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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 28,
2000
SOVEREIGN BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-16533 23-2453088
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Ident. No.)
2000 Market Street, Philadelphia Pennsylvania 19103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215)557-4630
N/A
(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On February 28, 2000, Sovereign Bank and its parent
company, Sovereign Bancorp, Inc. (the "Company"), entered into
an Amended and Restated Purchase and Assumption Agreement (the
"Agreement") with Fleet Boston Corporation, Fleet National Bank,
Fleet Bank-NH and BankBoston, N.A. (collectively, the
"Sellers"), pursuant to which Sovereign Bank is obligated to
purchase certain assets from and assume certain liabilities of
the Sellers. The Agreement supersedes the Purchase and
Assumption Agreement, dated as of September 3, 1999, by and
among the Company, Sovereign Bank and the Sellers.
The Agreement, the Company's press release and related
financial presentation are attached hereto as Exhibits 2.1, 99.1
and 99.2, respectively, and are incorporated herein by
reference. The descriptions of the Agreement in the press
release and the financial presentation are qualified in their
entirety by reference to the Agreement.
Item 7. Financial Statements and Exhibits.
(a) Exhibits.
The following exhibits are filed herewith:
2.1 Amended and Restated Purchase and Assumption
Agreement, dated as of February 28, 2000, by and
among Fleet Boston Corporation, Fleet National
Bank, Fleet Bank-NH, BankBoston, N.A., Sovereign
Bank and Sovereign Bancorp, Inc.
99.1 Press Release, dated February 29, 2000, of
Sovereign Bancorp, Inc.
99.2 Financial presentation, dated February 29, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
SOVEREIGN BANCORP, INC.
Dated: February 28, 2000
/s/ Mark R. McCollom
Mark R. McCollom,
Senior Vice President and Chief
Accounting Officer
EXHIBIT INDEX
Exhibit
Number Description
2.1 Amended and Restated Purchase and Assumption
Agreement, dated as of February 28, 2000, by and
among Fleet Boston Corporation, Fleet National Bank,
Fleet Bank-NH, BankBoston, N.A., Sovereign Bank and
Sovereign Bancorp, Inc.
99.1 Press Release, dated February 29, 2000, of Sovereign
Bancorp, Inc.
99.2 Financial presentation, dated February 29, 2000.
Exhibit 2.1
AMENDED AND RESTATED PURCHASE AND ASSUMPTION AGREEMENT
BY AND AMONG
FLEET BOSTON CORPORATION,
FLEET NATIONAL BANK, FLEET BANK-NH,
BANKBOSTON, N.A.,
SOVEREIGN BANK
AND
SOVEREIGN BANCORP, INC.
February 28, 2000
AMENDED AND RESTATED PURCHASE AND ASSUMPTION AGREEMENT
This Amended and Restated Purchase and Assumption Agreement
(the "Agreement") dated as of February 28, 2000 among Fleet
Boston Corporation, a Rhode Island corporation with its principal
office at One Federal Street, Boston, Massachusetts 02110
(formerly known as Fleet Financial Group, Inc.) ("Fleet"), Fleet
National Bank, a national banking association with an office at
One Federal Street, Boston, Massachusetts 02110 ("FNB"), Fleet
Bank-NH, a New Hampshire state-chartered bank with its principal
office at 1155 Elm Street, Manchester, New Hampshire 03101
("FBNH"), and BankBoston, N.A., a national banking association
with its principal office at 100 Federal Street, Boston,
Massachusetts 02110 ("BBNA") (FNB, FBNH, and BBNA individually a
"Seller" and collectively the "Sellers"), Sovereign Bank, a
federally chartered savings bank with its principal office at
1130 Berkshire Boulevard, Wyomissing, Pennsylvania 19610
("Purchaser"), and Sovereign Bancorp, Inc., a Pennsylvania
corporation with its principal office at 2000 Market Street,
Philadelphia, Pennsylvania 19103 ("Sovereign").
WHEREAS, the parties hereto have previously entered into a
Purchase and Assumption Agreement dated as of September 3, 1999
(the "Original Agreement"); and
WHEREAS, the parties hereto desire to supplement and amend
the Original Agreement in its entirety in the manner set forth in
this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual promises and covenants contained herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound
hereby subject to the terms and conditions set forth herein,
Sellers, Fleet, Purchaser and Sovereign agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Acceleration Event" shall have the meaning given to it in
Section 3.6(m) hereof.
"Accrued Interest" shall mean, as of any date, (a) with
respect to the Deposit Liabilities, the interest, dividends,
fees, costs and other charges that have been accrued on but not
paid, credited, or charged to the Deposit Liabilities, all as set
forth in the applicable Seller's general ledger and (b) with
respect to the Loans, the Advance Lines and the Negative
Deposits, interest, fees, premiums, consignment fees, costs and
other charges that have accrued on or been charged to the Loans,
the Advance Lines and the Negative Deposits but not paid by the
applicable borrower, or any guarantor, surety or other obligor
therefor, or otherwise collected by offset, recourse to
collateral or otherwise, all as set forth in the applicable
Seller's general ledger and in the Final Loan Schedule.
"ADA" shall mean the Americans with Disabilities Act of
1990, as amended, and similar state and local laws, regulations,
rules and ordinances.
"Additional Employees" shall mean those employees of
Sellers, other than Business Employees and Business Related
Employees designated by Sellers and Purchaser from time to time,
with functional descriptions previously provided by Purchaser to
Sellers, and the Auto Finance Employees and CAF Employees, to
whom Purchaser shall offer employment pursuant to the Hiring
Commitment and in accordance with Section 8.6 hereof.
"Additional Residential Mortgage Loan Pool Adjustment" as of
each Closing Date shall be equal to one hundred percent (100%)
minus the Market Adjustment of the Additional Residential
Mortgage Loans purchased by Purchaser on such Closing Date.
"Additional Residential Mortgage Loan Servicing Agreement"
shall mean one or more agreements pursuant to which Fleet
Mortgage Corp. or an Affiliate thereof will service the
Additional Residential Mortgage Loans purchased by Purchaser, to
be delivered on each Closing Date on which such loans shall be
purchased by Purchaser, which agreement or agreements shall
contain customary terms and conditions for a servicing agreement
for residential mortgage loans sold on the secondary market for
purposes of securitization.
"Additional Residential Mortgage Loans" shall mean each of
the loans listed on Schedule 1.1(ss) hereto secured by a first
mortgage on a one-to-four family residential property, but
excluding all servicing rights related to each such loan;
provided, however, that the aggregate unpaid principal balance of
the Additional Residential Mortgage Loans purchased by Purchaser
pursuant to the terms hereof shall not be less than One Billion
One Hundred Ninety Million Dollars ($1,190,000,000) and shall not
be greater than One Billion Two Hundred Fifteen Million Dollars
($1,215,000,000). Each Additional Residential Mortgage Loan
shall include all documents executed or delivered in connection
with such loan to the extent such documents are in the loan file
related to such loan, any and all collateral held as security
therefor or in which a security interest, Lien or mortgage has
been granted and any and all guarantees, insurance or other
credit enhancements relating thereto, together with Accrued
Interest thereon, all as exists as of the close of business on
the day on which such loan is purchased by Purchaser pursuant to
the terms hereof; provided, however that Additional Residential
Mortgage Loans shall not include any loan which is Nonperforming.
"Advance Lines" shall mean all overdraft lines of credit to
owners of the Deposit Liabilities, plus any and all Accrued
Interest thereon, as set forth in the applicable Seller's general
ledger.
"Affiliate" shall mean, with respect to any Person, any
other Person that directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, such Person, or a director, officer, partner, joint
venturer or member of such Person and any successors or assigns
of such Person.
"Agreement" shall have the meaning specified in the preamble
hereof.
"Assignment and Assumption Agreement" shall have the meaning
specified in Section 2.3(a)(iii) hereof.
"Assumed Liabilities" shall mean all duties,
responsibilities, and obligations of Sellers under the following:
(a) The Commercial Bank Liabilities;
(b) The Consumer Bank Liabilities;
(c) The CRA Liabilities;
(d) The Small Business Bank Liabilities;
(e) All of Sellers' duties and responsibilities relating
to the Deposit Liabilities, including without limitation, with
respect to: (i) the abandoned property laws of any state;
(ii) any legal process which is served on a Seller with respect
to claims against or related to the Deposit Liabilities; or
(iii) any other applicable law;
(f) The Assumed Severance Obligations;
(g) The Stay Bonus Payments;
(h) The Advance Lines and the Negative Deposits;
(i) Any of Sellers' accrued and unpaid expenses related
to the operations of the Business to the extent a proration or
adjustment is made with respect thereto pursuant to Section 3.8
hereof;
(j) The ISDA Agreements;
(k) Any and all liabilities or obligations of any Seller
or Fleet or any of their Affiliates under Environmental Laws
relating to, resulting from or arising out of: use or operation
of the Real Property prior to, on or after the day on which such
Real Property is purchased by Purchaser pursuant to the terms
hereof, or use or operation of the Real Property, the Leased
Facilities or the Facilities by the Purchaser on or after the day
on which such Real Property, Leased Facilities or Facilities are
transferred to Purchaser pursuant to the terms hereof, in either
case including without limitation (i) the presence of any
Hazardous Materials or a release or the threat of a release on,
at or from the Real Property, the Leased Facilities or the
Facilities, (ii) investigative, containment, removal, clean up
and other remedial actions with respect to a release or the
threat of release on, at or from the Real Property, the Leased
Facilities or Facilities, or (iii) human exposure to any
Hazardous Materials or nuisances of whatever kind to the extent
the same arise from the condition of the Real Property or
Facilities or the ownership, use, operation, sale, transfer or
conveyance thereof;
(l) With respect to each Purchased Asset or Assumed
Liability, any and all other liabilities and obligations relating
to or arising out of each such Purchased Asset or Assumed
Liability to be performed after the day on which such Purchased
Asset or Assumed Liability is transferred to Purchaser pursuant
to the terms hereof, or arising out of the operation of the
Facilities, the Leased Facilities or the Real Property from and
after the day on which such Facility, Leased Facility or Real
Property is transferred to Purchaser pursuant to the terms
hereof, but only to the extent that such liabilities or
obligations arise or accrue after the close of business on the
day on which such liabilities or obligations are assumed by
Purchaser pursuant to the terms hereof;
(m) Unfunded Advances under the Loans; and
(n) The participation obligations as contemplated in
Section 11.11 hereof relating to the Letters of Credit and the
Liquidity Support Agreements.
"Assumed Severance Obligations" shall have the meaning
specified in Section 8.6(e) hereof.
"ATM Lease Agreements" shall mean the lease or operating
agreements for the ATMs listed on Schedule 1.1(a) hereto, as such
agreements may be amended, renewed or extended in the ordinary
course of business, and other than those lease or operating
agreements terminated in the ordinary course of business.
"ATMs" shall mean the automated teller machines listed on
Schedule 1.1(b) hereto.
"Auto Finance Employee" shall mean the employees of Sellers
listed on Schedule 1.1(rr) hereto, but excluding such employees
who shall leave a Seller's employ between the date hereof and the
later of (i) the close of business on the day on which the
servicing of the Indirect Auto Loans is assumed by Purchaser and
(ii) the close of business on the day on which the Floor Plan
Assets are purchased by Purchaser pursuant to the terms hereof,
but including replacements of such employees made in the ordinary
course of business of the Sellers between the date hereof and the
later of (i) the close of business on the day on which the Floor
Plan Assets are purchased by Purchaser pursuant to the terms of
hereof and (ii) the close of business on the day on which the
servicing of the Indirect Auto Loans is assumed by Purchaser, and
including any person who fills a vacant position in the indirect
auto unit or dealer finance unit of Sellers between the date
hereof and the later of (i) the close of business on the day on
which the servicing of the Indirect Auto Loans is assumed by
Purchaser and (ii) the close of business on the day on which the
Floor Plan Assets are purchased by Purchaser pursuant to the
terms hereof.
"BankBoston" shall mean BankBoston Corporation, a
Massachusetts corporation.
"BankBoston Residential Mortgage Loans" shall mean each of
the loans listed on Schedule 1.1(c) hereto secured by a first
mortgage on a one-to-four family residential property, but
excluding the servicing rights related to each such loan. Each
BankBoston Residential Mortgage Loan shall include all documents
executed or delivered in connection with such loan to the extent
such documents are in the loan file related to such loan, any and
all collateral held as security therefor or in which a security
interest, Lien or mortgage has been granted and any and all
guarantees, insurance and other credit enhancements relating
thereto, together with Accrued Interest thereon, all as exists at
the close of business on the day on which such loan is purchased
by Purchaser pursuant to the terms hereof; provided, however that
BankBoston Residential Mortgage Loans shall not include any loan
which is Nonperforming.
"BBNA" shall have the meaning specified in the preamble
hereof.
"BBNA Precious Metals" shall mean all Precious Metals
inventory owned by BBNA or Precious Metals which BBNA has the
right to receive, whether held by BBNA or a third party and
whether segregated from or commingled with other Precious Metals,
in each case as exists at the close of business on the day on
which the Precious Metals inventory owned by BBNA is purchased by
Purchaser pursuant to the terms hereof. Attached hereto as
Schedule 1.1(d) is a list of Precious Metals owned by BBNA as of
June 30, 1999, consigned to or otherwise delivered to other
Persons pursuant to Precious Metals Loans.
"Board" shall mean the Board of Governors of the Federal
Reserve System.
"Branch Leases" shall mean the lease agreements for the
Branches listed on Schedule 1.1(e) hereto, as such agreements may
be amended, renewed or extended in the ordinary course of
business, and other than those lease agreements terminated in the
ordinary course of business.
"Branches" shall mean the branch offices of Sellers listed
on Schedule 1.1(f) hereto.
"Bridge Facility" shall mean the senior secured bridge
facility described in the Commitment Letter.
"Business" shall mean the Consumer Bank Division, the Small
Business Bank Division, the Commercial Bank Division, and the CRA
Division.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or authorized by law
to be closed in the State of Connecticut, the Commonwealth of
Massachusetts, the State of New Hampshire, or the State of Rhode
Island.
"Business Employees" shall mean the Consumer Bank Employees,
the Small Business Bank Employees and the Commercial Bank
Employees.
"Business Related Employees" shall mean the employees of
Sellers (other than Business Employees and Additional Employees)
as shall be designated by Sellers from time to time in writing to
Purchaser for possible interviews for employment with Purchaser.
"CAF Assets" shall mean the CAF Loans, the CAF Contracts and
the assets listed on Schedule 1.1(aaa) hereto.
"CAF Contracts" shall mean the contracts listed on Schedule
1.1(ccc) hereto.
"CAF Deposit Liabilities" shall mean all of any Seller's
obligations and liabilities relating to the deposit accounts
listed on Schedule 1.1(vv) hereto.
"CAF Employees" shall mean the employees of Sellers listed
on Schedule 1.1(tt) hereto, but excluding such employees who
shall leave a Seller's employ between the date hereof and the
close of business on the day on which the CAF Loans are purchased
by Purchaser pursuant to the terms hereof, but including
replacements of such employees made in the ordinary course of
business of Sellers between the date hereof and the close of
business on the day on which the CAF Loans are purchased by
Purchaser pursuant to the terms hereof and including any Person
who fills a vacant position in the consumer asset finance unit of
Sellers between the date hereof and the close of business on the
day on which the CAF Loans are purchased by Purchaser pursuant to
the terms hereof.
"CAF Loans" shall mean (a) each of the loans listed on
Schedule 1.1(uu) hereto (exclusive of any reserves for loan
losses) and each obligation of a Seller to make additional
extensions of credit in connection with each such loan, as each
such loan may be increased, decreased, amended, renewed or
extended by Sellers in the ordinary course of business of Sellers
between January 1, 2000, and the close of business on the day on
which such loan is purchased by Purchaser pursuant to the terms
hereof (included within each such loan shall be any Letters of
Credit, Liquidity Support Agreements, and ISDA Transactions
related to such loan), (b) each loan made in the ordinary course
of business of Sellers by the CAF Employees between January 1,
2000 and the close of business on the Third Closing Date
(exclusive of any reserves for loan losses) and each obligation
of a Seller to make additional extensions of credit in connection
with each such loan, as each such loan may be increased,
decreased, amended, renewed or extended by Sellers in the
ordinary course of business of Sellers between January 1, 2000
and the close of business on the day on which such loan is
purchased by Purchaser pursuant to the terms hereof (included
within each such loan shall be any Letters of Credit, Liquidity
Support Agreements, and ISDA Transactions related to such loan),
and (d) each application pending with a Seller on the day the
loans listed on Schedule 1.1(uu) hereto are purchased by
Purchaser pursuant to the terms hereof for a loan whose
relationship manager would have been a CAF Employee if such loan
was made by a Seller prior to the day on which the loans listed
on Schedule 1.1(uu) hereto are purchased by Purchaser pursuant to
the terms hereof. Each CAF Loan shall include all documents
executed or delivered in connection with such loan to the extent
such documents are in the loan file relating to such loan, and
any and all collateral held as security therefor or in which a
security interest, Lien or mortgage has been granted and any and
all guarantees, insurance and other credit enhancements relating
thereto, together with Accrued Interest thereon, all as exists at
the close of business on the day on which such loans are
transferred to Purchaser pursuant to the terms hereof.
"Capital Transactions" shall mean (a) the Bridge Facility,
(b) the High Yield Financing, (c) the Senior Credit Facility or
(d) the New Equity Issuance, in each case as described in the
Commitment Letter.
"Cash" shall mean all petty cash, vault cash, teller cash,
ATM cash and prepaid postage located at the Branches (excluding
foreign currency), in each case as of the close of business at
the respective Branch (6:00 p.m. for each automated teller
machine) on the day on which the Fixed Assets related to such
Branch are purchased by Purchaser pursuant to the terms hereof.
"Cash Management Employees" shall mean the employees of
Sellers listed on Schedule 1.1(g) hereto, but excluding such
employees who shall leave a Seller's employ between September 3,
1999 and the close of business on the day on which Sellers' cash
management business is purchased by Purchaser pursuant to the
terms hereof, but including replacements of such employees made
in the ordinary course of business between September 3, 1999 and
the close of business on the day on which Sellers' cash
management business is purchased by Purchaser pursuant to the
terms hereof and including any Person who fills a vacant position
with Sellers to provide cash management services to Customers
between September 3, 1999 and the day on which Sellers' cash
management business is purchased by Purchaser pursuant to the
terms hereof.
"Closing" shall mean any of the following: the First
Closing, the Second Closing, the Third Closing.
"Closing Date" shall mean any of the following: the First
Closing Date, the Second Closing Date or the Third Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
"Collateral Agent" shall mean FNB, in its capacity as
collateral agent under a Collateral Agency Agreement.
"Collateral Agency Agreements" shall mean one or more
Collateral Agency Agreements in substantially the form of
Exhibit P hereto.
"Collateral Assignment Instruments" shall mean such
assignments, financing statements, endorsements, stock powers or
other instruments as shall be required under applicable law to
transfer to the Collateral Agent in accordance with the terms of
the Collateral Agency Agreements the Letter of Credit/Liquidity
Support Agreement Collateral and the rights and remedies of
Sellers with respect thereto.
"Columbia Park Facility" shall mean the premises of Sellers
(or one or more Affiliates of Sellers) located at 2 Morrissey
Boulevard, Dorchester, Massachusetts, being a BankBoston data
processing center.
"Columbia Park Lease" shall mean a lease agreement to be
dated as of the First Closing Date pursuant to the terms hereof
between Fleet or an Affiliate thereof (as tenant) and Purchaser
(as landlord) for the Columbia Park Facility and containing the
terms set forth on Exhibit B hereto, including without limitation
terms to the effect that such tenant will lease two hundred
thousand (200,000) square feet at the rent per square foot
indicated on Exhibit B for a term commencing on the First Closing
Date and ending on the fifth (5th) anniversary thereof, and
thereafter one hundred thousand (100,000) square feet at the rent
per square foot indicated on Exhibit B for a term commencing on
such fifth (5th) anniversary and ending on the eighth (8th)
anniversary of the First Closing Date.
"Commercial Bank Assets" shall mean the Commercial Bank
Loans, the Floor Plan Assets, and the Precious Metals Assets.
"Commercial Bank Division" shall mean the Commercial Bank
Assets, the Commercial Bank Liabilities and the Commercial Bank
Employees.
"Commercial Bank Employees" shall mean the Middle Market
Employees, the Commercial Real Estate Employees, the Precious
Metals Employees and the Cash Management Employees.
"Commercial Bank Liabilities" shall mean (a) the Commercial
Deposit Liabilities and (b) with respect to each Commercial Bank
Asset, any and all liabilities and obligations relating to or
arising out of such Commercial Bank Asset, to the extent that
such liabilities and obligations arise or accrue after the close
of business on the day on which such Commercial Bank Asset is
purchased by Purchaser pursuant to the terms hereof, but
including Unfunded Advances under the Loans included therein.
"Commercial Bank Loans" shall mean the Middle Market Loans,
the Commercial Real Estate Loans, the Floor Plan Loans, and the
Precious Metals Loans.
"Commercial Deposit Liabilities" shall mean the Middle
Market Deposit Liabilities, the Commercial Real Estate Deposit
Liabilities, the Floor Plan Deposit Liabilities, and the Precious
Metals Deposit Liabilities.
"Commercial Real Estate Deposit Liabilities" shall mean all
of any Seller's obligations and liabilities relating to (a) the
deposit accounts listed on Schedule 1.1(h) hereto, (b) deposit
accounts of Sellers which are opened on behalf of an obligor of a
Commercial Real Estate Loan between July 1, 1999 and the close of
business on the Closing Date on which such obligor's Commercial
Real Estate Loan is purchased by Purchaser pursuant to the terms
hereof, and (c) the deposit accounts of Sellers which are
security for any Commercial Real Estate Loan, including, without
limitation, all passbook accounts, statement savings accounts,
checking, money market and NOW accounts, certificates of deposit,
and IRA, Keogh Plan and Employee Pension Plan accounts, together
with Accrued Interest thereon, but excluding any claim or other
liability relating to the origination of any such deposit account
or the administration of any such deposit account prior to the
close of business on the day on which the liabilities and
obligations relating to such deposit account are assumed by
Purchaser pursuant to the terms hereof.
"Commercial Real Estate Employees" shall mean the employees
of Sellers listed on Schedule 1.1(i) hereto, but excluding such
employees who shall leave a Seller's employ between September 3,
1999 and the close of business on the Third Closing Date (other
than employees who leave to work for Purchaser), but including
replacements of such employees made by Sellers in the ordinary
course of business of Sellers between September 3, 1999 and the
Third Closing Date (other than replacements made by Sellers of
employees who leave a Seller's employ to work for Purchaser
pursuant to the terms hereof), and including any Person who fills
a vacant position with a Seller between September 3, 1999 and the
Third Closing Date if such Person would have been a relationship
manager for a Commercial Real Estate Loan listed on
Schedule 1.1(j) if such Person had been employed by Sellers in
such position on September 3, 1999.
