FDIC, the Commissioner, any State Regulator or any self-regulatory
organization, and has paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of Purchaser, no Regulatory Agency
has initiated any proceeding or, to the best knowledge of Purchaser,
investigation into the business or operations of Purchaser since January 1,
1992. There is no violation, criticism or exception by any Regulatory Agency
with respect to any report or statement relating to any examination of Purchaser
that (x) has not been addressed by Purchaser in a written response to the
Regulatory Agency, (y) has been addressed by Purchaser in a written response to
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the Regulatory Agency, which response has been objected to by the Regulatory
Agency or (z) is expected to result in any supervisory action by such Regulatory
Agency.
4.06 FINANCIAL STATEMENTS.
(a) Purchaser has previously delivered to the Company copies of
the audited balance sheets of Purchaser as of December 31 for the fiscal years
1995 and 1996 and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the fiscal years 1994 through 1996,
inclusive, to be included in the Purchaser's Annual Report on Form F-2 for the
fiscal year ended December 31, 1996 to be filed with the FDIC under the Exchange
Act. The December 31, 1996 balance sheet of Purchaser (including the related
notes, where applicable) fairly presents in all material respects the financial
position of Purchaser as of the date thereof, and the other financial statements
referred to in this Section 4.06 (including the related notes, where applicable)
fairly present in all material respects and the financial statements referred to
in Section 6.08 hereof will fairly present (subject, in the case of the
unaudited statements, to recurring audit adjustments normal in nature and
amount) in all material respects, the results of the consolidated operations and
changes in shareholders' equity and financial position of Purchaser for the
respective fiscal periods or as of the respective dates therein set forth and
each of such statements (including the related notes, where applicable) has been
and the financial statements referred to in Section 6.08 hereof will be,
prepared in accordance with GAAP consistently applied during the periods
involved, except as indicated in the notes thereto, or in the case of unaudited
statements, as permitted by Form F-2. Without limiting the generality of the
foregoing, (x) the allowance for possible loan losses included in the financial
statements of the Purchaser to be included in its Form F-2 for the period ended
December 31, 1996 was determined in accordance with GAAP to be adequate to
provide for losses relating to or inherent in the loan and lease portfolios of
Purchaser (including without limitation commitments to extend credit), and (y)
the other real estate owned ("OREO") included in the financial statements of
Purchaser included in its Form F-2 for the period ended December 31, 1996 was
carried net of reserves at the lower of cost or market value based on current
independent appraisals and net of estimated disposal costs. Such reserves for
possible loan losses comply with all loan loss reserve guidelines utilized by
Purchaser, which guidelines have been acceptable to all regulatory agencies
having jurisdiction with respect thereto.
(b) Purchaser has furnished to the Company all Call Reports filed
by it with the FDIC with respect to any period subsequent to the year ended
January 1, 1992, and except as set forth in Section 4.06 of the Purchaser
Disclosure Schedule, such Call Reports do, and such Call Reports filed with
respect to periods ending after December 31, 1996 will, fairly present the
financial position of Purchaser as of its date, and the other financial
statements included therein do, and will, fairly present the results of
operations or other information Purchaser included therein for the periods or as
of the dates therein set forth, subject to the notes thereto, in each case in
accordance with the requirements of the FFIEC, and do, or will, reflect all of
Purchaser's assets, liabilities and accruals and all of its items of income and
expense in accordance with such standards consistently applied during the
periods involved.
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(c) The books and records of Purchaser have been, and are being,
maintained in accordance with applicable legal and accounting requirements,
reflect only actual transactions and reflect all of their assets, liabilities
and accruals and all of their items of income and expense in accordance with
GAAP. All accounting ledgers and other books and records of Purchaser are
located at the principal office of Purchaser, are true, complete and correct,
and present fairly the financial condition, results of operations and changes in
financial position of Purchaser as of the date and for the periods indicated.
(d) Except for liabilities incurred since December 31, 1996 in the
ordinary course of business consistent with past practice, Purchaser has no
liabilities or obligations of any nature whatsoever (whether absolute, accrued,
contingent or otherwise) which are not adequately reserved or reflected on the
balance sheet of Purchaser to be included in its Form F-2 for the period ending
December 31, 1996, except for liabilities or obligations which in the aggregate
do not exceed $20,000, and there do not exist any circumstances that, to the
best knowledge of Purchaser, could reasonably be expected to result in any such
liabilities or obligations.
4.07 BROKER'S FEES. Neither Purchaser, nor any of its officers or
directors, has employed any broker or finder or incurred any liability for any
broker's fee, commission or finder's fee in connection with any of the
transactions contemplated by this Agreement other than fees paid to Northeast
Capital & Advisory, Inc. ("NECA") in accordance with the terms of a letter
agreement dated February 10, 1997 between NECA and Purchaser, a true and
complete copy of which has heretofore been furnished to the Company. Purchaser
has previously received the opinion of NECA to the effect that, as of the date
of such opinion, the Exchange Ratio is fair to Purchaser's shareholders from a
financial point of view, and such opinion has not been amended or rescinded as
of the date of this Agreement.
4.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as may be set forth
in Section 4.08 of the Purchaser Disclosure Schedule, since December 31, 1996,
there has not been any Material Adverse Effect on Purchaser and, to the best
knowledge of Purchaser, no fact or condition exists which will, or is reasonably
likely to, cause such a Material Adverse Effect on Purchaser in the future.
4.09 LEGAL PROCEEDINGS. Except as set forth in Section 4.09 of the
Purchaser Disclosure Schedule, Purchaser is not a party to any, and there are no
pending or, to the best of Purchaser's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against or affecting Purchaser or any
property or asset of Purchaser, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign, which would,
either individually or in the aggregate, have a Material Adverse Effect and no
facts or circumstances have come to Purchaser's attention which have caused it
to believe that a claim, action, proceeding or investigation against or
affecting Purchaser could reasonably be expected to occur. Neither Purchaser,
nor any property or asset of Purchaser, is subject to any order, writ, judgment,
injunction, decree, determination or award which restricts its ability to
conduct business in any area in which it presently does business or has or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
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4.10 FDIC REPORTS. Purchaser has previously delivered to the Company an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1992 by
Purchaser with the FDIC pursuant to the Exchange Act or the Securities Act
(collectively, the "FDIC Reports") and (b) communication mailed by Purchaser to
its shareholders since January 1, 1992, and no such FDIC Reports or
communications 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. Purchaser has timely filed all FDIC Reports and other
documents required to be filed by it under the Securities Act and the Exchange
Act, and as of their respective dates, all FDIC Reports complied with all of the
rules and regulations of the FDIC with respect thereto. As of their respective
dates, no such FDIC 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. Purchaser has made available to the Company true
and complete copies of all amendments and modifications not filed by Purchaser
with the FDIC to all agreements, documents and other instruments that previously
had been filed with the FDIC by Purchaser and are currently in effect.
4.11 PARENT AND PURCHASER INFORMATION. The information supplied by
Purchaser and Parent relating to Purchaser and Parent contained in the
Registration Statement and Prospectus and Proxy Statement to be sent to the
shareholders of the Company and Purchaser in connection with the Shareholder
Meetings, or in any other document filed with any other regulatory agency in
connection herewith, will not contain, on the date of mailing of the Proxy
Statement and on the date of the Shareholder Meetings, any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
in which they are made, not false or misleading. The Registration Statement and
Prospectus and Proxy Statement will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder and the
rules and regulations of the FDIC or SEC with respect thereto.
4.12 COMPLIANCE WITH APPLICABLE LAW. Parent and Purchaser hold all
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of their businesses under and pursuant to all, and have complied
with and are not in conflict with, or in default or violation of any, (a)
statute, code, ordinance, law, rule, regulation, order, writ, judgment,
injunction or decree, published policies and guidelines of any Governmental
Entity, applicable to Purchaser or Parent or by which any property or asset of
Purchaser or Parent is bound or affected or (b) any note, bond, mortgage,
indenture, deed of trust, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Purchaser or Parent is a party or by
which Purchaser or Parent or any property or asset of Purchaser or Parent is
bound or affected, except for any such non-compliance, conflicts, defaults or
violations that would not, individually or in the aggregate, have a Material
Adverse Effect; and neither Purchaser nor Parent knows of, or has received
notice of, any material violations of any of the above. Without limiting the
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generality of the foregoing, the Purchaser has not been advised of the existence
of any facts or circumstances which would cause the Purchaser to be deemed not
to be in satisfactory compliance with the CRA, and the regulations promulgated
thereunder.
4.13 AGREEMENTS WITH REGULATORY AGENCIES. Purchaser 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, commitment letter
or similar undertaking, with any Regulatory Agency or other Governmental Entity
that restricts the conduct of its business or that relates to its capital
adequacy, its credit policies or its management, nor has Purchaser been notified
by any Regulatory Agency or other Governmental Entity that it is considering
issuing or requesting any Regulatory Agreement. Purchaser is not a party to any
agreement or arrangement entered into in connection with the consummation of a
federally assisted acquisition of a depository institution pursuant to which
Purchaser is entitled to receive financial assistance or indemnification from
any governmental agency.
4.14 REGULATORY APPROVALS. Purchaser is not, as of the date hereof,
aware of any reason why the regulatory approvals required to be obtained by it
or Parent to consummate the Merger would not be satisfied within the time frame
customary for transactions of the nature contemplated thereby.
4.15 TAXES AND TAX RETURNS.
(a) Purchaser has duly filed in correct form all federal, state,
county and local information returns and tax returns required to be filed by it
on or prior to the date hereof (all such returns being true and complete in all
material respects) and has duly paid, discharged or made provisions for the
payment of all material Taxes (as hereinafter defined) and other governmental
charges which have been incurred or are due or claimed to be due from it by
federal, state, county or local taxing authorities on or prior to the date
hereof (including without limitation, if and to the extent applicable, those due
in respect of its properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls, any net worth tax), other than Taxes
or other charges that are not yet delinquent or are being contested in good
faith and have not been finally determined. The amounts set up as reserves for
Taxes on the consolidated balance sheet of Purchaser to be included in its
Annual Report on Form F-2 for the period ended December 31, 1996 and in
Purchaser's Call Report for the period ended December 31, 1996 are reasonably
sufficient in the aggregate for the payment of all unpaid federal, state, county
and local Taxes (including any interest or penalties thereon), whether or not
disputed, accrued or applicable, for the period ended December 31, 1996 and all
prior periods covered by such returns, and for which Purchaser is 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
income tax returns of Purchaser have not in the five (5) years prior to the date
of this Agreement, been examined by the Internal Revenue Service ("IRS"). State
of New Hampshire tax returns of Purchaser have not, in the five (5) years prior
to the date of this Agreement, been examined by the Department of Revenue of the
State of New Hampshire. There are no disputes pending or claims asserted for
Taxes or assessments upon Purchaser, nor has Purchaser been requested to give
any waivers extending the statutory period of limitation applicable to any
federal, state, county or local income tax return for any period. In addition,
(a) proper and accurate amounts have been withheld by the Purchaser from its
employees for all prior periods in compliance with the tax withholding
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provisions of applicable federal, state, county and local laws; (b) federal,
state, county and local returns which are accurate and complete have been filed
by the Purchaser for all periods for which returns were due with respect to
income tax withholding, Social Security and unemployment taxes; and (c) the
amounts shown on such returns to be due and payable have been paid in full or
adequate provision therefor has been included by the Purchaser in its
consolidated financial statements to be included in its Annual Report on Form
F-2 for the period ended December 31, 1996.
(b) No property of Purchaser is property that Purchaser is or will
be required to treat as being owned by another person pursuant to the provisions
of Section 168(f)(8) of the Internal Revenue Code (as in effect prior to its
amendment by the Tax Reform Act of 1986) or is "tax-exempt use property" within
the meaning of Section 168(h) of the Internal Revenue Code of 1986, as amended
(the "Code"). Purchaser has not been required to include in income any
adjustment pursuant to Section 481 of the Code by reason of a voluntary change
in accounting method initiated by Purchaser, and the IRS has not initiated or
proposed any such adjustment or change in accounting method. Purchaser is not a
party to any agreement, contract or arrangement that would, individually or in
the aggregate, upon consummation of the transactions contemplated hereby, result
in the payment of an "excess parachute payment" within the meaning of Section
280G of the Code or that could result in payments that would be nondeductible
pursuant to Section 162(m) of the Code. Purchaser has not taken nor will take
any action which would result in a recapture of all or any portion of their
respective tax bad debt reserves.
(c) As used in this Agreement, the term "Taxes" means all federal,
state, county, local and foreign income, excise, gross receipts, ad valorem,
profits, gains, property, sales, transfer, use, payroll, employment, severance,
withholding, duties, intangibles, franchise and other taxes, charges, levies or
like assessments, including any net worth tax, or other tax of any kind
whatsoever together with all penalties and additions to tax and interest
thereon.
4.16 INSURANCE. Purchaser has made available to the Company true and
complete copies of all material policies of insurance of Purchaser currently in
effect. All of the policies relating to insurance maintained by Purchaser with
respect to its material properties and the conduct of its business in any
material respect (or any comparable policies entered into as a replacement
therefor) are in full force and effect and Purchaser has not received any notice
of cancellation with respect thereto. All life insurance policies on the lives
of any of the current and former officers of Purchaser which are maintained by
Purchaser or which are otherwise included as assets on the books of Purchaser
(i) are, or will at the Effective Time be, owned by Purchaser, free and clear of
any claims thereon by the officers or members of their families, except with
respect to the death benefits thereunder, as to which Purchaser agrees that
there will not be an amendment prior to the Effective Time without the consent
of the Company, and (ii) are accounted for properly as assets on the books of
Purchaser, as the case may be, in accordance with GAAP. Purchaser does not have
any material liability for unpaid premiums or premium adjustments not properly
reflected on Purchaser's consolidated financial statements contained in the FDIC
Reports. Purchaser has been and is adequately insured with respect to its
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property and the conduct of its business in such amounts and against such risks
as are substantially similar in kind and amount to that customarily carried by
parties similarly situated who own properties and engaged in businesses
substantially similar to that of Purchaser (including without limitation
liability insurance and blanket bond insurance). All claims under any policy or
bond have been duly and timely filed.
4.17 DISCLOSURE. No representation or warranty contained in this
Agreement, and no statement contained in any certificate, list or other writing
furnished to the Company pursuant to the provisions hereof, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances in
which they are made, not misleading. No information material to the Merger 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.
4.18 EMPLOYEE BENEFIT PLANS.
(a) Section 4.18 of the Purchaser Disclosure Schedule sets forth a
true and complete list of all Plans maintained or contributed to by Purchaser or
Parent during the three years preceding this Agreement. The term "Plans" for
purposes of this Article IV means all employee benefit plans, arrangements or
agreements that are maintained or contributed to, or that were maintained or
contributed to at any time during the three years preceding the date of this
Agreement, by Purchaser or Parent or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), all of which together with Purchaser would
be deemed a "single employer" within the meaning of Section 4001 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(b) Purchaser has heretofore delivered to the Company true and
complete copies of each of the Plans and all related documents, including but
not limited to (i) all required Forms 5500 and all related schedules for such
Plans (if applicable) for each of the last two years, (ii) the actuarial report
for such Plan (if applicable) for each of the last two years, and (iii) the most
recent determination letter from the IRS (if applicable) for such Plan.
(c) (i) Each of the Plans has been operated and administered in
all material respects in accordance with applicable laws, including but not
limited to ERISA and the Code, (ii) each of the Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code has been maintained so as to
qualify from the effective date of such Plan to the Effective Time, (iii) with
respect to each Plan which is subject to Title IV of ERISA, the present value of
"benefit liabilities" (within the meaning of Section 4001(a)(16) of ERISA) under
such Plan, based upon the actuarial assumptions currently used by the Plan for
IRS funding purposes, did not, as of its latest valuation date, exceed the then
current value of the assets of such Plan allocable to such accrued benefits, and
there has been no "accumulated funding deficiency" (whether or not waived), (iv)
no Plan provides benefits, including without limitation death, medical or other
benefits (whether or not insured), with respect to current or former employees
of Purchaser or Parent or any ERISA Affiliate beyond their retirement or other
termination of service, other than (u) coverage mandated by applicable law, (v)
life insurance death benefits payable in the event of the death of a covered
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employee, (w) disability benefits payable to disabled former employees, (x)
death benefits or retirement benefits under any "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (y) deferred compensation benefits
accrued as liabilities on the books of Purchaser or Parent or any ERISA
Affiliate or (z) benefits the full cost of which is borne by the current or
former employee (or his beneficiary), (v) with respect to each Plan subject to
Title IV of ERISA, no liability under Title IV of ERISA has been incurred by
Purchaser or Parent or any ERISA Affiliate that has not been satisfied in full,
no condition exists that presents a material risk to Purchaser or Parent or any
ERISA Affiliate of incurring a material liability to or on account of such Plan,
and there has been no "reportable event" (within the meaning of Section 4043 of
ERISA and the regulations thereunder), (vi) neither Purchaser nor Parent nor any
ERISA Affiliate has ever maintained or contributed to a "multiemployer pension
plan," as such term is defined in Section 3(37) of ERISA, (vii) all
contributions or other amounts payable by Purchaser or Parent as of the
Effective Time with respect to each Plan in respect of current or prior plan
years have been paid or accrued in accordance with GAAP and Section 412 of the
Code, (viii) neither Purchaser or Parent nor any ERISA Affiliate has engaged in
a transaction in connection with which Purchaser or Parent or any ERISA
Affiliate has any material liability for either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section
4975 or 4976 of the Code, (ix) consummation of the transactions contemplated
hereby will not cause any amounts payable under any of the Plans to fail to be
deductible for federal income tax purposes under Sections 280G or 162(m) of the
Code, (x) there are no pending or, to the best knowledge of Purchaser or Parent,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Plans or any trusts related thereto.
(d) With respect to any Plan that is a welfare plan (within the
meaning of Section 3(1) of ERISA) (i) no such Plan is funded through a "welfare
benefit fund," as such term is defined in Section 419(a) of the Code, and (ii)
each such Plan complies in all material respects with the applicable
requirements of Section 4980B(f) of the Code, Part 6 of Subtitle B of Title I of
ERISA and any applicable state continuation coverage requirements ("COBRA").
(e) Except as prohibited by law (including Section 411(d)(6) of
the Code), each Plan may be amended, terminated, modified or otherwise revised
by Purchaser, its Subsidiaries or its ERISA Affiliates as of the Effective Time
to eliminate, without material effect, any and all future benefit accruals under
any Plan (except claims incurred under any welfare plan).
4.19 CERTAIN CONTRACTS.
(a) Except as set forth in Section 4.19 of the Purchaser
Disclosure Schedule and in the FDIC Reports filed prior to the date of this
Agreement, neither Purchaser nor Parent is a party to or bound by any contract,
arrangement, commitment or understanding (whether written or oral): (i) with
respect to the employment of any director, officer or employee, or with respect
to the employment of any consultant which cannot be terminated with a payment of
less than $5,000, (ii) which, upon the consummation of the transactions
contemplated by this Agreement, will result in any payment (whether of severance
pay or otherwise) becoming due from Purchaser or Parent to any officer or
employee thereof, (iii) which is a material contract (as defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date of this
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Agreement that has not been filed or incorporated by reference in the FDIC
Reports, (iv) which is a consulting or other agreement (including agreements
entered into in the ordinary course and data processing, software programming
and licensing contracts) not terminable on 90 days or less notice involving the
payment of less than $10,000 per annum, (v) which restricts the conduct of any
line of business by Purchaser or Parent, (vi) with or to a labor union or guild
(including any collective bargaining agreement), or (vii) (including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan) any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement, or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement. Purchaser has previously delivered to the Company true and
complete copies of all employment, consulting and deferred compensation
agreements which are in writing and to which Purchaser or Parent is a party.
Each contract, arrangement, commitment or understanding of the type described in
this Section, whether or not set forth in Section 4.19 of Purchaser Disclosure
Schedule, is referred to herein as a "Purchaser Contract".
(b) (i) Each Purchaser Contract is legal, valid and binding upon
Purchaser or Parent, as the case may be, assuming due authorization of the other
party or parties thereto, and in full force and effect, (ii) Purchaser or Parent
each has in all material respects performed all obligations required to be
performed by it to date under each such Purchaser Contract, and (iii) no event
or condition exists which constitutes or, after notice or lapse of time or both,
would constitute, a default on the part of Purchaser or Parent under any such
Purchaser Contract.
4.20 INVESTMENT SECURITIES. Section 4.20(a) of Purchaser Disclosure
Schedule sets forth the book value as of December 31, 1996 of the investment
securities, mortgage backed securities and securities held for sale by Purchaser
or Parent. Section 4.20(b) of Purchaser or Parent Disclosure Schedule sets forth
the names of all the joint ventures in which Purchaser or Parent has an
investment (whether or not such joint ventures remain active). Except for
pledges to secure public and trust deposits, Federal Reserve borrowings,
repurchase agreements and reverse repurchase agreements entered into in
arms'-length transactions pursuant to normal commercial terms and conditions and
other pledges required by law, none of the investments reflected in the
consolidated balance sheets of Purchaser to be included in its Annual Report on
Form F-2 for the period ended December 31, 1996, and none of the investments
made by Purchaser since December 31, 1996, (i) is subject to any restriction
(contractual, statutory or otherwise) that would impair the ability of the
entity holding such investment freely to dispose of such investment at any time,
or (ii) has suffered or incurred any extraordinary loss nor is management of
Purchaser or Parent aware of any event (or events in the aggregate) which may
occur in the future that could reasonably be expected to result in such an
extraordinary loss.
4.21 ENVIRONMENTAL MATTERS.
(a) Each of Purchaser or Parent and, to the best knowledge of
Purchaser or Parent, their Participation Facilities and Loan Properties (each as
hereinafter defined), are, and have been, in material compliance with all
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applicable environmental laws and with all rules, regulations, standards and
requirements of the United States Environmental Protection Agency (the "EPA")
and of state and local agencies with jurisdiction over pollution or protection
of the environment.
(b) There is no suit, claim, action or proceeding pending or, to
the best knowledge of Purchaser or Parent, threatened, before any Governmental
Entity or other forum in which Purchaser or Parent or any of their Participation
Facilities has been or, with respect to threatened proceedings, may be, named as
a defendant, responsible party or potentially responsible party (i) for alleged
noncompliance (including by any predecessor), with any environmental law, rule,
regulation, standard or requirement or (ii) relating to the release into or
presence in the Environment (as hereinafter defined) of any Hazardous Materials
(as hereinafter defined) or Oil (as hereinafter defined) whether or not
occurring at or on a site owned, leased or operated by Purchaser or Parent or
any of their Participation Facilities.
(c) To the best knowledge of Purchaser or Parent, there is no
suit, claim, action or proceeding pending or threatened before any Governmental
Entity or other forum in which any Loan Property of Purchaser or Parent has been
or, with respect to threatened proceedings, may be, named as a defendant,
responsible party or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any environmental law, rule, regulation,
standard or requirement or (ii) relating to the release into or presence in the
Environment of any Hazardous Material or Oil whether or not occurring at or on a
site owned, leased or operated by a Loan Property of Purchaser or Parent.
(d) Neither Purchaser, nor Parent, nor to their best knowledge,
any of their Participation Facilities or Loan Properties, has received any
notice regarding a matter on which a suit, claim, action or proceeding as
described in subsection (b) or (c) of this Section 4.21 could reasonably be
based. No facts or circumstances have come to Purchaser's or Parent's attention
which have caused either to believe that a material suit, claim, action or
proceeding as described in subsection (b) or (c) of this Section 4.21 could
reasonably be expected to occur.
(e) During the period of (i) Purchaser's or Parent's ownership or
operation of any of their respective current properties, (ii) Purchaser's or
Parent's participation in the management of any of their Participation
Facilities, or (iii) Purchaser's or Parent's holding of a security interest in
any of their Loan Properties, there has been no release or presence in the
Environment of Hazardous Material or Oil in, on, under or affecting such
property or, to the best knowledge of Purchaser or Parent such Participation
Facility or Loan Property. To the best knowledge of Purchaser and Parent prior
to the period of (x) Purchaser's or Parent's ownership or operation of any of
their respective current properties or any previously owned or operated
properties, (y) Purchaser's or Parent's participation in the management of any
of their Participation Facilities, or (z) Purchaser's or Parent's holding of a
security interest in any of its Loan Properties, there was no release or
presence in the Environment of Hazardous Material or Oil in, on, under or
affecting any such property, Participation Facility or Loan Property.
(f) The following definitions apply for purposes of this Section
4.21: (i) "Loan Property" means any property in which Purchaser or Parent holds
a security interest, and, where required by the context, said term means the
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owner or operator of such property; (ii) "Participation Facility" means any
facility in which Purchaser or Parent participates or has participated in the
management and, where required by the context, said term means the owner or
operator of such property; (iii) "Hazardous Material" means any pollutant,
contaminant, or hazardous substance or hazardous material as defined in or
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. ss. 9601 et seq., or any other federal, state, or local
environmental law, regulation, or requirement; (iv) "Oil" means oil or petroleum
of any kind or origin or in any form, as defined in or pursuant to the Federal
Clean Water Act, 33 U.S.C. ss. 1251 et seq., or any other federal, state, or
local environmental law, regulation, or requirement; and (v) "Environment" means
any soil, surface waters, groundwaters, stream sediments, surface or subsurface
strata, and ambient air, and any other environmental medium.
4.22 PROPERTIES.
(a) Section 4.22 of the Purchaser Disclosure Schedule contains a
true, complete and correct list and a brief description (including carrying
value) of all real properties, including properties acquired by foreclosure or
deed in lieu thereof, owned or leased to Purchaser and Parent. Except as set
forth in Section 4.22 of Purchaser Disclosure Schedule, Purchaser and Parent
each has good and marketable title to all the real property and all other
property owned by it and included in the consolidated balance sheet of Purchaser
for the period ended December 31, 1996, and owns such property subject to no
encumbrances, liens, mortgages, security interests or pledges, except such
encumbrances, liens, mortgages, security interests and pledges that do not have
a Material Adverse Effect on Purchaser or Parent or which do not and will not
interfere with the use of the property as currently used or contemplated to be
used by Purchaser or Parent, or the conduct of the business of Purchaser or
Parent.
(b) Neither Purchaser nor Parent has received any notice of
violation of any applicable zoning or environmental regulation, ordinance or
other law, order, regulation or requirement relating to its operations or its
properties and to the knowledge of Purchaser and Parent, there is no such
violation of a material nature. Except as set forth in Section 4.22 to the
Purchaser Disclosure Schedule, all buildings and structures used by Purchaser or
Parent conform in all material respects with all applicable ordinances, codes
and regulations, or are not required to conform due to grandfathering clauses
contained in such ordinances, codes or regulations, except to the extent such
noncompliance does not and will not have a Material Adverse Effect on Purchaser
or Parent and which does not or will not interfere with the use of any property
as currently used or contemplated to be used by Purchaser or Parent, or the
conduct of the business of Purchaser or Parent.
(c) Section 4.22 to the Purchaser Disclosure Schedule contains a
true, complete and correct list of all leases pursuant to which Purchaser or
Parent lease any real or personal property, either as lessee or as lessor (the
"Purchaser Leases"). Assuming due authorization of the other party of parties
thereto, each of the Purchaser Leases is valid and binding on Purchaser or
Parent, as the case may be, and valid and binding on and enforceable against all
other respective parties to such leases in accordance with their respective
terms (subject to bankruptcy, insolvency, reorganization, moratorium and similar
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laws affecting the rights and remedies of creditors generally and general
principles of equity). There are not under such Purchaser Leases any existing
breaches, defaults, events of default by Purchaser or Parent, or events which
with notice and/or lapse of time would constitute a breach, default or event of
default by Purchaser or Parent, nor has Purchaser or Parent received notice of,
or made a claim with respect to, any breach or default by any other party to
such Purchaser Leases. Purchaser and Parent each enjoy quiet and peaceful
possession of all such leased properties occupied by it as lessee.