"Commercial Real Estate Loans" shall mean (a) each of the
loans listed on Schedule 1.1(j) hereto (exclusive of any reserves
for loan losses) and each obligation of a Seller to make
additional extensions of credit in connection with each such
loan, as each such loan may be increased, decreased, amended,
renewed or extended by Sellers in the ordinary course of business
of Sellers between July 1, 1999 and the close of business on the
day on which such loan is purchased by Purchaser pursuant to the
terms hereof (included within each such loan shall be any Letters
of Credit, Liquidity Support Agreements, and ISDA Transactions
related to such loan) and (b) each loan made in the ordinary
course of business of Sellers by the Commercial Real Estate
Employees between July 1, 1999 and the close of business on the
Third Closing Date (exclusive of any reserves for loan losses)
and each obligation of a Seller to make additional extensions of
credit in connection with each such loan, as each such loan may
be increased, decreased, amended, renewed or extended by Sellers
in the ordinary course of business of Sellers between
July 1, 1999 and the close of business on the day on which such
loan is purchased by Purchaser pursuant to the terms hereof
(included within each such loan shall be any Letters of Credit,
Liquidity Support Agreements and ISDA Transactions relating to
such loan); provided, however, that Commercial Real Estate Loans
shall not include any loan described above if such loan, as of
the day on which such loan is to be purchased by Purchaser
pursuant to the terms hereof, is (a) subject to a current legal
proceeding related to a Customer's inability or refusal to pay
such loan, (b) not current and with respect to which proceedings
are pending against the obligor or obligors of such loan under
Title 11 of the United States Code or (c) Nonperforming. Each
Commercial Real Estate Loan shall include all documents executed
or delivered in connection with such loan to the extent such
documents are in the loan file relating to such loan, any and all
collateral held as security therefor or in which a security
interest, Lien or mortgage has been granted and any and all
guarantees, insurance and other credit enhancements relating
thereto, together with Accrued Interest thereon, all as exists at
the close of business on the Closing Date on which such loans are
purchased by Purchaser pursuant to the terms hereof.
"Commitment Letter" shall mean that certain letter dated
September 3, 1999 from Salomon Smith Barney, Inc., Lehman
Commercial Paper Inc. and Lehman Brothers Inc. to Sovereign, a
copy of which has been provided to Sellers.
"Common Stock" shall mean shares of common stock of
Sovereign, no par value per share.
"Comparable Job" shall mean, with respect to any Business
Employee, Additional Employee or Business Related Employee, a
position with Purchaser (a) with the same base salary, (b) with
reasonably similar employment background and skill set
requirements, (c) with no significant changes in work
schedule and (d) (i) with respect to a Business Employee,
Additional Employee or Business Related Employee, who is
classified as a non-exempt employee, to be performed within
thirty (30) miles of such employee's home or his or her current
commuting distance, whichever is greater, or (ii) with respect to
a Business Employee, Additional Employee or Business Related
Employee who is classified as an exempt employee, to be performed
within forty (40) miles of such employee's home or his or her
current commuting distance, whichever is greater.
"Confidentiality Agreement" shall mean that certain letter
agreement between Sovereign and Fleet dated as of May 24, 1999.
"Consigned Precious Metals" shall mean all outstanding
Precious Metals consigned or otherwise delivered on credit by
BBNA to its customers pursuant to the Precious Metals Agreements
as of the close of business on the day on which the Precious
Metals Agreements are assumed by Purchaser pursuant to the terms
hereof.
"Consumer Bank Assets" shall mean the Real Property, the
ATMs, the Fixed Assets, the Consumer Bank Loans, the CAF Assets,
the Residential Mortgage Loans, the Cash, the Branch Leases, the
ATM Lease Agreements, the Tenant Leases, the Eastern MA Lease
Agreements, the CT/RI Lease Agreements, the Safe Deposit
Agreements and all keys for the related safe deposit boxes.
"Consumer Bank Division" shall mean the Consumer Bank
Assets, the Consumer Bank Liabilities, the Consumer Bank
Employees and the CAF Employees.
"Consumer Bank Employees" shall mean the employees of
Sellers listed on Schedule 1.1(k) hereto, but excluding such
employees who shall leave a Seller's employ between September 3,
1999 and the close of business on the Third Closing Date (other
than employees who leave to work for Purchaser), but including
replacements of such employees made by Sellers in the ordinary
course of business of Sellers between September 3, 1999 and the
Third Closing Date (other than replacements made by Sellers of
employees who leave a Seller's employ to work for Purchaser
pursuant to the terms hereof), and including any Person who fills
a vacant position with a Seller between September 3, 1999 and the
Third Closing Date to provide Branch services to Customers.
"Consumer Bank Liabilities" shall mean (a) the Consumer
Deposit Liabilities, (b) the CAF Deposit Liabilities and (c) with
respect to each Consumer Bank Asset, any and all liabilities and
obligations relating to or arising out of such Consumer Bank
Asset, to the extent that such liabilities and obligations arise
or accrue after the close of business on the day on which such
Consumer Bank Asset is purchased by Purchaser pursuant to the
terms hereof, but including Unfunded Advances under the Loans
included therein.
"Consumer Bank Loans" shall mean (a) each of the loans
listed on Schedule 1.1(l) hereto (exclusive of any reserves for
loan losses) and each obligation of a Seller to make additional
extensions of credit in connection with each such loan, as each
such loan may be increased, decreased, amended, renewed or
extended by Sellers in the ordinary course of business of Sellers
between July 1, 1999 and the close of business on the day on
which such loan is purchased by Purchaser pursuant to the terms
hereof, (b) each loan made in the ordinary course of business of
Sellers between July 1, 1999 and the close of business on the
Third Closing Date and linked, including by direct debit, to a
Consumer Deposit Liability account (exclusive of any reserves for
loan losses) and each obligation of a Seller to make additional
extensions of credit in connection with each such loan, as each
such loan may be increased, decreased, amended, renewed or
extended by Sellers in the ordinary course of business of Sellers
between July 1, 1999 and the close of business on the day on
which such loan is purchased by Purchaser pursuant to the terms
hereof, and (c) each application for a loan which would be
linked, including by direct debit, to a Consumer Deposit
Liability account pending with a Seller on the day on which the
Fixed Assets of the Branch to which such loan would be assigned
(by cost center) are purchased by Purchaser if such loan had been
made by a Seller prior to the day on which such Fixed Assets are
purchased by Purchaser, provided, however, that Consumer Bank
Loans shall not include any loan described in subsections (a) or
(b) above, if such loan, as of the day on which such loan is to
be purchased by Purchaser pursuant to the terms hereof, is
(i) subject to a current legal proceeding related to a Customer's
inability or refusal to pay such loan, (ii) not current and with
respect to which proceedings are pending against the obligor or
obligors of such loan under Title 11 of the United States Code or
(iii) Nonperforming. Each Consumer Bank Loan shall include all
documents executed or delivered in connection with such loan to
the extent such documents are in the loan file relating to such
loan, any and all collateral held as security therefor or in
which a security interest, Lien or mortgage has been granted and
any and all guarantees, insurance and other credit enhancements
relating thereto, together with Accrued Interest thereon, all as
exists at the close of business on the day on which such loan is
purchased by Purchaser pursuant to the terms hereof.
"Consumer Deposit Liabilities" shall mean all of any
Seller's obligations and liabilities relating to (a) the deposit
accounts listed on Schedule 1.1(m) hereto, (b) deposit accounts
which are opened between July 1, 1999 and the close of business
on the Third Closing Date on behalf of a Customer by a Consumer
Bank Employee, and (c) deposit accounts of Sellers which are
security for any Consumer Bank Loan, including, without
limitation, all passbook accounts, statement savings accounts,
checking, Money Market and NOW accounts, certificates of deposit,
and IRA, Keogh Plan and Employee Pension Plan accounts, together
with Accrued Interest thereon, but excluding any claim or other
liability relating to the origination of any such deposit account
or the administration of any such deposit account prior to the
close of business on the day on which the obligations and
liabilities relating to such deposit account are assumed by
Purchaser pursuant to the terms hereof.
"Contribution Agreement" shall mean that certain
Contribution Agreement dated as of October 28, 1997, as amended
on February 20, 1998, by and between Advanta Corporation and
Fleet.
"CRA" shall mean the Community Reinvestment Act (12 U.S.C.
Sections 2901-2907).
"CRA Assets" shall mean the CRA Loans, the CRA Equity
Holdings and the CRA Commitments.
"CRA Commitments" shall mean the Sellers' written
commitments listed on Schedule 1.1(n) hereto.
"CRA Division" shall mean the CRA Assets and the CRA
Liabilities.
"CRA Equity Holdings" shall mean the capital stock,
partnership interests and LLC membership interests owned by a
Seller and listed on Schedule 1.1(p) hereto.
"CRA Groups" shall mean the Persons listed on
Schedule 1.1(q) hereto.
"CRA Liabilities" shall mean any and all liabilities and
obligations relating to or arising out of each CRA Asset, to the
extent that such liabilities and obligations arise or accrue
after the close of business on the day on which such CRA Asset is
purchased by Purchaser pursuant to the terms hereof, but
including any Unfunded Advances under the Loans included therein.
"CRA Loans" shall mean (a) each of the loans listed on
Schedule 1.1(r) hereto (exclusive of any reserves for loan
losses) and each obligation of a Seller to make additional
extensions of credit in connection with each such loan, as each
such loan may be increased, decreased, amended, renewed or
extended by Sellers in the ordinary course of business of Sellers
between July 1, 1999 and the close of business on the day on
which such loan is purchased by Purchaser pursuant to the terms
hereof and (b) each loan made by Sellers in the ordinary course
of business of Sellers pursuant to the terms of the CRA
Commitments between July 1, 1999 and the close of business on the
Third Closing Date (exclusive of any reserves for loan losses)
and each obligation of a Seller to make additional extensions of
credit in connection with each such loan, as each such loan may
be increased, decreased, amended, renewed or extended by Sellers
in the ordinary course of business of Sellers between July 1,
1999 and the close of business on the day on which such loan is
purchased by Purchaser pursuant to the terms hereof; provided,
however, that CRA Loans shall not include any loan described in
subsection (a) or (b) above, if such loan, as of the day on which
such loan is to be purchased by Purchaser pursuant to the terms
hereof, is (i) subject to a current legal proceeding related to a
Customer's inability or refusal to pay such loan, (ii) not
current and with respect to which proceedings are pending against
the obligor or obligors of such loan under Title 11 of the United
States Code or (iii) Nonperforming. Each CRA Loan shall include
all documents executed or delivered in connection with such loan
to the extent such documents are in the loan file relating to
such loan, any and all collateral held as security therefor or in
which a security interest, Lien or mortgage has been granted and
any and all guarantees, insurance and other credit enhancements
relating thereto, together with Accrued Interest thereon, all as
exists at the close of business on the day on which such loan is
purchased by Purchaser pursuant to the terms hereof.
"CTA" shall mean the Connecticut Transfer Act (Connecticut
General Statutes Section 22a-134 et. seq.)
"CT/RI Assumed Liabilities" shall mean (a) the Consumer Bank
Liabilities, the CRA Liabilities and the Small Business Bank
Liabilities which are linked by Sellers to a CT/RI Branch,
(b) with respect to the Commercial Bank Liabilities, those
liabilities owed to Customers who have a mailing address in
Connecticut or Rhode Island and (c) such other Assumed
Liabilities as the parties hereto shall mutually and in good
faith agree shall be assumed by Purchaser at the First Closing;
the amount of Deposit Liabilities which shall be CT/RI Assumed
Liabilities shall be approximately Four Billion Dollars
($4,000,000,000).
"CT/RI Branches" shall mean the Branches listed on Schedule
1.1(f)(1) hereto.
"CT/RI Lease Agreements" shall mean those lease agreements
to be dated as of the First Closing Date between Fleet or an
Affiliate thereof (as landlord or sublandlord) and Purchaser (as
tenant or subtenant) for certain premises located at (a) 1221
Silas Deane Highway, Wethersfield, Connecticut, (b) 100 Pearl
Street, Hartford, Connecticut, (c) 15 Westminster Street,
Providence, Rhode Island, and (d) One BankBoston Plaza,
Providence, Rhode Island, and containing the terms set forth on
Exhibits E(2), (3), (4) and (5) hereto, respectively.
"CT/RI Purchased Assets" shall mean (a) the Consumer Bank
Assets, the CRA Assets, and the Small Business Bank Assets which
are linked by Sellers to a CT/RI Branch, (b) with respect to the
Commercial Bank Assets, those assets related to Customers who
have a mailing address in Connecticut or Rhode Island, (c) the
Fixed Assets, Real Property and Branch Leases related to the
CT/RI Branches, (d) the Additional Residential Mortgage Loans and
(e) such other Purchased Assets as the parties hereto may
mutually in good faith agree shall be purchased by Purchaser at
the First Closing.
"Customers" shall mean, individually and collectively, (a)
the Persons named as the owners of the deposit accounts relating
to the Deposit Liabilities, (b) the primary obligors under the
Loans and (c) the parties (other than Sellers and their
Affiliates) to the Safe Deposit Agreements.
"Customer Notices" shall have the meaning specified in
Section 9.3(a) hereof.
"Damages" shall have the meaning specified in Section 14.1
hereof.
"Deferred Contingent Amount" shall mean an amount equal to
the amount by which the Third Closing Purchase Price must be
reduced so that, after giving effect to the purchase of the
Purchased Assets and the assumption of the Assumed Liabilities,
Sovereign's Leverage Ratio is equal to its Minimum Capital
Requirement; provided, however, that in the event that the
aggregate amount of Deposit Liabilities assumed by Purchaser at
the First Closing, the Second Closing and the Third Closing is
less than or greater than Twelve Billion Dollars
($12,000,000,000), then the Deferred Contingent Amount shall mean
an amount equal to the aggregate amount of Deposit Liabilities
assumed by Purchaser at the First Closing, the Second Closing and
the Third Closing divided by Twelve Billion (12,000,000,000)
multiplied by Three Hundred Forty Million (340,000,000);
provided, further, that in the event that Sovereign or Purchaser
shall not deliver to Sellers, at the Third Closing, a Deferred
Contingent Letter of Credit or such other assurance of payment
acceptable to Fleet in its sole discretion, then the Deferred
Contingent Amount shall be the amount calculated pursuant to the
provisions of this definition plus Twenty Million Dollars
($20,000,000); and provided, further, that the Deferred
Contingent Amount shall not include any amount which is not due
and payable by reason of application of Section 3.6(b) hereof.
"Deferred Contingent Amount Letter of Credit" shall mean a
letter of credit issued by a Person acceptable to Fleet, in its
sole discretion, dated as of the Third Closing Date substantially
in the form of Exhibit R hereto.
"Deferred Contingent Payment Dates" shall have the meaning
specified in Section 3.6(a) hereof.
"Deferred Contingent Payment Period" shall have the meaning
specified in Section 3.6(b) hereof.
"Deposit Interest Rate" shall have the meaning specified in
Section 3.2 hereof.
"Deposit Liabilities" or "Deposit Liability" shall mean,
collectively, the Consumer Deposit Liabilities, the CAF Deposit
Liabilities, the Small Business Bank Deposit Liabilities, and the
Commercial Deposit Liabilities, but shall exclude the Excluded
IRA/Keogh/Employee Pension Plan Deposits and the Excluded
Deposits.
"Designated Employees" shall have the meaning specified in
Section 14.3(a) hereof.
"DOJ" shall mean the United States Department of Justice.
"Draft Closing Statement" shall mean a draft closing
statement dated as of the close of business of the fifth (5th)
Business Day immediately preceding the First Closing Date, the
Second Closing Date or the Third Closing Date, as applicable,
setting forth an estimate of the portion of the Purchase Price
owed by Purchaser as of such Closing Date (including all
adjustments and prorations thereto).
"Earnest Money Deposit" shall have the meaning specified in
Section 3.2 hereof.
"East Providence Facility" shall mean the offices of Sellers
(or one or more Affiliates of Sellers) located at One BankBoston
Way, East Providence, Rhode Island, being a BankBoston consumer
lending call facility.
"East Providence Lease" shall mean a lease agreement to be
dated as of the First Closing Date between Fleet or an Affiliate
thereof (as tenant) and Purchaser (as landlord) for the East
Providence Facility and containing the terms set forth in
Exhibit C hereto, including without limitation terms to the
effect that such tenant will lease 60,000 square feet at the rent
per square foot indicated on Exhibit C for a term commencing on
the First Closing Date and ending in part on each of the third
(3rd), fourth (4th) and fifth (5th) anniversary thereof.
"Eastern MA Assumed Liabilities" shall mean (a) the Consumer
Bank Liabilities, the CRA Liabilities and the Small Business Bank
Liabilities which are linked by Sellers to an Eastern MA Branch,
(b) with respect to the Commercial Bank Liabilities, those
liabilities related to Customers who have a mailing address in
close proximity to an Eastern MA Branch and whom the Commercial
Bank Employees have linked to an Eastern MA Branch and (c) such
other Assumed Liabilities as the parties hereto shall mutually in
good faith agree shall be assumed by Purchaser at the Second
Closing; the amount of the Deposit Liabilities which shall be
Eastern MA Assumed Liabilities shall be approximately Four
Billion Dollars ($4,000,000,000).
"Eastern MA Branches" shall mean the Branches listed on
Schedule 1.1(f)(2) hereto.
"Eastern MA Lease Agreements" shall mean those lease
agreements to be dated as of the First Closing Date between Fleet
or an Affiliate thereof (as landlord or sublandlord) and
Purchaser (as tenant or subtenant) for certain premises located
at (a) 75 State Street, Boston, Massachusetts and (b) One Federal
Street, Boston, Massachusetts, and containing the terms set forth
on Exhibits E(1) and (6) hereto, respectively.
"Eastern MA Purchased Assets" shall mean (a) the Consumer
Bank Assets, the CRA Assets and the Small Business Bank Assets
which are linked by Sellers to an Eastern MA Branch, (b) with
respect to the Commercial Bank Assets, those assets related to
Customers who have a mailing address in close proximity to an
Eastern MA Branch and whom the Commercial Bank Employees have
tied to an Eastern MA Branch, (c) the Fixed Assets, Real Property
and Branch Leases related to the Eastern MA Branches and (d) such
other Purchased Assets as the parties hereto may mutually in good
faith agree shall be purchased by Purchaser at the Second
Closing.
"Employee Pension Plan" shall mean any employee pension plan
for which a Seller serves as a trustee, including but not limited
to, employee pension benefit plans as defined in Section 3(2) of
ERISA, retirement plans qualified under the requirements of
Section 401(a) of the Code, nonqualified deferred compensation
plans, excess benefit plans and supplemental executive retirement
plans.
"Employee Pension Plan Deposit Liability" shall mean a
Deposit Liability in an account owned by an Employee Pension
Plan.
"Environmental Laws" shall mean all Federal, state or local
laws, rules, regulations, codes, ordinances, or by-laws, and any
judicial or administrative interpretations thereof, including
orders, decrees, judgments, rulings, directives or notices of
violation, that create duties, obligations or liabilities with
respect to (a) human health or (b) environmental pollution,
impairment or disruption, including, without limitation, laws
governing the existence, use, storage, treatment, discharge,
release, containment, transportation, generation, manufacture,
refinement, handling, production, disposal, or management of any
Hazardous Materials, or otherwise regulating or providing for the
protection of the environment, and further including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.),
the Hazardous Materials Transportation Act (49 U.S.C. Section
1801 et seq.), the Public Health Service Act (42 U.S.C. Section
300 et seq.), the Pollution Prevention Act (42 U.S.C. Section
13101 et seq.), the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. Section 136 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.),
the Safe Drinking Water Act (21 U.S.C. Section 349, 42 U.S.C.
Sections 201, 300f), the Toxic Substances Control Act (15 U.S.C.
Section 2601 et seq.), the Clean Water Act (33 U.S.C. Section
1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.
), and similar state and local statutes, and all regulations
adopted pursuant thereto.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended (11 U.S.C. Section 1101 et seq.)
"Escrow Agreement" shall mean that certain Pledge and Escrow
Agreement, dated as of November 15, 1999, between Sovereign
Bancorp, Inc. and Harris Trust and Savings Bank, as escrow agent,
and that certain Escrow Agreement dated as of December 16, 1999
between Sovereign, Delaware Escrow Company and Citibank, N.A.
"Excluded Deposits" shall mean all Deposit Liabilities (a)
owned by employees of Sellers or their Affiliates (other than
Transferred Employees) or Affiliates of Sellers or (b) which were
assumed by FNB in connection with the consummation of the
transactions contemplated by the Contribution Agreement.
"Excluded Fixed Assets" shall mean (a) artwork, supplies,
signs, marketing aids, or trade fixtures or equipment in each
case specifically identifying or relating to a Seller or any of
its Affiliates located at the Facilities, (b) telephone systems
located at the Facilities, software, source and object code, user
manuals and related documents and all updates, upgrades or other
revisions thereto and all copies or duplicates thereof located at
the Facilities, (c) copying machines, facsimile machines,
scanners, computers, printers, modems, peripheral equipment,
electronic teller station hardware and other hardware related to
teller stations and platforms located at the Facilities (except
for the ATMs), and (d) any other personal property of a Seller or
any of its Affiliates identified on Schedule 1.1(t) hereto, less
any such items consumed or disposed of, plus new similar items
acquired or obtained, in the ordinary course of the operation of
each of the Facilities through the close of business on the day
on which the Fixed Assets located in such Facility are purchased
by Purchaser pursuant to the terms hereof.
"Excluded IRA/Keogh/Employee Pension Plan Deposits" shall
have the meaning specified in Section 11.12(a).
"Facilities" shall mean the Branches, the ATM locations, the
Columbia Park Facility and the East Providence Facility.
"Fair Market Value" shall mean, on any day, with respect to
the calculation of the dollar value of Precious Metals, (a) with
respect to Gold, Palladium or Platinum, the dollar per ounce
Second London Fixing for Gold, Palladium or Platinum, for such
day, and (b) with respect to Silver, the dollar per ounce Handy
and Harman noon price for Silver for such day, in each case times
the number of ounces of Gold, Palladium, Platinum or, as the case
may be, Silver, for which such dollar value is being calculated.
If no such price is available for a particular day, the Fair
Market Value for such day shall be the price for the immediately
preceding day for which such price is available. In the event
that the London Bullion Brokers or Handy and Harman shall
discontinue or alter its usual practice of quoting a price for
the applicable Precious Metal(s), the Fair Market Value for such
day shall be BBNA's so called "spot price" per an ounce of
applicable Precious Metal(s) times the number of such Precious
Metal(s) ounces for which a dollar value is being calculated.
"FBNH" shall have the meaning specified in the preamble
hereof.
"FDIA" shall mean the Federal Deposit Insurance Act of 1991,
as amended (12 U.S.C. Sections 1811 et seq.).
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Funds Rate" shall mean, for the period involved,
the average of the interest rates for each day of the period set
forth in H.15(519) opposite the caption "Federal Funds
(Effective)". H.15(519) means the weekly statistical release
designated as such, or any successor publication, published by
the Board.
"Final" shall mean, as applied to any governmental order or
action, that such order or action has not been stayed, vacated or
otherwise rendered ineffective and either (a) the time period for
taking an appeal therefrom shall have passed without an appeal
therefrom having been taken, or (b) if any such appeal shall have
been dismissed or resolved, all applicable periods for further
appeal of such order or action shall have passed.
"Final Approval Date" shall mean, with respect to the
transactions contemplated hereby, the date upon which the last of
the following has occurred: (a) all Regulatory Approvals have
been obtained; (b) all applicable regulatory notices which are
required to be published or given prior to consummation of the
transactions contemplated hereby have been published or given;
(c) the filing of all applicable regulatory reports; and (d) the
expiration of all applicable regulatory comment and waiting
periods.
"Final Loan Schedule" shall mean the First Closing Final
Loan Schedule, the Second Closing Final Loan Schedule and the
Third Closing Final Loan Schedule.
"FIRPTA Affidavits" shall mean affidavits pursuant to
Section 1445 of the Code certifying to the non-foreign entity
status of a Seller.
"First Closing" shall have the meaning specified in
Section 2.2(a) hereof.
"First Closing Adjusted Payment Amount" shall have the
meaning specified in Section 3.3(c) hereof.
"First Closing Cut-off Date" shall have the meaning
specified in Section 3.3(f) hereof.
"First Closing Date" shall have the meaning specified in
Section 2.2(a) hereof.
"First Closing Estimated Payment Amount" shall have the
meaning specified in Section 3.3(b) hereof.
"First Closing Estimated Purchase Price" shall mean the
estimate of the First Closing Purchase Price set forth on the
Draft Closing Statement for the First Closing.
"First Closing Final Loan Schedule" shall have the meaning
specified in Section 3.3(c) hereof.
"First Closing Loan Sale Adjustment" shall mean an amount
equal to the sum of (a) the outstanding principal balance of the
Additional Residential Mortgage Loans transferred to Purchaser at
the First Closing multiplied by the Additional Residential
Mortgage Loan Pool Adjustment, (b) the outstanding principal
balance of the Indirect Auto Loans transferred to Purchaser on or
before the First Closing multiplied by .03 and (c) the
outstanding principal balance of Old CAF Loans transferred to
Purchaser on or before the First Closing multiplied by .03.
"First Closing Loan Value" shall mean, as of the close of
business on the First Closing Date, the unpaid principal balance
of the Loans purchased by Purchaser at the First Closing, plus
Accrued Interest thereon, as set forth in the general ledger of
the applicable Seller and the First Closing Final Loan Schedule,
less accrued servicing fees under arrangements with third parties
to service the Loans purchased by Purchaser at the First Closing.
For purposes hereof, the unpaid principal balance of any Precious
Metals Loans denominated in Precious Metals shall be the Fair
Market Value of the Precious Metals outstanding as of the First
Closing Date.
"First Closing Purchase Price" shall have the meaning
specified in Section 3.3(a) hereof.
"First Closing Swap Portfolio Adjustment" shall mean an
amount equal to the Swap Market Value of the ISDA Transactions
assumed by Purchaser at the First Closing.
"Fixed Assets" shall mean (i) all of the furniture,
fixtures, equipment and other assets of the Sellers listed on
Schedule 1.1(u) hereto, including but not limited to leasehold
improvements, less any items consumed or disposed of, plus new
items acquired or obtained, in the ordinary course of the
operation of the Facilities or the Leased Facilities through the
close of business on the day on which the Facility, Leased
Facility or Branch in which such Fixed Assets are located is
transferred to Purchaser pursuant to the terms hereof, but
excluding the Excluded Fixed Assets, (ii) the furniture,
fixtures, equipment and other assets of Sellers relating to the
Business that Purchaser shall request to purchase from Sellers,
and which Sellers shall consent to sell to Purchaser (which
consent shall not be unreasonably withheld); provided, however,
that Purchaser must submit its request to Sellers to purchase
such additional furniture, fixtures, equipment and other assets
on an item by item basis no later than March 1, 2000.
"Fleet" shall have the meaning specified in the preamble
hereof.
"Fleet Boston Divestiture Severance Plan" shall mean a
severance plan of Fleet and its Affiliates to be dated as of the
First Closing Date containing the terms set forth on Exhibit D
hereto.
"Fleet Residential Mortgage Loans" shall mean each of the
loans listed on Schedule 1.1(v) hereto secured by a first
mortgage on a one-to-four family residential property, but
excluding the servicing rights related to each such loan. Each
Fleet Residential Mortgage Loan shall include all documents
executed or delivered in connection with such loan to the extent
such documents are in the loan file related to such loan, any and
all collateral held as security therefor or in which a security
interest, Lien or mortgage has been granted and any and all
guarantees, insurance and other credit enhancements relating
thereto, together with Accrued Interest thereon, all as exists at
the close of business on the day on which such loan is purchased
by Purchaser pursuant to the terms hereof; provided, however,
that Fleet Residential Mortgage Loans shall not include any loan
which is Nonperforming.
"Floor Plan Assets" shall mean the Floor Plan Contracts and
the assets listed on Schedule 1.1(bbb) hereto.
"Floor Plan Deposit Liabilities" shall mean all of any
Seller's obligations and liabilities relating to (a) the deposit
accounts listed on Schedule 1.1(ww) hereto, and (b) deposit
accounts of Sellers which are opened on behalf of an obligor of a
Floor Plan Loan between the date hereof and the close of business
on the day on which the Floor Plan Loans are purchased by
Purchaser pursuant to the terms hereof and (c) deposit accounts
of Sellers which are security for any Floor Plan Loan, including,
without limitation, all passbook accounts, statement savings
accounts, checking, money market and NOW accounts, certificates
of deposit, and IRA, Keogh Plan and Employee Pension Plan
accounts, together with Accrued Interest thereon, but excluding
any claim or other liability relating to the origination of any
such deposit account or the administration of any such deposit
account prior to the close of business on the day on which such
obligations and liabilities relating to such deposit account are
assumed by Purchaser pursuant to the terms hereof.
"Floor Plan Contracts" shall mean the contracts listed on
Schedule 1.1(yy) hereto.
"Floor Plan Loans" shall mean (a) each of the loans listed
on Schedule 1.1(xx) hereto (exclusive of any reserves for loan
losses) and each obligation of a Seller to make additional
extensions of credit in connection with each such loan, as each
such loan may be increased, decreased, amended, renewed or
extended in the ordinary course of business of Sellers between
January 1, 2000 and the close of business on the Third Closing
Date (included within each such loan shall be any Letters of
Credit, Liquidity Support Agreements, and ISDA Transactions
related to such loan) and (b) each loan made in the ordinary
course of business of Sellers by the Auto Finance Employees
between the date hereof and the Third Closing Date (exclusive of
any reserves for loan losses) and each obligation of a Seller to
make additional extensions of credit in connection with each such
loan, as each such loan may be increased, decreased, amended,
renewed or extended by Sellers in the ordinary course of business
of Sellers between the date hereof and the close of business on
the day on which such loan is purchased by Purchaser pursuant to
the terms hereof (included within each such loan shall be any
Letters of Credit, Liquidity Support Agreements and ISDA
Transactions relating to such loan); provided, however, that
Floor Plan Loans shall not include any loan described in
subsection (a) or (b) above, if such loan, as of the day on which
such loan is to be purchased by Purchaser pursuant to the terms
hereof, is (i) subject to a current legal proceeding related to a
Customer's inability or refusal to pay such loan, (ii) not
current and with respect to which proceedings are pending against
the obligor or obligors of such loan under Title 11 of the United
States Code or (iii) Nonperforming. Each Loan shall include all
documents executed or delivered in connection with such loan to
the extent such documents are in the loan file relating to such
loan, any and all collateral held as security therefor or in
which a security interest, Lien or mortgage has been granted and
any and all guarantees, insurance and other credit enhancements
relating thereto, together with Accrued Interest thereon, all as
exists at the close of business on the day on which such loan is
purchased by Purchaser pursuant to the terms hereof.
"FNB" shall have the meaning specified in the preamble
hereof.
"Forward Contracts" shall mean all agreements for the
purchase or sale by BBNA of Precious Metals for delivery and
payment at a future date which have not been consummated as of
the close of business on the day on which the Precious Metals
Storage Contracts are assumed by Purchaser pursuant to the terms
hereof.
"GAAP" shall have the meaning specified in Section 1.2
hereof.
"Gold" shall mean gold measured in troy ounces having
fineness of not less than .9995, without regard to whether such
gold is alloyed or unalloyed, in bullion form or contained or
processed into other materials which contain elements other than
gold.
"Hazardous Materials" means (a) any "hazardous material",
"hazardous substance", "hazardous waste", "oil", "regulated
substance", "toxic substance" or words of similar import as
defined under any of the Environmental Laws, (b) asbestos in any
form, (c) urea formaldehyde foam insulation, (d) polychlorinated
biphenyls, (e) radon gas, (f) flammable explosives,
(g) radioactive materials, (h) any chemical, contaminant,
solvent, material, pollutant or substance that may be dangerous
or detrimental to any of the Facilities, the environment or the
health and safety of employees or other occupants of any of the
Facilities and (i) any substance, the generation, storage,
transportation, utilization, disposal, management, release or
location of which, on, under or from any of the Facilities is
prohibited or otherwise regulated pursuant to any of the
Environmental Laws.
"High Yield Financing" shall mean Two Hundred Million
Dollars ($200,000,000) of Sovereign's 10.25% Senior Notes due
2004, Five Hundred Million Dollars ($500,000,000) of Sovereign's
10.50% Senior Notes due 2006 and the Five Hundred Million Dollars
($500,000,000) available to Sovereign pursuant to a senior credit
facility issued to Sovereign on December 16, 1999.
"Hiring Commitment" shall mean Purchaser's commitment on or
prior to the close of business on the Third Closing Date to
extend an offer of employment for Comparable Jobs in accordance
with Section 8.6 hereof to at least 1352 Additional Employees.
"Hiring Commitment Adjustment" shall mean, in the event the
number of Additional Employees offered Comparable Jobs is less
than the Hiring Commitment, an amount equal to such shortfall
multiplied by $35,000.
"Indemnified Party" shall have the meaning specified in
Section 14.4 hereof.
"Indemnitor" shall have the meaning specified in Section
14.4 hereof.
"Indirect Auto Loans" shall mean those loans sold by a
Seller to Purchaser pursuant to the terms of that certain loan
purchase agreement dated as of the date hereof by and between
BBNA and Purchaser.
"Interpolated FNMA 15 Year March Cash Delivery Price" shall
be determined by first deriving (i) the average March Cash
Delivery Price (expressed as a percentage of par) for FNMA 15-
year mortgage-backed securities with a FNMA MBS coupon rate as
close to but not more than the weighted average net interest rate
on the applicable Additional Residential Mortgage Loans, and (ii)
the average March Cash Delivery Price (expressed as a percentage
of par) for FNMA 15-year mortgage-backed securities with a FNMA
MBS coupon rate as close to but not less than the weighted
average net interest rate on the applicable Additional
Residential Mortgage Loans; such averages to be determined by
obtaining bids for FNMA 15-year mortgage-backed securities in an
amount approximately equal to the estimated aggregate principal
balance of such Additional Residential Mortgage Loans as of the
Closing Date on which such loans shall be purchased by Purchaser
pursuant to the terms hereof; such bids to be obtained as of such
time as the parties hereto shall mutually agree in good faith
from 3 nationally recognized mortgage-backed securities dealers
selected by Fleet and acceptable to Sovereign (such acceptance
not to be unreasonably withheld or delayed). The Interpolated
FNMA 15 Year March Cash Delivery Price shall then be determined
for each Closing Date by interpolating the March Cash Delivery
Prices determined for (i) and (ii) above to determine a price
(expressed as a percentage), assuming a FNMA net pass through
rate equal to the weighted average net interest rate on the
applicable Additional Residential Mortgage Loans purchased by the
Purchaser on the applicable Closing Date.
"Interpolated FNMA 30 Year March Cash Delivery Price" shall
be determined by first deriving (i) the average March Cash
Delivery Price (expressed as a percentage of par) for FNMA 30-
year mortgage-backed securities with a FNMA MBS coupon rate as
close to but not more than the weighted average net interest rate
on the applicable Additional Residential Mortgage Loans, and (ii)
the average March Cash Delivery Price (expressed as a percentage
of par) for FNMA 30-year mortgage-backed securities with a FNMA
MBS coupon rate as close to but not less than the weighted
average net interest rate on the applicable Additional
Residential Mortgage Loans; such averages to be determined by
obtaining bids for FNMA 30-year mortgage-backed securities in an
amount approximately equal to the estimated aggregate principal
balance of such Additional Residential Mortgage Loans as of the
Closing Date on which such loans shall be purchased by Purchaser
pursuant to the terms hereof; such bids to be obtained as of such
time as the parties hereto shall mutually agree in good faith
from 3 nationally recognized mortgage-backed securities dealers
selected by Fleet and acceptable to Sovereign (such acceptance
not to be unreasonably withheld or delayed). The Interpolated
FNMA 30 Year March Cash Delivery Price shall then be determined
for each Closing Date by interpolating the March Cash Delivery
Prices determined for (i) and (ii) above to determine a price
(expressed as a percentage), assuming a FNMA net pass through
rate equal to the weighted average net interest rate on the
applicable Additional Residential Mortgage Loans purchased by the
Purchaser on the applicable Closing Date.
"IRA" shall mean an individual retirement account as
specified in Section 408 and 408A of the Code.
"IRA Deposit Liability" shall mean a Deposit Liability in a
deposit account which is an IRA.
"IRS" shall mean the Internal Revenue Service of the United
States.
"ISDA Agreements" shall mean those International Securities
Dealer Agreements between a Customer or other Person and a Seller
or one of its Affiliates evidencing an ISDA Transaction.
"ISDA Transactions" shall mean (a) each transaction set
forth on Schedule 1.1(x) hereto, as such transaction may be
renewed, amended or extended by Sellers in the ordinary course of
business of Sellers between July 1, 1999 and the close of
business on the day on which the related Loan is purchased by
Purchaser pursuant to the terms hereof and (b) each interest rate
swap, currency swap, forward, hedge or similar transactions
entered into by Sellers between July 1, 1999 and the close of
business on the day on which the related Loan is purchased by
Purchaser pursuant to the terms hereof, as such transactions may
be renewed, amended or extended by Sellers in the ordinary course
of business of Sellers between July 1, 1999 and the close of
business on the day on which the related Loan is purchased by
Purchaser pursuant to the terms hereof, each as may exist as of
the close of business on the day on which the related Loan is
purchased by Purchaser pursuant to the terms hereof.
"ISP98" shall mean the International Standby Practices
(ISP98), ICC Publication No. 590.
"Items" shall mean (a) transfers of funds by wire or through
the Automated Clearing House, checks, drafts, negotiable orders
of withdrawal and items of a like kind which are drawn on or
deposited and credited to the Deposit Liabilities, and (b)
payments, advances, disbursements, fees, reimbursements and items
of a like kind which are debited or credited to the Loans.
"Keogh Plan" shall mean an Employee Pension Plan covering
self-employed individuals.
"Keogh Plan Deposit Liability" shall mean a Deposit
Liability in a deposit account which is owned by a Keogh Plan.
"Knowledge" shall mean, with respect to a Seller, the actual
knowledge as of September 3, 1999, without further investigation,
of any of such Seller's officers that hold the title of senior
vice president or above and have responsibility with respect to
the operations of the Business.
"Landlord Consents" shall have the meaning set forth in
Section 2.3(a)(v) hereof.
"Lease Assignments" shall have the meaning set forth in
Section 2.3(a)(iv) hereof.
"Leased Facilities" shall mean the premises leased to
Purchaser pursuant to an Eastern MA Lease Agreement, a CT/RI
Lease Agreement or a Sublease Agreement.
"Letter of Credit Customer" shall mean an obligor under a
Loan for whose account a Letter of Credit was issued.
"Letters of Credit" shall mean (a) each letter of credit
listed on Schedule 1.1(y) hereto, (b) each letter of credit
issued by a Seller in connection with a Loan between July 1, 1999
and the close of business on the day on which such Loan is
purchased by Purchaser pursuant to the terms hereof and (c) any
letter of credit applied for by a Customer (but not yet issued by
a Seller) as of the day on which such Customer's Loan is
purchased by Purchaser pursuant to the terms hereof, each as
exists as of the close of business on the day on which the
related Loan is purchased by Purchaser pursuant to the terms
hereof. To the extent Purchaser shall assume (and the issuing
Seller has been released from) any Letter of Credit or Purchaser
has issued a replacement letter of credit, whether on or after
the day on which the related Loan is purchased by Purchaser
pursuant to the terms hereof, each as described in Section
11.11(c), the assumed or replaced Letter of Credit shall no
longer be deemed a "Letter of Credit" hereunder.
"Letter of Credit/Liquidity Support Collateral" shall mean
(a) all collateral in which a Seller, as issuer of a Letter of
Credit or obligor under a Liquidity Support Agreement, has been
granted a Lien, security interest or encumbrance, whether
pursuant to a pledge, collateral assignment, security agreement,
mortgage or otherwise, and (b) any other security for any such
Letter of Credit or Liquidity Support Agreement for the benefit
of such Seller, including without limitation, any guaranties,
subordination agreements, insurance or other credit enhancements
and any collateral therefor.
"Letter of Credit Disbursement" shall mean an amount equal
to the sum of (a) the amount drawn under any Letter of Credit in
connection with a Request plus (b) all reasonable and customary
out-of-pocket charges and expenses which Sellers may pay or incur
relative to such Request which are chargeable to the Customer
under the related Reimbursement Agreement.
"License Agreement" shall mean a license agreement between
Sellers or an Affiliate of Sellers, as licensor, and Purchaser,
as licensee, granting to Purchaser a non-exclusive non-
transferable license to use the software owned by such licensor
described on Schedule 1.1(w) at no charge and on such other terms
as are described on Exhibit Q hereto.
"Lien" shall mean any lien, easement, restrictions, pledge,
charge, encumbrance, security interest, mortgage, deed of trust,
lease, option or other adverse claim of any kind or description.
"Liquidity Support Agreements" shall mean (a) each liquidity
support obligation of Sellers or their Affiliates entered into in
connection with the Loans listed on Schedule 1.1(z) hereto, (b)
each liquidity support obligation entered into in connection with
a Loan between July 1, 1999 and the close of business on the day
on which such Loan is purchased by Purchaser pursuant to the
terms hereof and (c) any application pending with a Seller on the
date on which the Loan related thereto is purchased by Purchaser
pursuant to the terms hereof for liquidity support obligations
relating to such Loan. To the extent Purchaser shall have
assumed (and the applicable Seller has been released from) all of
its obligations under any such Liquidity Support Agreement,
whether on or after the day on which the related Loan is
purchased by Purchaser pursuant to the terms hereof, the assumed
Liquidity Support Agreement shall no longer be deemed a
"Liquidity Support Agreement" hereunder.
"Liquidity Support Disbursement" shall mean an amount equal
to the sum of (a) the amount of the extension of credit or other
financial accommodation and (b) all reasonable and customary out-
of-pocket charges and expenses which Sellers may pay or incur
relative to such Support Request which are chargeable to the
Customer under such Liquidity Support Agreement.
"Loan Sale Adjustment" shall mean the sum of the First
Closing Loan Sales Adjustment, the Second Closing Loan Sales
Adjustment and the Third Closing Loan Sales Adjustment.
"Loan Value" shall mean the sum of the First Closing Loan
Value, the Second Closing Loan Value and the Third Closing Loan
Value.
"Loans" shall mean, collectively, the Consumer Bank Loans,
the CAF Loans, the Residential Mortgage Loans, the SBA Loans, the
Small Business Bank Loans, the Commercial Bank Loans, and the CRA
Loans.
"Market Adjustment" shall mean, for each Closing Date, a
percentage equal to:
(a) For the 30-year residential mortgage loans included in
the Additional Residential Mortgage Loans purchased by Purchaser
on such Closing Date, the Interpolated FNMA 30 Year March Cash
Delivery Price minus 1.59375; and
(b) For the 15-year residential mortgage loans included in
the Additional Residential Mortgage Loans purchased by Purchaser
on such Closing Date, the Interpolated FNMA 15 Year March Cash
Delivery Price minus 1.125.
"Material Adverse Effect" shall mean any circumstance,
change in or effect on the Purchased Assets or the Assumed
Liabilities that is materially adverse to the business,
operation, results of operations or the financial condition of
the Business, taken as a whole; provided, however, that "Material
Adverse Effect" shall not include any circumstance, change in or
effect on the Business directly or indirectly arising out of or
attributable to (a) changes in general economic, legal,
regulatory or political conditions, (b) changes in prevailing
interest rates, (c) changes in GAAP, (d) any actions taken or
omitted to be taken pursuant to the Original Agreement or this
Agreement, (e) changes in the employee base of the Business or
(f) the announcement of the transactions contemplated by the
Original Agreement, this Agreement, other agreements entered into
in connection with the Merger and relating to the divestiture by
Sellers or any of their Affiliates of certain of their respective
assets and liabilities or the Merger Agreement.
"Merger" shall mean the merger of Fleet and BankBoston
pursuant to the terms of the Merger Agreement.
"Merger Agreement" shall mean that certain Agreement and
Plan of Merger dated as of March 14, 1999 by and between Fleet
and BankBoston, as the same may be amended or modified from time
to time.
"Middle Market Deposit Liabilities" shall mean all of any
Seller's obligations and liabilities relating to (a) the deposit
accounts listed on Schedule 1.1(aa) hereto, (b) the deposit
accounts of Sellers which are opened on behalf of an obligor of a
Middle Market Loan between July 1, 1999 and the close of business
on the Closing Date on which such obligor's Middle Market Loan is
purchased by Purchaser pursuant to the terms hereof, (c) the
deposit accounts of Sellers which are opened between July 1, 1999
and the close of business on the Third Closing Date on behalf of
a non-borrowing customer of Sellers by a Middle Market Employee,
and (d) deposit accounts of Sellers which are security for Middle
Market Loans, including, without limitation, all passbook
accounts, statement savings accounts, checking, Money Market and
NOW accounts, certificates of deposit, and IRA, Keogh Plan and
Employee Pension Plan accounts, together with Accrued Interest
thereon, but excluding any claim or other liability relating to
the origination of any such deposit account or the administration
of any such deposit account prior to the close of business on the
day on which the obligations and liabilities relating to such
deposit account are assumed by Purchaser pursuant to the terms
hereof.
"Middle Market Employees" shall mean the employees of
Sellers listed on Schedule 1.1(bb) hereto, but excluding such
employees who shall leave a Seller's employ between September 3,
1999 and the close of business on the Third Closing Date (other
than employees who leave to work for Purchaser), but including
replacements of such employees made by Sellers in the ordinary
course of business of Sellers between September 3, 1999 and the
close of business on the Third Closing Date (other than
replacements made by Sellers of employees who leave a Seller's
employ to work for Purchaser pursuant to the terms hereof) and
including any Person who fills a vacant position with a Seller
between September 3, 1999 and the Third Closing Date if such
Person would have been a relationship manager for a Middle Market
Loan listed on Schedule 1.1(cc) if such Person had been employed
by Sellers in such position on September 3, 1999.
"Middle Market Loans" shall mean (a) each of the loans
listed on Schedule 1.1(cc) hereto (exclusive of any reserves for
loan losses) and each obligation of a Seller to make additional
extensions of credit in connection with each such loan, as each
such loan may be increased, decreased, amended, renewed or
extended by Sellers in the ordinary course of business of Sellers
between July 1, 1999 and the close of business on the day on
which such loan is purchased by Purchaser pursuant to the terms
hereof (included within each such loan shall be any Letters of
Credit, Liquidity Support Agreements and ISDA Transactions
related to such loan), (b) each loan made in the ordinary course
of business of Sellers by the Middle Market Employees between
July 1, 1999 and the close of business on the Third Closing Date
(exclusive of any reserves for loan losses) and each obligation
of a Seller to make additional extensions of credit in connection
with each such loan, as each such loan may be increased,
decreased, amended, renewed or extended by Sellers in the
ordinary course of business of Sellers between July 1, 1999 and
the close of business on the day on which such loan is purchased
by Purchaser pursuant to the terms hereof (included within each
such loan shall be any Letters of Credit, Liquidity Support
Agreements and ISDA Transactions related to such loan) and (c)
each application pending with a Seller for a loan whose
relationship manager would have been a Middle Market Employee if
such loan had been made by a Seller prior to the Third Closing
Date; provided, however, that Middle Market Loans shall not
include any loan described in subsections (a) or (b) above, if
such loan, as of the day on which such loan is to be purchased by
Purchaser pursuant to the terms hereof, is (i) subject to a
current legal proceeding related to a Customer's inability or
refusal to pay such loan, (ii) not current and with respect to
which proceedings are pending against the obligor or obligors of
such loan under Title 11 of the United States Code or (iii)
Nonperforming. Each Middle Market Loan shall include all
documents executed or delivered in connection with such loan to
the extent such documents are in the loan file relating to such
loan, any and all collateral held as security therefor or in
which a security interest, Lien or mortgage has been granted and
any and all guarantees, insurance and other credit enhancements
relating thereto, together with Accrued Interest thereon, all as
exists at the close of business on the day on which such loan is
purchased by Purchaser pursuant to the terms hereof.