(d) All of the real properties, leasehold improvements and items
of equipment and other material personal property owned, leased, or licensed by
Purchaser or Parent, or in which any of those parties hold an interest, are in
good maintenance, repair, and operating condition, ordinary wear and tear
excepted, are adequate for the purposes for which they are now being or are
anticipated to be used, and are free from any material defects.
4.23 ADMINISTRATION OF FIDUCIARY ACCOUNTS. Each of Purchaser and Parent
has properly administered all accounts for which it acts as a fiduciary,
including but not limited to accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents and applicable law. The
accountings for each such fiduciary account are true and correct and accurately
reflect the assets of such fiduciary account. Neither Purchaser, nor Parent, to
the best knowledge of Purchaser and Parent, their respective officers, directors
or employees has committed any breach of trust with respect to any fiduciary
account.
4.24 TRANSACTIONS WITH CERTAIN PERSONS. Neither Purchaser nor Parent
has any outstanding loan, deposit or other relationship or other transaction
with any officer, director or greater-than-5% shareholder of Purchaser or Parent
or any "associate" (as defined in Rule 14a-1 under the Exchange Act of any such
officer or director) affiliates (as defined in Rule 144(a)(1) of the Securities
Act) of any such officer, director or shareholder (individually, an "Interested
Person"), other than deposit or loan transactions in the ordinary course of
business on terms substantially the same as those prevailing at the time for
comparable transactions with other, unaffiliated persons, and which did not and
do not involve any unusual risk (including of non-collectibility) or other
features unfavorable to Purchaser or Parent. Section 4.24 of the Purchaser
Disclosure Schedule hereto contains a full description of all outstanding loans
by Purchaser or Parent to an Interested Person which, either individually or in
the aggregate, have current outstanding balances of $5,000 or more (including in
the outstanding balance all amounts which Purchaser or Parent is obligated to
advance but not including loans secured by cash collateral). All deposit
relationships of Purchaser or Parent with an Interested Person with aggregate
balances in excess of $10,000 are fully described in Section 4.24 of the
Purchaser Disclosure Schedule. Except as otherwise set forth in Section 4.24 of
the Purchaser Disclosure Schedule, neither Purchaser nor Parent has entered into
any contractual or other business relationship with any Interested Person.
4.25 STATE TAKEOVER LAWS. The transactions contemplated by this
Agreement are not subject to any applicable state takeover laws in effect on the
date hereof. The Board of Directors of Purchaser has taken all necessary action
prior to the date of this Agreement in connection with the approval of the
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execution, delivery and performance of this Agreement, any purchase or other
transaction respecting Purchaser Common Stock provided for herein or therein,
and the other transactions contemplated hereby and thereby, including without
limitation approval by a majority of the Continuing Directors of Purchaser (as
such term is defined in the Amended and Restated Articles of Agreement of
Purchaser).
4.26. LABOR MATTERS. Neither Purchaser nor Parent is a party to any
collective bargaining or other labor union or guild contract. There is no
pending or, to the best knowledge of Purchaser, threatened, labor dispute,
strike or work stoppage against Purchaser or Parent which may interfere with the
respective business activities of Purchaser or Parent. Neither Purchaser nor
Parent, nor, their respective representatives or employees, has committed any
unfair labor practices in connection with the operation of the respective
businesses of Purchaser or Parent, and there is no pending or, to the best
knowledge of Purchaser or Parent, threatened, charge or complaint against
Purchaser or Parent by the National Labor Relations Board or any comparable
state agency.
4.27. INTELLECTUAL PROPERTY. Purchaser and Parent each owns or
possesses valid and binding licenses and other rights to use without payment of
any material amount all material patents, copyrights, trade secrets, trade
names, service marks and trademarks used in its businesses, provided, that
neither Purchaser nor Parent claims to have sole or exclusive right to use all
of the trade names and service marks used by it; neither Purchaser nor Parent
has received any notice of conflict with respect thereto that asserts the right
of others. Purchaser and Parent each has performed in all material respects all
the obligations required to be performed by them and are not in default under
any contract, agreement, arrangement or commitment relating to any of the
foregoing.
4.28 OWNERSHIP OF THE COMPANY COMMON STOCK; AFFILIATES AND ASSOCIATES.
Neither Purchaser, nor Parent, nor any of their affiliates or associates (as
such terms are defined under the Exchange Act), (i) beneficially own, directly
or indirectly, or (ii) is a party to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of, in each case, any
shares of capital stock of the Company or the Bank (other than Trust Account
Shares and DPC Shares). Neither Purchaser, nor Parent, nor any of their
directors, officers, or employees is an "affiliate" or an "associate" of the
Company.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.01 COVENANTS OF THE COMPANY AND THE BANK. During the period from the
date of this Agreement and continuing until the Effective Time, except as
expressly contemplated or permitted by this Agreement or with the prior written
consent of Purchaser, the Company and the Bank shall carry on their respective
businesses in the ordinary course consistent with past practice and with prudent
banking practice. The Company and the Bank each will use all reasonable efforts
to (x) preserve its business organization, (y) keep available the present
services of its employees and (z) preserve for itself and Purchaser the goodwill
of the customers of the Company and the Bank and others with whom business
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relationships exist. Without limiting the generality of the foregoing, and
except as set forth in Section 5.01 of the Company Disclosure Schedule or as
otherwise contemplated by this Agreement or consented to in writing by
Purchaser, whose consent shall not be unreasonably withheld or delayed, neither
the Company nor the Bank shall:
(a) declare or pay any dividends on, or make other
distributions in respect of, any of its capital stock, except that the Company
may pay its regular semi-annual cash dividend of up to $0.15 per share in June,
1997 and up to $0.29 in December, 1997 if the Closing has not yet occurred by
the respective date on which such dividend is payable;
(b) (i) split, combine or reclassify any shares of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock except
upon the exercise or fulfillment of rights or options issued or existing
pursuant to employee benefit plans, programs or arrangements, all to the extent
outstanding and in existence on the date of this Agreement, or (ii) repurchase,
redeem or otherwise acquire (except for the acquisition of Trust Account Shares
and DPC Shares as such terms are defined in Section 1.05(b) hereof), any shares
of the capital stock of the Company or the Bank, or any securities convertible
into or exercisable for any shares of the capital stock of the Company or the
Bank;
(c) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing;
(d) amend its Articles of Incorporation or Articles of
Association, as the case may be, or By-Laws, or elect or appoint any new
directors;
(e) enter into any real property lease for a term longer than
one year, or extend the term of any lease currently in effect;
(f) make any capital expenditures in excess of $10,000
individually, or $50,000 in the aggregate;
(g) enter into any new line of business or offer deposit and
loan pricing which is materially different relative to its competitors in the
local market;
(h) 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 with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings in
the ordinary course of business, which would be material to the Company or the
Bank;
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(i) 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 Merger set
forth in Article VII not being satisfied, or in a violation of any provision of
this Agreement, except, in every case, as may be required by applicable law;
(j) change its methods of accounting in effect at December 31,
1996, except as required by changes in GAAP or regulatory accounting principles
as concurred to by the Company's independent auditors;
(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, (x) adopt, amend, renew or terminate any
Plan or any agreement, arrangement, plan or policy between the Company or the
Bank and one or more of its current or former directors, officers or employees
or (y) except for normal increases in the ordinary course of business consistent
with past practice, increase in any manner the compensation or fringe benefits
of any director, officer or employee or pay any benefit not required by any plan
or agreement as in effect as of the date hereof (including, without limitation,
the granting of stock options, stock appreciation rights, restricted stock,
restricted stock units or performance units or shares) or (ii) except as
contemplated by Section 1.09 hereof, enter into, modify or renew any employment,
severance or other agreement with any director, officer or employee of the
Company or the Bank, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement providing for any benefit to any director, officer or employee;
(l) take or cause to be taken any action which would
disqualify the Merger as a "pooling of interests" for accounting purposes or a
tax free reorganization under Section 368 of the Code;
(m) 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;
(n) file any application to open, relocate or terminate the
operations of any banking or other office or facility except for the branch
facility to be opened in the Plymouth Regional High School;
(o) 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;
(p) 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 or purchase or sell
any loans in bulk;
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(q) foreclose upon or take deed or title to any commercial
real estate without first conducting a Phase I environmental assessment of the
property; or foreclosure upon such commercial real estate if such Phase I
environmental assessment indicates the presence of hazardous material in amounts
which, if such foreclosure were to occur, would be reasonably likely to result
in a Material Adverse Effect on the Company or the Bank;
(r) make any tax election or settle or compromise any material
Federal, state, local or foreign tax liability;
(s) pay, discharge or satisfy any claim, liability or
obligation, other than the payment, discharge or satisfaction, in the ordinary
course of business and consistent with past practice, of liabilities reflected
or reserved against in the balance sheet for the fiscal year ended December 31,
1996, or subsequently incurred in the ordinary course of business and consistent
with past practice;
(t) sell any securities in its investment portfolio, except in
the ordinary course of business;
(u) change its loan policies or procedures in effect at
December 31, 1996;
(v) enter into or renew, amend or terminate, or give notice of
a proposed renewal, amendment or termination of make any commitment with respect
to, (i) any contract, agreement or lease for office space, operations space or
branch space to which the Company or the Bank is a party or by which the Company
or the Bank or their respective properties is bound; (ii) any lease, contract or
agreement other than in the ordinary course of business consistent with past
practices; (iii) regardless of whether consistent with past practices, any
lease, contract, agreement or commitment involving an aggregate payment by or to
the Company or the Bank of more than $25,000 or having a term of one year or
more from the time of execution;
(w) make any loan other than in accordance with the Company's
or the Bank's loan and credit policies and the Company's or the Bank's customary
terms, conditions and standards, and in accordance with applicable law and
consistent with prudent banking practices;
(x) waive any material right, whether in equity or at law,
that it has with respect to any loan, except in the ordinary course of business
consistent with prudent banking practices;
(y) agree to do any of the foregoing.
5.02 NO SOLICITATION.
(a) Neither the Company nor the Bank nor any of their
directors, officers, employees, representatives, agents and advisors or other
persons controlled by the Company or the Bank shall, except to the extent
required by applicable law relating to fiduciary obligations of directors, upon
advice of counsel, solicit or hold discussions or negotiations with, or assist
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or provide any information to, any person, entity, or group (other than
Purchaser) concerning any merger, disposition of a significant portion of its
assets, or acquisition of a significant portion of its capital stock or similar
transactions involving the Company or the Bank. Nothing contained in this
Section shall prohibit the Company or its Board of Directors from taking and
disclosing to the Company's shareholders a position with respect to a tender
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act or making such other disclosure to the Company's shareholders
which, in the judgment of the Board of Directors, based upon the advice of
counsel, may be required under applicable law. The Company will promptly
communicate to Purchaser the terms of any proposal, discussion, negotiation, or
inquiry relating to a merger or disposition of a significant portion of its
capital stock or similar transaction involving the Company or the Bank and the
identity of the party making such proposal or inquiry, which it may receive with
respect to any such transaction.
(b) Neither Purchaser nor Parent nor any of their directors,
officers, employees, representatives, agents and advisors or other persons
controlled by the Purchaser shall, except to the extent required by applicable
law relating to fiduciary obligations of directors, upon advice of counsel,
solicit or hold discussions or negotiations with, or assist or provide any
information to, any person, entity, or group (other than Company) concerning any
merger, disposition of a significant portion of its assets, or acquisition of a
significant portion of its capital stock or similar transactions involving the
Purchaser or the Bank. Nothing contained in this Section shall prohibit the
Purchaser or its Board of Directors from taking and disclosing to the
Purchaser's shareholders a position with respect to a tender offer by a third
party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act or
making such other disclosure to the Purchaser's shareholders which, in the
judgment of the Board of Directors, based upon the advice of counsel, may be
required under applicable law. The Purchaser will promptly communicate to the
Company the terms of any proposal, discussion, negotiation, or inquiry relating
to a merger or disposition of a significant portion of its capital stock or
similar transaction involving the Purchaser and the identity of the party making
such proposal or inquiry, which it may receive with respect to any such
transaction.
5.03 COVENANTS OF PURCHASER AND PARENT. During the period from the date
of this Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written consent of
the Company, Purchaser and Parent shall carry on its respective business in the
ordinary course consistent with past practice and with prudent banking practice.
Purchaser will use all reasonable efforts to (x) preserve its present business
organizations intact, (y) keep available the present services of its employees
and (z) preserve for itself and the Company the goodwill of the customers of
Purchaser and others with whom business relationships exist. Without limiting
the generality of the foregoing, and except as set forth in Section 5.03 of the
Purchaser Disclosure Schedule or as otherwise contemplated by this Agreement or
consented to in writing by the Company, whose consent shall not be unreasonably
withheld or delayed, neither Purchaser nor Parent shall:
(a) declare or pay any dividends on, or make other
distributions in respect of, any of its capital stock, except for the
declaration and payment of regular cash dividends in such amount as Purchaser
may determine, provided, however, that the Dividend Payout Ratio (as hereinafter
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defined) of Purchaser in any fiscal year shall not exceed the Dividend Payout
Ratio of the Company in its 1996 fiscal year. With respect to either party, the
"Dividend Payout Ratio" for any fiscal year shall mean the ratio of the
aggregate cash dividends paid to such party's shareholders during such year
divided by such party's total net income for the same fiscal year.
(b) (i) split, combine or reclassify any shares of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock except
upon the exercise or fulfillment of rights or options issued or existing
pursuant to employee benefit plans, programs or arrangements, all to the extent
outstanding and in existence on the date of this Agreement, or (ii) repurchase,
redeem or otherwise acquire (except for the acquisition of Trust Account Shares
and DPC Shares as such terms are defined in Section 1.05(b) hereof), any shares
of the capital stock of Purchaser, or any securities convertible into or
exercisable for any shares of the capital stock of the Purchaser, PROVIDED,
HOWEVER, that Purchaser is permitted to effect the Holding Company
Reorganization which will involve an exchange of stock in accordance with the
Holding Company Exchange Ratio.
(c) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing;
(d) amend its Articles of Incorporation or By-Laws except as
required to comply with Sections 1.07 and 1.08 hereof;
(e) 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 with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings in
the ordinary course of business, which would be material to the Purchaser;
(f) 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 Merger set
forth in Article VII not being satisfied, or in a violation of any provision of
this Agreement, except, in every case, as may be required by applicable law;
(g) change its methods of accounting in effect at December 31,
1996, except as required by changes in GAAP or regulatory accounting principles
as concurred to by Purchaser's independent auditors;
(h) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, (x) adopt, amend, renew or terminate any
Plan or any agreement, arrangement, plan or policy between Purchaser or Parent
and one or more of its current or former directors, officers or employees or (y)
except for normal increases in the ordinary course of business consistent with
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past practice, increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any plan or
agreement as in effect as of the date hereof (including, without limitation, the
granting of stock options, stock appreciation rights, restricted stock,
restricted stock units or performance units or shares) or (ii) except as
contemplated by Section 1.09 hereof, enter into, modify or renew any employment,
severance or other agreement with any director, officer or employee of Purchaser
or Parent, or establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement providing for any
benefit to any director, officer or employee;
(i) take or cause to be taken any action which would disqualify
the Merger as a "pooling of interests" for accounting purposes or a tax free
reorganization under Section 368 of the Code;
(j) foreclose upon or take deed or title to any commercial real
estate without first conducting a Phase I environmental assessment of the
property; or foreclosure upon such commercial real estate if such Phase I
environmental assessment indicates the presence of hazardous material in amounts
which, if such foreclosure were to occur, would be reasonably likely to result
in a Material Adverse Effect on Purchaser or Parent;
(k) make any loan other than in accordance with Purchaser's or
Parent's loan and credit policies and Purchaser's or Parent's customary terms,
conditions and standards, and in accordance with applicable law and consistent
with prudent banking practices;
(l) waive any material right, whether in equity or at law, that it
has with respect to any loan, except in the ordinary course of business
consistent with prudent banking practices;
(m) agree to do any of the foregoing.
5.04 MINIMUM SHAREHOLDERS' EQUITY; Allowance for Loan Losses. At the
Effective Time, the Company shall have consolidated shareholders' equity
(exclusive of unrealized investment losses) at least equal to that reflected in
the Company's audited financial statements for the year ended December 31, 1996
and (ii) an allowance for loan and lease losses at least equal to 95% of that
reflected in the Company's audited financial statements for the year ended
December 31, 1996. At the Effective Time, Purchaser shall have (i) consolidated
shareholders' equity (exclusive of unrealized investment losses) at least equal
to that reflected in Purchaser's audited financial statements for the year ended
December 31, 1996 and (ii) an allowance for loan and lease losses at least equal
to 95% of that reflected in Purchaser's audited financial statements for the
year ended December 31, 1996 less $500,000.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 REGULATORY MATTERS.
(a) The parties hereto shall cooperate with each other and use
all reasonable efforts promptly to prepare and file 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 the Merger). The Company and Purchaser shall have the right to review
in advance, and to the extent practicable each will consult with the other on,
in each case subject to applicable laws relating to the exchange of information,
all the information relating to the Company, the Bank or Purchaser, as the case
may be, which appear in any filing made with or written materials submitted to,
any third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(b) Purchaser and the Company (or the Bank as the case may be)
shall, upon request, furnish each other with all information concerning
themselves, their respective directors, officers and shareholders and such other
matters as may be reasonably necessary or advisable in connection with the Proxy
Statement, the Registration Statement or any other statement, filing, notice or
application made by or on behalf of Purchaser, Parent, the Company or the Bank
to any Governmental Entity in connection with the Merger and the other
transactions contemplated hereby.
(c) Purchaser and the Company (or the Bank as the case may be)
shall promptly furnish each other with copies of written communications received
by Purchaser, the Company or the Bank, as the case may be, from, or delivered by
any of the foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
6.02 SECURITIES LAWS MATTERS.
(a) As soon as practicable after the date hereof, Parent and
the Company shall file the Registration Statement, in which the Proxy Statement
will be included as part of the prospectus, with the SEC and the FDIC under the
Exchange Act and applicable FDIC regulations. Parent, Purchaser and the Bank
shall use all reasonable efforts to have the Registration Statement cleared by
the SEC and the FDIC as promptly as practicable after such filing.
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(b) Parent, Purchaser and the Company shall cooperate with
each other in the preparation of the Registration Statement, and each shall
notify the other of the receipt of any comments of the SEC and the FDIC with
respect to the Registration Statement and of any requests by the SEC and the
FDIC for any amendment or supplement thereto or for additional information and
shall provide to the other parties promptly copies of all correspondence between
the party or any representative or agent of the party and the FDIC or SEC. Each
party shall review the Registration Statement prior to its being filed with the
SEC and the FDIC and shall review all amendments and supplements to the
Registration Statement and all responses to requests for additional information
and replies to comments prior to their being filed with, or sent to, the SEC and
the FDIC. The parties agree to use all reasonable efforts, after consultation
with each other, to respond promptly to all such comments of and requests by the
SEC and the FDIC.
(c) Purchaser will advise the Company, promptly after
Purchaser receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed or the
issuance of any stop order or the suspension of the qualification of the Parent
Common Stock for offering or sale in any jurisdiction, or the initiation or
threat or any proceeding for any such purpose.
(d) Purchaser and the Company shall each use all reasonable
efforts to obtain, prior to the effective date of the Registration Statement,
all necessary state securities laws or "blue sky" permits and approvals required
in connection with the issuance of Parent Common Stock in the Merger.
(e) Purchaser and the Company further agree to cause the
Registration Statement and all required amendments and supplements thereto to be
mailed to their respective shareholders entitled to vote at the Shareholder
Meetings at the earliest practicable time.
6.03 SHAREHOLDER MEETINGS. In order to consummate the Merger, the
Company and Purchaser shall take all steps necessary to duly call, give notice
of, convene and hold their respective Shareholder Meeting as soon as practicable
for the purpose of voting upon the approval of this Agreement and the
transactions contemplated hereby and shall use all reasonable efforts to obtain
such approval and adoption. The Company and Purchaser each shall, through their
respective Board of Directors, except to the extent legally required for the
discharge of the fiduciary duties of such Board under applicable law as advised
in writing by its independent counsel, recommend to their shareholders approval
of this Agreement and the transactions contemplated hereby. The Company and
Purchaser shall coordinate and cooperate with respect to the foregoing matters.
6.04 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, the parties shall afford each other's
officers, employees, counsel, accountants, agents, advisors and other authorized
representatives, access, during normal business hours during the period prior to
the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, make available to the other party (i) a copy of
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each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of Federal
securities laws or Federal or state banking laws (other than reports or
documents which are not permitted to be disclosed under applicable law), (ii)
copies of all periodic reports to senior management, including without
limitation, reports on non-performing loans and other asset quality matters and
all materials furnished to the respective boards of directors relating to asset
quality generally, and (iii) all other information concerning its business,
properties, assets and personnel as either party may reasonably request.
(b) No party shall be required to provide access to or to
disclose information where such access or disclosure would 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.
(c) All information (the "Confidential Information") furnished
by one party (the "Providing Party") to the other party or its directors,
officers, employees, counsel, accountants, agents, and advisors (the
"Representatives") (the "Receiving Party") shall be treated as the sole property
of the Providing Party and, if this Agreement terminates, the Receiving Party
shall return to the Providing Party or destroy all such written Confidential
Information. The Receiving Party shall, and shall use reasonable efforts to
cause its Representatives to, keep confidential all such Confidential
Information, and shall not directly or indirectly use such information for any
competitive or commercial purpose. Confidential Information shall not include
information which (i) was already in the possession of the Receiving Party prior
to receipt from the Providing Party, provided that such information is not known
by the Receiving Party or its Representatives to be subject to another
confidentiality agreement with or other obligation of secrecy to the Providing
Party; (ii) becomes generally available to the public other than as a result of
a disclosure by the Receiving Party; (iii) becomes available to the Receiving
Party on a non-confidential basis from a source other than the Providing Party
or its Representatives, provided that such source is not known by the Receiving
Party to be bound by a confidentiality agreement with or other obligation of
secrecy to the Providing Party; (iv) has been approved for release by written
authorization of the Providing Party; or (v) has been publicly disclosed
pursuant to a requirement of a government agency or of law.
6.05 LEGAL CONDITIONS TO MERGER. Each of Parent, Purchaser, the Company
and the Bank shall use all reasonable 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 with respect to the Merger and,
subject to the conditions set forth in Article VII hereof, to consummate the
transactions contemplated by this Agreement and (b) to obtain (and to cooperate
with the other party to obtain) any consent, authorization, order or approval
of, or any exemption by, any Governmental Entity and any other third party which
is required to be obtained by Parent, Purchaser, the Company or the Bank in
connection with the Merger and the other transactions contemplated by this
Agreement; provided, however, that (1) neither Parent nor Purchaser shall be
obligated to take any action pursuant to the foregoing if the taking of such
action or such compliance or the obtaining of such consent, authorization,
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order, approval or exemption is likely, in the reasonable opinion of Purchaser's
Board of Directors, to result in the imposition of a Purchaser Burdensome
Condition (as defined in Section 7.02(c) hereof) and (2) neither the Company nor
the Bank shall be obligated to take any action pursuant to the foregoing if the
taking of the action or such compliance or the obtaining of such consent,
authorization, order, approval or exemption is likely, in the reasonable opinion
of the Company's Board of Directors, to result in the imposition of a Company
Burdensome Condition.
6.06 RESTRICTIONS ON SALE OF PARENT COMMON STOCK.
(a) Each of Parent and the Bank shall use all reasonable
efforts to cause each director, executive officer and other person who is an
"affiliate" (for purposes of Rule 145 under the Securities Act and for purposes
of qualifying the Merger for "pooling of interests" accounting treatment) of
such party to deliver to the other party hereto, as soon as practicable after
the date of this Agreement, and prior to the date of the Shareholders Meetings,
written agreements in the forms attached hereto as Exhibits VII and VIII,
providing that such person will not sell, pledge, transfer or otherwise dispose
of any shares of Parent Common Stock, Purchaser Common Stock or the Company
Common Stock held by such "affiliate" and, in the case of the "affiliates" of
the Company, the shares of Parent Common Stock to be received by such
"affiliate" in the Merger: (1) otherwise than in compliance with the applicable
provisions of the Securities Act and the rules and regulations thereunder; and
(2) unless the parties shall have agreed that it will be impossible to obtain
pooling treatment for the Merger, during the period commencing 30 days prior to
the Merger and ending at the time of the publication of financial results
covering at least 30 days of combined operations of Parent and the Company.
(b) Parent shall use all reasonable efforts to publish no
later than twenty-five (25) days after the end of the first calendar quarter in
which there are at least thirty (30) days of post- Merger combined operations
(which calendar quarter may be the calendar quarter in which the Effective Time
occurs), combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135.
6.07 EMPLOYEE MATTERS. All employees of the Bank immediately prior to
the Effective Time (the "Current Employees") shall be employees of the Bank
immediately after the Effective Time. All Current Employees shall receive such
compensation and benefits as provided by the Bank immediately preceding the
Effective Time.
6.08 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS. As soon as
reasonably available, but in no event later than March 31, 1997, Purchaser will
deliver to the Company and the Company will deliver to Purchaser their
respective Annual Reports on Form F-2 and 10-K for the fiscal year ended
December 31, 1996, as filed with the FDIC and SEC, respectively, under the
Exchange Act. As soon as reasonably available, but in no event more than 45 days
after the end of each fiscal quarter ending after the date of this Agreement,
Purchaser will deliver to the Company and the Company will deliver to Purchaser
their respective Quarterly Reports on Form F-4 and 10-Q, as filed with the FDIC
and SEC under the Exchange Act.
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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 Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement shall take all such necessary action as may be reasonably requested by
Parent or Purchaser.
6.10 DISCLOSURE SUPPLEMENTS. From time to time prior to the Effective
Time, each party will promptly supplement or amend the Disclosure 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 Disclosure
Schedules or which is necessary to correct any information in such Disclosure
Schedules which has been rendered inaccurate thereby. No supplement or amendment
to such Disclosure 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 the Company or
Purchaser, as the case may be, with the respective covenants set forth in
Sections 5.01 and 5.03 hereof.
6.11 CURRENT INFORMATION.
(a) During the period from the date of this Agreement to the
Effective Time, each of the Company and Purchaser will cause one or more of its
designated representatives to be available to confer on a regular and frequent
basis (not less than bi-weekly) with representatives of the other and to report
the general status of their ongoing operations. Without limiting the generality
of the foregoing, each such party will provide monthly reports on the status of
loans made, the investment portfolio including all purchases and sales of
securities and other assets, the type and mix of products and services,
personnel matters, problem loan management, reserve adequacy, results of
operations, and any other data reasonably requested by the other party. Each
such party will promptly notify the other party of any material change in the
normal course of its business and of any governmental complaints, investigations
or hearings or the institution of significant litigation involving them or their
subsidiaries or properties and will keep the other party reasonably informed of
such events.
(b) To the extent not covered by paragraph (a) above, the
Company shall give prompt notice to Purchaser, and Purchaser shall give prompt
notice to the Company, of (i) the occurrence or non-occurrence of any event
which would be reasonably likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
and (ii) any failure of Purchaser or the Company or the Bank, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; PROVIDED, HOWEVER, that
the delivery of any notice pursuant to this paragraph (b) shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
6.12 PARENT. Purchaser shall (a) cause the organization of Parent, (b)
cause Parent to execute a copy of this Agreement and deliver such executed copy
to each of Purchaser and the Company and (c) cause Parent to take all necessary
action to complete the transactions contemplated hereby subject to the terms and
conditions hereof.
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6.13 NO INCONSISTENT ACTIONS. Prior to the Effective Time, no party
will: (i) enter into any transaction or make any agreement or commitment and
will use reasonable efforts not to permit any event to occur, which could
reasonably be anticipated to result in (x) a denial of the regulatory approvals
referred to in Section 7.01(b) or (y) the imposition of any condition or
requirement that would materially adversely affect the economic or business
benefits to the Surviving Corporation of the transactions contemplated by this
Agreement; or (ii) adopt by plan or arrangement, or take or cause to be taken
any action, that would adversely affect holders of the Company Common Stock in a
disproportionate manner after the Effective Time. Without limiting the scope of
the immediately preceding sentence, no party hereto shall take or cause to be
taken any action, either before or after the Effective Time, that would
disqualify the Merger as a "reorganization" within the meaning of Section 368(a)
of the Code or that would disqualify the Merger for "pooling of interests"
accounting treatment.
ARTICLE VII
CONDITIONS PRECEDENT
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the affirmative vote
of the shareholders of the Company and Purchaser to the extent required by New
Hampshire law and the respective charters of the Company and Purchaser.
(b) REGULATORY APPROVALS. All necessary approvals,
authorizations and consents of all Governmental Entities required to consummate
the transactions contemplated hereby (including the Holding Company
Reorganization and Merger) shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof shall have
expired or been terminated (all such approvals and the expiration of all such
waiting periods being referred to herein as the "Requisite Regulatory
Approvals"). For purposes of this Agreement, the term "Requisite Regulatory
Approvals" shall mean: (i) a final order or orders of the Federal Reserve Board
approving or authorizing the organization of Parent and Parent's acquisition of
all of the outstanding stock of Purchaser prior to the Merger, approving or
authorizing the Merger, and granting any other necessary approvals with respect
to the transactions contemplated by this Agreement, and (ii), if necessary, a
final order of the Bank Commissioner or the Board of Trust Company Incorporation
approving or authorizing or waiving jurisdiction with respect to the
organization of Parent and Parent's acquisition of all of the outstanding stock
of Purchaser prior to the Merger and with respect to the Merger.
(c) SECURITIES LAWS MATTERS. The Registration Statement shall
have become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
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proceedings for that purpose shall have been initiated or threatened by the SEC
or any other regulatory authority. Parent and Purchaser shall have received all
necessary state securities laws and "blue sky" permits and other authorizations
required in connection with the issuance of Parent Common Stock in the Holding
Company Reorganization and the Merger. The Parent Common Stock issued in the
Merger shall be approved for listing on the NASDAQ/NMS or the American Stock
Exchange.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order,
injunction or decree issued by any court or agency of competent jurisdiction or
other legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger, or any of the other transactions contemplated by
this Agreement shall be in effect and no proceeding initiated by any
Governmental Entity seeking an injunction shall be pending. No statute, rule,
regulation, order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits, restricts or
makes illegal consummation of the Merger, or any of the other transactions
contemplated by this Agreement.
7.02 CONDITIONS TO OBLIGATIONS OF PURCHASER AND PARENT. The obligation
of Purchaser and Parent to effect the Merger is also subject to the satisfaction
or waiver by Purchaser and Parent at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Bank set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date, it
being understood that such representations and warranties shall be deemed to be
true and correct in all material respects unless the failure or failures of such
representations and warranties to be so true and correct represent, either
individually or in the aggregate, a Material Adverse Effect on the Company and
the Bank taken as a whole; provided, however, that for purposes of determining
satisfaction of this condition, no effect shall be given to any exception in
such representations and warranties relating to materiality or the knowledge of
the Company or Bank. Purchaser shall have received a certificate signed on
behalf of the Company and the Bank by their respective Chief Executive Officers
and Chief Financial Officers to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY AND THE BANK.
The Company and the Bank shall have each performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, and Purchaser shall have received a certificate signed on
behalf of the Company and the Bank by their respective Chief Executive Officers
and Chief Financial Officers to such effect.
(c) NO BURDENSOME CONDITION. None of the Requisite Regulatory
Approvals shall impose any term, condition or restriction upon Purchaser,
Parent, or the Surviving Corporation that in the reasonable opinion of
Purchaser's Board of Directors would (i) require the expenditure of $1,000,000
or more, (ii) result in a delay of the Closing by six months or more, (iii)
require the divestiture of any of the deposits of any party, (iv) restrict the
payment of dividends by any party in any manner below historical levels, (v)
subject any party to a higher minimum capital requirement
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than is imposed by applicable law or (vi) require any party to raise additional
capital (a "Purchaser Burdensome Condition").
(d) CONSENTS UNDER AGREEMENTS. The consent, approval or waiver
of each person (other than the Governmental Entities referred to in Section
7.01(b)) whose consent or approval shall be required in order to permit the
succession by the Surviving Corporation pursuant to the Merger, to any
obligation, right or interest of the Company or the Bank under any loan or
credit agreement, note, mortgage, indenture, lease, license or other agreement
or instrument shall have been obtained.
(e) TAX OPINION. Parent shall have received the opinion of
Goodwin, Procter & Hoar, LLP subject to customary conditions and qualifications
(including reliance, in part, on representations of Parent, Purchaser, the
Company and the Bank, and assumptions concerning, among other things, the
actions of shareholders), to the effect that the Merger will be treated for
federal income tax purposes as a tax-free reorganization qualifying under the
provisions of Section 368(a) of the Code.
(f) ACCOUNTANT'S LETTER. The Company shall have caused to be
delivered to Purchaser letters from Shatswell McLeod & Co., independent public
accountants with respect to the Company, dated the date on which the
Registration Statement or last amendment thereto shall become effective, and
dated the date of the Closing, and addressed to Parent and Purchaser, covering
such matters as Parent and Purchaser shall reasonably request with respect to
facts concerning the Company's financial condition.
(g) LEGAL OPINION. Parent shall have received the opinion of
Cranmore, FitzGerald & Meaney, counsel to the Company, dated the Closing Date,
in a form that is customary for transactions of this type.
(h) OPINION OF FINANCIAL ADVISER. Parent shall have received
an opinion, dated as of the date of the Proxy Statement, from NECA to the effect
that as of the date thereof the Exchange Ratio is fair to shareholders of
Purchaser from a financial point of view.
(i) CASH CONSIDERATION. The amount of cash consideration to be
paid the shareholders of the Company in the Merger as a percentage of the total
consideration to be paid to the shareholders of the Company shall not exceed
35%.
7.03 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company and the Bank to effect the Merger is also subject to the satisfaction or
waiver by the Company and the Bank at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser and Parent set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date, it being
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understood that such representations and warranties shall be deemed to be true
and correct in all material respects unless the failure or failures of such
representations and warranties to be so true and correct represent, either
individually or in the aggregate, a Material Adverse Effect on the Parent and
Purchaser taken as a whole; provided, however, that for purposes of determining
satisfaction of this condition, no effect shall be given to any exception in
such representations and warranties relating to materiality or the knowledge of
Parent or Purchaser. The Company shall have received a certificate signed on
behalf of Purchaser and Parent by their respective Chief Executive Officers and
Chief Financial Officers to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF PURCHASER AND PARENT.
Purchaser and Parent shall have each performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, and the Company shall have received a certificate signed on
behalf of Parent and Purchaser by their respective Chief Executive Officers and
Chief Financial Officers to such effect.
(c) NO BURDENSOME CONDITION. None of the Requisite Regulatory
Approvals shall impose any term, condition or restriction upon the Company or
the Bank that in the reasonable opinion of the Company's Board of Directors
would (i) require the expenditure of $1,000,000 or more, (ii) result in a delay
of the Closing by six months or more, (iii) require the divestiture of any of
the deposits of any party, (iv) restrict the payment of dividends by any party
in any manner below historical levels, (v) subject any party to a higher minimum
capital requirement than is imposed by applicable law or (vi) require any party
to raise additional capital (a "Company Burdensome Condition").
(d) TAX OPINION. The Company shall have received the opinion
of Cranmore, FitzGerald & Meaney, subject to customary conditions and
qualifications (including reliance, in part, on representations of Parent and
the Company, and assumptions concerning, among other things, the actions of
shareholders), to the effect that the Merger will be treated for federal income
tax purposes as a tax-free reorganization qualifying under the provisions of
Section 368(a) of the Code.
(e) ACCOUNTANT'S LETTER. Purchaser shall have caused to be
delivered to the Company letters from Shatswell McLeod & Co., independent public
accountants with respect to Purchaser, dated the date on which the Registration
Statement or last amendment thereto shall become effective, and dated the date
of the Closing, and addressed to the Company and Purchaser, covering such
matters as the Company and Purchaser shall reasonably request with respect to
facts concerning Purchaser's financial condition.
(f) LEGAL OPINION. The Company shall have received the opinion
of Goodwin, Procter & Hoar LLP, counsel to Parent and Purchaser, dated the
Closing Date, in a form that is customary for transactions of this type.
(g) OPINION OF FINANCIAL ADVISOR. The Company shall have
received an opinion, dated as of the date of the Proxy Statement, from HAS
Associates, Inc. to the effect that as of the
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date thereof the Merger Consideration to be received by the shareholders of the
Company pursuant to the Merger is fair to such shareholders from a financial
point of view.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.01 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the shareholders of the Company:
(a) by mutual consent of Purchaser and the Company in a
written instrument, if the Board of Directors of each so determines by a vote of
a majority of the members of its entire Board;
(b) by either Purchaser or the Company upon written notice to
the other party (i) ninety days after the date on which any request or
application for a regulatory approval required to consummate the Merger 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 ninety 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 8.01(b)(i) 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, or (ii) if any Governmental
Entity of competent jurisdiction shall have issued a final nonappealable order
enjoining or otherwise prohibiting the consummation of any of the transactions
contemplated by this Agreement;
(c) by either Purchaser or the Company if the Merger shall not
have been consummated on or before February 15, 1998, 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 Purchaser or the Company (PROVIDED, that the
terminating party shall not be in material breach of any of its obligations
under Section 6.03) if any approval of the shareholders of the Purchaser or
Company required for the consummation of the Merger shall not have been obtained
by reason of the failure to obtain the required vote at a duly held meeting of
shareholders or at any adjournment or postponement thereof;
(e) by either Purchaser or the Company (PROVIDED, that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach is not cured within
forty-five days
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following written notice to the party committing such breach, or which breach,
by its nature, cannot be cured prior to the Closing;
(f) by either Purchaser or the Company (PROVIDED, that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which breach shall not have been cured
within forty-five days following receipt by the breaching party of written
notice of such breach from the other party hereto; or
(g) by Purchaser, if the Board of Directors of the Company
does not publicly recommend, as required by Section 6.03 hereof, in the Proxy
Statement that the Company's shareholders approve and adopt this Agreement, or
if after recommending in the Proxy Statement that shareholders approve and adopt
this Agreement, the Board of Directors of the Company shall have withdrawn,
modified or amended such recommendation in any respect materially adverse to
Purchaser; or
(h) by the Company, if the Board of Directors of Purchaser
does not publicly recommend, as required by Section 6.03 hereof, in the Proxy
Statement that Purchaser's shareholders approve and adopt this Agreement, or if
after recommending in the Proxy Statement that shareholders approve and adopt
this Agreement, the Board of Directors of Purchaser shall have withdrawn,
modified or amended such recommendation in any respect materially adverse to the
Company.
8.02 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either
Purchaser or the Company as provided in Section 8.01, this Agreement shall
forthwith become void and have no effect except Sections 6.04(c) and 8.03, shall
survive any termination of this Agreement, and there shall be no further
obligation on the part of Parent, Purchaser, the Company, the Bank or their
respective officers or directors except for the obligations under such
provisions. 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 willful breach of any provision of this Agreement.
8.03 EXPENSES; TERMINATION FEE.
(a) Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense; PROVIDED,
HOWEVER, that the costs and expenses of printing and mailing the Proxy
Statement, and all filing and other fees paid to the SEC or any other
Governmental Entity in connection with the Merger and the other transactions
contemplated hereby, shall be shared evenly by the Company and Purchaser; and
provided further that nothing contained herein shall limit either party's rights
under Sections 8.03(b) and (c) hereof.
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(b) In order to induce Purchaser to enter into this Agreement
and to reimburse Purchaser for incurring the costs and expenses related to
entering into this Agreement and consummating the transactions contemplated by
this Agreement, the Company will make a cash payment to Purchaser of $2,500,000
as liquidated damages if and only if:
(i) Purchaser has terminated this Agreement pursuant to
Sections 8.01(e) or 8.01(f) and the breach of the representation,
warranty, covenant or agreement was caused by the action, failure to
take action or an occurrence which is within the control of the Company
or the Bank; or
(ii) Purchaser has terminated this Agreement pursuant to
Section 8.01(g), and (x) at the time of such termination any person
other than Purchaser, Parent or any subsidiary or affiliate of
Purchaser or Parent, shall have made a bona fide proposal to the Bank,
the Company or its shareholders to engage in an Acquisition Transaction
by public announcement or written communication, or (y) at the time of
or within six months of any such termination, the Company shall have
entered into an agreement to engage in an Acquisition Transaction with
any person other than Purchaser, Parent or any subsidiary or other
affiliate of Purchaser or Parent, or the Board of Directors of the
Company shall have approved an Acquisition Transaction or recommended
that the shareholders of the Company approve or adopt any Acquisition
Transaction with any person other than Purchaser, Parent or any
subsidiary or other affiliate of Purchaser or Parent.
For purposes of this Agreement, "Acquisition Transaction" shall mean
(i) a merger, consolidation or other similar transaction with the Company or the
Bank, (ii) any sale, lease or other disposition of 25% or more of the assets of
the Company and the Bank, taken as a whole, in a single transaction or series of
transaction, or (iii) any tender or exchange offer for 25% or more of the
outstanding shares of the Company Common Stock or the Bank Common Stock or the
economic value of equity interests therein.
(c) In order to induce the Company to enter into this
Agreement and to reimburse the Company for incurring the costs and expenses
related to entering into this Agreement and consummating the transactions
contemplated by this Agreement, Purchaser shall make a cash payment to the
Company of $2,500,000 as liquidated damages if and only if:
(i) The Company has terminated this Agreement pursuant to
Sections 8.01(e) or 8.01(f) and the breach of the representation,
warranty, covenant or agreement was caused by the action, failure to
take action or an occurrence which is within the control of the
Purchaser or Parent; or
(ii) The Company has terminated this Agreement pursuant to
Section 8.01(h), and (x) at the time of such termination any person
other than Purchaser, Parent or any subsidiary or affiliate of
Purchaser or Parent, shall have made a bona fide proposal to the
Parent, Purchaser or its shareholders to engage in an Acquisition
Transaction by public announcement or written communication, or (y) at
the time of or within six months of any such termination,
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Purchaser shall have entered into an agreement to engage in an
Acquisition Transaction with any person other than the Company, the
Bank or any subsidiary or other affiliate of the Company or the Bank,
or the Board of Directors of Purchaser shall have approved an
Acquisition Transaction or recommended that the shareholders of
Purchaser approve or adopt any Acquisition Transaction with any person
other than the Company, the Bank or any subsidiary or other affiliate
of the Company or the Bank.
8.04 AMENDMENT. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the shareholders of
Purchaser and the Company. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.05 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. 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 IX
GENERAL PROVISIONS
9.01 CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") will take place at Goodwin, Procter &
Hoar LLP, Exchange Place, Boston, MA 02109, at 10:00 a.m. on a date to be
specified by Purchaser and satisfactory to the Company, which shall be not more
than five business days after the satisfaction of the conditions set forth in
Article VII hereof or at such other date, time and place as is mutually agreed
upon by the Company and Purchaser. The date on which such Closing takes place is
referred to herein as the "Closing Date". Purchaser shall provide the Company
written notice of the date specified by it as the Closing Date at least three
business days prior to such date.
9.02 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None
of the representations, warranties, covenants and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
Effective Time, except for those covenants and agreements contained herein and
therein which by their terms apply in whole or in part after the Effective Time.
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9.03 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopies (with
confirmation from recipient), mailed by registered or certified mail (return
receipt requested) or delivered by an express courier (with confirmation from
recipient) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Parent or Purchaser, to:
The Berlin City Bank
9 Main Street
Berlin, New Hampshire 03570
Attn: William J. Woodward
with a copy to:
William Pratt Mayer, Esq.
Margaret B. Crockett, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
(b) if to the Company or the Bank, to:
Pemi Bancorp, Inc.
287 Highland Street, P. O. Box 29
Plymouth, New Hampshire 03264-0029
Attn: Fletcher W. Adams
with a copy to:
J.J. Cranmore, Esq.
Cranmore, FitzGerald & Meaney
49 Wethersfield Avenue
Hartford, Connecticut, 06114-1102
9.04 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to be March 14, 1997.
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9.05 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
9.06 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof except that the
Confidentiality Agreement among the Company, the Bank and Purchaser dated as of
November 20, 1996, as amended, shall remain in full force and effect.
9.07 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New Hampshire, without regard to any
applicable conflicts of law.
9.08 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained in
Section 6.04(c) of this Agreement were not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
Section 6.04(c) of this Agreement and to enforce specifically the terms and
provisions thereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
9.09 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is deemed to be so broad as to be unenforceable, the provision shall
be interpreted to be only so broad as is enforceable.
9.10 PUBLICITY. Except as otherwise required by law or the rules of the
National Association of Securities Dealers, so long as this Agreement is in
effect, neither Purchaser nor the Company shall, or shall permit any of its
Subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld.
9.11 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Except as otherwise expressly
provided herein, this Agreement (including the documents and instruments
referred to herein) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
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IN WITNESS WHEREOF, Purchaser, Parent, the Company and the Bank have
caused this Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
THE BERLIN CITY BANK
Attest: By /s/ William J. Woodward
------------------------------------
Title: Chairman, President and
Chief Executive Officer
By /s/ Mary E. Durgin
---------------------------------
Title: Assistant Vice President
NORTHWAY FINANCIAL, INC.
Attest: By /s/ William J. Woodward
------------------------------------
Title: President and
Chief Executive Officer
By /s/ Mary E. Durgin
---------------------------------
Title: Assistant Vice President
PEMI BANCORP, INC.
Attest: By /s/ Fletcher W. Adams
------------------------------------
Title: President and
Chief Executive Officer
By /s/ Mary E. Durgin
---------------------------------
Title: Assistant Vice President
PEMIGEWASSET NATIONAL BANK
Attest: By /s/ Fletcher W. Adams
------------------------------------
Title: President and
Chief Executive Officer
By /s/ Mary E. Durgin
---------------------------------
Title: Assistant Vice President
356904.c10
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EXHIBIT I
FORM OF
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
NORTHWAY FINANCIAL, INC.
THE BERLIN CITY BANK, ACTING BY ITS DULY AUTHORIZED REPRESENTATIVE, AND AS SOLE
STOCKHOLDER OF A CORPORATION UNDER THE NEW HAMPSHIRE BUSINESS CORPORATION ACT,
ADOPTS THE FOLLOWING AMENDED AND RESTATED ARTICLES OF INCORPORATION FOR SUCH
CORPORATION:
FIRST: The name of the corporation is Northway Financial, Inc.
SECOND: The period of its duration is perpetual.
THIRD: The corporation is empowered to transact any and all lawful
business for which corporations may be incorporated under RSA 293-A. The
principal purpose or purposes for which the corporation is organized are:
1. Generally conducting the business and carrying on the activities of
a bank holding company, as defined in the Bank Holding Company Act of 1956, as
amended.
2. Acquiring an interest in or control of banks, savings banks,
financial institutions, and other corporations or associations of every kind and
description through ownership of stock; acquiring such stock by purchase,
exchange for its own securities, or otherwise; and exercising all of the rights,
powers and privileges of such stock.
FOURTH:
SECTION 1. NUMBER OF SHARES. The aggregate number of shares which the
corporation shall have authority to issue is _________________ shares of Common
Stock, par value $1.00 per share, and _________ shares of Preferred Stock, par
value $_____ per share.
As set forth in this Article Fourth, the Board of Directors or any
authorized committee thereof is authorized from time to time to establish and
designate one or more series of Preferred Stock, to fix and determine the
variations in the relative rights and preferences as between the different
series of Preferred Stock in the manner hereinafter set forth in this Article
Fourth, and to fix or alter the number of shares comprising any such series and
the designation thereof to the extent permitted by law.
The number of authorized shares of the class of Preferred Stock may be
increased or decreased (but not below the number of shares outstanding) by the
affirmative vote of the holders of a majority of the Common Stock entitled to
vote, without a vote of the holders of the Preferred
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Stock, pursuant to the resolution or resolutions establishing the class of
Preferred Stock or Amended and Restated Articles of Incorporation, as it may be
amended from time to time.
SECTION 2. GENERAL.
The designations, powers, preferences and rights of, and the
qualifications, limitations, and restrictions upon, each class or series of
stock shall be determined in accordance with, or as set forth below in, Sections
3, 4, and 5 of this Article Fourth.
SECTION 3. COMMON STOCK.
Subject to all of the rights, powers, and preferences of the Preferred
Stock, and except as provided by law or in this Article Fourth (or in any
certificate of designation of any series of Preferred Stock) or by the Board of
Directors or any authorized committee thereof pursuant to this Article Fourth:
(a) the holders of the Common Stock shall have the exclusive
right to vote for the election of directors and on all other matters requiring
shareholder action, each share being entitled to one vote;
(b) dividends may be declared and paid or set apart for
payment upon the Common Stock out of any assets or funds of the Corporation
legally available for the payment of dividends, but only when and as declared by
the Board of Directors or any authorized committee thereof; and
(c) upon the voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation, the net assets of the Corporation
shall be distributed pro rata to the holders of the Common Stock in accordance
with their respective rights and interests.
SECTION 4. PREFERRED STOCK.
Subject to any limitations prescribed by law, the Board of Directors or
any authorized committee thereof is expressly authorized to provide for the
issuance of shares of Preferred Stock in one or more series of such stock, and
by filing articles of amendment to these Amended and Restated Articles of
Incorporation pursuant to applicable law of the State of New Hampshire, to
establish or change from time to time the number of shares to be included in
each such series, and to fix the designations, powers, and preferences and the
relative, participating, optional, or other special rights of the shares of each
series and any qualifications, limitations, and restrictions thereof. Any action
by the Board of Directors or any authorized committee thereof under this SECTION
4 of Article Fourth shall require the affirmative vote of a majority of the
directors then in office or a majority of the members of such committee. The
Board of Directors or any authorized committee thereof shall have the right to
determine or fix one or more of the following with respect to each series of
Preferred Stock to the extent permitted by law:
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(a) The distinctive serial designation and the number of
shares constituting such series;
(b) The dividend rates or the amount of dividends to be paid
on the shares of such series, whether dividends shall be cumulative and, if so,
from which date or dates, the payment date or dates for dividends, and the
participating and other rights, if any, with respect to dividends;
(c) The voting powers, full or limited, if any, of the shares
of such series;
(d) Whether the shares of such series shall be redeemable and,
if so, the price or prices at which, and the terms and conditions on which, such
shares may be redeemed;
(e) The amount or amounts payable upon the shares of such
series and any preferences applicable thereto in the event of voluntary or
involuntary liquidation, dissolution, or winding up of the Corporation;
(f) Whether the shares of such series shall be entitled to the
benefit of a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and if so entitled, the amount of such fund and the
manner of its application, including the price or prices at which such shares
may be redeemed or purchased through the application of such fund;
(g) Whether the shares of such series shall be convertible
into, or exchangeable for, shares of any other class or classes or of any other
series of the same or any other class or classes of stock of the Corporation
and, if so convertible or exchangeable, the conversion price or prices, or the
rate or rates of exchange, and the adjustments thereof, if any, at which such
conversion or exchange may be made, and any other terms and conditions of such
conversion or exchange;
(h) The price or other consideration for which the shares of
such series shall be issued;
(i) Whether the shares of such series which are redeemed or
converted shall have the status of authorized but unissued shares of Preferred
Stock (or series thereof) and whether such shares may be reissued as shares of
the same or any other class or series of stock; and
(j) Such other powers, preferences, rights, qualifications,
limitations, and restrictions thereof as the Board of Directors or any
authorized committee thereof may deem advisable.
FIFTH: The capital stock will be sold or offered for sale
within the meaning of RSA 421-B. (New Hampshire Securities Act).
SIXTH: None of the shares of the Corporation shall carry any preemptive
or preferential rights of subscription with respect to any shares of any class
or series of capital stock of the Corporation or any warrants to purchase such
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shares or securities convertible into such shares, whether now or hereafter
authorized. Any and all capital stock or other securities of the Corporation now
or hereafter authorized or created may be issued by action of the Board of
Directors, without the necessity of any shareholder approval, to such persons,
for such lawful consideration, and on such terms as the Board of Directors may
determine.
SEVENTH:
SECTION 1. INTERNAL AFFAIRS OF THE CORPORATION.
(a) POWERS OF DIRECTORS. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, the Board of Directors, except as otherwise
provided by the Amended and Restated Articles of Incorporation or required by
law.
(b) ELECTION OF DIRECTORS. Election of directors need not be by written
ballot unless the By-laws of the Corporation shall so provide. There shall be no
cumulative voting for directors or otherwise.
(c) TERMS OF DIRECTORS. The directors, other than those who may be
elected by the holders of any series of Preferred Stock of the Corporation,
shall be classified, with respect to the term for which they severally hold
office, into three classes, as nearly equal in number as possible. The initial
Class I Directors of the Corporation shall be [INSERT NAMES]; the initial Class
II Directors of the Corporation shall be [INSERT NAMES]; and the initial Class
III Directors of the Corporation shall be [INSERT NAMES]. The initial Class I
Directors shall serve for a term expiring at the annual meeting of shareholders
to be held in 1998; the initial Class II Directors shall serve for a term
expiring at the annual meeting of shareholders to be held in 1999; and the
initial Class III Directors shall serve for a term expiring at the annual
meeting of shareholders to be held in 2000. At each annual meeting of
shareholders, the successor or successors of the class of directors whose term
expires at that meeting shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at such meeting and entitled to
vote on the election of directors, and shall hold office for a term expiring at
the annual meeting of shareholders held in the third year following the year of
their election. The directors elected to each class shall hold office until
their successors are duly elected and qualified or until their earlier death,
disqualification, resignation, or removal.
Notwithstanding the foregoing, whenever, pursuant to the provisions of
Article Fourth of these Amended and Restated Articles of Incorporation, the
holders of any one or more series of Preferred Stock shall have the right,
voting separately as a series or together with holders of other such series, to
elect directors at an annual or special meeting of shareholders, the election,
term of office, filling of vacancies, and other features of such directorships
shall be governed by the terms of these Amended and Restated Articles of
Incorporation and any amendments applicable thereto, and such directors so
elected shall not be divided into classes pursuant to this Section 3.
During any period when the holders of any series of Preferred Stock
have the right to elect additional directors as provided for or fixed pursuant
to the provisions of Article Fourth hereof, then upon commencement and for the
duration of the period during which such right continues: (a) the then otherwise
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total authorized number of directors of the Corporation shall automatically be
increased by such specified number of directors, and the holders of such
Preferred Stock shall be entitled to elect the additional directors so provided
for or fixed pursuant to said provisions, and (b) each such additional director
shall serve until such director's successor shall have been duly elected and
qualified, or until such director's right to hold such office terminates
pursuant to said provisions, whichever occurs earlier, subject to such
director's earlier death, disqualification, resignation, or removal. Except as
otherwise provided by the Board of Directors in the resolution or resolutions
establishing such series, whenever the holders of any series of Preferred Stock
having such right to elect additional directors are divested of such right
pursuant to the provisions of such stock, the terms of office of all such
additional directors elected by the holders of such stock, or elected to fill
any vacancies resulting from the death, resignation, disqualification, or
removal of such additional directors, shall forthwith terminate and the total
and authorized number of directors of the Corporation shall be reduced
accordingly.