"Minimum Capital Requirement" shall have the meaning
specified in Schedule 3.6(e).
"Negative Deposits" shall mean overdrafts in Deposit
Liability accounts which are not covered by Advance Lines, plus
any and all Accrued Interest thereon, all as set forth in the
applicable Seller's general ledger.
"Net Book Value" shall mean, as of any date, the net book
value (exclusive of reserves) of any Purchased Asset as of the
close of business on such date as set forth in the general
ledgers of the applicable Sellers.
"New Equity Issuance" shall mean the issuance of Common
Stock described in the Commitment Letter.
"New Jersey Assets" shall have the meaning specified in
Section 3.6(j)(i) hereof.
"New Jersey Deposit Liabilities" shall have the meaning
specified in Section 3.6(j)(i) hereof.
"New Jersey Right" shall have the meaning specified in
Section 3.6(j)(i) hereof.
"Nonperforming" shall mean any Loan with respect to which,
on the day such Loan is being purchased by Purchaser pursuant to
the terms hereof, any principal or interest shall be due and
unpaid by the borrower thereunder for more than ninety (90) days
prior to the day such Loan is purchased by Purchaser pursuant to
the terms hereof.
"Offering Memorandum" shall mean those certain offering
memoranda provided to Purchaser pursuant to the terms of the
Confidentiality Agreement and describing the Business.
"Old CAF Loans" shall mean CAF Loans originated prior to
December 1, 1999.
"Original Agreement" shall have the meaning specified in the
preamble hereof.
"Other Capital Transactions" shall have the meaning
specified in Section 14.3(a) hereof.
"Other Precious Metals Contracts" shall mean all agreements
for the present purchase or sale by BBNA of Precious Metals with
respect to which the Precious Metals covered thereby have not
been delivered to the applicable purchaser as of the close of
business on the day on which the Precious Metals are purchased by
Purchaser pursuant to the terms hereof.
"Outstanding Credit Exposure" shall mean, at any time, the
aggregate maximum amount available to be drawn or advanced under
each Outstanding Credit Obligation, the determination of such
maximum amount to assume (a) compliance with all conditions for
drawing or advance under the specific Letter of Credit or
Liquidity Support Agreement, and (b) no reduction (i) for any
amount drawn under any Outstanding Credit Obligation unless such
amount is not to be reinstated under the terms of the specific
Letter of Credit or Liquidity Support Agreement, or (ii) for any
amount not available to be drawn or advanced under the terms of
the specific Letter of Credit or Liquidity Support Agreement.
"Outstanding Credit Obligations" shall mean, at any time,
those Letters of Credit and Liquidity Support Agreements (a)
which have not been replaced or terminated, and (b) as to which
the applicable Seller has not been released from liability.
"Palladium" shall mean palladium measured in troy ounces
having a fineness of not less than .9999, without regard to
whether such palladium is alloyed or unalloyed, in bullion form
or contained in or processed into other materials which contain
elements other than palladium.
"Permitted Investments" shall have the meaning given such
term in the Senior Credit Facility and shall also include loans
and capital contributions made by Sovereign directly to the
Purchaser.
"Permitted Liens" shall mean (a) Liens for taxes,
assessments, governmental charges or levies not yet due and
payable or which although delinquent can be paid without penalty
or are being contested in good faith by appropriate proceedings,
(b) Liens resulting from a filing by a lessor as a precautionary
filing for a lease, (c) landlords' Liens under the Branch Leases
and ATM Lease Agreements, (d) Liens imposed by law, such as
carriers', warehousemen's and mechanics' Liens and other similar
Liens arising in the ordinary course of business which secure
payment of obligations not more than ninety (90) days past due or
which are being contested in good faith by appropriate
proceedings, (e) any other Liens affecting the Purchased Assets
which do not impede the ownership, operation or value of such
Purchased Assets in any material respect and (f) with respect to
Consigned Precious Metals, the rights of the applicable Customer
of BBNA to the Consigned Precious Metals delivered to such
Customer.
"Person" shall mean any individual, partnership, joint
venture, corporation, trust, limited liability company,
unincorporated organization, government or other entity.
"Platinum" shall mean platinum measured in troy ounces
having a fineness of not less than .9990, without regard to
whether such platinum is alloyed or unalloyed, in bullion form or
contained in or processed into other materials which contain
elements other than platinum.
"Precious Metals" means Gold, Silver, Platinum and
Palladium.
"Precious Metals Agreements" shall mean all consignment
agreements, precious metals sales agreements, documents and other
agreements evidencing the obligation of a customer of BBNA to
purchase and/or redeliver Precious Metals in connection with a
Precious Metals Loan.
"Precious Metals Assets" shall mean, collectively, the
Precious Metals Agreements, Consigned Precious Metals, the BBNA
Precious Metals, the Other Precious Metals Contracts, the Forward
Contracts, the Precious Metals Options and the Precious Metals
Storage Contracts.
"Precious Metals Deposit Liabilities" shall mean all of any
Seller's obligations and liabilities relating to (a) the deposit
accounts listed on Schedule 1.1(dd) hereto, (b) the deposit
accounts of Sellers which are opened on behalf of an obligor of a
Precious Metals Loan between July 1, 1999 and the close of
business on the Closing Date on which the Precious Metals Loans
are purchased by Purchaser pursuant to the terms hereof, (c)
deposit accounts of Sellers which are opened between July 1, 1999
and the close of business on the Third Closing Date on behalf of
a non-borrowing customer of Sellers by a Precious Metals
Employee, and (d) deposit accounts of Sellers which are security
for any Precious Metal Loan, including, without limitation, all
passbook accounts, statement savings accounts, checking, Money
Market and NOW accounts, certificates of deposit, and IRA, Keogh
Plan and Employee Pension Plan accounts, together with Accrued
Interest thereon, but excluding any claim or other liability
relating to the origination of any such deposit account or the
administration of any such deposit account prior to the close of
business on the day on which such obligations and liabilities
relating to such account are assumed by Purchaser pursuant to the
terms hereof.
"Precious Metals Employees" shall mean the employees of
Sellers listed on Schedule 1.1(ee) hereto, but excluding such
employees who shall leave a Seller's employ between September 3,
1999 and the close of business on the Third Closing Date (other
than employees who leave to work for Purchaser), but including
replacements of such employees made by Sellers in the ordinary
course of business of Sellers between September 3, 1999 and the
day on which the Precious Metals Assets are transferred to
Purchaser pursuant to the terms hereof (other than replacements
made by Sellers of employees who leave a Seller's employ to work
for Purchaser pursuant to the terms hereof), and including any
Person who fills a vacant position with a Seller between
September 3, 1999 and the Third Closing Date if such Person would
have been a relationship manager for a Precious Metals Loan
listed on Schedule 1.1(ff) if such Person had been employed by
Sellers in such position on September 3, 1999.
"Precious Metals Liabilities" shall mean (a) the Precious
Metals Deposit Liabilities and (b) any and all liabilities and
obligations relating to or arising out of the Precious Metals
Assets, to the extent that such liabilities and obligations arise
or accrue after the close of business on the day on which the
Precious Metals Assets are purchased by Purchaser pursuant to the
terms hereof, but including Unfunded Advances under the Loans
included therein.
"Precious Metals Loans" shall mean (a) each consignment,
loan and other extension of credit listed on Schedule 1.1(ff)
hereto (in each instance exclusive of any reserves for loan
losses) pursuant to which BBNA does any of the following:
(i) consigns Precious Metals to its customers; (ii) sells
Precious Metals to its customers for present delivery but future
pricing and payment; or (iii) makes other extensions of credit
and all obligations of BBNA to make additional extensions of
credit in connection with each such loan, as each such loan may
be increased, decreased, amended, renewed or extended by BBNA in
the ordinary course of business of BBNA between July 1, 1999 and
the close of business on the day on which such loan is purchased
by Purchaser pursuant to the terms hereof (included within each
such loan shall be any Letters of Credit, Liquidity Support
Agreements and ISDA Transactions related to such loan), (b) each
loan, consignment and other extension of credit made in the
ordinary course of business of BBNA by the Precious Metals
Employees between July 1, 1999 and the close of business on the
day on the Precious Metals are purchased by Purchaser pursuant to
the terms hereof (in each instance exclusive of any reserves for
loan losses) and each obligation of BBNA to make additional
extensions of credit in connection with each such loan, as each
such loan may be increased, decreased, amended, renewed or
extended in the ordinary course of business of BBNA between July
1, 1999 and the close of business on the day on which such loan
is purchased by Purchaser pursuant to the terms hereof (included
within each such loans shall be any Letters of Credit, Liquidity
Support Agreements and ISDA Transactions related to such loan),
and (c) each application pending with BBNA on the date the
Precious Metals are purchased by Purchaser pursuant to the terms
hereof for a loan, consignment and other extension of credit,
whose relationship manager would be a Precious Metals Employee if
such loan, consignment or other extension of credit had been made
by BBNA prior to the date on which the Precious Metals are
purchased by Purchaser pursuant to the terms hereof; provided,
however, that Precious Metals Loans shall not include any loan,
consignment or other extension of credit, described in subsection
(a) or (b) above if such loan, consignment or other extension of
credit, as of the day on which such loan is to be purchased by
Purchaser pursuant to the terms hereof, is (i) subject to a
current legal proceeding related to a Customer's inability or
refusal to pay such loan, (ii) not current and with respect to
which proceedings are pending against the obligor or obligors of
such loan under Title 11 of the United States Code or (iii)
Nonperforming. Each Precious Metals Loan shall include all
documents executed or delivered in connection with such loan,
consignment or extension of credit to the extent such documents
are in the loan file relating to such loan, consignment or
extension of credit, any and all collateral held as security
therefor or in which a security interest, Lien or mortgage has
been granted, and any and all guarantees, insurance and other
credit enhancements relating thereto, together with Accrued
Interest thereon, all as exists at the close of business on the
day on which such loan is purchased by Purchaser pursuant to the
terms hereof.
"Precious Metals Options" shall mean all outstanding options
held by BBNA or granted by BBNA as of the close of business on
the day on which the Precious Metals are purchased by Purchaser
pursuant to the terms hereof with respect to the purchase or sale
of Precious Metals.
"Precious Metals Storage Contracts" shall mean all
outstanding contracts of BBNA with third parties for the storage
or transportation of Precious Metals as of the close of business
on the day on which the Precious Metals are purchased by
Purchaser pursuant to the terms hereof.
"Purchase Price" shall have the meaning specified in Section
3.1 hereof.
"Purchased Assets" shall mean:
(a) The Commercial Bank Assets;
(b) The Consumer Bank Assets;
(c) The CRA Assets;
(d) The Small Business Bank Assets;
(e) All of Sellers' rights with respect to the contracts
and relationships giving rise to the Deposit Liabilities;
(f) The Advance Lines and the Negative Deposits;
(g) All insurance premiums paid by Sellers to the FDIC
which are allocated to insurance coverage for the Deposit
Liabilities following the assumption thereof by Purchaser, to the
extent a proration or adjustment is made with respect thereto
pursuant to Section 3.8 hereof;
(h) All of Sellers' right, title and interest in and to
all books and records relating to the Purchased Assets described
in the other subsections of this definition and the Assumed
Liabilities, as such books and records may exist and as are held
by Sellers at the Branches;
(i) The ISDA Agreements; and
(j) A 100% participation interest in the Letters of
Credit and the Liquidity Support Agreements as contemplated by
Section 11.11 hereof.
"Purchaser" shall have the meaning specified in the preamble
hereof.
"Purchaser Regulatory Approvals" shall have the meaning
specified in Section 6.5(a) hereof.
"Purchaser's Account" shall have the meaning specified in
Section 3.3(b) hereof.
"Purchaser's Letter of Credit" shall mean standby letter of
credits issued by Purchaser in favor of Sellers, in substantially
the form of Exhibit F hereto, in a face amount equal to the sum
of the aggregate maximum amount available to be drawn or advanced
under each Letter of Credit and Liquidity Support Agreement, the
determination of such maximum amount to assume (a) compliance
with all conditions for drawing or advance under the specific
Letter of Credit or Liquidity Support Agreement and (b) no
reduction (i) for any amount drawn or advanced under any Letter
of Credit or Liquidity Support Agreement unless such amount is
not to be reinstated under the terms of the specific Letter of
Credit or Liquidity Support Agreement or (ii) for any amount not
available to be drawn or advanced under the terms of the specific
Letter of Credit or Liquidity Support Agreement.
"Real Property" shall mean each parcel of real property
owned by a Seller on which a Facility is located, and all
improvements thereon, all as more fully described on
Schedule 1.1(hh) hereto, including without limitation the
Columbia Park Facility and the East Providence Facility.
"Real Property Purchase Price" shall mean, with respect to
any parcel or parcels of Real Property, the purchase price
specified on Schedule 1.1(ii) hereto; provided that the purchase
price for the Columbia Park Facility and the East Providence
Facility shall be reflected as an aggregate amount.
"Registration Statement" shall mean the registration
statement to be filed by Sovereign, registering the New Equity
Issuance under the Securities Act of 1933, as amended.
"Regulatory Approvals" shall mean the Seller Regulatory
Approvals and the Purchaser Regulatory Approvals.
"Reimbursement Agreement" shall mean all documents and
agreements evidencing, securing or insuring the obligation of a
Letter of Credit Customer to repay, or the rights of a Seller to
recover, sums paid under a Letter of Credit.
"Released Parties" shall have the meaning specified in
Section 14.3(a) hereof.
"Releasing Parties" shall have the meaning specified in
Section 14.3(a) hereof.
"Request" shall have the meaning specified in Section
11.11(c) hereof.
"Residential Mortgage Loans" shall mean the Fleet
Residential Mortgage Loans, the BankBoston Residential Mortgage
Loans, and the Additional Residential Mortgage Loans.
"Safe Deposit Agreements" shall mean, as of the applicable
Closing Date, the agreements between a Seller and a Customer or
Customers relating to safe deposit boxes located in the Branches
as of the close of business on the day on which the Fixed Assets
located in such Branches are purchased by Purchaser pursuant to
the terms hereof.
"SBA" shall mean the United States Small Business
Administration.
"SBA Consents" shall mean all consents necessary to transfer
to Purchaser the SBA Loans.
"SBA Loans" shall mean (a) each of the loans listed on
Schedule 1.1(jj) hereto (exclusive of any reserves for loan
losses) and each obligation of a Seller to make additional
extensions of credit in connection with each such loan, as each
such loan may be increased, decreased, amended, renewed, or
extended by Sellers in the ordinary course of business of Sellers
between July 1, 1999 and the close of business on the day on
which such loan is purchased by Purchaser pursuant to the terms
hereof (included within each such loan shall be any Letters of
Credit, Liquidity Support Agreements, and ISDA Transactions
related to such loan), (b) each loan made in the ordinary course
of business of Sellers between July 1, 1999 and the close of
business on the Third Closing Date by Small Business Bank
Employees or Consumer Bank Employees, which loans are secured by
an SBA guaranty, whether in whole or in part (exclusive of any
reserves for loan losses) and each obligation of a Seller to make
additional extensions of credit in connection with each such
loan, as each such loan may be increased, decreased, amended,
renewed, or extended in the ordinary course of business of
Sellers between July 1, 1999 and the close of business on the day
on which such loan is purchased by Purchaser pursuant to the
terms hereof (included within each such loan shall be any Letters
of Credit, Liquidity Support Agreements and ISDA Transactions
related to such loan) and (c) each application pending with a
Seller for a loan whose relationship manager would have been a
Small Business Bank Employee if such loan had been made by a
Seller prior to the day on which such Small Business Bank
Employee is employed by Purchaser pursuant to the terms hereof
and which loan would be secured by a SBA guaranty, whether in
whole or in part; provided, however, that SBA Loans shall not
include any loan described in subsections (a) or (b) above if
such loan, as of the day on which such Loan is to be purchased by
Purchaser pursuant to the terms hereof, is (i) subject to a
current legal proceeding related to a Customer's inability or
refusal to pay such loan, (ii) not current and with respect to
which proceedings are pending against the obligor or obligors of
such loan under Title 11 of the United States Code, or (iii)
Nonperforming; and provided, further, that with respect to any
such loan, to the extent that as of the Closing Purchaser shall
not have received an SBA Consent, such loan shall no longer be
deemed a "SBA Loan" hereunder. Each SBA Loan shall include all
documents executed or delivered in connection with such loan to
the extent such documents are in the loan file relating to such
loan, any and all collateral held as security therefor or in
which a security interest, Lien or mortgage has been granted and
any and all guarantees, insurance and other credit enhancements
relating thereto, together with Accrued Interest thereon, all as
exists at the close of business on the day on which such Loan is
purchased by Purchaser pursuant to the terms hereof.
"Second Closing" shall have the meaning specified in
Section 2.4(a) hereof.
"Second Closing Adjusted Payment Amount" shall have the
meaning specified in Section 3.4(c) hereof.
"Second Closing Cut-off Date" shall have the meaning
specified in Section 3.4(f) hereof.
"Second Closing Date" shall have the meaning specified in
Section 2.4(a) hereof.
"Second Closing Estimated Payment Amount" shall have the
meaning specified in Section 3.4(b).
"Second Closing Estimated Purchase Price" shall mean the
estimate of the Second Closing Purchase Price set forth on the
Draft Closing Statement for the Second Closing.
"Second Closing Final Loan Schedule" shall have the meaning
specified in Section 3.4(c) hereof.
"Second Closing Loan Sale Adjustment" shall mean an amount
equal to the sum of (a) the outstanding principal balance of the
Additional Residential Mortgage Loans transferred to Purchaser at
the Second Closing multiplied by the Additional Residential
Mortgage Loan Pool Adjustment, (b) the outstanding principal
balance of the Indirect Auto Loans transferred to Purchaser after
the First Closing but on or before the Second Closing multiplied
by .03 and (c) the outstanding principal balance of the Old CAF
Loans transferred to Purchaser after the First Closing but on or
before the Second Closing multiplied by .03.
"Second Closing Loan Value" shall mean, as of the close of
business on the Second Closing Date, the unpaid principal balance
of the Loans purchased by Purchaser at the Second Closing, plus
Accrued Interest thereon, as set forth in the general ledger of
the applicable Seller and the Second Closing Final Loan Schedule,
less accrued servicing fees under arrangements with third parties
to service the Loans purchased by Purchaser at the Second
Closing. For purposes hereof, the unpaid principal balance of
any Precious Metals Loans denominated in Precious Metals shall be
the Fair Market Value of the Precious Metals outstanding as of
the Second Closing Date.
"Second Closing Purchase Price" shall have the meaning
specified in Section 3.4 hereof.
"Second Closing Swap Portfolio Adjustment" shall be an
amount equal to the Swap Market Value of the ISDA Transactions
assumed by Purchaser at the Second Closing.
"Second London Fixing" shall mean on any determination date,
the so-called "second fixing price" quoted by the London Bullion
Brokers' Board of Gold, Palladium or Platinum, as applicable.
"Seller" shall have the meaning specified in the preamble
hereof.
"Sellers" shall have the meaning specified in the preamble
hereof.
"Sellers' Account" shall have the meaning specified in
Section 3.3(b) hereof.
"Seller Regulatory Approvals" shall have the meaning
specified in Section 5.15(a) hereof.
"Senior Credit Facility" shall mean that certain Credit
Agreement dated as of December 16, 1999 among Sovereign,
Sovereign Delaware Escrow Company, the Lenders parties thereto,
and Citibank, N.A.
"Servicing Agreement" shall mean one or more servicing
agreements for the Fleet Residential Mortgage Loans between
Purchaser and Fleet Mortgage Corp., a subsidiary of FNB,
substantially in the form of Exhibit G hereto for the servicing
by Fleet Mortgage Corp. of all the Fleet Residential Mortgage
Loans.
"Silver" shall mean silver measured in troy ounces having
fineness of not less than .9999, without regard to whether such
silver is alloyed or unalloyed, in bullion form or contained in
or processed into other materials which contain elements other
than silver.
"Small Business Bank Assets" shall mean the Small Business
Bank Loans and the SBA Loans.
"Small Business Bank Deposit Liabilities" shall mean all of
any Seller's obligations and liabilities relating to (a) the
deposit accounts listed on Schedule 1.1(kk) hereto, (b) the
deposit accounts of Sellers which are opened on behalf of an
obligor of a Small Business Bank Loan or a SBA Loan between July
1, 1999 and the close of business on the Closing Date on which
such obligor's Small Business Bank Loan or SBA Loan is purchased
by Purchaser pursuant to the terms hereof, (c) the deposit
accounts of Sellers which are opened between July 1, 1999 and the
close of business on the Third Closing Date on behalf of a non-
borrowing small business customer of Sellers by a Small Business
Bank Employee or a Consumer Bank Employee, and (d) deposit
accounts of Sellers which are security for any Small Business
Bank Loans, including, without limitation, all passbook accounts,
statement savings accounts, checking, Money Market and NOW
accounts, certificates of deposit, and IRA, Keogh Plan and
Employee Pension Plan accounts, together with Accrued Interest
thereon, but excluding any claim or other liability relating to
the origination of any such deposit account or the administration
of any such deposit account prior to the close of business on the
day on which such obligations and liabilities relating to such
accounts are assumed by Purchaser pursuant to the terms hereof.
"Small Business Bank Division" shall mean the Small Business
Bank Assets, the Small Business Bank Liabilities and the Small
Business Bank Employees.
"Small Business Bank Employees" shall mean the employees of
Sellers listed on Schedule 1.1(ll) hereto, but excluding such
employees who shall leave a Seller's employ between September 3,
1999 and the close of business on the Third Closing Date (other
than employees who leave to work for Purchaser), but including
replacements thereof made by Sellers' in the ordinary course of
business of Sellers between September 3, 1999 and the Third
Closing Date (other than replacements made by Sellers of
employees who leave a Seller's employ to work for Purchaser
pursuant to the terms hereof), and including any Person who fills
a vacant position with a Seller between September 3, 1999 and the
Third Closing Date if such Person would have been a relationship
manager for an SBA Loan listed on Schedule 1.1(jj) or a Small
Business Bank Loan listed on Schedule 1.1(mm) if such Person had
been employed by Sellers in such position on September 3, 1999.
"Small Business Bank Liabilities" shall mean (a) the Small
Business Bank Deposit Liabilities, and (b) with respect to each
Small Business Bank Asset, all liabilities and obligations
relating to or arising out of such Small Business Bank Asset, to
the extent that such liabilities and obligations arise or accrue
after the close of business on the day on which such asset is
purchased by Purchaser pursuant to the terms hereof, but
including any Unfunded Advances under the Loans included therein.
"Small Business Bank Loans" shall mean (a) each of the loans
listed on Schedule 1.1(mm) hereto (exclusive of any reserves for
loan losses) and each obligation of a Seller to make additional
extensions of credit in connection with each such loan, as each
such loan may be increased, decreased, amended, renewed or
extended by Sellers in the ordinary course of business of Sellers
between July 1, 1999 and the close of business on the day on
which such loan is purchased by Purchaser pursuant to the terms
hereof (included within each such loan shall be any Letters of
Credit, Liquidity Support Agreements, and ISDA Transactions
related to such loan), (b) each loan made to a small business in
the ordinary course of business of Sellers between July 1, 1999
and the Third Closing Date by the Small Business Bank Employees
or the Consumer Bank Employees (exclusive of any reserves for
loan losses) and each obligation of Sellers to make additional
extensions of credit in connection with each such loan, as each
such loan may be increased, decreased, amended, renewed or
extended in the ordinary course of business of Sellers between
July 1, 1999 and the close of business on the day on which such
loan is purchased by Purchaser pursuant to the terms hereof
(included within each such loan shall be any Letters of Credit,
Liquidity Support Agreements, and ISDA Transactions related to
such loan), (c) each VISA Loan and (d) each application pending
with a Seller for a loan whose relationship manager would be a
Small Business Bank Employee if such loan had been made by a
Seller prior to the day on which such Small Business Bank
Employee is employed by Purchaser pursuant to the terms hereof;
provided, however, that Small Business Bank Loans shall not
include any loan described in subsections (a), (b) or (c) above
if such loan, as of the day on which such loan is to be purchased
by Purchaser pursuant to the terms hereof, is (i) subject to a
current legal proceeding related to a Customer's inability or
refusal to pay such loan, (ii) not current and with respect to
which proceedings are pending against the obligor or obligors of
such loan under Title 11 of the United States Code or (iii)
Nonperforming. Each Small Business Bank Loan shall include all
documents executed or delivered in connection with such loan to
the extent such documents are in the loan file relating to such
loan, and any and all collateral held as security therefor or in
which a security interest, Lien or mortgage has been granted and
any and all guarantees, insurance and other credit enhancements
relating thereto, together with Accrued Interest thereon, all as
exists at the close of business on the day on which such loan is
purchased by Purchaser pursuant to the terms hereof.