(d) VACANCIES. For a period of three years following the effective date
of these Amended and Restated Articles of Incorporation, subject to the rights,
if any, of the holders of any series of Preferred Stock to elect directors and
to fill vacancies in the Board of Directors relating thereto: (i) any vacancy in
the Board of Directors occurring as a result of an increase in the size of the
Board of Directors or the death, resignation, disqualification, or removal of a
director nominated by Pemi Bancorp, Inc. pursuant to Section 1.09 of the
Agreement and Plan of Merger by and among The Berlin City Bank, Northway
Financial, Inc., Pemigewasset National Bank and Pemi Bancorp, Inc. dated as of
March 14, 1997 shall be filled solely by the affirmative vote of two-thirds of
the remaining directors then in office, even if less than a quorum of the Board
of Directors, and (ii) all other vacancies in the Board of Directors shall be
filled solely by the affirmative vote of a majority of the remaining directors
then in office, even if less than a quorum of the Board of Directors.
Thereafter, subject to the rights, if any, of the holders of any series of
Preferred Stock to elect directors and to fill vacancies on the Board of
Directors relating thereto, any and all vacancies in the Board of Directors,
however occurring, including, without limitation, by reason of an increase in
size of the Board of Directors, or the death, resignation, disqualification, or
removal of a director, shall be filled solely by the affirmative vote of a
majority of the remaining directors then in office, even if less than a quorum
of the Board of Directors. Any director appointed to fill a vacancy in
accordance with the preceding provisions of this Section shall hold office until
the next annual meeting of shareholders and until such director's successor
shall have been duly elected and qualified or until his or her earlier death,
disqualification, resignation or removal. Subject to the rights, if any, of the
holders of any series of Preferred Stock to elect directors, when the number of
directors is increased or decreased, the Board of Directors shall determine the
class or classes to which the increased or decreased number of directors shall
be apportioned; PROVIDED, HOWEVER, that no decrease in the number of directors
shall shorten the term of any incumbent director. In the event of a vacancy in
the Board of Directors, the remaining directors, except as otherwise provided by
law, may exercise the powers of the full Board of Directors until the vacancy is
filled. The affirmative vote of two-thirds of the directors of the Corporation
shall be required to amend or repeal or adopt any provision in contravention of
or inconsistent with clause (i) of this Subsection (d) of SECTION 2 of Article
Seventh.
(e) REMOVAL. Subject to the rights, if any, of any series of Preferred
Stock to elect directors and to remove any director whom the holders of any such
stock have the right to elect, any director (including persons elected by
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directors to fill vacancies on the Board of Directors) may be removed from
office (a) only with cause and (b) only by the affirmative vote of the holders
of two-thirds of the shares then entitled to vote at an election of directors.
At least 30 days prior to any meeting of stockholders at which it is proposed
that any director be removed from office, written notice of such proposed
removal shall be sent to the director whose removal will be considered at the
meeting. For purposes of this SECTION 1 of Article Seventh of these Amended and
Restated Articles of Incorporation, "cause," with respect to the removal of any
director shall mean only (i) conviction of a felony, (ii) declaration of unsound
mind by order of court, (iii) gross dereliction of duty, (iv) commission of any
action involving moral turpitude, or (v) commission of an action which
constitutes intentional misconduct or a knowing violation of law if such action
in either event results both in an improper substantial personal benefit and a
material injury to the Corporation.
SECTION 2. VOTING FOR BUSINESS COMBINATIONS
(a) Neither the Corporation nor any subsidiary of which the Corporation
owns at least a majority of the equity securities ordinarily entitled to vote
for the election of directors ("SUBSIDIARY"), shall be a party to any of the
transactions specified herein (a "BUSINESS COMBINATION") or enter into any
agreement providing for any Business Combination unless the conditions specified
in (b), (c) and (d) below shall have been satisfied:
(i) any merger or consolidation (whether in a single
transaction or a series of related transactions)
other than a merger or consolidation of the
Corporation and any of its Subsidiaries or a merger
or consolidation of any Subsidiaries of the
Corporation; or
(ii) any sale, lease, exchange, transfer, or distribution
of all or substantially all or a substantial portion
of the property or assets of the Corporation or any
of its Subsidiaries, including its goodwill; or
(iii) the issuance of any securities, or of any rights
warrants or options to acquire any securities of the
Corporation or any of its Subsidiaries, to any
shareholders other than by stock dividend declared
and paid to all shareholders of the Corporation or
pursuant to an employee stock ownership plan or a
stock option plan established by the Corporation; or
(iv) any reclassification of the stock of the Corporation
or any of its Subsidiaries or any recapitalization or
other transaction (other than a redemption of stock)
which has the effect, directly or indirectly, of
increasing the proportionate share of stock of the
Corporation or any of its Subsidiaries held by any
person; or
(v) the adoption of any plan or proposal for (i)
dissolution of the Corporation or any Subsidiary
thereof or (ii) any partial or complete liquidation
of the Corporation or any Subsidiary thereof.
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(b) The vote of the holders of at least eighty percent (80%) of the
outstanding shares entitled to vote for the election of directors shall be
required to approve or authorize any Business Combination to which the
Corporation or any Subsidiary is a party unless the aggregate of the cash and
fair market value of the consideration to be paid to all the holders of the
Common Stock of the Corporation in connection with the Business Combination
(when adjusted for stock splits, stock dividends, reclassification of shares, or
otherwise) shall be equal to the highest price per share paid by the other party
or parties to the Business Combination (the "ACQUIRING PARTY") in acquiring any
of the Corporation's Common Stock; PROVIDED, HOWEVER, that the consideration to
be paid to the holders of the Common Stock of the Corporation shall be in the
same form as that paid by the Acquiring Party in acquiring the shares of the
Common Stock held by it except to the extent that any shareholder of the
Corporation shall otherwise agree.
(c) Subject to the provisions in (b) above, the vote of the holders of
at least seventy-five percent (75%) of the outstanding shares entitled to vote
for the election of directors shall be required to approve or authorize any
Business Combination to which the Corporation or any Subsidiary is a party
unless the Business Combination shall have been approved by at least two-thirds
(2/3) of the directors of the Corporation who are not affiliated with, or
shareholders of, the Acquiring Party, in which case the vote of the holders of
at least a majority of the outstanding shares entitled to vote for the election
of directors shall be required to approve or authorize such Business
Combination.
In connection with the exercise of its judgment in determining what is in the
best interests of the Corporation and of the shareholders, when evaluating a
Business Combination or a proposal by another person or persons to make a
Business Combination or a tender or exchange offer, the Board of Directors may,
in addition to considering the adequacy of the amount to be paid in connection
with any such transaction, consider all of the following factors and any other
factors which it deems relevant: (i) the social and economic effects of the
transaction on the Corporation and its subsidiaries, employees, depositors, loan
and other customers, creditors, and other elements of the communities in which
the Corporation and its Subsidiaries operate or are located; (ii) the business
and financial condition and earnings prospects of the Acquiring Party,
including, but not limited to, debt service and other existing financial
obligations, financial obligations to be incurred in connection with the
Business Combination, and other likely financial obligations of the Acquiring
Party, and the possible effect of such conditions upon the Corporation and its
Subsidiaries and the other elements of the communities in which the Corporation
and its subsidiaries operate or are located; and (iii) the experience and
integrity of the Acquiring Party and its management.
(d) In the event that all of the conditions set forth in (b) and (c)
above are met, the Corporation or any Subsidiary may enter into any Business
Combination under the terms and conditions specified in the NHBCA.
(e) The affirmative vote of the holders of at least eighty percent
(80%) of all of the shares of the Corporation entitled to vote for the election
of directors shall be required to amend or repeal, or to adopt any provision in
contravention of or inconsistent with Subsections (a) through (e) of SECTION 2
of Article Seventh, notwithstanding the fact that a lesser percentage may be
specified by law.
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(f) For a period of three years following the effective date of these
Amended and Restated Articles of Incorporation, the affirmative vote of
two-thirds of the directors of the Corporation shall be required to approve or
authorize a merger or consolidation involving Pemigewasset National Bank. The
affirmative vote of two-thirds of the directors of the Corporation shall be
required to amend or repeal, or adopt any provision in contravention of or
inconsistent with this Subsection (f) of SECTION 2 of Article Seventh,
notwithstanding the fact that a lesser percentage may be specified by law.
Section 3. Amendment of Amended and Restated Articles of Incorporation
The Corporation reserves the right to amend or repeal these Amended and
Restated Articles of Incorporation in the manner now or hereafter prescribed by
statute and these Amended and Restated Articles of Incorporation, and all rights
conferred upon shareholders herein are granted subject to this reservation.
Except as otherwise provided in these Amended and Restated Articles of
Incorporation, no amendment or repeal of these Amended and Restated Articles of
Incorporation shall be made unless the same is first approved by the Board of
Directors pursuant to a resolution adopted by the Board of Directors in
accordance with Section 293-A.10.03 of the NHBCA, and except as otherwise
provided by law, thereafter approved by the shareholders. Whenever any vote of
the holders of voting stock is required to amend or repeal any provision of
these Amended and Restated Articles of Incorporation, and in addition to any
other vote of the holders of voting stock that is required by these Amended and
Restated Articles of Incorporation or by law, the affirmative vote of a majority
of the outstanding shares entitled to vote on such amendment or repeal, and the
affirmative vote of a majority of the outstanding shares of each class entitled
to vote thereon as a class, shall be required to amend or repeal any provision
of these Amended and Restated Articles of Incorporation; PROVIDED, HOWEVER, that
the affirmative vote of not less than two-thirds of the outstanding shares
entitled to vote on such amendment or repeal, and the affirmative vote of not
less than two-thirds of the outstanding shares of each class entitled to vote
thereon as a class, shall be required to amend or repeal any of the provisions
of Article Seventh, Sections 1, 2, 3, or 5 of these Amended and Restated
Articles of Incorporation.
SECTION 4. AMENDMENT OF BY-LAWS
(a) AMENDMENT BY DIRECTORS. Except as otherwise provided by law or the
By-laws, the By-laws of the Corporation may be amended or repealed by the Board
of Directors by the affirmative vote of a majority of the directors then in
office.
(b) AMENDMENT BY SHAREHOLDERS. The By-laws of the Corporation may be
amended or repealed at any annual meeting of shareholders, or special meeting of
shareholders called for such purpose, by the affirmative vote of at least
two-thirds of the shares present in person or represented by proxy at such
meeting and entitled to vote on such amendment or repeal, voting together as a
single class; PROVIDED, HOWEVER, that if the Board of Directors recommends that
shareholders approve such amendment or repeal at such meeting of shareholders,
such amendment or repeal shall only require the affirmative vote of the majority
of the shares present in person or represented by proxy at such meeting and
entitled to vote on such amendment or repeal, voting together as a single class.
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SECTION 5. LIABILITY LIMITATIONS FOR OFFICERS AND DIRECTORS. No person
who serves the Corporation as a director or an officer shall have any personal
liability to the Corporation or its shareholders for money damages for any
action taken, or any failure to take any action, as a director or an officer,
except liability for:
(a) The amount of a financial benefit received by such director or
officer to which he is not entitled;
(b) An intentional infliction of harm on the Corporation or its
shareholders;
(c) A violation of Section 293-A.8.33; or
(d) An intentional violation of criminal law.
If the NHBCA is amended after the effective date of these Amended and
Restated Articles of Incorporation to authorize corporate action further
eliminating or limiting the personal liability of directors or officers, then
the liability of a director or officer of the Corporation shall be eliminated or
limited to the fullest extent permitted by the NHBCA. Any repeal or modification
of this Section 5 of Article Seventh by the shareholders of the Corporation
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director or officer of the Corporation for acts or
omissions occurring prior to the effective date of such repeal or modification.
EIGHTH: Any action required or permitted to be taken by the
shareholders of the Corporation at any annual or special meeting of shareholders
of the Corporation must be effected at a duly called annual or special meeting
of shareholders and may not be taken or effected by a written consent of
shareholders in lieu thereof.
NINTH: The address of the initial registered office of the corporation is
- ------------------------------------------------------------------------------
- ---------------------------------------------------------------------------.
TENTH: The number of directors constituting the initial board of
directors of the corporation is ______ and the names and addresses of the
persons who are to serve as directors until the first annual meeting of
shareholders or until their successors are elected and shall qualify are:
Name Address
DATED: ___________, 1997
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THE BERLIN CITY BANK
--------------------------------
William J. Woodward
Chairman, President and
Chief Executive Officer
358278.c7
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EXHIBIT II
FORM OF
BY-LAWS
OF
NORTHWAY FINANCIAL, INC.
ARTICLE I
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of shareholders shall be
held at the hour, date and place within or without the United States which is
fixed by the majority of the Board of Directors, the Chairman of the Board, if
one is elected, or the President, which time, date and place may subsequently be
changed at any time by vote of the Board of Directors. If no annual meeting has
been held for a period of thirteen months after the Corporation's last annual
meeting of shareholders, a special meeting in lieu thereof may be held, and such
special meeting shall have, for the purposes of these By-laws or otherwise, all
the force and effect of an annual meeting. Any and all references hereafter in
these By-laws to an annual meeting or annual meetings also shall be deemed to
refer to any special meeting(s) in lieu thereof.
SECTION 2. MATTERS TO BE CONSIDERED AT ANNUAL MEETINGS. At any annual
meeting of shareholders or any special meeting in lieu of annual meeting of
shareholders (the "ANNUAL MEETING"), only such business shall be conducted, and
only such proposals shall be acted upon, as shall have been properly brought
before such Annual Meeting. To be considered as properly brought before an
Annual Meeting, business must be: (a) specified in the notice of meeting, (b)
otherwise properly brought before the meeting by, or at the direction of, the
Board of Directors, or (c) otherwise properly brought before the meeting by any
holder of record (both as of the time notice of such proposal is given by the
shareholder as set forth below and as of the record date for the Annual Meeting
in question) of any shares of capital stock of the Corporation entitled to vote
at such Annual Meeting who complies with the requirements set forth in this
SECTION 2.
In addition to any other applicable requirements, for business to be
properly brought before an Annual Meeting by a shareholder of record of any
shares of capital stock entitled to vote at such Annual Meeting, such
shareholder shall: (i) give timely notice as required by this SECTION 2 to the
Secretary of the Corporation and (ii) be present at such meeting, either in
person or by a representative. For the first Annual Meeting following the date
the Corporation becomes a reporting company under Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), a
shareholder's notice shall be timely if delivered to, or mailed to and received
by, the Corporation at its principal executive office not later than the close
of business on the later of (x) the 75th day prior to the scheduled date of such
Annual Meeting or (y) the 15th day following the day on which public
announcement of the date of such Annual Meeting is first made by the
Corporation. For all subsequent Annual Meetings, a shareholder's notice shall be
timely if delivered to, or mailed to and received by, the Corporation at its
principal executive office not less than 75 days nor more than 120 days prior to
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the anniversary date of the immediately preceding Annual Meeting (the
"ANNIVERSARY DATE"); provided, however, that in the event the Annual Meeting is
scheduled to be held on a date more than 30 days before the Anniversary Date or
more than 60 days after the Anniversary Date, a shareholder's notice shall be
timely if delivered to, or mailed to and received by, the Corporation at its
principal executive office not later than the close of business on the later of
(1) the 75th day prior to the scheduled date of such Annual Meeting or (2) the
15th day following the day on which public announcement of the date of such
Annual Meeting is first made by the Corporation.
For purposes of these By-laws, "public announcement" shall mean: (a)
disclosure in a press release reported by the Dow Jones News Service, Associated
Press, or comparable national news service, (b) a report or other document filed
publicly with the Securities and Exchange Commission (including, without
limitation, a Form 8-K), or (c) a letter or report sent to shareholders of
record of the Corporation at the time of the mailing of such letter or report.
A shareholder's notice to the Secretary shall set forth as to each
matter proposed to be brought before an Annual Meeting: (i) a brief description
of the business the shareholder desires to bring before such Annual Meeting and
the reasons for conducting such business at such Annual Meeting, (ii) the name
and address, as they appear on the Corporation's stock transfer books, of the
shareholder proposing such business, (iii) the class and number of shares of the
Corporation's capital stock beneficially owned by the shareholder proposing such
business, (iv) the names and addresses of the beneficial owners, if any, of any
capital stock of the Corporation registered in such shareholder's name on such
books, and the class and number of shares of the Corporation's capital stock
beneficially owned by such beneficial owners, (v) the names and addresses of
other shareholders known by the shareholder proposing such business to support
such proposal, and the class and number of shares of the Corporation's capital
stock beneficially owned by such other shareholders, and (vi) any material
interest of the shareholder proposing to bring such business before such meeting
(or any other shareholders known to be supporting such proposal) in such
proposal.
If the Board of Directors or a designated committee thereof determines
that any shareholder proposal was not made in a timely fashion in accordance
with the provisions of this SECTION 2 or that the information provided in a
shareholder's notice does not satisfy the information requirements of this
SECTION 2 in any material respect, such proposal shall not be presented for
action at the Annual Meeting in question. If neither the Board of Directors nor
such committee makes a determination as to the validity of any shareholder
proposal in the manner set forth above, the presiding officer of the Annual
Meeting shall determine whether the shareholder proposal was made in accordance
with the terms of this SECTION 2. If the presiding officer determines that any
shareholder proposal was not made in a timely fashion in accordance with the
provisions of this SECTION 2 or that the information provided in a shareholder's
notice does not satisfy the information requirements of this SECTION 2 in any
material respect, such proposal shall not be presented for action at the Annual
Meeting in question. If the Board of Directors, a designated committee thereof,
or the presiding officer determines that a shareholder proposal was made in
accordance with the requirements of this SECTION 2, the presiding officer shall
so declare at the Annual Meeting and ballots shall be provided for use at the
meeting with respect to such proposal.
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Notwithstanding the foregoing provisions of this By-law, a shareholder
shall also comply with all applicable requirements of the Exchange Act, and the
rules and regulations thereunder with respect to the matters set forth in this
Section 2, and nothing in this SECTION 2 shall be deemed to affect any rights of
shareholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION 3. SPECIAL MEETINGS. Except as otherwise required by law and
subject to the rights, if any, of the holders of any series of Preferred Stock,
special meetings of the shareholders of the Corporation may be called only by
the Board of Directors pursuant to a resolution approved by the affirmative vote
of a majority of the directors then in office, or upon delivery of written
demand therefor to the Secretary describing the purpose or purposes for which it
is to be held by the holders of not less than ten percent (10%) of the shares
entitled to vote at the meeting.
SECTION 4. MATTERS TO BE CONSIDERED AT SPECIAL MEETINGS. No business
other than specified in the call for the meeting shall be transacted at any
special meeting of the shareholders.
SECTION 5. Notice of Meetings; Adjournments. A written notice of each
Annual Meeting stating the hour, date, and place of such Annual Meeting shall be
given by the Secretary or an Assistant Secretary (or other person authorized by
these By-laws or by law) not less than 10 days nor more than 60 days before the
Annual Meeting, to each shareholder entitled to vote thereat and to each
shareholder who, by law or under the Articles of Incorporation of the
Corporation (as the same may hereafter be amended and/or restated, the "ARTICLES
OF INCORPORATION") or under these By-laws, is entitled to such notice, by
delivering such notice to him or by mailing it, postage prepaid, addressed to
such shareholder at the address of such shareholder as it appears on the
Corporation's stock transfer books. Such notice shall be deemed to be delivered
when hand delivered to such address or deposited in the mail so addressed, with
postage prepaid.
Notice of all special meetings of shareholders shall be given in the
same manner as provided for Annual Meetings, except that the written notice of
all special meetings shall state the purpose or purposes for which the meeting
has been called.
Notice of an Annual Meeting or special meeting of shareholders need not
be given to a shareholder if a written waiver of notice is signed before or
after such meeting by such shareholder or if such shareholder attends such
meeting, unless such attendance was for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
was not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any Annual Meeting or special meeting of shareholders need
be specified in any written waiver of notice.
The Board of Directors may postpone and reschedule any previously
scheduled Annual Meeting or special meeting of shareholders and any record date
with respect thereto, regardless of whether any notice or public announcement
with respect to any such meeting has been sent or made pursuant to SECTION 2 of
this Article I or SECTION 3 of Article II hereof or otherwise. In no event shall
the public announcement of an adjournment, postponement, or rescheduling of any
previously scheduled meeting of shareholders commence a new time period for the
giving of a shareholder's notice under SECTION 2 of Article I and SECTION 3 of
Article II of these By-laws.
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When any meeting is convened, the presiding officer may adjourn the
meeting if (a) no quorum is present for the transaction of business, (b) the
Board of Directors determines that adjournment is necessary or appropriate to
enable the shareholders to consider fully information which the Board of
Directors determines has not been made sufficiently or timely available to
shareholders, or (c) the Board of Directors determines that adjournment is
otherwise in the best interests of the Corporation. When any Annual Meeting or
special meeting of shareholders is adjourned to another hour, date, or place,
notice need not be given of the adjourned meeting other than an announcement at
the meeting at which the adjournment is taken of the hour, date, and place to
which the meeting is adjourned; PROVIDED, HOWEVER, that if the adjournment is
for more than 120 days, or if after the adjournment a new record date is fixed
for the adjourned meeting, notice of the adjourned meeting shall be given to
each shareholder of record entitled to vote thereat and each shareholder who, by
law or under the Articles of Incorporation or these By-laws, is entitled to such
notice.
SECTION 6. QUORUM. A majority of the shares entitled to vote, present
in person or represented by proxy, shall constitute a quorum at any meeting of
shareholders. If less than a quorum is present at a meeting, the holders of
voting stock representing a majority of the voting power present at the meeting
or the presiding officer may adjourn the meeting from time to time, and the
meeting may be held as adjourned without further notice, except as provided in
SECTION 5 of this Article I. At such adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at the
meeting as originally noticed. The shareholders present at a duly constituted
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
SECTION 7. VOTING AND PROXIES. Shareholders shall have one vote for
each share of stock entitled to vote owned by them of record according to the
books of the Corporation, unless otherwise provided by law or by the Articles of
Incorporation. Shareholders may vote either in person or by written proxy, but
no proxy shall be voted or acted upon after eleven months from its date, unless
the proxy expressly provides for a longer period. Proxies shall be filed with
the Secretary of the meeting before being voted. Except as otherwise limited
therein or as otherwise provided by law, proxies shall entitle the persons
authorized thereby to vote at any adjournment of such meeting, but they shall
not be valid after final adjournment of such meeting. The Corporation, if acting
in good faith, may accept a proxy with respect to stock held in the name of two
or more persons if executed by or on behalf of any one of them.
SECTION 8. ACTION AT MEETING. When a quorum is present, any matter
before any meeting of shareholders shall be decided by the affirmative vote of
the majority of shares present in person or represented by proxy at such meeting
and entitled to vote on such matter, except where a larger vote is required by
law, by the amended and restated Articles of Incorporation, or by these By-laws.
Any election by shareholders shall be determined by a plurality of the votes of
the shares present in person or represented by proxy at the meeting and entitled
to vote on the election of directors, except where a larger vote is required by
law, by the Articles of Incorporation, or by these By-laws. The Corporation
shall not directly or indirectly vote any shares of its own stock; PROVIDED,
HOWEVER, that the Corporation may vote shares which it holds in a fiduciary
capacity to the extent permitted by law.
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SECTION 9. SHAREHOLDER LISTS. The Secretary or an Assistant Secretary
(or the Corporation's transfer agent or other person authorized by these By-laws
or by law) shall prepare and make available for inspection, within two business
days after notice of the Annual Meeting or special meeting for which the list
was prepared and continuing through such Annual Meeting or special meeting, a
complete list of the shareholders entitled to vote at the meeting, arranged in
alphabetical order and by voting group and class and series, if applicable, and
showing the address of each shareholder and the number of shares registered in
the name of each shareholder. Such list shall be open to the examination of any
shareholder, or such shareholder's agent or attorney, for any purpose germane to
the meeting, during ordinary business hours, upon written demand, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
hour, date, and place of the meeting during the whole time thereof, and may be
inspected by any shareholder, and any such shareholder's agent or attorney, who
is present.
SECTION 10. PRESIDING OFFICER. The Chairman of the Board, if one is
elected, or if not elected or in his or her absence, the Vice-Chairman, shall
preside at all Annual Meetings or special meetings of shareholders and shall
have the power, among other things, to adjourn such meeting at any time and from
time to time, subject to SECTIONS 5 and 6 of this Article I. The order of
business and all other matters of procedure at any meeting of the shareholders
shall be determined by the presiding officer.
SECTION 11. VOTING PROCEDURES AND INSPECTORS OF ELECTIONS. The
Corporation shall, in advance of any meeting of shareholders, appoint one or
more inspectors to act at the meeting and make a written report thereof. The
Corporation may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is able to act at a
meeting of shareholders, the presiding officer shall appoint one or more
inspectors to act at the meeting. Any inspector may, but need not, be an
officer, employee, or agent of the Corporation. Each inspector, before entering
upon the discharge of his or her duties, shall take and sign an oath faithfully
to execute the duties of inspector with strict impartiality and according to the
best of his or her ability. The inspectors shall perform such duties as are
required by the New Hampshire Business Corporation Act, as amended from time to
time (the "NHBCA"), including the counting of all votes and ballots. The
inspectors may appoint or retain other persons or entities to assist the
inspectors in the performance of the duties of the inspectors. The presiding
officer may review all determinations made by the inspectors, and in so doing
the presiding officer shall be entitled to exercise his or her sole judgment and
discretion and he or she shall not be bound by any determinations made by the
inspectors. All determinations by the inspectors and, if applicable, the
presiding officer, shall be subject to further review by any court of competent
jurisdiction.
ARTICLE II
DIRECTORS
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SECTION 1. POWERS. All corporate powers shall be exercised by or under
the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, the Board of Directors, except as otherwise
provided by the Articles of Incorporation or required by law.
SECTION 2. NUMBER AND TERMS. At the effective date of these By-laws,
the number of directors of the Corporation shall be ten. Thereafter, the number
of directors of the Corporation shall be no less than eight and no more than
thirteen. The exact number of directors within the minimum and maximum
limitations specified in the preceding sentence shall be fixed from time to time
during the three year period following the effective date of these By-laws by
the Board pursuant to a resolution adopted by two-thirds of the entire Board of
Directors and thereafter by a majority of the entire Board. No decrease in the
number of directors constituting the Board shall shorten the term of any
incumbent director. The affirmative vote of two-thirds of the directors of the
Corporation shall be required to amend or repeal or adopt any provision in
contravention of or inconsistent with the required directors' vote to fix the
number of directors during the three-year period following the effective date of
these By-laws as set forth in the third sentence of this SECTION 2.
SECTION 3. DIRECTOR NOMINATIONS. Nominations of candidates for election
as directors of the Corporation at any Annual Meeting may be made only (a) by,
or at the direction of, a [majority] of the Board of Directors or (b) by any
holder of record (both as of the time notice of such nomination is given by the
shareholder as set forth below and as of the record date for the Annual Meeting
in question) of any shares of the capital stock of the Corporation entitled to
vote at such Annual Meeting who complies with the timing, informational, and
other requirements set forth in this SECTION 3. Any shareholder who has complied
with the timing, informational, and other requirements set forth in this SECTION
3 and who seeks to make such a nomination, or his, her, or its representative,
must be present in person at the Annual Meeting. Only persons nominated in
accordance with the procedures set forth in this SECTION 3 shall be eligible for
election as directors at an Annual Meeting.
Nominations, other than those made by, or at the direction of, the
Board of Directors, shall be made pursuant to timely notice in writing to the
Secretary of the Corporation as set forth in this SECTION 3. For the first
Annual Meeting following the date the Corporation becomes a reporting company
under Section 13(a) or Section 15(d) of the Exchange Act, a shareholder's notice
shall be timely if delivered to, or mailed to and received by, the Corporation
at its principal executive office not later than the close of business on the
later of (i) the 75th day prior to the scheduled date of such Annual Meeting or
(ii) the 15th day following the day on which public announcement of the date of
such Annual Meeting is first made by the Corporation. For all subsequent Annual
Meetings, a shareholder's notice shall be timely if delivered to, or mailed to
and received by, the Corporation at its principal executive office not less than
75 days nor more than 120 days prior to the Anniversary Date; PROVIDED, HOWEVER,
that in the event the Annual Meeting is scheduled to be held on a date more than
30 days before the Anniversary Date or more than 60 days after the Anniversary
Date, a shareholder's notice shall be timely if delivered to, or mailed and
received by, the Corporation at its principal executive office not later than
the close of business on the later of (x) the 75th day prior to the scheduled
date of such Annual Meeting or (y) the 15th day following the day on which
public announcement of the date of such Annual Meeting is first made by the
Corporation.
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A shareholder's notice to the Secretary shall set forth as to each
person whom the shareholder proposes to nominate for election or re-election as
a director: (1) the name, age, business address, and residence address of such
person, (2) the principal occupation or employment of such person, (3) the class
and number of shares of the Corporation's capital stock which are beneficially
owned by such person on the date of such shareholder notice, and (4) the consent
of each nominee to serve as a director if elected. A shareholder's notice to the
Secretary shall further set forth as to the shareholder giving such notice: (a)
the name and address, as they appear on the Corporation's stock transfer books,
of such shareholder and of the beneficial owners (if any) of the Corporation's
capital stock registered in such shareholder's name and the name and address of
other shareholders known by such shareholder to be supporting such nominee(s),
(b) the class and number of shares of the Corporation's capital stock which are
held of record, beneficially owned, or represented by proxy by such shareholder
and by any other shareholders known by such shareholder to be supporting such
nominee(s) on the record date for the Annual Meeting in question (if such date
shall then have been made publicly available) and on the date of such
shareholder's notice, and (c) a description of all arrangements or
understandings between such shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by such shareholder.
If the Board of Directors or a designated committee thereof determines
that any shareholder nomination was not made in accordance with the terms of
this SECTION 3 or that the information provided in a shareholder's notice does
not satisfy the informational requirements of this SECTION 3 in any material
respect, then such nomination shall not be considered at the Annual Meeting in
question. If neither the Board of Directors nor such committee makes a
determination as to whether a nomination was made in accordance with the
provisions of this SECTION 3, the presiding officer of the Annual Meeting shall
determine whether a nomination was made in accordance with such provisions. If
the presiding officer determines that any shareholder nomination was not made in
accordance with the terms of this SECTION 3 or that the information provided in
a shareholder's notice does not satisfy the informational requirements of this
SECTION 3 in any material respect, then such nomination shall not be considered
at the Annual Meeting in question. If the Board of Directors, a designated
committee thereof, or the presiding officer determines that a nomination was
made in accordance with the terms of this SECTION 3, the presiding officer shall
so declare at the Annual Meeting and ballots shall be provided for use at the
meeting with respect to such nominee.
Notwithstanding anything to the contrary in the second paragraph of
this SECTION 3, in the event that the number of directors to be elected to the
Board of Directors of the Corporation is increased pursuant to SECTION 2 of
Article II and there is no public announcement by the Corporation naming all of
the nominees for director or specifying the size of the increased Board of
Directors at least 75 days prior to the Anniversary Date, a shareholder's notice
required by this SECTION 3 shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if such
notice shall be delivered to, or mailed to and received by, the Corporation at
its principal executive office not later than the close of business on the 15th
day following the day on which such public announcement is first made by the
Corporation.
No person shall be elected by the shareholders as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section. Election of directors at an Annual Meeting need not be by written
ballot, unless otherwise provided by the Board of Directors, or presiding
officer at such Annual Meeting. If written ballots are to be used, ballots
bearing the names of all the persons who have been nominated for election as
directors at the Annual Meeting in accordance with the procedures set forth in
this Section shall be provided for use at the Annual Meeting.
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SECTION 4. QUALIFICATION. No director need be a resident of the State
of New Hampshire, but directors must own qualifying shares of the Corporation
with a fair market value at the time of such director's election of $5,000.
SECTION 5. VACANCIES. For a period of three years following the
effective date of these By-laws of the Corporation, subject to the rights, if
any, of the holders of any series of Preferred Stock to elect directors and to
fill vacancies in the Board of Directors relating thereto: (i) any vacancy in
the Board of Directors occurring as a result of an increase in the size of the
Board of Directors or the death, resignation, disqualification, or removal of a
director nominated by Pemi Bancorp, Inc. pursuant to Section 1.09 of the
Agreement and Plan of Merger, by and among The Berlin City Bank, Northway
Financial, Inc., Pemigewasset National Bank and Pemi Bancorp, Inc., dated as of
March 14, 1997, shall be filled solely by the affirmative vote of two-thirds of
the remaining directors then in office, even if less than a quorum of the Board
of Directors, and (ii) all other vacancies in the Board of Directors shall be
filled solely by the affirmative vote of a majority of the remaining directors
then in office, even if less than a quorum of the Board of Directors.
Thereafter, subject to the rights, if any, of the holders of any series of
Preferred Stock to elect directors and to fill vacancies on the Board of
Directors relating thereto, any and all vacancies in the Board of Directors,
however occurring, including, without limitation, by reason of an increase in
size of the Board of Directors, or the death, resignation, disqualification, or
removal of a director, shall be filled solely by the affirmative vote of a
majority of the remaining directors then in office, even if less than a quorum
of the Board of Directors. Any director appointed to fill a vacancy in
accordance with the preceding provisions of this Section shall hold office until
the next Annual Meeting and until such director's successor shall have been duly
elected and qualified or until his or her earlier death, disqualification,
resignation, or removal. Subject to the rights, if any, of the holders of any
series of Preferred Stock to elect directors, when the number of directors is
increased or decreased, the Board of Directors shall determine the class or
classes to which the increased or decreased number of directors shall be
apportioned; PROVIDED, HOWEVER, that no decrease in the number of directors
shall shorten the term of any incumbent director. In the event of a vacancy in
the Board of Directors, the remaining directors, except as otherwise provided by
law, may exercise the powers of the full Board of Directors until the vacancy is
filled. The affirmative vote of two-thirds of the directors of the Corporation
shall be required to amend or repeal or adopt any provision in contravention or
inconsistent with clause (i) of the first sentence of this SECTION 5 of Article
II.
SECTION 6. REMOVAL. Directors may be removed from office in the manner
provided in the Articles of Incorporation.
SECTION 7. RESIGNATION. A director may resign at any time by giving
written notice to the Chairman of the Board, if one is elected, the President,
or the Secretary. A resignation shall be effective upon receipt, unless the
resignation otherwise provides.
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SECTION 8. REGULAR MEETINGS. The regular annual meeting of the Board of
Directors shall be held, without notice other than this SECTION 8, on the same
date and at the same place as the Annual Meeting following the close of such
meeting of shareholders. Other regular meetings of the Board of Directors may be
held at such hour, date, and place as the Board of Directors may by resolution
from time to time determine without notice other than such resolution.
SECTION 9. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called, orally or in writing, by or at the request of a majority of the
directors, the Chairman of the Board, if one is elected, or the President. The
person calling any such special meeting of the Board of Directors may fix the
hour, date, and place thereof.
SECTION 10. NOTICE OF MEETINGS. Notice of the hour, date, and place of
all special meetings of the Board of Directors shall be given to each director
by the Secretary or an Assistant Secretary, or in case of the death, absence,
incapacity, or refusal of such persons, by the Chairman of the Board, if one is
elected, or the President or such other officer designated by the Chairman of
the Board, if one is elected, or the President. Notice of any special meeting of
the Board of Directors shall be given to each director in person, by telephone,
or by facsimile, telex, telecopy, telegram, or other written form of electronic
communication, sent to his or her business or home address, at least 24 hours in
advance of the meeting, or by written notice mailed to his or her business or
home address, at least 48 hours in advance of the meeting. Such notice shall be
deemed to be delivered when hand delivered to such address, read to such
director by telephone, deposited in the mail so addressed, with postage thereon
prepaid if mailed, dispatched or transmitted if faxed, telexed or telecopied, or
when delivered to the telegraph company if sent by telegram.
When any Board of Directors meeting, either regular or special, is
adjourned for 30 days or more, notice of the adjourned meeting shall be given as
in the case of an original meeting. It shall not be necessary to give any notice
of the hour, date, or place of any meeting adjourned for less than 30 days or of
the business to be transacted thereat, other than an announcement at the meeting
at which such adjournment is taken of the hour, date, and place to which the
meeting is adjourned.
A written waiver of notice signed before or after a meeting by a
director and filed with the records of the meeting shall be deemed to be
equivalent to notice of the meeting. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting at the beginning of the
meeting or promptly upon his or her arrival to the transaction of any business
because such meeting is not lawfully called or convened and does not thereafter
vote for or assent to action taken at the meeting. Except as otherwise required
by law, by the Articles of Incorporation, or by these By-laws, neither the
business to be transacted at, nor the purpose of, any meeting of the Board of
Directors need be specified in the notice or waiver of notice of such meeting.
SECTION 11. QUORUM. At any meeting of the Board of Directors, a
majority of the directors then in office shall constitute a quorum for the
transaction of business, but if less than a quorum is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time, and
the meeting may be held as adjourned without further notice, except as provided
in SECTION 10 of this Article II. Any business which might have been transacted
at the meeting as originally noticed may be transacted at such adjourned meeting
at which a quorum is present.
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SECTION 12. ACTION AT MEETING. At any meeting of the Board of Directors
at which a quorum is present, a majority of the directors present may take any
action on behalf of the Board of Directors, unless otherwise required by law, by
the Articles of Incorporation, or by these By-laws.
SECTION 13. ACTION BY CONSENT. Any action required or permitted to be
taken at any meeting of the Board of Directors may be taken without a meeting if
all members of the Board of Directors unanimously consent thereto in writing.
Such action shall be evidenced by one or more written consents describing the
action taken, signed by each director, and filed with the records of the
meetings of the Board of Directors and shall be treated for all purposes as a
vote at a meeting of the Board of Directors.
SECTION 14. MANNER OF PARTICIPATION. Directors may participate in
meetings of the Board of Directors by means of conference telephone or similar
communications equipment by means of which all directors participating in the
meeting can hear each other, and participation in a meeting in accordance
herewith shall constitute presence in person at such meeting for purposes of
these By-laws.
SECTION 15. COMMITTEES. The Board of Directors, by vote of a majority
of the directors then in office, may elect from its number one or more
committees, including, without limitation, an Executive Committee, a
Compensation Committee, and an Audit Committee, each of which must contain two
or more members, and may delegate thereto some or all of its powers except those
which by law, by the Articles of Incorporation, or by these By-laws may not be
delegated. Except as the Board of Directors may otherwise determine, any such
committee may make rules for the conduct of its business, but unless otherwise
provided by the Board of Directors or in such rules, its business shall be
conducted so far as possible in the same manner as is provided by these By-laws
for the Board of Directors. All members of such committees shall hold such
offices at the pleasure of the Board of Directors. The Board of Directors may
abolish any such committee at any time. Any committee to which the Board of
Directors delegates any of its powers or duties shall keep records of its
meetings and shall report its action to the Board of Directors. The Board of
Directors shall have power to rescind any action of any committee, to the extent
permitted by law, but no such rescission shall have retroactive effect.
SECTION 16. COMPENSATION OF DIRECTORS. Directors shall receive such
compensation for their services as shall be determined by a majority of the
Board of Directors provided that directors who are serving the Corporation as
employees and who receive compensation for their services as such shall not
receive any salary or other compensation for their services as directors of the
Corporation.
ARTICLE III
OFFICERS
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SECTION 1. ENUMERATION. The officers of the Corporation shall consist
of a Chairman, a Vice-Chairman, a President, a Treasurer, a Secretary, and such
other officers, including, without limitation, a Chairman of the Board of
Directors, a Chief Executive Officer, and one or more Vice Presidents (including
Executive Vice Presidents or Senior Vice Presidents), Assistant Vice Presidents,
Assistant Treasurers, and Assistant Secretaries, as the Board of Directors may
determine.
SECTION 2. ELECTION. At the regular annual meeting of the Board of
Directors following the Annual Meeting of shareholders, the Board of Directors
shall elect the President, the Treasurer, and the Secretary. Other officers may
be elected by the Board of Directors at such regular annual meeting of the Board
of Directors or at any other regular or special meeting.
SECTION 3. QUALIFICATION. No officer need be a shareholder or a
director. Any person may occupy more than one office of the Corporation at any
time. Any officer may be required by the Board of Directors to give bond for the
faithful performance of his or her duties in such amount and with such sureties
as the Board of Directors may determine.
SECTION 4. TENURE. Except as otherwise provided by the Articles of
Incorporation or by these By-laws, each of the officers of the Corporation shall
hold office until the regular annual meeting of the Board of Directors following
the next Annual Meeting of shareholders and until his or her successor is
elected and qualified or until his or her earlier death, disqualification,
resignation, or removal.
SECTION 5. RESIGNATION. Any officer may resign at any time by
delivering his or her written resignation to the Corporation addressed to the
President or the Secretary, and such resignation shall be effective upon receipt
unless it is specified to be effective at some other time or upon the happening
of some other event.
SECTION 6. REMOVAL. Except as otherwise provided by law, the Board of
Directors may remove any officer at any time with or without cause by the
affirmative vote of two-thirds of the directors then in office.
SECTION 7. ABSENCE OR DISABILITY. In the event of the absence or
disability of any officer, the Board of Directors may designate another officer
to act temporarily in place of such absent or disabled officer.
SECTION 8. VACANCIES. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors.
SECTION 9. PRESIDENT. The President shall, subject to the direction of
the Board of Directors, have general supervision and control of the
Corporation's business. The President shall have such other powers and perform
such other duties as the Board of Directors may from time to time designate.
SECTION 10. CHAIRMAN OF THE BOARD. The Chairman of the Board, if one is
elected, shall preside, when present, at all meetings of the shareholders and of
the Board of Directors. The Chairman of the Board shall have such other powers
and shall perform such other duties as the Board of Directors may from time to
time designate.
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SECTION 11. VICE-CHAIRMAN OF THE BOARD. The Vice-Chairman of the Board,
if one is elected, shall, in the absence of the Chairman, preside at all
meetings of the shareholders and the Board of Directors. The Vice-Chairman shall
perform the duties and have the powers of the President or the Chief Executive
Officer if he or she is absent and shall have such other powers and shall
perform such other duties as the Board of Directors may from time to time
designate. The affirmative vote of two-thirds of the directors of the
Corporation shall be required to amend or repeal or adopt any provision in
contravention of or inconsistent with this Section 11 during the three-year
period following the effective date of these By-laws.
SECTION 12. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer, if
one is elected, shall have such powers and shall perform such duties as the
Board of Directors may from time to time designate.
SECTION 13. VICE PRESIDENTS AND ASSISTANT VICE PRESIDENTS. Any Vice
President (including any Executive Vice President or Senior Vice President) and
any Assistant Vice President shall have such powers and shall perform such
duties as the Board of Directors or the Chief Executive Officer may from time to
time designate.
SECTION 14. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall,
subject to the direction of the Board of Directors and except as the Board of
Directors or the Chief Executive Officer may otherwise provide, have general
charge of the financial affairs of the Corporation and shall cause to be kept
accurate books of account. The Treasurer shall have custody of all funds,
securities, and valuable documents of the Corporation. He or she shall have such
other duties and powers as may be designated from time to time by the Board of
Directors or the Chief Executive Officer.
Any Assistant Treasurer shall have such powers and perform such duties
as the Board of Directors or the Chief Executive Officer may from time to time
designate.
SECTION 15. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall
record all the proceedings of the meetings of the shareholders and the Board of
Directors (including committees of the Board) in books kept for that purpose. In
his or her absence from any such meeting, a temporary secretary chosen at the
meeting shall record the proceedings thereof. The Secretary shall have charge of
the stock ledger (which may, however, be kept by any transfer or other agent of
the Corporation). The Secretary shall have custody of the seal of the
Corporation, if any, and the Secretary, or an Assistant Secretary, shall have
authority to affix it to any instrument requiring it, and, when so affixed, the
seal may be attested by his or her signature or that of an Assistant Secretary.
The Secretary shall have such other duties and powers as may be designated from
time to time by the Board of Directors or the Chief Executive Officer. In the
absence of the Secretary, any Assistant Secretary may perform his or her duties
and responsibilities.
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Any Assistant Secretary shall have such powers and perform such duties
as the Board of Directors or the Chief Executive Officer may from time to time
designate.
SECTION 16. OTHER POWERS AND DUTIES. Subject to these By-laws and to
such limitations as the Board of Directors may from time to time prescribe, the
officers of the Corporation shall each have such powers and duties as generally
pertain to their respective offices, as well as such powers and duties as from
time to time may be conferred by the Board of Directors or the Chief Executive
Officer.
ARTICLE IV
CAPITAL STOCK
SECTION 1. CERTIFICATES OF STOCK. Each shareholder shall be entitled to
a certificate of the capital stock of the Corporation in such form as may from
time to time be prescribed by the Board of Directors. Such certificate shall be
signed by the Chairman of the Board of Directors, the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary. The Corporation seal and the signatures by the
Corporation's officers, the transfer agent, or the registrar may be facsimiles.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed on such certificate shall have ceased to be
such officer, transfer agent, or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he or she were such
officer, transfer agent, or registrar at the time of its issue. Every
certificate for shares of stock which are subject to any restriction on transfer
and every certificate issued when the Corporation is authorized to issue more
than one class or series of stock shall contain such legend with respect thereto
as is required by law.
SECTION 2. TRANSFERS. Subject to any restrictions on transfer and
unless otherwise provided by the Board of Directors, shares of stock may be
transferred only on the books of the Corporation by the surrender to the
Corporation or its transfer agent of the certificate theretofore properly
endorsed or accompanied by a written assignment or power of attorney properly
executed, with transfer stamps (if necessary) affixed, and with such proof of
the authenticity of signature as the Corporation or its transfer agent may
reasonably require.
SECTION 3. RECORD HOLDERS. Except as may otherwise be required by law,
by the Articles of Incorporation, or by these By-laws, the Corporation shall be
entitled to treat the record holder of stock as shown on its books as the owner
of such stock for all purposes, including the payment of dividends and the right
to vote with respect thereto, regardless of any transfer, pledge, or other
disposition of such stock, until the shares have been transferred on the books
of the Corporation in accordance with the requirements of these By-laws.
It shall be the duty of each shareholder to notify the Corporation of
his or her post office address and any changes thereto.
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SECTION 4. RECORD DATE. In order that the Corporation may determine the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than seventy days prior to such meeting or other action. If no
record date is fixed: (i) the record date for determining shareholders entitled
to notice of or to vote at a meeting of shareholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held and (ii) the record date for determining shareholders
for any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
SECTION 5. REPLACEMENT OF CERTIFICATES. In case of the alleged loss,
destruction, or mutilation of a certificate of stock, a duplicate certificate
may be issued in place thereof, upon such terms as the Board of Directors may
prescribe.
ARTICLE V
INDEMNIFICATION
SECTION 1. DEFINITIONS. For purposes of this Article:
(a) "Director" means an individual who is or was on the Board of
Directors of the Corporation or an individual who, while a director of the
Corporation, is or was serving at the Corporation's request as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee, benefit plan, or other
enterprise;
(b) "Disinterested Director" means, with respect to each Proceeding in
respect of which indemnification is sought hereunder, a Director of the
Corporation who is not and was not a Party to such Proceeding;
(c) "Expenses" means all reasonable attorneys' fees, retainers, court
costs, transcript costs, fees of expert witnesses, private investigators, and
professional advisors (including, without limitation, accountants and investment
bankers), travel expenses, duplicating costs, printing and binding costs, costs
of preparation of demonstrative evidence and other courtroom presentation aids
and devices, costs incurred in connection with document review, organization,
imaging, and computerization, telephone charges, postage, delivery service fees,
and all other disbursements, costs, or expenses of the type customarily incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, settling, or otherwise
participating in, a Proceeding;
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(d) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine, including an excise tax assessed with respect to an employee
benefit plan, or reasonable Expenses incurred in connection with a Proceeding;
(e) "Non-Officer Employee" means an individual who is or was an
employee of the Corporation but who is not or was not a Director or Officer, or
an individual who, while a Non-Officer Employee of the Corporation, is or was
serving at the Corporation's request as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee, benefit plan, or other enterprise;
(f) "Party" includes any individual who was, is, or is threatened to be
made a named defendant or respondent in a Proceeding.
(g) "Proceeding" means any threatened, pending or completed action,
suit, arbitration, alternate dispute resolution mechanism, inquiry,
investigation, administrative hearing, or other proceeding, whether civil,
criminal, administrative, arbitrative, or investigative and whether formal or
informal;
(h) "Officer" means an individual who is or was appointed by the Board
of Directors of the Corporation or an individual who, while an Officer of the
Corporation, is or was serving at the Corporation's request as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee, benefit plan, or other
enterprise;
SECTION 2. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Subject to the
operation of Section 4 of this Article V, each Director and Officer shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the NHBCA, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than such law
permitted the Corporation to provide prior to such amendment) against any and
all Expenses and Liabilities that are incurred by such Director or Officer or on
such Director or Officer's behalf in connection with any Proceeding or any
claim, issue, or matter therein, which such Director or Officer is a Party to or
participant in by reason of such Director or Officer's status as a Director or
Officer, if such Director or Officer acted in good faith and in a manner such
Director or Officer reasonably believed to be in, or not opposed to, the best
interests of the Corporation and, with respect to any criminal proceeding, had
no reasonable cause to believe his or her conduct was unlawful. The rights of
indemnification provided by this SECTION 2 shall continue as to a Director or
Officer after he or she has ceased to be a Director or Officer and shall inure
to the benefit of his or her heirs, executors, administrators, and personal
representatives. Notwithstanding the foregoing, the Corporation shall indemnify
any Director or Officer seeking indemnification in connection with a Proceeding
initiated by such Director or Officer only if such Proceeding was authorized by
the Board of Directors of the Corporation.
SECTION 3. INDEMNIFICATION OF NON-OFFICER EMPLOYEES. Subject to the
operation of Section 4 of this Article V, each Non-Officer Employee may, in the
discretion of the Board of Directors of the Corporation, be indemnified by the
Corporation to the fullest extent authorized by the NHBCA, as the same exists or
may hereafter be amended, against any or all Expenses and Liabilities that are
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incurred by such Non-Officer Employee or on such Non-Officer Employee's behalf
in connection with any Proceeding, or any claim, issue, or matter therein, which
such Non-Officer Employee is a Party to or participant in by reason of such
Non-Officer Employee's status as a Non-Employee Officer, if such Non-Officer
Employee acted in good faith and in a manner such Non-Officer Employee
reasonably believed to be in, or not opposed to, the best interests of the
Corporation and, with respect to any criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful. The rights of indemnification
provided by this SECTION 3 shall continue as to a Non-Officer Employee after he
or she has ceased to be a Non-Officer Employee and shall inure to the benefit of
his or her heirs, personal representatives, executors, and administrators.
Notwithstanding the foregoing, the Corporation may indemnify any Non-Officer
Employee seeking indemnification in connection with a Proceeding initiated by
such Non-Officer Employee only if such Proceeding was authorized by the Board of
Directors of the Corporation.
SECTION 4. GOOD FAITH. Unless ordered by a court, no indemnification
shall be provided pursuant to this Article V to a Director, to an Officer or to
a Non-Officer Employee unless a determination shall have been made that such
person acted in good faith and in a manner such person reasonably believed to be
in, or not opposed to, the best interests of the Corporation and, with respect
to any criminal Proceeding, such person had no reasonable cause to believe his
or her conduct was unlawful. Such determination shall be made by (a) a majority
vote of the Disinterested Directors, even though less than a quorum of the Board
of Directors, (b) if there are no such Disinterested Directors, or if a majority
of Disinterested Directors so direct, by independent legal counsel in a written
opinion, or (c) by the shareholders of the Corporation provided that shares
owned by or voted under the control of Directors who are not Disinterested
Directors may not be voted in the determination.
SECTION 5. ADVANCEMENT OF EXPENSES TO DIRECTORS PRIOR TO FINAL
DISPOSITION. The Corporation shall advance all Expenses incurred by or on behalf
of any Director in connection with any Proceeding in which such Director is
involved by reason of such Director's status as a Director within ten days after
the receipt by the Corporation of a written statement from such Director
requesting such advance or advances from time to time, whether prior to or after
final disposition of such Proceeding. Such statement or statements shall
reasonably evidence the Expenses incurred by such Director and shall be preceded
or accompanied by (i) a written affirmation of such Director's good faith belief
that such Director has met the standard of conduct set forth in SECTION 2 above,
and (ii) a written undertaking by or on behalf of such Director to repay any
Expenses so advanced if it shall ultimately be determined that such Director is
not entitled to be indemnified against such Expenses.
SECTION 6. ADVANCEMENT OF EXPENSES TO OFFICERS AND NON-OFFICER
EMPLOYEES PRIOR TO FINAL DISPOSITION. The Corporation may, in the discretion of
the Board of Directors of the Corporation, advance any or all Expenses incurred
by or on behalf of any Officer or Non-Officer Employee in connection with any
Proceeding in which such Officer or Non-Officer Employee is involved by reason
of such Officer or Non-Officer Employee's status as an Officer or Non-Officer
Employee upon the receipt by the Corporation of a statement or statements from
such Officer or Non-Officer Employee requesting such advance or advances from
time to time, whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses incurred by
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such Officer or Non-Officer Employee and shall be preceded or accompanied by (i)
a written affirmation of such Officer's or Non-Officer Employee's good faith
belief that he or she has met the standard of conduct set forth in SECTION 2 or
SECTION 3, hereof, as the case may be, and (ii) a written undertaking by or on
behalf of such Officer or Non-Officer Employee to repay any Expenses so advanced
if it shall ultimately be determined that such Officer or Non-Officer Employee
is not entitled to be indemnified against such Expenses.
SECTION 7. CONTRACTUAL NATURE OF RIGHTS. The foregoing provisions of
this Article V shall be deemed to be a contract between the Corporation and each
Director and Officer who serves in such capacity at any time while this Article
V is in effect, and any repeal or modification thereof shall not affect any
rights or obligations then existing with respect to any state of facts then or
theretofore existing or any Proceeding theretofore or thereafter brought based
in whole or in part upon any such state of facts. If a claim for indemnification
or advancement of Expenses hereunder by a Director or Officer is not paid in
full by the Corporation within (a) 60 days after the Corporation's receipt of a
written claim for indemnification, or (b) in the case of a Director, 10 days
after the Corporation's receipt of documentation of Expenses and the required
undertaking, such Director or Officer may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim, and if
successful in whole or in part, such Director or Officer shall also be entitled
to be paid the expenses of prosecuting such claim. The failure of the
Corporation (including its Board of Directors or any committee thereof,
independent legal counsel, or shareholders) to make a determination concerning
the permissibility of such indemnification or, in the case of a Director,
advancement of Expenses, under this Article V shall not be a defense to the
action and shall not create a presumption that such indemnification or
advancement is not permissible.
SECTION 8. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and
advancement of Expenses set forth in this Article V shall not be exclusive of
any other right which any Director, Officer, or Non-Officer Employee may have or
hereafter acquire under any statute, provision of the Corporation's Articles of
Incorporation, or these By-laws, or pursuant to any agreement, vote of
shareholders or Disinterested Directors or otherwise.