"Sovereign" shall have the meaning specified in the preamble
hereof.
"Sovereign's Leverage Ratio" shall be Sovereign's leverage
ratio computed as though Sovereign were a thrift in accordance
with Schedule CCR of the OTS' Thrift Financial Report, after
adjustment (a) to include, as core capital, all cumulative
preferred securities outstanding at the time (including
cumulative trust preferred securities) issued by Sovereign or any
non-banking consolidated subsidiary of Sovereign (up to the
maximum amount permissible for a bank holding company to include
in its Tier 1 capital under 12 C.F.R. Section 225, Appendix A),
and (b) to use (i) with respect to the computation required on
any Deferred Contingent Payment Date, quarterly average adjusted
total tangible assets of Sovereign rather than period end
adjusted tangible assets of Sovereign and (ii) at the Third
Closing in connection with the calculation of the Deferred
Contingent Amount, the period end adjusted tangible assets of
Sovereign as of Third Closing Date shall be the sum of (A) the
actual period end adjusted tangible assets of Sovereign at June
30, 2000, (B) Sovereign's good faith estimate of the net increase
(decrease) in its consolidated tangible assets between June 30,
2000 and the Third Closing Date, and (C) the adjusted tangible
assets actually acquired by Purchaser from Sellers on the Third
Closing Date.
"Stay Bonus Payments" shall mean bonus payments payable in
accordance with their terms in the amount set forth on
Schedule 1.1(nn) hereto to be paid to the employees of Sellers
listed on Schedule 1.1(nn) hereto.
"Sublease Agreement" shall have the meaning specified in
Section 7.3(b) hereof.
"Support Request" shall have the meaning specified in
Section 11.11(e) hereto.
"Swap Market Value of the ISDA Transactions" shall mean, as
of any day, an amount equal to the aggregate of bid-offer spread
for each ISDA Transaction assumed by Purchaser on such day,
calculated by a nationally recognized securities dealer mutually
acceptable to Fleet and Sovereign and calculated as if an Early
Termination Event (as defined in the standard form of ISDA
Agreement) has occurred; provided, however, that in the event
that Fleet and Sovereign are unable to mutually agree upon such
securities dealer, then Fleet shall designate a nationally
recognized securities dealer, Sovereign shall designate a
nationally recognized securities dealer and such securities
dealers shall designate a third nationally recognized securities
dealer to calculate such aggregate bid-offer spread.
"Swap Portfolio Adjustment" shall mean an amount equal to
the sum of the First Closing Swap Portfolio Adjustment, the
Second Closing Swap Portfolio Adjustment and the Third Closing
Swap Portfolio Adjustment.
"Tenant Leases" shall mean leases or subleases between a
Seller, as lessor, and the tenants, if any, listed on
Schedule 1.1(pp) hereto.
"Third Closing" shall have the meaning specified in
Section 2.6(a) hereof.
"Third Closing Adjusted Payment Amount" shall have the
meaning specified in Section 3.5(c) hereof.
"Third Closing Assumed Liabilities" shall have the meaning
specified in Section 2.6(b) hereof.
"Third Closing Cut-Off Date" shall have the meaning
specified in Section 3.5(f) hereof.
"Third Closing Date" shall have the meaning specified in
Section 2.6(a) hereof.
"Third Closing Estimated Payment Amount" shall have the
meaning specified in Section 3.5(b) hereof.
"Third Closing Estimated Purchase Price" shall mean the
estimate of the Third Closing Purchase Price set forth on the
Draft Closing Statement for the Third Closing.
"Third Closing Final Loan Schedule" shall have the meaning
specified in Section 3.5(c) hereof.
"Third Closing Loan Sale Adjustment" shall mean an amount
equal to the sum of (a) the outstanding principal balance of the
Additional Residential Mortgage Loans transferred to Purchaser at
the Third Closing multiplied by the Additional Residential
Mortgage Loan Pool Adjustment, (b) the outstanding principal
balance of the Indirect Auto Loans transferred to Purchaser after
the Second Closing but on or before the Third Closing multiplied
by .03 and (c) the outstanding principal balance of the Old CAF
Loans transferred to Purchaser after the Second Closing but on or
before the Third Closing Date multiplied by .03.
"Third Closing Loan Value" shall mean, as of the close of
business on the Third Closing Date, the unpaid principal balance
of the Loans purchased by Purchaser at the Third Closing, plus
Accrued Interest thereon, as set forth in the general ledger of
the applicable Seller and the Third Closing Final Loan Schedule,
less accrued servicing fees under arrangements with third parties
to service the Loans purchased by Purchaser at the Third Closing.
For purposes hereof, the unpaid principal balance of any Precious
Metals Loans denominated in Precious Metals shall be the Fair
Market Value of the Precious Metals outstanding as of the Third
Closing Date.
"Third Closing Purchase Price" shall have the meaning
specified in Section 3.5(a) hereof.
"Third Closing Purchased Assets" shall have the meaning
specified in Section 2.6(a) hereof.
"Third Closing Swap Portfolio Adjustment" shall be an amount
equal to the Swap Market Value of the ISDA Transactions assumed
by Purchaser at the Third Closing.
"Transferred Employees" shall mean the Business Employees,
the Additional Employees, the Business Related Employees, who
accept offers of employment from Purchaser as contemplated by
Section 8.6 hereof.
"UCC" shall mean the Uniform Commercial Code in effect in
the Commonwealth of Massachusetts.
"UCC Article 5" shall mean Article 5 of the UCC.
"UCP 500" shall mean the Uniform Customs and Practice for
Documentary Credits, 1993 Revision, ICC Publication No. 500.
"Unfunded Advance" shall mean an advance requested under a
Loan on or prior to the day on which such Loan is purchased by
Purchaser pursuant to the terms hereof pursuant to the terms and
provisions of such Loan which the applicable Seller is not
obligated to fund until following the day on which such Loan is
purchased by Purchaser pursuant to the terms hereof.
"VISAr Loans" shall mean each of the VISAr credit cards
issued to Persons listed on Schedule 1.1(qq) hereto and the loan
receivable related thereto, each as exists at the close of
business on the day on which such credit card and receivable are
purchased by Purchaser pursuant to the terms hereof; provided,
however, that VISAr Loans shall not include any such receivables
described above if such receivable, as of the day on which such
receivable is to be purchased by Purchaser pursuant to the terms
hereof, is (a) subject to a current legal proceeding related to a
Customer's inability or refusal to pay such Loan, (b) not current
and with respect to which proceedings are pending against the
obligor or obligors of such Loan under Title 11 of the United
States Code, or (c) Nonperforming. Each VISAr Loan shall include
all credit agreements and other documents executed or delivered
in connection with such loan to the extent such documents are in
the loan file relating to such loan, and any and all collateral
held as security therefor or in which a security interest, Lien
or mortgage has been granted and any and all guarantees,
insurance and other credit enhancements relating thereto,
together with Accrued Interest thereon, all as exists at the
close of business on the day on which such Loan is purchased by
Purchaser pursuant to the terms hereof.
"WARN Act" shall mean the Worker Adjustment and Retraining
Notification Act, as amended (29 U.S.C. Section 2101, et seq.)
and similar state and local laws, regulations and other
issuances.
"Western MA Assumed Liabilities" shall mean (a) the Consumer
Bank Liabilities, the CRA Liabilities and the Small Business Bank
Liabilities which are linked by Sellers to a Western MA Branch,
(b) with respect to the Commercial Bank Liabilities, those
liabilities related to Customers who have a mailing address in
close proximity to a Western MA Branch and whom the Commercial
Bank Employees have linked to a Western MA Branch and (c) such
other Assumed Liabilities as the parties hereto shall mutually in
good faith agree shall be assumed by Purchaser at the Third
Closing; the amount of Deposit Liabilities which shall be Western
MA Assumed Liabilities shall be approximately Four Billion
Dollars ($4,000,000,000).
"Western MA Branches" shall mean the Branches listed on
Schedule 1.1(f)(3) hereto.
"Western MA Purchased Assets" shall mean (a) the Consumer
Bank Assets, the CRA Assets and the Small Business Bank Assets
which are linked by Sellers to a Western MA Branch, (b) with
respect to the Commercial Bank Assets, those Commercial Bank
Assets related to Customers who have a mailing address in close
proximity to a Western MA Branch and whom the Commercial Bank
Employees have linked to a Western MA Branch, (c) the Fixed
Assets, Real Property and Branch Leases related to the Western MA
Branches and (d) such other Purchased Assets as the parties
hereto may mutually in good faith agree shall be purchased by
Purchaser at the Third Closing.
Section 1.2. Accounting Terms. All accounting terms not
otherwise defined herein shall have the respective meanings
assigned to them in accordance with "generally accepted
accounting principles" consistently applied as are in effect from
time to time in the United States of America ("GAAP").
ARTICLE II
PURCHASE AND SALE OF PURCHASED ASSETS AND
ASSIGNMENT AND ASSUMPTION OF ASSUMED LIABILITIES
Section 2.1. Purchase and Sale of Purchased Assets and
Assumption of Assumed Liabilities.
(a) Subject to all of the terms and conditions set forth
in this Agreement, and in reliance on the representations and
warranties set forth herein, Purchaser shall purchase and accept
from Sellers, and Sellers shall sell, convey, assign, transfer
and deliver to Purchaser, on the dates and in the manner
specified in this Article II, all of each Seller's right, title
and interest in the Purchased Assets.
(b) Subject to all of the terms and conditions set forth
in this Agreement and in reliance on the representations and
warranties set forth herein, Purchaser shall assume, on the dates
and in the manner specified in this Article II, and thereafter
fully and timely pay, perform and discharge when due, the Assumed
Liabilities.
(c) Purchaser understands and agrees that it is
purchasing only the Purchased Assets (and assuming only the
Assumed Liabilities) specified in this Agreement and except as
may be expressly provided for in this Agreement, Purchaser has no
interest in (i) any other business relationship which Sellers or
their Affiliates have or may have with any Customer or (ii) any
other customer of Sellers or their Affiliates. Purchaser further
understands and agrees that Sellers and their Affiliates are
retaining any and all rights and claims which any of them may
have, including but not limited to indemnification or
reimbursement rights, with respect to the Purchased Assets and
the Assumed Liabilities, to the extent that such rights or claims
relate to the conduct of the business of the Business prior to
the day on which the Purchased Assets and Assumed Liabilities
from which such rights or claims arise out of are transferred to
Purchaser, unless such rights or claims relate to liabilities,
duties, responsibilities and obligations of Sellers are included
in the Assumed Liabilities.
(d) Except for the Assumed Liabilities and except as
otherwise set forth in this Agreement, Purchaser shall not assume
or be bound by any duties, responsibilities, obligations or
liabilities of any kind or nature, whether known or unknown,
whether asserted or unasserted, whether accrued or unaccrued,
whether contingent or otherwise.
Section 2.2. First Closing.
(a) The first closing of the purchase and sale of the
Purchased Assets and assumption of the Assumed Liabilities (the
"First Closing") will take place at the offices of Edwards &
Angell, LLP, 101 Federal Street, 23rd Floor, Boston,
Massachusetts at 9:00 a.m. on March 24, 2000, or such other date,
time and place as the parties hereto may agree (the "First
Closing Date").
(b) At the First Closing, Sellers shall sell, convey,
assign, transfer and deliver to the Purchaser, and Purchaser
shall purchase and accept from Sellers, all of each Seller's
right, title and interest in the CT/RI Purchased Assets. The
sale of the Purchased Assets to Purchaser at the First Closing,
the Second Closing and the Third Closing shall constitute
separate sales under this Agreement.
(c) At the First Closing, Purchaser shall assume, and
thereafter fully and timely pay, perform and discharge, the CT/RI
Assumed Liabilities. The assumption of the Assumed Liabilities
at the First Closing, the Second Closing and the Third Closing
shall constitute separate assumptions of liabilities under this
Agreement.
Section 2.3. First Closing Deliveries.
(a) At the First Closing, Sellers shall deliver to
Purchaser, duly executed and acknowledged where required:
(i) Deeds for the Real Property included in CT/RI
Purchased Assets in substantially the forms of Exhibits H(1),
(2), (3) and (4) hereto, as applicable, pursuant to which the
Real Property included in CT/RI Purchased Assets shall be
transferred to Purchaser "AS IS", "WHERE IS" and with all faults
but with the benefit of any statutory quitclaim covenants;
(ii) A bill of sale for the CT/RI Purchased Assets
in substantially the form of Exhibit I hereto, to which there
shall be attached a list of the specific Purchased Assets
purchased by Purchaser at the First Closing, pursuant to which
such assets (other than the Real Property included in such
assets) shall be transferred to Purchaser "AS IS", "WHERE IS" and
with all faults;
(iii) An assignment and assumption agreement in
substantially the form of Exhibit J hereto (an "Assignment and
Assumption Agreement") with respect to the CT/RI Assumed
Liabilities to which there shall be attached a list of the
specific Assumed Liabilities assumed by Purchaser pursuant to the
terms thereof;
(iv) Lease assignment and assumption agreements in
substantially the form of Exhibit K hereto (each a "Lease
Assignment") with respect to each of the Branch Leases and ATM
Lease Agreements included in the CT/RI Purchased Assets and such
other instruments and documents as any landlord under a Branch
Lease or ATM Lease Agreement included in the CT/RI Purchased
Assets may reasonably require as necessary or desirable for
providing for the assumption by Purchaser of such Branch Lease or
ATM Lease Agreement, as applicable, each such instrument and
document to be in form and substance reasonably satisfactory to
the parties hereto and dated as of the First Closing Date;
(v) Subject to the provisions of Section 7.3
hereof, such consents of landlords under the Branch Leases and
ATM Lease Agreements included in the CT/RI Purchased Assets as
shall be required pursuant to the terms of such Branch Leases and
ATM Lease Agreements to the assignment of such Branch Leases and
ATM Lease Agreements to Purchaser and (to the extent practicable)
to the release of Sellers from liability thereunder (each a
"Landlord Consent") and any required consents of the landlords to
the execution of the CT/RI Lease Agreements;
(vi) An Officer's Certificate in substantially the
form of Exhibit L hereto;
(vii) An opinion of counsel of Sellers and Fleet
(which opinion shall not be from in-house counsel), dated the
First Closing Date, in form and substance reasonably satisfactory
to Purchaser to the effect that: (A) each of Sellers and Fleet is
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation or incorporation, with
full corporate power and authority to enter into and perform its
obligations under this Agreement; and (B) this Agreement and the
other closing documents delivered and executed by any of the
Sellers or Fleet have been duly and validly authorized, executed
and delivered by each of Sellers and Fleet and (assuming due
authorization, execution and delivery by Purchaser and Sovereign)
are legal, valid and binding obligations of each of Sellers and
Fleet to the extent it is a party thereto, enforceable against
each of Sellers and Fleet in accordance with their respective
terms, except as enforcement may be limited by receivership,
conservatorship, and supervisory powers of bank regulatory
agencies generally as well as bankruptcy, insolvency,
reorganization, moratorium or other laws of general applicability
relating to or affecting creditor's rights, or the limiting
effect of rules of law governing specific performance, equitable
relief and other equitable remedies or the waiver of rights or
remedies;
(viii) The resignation of Sellers as trustee or
custodian, as applicable, with respect to each IRA, Keogh Plan or
Employee Pension Plan deposit account included in the CT/RI
Assumed Liabilities and the designation of Purchaser as successor
trustee or custodian with respect thereto;
(ix) A limited power of attorney granting Purchaser
the authority to execute certain documents on behalf of Sellers
in substantially the form of Exhibit M hereto;
(x) The CT/RI Lease Agreements;
(xi) The FIRPTA Affidavits;
(xii) Physical possession of all CT/RI Purchased
Assets as are capable of physical delivery;
(xiii) The East Providence Lease and the Columbia Park
Lease;
(xiv) Possession of all loan files relating to the
CT/RI Purchased Assets held in the Facilities and collateral in
the custody of Sellers relating to the Loans included in the
CT/RI Purchased Assets;
(xv) A Collateral Agency Agreement and Collateral
Assignment Instruments (if such documents are required pursuant
to the terms of Section 11.11 hereof);
(xvi) An Additional Residential Mortgage Loan
Servicing Agreement and a Servicing Agreement, if Fleet
Residential Mortgage Loans are included in the CT/RI Purchased
Assets; and
(xvii) Such other documents as are necessary to effect
the transfer of the CT/RI Purchased Assets and CT/RI Assumed
Liabilities to Purchaser as Purchaser shall reasonably request.
(b) At the First Closing, Purchaser shall deliver to
Sellers, duly executed and acknowledged where required:
(i) An Assignment and Assumption Agreement with
respect to the CT/RI Assumed Liabilities;
(ii) Purchaser's acceptance of its appointment as
successor trustee or custodian, as applicable, as of the close of
business on the First Closing Date, of the IRA, Keogh Plan and
Employee Pension Plan deposit accounts included in the CT/RI
Assumed Liabilities and its assumption of the fiduciary
obligations of the trustee or custodian with respect thereto;
(iii) Lease Assignments with respect to each of the
Branch Leases and ATM Lease Agreements included in the CT/RI
Purchased Assets and such other instruments and documents as any
landlord under a Branch Lease or ATM Lease Agreement included in
the CT/RI Purchased Assets may reasonably require as necessary or
desirable for providing for the assumption by Purchaser of such
Branch Lease or ATM Lease Agreement, as applicable, each such
instrument and document in the form and substance reasonably
satisfactory to the parties hereto and dated as of the First
Closing Date;
(iv) An Officer's Certificate in substantially the
form of Exhibit N hereto;
(v) An opinion of counsel of Purchaser and
Sovereign (which opinion shall not be from in-house counsel),
dated the First Closing Date, in the form and substance
reasonably satisfactory to Sellers, to the effect that (A) each
of Purchaser and Sovereign is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
formation or incorporation, with full corporate power and
authority to enter into and perform its obligations under this
Agreement; and (B) this Agreement and the other closing documents
executed and delivered by Purchaser or Sovereign have been duly
and validly authorized, executed and delivered by each of
Purchaser and Sovereign, and (assuming due authorization,
execution and delivery by Sellers and Fleet) are legal, valid and
binding obligation of each of Purchaser and Sovereign, to the
extent it is a party thereto, enforceable against Purchaser and
Sovereign in accordance with their respective terms, except as
enforcement may be limited by receivership, conservatorship and
supervisory powers of bank regulatory agencies generally as well
as bankruptcy, insolvency, reorganization, moratorium or other
laws of general applicability relating to or affecting creditors'
rights, or the limiting effect of rules of law governing specific
performance, equitable relief and other equitable remedies of the
waiver of rights or remedies;
(vi) An Additional Residential Mortgage Loan
Servicing Agreement and a Servicing Agreement, if Fleet
Residential Mortgage Loans are included in the CT/RI Purchased
Assets;
(vii) A Purchaser's Letter of Credit, a Collateral
Agency Agreement and Collateral Assignment Instruments (if such
documents are required pursuant to the provisions of Section
11.11 hereof);
(viii) The SBA Consents for the transfer to Purchaser
of the SBA Loans included in CT/RI Purchased Assets;
(ix) The CT/RI Lease Agreements;
(x) The East Providence Lease and the Columbia Park
Lease; and
(xi) Such other documents as are necessary to effect
the transfer of the CT/RI Purchased Assets and the CT/RI Assumed
Liabilities as Sellers shall reasonably request.
Section 2.4. Second Closing.
(a) The second closing of the purchase and sale of the
Purchased Assets and assumption of the Assumed Liabilities (the
"Second Closing") will take place at the offices of Edwards &
Angell, LLP, 101 Federal Street, 23rd Floor, Boston,
Massachusetts at 9:00 a.m. on June 16, 2000 (the "Second Closing
Date"). At the Second Closing, Sellers shall sell, convey,
assign, transfer and deliver to Purchaser, and Purchaser shall
purchase and accept from Sellers all of each Seller's right,
title and interest in the Eastern MA Purchased Assets.
(b) At the Second Closing, Purchaser shall assume, and
thereafter fully and timely pay, perform and discharge, the
Eastern MA Assumed Liabilities.
Section 2.5. Second Closing Deliveries. (a) At the Second
Closing, Sellers shall deliver to Purchaser, duly executed and
acknowledged where required:
(i) Deeds for the Real Property included in the
Eastern MA Purchased Assets in substantially the forms of
Exhibit H(1), (2), (3) and (4) hereto, as applicable, pursuant to
which the Real Property included in the Eastern MA Purchased
Assets shall be transferred to Purchaser "AS IS", "WHERE IS" and
with all faults but with the benefit of any statutory quitclaim
covenants;
(ii) A bill of sale for the Eastern MA Purchased
Assets in substantially the form of Exhibit I hereto, to which
there shall be attached a list of the specific Purchased Assets
purchased by Purchaser at the Second Closing, pursuant to which
such assets (other than Real Property included in such assets)
shall be transferred to Purchaser "AS IS", "WHERE IS" and with
all faults;
(iii) An Assignment and Assumption Agreement with
respect to the Eastern MA Assumed Liabilities, to which there
shall be attached a list of the specific Assumed Liabilities
assumed by Purchaser at the Second Closing;
(iv) Lease Assignments with respect to each of the
Branch Leases and ATM Lease Agreements included in the Eastern MA
Purchased Assets and such other instruments and documents as any
landlord under a Branch Lease or ATM Lease Agreement included in
the Eastern MA Purchased Assets may reasonably require as
necessary or desirable for providing for the assumption by
Purchaser of such Branch Lease or ATM Lease Agreement, as
applicable, each such instrument and document to be in form and
substance reasonably satisfactory to the parties hereto and dated
as of the Second Closing Date;
(v) Subject to the provisions of Section 7.3 hereof,
Landlords' Consents required under the Branch Leases and ATM
Lease Agreements included in the Eastern MA Purchased Assets and
any required consents of the landlords to the execution of the
Eastern MA Lease Agreements;
(vi) The resignation of Sellers as trustee or
custodian, as applicable, with respect to each IRA, Keogh Plan or
Employee Pension Plan deposit account included in the Eastern MA
Assumed Liabilities and the designation of Purchaser as successor
trustee or custodian with respect thereto;
(vii) A limited power of attorney granting Purchaser
the authority to execute certain documents on behalf of Sellers
in substantially the form of Exhibit M hereto;
(viii) A Servicing Agreement and/or an Additional
Residential Mortgage Loan Servicing Agreement, as applicable, if
Fleet Residential Mortgage Loans or Additional Residential
Mortgage Loans are included in the Eastern MA Purchased Assets;
(ix) The Eastern MA Lease Agreements;
(x) The FIRPTA Affidavits;
(xi) Physical possession of all Eastern MA Purchased
Assets as are capable of physical delivery;
(xii) Possession of the BBNA Precious Metals in the
possession of Sellers, together with an inventory thereof as of
the close of business on the Second Closing Date;
(xiii) Possession of all loan files relating to the
Eastern MA Purchased Assets held in the Facilities and collateral
in the custody of Sellers relating to the Loans included in the
Eastern MA Purchased Assets;
(xiv) The License Agreement;
(xv) A Collateral Agency Agreement and Collateral
Assignment Instruments (if such documents are required pursuant
to the terms of Section 11.11 hereof);
(xvi) An opinion of counsel of Sellers and Fleet
(which opinion shall not be from in-house counsel), dated the
Second Closing Date, in form and substance reasonably
satisfactory to Purchaser to the effect that: (A) each of Sellers
and Fleet is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation or
incorporation, with full corporate power and authority to enter
into and perform its obligations under this Agreement; and (B)
this Agreement and the other closing documents delivered and
executed by any of the Sellers or Fleet have been duly and
validly authorized, executed and delivered by each of Sellers and
Fleet and (assuming due authorization, execution and delivery by
Purchaser and Sovereign) are legal, valid and binding obligations
of each of Sellers and Fleet to the extent it is a party thereto,
enforceable against each of Sellers and Fleet in accordance with
their respective terms, except as enforcement may be limited by
receivership, conservatorship, and supervisory powers of bank
regulatory agencies generally as well as bankruptcy, insolvency,
reorganization, moratorium or other laws of general applicability
relating to or affecting creditor's rights, or the limiting
effect of rules of law governing specific performance, equitable
relief and other equitable remedies or the waiver of rights or
remedies; and
(xvii) Such other documents as are necessary to effect
the transfer of the Eastern MA Purchased Assets and the Eastern
MA Assumed Liabilities to Purchaser as Purchaser shall reasonably
request.
(b) At the Second Closing, Purchaser shall deliver to
Sellers, duly executed and acknowledged where required:
(i) An Assignment and Assumption Agreement with
respect to the Eastern MA Assumed Liabilities;
(ii) Purchaser's acceptance of its appointment as
successor trustee or custodian, as applicable, as of the close of
business on the Second Closing Date, of the IRA, Keogh Plan and
Employee Pension Plan deposit accounts included in the Eastern MA
Assumed Liabilities and its assumption of the fiduciary
obligations of the trustee or custodian with respect thereto;
(iii) Lease Assignments with respect to each of the
Branch Leases and ATM Lease Agreements included in the Eastern MA
Purchased Assets and such other instruments and documents as any
landlord under a Branch Lease or ATM Lease Agreement included in
the Eastern MA Purchased Assets may reasonably require as
necessary or desirable for providing for the assumption by
Purchaser of such Branch Lease or ATM Lease Agreement, as
applicable, each such instrument and document in the form and
substance reasonably satisfactory to the parties hereto and dated
as of the Second Closing Date;
(iv) An opinion of counsel of Purchaser and
Sovereign (which opinion shall not be from in-house counsel),
dated the Second Closing Date, in the form and substance
reasonably satisfactory to Sellers, to the effect that (A) each
of Purchaser and Sovereign is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
formation or incorporation, with full corporate power and
authority to enter into and perform its obligations under this
Agreement; and (B) this Agreement and the other closing documents
executed and delivered by Purchaser or Sovereign have been duly
and validly authorized, executed and delivered by each of
Purchaser and Sovereign, and (assuming due authorization,
execution and delivery by Sellers and Fleet) are legal, valid and
binding obligation of each of Purchaser and Sovereign, to the
extent it is a party thereto, enforceable against Purchaser and
Sovereign in accordance with their respective terms, except as
enforcement may be limited by receivership, conservatorship and
supervisory powers of bank regulatory agencies generally as well
as bankruptcy, insolvency, reorganization, moratorium or other
laws of general applicability relating to or affecting creditors'
rights, or the limiting effect of rules of law governing specific
performance, equitable relief and other equitable remedies of the
waiver of rights or remedies;
(v) A Purchaser's Letter of Credit, a Collateral
Agency Agreement and Collateral Assignment Instruments (if such
documents are required pursuant to the terms of such Section
11.11 hereof);
(vi) The SBA Consents for the transfer to Purchaser
of the SBA Loans included in Eastern MA Purchased Assets;
(vii) The Eastern MA Lease Agreements;
(viii) A Servicing Agreement and/or an Additional
Residential Mortgage Loan Servicing Agreement, as applicable, if
Fleet Residential Mortgage Loans or Additional Residential
Mortgage Loans are included in the Eastern MA Purchased Assets;
(ix) The License Agreement; and
(x) Such other documents as are necessary to effect
the transfer of the Eastern MA Purchased Assets and the Eastern
MA Assumed Liabilities to Purchaser as Sellers shall reasonably
request.
Section 2.6. Third Closing.
(a) The third closing of the purchase and sale of the
Purchased Assets and assumption of the Assumed Liabilities (the
"Third Closing") will take place at the offices of Edwards &
Angell, LLP, 101 Federal Street, Boston, Massachusetts at 9:00
a.m. on July 21, 2000 (the "Third Closing Date"). At the Third
Closing Sellers shall sell, convey, assign, transfer and deliver
to Purchaser, and Purchaser shall purchase and accept from the
Sellers, all of each Seller's right, title and interest in all of
the Purchased Assets which were not transferred to Purchaser at
the First Closing or the Second Closing, including but not
limited to the Western MA Purchased Assets (the "Third Closing
Purchased Assets").
(b) At the Third Closing, Purchaser shall assume, and
thereafter fully and timely pay, perform and discharge, all of
the Assumed Liabilities which were not assumed by Purchaser at
the First Closing or the Second Closing, including but not
limited to the Western MA Assumed Liabilities (the "Third Closing
Assumed Liabilities").
Section 2.7. Third Closing Deliveries.
(a) At the Third Closing, Sellers shall deliver to Purchaser,
duly executed and acknowledged where required:
(i) Deeds for the Real Property included in the
Third Closing Purchased Assets in substantially the form of
Exhibit H(1), (2), (3) or (4), as applicable, pursuant to which
the Real Property included in the Third Closing Purchased Assets
shall be transferred to Purchaser "AS IS", "WHERE IS" and with
all faults but with the benefit of any statutory quitclaim
covenants;
(ii) A bill of sale for the Third Closing Purchased
Assets in substantially the form of Exhibit I hereto, to which
there shall be attached a list of the specific Purchased Assets
purchased by Purchaser at the Third Closing, pursuant to which
the Third Closing Purchased Assets (other than the Real Property
included in the Third Closing Purchased Assets) shall be
transferred to Purchaser "AS IS", "WHERE IS" and with all faults;
(iii) An Assignment and Assumption Agreement with
respect to the Third Closing Assumed Liabilities, to which there
shall be attached a list of the specific Assumed Liabilities
assumed by Purchaser at the Third Closing;
(iv) Lease Assignments with respect to each of the
Branch Leases and ATM Lease Agreements included in the Third
Closing Purchased Assets and such other instruments and documents
as any landlord under a Branch Lease or ATM Lease Agreement
included in the Third Closing Purchased Assets may reasonably
require as necessary or desirable for providing for the
assumption by Purchaser of such Branch Lease or ATM Lease
Agreement, as applicable, each such instrument and document to be
in form and substance reasonably satisfactory to the parties
hereto and dated as of the Third Closing Date;
(v) Subject to the provisions of Section 7.3
hereof, Landlords' Consents under the Branch Leases and ATM Lease
Agreements included in the Third Closing Purchased Assets;
(vi) The resignation of Sellers as trustee or
custodian, as applicable, with respect to each IRA, Keogh Plan or
Employee Pension Plan deposit account included in the Third
Closing Assumed Liabilities and the designation of Purchaser as
successor trustee or custodian with respect thereto;
(vii) A limited power of attorney granting Purchaser
the authority to execute certain documents on behalf of Sellers
in substantially the form of Exhibit M hereto;
(viii) A Servicing Agreement and/or an Additional
Residential Mortgage Loan Servicing Agreement, as applicable, if
Fleet Residential Mortgage Loans or Additional Residential
Mortgage Loans are included in the Third Closing Purchased
Assets;
(ix) The FIRPTA Affidavits;
(x) Physical possession of all Third Closing
Purchased Assets as are capable of physical delivery;
(xi) Possession of all loan files relating to the
Third Closing Purchased Assets held in the Facilities and
collateral in the custody of Sellers relating to the Loans
included in the Third Closing Purchased Assets;
(xii) A Collateral Agency Agreement and Collateral
Assignment Instruments (if such documents are required pursuant
to the terms of Section 11.11 hereof);
(xiii) An opinion of counsel of Sellers and Fleet
(which opinion shall not be from in-house counsel), dated the
Third Closing Date, in form and substance reasonably satisfactory
to Purchaser to the effect that: (A) each of Sellers and Fleet is
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation or incorporation, with
full corporate power and authority to enter into and perform its
obligations under this Agreement; and (B) this Agreement and the
other closing documents delivered and executed by any of the
Sellers or Fleet have been duly and validly authorized, executed
and delivered by each of Sellers and Fleet and (assuming due
authorization, execution and delivery by Purchaser and Sovereign)
are legal, valid and binding obligations of each of Sellers and
Fleet to the extent it is a party thereto, enforceable against
each of Sellers and Fleet in accordance with their respective
terms, except as enforcement may be limited by receivership,
conservatorship, and supervisory powers of bank regulatory
agencies generally as well as bankruptcy, insolvency,
reorganization, moratorium or other laws of general applicability
relating to or affecting creditor's rights, or the limiting
effect of rules of law governing specific performance, equitable
relief and other equitable remedies or the waiver of rights or
remedies; and
(xiv) Such other documents as are necessary to effect
the transfer of all of the Purchased Assets which were not
transferred to Purchaser at the First Closing or the Second
Closing, including but not limited to the Third Closing Purchased
Assets, and to effect the transfer of all of the Assumed
Liabilities which were not assumed by Purchaser at the First
Closing or the Second Closing, including but not limited to the
Third Closing Assumed Liabilities, as Purchaser shall reasonably
request.
(b) At the Third Closing, Purchaser shall deliver to
Sellers, duly executed and acknowledged where required:
(i) An Assignment and Assumption Agreement with
respect to the Third Closing Assumed Liabilities;
(ii) Purchaser's acceptance of its appointment as
successor trustee or custodian, as applicable, as of the close of
business on the Third Closing Date, of the IRA, Keogh Plan and
Employee Pension Plan deposit accounts included in the Third
Closing Assumed Liabilities and its assumption of the fiduciary
obligations of the trustee or custodian with respect thereto;
(iii) Lease Assignments with respect to each of the
Branch Leases and ATM Lease Agreements included in the Third
Closing Purchased Assets and such other instruments and documents
as any landlord under a Branch Lease or ATM Lease Agreement
included in the Third Closing Purchased Assets may reasonably
require as necessary or desirable for providing for the
assumption by Purchaser of such Branch Lease or ATM Lease
Agreement, as applicable, each such instrument and document in
the form and substance reasonably satisfactory to the parties
hereto and dated as of the Third Closing Date;
(iv) An opinion of counsel of Purchaser and
Sovereign (which opinion shall not be from in-house counsel),
dated the Third Closing Date, in the form and substance
reasonably satisfactory to Sellers, to the effect that (A) each
of Purchaser and Sovereign is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
formation or incorporation, with full corporate power and
authority to enter into and perform its obligations under this
Agreement; and (B) this Agreement and the other closing documents
executed and delivered by Purchaser or Sovereign have been duly
and validly authorized, executed and delivered by each of
Purchaser and Sovereign, and (assuming due authorization,
execution and delivery by Sellers and Fleet) are legal, valid and
binding obligation of each of Purchaser and Sovereign, to the
extent it is a party thereto, enforceable against Purchaser and
Sovereign in accordance with their respective terms, except as
enforcement may be limited by receivership, conservatorship and
supervisory powers of bank regulatory agencies generally as well
as bankruptcy, insolvency, reorganization, moratorium or other
laws of general applicability relating to or affecting creditors'
rights, or the limiting effect of rules of law governing specific
performance, equitable relief and other equitable remedies of the
waiver of rights or remedies;
(v) A Purchaser's Letter of Credit, a Collateral
Agency Agreement and Collateral Assignment Instruments (if such
documents are required pursuant to the terms of Section 11.11
hereof);
(vi) A Servicing Agreement and/or an Additional
Residential Mortgage Loan Servicing Agreement, as applicable, if
Fleet Residential Mortgage Loans or Additional Residential
Mortgage Loans are included in the Third Closing Purchased
Assets;
(vii) The SBA Consents for the transfer to Purchaser
of the SBA Loans included in the Third Closing Purchased Assets;
and
(viii) Such other documents as are necessary to effect
the transfer to Purchaser of all of the Purchased Assets which
were not transferred to Purchaser at the First Closing or the
Second Closing, including but not limited to the Western MA
Purchased Assets, and to effect the transfer of all of the
Assumed Liabilities to Purchaser which were not assumed by
Purchaser at the First Closing or the Second Closing, including
but not limited to the Western MA Assumed Liabilities, as Sellers
shall reasonably request.
ARTICLE III
PURCHASE PRICE; PAYMENT OF PURCHASE PRICE
Section 3.1. Purchase Price. The purchase price (the "Purchase
Price") for the Purchased Assets shall be an amount computed as
follows:
(a) An amount equal to twelve percent (12%) of the
Deposit Liabilities transferred to Purchaser at the First
Closing, the Second Closing and the Third Closing; PLUS
(b) The aggregate of the Real Property Purchase Prices
for all of the Real Property transferred to Purchaser at the
First Closing, the Second Closing and the Third Closing; PLUS
(c) The aggregate Net Book Value of the Fixed Assets
transferred to Purchaser at the First Closing, the Second Closing
and the Third Closing; PLUS
(d) The Loan Value of the Loans transferred to Purchaser
at the First Closing, the Second Closing and the Third Closing;
PLUS
(e) The aggregate unpaid principal balance of the
Advance Lines and the Negative Deposits transferred to Purchaser
at the First Closing, the Second Closing and the Third Closing;
PLUS
(f) The aggregate Net Book Value of the ATMs transferred
to Purchaser at the First Closing, the Second Closing and the
Third Closing; PLUS
(g) The aggregate Net Book Value of the CRA Equity
Holdings transferred to Purchaser at the First Closing, the
Second Closing and the Third Closing; PLUS
(h) The aggregate amount of Cash transferred to
Purchaser at the First Closing, the Second Closing and the Third
Closing; PLUS
(i) The Fair Market Value of the BBNA Precious Metals
(exclusive of such BBNA Precious Metals already included in the
Loan Value of a particular loan under Section 3.1(d) hereof)
transferred to Purchaser at the First Closing, the Second Closing
and the Third Closing; PLUS
(j) (i) The Swap Portfolio Adjustment, if such
adjustment is a positive number or (ii) if the Swap Portfolio
Adjustment is a negative number MINUS the absolute value of the
Swap Portfolio Adjustment; PLUS
(k) The aggregate Net Book Value of the Floor Plan
Assets, other than Floor Plan Loans, transferred to Purchaser at
the First Closing, the Second Closing and the Third Closing; PLUS
(l) The aggregate Net Book Value of the CAF Assets,
other than the CAF Loans, transferred to Purchaser at the First
Closing, the Second Closing and the Third Closing; PLUS
(m) The Hiring Commitment Adjustment; MINUS
(n) The Loan Sale Adjustment.
Section 3.2. Deposit. Simultaneously with the execution of this
Agreement, Purchaser shall pay to Sellers a deposit in the amount
of Two Hundred Million Dollars ($200,000,000) (the "Earnest Money
Deposit"). Purchaser shall pay the Earnest Money Deposit to
Sellers in immediately available funds by a wire transfer to an
account at Fleet National Bank previously designated by Sellers.
If the Third Closing occurs, the Purchase Price shall be credited
by the amount of the Earnest Money Deposit, together with
interest thereon calculated at a simple interest rate of 5.65%
per annum (based on a 360-day year) (the "Deposit Interest
Rate"), and the balance of the Purchase Price shall be paid in
accordance with Section 3.5 hereof. If the Third Closing does
not occur by July 31, 2000 or such later date as may be deemed by
the DOJ, the Board and the Massachusetts Attorney General to be
the latest date for the completion of the Third Closing (the
earliest of any later dates required by the DOJ, the Board and
the Massachusetts Attorney General to be the final date for
purposes of this Section 3.2 but in no event shall such later
date be later than September 30, 2000), the Earnest Money
Deposit, together with interest thereon calculated at the Deposit
Interest Rate, will be immediately refunded to Purchaser
provided; however, that if the failure of the Third Closing to
occur is because of Purchaser's or Sovereign's breach of this
Agreement, Purchaser's or Sovereign's failure to satisfy all of
the conditions precedent to Fleet and Sellers' obligations set
forth in Sections 12.1 and 12.3 of this Agreement, or Sellers'
failure or refusal to close which failure or refusal was caused
by the willful misconduct of Purchaser or Sovereign, then Sellers
shall retain the Earnest Money Deposit plus accrued interest
thereon; provided further, however, that the Earnest Money
Deposit will be immediately refunded to Purchaser if the Third
Closing does not occur by July 31, 2000 if any court or
governmental authority or regulatory authority of competent
jurisdiction (other than the Office of Thrift Supervision or any
state regulatory authority which has competent jurisdiction with
respect to Sovereign or the Purchaser) shall have enacted,
issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect to
enjoin, or which prohibits, consummation of the transactions
contemplated hereby unless such action by such court,
governmental authority or regulatory authority is due to the
failure of Sovereign or Purchaser to fulfill any of its
obligations under this Agreement.
Section 3.3. First Closing Payment.
(a) The amount of the Purchase Price which shall be due
at the First Closing shall be an amount computed as follows (the
"First Closing Purchase Price"):
(i) An amount equal to twelve percent (12%) of the
Deposit Liabilities assumed by Purchaser at the First Closing;
PLUS
(ii) The aggregate of the Real Property Purchase
Prices for all of the Real Property transferred to Purchaser at
the First Closing; PLUS
(iii) The aggregate Net Book Value of the Fixed
Assets transferred to Purchaser at the First Closing, calculated
as of the close of business on the First Closing Date; PLUS
(iv) The First Closing Loan Value of the Loans
transferred to Purchaser at the First Closing, calculated as of
the close of business on the First Closing Date; PLUS
(v) The aggregate of the unpaid principal balance
of the Advance Lines and the Negative Deposits transferred to
Purchaser at the First Closing, calculated as of the close of
business on the First Closing Date; PLUS
(vi) The aggregate Net Book Value of the ATMs
transferred to Purchaser at the First Closing, calculated as of
the close of business on the First Closing Date; PLUS
(vii) The aggregate Net Book Value of the CRA Equity
Holdings transferred to Purchaser at the First Closing,
calculated as of the close of business on the First Closing Date;
PLUS
(viii) The aggregate Net Book Value of the CAF Assets
transferred to the Purchaser at the First Closing, other than the
CAF Loans, calculated as of the close of business on the First
Closing Date; PLUS
(ix) The aggregate Net Book Value of the Floor Plan
Assets transferred to Purchaser at the First Closing, other than
the Floor Plan Loans, calculated as of the close of business on
the First Closing Date; Plus
(x) The Fair Market Value of the BBNA Precious
Metals (exclusive of such BBNA Precious Metals already included
in the Loan Value of a particular Loan under Section 3.3(a)(iv)
hereof) transferred to Purchaser at the First Closing, calculated
as of the close of business on the First Closing Date; plus
(xi) The aggregate amount of Cash transferred to
Purchaser at the First Closing; PLUS
(xii) (i) The First Closing Swap Portfolio
Adjustment, if such adjustment is a positive number or (ii) if
the First Closing Swap Portfolio Adjustment is a negative number
MINUS the absolute value of the First Closing Swap Portfolio
Adjustment; minus
(xiii) The First Closing Loan Sale Adjustment.
(b) On or prior to the second (2nd) Business Day
immediately preceding the First Closing Date, Sellers shall
deliver to Purchaser a Draft Closing Statement for the First
Closing. On the First Closing Date, (i) Sellers shall pay to
Purchaser by wire transfer of immediately available funds to such
account as Purchaser shall advise Sellers no later than three (3)
Business Days prior to the First Closing ("Purchaser's Account")
the amount by which the aggregate amount (including Accrued
Interest) of the Deposit Liabilities assumed by Purchaser at the
First Closing as of the close of business on the fifth (5th)
Business Day preceding the First Closing Date exceeds the First
Closing Estimated Purchase Price, or (ii) if the First Closing
Estimated Purchase Price exceeds the aggregate amount (including
Accrued Interest) of the Deposit Liabilities assumed by Purchaser
at the First Closing as of the close of business on the fifth
(5th) Business Day preceding the First Closing Date (the amount
calculated pursuant to subparagraph (i) or (ii) hereof, the
"First Closing Estimated Payment Amount"), Purchaser shall pay to
Sellers, by wire transfer of immediately available funds to such
account as Sellers shall advise Purchaser no later than three (3)
Business Days prior to the First Closing Date ("Sellers'
Account"), the amount of such excess.
(c) On or before 12:00 noon on the thirtieth (30th) day
following the First Closing Date, Sellers shall deliver to
Purchaser a statement setting forth (i) the First Closing
Purchase Price (including all adjustments and prorations thereto)
and each component thereof (including with respect to the Loans a
schedule as of the close of business on the First Closing Date of
the Loans transferred to Purchaser on the First Closing Date (the
"First Closing Final Loan Schedule")) and (ii) the amount of
Deposit Liabilities (including Accrued Interest thereon) assumed
by Purchaser as of the close of business on the First Closing
Date. Sellers shall make available to Purchaser such work
papers, schedules and other supporting data as may be reasonably
requested by Purchaser to enable Purchaser to verify such
determinations. Such statement shall also set forth, as
applicable, (i) the amount by which the aggregate balance of the
Deposit Liabilities (including Accrued Interest thereon)
transferred to Purchaser on the First Closing Date exceeded the
First Closing Purchase Price (including all adjustments and
prorations thereto) calculated as of the close of business on the
First Closing Date or (ii) the amount by which the First Closing
Purchase Price, including all adjustments and prorations thereto
exceeded the aggregate balance of the Deposit Liabilities assumed
by Purchaser on the First Closing Date, calculated as of the
close of business on the First Closing Date (the amount
calculated pursuant to subparagraph (i) or (ii) hereof the "First
Closing Adjusted Payment Amount").
(d) On or before 12:00 noon on the forty-fifth (45) day
following the First Closing Date, Sellers shall pay to Purchaser
by wire transfer of immediately available funds to Purchaser's
Account, an amount equal to the excess of the First Closing
Adjusted Payment Amount over the First Closing Estimated Payment
Amount, plus interest calculated using the Federal Funds Rate on
such excess amount from the First Closing Date to but excluding
the payment date, or, if the First Closing Estimated Payment
Amount exceeds the First Closing Adjusted Payment Amount,
Purchaser shall pay to Sellers by wire transfer of immediately
available funds to Sellers' Account, an amount equal to such
excess, plus interest thereon calculated using the Federal Funds
Rate from the First Closing Date to but excluding the payment
date. Any payment pursuant to this Section 3.3(d) shall be
treated for all purposes as an adjustment to the Purchase Price.
(e) In the event that with respect to a VISAr Loan
purchased by Purchaser at the First Closing (i) Sellers are
debited by VISAr for a chargeback in respect of a purchase made
by a cardholder on an account on or before the First Closing Date
or a check from a cardholder in payment of amounts owed on a
credit card account, which was credited to such account on or
before the First Closing Date, is returned unpaid by the drawee
on or after the First Closing Date, or (ii) Sellers receive a
credit on or after the First Closing Date with respect to a
transaction charged to an account on or before the First Closing
Date, and such debit or credit is not reflected in the
calculation of the First Closing Adjusted Payment Amount, Sellers
or Purchaser, as the case may be, shall reimburse the other party
for such debit, unpaid amount or recovery, without regard to any
discount or premium.