SECTION 9. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any Director, Officer, or Non-Officer Employee
against any liability of any character asserted against or incurred by the
Corporation or any such Director, Officer, or Non-Officer Employee, or arising
out of any such person's status as such Director, Officer, or Non-Officer
Employee, whether or not the Corporation would have the power to indemnify such
person against such liability under the NHBCA or the provisions of this Article
V.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 1. FISCAL YEAR. Except as otherwise determined by the Board of
Directors, the fiscal year of the Corporation shall end on the last day of
December of each year.
SECTION 2. SEAL. The Board of Directors shall have power to adopt and
alter the seal of the Corporation.
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SECTION 3. EXECUTION OF INSTRUMENTS. All deeds, leases, transfers,
contracts, bonds, notes, and other obligations to be entered into by the
Corporation in the ordinary course of its business without director action may
be executed on behalf of the Corporation by the Chairman of the Board, if one is
elected, the President, or the Treasurer or any other officer, employee, or
agent of the Corporation as the Board of Directors or Executive Committee may
authorize.
SECTION 4. VOTING OF SECURITIES. Unless the Board of Directors
otherwise provides, the Chairman of the Board, if one is elected, the President,
or the Treasurer may waive notice of and act on behalf of this Corporation, or
appoint another person or persons to act as proxy or attorney in fact for this
Corporation with or without discretionary power and/or power of substitution, at
any meeting of shareholders or shareholders of any other corporation or
organization, any of whose securities are held by this Corporation.
SECTION 5. RESIDENT AGENT. The Board of Directors may appoint a
resident agent upon whom legal process may be served in any action or proceeding
against the Corporation.
SECTION 6. CORPORATE RECORDS. The original or attested copies of the
Articles of Incorporation, By-laws, and records of all meetings of the
incorporators, shareholders, and the Board of Directors and the stock transfer
books, which shall contain the names of all shareholders, their record
addresses, and the amount of stock held by each, may be kept outside the State
of New Hampshire and shall be kept at the principal office of the Corporation
and at such other place or places as may be designated from time to time by the
Board of Directors.
SECTION 7. AMENDMENT OF BY-LAWS.
(a) AMENDMENT BY DIRECTORS. Except as provided otherwise by law or
elsewhere in these By-laws, these By-laws may be amended or repealed by the
Board of Directors by the affirmative vote of a majority of the directors then
in office.
(b) AMENDMENT BY SHAREHOLDERS. These By-laws may be amended or repealed
at any Annual Meeting of shareholders, or special meeting of shareholders called
for such purpose, by the affirmative vote of at least two-thirds of the shares
present in person or represented by proxy at such meeting and entitled to vote
on such amendment or repeal, voting together as a single class; provided,
however, that if the Board of Directors recommends that shareholders approve
such amendment or repeal at such meeting of shareholders, such amendment or
repeal shall only require the affirmative vote of the majority of the shares
present in person or represented by proxy at such meeting and entitled to vote
on such amendment or repeal, voting together as a single class.
Adopted ________ ___, 1997 and effective as of ________ ___, 1997.
358352.c7
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EXHIBIT III
FORM OF
EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement") is made as of _____________________ ,
1997 (the "Effective Date"), by and between Northway Financial, Inc., a New
Hampshire chartered corporation ("Northway"), The Berlin City Bank, a New
Hampshire chartered bank and wholly owned subsidiary of Northway with its
principal offices located in Berlin, New Hampshire (Northway and The Berlin City
Bank shall hereinafter collectively be referred to as the "Employer"), and
William J. Woodward (the "Executive"). In consideration of the mutual covenants
contained in this Agreement, the Employer and the Executive agree as follows:
1. EMPLOYMENT. The Employer agrees to employ the Executive and the
Executive agrees to be employed by the Employer on the terms and conditions set
forth in this Agreement.
2. CAPACITY. The Executive shall serve the Employer as Chairman,
President and Chief Executive Officer, subject to election by the Board of
Directors of Northway or The Berlin City Bank, as the case may be (the "Board of
Directors"), and as a member of the Board of Directors, subject to election by
the shareholders of the Employer. The Executive shall also serve the Employer in
such other or additional offices as the Executive may be requested to serve by
the Board of Directors. In such capacity or capacities, the Executive shall
perform such services and duties in connection with the business, affairs and
operations of the Employer as may be assigned or delegated to the Executive from
time to time by or under the authority of the Board of Directors.
3. TERM. Subject to the provisions of Section 6, the term of employment
pursuant to this Agreement (the "Term") shall be for three (3) years from the
Effective Date and shall be renewed automatically for periods of one (1) year
commencing at the first anniversary of the Effective Date and on each subsequent
anniversary thereafter, unless either the Executive or the Employer gives
written notice to the other not less than sixty (60) days prior to the date of
any such anniversary of such party's election not to extend the Term.
4. COMPENSATION AND BENEFITS. The regular compensation and benefits
payable to the Executive under this Agreement shall be as follows:
(a) SALARY. For all services rendered by the Executive under this
Agreement, the Employer shall pay the Executive a salary (the "Salary")
at the annual rate of ________________________Dollars ($___), subject
to increase from time to time in the discretion of the Board of
Directors. The Salary shall be payable in periodic installments in
accordance with the Employer's usual practice for its senior
executives.
(b) BONUS OR SIMILAR INCENTIVE PROGRAMS. The Executive shall be
entitled to participate in any incentive or bonus program established
by the Board of Directors with such terms as may be established in the
sole discretion of the Board of Directors; or
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(c) REGULAR BENEFITS. The Executive shall also be entitled to
participate in any employee benefit plans, medical insurance plans,
life insurance plans, disability income plans, retirement plans,
vacation plans, expense reimbursement plans and other benefit plans
which the Employer may from time to time have in effect for all or most
of its senior executives. Such participation shall be subject to the
terms of the applicable plan documents, generally applicable policies
of the Employer, applicable law and the discretion of the Board of
Directors or any administrative or other committee provided for in or
contemplated by any such plan. Nothing contained in this Agreement
shall be construed to create any obligation on the part of the Employer
to establish any such plan or to maintain the effectiveness of any such
plan which may be in effect from time to time.
(d) TAXATION OF PAYMENTS AND BENEFITS. The Employer shall undertake
to make deductions, withholdings and tax reports with respect to
payments and benefits under this Agreement to the extent that it
reasonably and in good faith believes that it is required to make such
deductions, withholdings and tax reports. Payments under this Agreement
shall be in amounts net of any such deductions or withholdings. Nothing
in this Agreement shall be construed to require the Employer to make
any payments to compensate the Executive for any adverse tax effect
associated with any payments or benefits or for any deduction or
withholding from any payment or benefit.
(e) EXCLUSIVITY OF SALARY AND BENEFITS. Unless approved by the
Board of Directors, the Executive shall not be entitled to any payments
or benefits other than those provided under this Agreement.
5. EXTENT OF SERVICE. During the Executive's employment under this
Agreement, the Executive shall, subject to the direction and supervision of the
Board of Directors, devote the Executive's, best efforts and business judgment,
skill and knowledge to the advancement of the Employer's interests and to the
discharge of the Executive's duties and responsibilities under this Agreement.
The Executive shall not engage in any other business activity, except as may be
approved by the Board of Directors; PROVIDED THAT nothing in this Agreement
shall be construed as preventing the Executive from:
(a) investing the Executive's assets in any company or other
entity in a manner not prohibited by Section 7(d) and in such form
or manner as shall not require any material activities on the
Executive's part in connection with the operations or affairs of
the companies or other entities in which such investments are made;
or
(b) engaging in religious, charitable or other community or
non-profit activities that do not impair the Executive's ability to
fulfill the Executive's duties and responsibilities under this
Agreement; or
(c) continuing to advise and consult regularly the activities
of Vaillancourt & Woodward, Inc. in his current positions with the
same, provided that such advice and consultation does not
unreasonably interfere with the performance of the Executive's
duties hereunder.
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6. TERMINATION AND TERMINATION BENEFITS. Notwithstanding the provisions
of Section 3, the Executive's employment under this Agreement shall terminate
under the following circumstances set forth in this Section 6.
(a) TERMINATION BY THE EMPLOYER FOR CAUSE. The Executive's
employment under this Agreement may be terminated for cause without
further liability on the part of the Employer effective immediately
upon a two-thirds (2/3) vote of the Board of Directors and written
notice to the Executive. Only the following shall constitute
"cause" for such termination:
(i) dishonest statements or acts of the Executive with
respect to the business of the Employer or any affiliate of the
Employer;
(ii) the commission by or indictment of the Executive for
(A) a felony or (B) any misdemeanor involving moral turpitude,
deceit, dishonesty or fraud ("indictment," for these purposes,
meaning an indictment, probable cause hearing or any other
procedure pursuant to which an initial determination of
probable or reasonable cause with respect to such offense is
made);
(iii) material failure to perform to the reasonable
satisfaction of the Board of Directors a substantial portion of
the Executive's duties and responsibilities assigned or
delegated under this Agreement, which failure continues, in the
reasonable judgment of the Board of Directors, for sixty (60)
days after written notice given to the Executive by the Board
of Directors;
(iv) gross negligence, willful misconduct or
insubordination of the Executive with respect to the Employer
or any affiliate of the Employer; or
(v) material breach by the Executive of any of the
Executive's obligations under this Agreement.
(b) TERMINATION BY THE EXECUTIVE. The Executive's employment
under this Agreement may be terminated by the Executive by written
notice to the Board of Directors at least thirty (30) days prior to
such termination.
(c) TERMINATION BY THE EMPLOYER WITHOUT CAUSE. Subject to the
payment of Termination Benefits pursuant to Section 6(d), the
Executive's employment under this Agreement may be terminated by
the Employer without cause upon written notice to the Executive by
a two-thirds (2/3) vote of the Board of Directors.
(d) CERTAIN TERMINATION BENEFITS. Unless otherwise specifically
provided in this Agreement or otherwise required by law, all
compensation and benefits payable to the Executive under this
Agreement shall terminate on the date of termination of the
Executive's employment under this Agreement. Notwithstanding the
foregoing, in the event of termination of the Executive's
employment with the Employer pursuant to Section 6(c) above, the
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Employer shall provide to the Executive the following termination
benefits ("Termination Benefits"):
(i) continuation of the Executive's Salary at the rate then
in effect pursuant to Section 4(a) and
(ii) continuation of group health plan benefits to the
extent authorized by and consistent with 29 U.S.C. ss. 1161 et
seq. (commonly known as "COBRA"), with the cost of the regular
premium for such benefits shared in the same relative
proportion by the Employer and the Executive as in effect on
the date of termination.
The Termination Benefits set forth in (i) and (ii) above shall
continue effective until the expiration of the Term; PROVIDED THAT
in the event that the Executive commences any employment or
self-employment during the period during which the Executive is
entitled to receive Termination Benefits (the "Termination Benefits
Period"), the remaining amount of Salary due pursuant to Section
6(d)(i) for the period from the commencement of such employment
(other than in connection with the activities of Vaillancourt &
Woodward, Inc.) or self-employment to the end of the Termination
Benefits Period shall be reduced by one-half of the salary the
Executive receives from such employment or self-employment and, if
the Executive receives benefits from such employment or
self-employment comparable to those benefits provided by the
Employer, the payments provided under Section 6(d)(ii) shall cease
effective as of the date of commencement of such employment or
self-employment. The Employer's liability for Salary continuation
pursuant to Section 6(d)(i) shall be reduced by the amount of any
severance pay due or otherwise paid to the Executive pursuant to
any severance pay plan or stay bonus plan of the Employer.
Notwithstanding the foregoing, nothing in this Section 6(d) shall
be construed to affect the Executive's right to receive COBRA
continuation entirely at the Executive's own cost to the extent
that the Executive may continue to be entitled to COBRA
continuation after the Executive's right to cost sharing under
Section 6(d)(ii) ceases. The Executive shall be obligated to give
prompt notice of the date of commencement of any employment or
self-employment during the Termination Benefits Period and shall
respond promptly to any reasonable inquiries concerning any
employment or self-employment in which the Executive engages during
the Termination Benefits Period.
(e) DISABILITY. If the Executive shall be disabled so as to be
unable to perform the essential functions of the Executive's then
existing position or positions under this Agreement with or without
reasonable accommodation, the Board of Directors of Northway by a
two-thirds (2/3) vote may remove the Executive from any
responsibilities and/or reassign the Executive to another position
with the Employer for the remainder of the Term or during the
period of such disability. Notwithstanding any such removal or
reassignment, the Executive shall continue to receive the
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Executive's full Salary (less any disability pay or sick pay
benefits to which the Executive may be entitled under the
Employer's policies) and benefits under Section 4 of this Agreement
(except to the extent that the Executive may be ineligible for one
or more such benefits under applicable plan terms) for a period of
time equal to the lesser of (i) one (1) year; or (ii) the remainder
of the Term. If any question shall arise as to whether during any
period the Executive is disabled so as to be unable to perform the
essential functions of the Executive's then existing position or
positions with or without reasonable accommodation, the Executive
may, and at the request of the Employer shall, submit to the
Employer a certification in reasonable detail by a physician
selected by the Employer to whom the Executive or the Executive's
guardian has no reasonable objection as to whether the Executive is
so disabled or how long such disability is expected to continue,
and such certification shall for the purposes of this Agreement be
conclusive of the issue. The Executive shall cooperate with any
reasonable request of the physician in connection with such
certification. If such question shall arise and the Executive shall
fail to submit such certification, the Employer's determination of
such issue shall be binding on the Executive. Nothing in this
Section 6(e) shall be construed to waive the Executive's rights, if
any, under existing law including, without limitation, the Family
and Medical Leave Act of 1993, 29 U.S.C. ss.2601 ET SEQ. and the
Americans with Disabilities Act, 42 U.S.C. ss.12101 ET SEQ.
(f) TERMINATION FOLLOWING A CHANGE OF CONTROL. If there is a
Change of Control, as defined in Section 6(f)(i) below, during the
Term, the provisions of this Section 6(f) shall apply and shall
continue to apply throughout the remainder of the term of this
Agreement. If, within eighteen (18) months following a Change of
Control, the Executive's employment is terminated by the Employer
or the Executive following the occurrence of any of the events
listed in Section 6(f)(ii) below or if the Executive's employment
is terminated without cause (in accordance with Section 6(c)
above), in lieu of any payments under Section 6(d) above, the
Employer shall pay to the Executive (or the Executive's estate, if
applicable) a lump sum amount equal to 2.99 times the Executive's
"base amount" within the meaning of Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code").
(i) Change of Control shall mean the occurrence of one or
more of the following events:
(A) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) becomes a "beneficial owner"
(as such term is defined in Rule 13d-3 promulgated under the
Exchange Act) (other than the Employer, any trustee or other
fiduciary holding securities under an employee benefit plan
of the Employer, or any corporation owned, directly or
indirectly, by the stockholders of the Employer, in
substantially the same proportions as their ownership of
stock of Northway), directly or indirectly, of securities of
Northway, representing fifty percent (50%) or more of the
combined voting power of Northway's then outstanding
securities; or
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(B) persons who, as of the Effective Date, constituted
Northway's Board of Directors (the "Incumbent Board") cease
for any reason including, without limitation, as a result of
a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of Northway's
Board of Directors, provided that any person becoming a
director of Northway subsequent to the Effective Date whose
election was approved by at least a majority of the
directors then comprising the Incumbent Board shall, for
purposes of this Section 6(f), be considered a member of the
Incumbent Board; or
(C) the stockholders of Northway approve a merger or
consolidation of Northway with any other corporation or
other entity, other than (1) a merger or consolidation which
would result in the voting securities of Northway
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than fifty percent (50%) of the combined voting power
of the voting securities of Northway or such surviving
entity outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effected to
implement a recapitalization of Northway (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than fifty percent (50%) of the combined
voting power of Northway's then outstanding securities; or
(D) the stockholders of Northway approve a plan of
complete liquidation of Northway or an agreement for the
sale or disposition by Northway of all or substantially all
of Northway's assets.
(ii) The events referred to in Section 6(f) above shall be
as follows:
(A) a reduction of the Executive's salary other than a
reduction that (1) is based on the Employer's financial
performance or (2) is similar to the reduction made to the
salaries provided to all or most other senior executives of
the Employer; or
(B) a significant change in the Executive's
responsibilities and/or duties which constitutes, when
compared to the Executive's responsibilities and/or duties
before the Change of Control, a demotion; or
(C) a material loss of title or office; or
(D) the relocation of the offices at which the Executive
is principally employed as of the Change of Control to a
location more than fifty (50) miles from such offices, which
relocation is not approved by the Executive.
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(iii) The Executive shall provide the Employer with
reasonable notice and an opportunity to cure any of the events
listed in Section 6(f)(ii) and shall not be entitled to
compensation pursuant to this Section 6(f) unless the Employer
fails to cure within a reasonable period; and
(iv) It is the intention of the Executive and of the
Employer that no payments by the Employer to or for the benefit
of the Executive under this Agreement or any other agreement or
plan, if any, pursuant to which the Executive is entitled to
receive payments or benefits shall be nondeductible to the
Employer by reason of the operation of Section 280G of the Code
relating to parachute payments or any like statutory or
regulatory provision. Accordingly, and notwithstanding any other
provision of this Agreement or any such agreement or plan, if by
reason of the operation of said Section 280G or any like
statutory or regulatory provision, any such payments exceed the
amount which can be deducted by the Employer, such payments
shall be reduced to the maximum amount which can be deducted by
the Employer. To the extent that payments exceeding such maximum
deductible amount have been made to or for the benefit of the
Executive, such excess payments shall be refunded to the
Employer with interest thereon at the applicable Federal rate
determined under Section 1274(d) of the Code, compounded
annually, or at such other rate as may be required in order that
no such payments shall be nondeductible to the Employer by
reason of the operation of said Section 280G or any like
statutory or regulatory provision. To the extent that there is
more than one method of reducing the payments to bring them
within the limitations of said Section 280G or any like
statutory or regulatory provision, the Executive shall determine
which method shall be followed, provided that if the Executive
fails to make such determination within forty-five (45) days
after the Employer has given notice of the need for such
reduction, the Employer may determine the method of such
reduction in its sole discretion.
7. CONFIDENTIAL INFORMATION, NONCOMPETITION AND COOPERATION.
(a) CONFIDENTIAL INFORMATION. As used in this Agreement,
"Confidential Information" means information belonging to the
Employer which is of value to the Employer in the course of
conducting its business and the disclosure of which could result in
a competitive or other disadvantage to the Employer. Confidential
Information includes, without limitation, financial information,
reports, and forecasts; inventions, improvements and other
intellectual property; trade secrets; know-how; designs, processes
or formulae; software; market or sales information or plans;
customer lists; and business plans, prospects and opportunities
(such as possible acquisitions or dispositions of businesses or
facilities) which have been discussed or considered by the
management of the Employer. Confidential Information includes
information developed by the Executive in the course of the
Executive's employment by the Employer, as well as other
information to which the Executive may have access in connection
with the Executive's employment. Confidential Information also
includes the confidential information of others with which the
Employer has a business relationship. Notwithstanding the
foregoing, Confidential Information does not include information in
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the public domain, unless due to breach of the Executive's duties
under Section 7(b).
(b) CONFIDENTIALITY. The Executive understands and agrees that
the Executive's employment creates a relationship of confidence and
trust between the Executive and the Employer with respect to all
Confidential Information. At all times, both during the Executive's
employment with the Employer and after its termination, the
Executive will keep in confidence and trust all such Confidential
Information, and will not use or disclose any such Confidential
Information without the written consent of the Employer, except as
may be necessary in the ordinary course of performing the
Executive's duties to the Employer.
(c) DOCUMENTS, RECORDS, ETC. All documents, records, data,
apparatus, equipment and other physical property, whether or not
pertaining to Confidential Information, which are furnished to the
Executive by the Employer or are produced by the Executive in
connection with the Executive's employment will be and remain the
sole property of the Employer. The Executive will return to the
Employer all such materials and property as and when requested by
the Employer. In any event, the Executive will return all such
materials and property immediately upon termination of the
Executive's employment for any reason. The Executive will not
retain with the Executive any such material or property or any
copies thereof after such termination.
(d) NONCOMPETITION AND NONSOLICITATION. During the Term and for
one (1) year thereafter (or during the Termination Benefits Period,
if longer), the Executive (i) will not, directly or indirectly,
whether as owner, partner, shareholder, consultant, agent,
employee, co-venturer or otherwise, engage, participate, assist or
invest in any Competing Business (as hereinafter defined); (ii)
will refrain from directly or indirectly employing, attempting to
employ, recruiting or otherwise soliciting, inducing or influencing
any person to leave employment with the Employer (other than
terminations of employment of subordinate employees undertaken in
the course of the Executive's employment with the Employer); and
(iii) will refrain from soliciting or encouraging any customer or
supplier to terminate or otherwise modify adversely its business
relationship with the Employer; PROVIDED, HOWEVER, that the
foregoing one-year restriction shall not apply in the event the
Executive's employment under this Agreement is terminated pursuant
to Section 6(c) hereof. The Executive understands that the
restrictions set forth in this Section 7(d) are intended to protect
the Employer's interest in its Confidential Information and
established employee, customer and supplier relationships and
goodwill, and agrees that such restrictions are reasonable and
appropriate for this purpose. For purposes of this Agreement, the
term "Competing Business" shall mean a business (other than
Vaillancourt & Woodward, Inc.) conducted anywhere in the State of
New Hampshire which is competitive with any business which the
Employer or any of its affiliates conducts or proposes to conduct
at any time during the employment of the Executive. Notwithstanding
the foregoing, the Executive may own up to one percent (1%) of the
outstanding stock of a publicly held corporation which constitutes
or is affiliated with a Competing Business.
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(e) THIRD-PARTY AGREEMENTS AND RIGHTS. The Executive hereby
confirms that the Executive is not bound by the terms of any
agreement with any previous employer or other party which restricts
in any way the Executive's use or disclosure of information or the
Executive's engagement in any business. The Executive represents to
the Employer that the Executive's execution of this Agreement, the
Executive's employment with the Employer and the performance of the
Executive's proposed duties for the Employer will not violate any
obligations the Executive may have to any such previous employer or
other party. In the Executive's work for the Employer, the
Executive will not disclose or make use of any information in
violation of any agreements with or rights of any such previous
employer or other party, and the Executive will not bring to the
premises of the Employer any copies or other tangible embodiments
of non-public information belonging to or obtained from any such
previous employment or other party.
(f) LITIGATION AND REGULATORY COOPERATION. During and after the
Executive's employment, the Executive shall cooperate fully with
the Employer in the defense or prosecution of any claims or actions
now in existence or which may be brought in the future against or
on behalf of the Employer which relate to events or occurrences
that transpired while the Executive was employed by the Employer.
The Executive's full cooperation in connection with such claims or
actions shall include, but not be limited to, being available to
meet with counsel to prepare for discovery or trial and to act as a
witness on behalf of the Employer at mutually convenient times.
During and after the Executive's employment, the Executive also
shall cooperate fully with the Employer in connection with any
investigation or review of any federal, state or local regulatory
authority as any such investigation or review relates to events or
occurrences that transpired while the Executive was employed by the
Employer. The Employer shall reimburse the Executive for any
reasonable out-of-pocket expenses incurred in connection with the
Executive's performance of obligations pursuant to this Section
7(f).
(g) INJUNCTION. The Executive agrees that it would be difficult
to measure any damages caused to the Employer which might result
from any breach by the Executive of the promises set forth in this
Section 7, and that in any event money damages would be an
inadequate remedy for any such breach. Accordingly, subject to
Section 8 of this Agreement, the Executive agrees that if the
Executive breaches, or proposes to breach, any portion of this
Agreement, the Employer shall be entitled, in addition to all other
remedies that it may have, to an injunction or other appropriate
equitable relief to restrain any such breach without showing or
proving any actual damage to the Employer.
8. ARBITRATION OF DISPUTES. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive's employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall, to the fullest extent permitted by law, be settled by
arbitration in any forum and form agreed upon by the parties or, in the absence
of such an agreement, under the auspices of the American Arbitration Association
("AAA") in Boston, Massachusetts in accordance with the Employment Dispute
Resolution Rules of the AAA, including, but not limited to, the rules and
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procedures applicable to the selection of arbitrators, except that the
arbitrator shall apply the law as established by decisions of the U.S. Supreme
Court, the Court of Appeals for the First Circuit and the U.S. District Court
for the District of New Hampshire in deciding the merits of claims and defenses
under federal law or any state or federal anti-discrimination law, and any
awards to the Executive for violation of any anti-discrimination law shall not
exceed the maximum award to which the Executive could be entitled under the
applicable (or most analogous) federal anti-discrimination or civil rights laws.
In the event that any person or entity other than the Executive or the Employer
may be a party with regard to any such controversy or claim, such controversy or
claim shall be submitted to arbitration subject to such other person or entity's
agreement. Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. This Section 8 shall be specifically
enforceable. Notwithstanding the foregoing, this Section 8 shall not preclude
either party from pursuing a court action for the sole purpose of obtaining a
temporary restraining order or a preliminary injunction in circumstances in
which such relief is appropriate; PROVIDED THAT any other relief shall be
pursued through an arbitration proceeding pursuant to this Section 8.
9. CONSENT TO JURISDICTION. To the extent that any court action is
permitted consistent with or to enforce Section 8 of this Agreement, the parties
hereby consent to the jurisdiction of the Superior Court of the State of New
Hampshire and the United States District Court for the District of New
Hampshire. Accordingly, with respect to any such court action, the Executive (a)
submits to the personal jurisdiction of such courts; (b) consents to service of
process; and (c) waives any other requirement (whether imposed by statute, rule
of court, or otherwise) with respect to personal jurisdiction or service of
process.
10. INTEGRATION. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements between the parties with respect to any related subject matter.
11. ASSIGNMENT; SUCCESSORS AND ASSIGNS, ETC. Neither the Employer nor
the Executive may make any assignment of this Agreement or any interest herein,
by operation of law or otherwise, without the prior written consent of the other
party; PROVIDED THAT the Employer may assign its rights under this Agreement
without the consent of the Executive in the event that the Employer shall effect
a reorganization, consolidate with or merge into any other corporation,
partnership, organization or other entity, or transfer all or substantially all
of its properties or assets to any other corporation, partnership, organization
or other entity. This Agreement shall inure to the benefit of and be binding
upon the Employer and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns.
12. ENFORCEABILITY. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
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13. WAIVER. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
14. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, to the
Executive at the last address the Executive has filed in writing with the
Employer or, in the case of the Employer, at its main offices, attention of the
Board of Directors, and shall be effective on the date of delivery in person or
by courier or three (3) days after the date mailed.
15. AMENDMENT. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Employer.
16. GOVERNING LAW. This is a New Hampshire contract and shall be
construed under and be governed in all respects by the laws of the State of New
Hampshire, without giving effect to the conflict of laws principles of such
State.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original; but such counterparts shall together constitute one and the same
document.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Employer, by its duly authorized officer, and by the
Executive, as of the Effective Date.
NORTHWAY FINANCIAL, INC.
Attest:
By: _________________________
- --------------------
Title
THE BERLIN CITY BANK
Attest:
By:_________________________
- --------------------
Title
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Attest:
By:_________________________
William J. Woodward
- --------------------
Title
363734.c5
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EXHIBIT IV
FORM OF
EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement") is made as of , 1997 (the "Effective
Date"), by and between Northway Financial, Inc., a New Hampshire chartered
corporation ("Northway"), Pemigewasset National Bank, a national bank and wholly
owned subsidiary of Northway with its principal office located in New Hampshire
(Northway and Pemigewasset National Bank shall hereinafter collectively be
referred to as the "Employer"), and Fletcher W. Adams (the "Executive"). In
consideration of the mutual covenants contained in this Agreement, the Employer
and the Executive agree as follows:
1. EMPLOYMENT. The Employer agrees to employ the Executive and the
Executive agrees to be employed by the Employer on the terms and conditions set
forth in this Agreement.