(f) Except as provided in the next sentence, all
payments with respect to any Loan purchased by Purchaser at the
First Closing received by any Seller or Purchaser on or prior to
the close of business on the First Closing Date (the "First
Closing Cut-off Date") shall be the property of Sellers, and all
payments with respect to such Loan received by any Seller or
Purchaser after the First Closing Cut-off Date shall be the
property of Purchaser. Any payments with respect to any Loan
purchased by Purchaser at the First Closing received by any
Seller prior to the First Cut-off Date that are not reflected in
the calculation of the First Closing Adjusted Payment Amount and
any payments with respect to any Loan purchased by Purchaser at
the First Closing received after the First Closing Cut-off Date
shall be promptly forwarded by such Seller to Purchaser.
Section 3.4. Second Closing Payment.
(a) The amount of Purchase Price which shall be due at
the Second Closing shall be an amount computed as follows (the
"Second Closing Purchase Price"):
(i) An amount equal to twelve percent (12%) of the
Deposit Liabilities assumed by Purchaser at the Second Closing;
PLUS
(ii) The aggregate of the Real Property Purchase
Prices for all of the Real Property transferred to Purchaser at
the Second Closing; PLUS
(iii) The aggregate Net Book Value of the Fixed
Assets transferred to Purchaser at the Second Closing, calculated
as of the close of business on the Second Closing Date; PLUS
(iv) The Second Closing Loan Value of the Loans
transferred to Purchaser at the Second Closing, calculated as of
the close of business on the Second Closing Date; PLUS
(v) The aggregate of the unpaid principal balance
of the Advance Lines and the Negative Deposits transferred to
Purchaser at the Second Closing, calculated as of the close of
business on the Second Closing Date; PLUS
(vi) The aggregate Net Book Value of the ATMs
transferred to Purchaser at the Second Closing, calculated as of
the close of business on the Second Closing Date; PLUS
(vii) The aggregate Net Book Value of the CRA Equity
Holdings transferred to Purchaser at the Second Closing,
calculated as of the close of business on the Second Closing
Date; PLUS
(viii) The aggregate amount of Cash transferred to
Purchaser at the Second Closing; PLUS
(ix) The aggregate Net Book Value of the CAF Assets
transferred to the Purchaser at the Second Closing, other than
the CAF Loans, calculated as of the close of business on the
Second Closing Date; PLUS
(x) The aggregate Net Book Value of the Floor Plan
Assets transferred to Purchaser at the Second Closing, other than
the Floor Plan Loans, calculated as of the close of business on
the Second Closing Date; Plus
(xi) The Fair Market Value of the BBNA Precious
Metals (exclusive of such BBNA Precious Metals already included
in the Loan Value of a particular Loan under Section 3.4(a)(iv)
hereof) transferred to Purchaser at the Second Closing,
calculated as of the close of business on the Second Closing
Date; plus
(xii) (i) The Second Closing Swap Portfolio
Adjustment, if such adjustment is a positive number or (ii) if
the Swap Portfolio Adjustment is a negative number MINUS the
absolute value of the Second Closing Swap Portfolio Adjustment;
minus
(xiii) The Second Closing Loan Sale Adjustment.
(b) On or prior to the second (2nd) Business Day
immediately preceding the Second Closing Date, Sellers shall
deliver to Purchaser a Draft Closing Statement for the Second
Closing. On the Second Closing Date, (i) Sellers shall pay to
Purchaser by wire transfer of immediately available funds to
Purchaser's Account the amount by which the aggregate amount
(including Accrued Interest) of the Deposit Liabilities assumed
by Purchaser at the Second Closing as of the close of business on
the fifth (5th) Business Day preceding the Second Closing Date
exceeds the Second Closing Estimated Purchase Price, or (ii) if
the Second Closing Estimated Purchase Price exceeds the aggregate
amount (including Accrued Interest) of the Deposit Liabilities
assumed by Purchaser at the Second Closing as of the close of
business in the fifth (5th) Business Day preceding the Second
Closing Date (the amount calculated pursuant to subparagraph (i)
or (ii) hereof, the "Second Closing Estimated Payment Amount"),
Purchaser shall pay to Sellers, by wire transfer of immediately
available funds to Sellers' Account, the amount of such excess.
(c) On or before 12:00 noon on the thirtieth (30th) day
following the Second Closing Date, Sellers shall deliver to
Purchaser a statement setting forth (i) the Second Closing
Purchase Price (including all adjustments and prorations thereto)
and each component thereof (including with respect to the Loans a
schedule as of the close of business on the Second Closing Date
of the Loans transferred to Purchaser on the Second Closing Date
(the "Second Closing Final Loan Schedule")) and (ii) the amount
of Deposit Liabilities (including Accrued Interest thereon)
assumed by Purchaser as of the close of business on the Second
Closing Date. Sellers shall make available to Purchaser such
work papers, schedules and other supporting data as may be
reasonably requested by Purchaser to enable Purchaser to verify
such determinations. Such statement shall also set forth, as
applicable, (i) the amount by which the aggregate balance of the
Deposit Liabilities (including Accrued Interest thereon)
transferred to Purchaser on the Second Closing Date exceeded the
Second Closing Purchase Price (including all adjustments and
prorations thereto) calculated as of the close of business on the
Second Closing Date or (ii) the amount by which the Second
Closing Purchase Price, including all adjustments and prorations
thereto exceeded the aggregate balance of the Deposit Liabilities
assumed by Purchaser on the Second Closing Date, calculated as of
the close of business on the Second Closing Date (the amount
calculated pursuant to subparagraph (i) or (ii) hereof the
"Second Closing Adjusted Payment Amount").
(d) On or before 12:00 noon on the forty-fifth (45) day
following the Second Closing Date, Sellers shall pay to Purchaser
by wire transfer of immediately available funds to Purchaser's
Account, an amount equal to the excess of the Second Closing
Adjusted Payment Amount over the Second Closing Estimated Payment
Amount, plus interest calculated using the Federal Funds Rate on
such excess amount from the Second Closing Date to but excluding
the payment date, or, if the Second Closing Estimated Payment
Amount exceeds the Second Closing Adjusted Payment Amount,
Purchaser shall pay to Sellers by wire transfer of immediately
available funds to Sellers' Account, an amount equal to such
excess, plus interest thereon calculated using the Federal Funds
Rate from the Second Closing Date to but excluding the payment
date. Any payment pursuant to this Section 3.4(d) shall be
treated for all purposes as an adjustment to the Purchase Price.
(e) In the event that with respect to a VISAr Loan
purchased by Purchaser at the Second Closing (i) Sellers are
debited by VISAr for a chargeback in respect of a purchase made
by a cardholder on an account on or before the Second Closing
Date or a check from a cardholder in payment of amounts owed on a
credit card account, which was credited to such account on or
before the Second Closing Date, is returned unpaid by the drawee
on or after the Second Closing Date, or (ii) Sellers receive a
credit on or after the Second Closing Date with respect to a
transaction charged to an account on or before the Second Closing
Date, and such debit or credit is not reflected in the
calculation of the Second Closing Adjusted Payment Amount,
Sellers or Purchaser, as the case may be, shall reimburse the
other party for such debit, unpaid amount or recovery, without
regard to any discount or premium.
(f) Except as provided in the next sentence, all
payments with respect to any Loan purchased by Purchaser at the
Second Closing received by any Seller or Purchaser on or prior to
the close of business on the Second Closing Date (the "Second
Closing Cut-off Date") shall be the property of Sellers, and all
payments with respect to such Loan received by any Seller or
Purchaser after the Second Closing Cut-off Date shall be the
property of Purchaser. Any payments with respect to any Loan
purchased by Purchaser at the Second Closing received by any
Seller prior to the Second Cut-off Date that are not reflected in
the calculation of the Second Closing Adjusted Payment Amount and
any payments with respect to any Loan purchased by Purchaser at
the Second Closing received after the Second Closing Cut-off Date
shall be promptly forwarded by such Seller to Purchaser.
Section 3.5. Third Closing Payment.
(a) The amount of the Purchase Price which shall be
payable at the Third Closing shall be an amount equal to the
following (the "Third Closing Purchase Price"):
(i) The Purchase Price; MINUS
(ii) The First Closing Purchase Price; MINUS
(iii) The Second Closing Purchase Price; MINUS
(iv) The Deposit;
provided, however, that if, after giving effect to the purchase
of the Third Closing Purchased Assets, the assumption of the
Third Closing Assumed Liabilities and the payment of the Third
Closing Purchase Price, Sovereign's Leverage Ratio is lower than
its Minimum Capital Requirement, then the amount of the Purchase
Price which shall be payable at the Third Closing shall be an
amount equal to the following:
(i) The Purchase Price; minus
(ii) The First Closing Purchase Price; minus
(iii) The Second Closing Purchase Price; minus
(iv) The Deposit; minus
(v) The Deferred Contingent Amount.
(b) On or prior to the second (2nd) Business Day
immediately preceding the Third Closing Date, Sellers shall
deliver to Purchaser a Draft Closing Statement for the Third
Closing. On the Third Closing Date, (i) Sellers shall pay to
Purchaser by wire transfer of immediately available funds to
Purchaser's Account the amount by which the aggregate amount
(including Accrued Interest) of the Deposit Liabilities assumed
by Purchaser at the Third Closing as of the close of business on
the fifth (5th) Business Day preceding the Third Closing Date
exceeds the Third Closing Estimated Purchase Price, or (ii) if
the Third Closing Estimated Purchase Price exceeds the aggregate
amount (including Accrued Interest) of the Deposit Liabilities
assumed by Purchaser at the Third Closing as of the close of
business in the fifth (5th) Business Day preceding the Third
Closing Date (the amount calculated pursuant to subparagraph (i)
or (ii) hereof, the "Third Closing Estimated Payment Amount"),
Purchaser shall pay to Sellers, by wire transfer of immediately
available funds to Sellers' Account, the amount of such excess.
(c) On or before 12:00 noon on the thirtieth (30th) day
following the Third Closing Date, Sellers shall deliver to
Purchaser a statement setting forth (i) the Third Closing
Purchase Price (including all adjustments and prorations thereto)
and each component thereof (including with respect to the Loans a
schedule as of the close of business on the Third Closing Date of
the Loans transferred to Purchaser on the Third Closing Date (the
"Third Closing Final Loan Schedule")) and (ii) the amount of
Deposit Liabilities (including Accrued Interest thereon) assumed
by Purchaser as of the close of business on the Third Closing
Date. Sellers shall make available to Purchaser such work
papers, schedules and other supporting data as may be reasonably
requested by Purchaser to enable Purchaser to verify such
determinations. Such statement shall also set forth, as
applicable, (i) the amount by which the aggregate balance of the
Deposit Liabilities (including Accrued Interest thereon)
transferred to Purchaser on the Third Closing Date exceeded the
Third Closing Purchase Price (including all adjustments and
prorations thereto) calculated as of the close of business on the
Third Closing Date or (ii) the amount by which the Third Closing
Purchase Price, including all adjustments and prorations thereto
exceeded the aggregate balance of the Deposit Liabilities assumed
by Purchaser on the Third Closing Date, calculated as of the
close of business on the Third Closing Date (the amount
calculated pursuant to subparagraph (i) or (ii) hereof the "Third
Closing Adjusted Payment Amount").
(d) On or before 12:00 noon on the forty-fifth (45) day
following the Third Closing Date, Sellers shall pay to Purchaser
by wire transfer of immediately available funds to Purchaser's
Account, an amount equal to the excess of the Third Closing
Adjusted Payment Amount over the Third Closing Estimated Payment
Amount, plus interest calculated using the Federal Funds Rate on
such excess amount from the Third Closing Date to but excluding
the payment date, or, if the Third Closing Estimated Payment
Amount exceeds the Third Closing Adjusted Payment Amount,
Purchaser shall pay to Sellers by wire transfer of immediately
available funds to Sellers' Account, an amount equal to such
excess, plus interest thereon calculated using the Federal Funds
Rate from the Third Closing Date to but excluding the payment
date. Any payment pursuant to this Section 3.5(d) shall be
treated for all purposes as an adjustment to the Purchase Price.
(e) In the event that with respect to a VISAr Loan
purchased by Purchaser at the Third Closing (i) Sellers are
debited by VISAr for a chargeback in respect of a purchase made
by a cardholder on an account on or before the Third Closing Date
or a check from a cardholder in payment of amounts owed on a
credit card account, which was credited to such account on or
before the Third Closing Date, is returned unpaid by the drawee
on or after the Third Closing Date, or (ii) Sellers receive a
credit on or after the Third Closing Date with respect to a
transaction charged to an account on or before the Third Closing
Date, and such debit or credit is not reflected in the
calculation of the Third Closing Adjusted Payment Amount, Sellers
or Purchaser, as the case may be, shall reimburse the other party
for such debit, unpaid amount or recovery, without regard to any
discount or premium.
(f) Except as provided in the next sentence, all
payments with respect to any Loan purchased by Purchaser at the
Third Closing received by any Seller or Purchaser on or prior to
the close of business on the Third Closing Date (the "Third
Closing Cut-off Date") shall be the property of Sellers, and all
payments with respect to such Loan received by any Seller or
Purchaser after the Third Closing Cut-off Date shall be the
property of Purchaser. Any payments with respect to any Loan
purchased by Purchaser at the Third Closing received by any
Seller prior to the Third Cut-off Date that are not reflected in
the calculation of the Third Closing Adjusted Payment Amount and
any payments with respect to any Loan purchased by Purchaser at
the Third Closing received after the Third Closing Cut-off Date
shall be promptly forwarded by such Seller to Purchaser.
Section 3.6. Deferred Contingent Amount.
(a) Subject to the provisions of this Section 3.6, in
the event that after payment of the First Closing Purchase Price,
the Second Closing Purchase Price and the Third Closing Purchase
Price, Purchaser shall not have paid to Sellers the entire amount
of the Purchase Price, Purchaser or Sovereign shall pay to Fleet,
as agent for the Sellers, by wire transfer of immediately
available funds to an account previously designated by Fleet, on
the dates and subject to the conditions set forth in this Section
3.6, the Deferred Contingent Amount, in four (4) quarterly
installments, as follows:
Deferred Contingent Deferred Contingent
Payment Dates Amount Payable
January 10, 2001 $90,000,000
April 10, 2001 $90,000,000
July 10, 2001 $125,000,000
October 10, 2001 Remaining
unpaid balance
provided that, if the Deferred Contingent Amount shall be less
than $340,000,000, the installments payable on each Deferred
Contingent Payment Date (as defined below) shall be reduced in
inverse chronological order; and provided further that in the
event that Sovereign or Purchaser shall fail to deliver at the
Third Closing a Deferred Contingent Letter of Credit or such
other assurance of payment acceptable to Fleet in its sole
discretion but Purchaser or Sovereign shall have paid to Fleet,
as agent for the Sellers, all amounts payable to Fleet, as agent
for the Sellers, on each Deferred Contingent Payment Date (other
than amounts which Sovereign and the Purchaser defer payment of
pursuant to the provisions of Section 3.6(e) hereof), the amount
of the Deferred Contingent Amount, subject to the provisions of
Section 3.6(e) hereof, payable on October 10, 2001, shall be
equal to (y) the remaining unpaid balance of the Deferred
Contingent Amount minus (y) Twenty Million Dollars ($20,000,000).
Any balance of the Deferred Contingent Amount which is otherwise
payable to Fleet, as agent for the Sellers, pursuant to this
Section 3.6 and which has not been paid to Fleet by October 10,
2001, shall be payable in full on the last Business Day of each
calendar quarter thereafter beginning with the calendar quarter
ended December 31, 2001, subject only to the payment deferral
provisions of Section 3.6(e) hereof, until paid in full in
accordance with this Section 3.6. The dates set forth above and
the last Business Day of each calendar quarter commencing with
the calendar quarter ending December 31, 2001 and continuing
thereafter until the Deferred Contingent Amount, and all accrued
interest thereon, is paid in full are herein called the "Deferred
Contingent Payment Dates".
(b) (i) If during the Deferred Contingent Payment Period
(as defined below) immediately preceding a Deferred Contingent
Payment Date, or (ii) if during the 45-day period immediately
preceding a Deferred Contingent Payment Period, Sellers are not
in material compliance with the provisions of Section 7.4 or
Section 7.5 of this Agreement, the installment of the Deferred
Contingent Amount scheduled to be paid on such Deferred
Contingent Payment Date, together with accrued interest thereon,
shall cease to be due and payable on such Deferred Contingent
Payment Date or at any time thereafter. For purposes of this
Section 3.6, a "Deferred Contingent Payment Period" shall mean,
as applicable, (w) the period beginning on July 21, 2000 and
ending on December 31, 2000, (x) the period beginning on January
1, 2001 and ending on March 31, 2001, (y) the period beginning on
April 1, 2001 and ending on June 30, 2001, and (z) the period
beginning on July 1, 2001 and ending on September 30, 2001.
(c) Sellers shall be deemed to be in material compliance
with the provisions of Section 7.4 and Section 7.5 of this
Agreement at all times unless:
(i) Fleet has received, no later than forty-five
(45) days prior to the last day of the then applicable Deferred
Contingent Payment Period, written notification from Sovereign,
signed by the President and Chief Executive Officer of Sovereign,
made in good faith, to the effect that repeated, documented, and
clear material breaches by Sellers of Section 7.4 or Section 7.5
hereof have occurred during such period, and that such clear,
material breaches by Sellers of Section 7.4 or Section 7.5 hereof
have continued after formal written notice to Fleet of such
material breaches; each such written notification documenting,
with particularity, the facts and circumstances relating to such
alleged material breaches, including but not limited to
identifying the specific Customers which Sellers have allegedly
solicited in violation of Section 7.4 hereof, and/or identifying
the specific employees which Sellers have allegedly hired in
violation of Section 7.5 hereof;
(ii) Such material breach, in and of itself, has had
a Material Adverse Effect on Sovereign;
(iii) Fleet makes a good faith determination that (A)
such conduct has occurred and constitutes a clear, material
breach of Section 7.4 or Section 7.5 hereof and (B) such breach
has had a Material Adverse Effect on Sovereign; and
(iv) Fleet intentionally permits or causes the
conduct causing the material breach to continue after receipt of
the notification required pursuant to Section 3.6(c)(i) hereof.
For purposes of this Section 3.6, the delivery of an officer's
certificate from Fleet on or prior to the then applicable
Deferred Contingent Payment Date to the effect that one or more
of the conditions set forth in this subsection (c) do not exist
shall conclusively establish Sellers' compliance with the
provisions of Section 7.4 and Section 7.5 hereof, absent
intentional and knowing fraud.
(d) Sovereign and Purchaser each hereby acknowledge that
Fleet's delivery of the officer's certificate referred to in
Section 3.6(c) hereof shall conclusively establish Sellers'
compliance with the provisions of Section 7.4 and Section 7.5
hereof, absent intentional and knowing fraud. Sovereign and
Purchaser shall not challenge Fleet's ability to deliver the
officer's certificate referred to in Section 3.6(c) hereof except
by a court action filed in the United States District Court for
the District of Massachusetts located in Boston, Massachusetts,
or the Superior Court for the Commonwealth of Massachusetts for
Suffolk County, Massachusetts. Prior to bringing any such
action, Sovereign or Purchaser shall deposit the entire amount of
the installment of the Deferred Contingent Amount which Sovereign
is challenging Fleet's right to receive into an escrow account
with Citibank, N.A., as escrow agent, to be held in escrow until
final resolution of such action. In the event that Sovereign
should amend any such action to challenge Fleet's right to
receive any additional installment of the Deferred Contingent
Amount, prior to the filing of such amendment, Sovereign shall
deposit the entire amount of the additional installment that it
is challenging Fleet's right to receive into such Citibank escrow
account, to be held in escrow pending resolution of such amended
action. In the event that Fleet and Sellers ultimately prevail
in any such action, Sovereign or Purchaser shall pay to Fleet the
entire amount of each installment of the Deferred Contingent
Amount that Sovereign challenged Fleet's right to receive,
together with accrued interest thereon, calculated at a rate of
eighteen percent (18%) per annum, compounded daily, calculated on
the basis of the actual days elapsed over a 360-day year,
beginning on the date on which the court action is filed. In the
event that Fleet and Sellers ultimately prevail in any such court
action, Sovereign or Purchaser shall also pay all reasonable
costs and expenses of Fleet and Sellers incurred in connection
with such court action, including but not limited to reasonable
attorney's fees and expenses.
(e) On each Deferred Contingent Payment Date on which an
installment of the Deferred Contingent Amount is payable to
Fleet, as agent for the Sellers, pursuant to the provisions of
this Section 3.6, Purchaser or Sovereign shall pay to Fleet, as
agent for Sellers, by wire transfer of immediately available
funds, the full amount of the installment of the Deferred
Contingent Amount payable on such Deferred Contingent Payment
Date less any portion of such installment the payment of which
would cause Purchaser or Sovereign to fail to meet their
respective Minimum Capital Requirements after giving pro forma
effect to such payment. To the extent that any portion of any
installment of the Deferred Contingent Amount cannot be paid on
the Deferred Contingent Payment Date on which it is payable to
Fleet, as agent for the Sellers, because the effect of such
payment would be to cause Sovereign or Purchaser to fail to meet
their respective Minimum Capital Requirements, such unpaid
installment or portion thereof shall cumulate and be deferred and
shall become due and payable on the next succeeding Deferred
Contingent Payment Date, without regard to Sellers' compliance
with Section 7.4 and Section 7.5 hereof.
(f) Sovereign or Purchaser may pay to Fleet, as agent
for Sellers, at any time, the entire unpaid amount of the
Deferred Contingent Amount or any portion thereof. Such cash
payment shall be made by wire transfer in immediately available
funds to an account which Fleet shall designate to Sovereign in
writing not less than three (3) Business Days prior to the date
of payment. Upon making such payment, together with payment of
all accrued and unpaid interest on the Deferred Contingent
Amount, Sovereign shall be deemed to have satisfied in full its
obligations under this Section 3.6.
(g) The initial interest rate on the Deferred Contingent
Amount shall be equal to eleven and one-half percent (11.5%) per
annum, compounded daily, calculated on the basis of actual days
elapsed over a 360-day year, beginning on the Third Closing Date.
Interest shall be payable on each Deferred Contingent Payment
Date commencing on December 29, 2000 and continuing thereafter on
each subsequent Deferred Contingent Payment Date until the entire
Deferred Contingent Amount, and accrued interest due thereon, is
paid in full. In the event that Purchaser shall defer pursuant
to the provisions of Section 3.6(e) hereof the payment of any
installment of the Deferred Contingent Amount, or any portion
thereof, when payable to Fleet, as agent for the Sellers, then
(i) the interest rate on the deferred installment or portion
thereof shall be increased to the greater of (x) fifteen percent
(15%) per annum and (y) the then current interest rate payable on
the unpaid portion of the Deferred Contingent Amount plus two
percent (2%) per annum, compounded daily, calculated on the basis
of actual days elapsed over a 360-day year, beginning on the date
the deferred payment was payable, and (ii) the interest rate then
in effect on the unpaid portion of the Deferred Contingent Amount
shall increase by two percent (2%) per annum, up to a maximum
interest rate of eighteen percent (18%) per annum, compounded
daily on the basis of the actual days elapsed over a 360-day
year.
(h) All payments made by Purchaser or Sovereign of the
Deferred Contingent Amount will be applied first to accrued
interest currently payable, second to the installment of the
Deferred Contingent Amount then payable, third to interest on
missed installments of the Deferred Contingent Amount or any
portion thereof, and fourth to the principal amount of missed
installments of the Deferred Contingent Amount or any portion
thereof, in the inverse order of their maturity.