2. CAPACITY. The Executive shall serve Northway as Vice Chairman and
Pemigewasset National Bank as President and Chief Executive Officer subject to
election by the Board of Directors of Northway or Pemigewasset National Bank, as
the case may be (the "Board of Directors"), and as a member of the Board of
Directors, subject to election by the shareholders of Northway and Pemigewasset
National Bank respectively. The Executive shall also serve the Employer in such
other or additional offices as the Executive may be requested to serve by the
Chief Executive Officer of Northway or the Board of Directors. In such capacity
or capacities, the Executive shall perform such services and duties from
Employer's Plymouth, New Hampshire office in connection with the business,
affairs and operations of the Employer as may be assigned or delegated to the
Executive from time to time by or under the authority of the Chief Executive
Officer of Northway or the Board of Directors.
3. TERM. Subject to the provisions of Section 6, the term of employment
pursuant to this Agreement (the "Term") shall be for three (3) years from the
Effective Date and shall be renewed automatically for periods of one (1) year
commencing at the first anniversary of the Effective Date and on each subsequent
anniversary thereafter, unless either the Executive or the Employer gives
written notice to the other not less than sixty (60) days prior to the date of
any such anniversary of such party's election not to extend the Term.
4. COMPENSATION AND BENEFITS. The regular compensation and benefits
payable to the Executive under this Agreement shall be as follows:
(a) SALARY. For all services rendered by the Executive under this
Agreement, the Employer shall pay the Executive a salary (the "Salary")
at the annual rate of ________________________Dollars ($________),
subject to increase from time to time in the discretion of the Board of
Directors. The Salary shall be payable in periodic installments in
accordance with the Employer's usual practice for its senior
executives.
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(b) BONUS OR SIMILAR INCENTIVE PROGRAMS. The Executive shall be
entitled to participate in any incentive or bonus program established
by the Board of Directors with such terms as may be established in the
sole discretion of the Board of Directors.
(c) REGULAR BENEFITS. The Executive shall also be entitled to
participate in any employee benefit plans, medical insurance plans,
life insurance plans, disability income plans, retirement plans,
vacation plans, expense reimbursement plans and other benefit plans
which the Employer may from time to time have in effect for all or most
of its senior executives. Such participation shall be subject to the
terms of the applicable plan documents, generally applicable policies
of the Employer, applicable law and the discretion of the Board of
Directors or any administrative or other committee provided for in or
contemplated by any such plan. Nothing contained in this Agreement
shall be construed to create any obligation on the part of the Employer
to establish any such plan or to maintain the effectiveness of any such
plan which may be in effect from time to time.
(d) TAXATION OF PAYMENTS AND BENEFITS. The Employer shall undertake
to make deductions, withholdings and tax reports with respect to
payments and benefits under this Agreement to the extent that it
reasonably and in good faith believes that it is required to make such
deductions, withholdings and tax reports. Payments under this Agreement
shall be in amounts net of any such deductions or withholdings. Nothing
in this Agreement shall be construed to require the Employer to make
any payments to compensate the Executive for any adverse tax effect
associated with any payments or benefits or for any deduction or
withholding from any payment or benefit.
(e) EXCLUSIVITY OF SALARY AND BENEFITS. Unless approved by the
Board of Directors, the Executive shall not be entitled to any payments
or benefits other than those provided under this Agreement.
5. EXTENT OF SERVICE. During the Executive's employment under this
Agreement, the Executive shall, subject to the direction and supervision of the
Chief Executive Officer of Northway or the Board of Directors, devote the
Executive's, best efforts and business judgment, skill and knowledge to the
advancement of the Employer's interests and to the discharge of the Executive's
duties and responsibilities under this Agreement. The Executive shall not engage
in any other business activity, except as may be approved by the Board of
Directors; PROVIDED THAT nothing in this Agreement shall be construed as
preventing the Executive from:
(a) investing the Executive's assets in any company or other entity
in a manner not prohibited by Section 7(d) and in such form or manner
as shall not require any material activities on the Executive's part in
connection with the operations or affairs of the companies or other
entities in which such investments are made; or
(b) engaging in religious, charitable or other community or
non-profit activities that do not impair the Executive's ability to
fulfill the Executive's duties and responsibilities under this
Agreement.
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6. TERMINATION AND TERMINATION BENEFITS. Notwithstanding the provisions
of Section 3, the Executive's employment under this Agreement shall terminate
under the following circumstances set forth in this Section 6.
(a) TERMINATION BY THE EMPLOYER FOR CAUSE. The Executive's
employment under this Agreement may be terminated for cause without
further liability on the part of the Employer effective immediately
upon a two-thirds (2/3) vote of the Board of Directors and written
notice to the Executive. Only the following shall constitute
"cause" for such termination:
(i) dishonest statements or acts of the Executive with
respect to the business of the Employer or any affiliate of the
Employer;
(ii) the commission by or indictment of the Executive for
(A) a felony or (B) any misdemeanor involving moral turpitude,
deceit, dishonesty or fraud ("indictment," for these purposes,
meaning an indictment, probable cause hearing or any other
procedure pursuant to which an initial determination of
probable or reasonable cause with respect to such offense is
made);
(iii) material failure to perform to the reasonable
satisfaction of the Board of Directors a substantial portion of
the Executive's duties and responsibilities assigned or
delegated under this Agreement, which failure continues, in the
reasonable judgment of the Board of Directors, for sixty (60)
days after written notice given to the Executive by the Board
of Directors;
(iv) gross negligence, willful misconduct or
insubordination of the Executive with respect to the Employer
or any affiliate of the Employer; or
(v) material breach by the Executive of any of the
Executive's obligations under this Agreement.
(b) TERMINATION BY THE EXECUTIVE. The Executive's employment
under this Agreement may be terminated by the Executive by written
notice to the Board of Directors at least thirty (30) days prior to
such termination.
(c) TERMINATION BY THE EMPLOYER WITHOUT CAUSE. Subject to the
payment of Termination Benefits pursuant to Section 6(d), the
Executive's employment under this Agreement may be terminated by
the Employer without cause upon written notice to the Executive by
a two-thirds (2/3) vote of the Board of Directors.
(d) CERTAIN TERMINATION BENEFITS. Unless otherwise specifically
provided in this Agreement or otherwise required by law, all
compensation and benefits payable to the Executive under this
Agreement shall terminate on the date of termination of the
Executive's employment under this Agreement. Notwithstanding the
foregoing, in the event of termination of the Executive's
employment with the Employer pursuant to Section 6(c) above, the
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Employer shall provide to the Executive the following termination
benefits ("Termination Benefits"):
(i) continuation of the Executive's Salary at the rate then
in effect pursuant to Section 4(a); and
(ii) continuation of group health plan benefits to the
extent authorized by and consistent with 29 U.S.C. ss. 1161 ET
SEQ. (commonly known as "COBRA"), with the cost of the regular
premium for such benefits shared in the same relative
proportion by the Employer and the Executive as in effect on
the date of termination.
The Termination Benefits set forth in (i) and (ii) above shall
continue effective until the expiration of the Term; PROVIDED THAT
in the event that the Executive commences any employment or
self-employment during the period during which the Executive is
entitled to receive Termination Benefits (the "Termination Benefits
Period"), the remaining amount of Salary due pursuant to Section
6(d)(i) for the period from the commencement of such employment or
self-employment to the end of the Termination Benefits Period shall
be reduced by one-half of the salary the Executive receives from
such employment or self-employment and, if the Executive receives
benefits from such employment or self-employment comparable to
those benefits provided by the Employer, the payments provided
under Section 6(d)(ii) shall cease effective as of the date of
commencement of such employment or self-employment. The Employer's
liability for Salary continuation pursuant to Section 6(d)(i) shall
be reduced by the amount of any severance pay due or otherwise paid
to the Executive pursuant to any severance pay plan or stay bonus
plan of the Employer. Notwithstanding the foregoing, nothing in
this Section 6(d) shall be construed to affect the Executive's
right to receive COBRA continuation entirely at the Executive's own
cost to the extent that the Executive may continue to be entitled
to COBRA continuation after the Executive's right to cost sharing
under Section 6(d)(ii) ceases. The Executive shall be obligated to
give prompt notice of the date of commencement of any employment or
self-employment during the Termination Benefits Period and shall
respond promptly to any reasonable inquiries concerning any
employment or self-employment in which the Executive engages during
the Termination Benefits Period.
(e) DISABILITY. If the Executive shall be disabled so as to be
unable to perform the essential functions of the Executive's then
existing position or positions under this Agreement with or without
reasonable accommodation, the Board of Directors of Northway by a
two-thirds (2/3) vote may remove the Executive from any
responsibilities and/or reassign the Executive to another position
with the Employer for the remainder of the Term or during the
period of such disability. Notwithstanding any such removal or
reassignment, the Executive shall continue to receive the
Executive's full Salary (less any disability pay or sick pay
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benefits to which the Executive may be entitled under the
Employer's policies) and benefits under Section 4 of this Agreement
(except to the extent that the Executive may be ineligible for one
or more such benefits under applicable plan terms) for a period of
time equal to the lesser of (i) one (1) year; or (ii) the remainder
of the Term. If any question shall arise as to whether during any
period the Executive is disabled so as to be unable to perform the
essential functions of the Executive's then existing position or
positions with or without reasonable accommodation, the Executive
may, and at the request of the Employer shall, submit to the
Employer a certification in reasonable detail by a physician
selected by the Employer to whom the Executive or the Executive's
guardian has no reasonable objection as to whether the Executive is
so disabled or how long such disability is expected to continue,
and such certification shall for the purposes of this Agreement be
conclusive of the issue. The Executive shall cooperate with any
reasonable request of the physician in connection with such
certification. If such question shall arise and the Executive shall
fail to submit such certification, the Employer's determination of
such issue shall be binding on the Executive. Nothing in this
Section 6(e) shall be construed to waive the Executive's rights, if
any, under existing law including, without limitation, the Family
and Medical Leave Act of 1993, 29 U.S.C. ss.2601 ET SEQ. and the
Americans with Disabilities Act, 42 U.S.C. ss.12101 ET SEQ.
(f) TERMINATION FOLLOWING A CHANGE OF CONTROL. If there is a
Change of Control, as defined in Section 6(f)(i) below, during the
Term, the provisions of this Section 6(f) shall apply and shall
continue to apply throughout the remainder of the term of this
Agreement. If, within eighteen (18) months following a Change of
Control, the Executive's employment is terminated by the Employer
or the Executive following the occurrence of any of the events
listed in Section 6(f)(ii) below or if the Executive's employment
is terminated without cause (in accordance with Section 6(c)
above), in lieu of any payments under Section 6(d) above, the
Employer shall pay to the Executive (or the Executive's estate, if
applicable) a lump sum amount equal to 2.99 times the Executive's
"base amount" within the meaning of Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code").
(i) Change of Control shall mean the occurrence of one or
more of the following events:
(A) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) becomes a "beneficial owner"
(as such term is defined in Rule 13d-3 promulgated under the
Exchange Act) (other than the Employer, any trustee or other
fiduciary holding securities under an employee benefit plan
of the Employer, or any corporation owned, directly or
indirectly, by the stockholders of the Employer, in
substantially the same proportions as their ownership of
stock of Northway), directly or indirectly, of securities of
Northway, representing fifty percent (50%) or more of the
combined voting power of Northway's then outstanding
securities; or
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(B) persons who, as of the Effective Date, constituted
Northway's Board of Directors (the "Incumbent Board") cease
for any reason including, without limitation, as a result of
a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of Northway's
Board of Directors, provided that any person becoming a
director of Northway subsequent to the Effective Date whose
election was approved by at least a majority of the
directors then comprising the Incumbent Board shall, for
purposes of this Section 6(f), be considered a member of the
Incumbent Board; or
(C) the stockholders of Northway approve a merger or
consolidation of Northway with any other corporation or
other entity, other than (1) a merger or consolidation which
would result in the voting securities of Northway
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than fifty percent (50%) of the combined voting power
of the voting securities of Northway or such surviving
entity outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effected to
implement a recapitalization of Northway (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than fifty percent (50%) of the combined
voting power of Northway's then outstanding securities; or
(D) the stockholders of Northway approve a plan of
complete liquidation of Northway or an agreement for the
sale or disposition by Northway of all or substantially all
of Northway's assets.
(ii) The events referred to in Section 6(f) above shall be
as follows:
(A) a reduction of the Executive's salary other than a
reduction that (1) is based on the Employer's financial
performance or (2) is similar to the reduction made to the
salaries provided to all or most other senior executives of
the Employer; or
(B) a significant change in the Executive's
responsibilities and/or duties which constitutes, when
compared to the Executive's responsibilities and/or duties
before the Change of Control, a demotion; or
(C) a material loss of title or office; or
(D) the relocation of the offices at which the Executive
is principally employed as of the Change of Control to a
location more than fifty (50) miles from such offices, which
relocation is not approved by the Executive.
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(iii) The Executive shall provide the Employer with
reasonable notice and an opportunity to cure any of the events
listed in Section 6(f)(ii) and shall not be entitled to
compensation pursuant to this Section 6(f) unless the Employer
fails to cure within a reasonable period; and
(iv) It is the intention of the Executive and of the
Employer that no payments by the Employer to or for the benefit
of the Executive under this Agreement or any other agreement or
plan, if any, pursuant to which the Executive is entitled to
receive payments or benefits shall be nondeductible to the
Employer by reason of the operation of Section 280G of the Code
relating to parachute payments or any like statutory or
regulatory provision. Accordingly, and notwithstanding any
other provision of this Agreement or any such agreement or
plan, if by reason of the operation of said Section 280G or any
like statutory or regulatory provision, any such payments
exceed the amount which can be deducted by the Employer, such
payments shall be reduced to the maximum amount which can be
deducted by the Employer. To the extent that payments exceeding
such maximum deductible amount have been made to or for the
benefit of the Executive, such excess payments shall be
refunded to the Employer with interest thereon at the
applicable Federal rate determined under Section 1274(d) of the
Code, compounded annually, or at such other rate as may be
required in order that no such payments shall be nondeductible
to the Employer by reason of the operation of said Section 280G
or any like statutory or regulatory provision. To the extent
that there is more than one method of reducing the payments to
bring them within the limitations of said Section 280G or any
like statutory or regulatory provision, the Executive shall
determine which method shall be followed, provided that if the
Executive fails to make such determination within forty-five
(45) days after the Employer has given notice of the need for
such reduction, the Employer may determine the method of such
reduction in its sole discretion.
7. CONFIDENTIAL INFORMATION, NONCOMPETITION AND COOPERATION.
(a) CONFIDENTIAL INFORMATION. As used in this Agreement,
"Confidential Information" means information belonging to the Employer
which is of value to the Employer in the course of conducting its
business and the disclosure of which could result in a competitive or
other disadvantage to the Employer. Confidential Information includes,
without limitation, financial information, reports, and forecasts;
inventions, improvements and other intellectual property; trade
secrets; know-how; designs, processes or formulae; software; market or
sales information or plans; customer lists; and business plans,
prospects and opportunities (such as possible acquisitions or
dispositions of businesses or facilities) which have been discussed or
considered by the management of the Employer. Confidential Information
includes information developed by the Executive in the course of the
Executive's employment by the Employer, as well as other information to
which the Executive may have access in connection with the Executive's
employment. Confidential Information also includes the confidential
information of others with which the Employer has a business
relationship. Notwithstanding the foregoing, Confidential Information
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does not include information in the public domain, unless due to breach
of the Executive's duties under Section 7(b).
(b) CONFIDENTIALITY. The Executive understands and agrees that
the Executive's employment creates a relationship of confidence and
trust between the Executive and the Employer with respect to all
Confidential Information. At all times, both during the Executive's
employment with the Employer and after its termination, the Executive
will keep in confidence and trust all such Confidential Information,
and will not use or disclose any such Confidential Information without
the written consent of the Employer, except as may be necessary in the
ordinary course of performing the Executive's duties to the Employer.
(c) DOCUMENTS, RECORDS, ETC. All documents, records, data,
apparatus, equipment and other physical property, whether or not
pertaining to Confidential Information, which are furnished to the
Executive by the Employer or are produced by the Executive in
connection with the Executive's employment will be and remain the sole
property of the Employer. The Executive will return to the Employer all
such materials and property as and when requested by the Employer. In
any event, the Executive will return all such materials and property
immediately upon termination of the Executive's employment for any
reason. The Executive will not retain with the Executive any such
material or property or any copies thereof after such termination.
(d) NONCOMPETITION AND NONSOLICITATION. During the Term and for
one (1) year thereafter (or during the Termination Benefits Period, if
longer), the Executive (i) will not, directly or indirectly, whether as
owner, partner, shareholder, consultant, agent, employee, co-venturer
or otherwise, engage, participate, assist or invest in any Competing
Business (as hereinafter defined); (ii) will refrain from directly or
indirectly employing, attempting to employ, recruiting or otherwise
soliciting, inducing or influencing any person to leave employment with
the Employer (other than terminations of employment of subordinate
employees undertaken in the course of the Executive's employment with
the Employer); and (iii) will refrain from soliciting or encouraging
any customer or supplier to terminate or otherwise modify adversely its
business relationship with the Employer; PROVIDED, HOWEVER, that the
foregoing one-year restriction shall not apply in the event the
Executive's employment under this Agreement is terminated pursuant to
Section 6(c) hereof. The Executive understands that the restrictions
set forth in this Section 7(d) are intended to protect the Employer's
interest in its Confidential Information and established employee,
customer and supplier relationships and goodwill, and agrees that such
restrictions are reasonable and appropriate for this purpose. For
purposes of this Agreement, the term "Competing Business" shall mean a
business conducted anywhere in the State of New Hampshire which is
competitive with any business which the Employer or any of its
affiliates conducts or proposes to conduct at any time during the
employment of the Executive. Notwithstanding the foregoing, the
Executive may own up to one percent (1%) of the outstanding stock of a
publicly held corporation which constitutes or is affiliated with a
Competing Business.
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(e) THIRD-PARTY AGREEMENTS AND RIGHTS. The Executive hereby
confirms that the Executive is not bound by the terms of any agreement
with any previous employer or other party which restricts in any way
the Executive's use or disclosure of information or the Executive's
engagement in any business. The Executive represents to the Employer
that the Executive's execution of this Agreement, the Executive's
employment with the Employer and the performance of the Executive's
proposed duties for the Employer will not violate any obligations the
Executive may have to any such previous employer or other party. In the
Executive's work for the Employer, the Executive will not disclose or
make use of any information in violation of any agreements with or
rights of any such previous employer or other party, and the Executive
will not bring to the premises of the Employer any copies or other
tangible embodiments of non-public information belonging to or obtained
from any such previous employment or other party.
(f) LITIGATION AND REGULATORY COOPERATION. During and after the
Executive's employment, the Executive shall cooperate fully with the
Employer in the defense or prosecution of any claims or actions now in
existence or which may be brought in the future against or on behalf of
the Employer which relate to events or occurrences that transpired
while the Executive was employed by the Employer. The Executive's full
cooperation in connection with such claims or actions shall include,
but not be limited to, being available to meet with counsel to prepare
for discovery or trial and to act as a witness on behalf of the
Employer at mutually convenient times. During and after the Executive's
employment, the Executive also shall cooperate fully with the Employer
in connection with any investigation or review of any federal, state or
local regulatory authority as any such investigation or review relates
to events or occurrences that transpired while the Executive was
employed by the Employer. The Employer shall reimburse the Executive
for any reasonable out-of-pocket expenses incurred in connection with
the Executive's performance of obligations pursuant to this Section
7(f).
(g) INJUNCTION. The Executive agrees that it would be difficult
to measure any damages caused to the Employer which might result from
any breach by the Executive of the promises set forth in this Section
7, and that in any event money damages would be an inadequate remedy
for any such breach. Accordingly, subject to Section 8 of this
Agreement, the Executive agrees that if the Executive breaches, or
proposes to breach, any portion of this Agreement, the Employer shall
be entitled, in addition to all other remedies that it may have, to an
injunction or other appropriate equitable relief to restrain any such
breach without showing or proving any actual damage to the Employer.
8. ARBITRATION OF DISPUTES. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive's employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall, to the fullest extent permitted by law, be settled by
arbitration in any forum and form agreed upon by the parties or, in the absence
of such an agreement, under the auspices of the American Arbitration Association
("AAA") in Boston, Massachusetts in accordance with the Employment Dispute
9
<PAGE>
Resolution Rules of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators, except that the
arbitrator shall apply the law as established by decisions of the U.S. Supreme
Court, the Court of Appeals for the First Circuit and the U.S. District Court
for the District of New Hampshire in deciding the merits of claims and defenses
under federal law or any state or federal anti-discrimination law, and any
awards to the Executive for violation of any anti-discrimination law shall not
exceed the maximum award to which the Executive could be entitled under the
applicable (or most analogous) federal anti-discrimination or civil rights laws.
In the event that any person or entity other than the Executive or the Employer
may be a party with regard to any such controversy or claim, such controversy or
claim shall be submitted to arbitration subject to such other person or entity's
agreement. Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. This Section 8 shall be specifically
enforceable. Notwithstanding the foregoing, this Section 8 shall not preclude
either party from pursuing a court action for the sole purpose of obtaining a
temporary restraining order or a preliminary injunction in circumstances in
which such relief is appropriate; PROVIDED THAT any other relief shall be
pursued through an arbitration proceeding pursuant to this Section 8.
9. CONSENT TO JURISDICTION. To the extent that any court action is
permitted consistent with or to enforce Section 8 of this Agreement, the parties
hereby consent to the jurisdiction of the Superior Court of the State of New
Hampshire and the United States District Court for the District of New
Hampshire. Accordingly, with respect to any such court action, the Executive (a)
submits to the personal jurisdiction of such courts; (b) consents to service of
process; and (c) waives any other requirement (whether imposed by statute, rule
of court, or otherwise) with respect to personal jurisdiction or service of
process.
10. INTEGRATION. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements between the parties with respect to any related subject matter.
11. ASSIGNMENT; SUCCESSORS AND ASSIGNS, ETC. Neither the Employer nor
the Executive may make any assignment of this Agreement or any interest herein,
by operation of law or otherwise, without the prior written consent of the other
party; PROVIDED THAT the Employer may assign its rights under this Agreement
without the consent of the Executive in the event that the Employer shall effect
a reorganization, consolidate with or merge into any other corporation,
partnership, organization or other entity, or transfer all or substantially all
of its properties or assets to any other corporation, partnership, organization
or other entity. This Agreement shall inure to the benefit of and be binding
upon the Employer and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns.
12. ENFORCEABILITY. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
10
<PAGE>
13. WAIVER. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
14. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, to the
Executive at the last address the Executive has filed in writing with the
Employer or, in the case of the Employer, at Northway's main offices, attention
of the Chief Executive Officer of Northway, and shall be effective on the date
of delivery in person or by courier or three (3) days after the date mailed.
15. AMENDMENT. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Employer.
16. GOVERNING LAW. This is a New Hampshire contract and shall be
construed under and be governed in all respects by the laws of the State of New
Hampshire, without giving effect to the conflict of laws principles of such
State.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original; but such counterparts shall together constitute one and the same
document.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Employer, by its duly authorized officer, and by the
Executive, as of the Effective Date.
NORTHWAY FINANCIAL, INC.
Attest:
By:----------------------------
- --------------------
Title
PEMIGEWASSET NATIONAL BANK
Attest:
By:----------------------------
- --------------------
Title
11
<PAGE>
----------------------------
Attest: Fletcher W. Adams
- --------------------
Title
364205.c5
12
<PAGE>
EXHIBIT V
FORM OF
VOTING AGREEMENT
Date: March __, 1997
The Berlin City Bank and
Northway Financial, Inc.
9 Main Street
Berlin, New Hampshire 03570-0009
Ladies and Gentlemen:
The undersigned (the "Stockholder") beneficially owns and has sole or
shared voting power with respect to the number of shares of the common stock,
par value $1.00 per share (the "Shares"), of Pemi Bancorp, Inc., a New Hampshire
chartered corporation (the "Company"), indicated opposite the Stockholder's name
on SCHEDULE 1 attached hereto.
Simultaneously with the execution of this letter agreement, The Berlin
City Bank ("Purchaser"), Northway Financial, Inc., a New Hampshire chartered
corporation wholly owned by Purchaser ("Parent"), the Company and Pemigewasset
National Bank, a national bank and wholly-owned subsidiary of the Company (the
"Bank"), are entering into an Agreement and Plan of Merger (the "Merger
Agreement") providing, among other things, for the merger (the "Merger") of the
Company with and into Parent, which, as of a date immediately preceding the
Merger, will own all of the issued and outstanding stock of Purchaser. The
undersigned understands that Purchaser has undertaken and will continue to
undertake substantial expenses in connection with the negotiation and execution
of the Merger Agreement and the subsequent actions necessary to consummate the
Merger and the other transactions contemplated by the Merger Agreement.
In consideration of, and as a condition to, Purchaser's entering into
the Merger Agreement, and in consideration of the expenses incurred and to be
incurred by Purchaser in connection therewith, the Stockholder and Purchaser
agree as follows:
1. AGREEMENT TO VOTE IN FAVOR OF MERGER. The Stockholder (a) shall vote
or cause to be voted all of the Shares that such Stockholder shall be entitled
to so vote, whether such Shares are beneficially owned by such Stockholder on
the date of this letter agreement or are subsequently acquired, at the special
or any other meeting of the Company's stockholders to be called and held
following the date hereof, in favor of the approval of the Merger Agreement and
the Merger and (b) shall vote or cause to be voted all such Shares, at such
special meeting or any other meeting of the Company's stockholders following the
date hereof, against the approval of any other agreement providing for a merger,
acquisition, consolidation, sale of a material amount of assets or other
1
<PAGE>
business combination of the Company or the Bank with any person or entity other
than Purchaser or an affiliate of Purchaser; except, in the case of either (a)
or (b), to the extent required by applicable law relating to fiduciary
obligations of directors upon advice of counsel.
2. RESTRICTIONS ON SALE OR OTHER DISPOSITION OF SHARES. The Stockholder
will not sell, assign, transfer or otherwise dispose of (including, without
limitation, by the creation of a Lien (as defined in paragraph 3 below)), or
permit to be sold, assigned, transferred or otherwise disposed of, any Shares
owned by the Stockholder, whether such Shares are held by the Stockholder on the
date of this letter agreement or are subsequently acquired, except (a) transfers
by will or by operation of law, in which case this letter agreement shall bind
the transferee, (b) transfers pursuant to any pledge agreement, subject to the
pledgee agreeing in writing to be bound by the terms of this letter agreement,
(c) transfers in connection with estate planning purposes, including transfers
to relatives, trusts and charitable organizations, subject to the transferee
agreeing in writing to be bound by the terms of this letter agreement, (d)
transfers to any other stockholder of the Company who has executed a copy of
this letter agreement on the date hereof with respect to some or all of the
Shares held by such stockholder, and (e) as Purchaser may otherwise agree in
writing in its sole discretion. Purchaser shall have the option to elect to have
any existing certificates representing Shares subject to this letter agreement
canceled and reissued bearing the following legend:
"THIS CERTIFICATE, AND THE SHARES REPRESENTED HEREBY, ARE
SUBJECT TO CERTAIN VOTING AND TRANSFER RESTRICTIONS CONTAINED
IN A VOTING AGREEMENT BY AND BETWEEN THE BERLIN CITY BANK AND
NORTHWAY FINANCIAL, INC. AND THE BENEFICIAL OWNER OF THESE
SHARES AND MAY BE TRANSFERRED ONLY IN COMPLIANCE THEREWITH.
COPIES OF THE ABOVE-REFERENCED AGREEMENT ARE ON FILE AT THE
OFFICES OF PEMI BANCORP, INC."
3. REPRESENTATIONS. The Stockholder represents that the Stockholder has
the complete and unrestricted power and the unqualified right to enter into and
perform the terms of this letter agreement. The Stockholder further represents
that this letter agreement constitutes a valid and binding agreement with
respect to the Stockholder, enforceable against the Stockholder in accordance
with its terms. Except as set forth on SCHEDULE 1, the Stockholder represents
that the Stockholder beneficially owns the number of Shares indicated opposite
such Stockholder's name on said SCHEDULE 1, free and clear of any liens, claims,
charges or other encumbrances or restrictions of any kind whatsoever ("Liens"),
and has sole or shared, and otherwise unrestricted, voting power with respect to
such Shares.
4. TERM. Notwithstanding anything herein to the contrary, the
agreements contained herein shall remain in full force and effect until the
earlier of (i) the consummation of the Merger or (ii) the termination of the
Merger Agreement in accordance with Article VIII thereof.
5. EQUITABLE REMEDIES. The Stockholder has signed this letter agreement
intending to be bound thereby. The Stockholder expressly agrees that this letter
2
<PAGE>
agreement shall be specifically enforceable in any court of competent
jurisdiction in accordance with its terms against the Stockholder. All of the
covenants and agreements contained in this letter agreement shall be binding
upon, and inure to the benefit of, the respective parties and their permitted
successors, assigns, heirs, executors, administrators and other legal
representatives, as the case may be.
6. MISCELLANEOUS. This letter agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
shall constitute one and the same instrument. No waivers of any breach of this
letter agreement extended by Purchaser to the Stockholder shall be construed as
a waiver of any rights or remedies of Purchaser with respect to any other
stockholder of the Company who has executed a copy of this letter agreement with
respect to Shares held by such stockholder or with respect to any subsequent
breach of the Stockholder or any other such stockholder of the Company. This
letter agreement is deemed to be signed as a sealed instrument and is to be
governed by the laws of the State of New Hampshire, 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.
Please confirm our agreement by signing a copy of this letter.
Very truly yours,
------------------------
Name:
AGREED TO AND ACCEPTED
AS OF MARCH ____, 1997
THE BERLIN CITY BANK AND
NORTHWAY FINANCIAL, INC.
By:---------------------------------------
William J. Woodward
Chairman, President and Chief Executive Officer
357775.c5
3
<PAGE>
Schedule 1
================================================================================
Name of Number of Shares Shares
Stockholder Beneficially Owned Subject to Pledge
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
357775.c5
4
<PAGE>
EXHIBIT IV
FORM OF
VOTING AGREEMENT
March __, 1997
Pemi Bancorp, Inc.
51 Highland Street
Plymouth, New Hampshire 03264-0029
Ladies and Gentlemen:
The undersigned (the "Stockholder") beneficially owns and has sole or
shared voting power with respect to the number of shares of the common stock,
par value $5.00 per share (the "Shares"), of The Berlin City Bank, a New
Hampshire chartered commercial bank (the "Purchaser"), indicated opposite the
Stockholder's name on SCHEDULE 1 attached hereto.
Simultaneously with the execution of this letter agreement, Purchaser,
Northway Financial, Inc., a New Hampshire chartered corporation wholly owned by
Purchaser ("Parent"), Pemi Bancorp, Inc. (the "Company") and Pemigewasset
National Bank, a national bank and wholly-owned subsidiary of the Company (the
"Bank") are entering into an Agreement and Plan of Merger (the "Merger
Agreement") providing, among other things, for the merger (the "Merger") of the
Company with and into Parent, which, as of a date immediately preceding the
Merger, will own all of the issued and outstanding stock of Purchaser. The
undersigned understands that the Company has undertaken and will continue to
undertake substantial expenses in connection with the negotiation and execution
of the Merger Agreement and the subsequent actions necessary to consummate the
Merger and the other transactions contemplated by the Merger Agreement.
In consideration of, and as a condition to, the Company's entering into
the Merger Agreement, and in consideration of the expenses incurred and to be
incurred by the Company in connection therewith, the Stockholder and the Company
agree as follows:
1. AGREEMENT TO VOTE IN FAVOR OF MERGER. The Stockholder (a) shall vote
or cause to be voted all of the Shares that such Stockholder shall be entitled
to so vote, whether such Shares are beneficially owned by such Stockholder on
the date of this letter agreement or are subsequently acquired, at the special
or any other meeting of Purchaser's stockholders to be called and held following
the date hereof, in favor of the approval of the Merger Agreement and the Merger
and (b) shall vote or cause to be voted all such Shares, at such special meeting
or any other meeting of Purchaser's stockholders following the date hereof,
against the approval of any other agreement providing for a merger, acquisition,
consolidation, sale of a material amount of assets or other business combination
of Purchaser or Parent with any person or entity other than the Company or the
Bank; except, in the case of either (a) or (b), to the extent required by
applicable law relating to fiduciary obligations of directors upon advice of
counsel.
1
<PAGE>
2. RESTRICTIONS ON SALE OR OTHER DISPOSITION OF SHARES. The Stockholder
will not sell, assign, transfer or otherwise dispose of (including, without
limitation, by the creation of a Lien (as defined in paragraph 3 below)), or
permit to be sold, assigned, transferred or otherwise disposed of, any Shares
owned by the Stockholder, whether such Shares are held by the Stockholder on the
date of this letter agreement or are subsequently acquired, except (a) transfers
by will or by operation of law, in which case this letter agreement shall bind
the transferee, (b) transfers pursuant to any pledge agreement, subject to the
pledgee agreeing in writing to be bound by the terms of this letter agreement,
(c) transfers in connection with estate planning purposes, including transfers
to relatives, trusts and charitable organizations, subject to the transferee
agreeing in writing to be bound by the terms of this letter agreement, (d)
transfers to any other stockholder of Purchaser who has executed a copy of this
letter agreement on the date hereof with respect to some or all of the Shares
held by such stockholder, and (e) as the Company may otherwise agree in writing
in its sole discretion. The Company shall have the option to elect to have any
existing certificates representing Shares subject to this letter agreement
canceled and reissued bearing the following legend:
"THIS CERTIFICATE, AND THE SHARES REPRESENTED HEREBY, ARE
SUBJECT TO CERTAIN VOTING AND TRANSFER RESTRICTIONS CONTAINED
IN A VOTING AGREEMENT BY AND BETWEEN THE PEMI BANCORP, INC.
AND THE BENEFICIAL OWNER OF THESE SHARES AND MAY BE
TRANSFERRED ONLY IN COMPLIANCE THEREWITH. COPIES OF THE
ABOVE-REFERENCED AGREEMENT ARE ON FILE AT THE OFFICES OF THE
BERLIN CITY BANK."
3. REPRESENTATIONS. The Stockholder represents that the Stockholder has
the complete and unrestricted power and the unqualified right to enter into and
perform the terms of this letter agreement. The Stockholder further represents
that this letter agreement constitutes a valid and binding agreement with
respect to the Stockholder, enforceable against the Stockholder in accordance
with its terms. Except as set forth on SCHEDULE 1, the Stockholder represents
that the Stockholder beneficially owns the number of Shares indicated opposite
such Stockholder's name on said SCHEDULE 1, free and clear of any liens, claims,
charges or other encumbrances or restrictions of any kind whatsoever ("Liens"),
and has sole or shared, and otherwise unrestricted, voting power with respect to
such Shares.
4. TERM. Notwithstanding anything herein to the contrary, the
agreements contained herein shall remain in full force and effect until the
earlier of (i) the consummation of the Merger or (ii) the termination of the
Merger Agreement in accordance with Article VIII thereof.
5. EQUITABLE REMEDIES. The Stockholder has signed this letter agreement
intending to be bound thereby. The Stockholder expressly agrees that this letter
agreement shall be specifically enforceable in any court of competent
jurisdiction in accordance with its terms against the Stockholder. All of the
covenants and agreements contained in this letter agreement shall be binding
upon, and inure to the benefit of, the respective parties and their permitted
successors, assigns, heirs, executors, administrators and other legal
representatives, as the case may be.
2
<PAGE>
6. MISCELLANEOUS. This letter agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
shall constitute one and the same instrument. No waivers of any breach of this
letter agreement extended by the Company to the Stockholder shall be construed
as a waiver of any rights or remedies of the Company with respect to any other
stockholder of Purchaser who has executed a copy of this letter agreement with
respect to Shares held by such stockholder or with respect to any subsequent
breach of the Stockholder or any other such stockholder of Purchaser. This
letter agreement is deemed to be signed as a sealed instrument and is to be
governed by the laws of the State of New Hampshire, 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.
Please confirm our agreement by signing a copy of this letter.
Very truly yours,
-----------------------------
Name:
AGREED TO AND ACCEPTED
AS OF MARCH ____, 1997
PEMI BANCORP, INC.
By:-----------------------------------------
Fletcher W. Adams
Chairman, President and Chief Executive Officer
363767.c4
3
<PAGE>
Schedule 1
================================================================================
Name of Number of Shares Shares
Stockholder Beneficially Owned Subject to Pledge
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
363767.c4
4
<PAGE>
The Berlin City Bank and
Northway Financial, Inc.
March __, 1997
Page 1
EXHIBIT VII
FORM OF
RULE 145 REPRESENTATION LETTER
March __, 1997
The Berlin City Bank and
Northway Financial, Inc.
9 Main Street
Berlin, New Hampshire 03570-0009
Ladies and Gentlemen:
I have been advised that I might be considered to be an "affiliate" of
The Berlin City Bank for purposes of paragraphs (c) and (d) of Rule 145 of the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Act"), and for purposes of generally accepted accounting
principles as such term relates to pooling of interests accounting treatment for
certain business combinations under generally accepted accounting principles and
the interpretations of the SEC or its staff, including, without limitation,
Section 201.01 of the SEC's Codification of Financial Reporting Policies and the
SEC's Staff Accounting Bulletin No. 65. Neither my entering into this letter
agreement, nor anything contained herein, shall be deemed an admission on my
part that I am such an "affiliate".
The Berlin City Bank, a New Hampshire chartered commercial bank
("Purchaser"), Northway Financial, Inc., a New Hampshire chartered corporation
wholly owned by Purchaser, ("Parent"), Pemi Bancorp, Inc. (the "Company") and
Pemigewasset National Bank, a national bank and wholly-owned subsidiary of the
Company (the "Bank"), have entered into an Agreement and Plan of Merger, dated
on or about the date hereof (the "Merger Agreement"), providing for among other
things, the merger (the "Merger") of the Company with and into Parent which, as
of a date immediately preceding the Merger, will own all of the issued and
outstanding stock of Purchaser. Upon consummation of the merger contemplated by
the Merger Agreement (the "Merger"), I will receive shares of common stock, par
value $1.00 per share, of Parent ("Parent Common Stock") in exchange for all of
my shares of common stock, par value $5.00 per share, of Purchaser ("Purchaser
Common Stock"). This agreement is hereinafter referred to as the "Letter
Agreement".
A. I represent and warrant to, and agree with, Parent as follows:
1. I have read this Letter Agreement and the Merger Agreement and
have discussed their requirements and other applicable limitations upon my
1
<PAGE>
ability to sell, pledge, transfer or otherwise dispose of shares of Purchaser
Common Stock and Parent Common Stock, to the extent I felt necessary, with my
counsel or counsel for Purchaser.
2. I hereby agree that (a) without the consent of Purchaser if
prior to the Effective Date of the Merger, or (b) without the consent of Parent
if subsequent to the Effective Date of the Merger, (i) I will not sell or
otherwise reduce my risk relative to any shares of Purchaser Common Stock
during the period of thirty days prior to the effective date of the Merger, and
(ii) I will not sell or otherwise reduce my risk relative to any shares of
Parent Common Stock until financial results covering at least thirty days of
combined operations have been published following the effective date of the
Merger.
3. I shall not make any offer, sale, pledge, transfer or other
disposition in violation of the Act or the rules and regulations of the SEC
thereunder of the shares of Parent Common Stock I receive pursuant to the
Merger.
I agree that, if I desire to dispose of any shares of Purchaser Common
Stock owned by me after the date of this Letter Agreement and prior to the
expiration of a two-year period following the effective date of the Merger, I
will affirmatively inquire of Purchaser through its counsel, Goodwin, Procter &
Hoar LLP, if prior to the effective date of the Merger, whether I may so dispose
of said shares of Purchaser Common Stock, or counsel for Parent following the
effective date of Merger whether I may so dispose of shares of Parent Common
Stock, without violating the requirements of this Letter Agreement. I will
dispose of said shares only if such inquiry is answered in the affirmative by
the written response of said counsel.
B. I understand and agree that:
1. I have been advised that any issuance of the shares of Parent
Common Stock to me pursuant to the Merger will have been registered with the SEC
and will be listed for trading on the NASDAQ/NMS or American Stock Exchange. I
have also been advised, however, that, because I may be an "affiliate" of
Purchaser at the time the Merger will be submitted for a vote of the
stockholders of the Purchaser and because any subsequent disposition of such
shares by me has not been registered under the Act, I must hold such shares
until and unless (i) such disposition of such shares is subject to an effective
registration statement under the Act, (ii) a sale of such shares is made in
conformity with the provisions of Rule 145(d) under the Act, or (iii) in an
opinion of counsel, in form and substance reasonably satisfactory to Parent,
some other exemption from registration is available with respect to any such
proposed disposition of such shares.
2
<PAGE>
2. Stop transfer instructions will be given to the transfer agents
of Parent and Purchaser with respect to the shares of Parent Common Stock and
Purchaser Common Stock in connection with the restrictions set forth herein, and
there will be placed on the certificate representing shares of Parent Common
Stock I receive pursuant to the Merger, or any certificates delivered in
substitution therefor, a legend stating in substance:
The shares represented by this certificate were issued in a
transaction to which Rule 145 under the Securities Act of 1933
applies. The shares represented by this certificate may only be
transferred in accordance with the terms of an agreement between
the registered holder hereof and The Berlin City Bank and Northway
Financial, Inc., a copy of which agreement is on file at the
principal offices of The Berlin City Bank.
3. Unless a transfer of my shares of Parent Common Stock is a sale
made in conformity with the provisions of Rule 145(d), or made pursuant to any
effective registration statement under the Act, Parent reserves the right to put
an appropriate legend an the certificates issued to my transferee.
C. By countersigning this Letter Agreement, Parent (a) represents and
warrants that prior to the effective date of the Merger it has or will have
filed, and (b) agrees that from and after the effective date of the Merger it
will file, on a timely basis, all reports (referred to in paragraph (c) of Rule
144 under the Act) required to be filed by Parent pursuant to Section 13 or
Section 15(d), as applicable, of the Securities Exchange Act of 1934, as
amended, in each case to the extent necessary in order to permit me to dispose
of any Parent Common Stock issued in the Merger pursuant to Rule 145(d).
It is understood and agreed that this Letter Agreement shall terminate
and be of no further force and effect if the Merger Agreement is terminated
pursuant to Article VIII thereof, It is also understood and agreed that this
Letter Agreement shall terminate and be of no further force and effect and the
stop transfer instructions set forth in Paragraph B.2. above shall be lifted
forthwith at the later of (i) such time as financial results covering at least
thirty days of combined operations following the effective date of the Merger
have been published, or (ii) delivery by the undersigned to Parent of a copy of
a letter from the staff of the SEC, or an opinion of counsel in form and
substance reasonably satisfactory to Parent, or other evidence reasonably
satisfactory to Parent, to the effect that a transfer of my shares of Parent
Common Stock will not violate the Act or any of the rules and regulations of the
3
<PAGE>
SEC, or (iii) the passage of two (2) years after the effective date of the
Merger (unless I am advised that I am an "affiliate" of Parent at such time). In
addition, it is understood and agreed that the legend set forth in Paragraph B.2
above shall be removed forthwith from the certificate or certificates
representing my shares of Parent Common Stock if I shall have delivered to
Parent a copy of a letter from the staff of the SEC or, an opinion of counsel in
form and substance reasonably satisfactory to Parent, or other evidence
satisfactory to Parent that a transfer of my shares of Parent Common Stock
represented by such certificate or certificates will be pursuant to a sale made
in conformity with the provisions of Rule 145(d), or made pursuant to an
effective registration statement under the Act. Additionally, it is understood
and agreed that, in any event, on surrender of any certificates bearing the
legend set forth in Paragraph B.2 above, Parent shall issue substitute
certificates without the legend upon my (or a transferees) request made at any
time after the expiration of two years from the effective date of the Merger,
unless counsel for Parent advises me or my transferee in writing that the person
so requesting is an "affiliate" of Parent (within the meaning of Rule 144) at
the time of such request.
This Letter Agreement shall be binding on my heirs, legal
representatives and successors.
Very truly yours,
------------------------------------------------
Accepted as of________ _____, 1997
THE BERLIN CITY BANK AND
NORTHWAY FINANCIAL, INC.
By:________________________________
William J. Woodward
Chairman, President and
Chief Executive Officer
368262.c3
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EXHIBIT VIII
FORM OF
RULE 145 REPRESENTATION LETTER
March __, 1997
The Berlin City Bank and
Northway Financial, Inc.
9 Main Street
Berlin, New Hampshire 03570-0009
Ladies and Gentlemen:
I have been advised that I might be considered to be an "affiliate" of
Pemi Bancorp, Inc. (the "Company") for purposes of paragraphs (c) and (d) of
Rule 145 of the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Act"), and for purposes of generally
accepted accounting principles as such term relates to pooling of interests
accounting treatment for certain business combinations under generally accepted
accounting principles and the interpretations of the SEC or its staff,
including, without limitation, Section 201.01 of the SEC's Codification of
Financial Reporting Policies and the SEC's Staff Accounting Bulletin No. 65.
Neither my entering into this letter agreement, nor anything contained herein,
shall be deemed an admission on my part that I am such an "affiliate".
The Berlin City Bank, a New Hampshire chartered commercial bank
("Purchaser"), Northway Financial, Inc., a New Hampshire chartered corporation
wholly owned by Purchaser, ("Parent"), the Company and Pemigewasset National
Bank, a national bank and wholly-owned subsidiary of the Company (the "Bank")
have entered into an Agreement and Plan of Merger, dated on or about the date
hereof (the "Merger Agreement"), providing for among other things, the merger
(the "Merger") of the Company with and into Parent which, as of a date
immediately preceding the Merger, will own all of the issued and outstanding
stock of Purchaser. Upon consummation of the merger contemplated by the Merger
Agreement (the "Merger"), I will receive shares of common stock, par value $1.00
per share, of Parent ("Parent Common Stock") in exchange for all of my shares of
common stock, par value $1.00 per share, of the Company ("Company Common
Stock"). This agreement is hereinafter referred to as the "Letter Agreement".
A. I represent and warrant to, and agree with, Parent as follows:
1. I have read this Letter Agreement and the Merger Agreement and
have discussed their requirements and other applicable limitations upon my
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ability to sell, pledge, transfer or otherwise dispose of shares of Company
Common Stock and Parent Common Stock, to the extent I felt necessary, with my
counsel or counsel for the Company.
2. I hereby agree that (a) without the consent of the Company if
prior to the Effective Date of the Merger, or (b) without the consent of Parent
if subsequent to the Effective Date of the Merger, (i) I will not sell or
otherwise reduce my risk relative to any shares of Company Common Stock during
the period of thirty days prior to the effective date of the Merger, and (ii) I
will not sell or otherwise reduce my risk relative to any shares of Parent
Common Stock until financial results covering at least thirty days of combined
operations have been published following the effective date of the Merger.
3. I shall not make any offer, sale, pledge, transfer or other
disposition in violation of the Act or the rules and regulations of the SEC
thereunder of the shares of Parent Common Stock I receive pursuant to the
Merger.
I agree that, if I desire to dispose of any shares of Company Common
Stock owned by me after the date of this Letter Agreement and prior to the
expiration of a two-year period following the effective date of the Merger, I
will affirmatively inquire of the Company through its counsel, Cranmore,
Fitzgerald & Meaney, if prior to the effective date of the Merger, whether I may
so dispose of said shares of Company Common Stock, or counsel for Parent
following the effective date of Merger whether I may so dispose of shares of
Parent Common Stock, without violating the requirements of this Letter
Agreement. I will dispose of said shares only if such inquiry is answered in the
affirmative by the written response of said counsel.
B. I understand and agree that:
1. I have been advised that any issuance of the shares of
Parent Common Stock to me pursuant to the Merger will have been registered with
the SEC and will be listed for trading on the NASDAQ/NMS or American Stock
Exchange. I have also been advised, however, that, because I may be an
"affiliate" of the Company at the time the Merger will be submitted for a vote
of the stockholders of the Company and because any subsequent disposition of
such shares by me has not been registered under the Act, I must hold such shares
until and unless (i) such disposition of such shares is subject to an effective
registration statement under the Act, (ii) a sale of such shares is made in
conformity with the provisions of Rule 145(d) under the Act, or (iii) in an
opinion of counsel, in form and substance reasonably satisfactory to Parent,
some other exemption from registration is available with respect to any such
proposed disposition of such shares.
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2. Stop transfer instructions will be given to the transfer
agents of Parent and the Company with respect to the shares of Parent Common
Stock and Company Common Stock in connection with the restrictions set forth
herein, and there will be placed on the certificate representing shares of
Parent Common Stock I receive pursuant to the Merger, or any certificates
delivered in substitution therefor, a legend stating in substance:
The shares represented by this certificate were issued in a transaction
to which Rule 145 under the Securities Act of 1933 applies. The shares
represented by this certificate may only be transferred in accordance
with the terms of an agreement between the registered holder hereof and
The Berlin City Bank and Northway Financial, Inc., a copy of which
agreement is on file at the principal offices of The Berlin City Bank.
3. Unless a transfer of my shares of Parent Common Stock is a
sale made in conformity with the provisions of Rule 145(d), or made pursuant to
any effective registration statement under the Act, Parent reserves the right to
put an appropriate legend an the certificates issued to my transferee.
C. By countersigning this Letter Agreement, Parent (a) represents and
warrants that prior to the effective date of the Merger it has or will have
filed, and (b) agrees that from and after the effective date of the Merger it
will file, on a timely basis, all reports (referred to in paragraph (c) of Rule
144 under the Act) required to be filed by Parent pursuant to Section 13 or
Section 15(d), as applicable, of the Securities Exchange Act of 1934, as
amended, in each case to the extent necessary in order to permit me to dispose
of any Parent Common Stock issued in the Merger pursuant to Rule 145(d).
The Berlin City Bank and
Northway Financial, Inc.
March __, 1997
Page 1
It is understood and agreed that this Letter Agreement shall terminate
and be of no further force and effect if the Merger Agreement is terminated
pursuant to Article VIII thereof, It is also understood and agreed that this
Letter Agreement shall terminate and be of no further force and effect and the
stop transfer instructions set forth in Paragraph B.2. above shall be lifted
forthwith at the later of (i) such time as financial results covering at least
thirty days of combined operations following the effective date of the Merger
have been published, or (ii) delivery by the undersigned to Parent of a copy of
a letter from the staff of the SEC, or an opinion of counsel in form and
substance reasonably satisfactory to Parent, or other evidence reasonably
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satisfactory to Parent, to the effect that a transfer of my shares of Parent
Common Stock will not violate the Act or any of the rules and regulations of the
SEC, or (iii) the passage of two (2) years after the effective date of the
Merger (unless I am advised that I am an "affiliate" of Parent at such time). In
addition, it is understood and agreed that the legend set forth in Paragraph B.2
above shall be removed forthwith from the certificate or certificates
representing my shares of Parent Common Stock if I shall have delivered to
Parent a copy of a letter from the staff of the SEC or, an opinion of counsel in
form and substance reasonably satisfactory to Parent, or other evidence
satisfactory to Parent that a transfer of my shares of Parent Common Stock
represented by such certificate or certificates will be pursuant to a sale made
in conformity with the provisions of Rule 145(d), or made pursuant to an
effective registration statement under the Act. Additionally, it is understood
and agreed that, in any event, on surrender of any certificates bearing the
legend set forth in Paragraph B.2 above, Parent shall issue substitute
certificates without the legend upon my (or a transferees) request made at any
time after the expiration of two years from the effective date of the Merger,
unless counsel for Parent advises me or my transferee in writing that the person
so requesting is an "affiliate" of Parent (within the meaning of Rule 144) at
the time of such request.
This Letter Agreement shall be binding on my heirs, legal
representatives and successors.
Very truly yours,
---------------------------------------
Accepted as of , 1997
THE BERLIN CITY BANK AND
NORTHWAY FINANCIAL, INC.
By:_________________________________
Chairman, President and
Chief Executive Officer
358899.c5
4
Exhibit 99
Copy of the joint press release, dated March 14, 1997,
issued by Pemi Bancorp, Inc. and The Berlin City Bank.
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NEWS RELEASE
FOR IMMEDIATE RELEASE
FOR FURTHER INFORMATION
William Woodward, President and CEO
The Berlin City Bank
(603) 752-1171
Fletcher Adams, President and CEO
Pemi Bancorp, Inc.
(603) 536-3339
- --------------------------------------------------------------------------------
BERLIN CITY BANK AND PEMIGEWASSET NATIONAL BANK
JOINTLY ANNOUNCE MERGER PLANS
Berlin and Plymouth, NH - March 14, 1997. The Berlin City Bank, and the
Pemi Bancorp, Inc., parent of Pemigewasset National Bank, jointly announced
today that they have signed a definitive merger agreement under which both banks
will become subsidiaries of a new Holding Company, Northway Financial, Inc. Both
Pemigewasset National Bank and Berlin City Bank will continue to operate as
separate community banks.
Prior to the effective date of the merger, each share of Berlin City
Bank stock will be converted automatically into 16 shares of Northway Financial
common stock. Each outstanding share of The Pemi Bancorp Common Stock will be
converted into 1.0419 shares of Northway Financial Common Stock. This
transaction, which is expected to be accounted for as a pooling- of-interests,
is valued at $19.3 million.
The proposed transaction is subject to state and federal regulatory
approval as well as approval be shareholders.
In announcing the transaction, William J. Woodward, Chairman, President
and Chief Executive Officer of The Berlin City Bank, and of the new holding
company, stated, "The Pemi Bank is a strong community bank which is highly
successful in providing personalized service to its customers. Plymouth, New
Hampshire is an attractive banking market and a logical extension of the
existing market base of both banks. We plan to capitalize on our two successful
community banking franchises. The two companies are the dominant institutions in
their respective communities, and we look forward to collectively helping the
three northern counties of New Hampshire prosper and grow."
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Fletcher Adams, President and Chief Executive Officer of Pemigewasset
National Bank, and Vice Chairman of Northway Financial, Inc. stated, "Since
1881, Pemigewasset's focus has been the promotion of strong banking services to
its customers and communities. Northway Financial brings together two strong
northern New Hampshire community banks which will continue to operate under
separate franchises. The shared strengths and visions of the two banks will
combine to offer stronger lending capabilities, and deposit product offerings.
As the banking locations are in different towns, and complement each other, we
do not expect that there will be any office closings or job loss. Bill Woodward
and I have had extensive discussions about this transaction and its structure.
It is an ideal combination, and is a very positive action for Northern New
Hampshire."
Northway Financial, Inc., headquartered in Berlin, will be a multi-bank
holding company with total assets of approximately $373 million. The transaction
is expected to be consummated in late summer or early fall. The company will
operate, through its two banking subsidiaries, twelve full-service offices
located in the three northern counties of the State.
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