(i) Sovereign covenants and agrees that if, on or after
September 30, 2001, it appears likely that every installment of
the Deferred Contingent Amount, together with accrued interest
thereon, shall not be paid on or before December 31, 2001,
Sovereign shall use its best efforts to offer and sell, and/or
cause Purchaser to offer and sell, securities necessary to meet
Sovereign and Purchaser's respective Minimum Capital Requirement
after giving effect to the payment in full of the entire amount
of the unpaid installments of the Deferred Contingent Amount and
accrued interest thereon. Sovereign further agrees that
simultaneously with the closing of any such equity offering by
Sovereign or Purchaser, Purchaser or Sovereign will pay Fleet, as
agent for the Sellers, the entire amount of the unpaid
installments of Deferred Contingent Amount together with accrued
interest thereon calculated at the interest rate then in effect
in accordance with Section 3.6(g) hereof, or such lesser amount
as equals the net proceeds of such equity offering.
(j) (i) In the event that Purchaser or Sovereign
fails to pay to Fleet, as agent for Sellers, the entire amount of
every installment of the Deferred Contingent Amount that is
payable to Fleet, as agent for the Sellers, and all accrued or
unpaid interest thereon, by December 31, 2001, Fleet may, at its
sole election (the "New Jersey Right") with the prior written
approval of the regulatory agencies having jurisdiction and
subject to compliance with applicable laws and regulations, at
any time after December 31, 2001, elect to receive payment of the
unpaid amount of the Deferred Contingent Amount, together with
accrued but unpaid interest thereon, through (A) the assumption
by Sellers or an Affiliate thereof from Purchaser of deposit
liabilities of New Jersey customers of Purchaser in an amount
equal to (i) the unpaid amount of the Deferred Contingent Amount,
and accrued and unpaid interest thereon, divided by (ii) .12 (the
"New Jersey Deposit Liabilities") and the transfer of cash from
Sovereign or Purchaser in the amount of the New Jersey Deposit
Liabilities and (B) the purchase by Sellers or an Affiliate
thereof at Book Value of the loans which shall not be
Nonperforming and other assets of Purchaser related to the
branches of Purchaser to which the New Jersey Deposit Liabilities
are linked (the "New Jersey Assets").
(ii) In the event that Fleet exercises the New
Jersey Right, Sovereign and Fleet shall mutually agree in good
faith as to the identification of New Jersey Deposit Liabilities
and New Jersey Assets and negotiate a mutually agreeable purchase
and assumption agreement with respect thereto, which agreement
shall contain customary terms and conditions for a purchase and
assumption transaction.
(k) Sovereign, in consultation with Salomon Smith
Barney, Fleet, the OTS, Sovereign's independent public
accountants and such other parties as Fleet may reasonably
suggest, shall use its good faith commercially reasonable efforts
to deliver to Sellers at the Third Closing a Deferred Contingent
Amount Letter of Credit or other form of assurance of payment of
the Deferred Contingent Amount as may be acceptable to Fleet in
its sole discretion, provided, however, that such Deferred
Contingent Amount Letter of Credit or other form of payment
assurance which Sovereign or Purchaser may provide to Fleet, as
agent for the Sellers, shall not cause Sovereign or the Purchaser
to violate the conditions set forth in the Purchaser Regulatory
Approval.
(l) In the event that Sovereign or the Purchaser is
unable to deliver on the Third Closing Date a Deferred Contingent
Letter of Credit or other form of payment assurance acceptable to
Fleet in its sole discretion, on the Third Closing Date Sovereign
will hold Permitted Investments of at least Two Hundred Forty
Million Dollars ($240,000,000), free and clear of all Liens, and
thereafter will continue to hold Permitted Investments of at
least Two Hundred Forty Million Dollars ($240,000,000), free and
clear of all Liens, until such time as the Deferred Contingent
Amount, together with all accrued but unpaid interest thereon,
payable but not yet paid to Sellers in accordance with the
provisions of Section 3.6 hereof, is less than Two Hundred Forty
Million Dollars ($240,000,000). From and after such time as the
Deferred Contingent Amount, together with accrued but unpaid
interest thereon, payable but not paid to Sellers in accordance
with the provision of Section 3.6 hereof is less than Two Hundred
Forty Million Dollars ($240,000,000) Sovereign shall hold
Permitted Investments, free and clear of all Liens, equal to the
amount of Deferred Contingent Amount, plus accrued but unpaid
interest thereon, payable but not yet paid to Sellers in
accordance with the provisions of Section 3.6 hereof. In the
event that Purchaser shall fail to maintain its Minimum Capital
Requirement, Sovereign shall immediately request approval from
the OTS to contribute to Purchaser that amount of cash as
necessary (up to an aggregate contribution of Two Hundred Forty
Million Dollars ($240,000,000)) to assure that the Purchaser
meets its Minimum Capital Requirement on each Deferred Contingent
Payment Date, and immediately upon receipt of such approval
Sovereign shall make such capital contribution to the Purchaser.
(m) If any one or more of the following events (each an
"Acceleration Event") shall occur and be continuing for any
reason whatsoever:
(i) Purchaser shall fail to pay or cause to be paid
to Fleet, as agent for the Sellers, when payable any amount
payable under this Section 3.6 (other than a failure to pay
pursuant to Section 3.6(e) hereof);
(ii) Sovereign or Purchaser shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under receivership, conservatorship or supervisory powers
of bank regulatory agencies, or under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its
property, or Purchaser or Sovereign shall consent to any such
relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any
of the foregoing;
(iii) An involuntary case or other proceeding shall
be commenced against Sovereign or Purchaser seeking liquidation,
reorganization or other relief with respect to it or its debts
under receivership, conservatorship or supervisory powers of bank
regulatory agencies, or under bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and
unstayed for a period of sixty (60) days; or a final and
nonappealable order for relief shall be entered against Sovereign
or Purchaser under the federal bankruptcy laws as now or
hereafter in effect;
(iv) Any person which is a bank holding company as
defined in 12 CFR Section 225.2, a savings and loan holding
company as defined in 12 CFR Sections 583.11, 583.12 or 583.20 or
a financial holding company as defined in 12 CFR Section 225.81,
other than Fleet or an Affiliate of Fleet, shall have acquired
beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the
Securities and Exchange Act, 1934) of more than nineteen and nine
tenths percent (19.9%) of the outstanding shares of Common Stock
and such person has, on a consolidated basis, a leverage ratio as
reported to its primary regulator of at least three percent (3%);
(v) Sovereign shall either (A) consolidate or merge
with or into any other Person (other than pursuant to a
consolidation or merger pursuant to which the holders of Common
Stock immediately prior to the effective time of such
consolidation or merger own a majority of the issued and
outstanding common stock of the surviving corporation immediately
after such effective time) or (B) sell, lease or otherwise
transfer, directly or indirectly, all or any substantial part of
the assets of Sovereign and its subsidiaries, taken as a whole,
to any other Person;
(vi) Purchaser shall (A) consolidate or merge with
or into any other Person or (B) sell, lease or otherwise
transfer, directly or indirectly, all or any substantial part of
the assets of Purchaser to any other Person;
(vii) Sovereign shall enter into an agreement to
purchase, through stock acquisition, asset acquisition or
otherwise, any of the capital stock or other equity interest of,
or assets of, any Person and at the time of such agreement is
entered into (A) Sovereign's Leverage Ratio is greater than five
percent (5%) and after giving pro forma effect to such
acquisition, Sovereign's Leverage Ratio would be less than five
percent (5%); or (B) Sovereign's Leverage Ratio is less than five
percent (5%) and after giving pro forma effect to such
acquisition, Sovereign's Leverage Ratio would be less than
Sovereign's Leverage Ratio at the time of the acquisition
agreement is entered into; provided that, if Purchaser shall
timely make the payments scheduled to be made on December 29,
2000 and March 30, 2001 in the amounts specified in Section
3.6(a), together with accrued interest thereon, without deferral
of any portion of such scheduled payments, Sovereign may enter an
agreement with respect to, or effect, an acquisition described in
this subsection (vii) so long as the aggregate consideration
deliverable, including any debt assumed or guaranteed and any
deferred or contingent payments or earnout, shall not exceed
Twenty Million Dollars ($20,000,000) individually or in the
aggregate;
(viii) An event of default is declared with respect to
Sovereign's indebtedness for borrowed money resulting from a
failure to pay any amount when due thereunder;
(ix) Any other event of default is declared with
respect to Sovereign's indebtedness and such indebtedness shall
have been accelerated by the holders thereof; or
(x) Sovereign fails to deliver its calculations as
required by Section 3.6(o) hereof after notice thereof and
failure to cure within two (2) days after such notification;
then Fleet may by written notice to Purchaser and Sovereign
demand that (A) in the event that the Acceleration Event to have
occurred is the Acceleration Event described in Sections
3.6(m)(i) or (x) hereof, the entire unpaid amount of the Deferred
Contingent Amount, together with all accrued but unpaid interest
thereon or (B) in the event that the Acceleration Event to have
occurred is any Acceleration Event other than the Acceleration
Events described in Sections 3.6(m)(i) or (x) hereof, the entire
unpaid amount of the Deferred Contingent Amount, together with
all accrued but unpaid interest thereon less Twenty Million
Dollars ($20,000,000) if Sovereign or Purchaser shall have failed
to deliver at the Third Closing a Deferred Contingent Letter of
Credit or such other assurance of payment acceptable to Fleet in
its sole discretion but Purchaser or Sovereign shall have paid to
Fleet, as agent for the Sellers, all amounts payable to Fleet, as
agent for the Sellers, on each Deferred Contingent Payment Date
prior to the date of the Acceleration Event (other than amounts
which Sovereign and the Purchaser defer payment of pursuant to
the provisions of Section 3.6(e) hereof) immediately be paid to
Fleet, as agent for Sellers, and, on the date specified in such
notice, such cash payment shall be made by wire transfer, in
immediately available funds, to an account of Fleet or its
designee, which account shall be designated in such notice;
provided that in the case of the events specified in clause (ii)
or (iii) above, without any notice to Purchaser or Sovereign or
any other action by Fleet or any of the Sellers, the entire
unpaid amount of the Deferred Contingent Amount, together with
all accrued but unpaid interest thereon less Twenty Million
Dollars ($20,000,000) if Sovereign or Purchaser shall have failed
to deliver at the Third Closing a Deferred Contingent Letter of
Credit or such other assurance of payment acceptable to Fleet in
its sole discretion but Purchaser or Sovereign shall have paid to
Fleet, as agent for the Sellers, all amounts payable to Fleet, as
agent for the Sellers, on each Deferred Contingent Payment Date
prior to the date of the Acceleration Event (other than amounts
which Sovereign and the Purchaser defer payment of pursuant to
the provisions of Section 3.6(e) hereof), shall become
immediately due and payable to Fleet, as agent for the Sellers.
Additionally, in the event that an Acceleration Event shall occur
and Sovereign or Purchaser shall have delivered a Deferred
Contingent Letter of Credit or other form of payment assurance as
contemplated by Section 3.6(k) hereof, then Fleet, as agent for
the Sellers, shall be entitled to draw on the Deferred Contingent
Letter of Credit or other form of payment assurance without
regard to the effect such draw would have on Sovereign's or
Purchaser's ability to maintain their respective Minimum Capital
Requirements.
(n) Purchaser agrees that, during the period beginning
on the Third Closing Date and ending on the date that the entire
amount of the Deferred Contingent Amount, together with accrued
but unpaid interest thereon, has been paid in full, Purchaser
shall, within forty-five (45) days after the end of each fiscal
quarter of the Purchaser until the full amount of the Deferred
Contingent Amount, together with accrued but unpaid interest
thereon, has been paid in full, furnish Sellers with its
customary quarterly management financial package, which shall
include Purchaser's Consolidated Report of Condition and Income
(Call report) for such fiscal quarter.
(o) In the event that Sovereign or Purchaser believes
that it will fail to pay to Fleet, as agent for the Sellers, the
entire amount of any installment of the Deferred Contingent
Amount on any Deferred Contingent Payment Date because as a
result of making such payment Sovereign or Purchaser would fail
to meet their respective Minimum Capital Requirement, no later
than thirty (30) days prior to the Deferred Contingent Payment
Date on which such installment is otherwise payable, Sovereign
shall deliver to Fleet, as agent for the Sellers (i) its
calculation of Sovereign's Leverage Ratio, (ii) its calculation
of Purchaser's leverage ratio as described in Section 12 C.F.R.
Sections 565.4 and 567, and (iii) its calculation of Purchaser's
total risk-based capital ratio, Tier 1 risk-based capital ratio,
and leverage ratio (each as calculated pursuant to 12 CFR
Sections 565.2 and 567), after giving pro forma effect to the
payment of the entire amount of such installment. In the event
that Fleet should disagree with such calculations, within ten
(10) days of receipt of such calculations, Fleet may make a
written request to Ernst & Young to prepare a report verifying
such calculations, using procedures to verify such calculations
as agreed upon by Sovereign and Ernst & Young, with Fleet's
consent (which shall not be unreasonably withheld or delayed).
The cost of such report shall be borne equally by Fleet and
Sovereign. The calculations resulting from such report, or the
calculations delivered by Sovereign, if no report is requested by
written notice to Sovereign within ten (10) days of delivery of
such calculations, shall be final.
(p) Section 3.6 hereof is hereby expressly limited so
that in no contingency or event whatsoever, whether by reason of
acceleration of payment of the Deferred Contingent Amount or
otherwise, shall the amount paid or agreed to be paid to Fleet,
as agent for the Sellers, with respect to the Deferred Contingent
Amount exceed the maximum rate of interest permissible under
applicable law. As used herein, the term "applicable law" shall
mean the law in effect as of the date hereof; provided, however,
that in the event there is a change in the law which results in a
higher permissible rate of interest, then the payment of the
Deferred Contingent Amount shall be governed by such new law as
of its effective date. In this regard, it is expressly agreed
that it is the intent of the Sellers, Fleet, the Purchaser and
Sovereign to interpret Section 3.6 hereof in strict compliance
with the laws of the Commonwealth of Massachusetts from time to
time in effect. If, from any circumstance whatsoever, payment of
any amount pursuant to Section 3.6 at the time such payment shall
be due, shall involve exceeding such maximum rate of interest
prescribed by law, then such payment to be fulfilled shall
automatically be reduced to the limit of validity, and if from
any circumstances Sellers or Fleet should ever receive as
interest an amount with respect to the Deferred Contingent Amount
which would exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of
the Deferred Contingent Amount and not to the payment of
interest.
Section 3.7. Allocation of Purchase Price.
(a) Purchaser and Sellers agree that, upon final
determination of the Purchase Price, the Purchase Price shall be
allocated in accordance with Schedule 3.7(a) hereto.
(b) Purchaser and Sellers shall report the transaction
contemplated by this Agreement (including income tax reporting
requirements imposed pursuant to Section 1060 of the Code) in
accordance with the allocation specified on Schedule 3.7(a)
hereto. In the event any party hereto receives notice of a tax
audit with respect to the allocation of the Purchase Price
specified herein, such party shall immediately notify the other
party in writing as to the date and subject of such audit.
(c) If any federal, state or local tax return report or
filing by Purchaser or Sellers relating to the transactions
contemplated hereby and filed on the basis of the allocation set
forth on Schedule 3.7(a) hereto, is challenged by the taxing
authority with which such return, report or filing was filed, the
filing party shall assert and maintain in good faith the validity
and correctness of such allocation during the audit thereof until
the issuance by the taxing authority of a "30 Day Letter", or a
determination of liability equivalent thereto, to such party,
whereupon such party shall, in its sole discretion, have the
right to pay, compromise, settle, dispute or otherwise deal with
its alleged tax liability. If such a tax return, report or
filing is challenged as herein described, the party filing such
return, report or filing shall timely keep the other party
apprised of its decisions and the current status and progress of
all administrative and judicial proceedings, if any, that are
undertaken at the election of the filing party.
(d) If either party (including permitted successors and
assigns thereof) to this Agreement defaults under this Section
3.7, it shall pay as damages to the other party, so long as such
other party is not in default under this Section 3.7, an amount
which, after reduction for all income or gain taxes, including
without limitation interest and penalties, which would be
incurred (calculated at the highest marginal rate applicable in
the relevant jurisdictions) as a result of receiving said amount,
is equal to the result (but not less than zero) of subtracting
the amount in (ii) below from the amount in (i) below:
(i) The total amount of income or gains taxes
(including interest and penalties calculated at the highest
marginal rate applicable in the relevant jurisdictions) to all
jurisdictions imposing such taxes upon the non-defaulting party
with respect to the transactions contemplated hereby; and
(ii) The total amount of income or gains taxes which
would have been incurred (including interest and penalties
calculated at the highest marginal rate applicable in the
relevant jurisdictions) to all jurisdictions imposing such taxes
upon the non-defaulting party with respect to the transactions
contemplated hereby, if such taxing jurisdictions had accepted
the allocations specified in Schedule 3.7(a) hereto.
Section 3.8. Proration; Other Closing Date Adjustments.
(a) Except as otherwise specifically provided in this
Agreement, it is the intention of the parties that Sellers will
operate the Facilities for their own account and own the Loans
and other Purchased Assets until the close of business on the day
or days on which all or a portion of the Purchased Assets are
purchased by Purchaser, and that Purchaser shall operate the
Facilities, own the Loans and other Purchased Assets and assume
the Deposit Liabilities and other Assumed Liabilities for its own
account from and after the close of business on day or days on
which Purchaser purchases all or a portion of the Purchased
Assets and assumes all or a portion of the Assumed Liabilities.
Thus, except as otherwise specifically provided in this
Agreement, items of income and expense shall be prorated as of
the close of business on each Closing Date (with respect to the
Purchased Assets and Assumed Liabilities being transferred to
Purchaser on such Closing Date), and shall be settled between
Sellers and Purchaser as of each Closing Date (with respect to
the Purchased Assets and Assumed Liabilities being transferred to
Purchaser on such Closing Date), whether or not such adjustment
would normally be made as of such time. Items of proration will
be handled as an adjustment to the Purchase Price and not as
adjustments to the Estimated Payment Amount, unless otherwise
agreed by the parties hereto.
(b) For purposes of this Agreement, items of proration
and other adjustments shall include, without limitation: (i)
amounts prepaid and unused for safe deposit rentals; (ii) rental
and other payments under the Branch Leases, ATM Lease Agreements
and Tenant Leases, including security deposits; (iii) sales, real
estate and use taxes (other than such sales, real estate and use
taxes that arise as a result of the transactions contemplated by
this Agreement which shall be paid by Purchaser or Sellers in
accordance with Sections 4.1 and 16.1 hereof); (iv) insurance
premiums paid or payable to the FDIC attributable to insurance
coverage for the Deposit Liabilities; (v) fees for customary
annual or periodic assignable licenses or permits that benefit
Purchaser; (vi) water, sewer, fuel and utility charges; (vii)
amounts received or to be received under the Precious Metals
Options, the Forward Contracts, and the Other Precious Metals
Contracts; (viii) amounts prepaid under the Precious Metals
Storage Contracts; and (ix) other prepaid items, in each case as
of the close of business on a Closing Date; provided that items
of proration and other adjustments shall not include commitment
and other fees paid in advance by Customers with respect to
Loans, Letters of Credit, Liquidity Support Agreements and ISDA
Agreements. Notwithstanding the foregoing, if accurate
arrangements cannot be made as of each Closing Date for any of
the foregoing items of proration, the parties shall apportion the
charges for the foregoing items on the basis of the bill therefor
for the most recent billing period prior to each Closing Date.
Section 3.9. Post-Closing Adjustments. (a) Following the
Third Closing, the Purchase Price shall be reduced by an amount
equal to all properly paid Stay Bonus Payments paid to
Transferred Employees during the twelve (12) months following the
Third Closing Date (which amount shall be determined as provided
below).
(b) On the last day of the thirteenth (13th) month
following the Third Closing Date, Purchaser shall deliver to
Sellers a statement as to the amount of all Stay Bonus Payments
paid to Transferred Employees, including a listing of such
Transferred Employees and the amount and date of any such
payments made to each such Transferred Employee.
(c) Unless Sellers shall reasonably object in writing to
such statement within thirty (30) days of the receipt thereof by
Sellers, Sellers shall pay to Purchaser by wire transfer an
amount equal to such Stay Bonus Payments plus interest thereon
calculated using the Federal Funds Rate from the date of payment
of the respective Stay Bonus Payments to but excluding the date
of payment by Sellers, or in the event of such objection, such
portion thereof plus interest thereon as determined above as
shall not be in dispute.
(d) In the event of any dispute as to the amount of such
Stay Bonus Payments, the parties shall attempt to mutually agree
to resolve such dispute for a period of thirty (30) days
following notice of any objection by Sellers. If no such
resolution is reached, either party may proceed to enforce the
terms and provisions of this Section.
ARTICLE IV
TAXES
Section 4.1. Sales, Transfer and Use Taxes. Except as otherwise
provided in this Agreement, any sales, transfer, use or similar
taxes, including but not limited to all transfer taxes required
in connection with the transfer of the Real Property to
Purchaser, which are payable or arise as a result of this
Agreement or the consummation of the transactions contemplated
hereby, shall be paid by Purchaser when due and payable.
Section 4.2. Information Reports. Purchaser and Sellers shall
each provide to the IRS on a timely basis and otherwise as
required by law Forms 1099INT, 1099R, W-2P, 5498 and any other
required forms and reports with respect to each Deposit Liability
concerning interest paid on, or contributions to and
distributions from, the Deposit Liability accounts, as
appropriate, for the periods during which Purchaser and Sellers,
respectively, administered such accounts, including without
limitation, any information required by the IRS pursuant to any
request for back-up withholding and taxpayer identification
number certification records and documents. Sellers shall make
such reports for interest paid or credited to Customers through
and including (i) the First Closing Date, with respect to
Customers whose Loans or Deposit Liabilities are transferred to
Purchaser at the First Closing, (ii) the Second Closing Date,
with respect to Customers whose Loans or Deposit Liabilities are
transferred to Purchaser at the Second Closing or (iii) the Third
Closing Date, with respect to Customers whose Loans or Deposit
Liabilities are transferred to Purchaser at the Third Closing,
and Purchaser shall make such reports after (i) the First Closing
Date, with respect to Customers whose Loans or Deposit
Liabilities are transferred to Purchaser at the First Closing,
(ii) the Second Closing Date, with respect to Customers whose
Loans or Deposit Liabilities are transferred to Purchaser at the
Second Closing or (iii) the Third Closing Date, with respect to
Customers whose Loans or Deposit Liabilities are transferred to
Purchaser at the Third Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Purchaser as follows:
Section 5.1. Organization. Each Seller is a bank duly
organized, validly existing and in good standing under the laws
of its jurisdiction of formation. Fleet is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Rhode Island.
Section 5.2. Authority. Each Seller and Fleet has the power and
authority to enter into and perform this Agreement and any other
documents executed pursuant hereto. This Agreement and any other
documents or instruments executed pursuant hereto and the
execution, delivery and performance hereof and thereof have been
duly authorized and approved by all necessary corporate action on
the part of each Seller and Fleet, and this Agreement and the
instruments and documents executed pursuant hereto constitutes,
or when executed will constitute, the valid and binding
obligations of each Seller and Fleet, enforceable against each
Seller and Fleet in accordance with its terms, except as
enforcement may be limited by receivership, conservatorship and
supervisory powers of bank regulatory agencies generally as well
as by bankruptcy, insolvency, reorganization, moratorium or other
laws of general applicability relating to or affecting creditors'
rights, or the limiting effect of rules of law governing specific
performance, equitable relief and other equitable remedies or the
waiver of rights or remedies.
Section 5.3. Non-Contravention. The execution and delivery of
this Agreement and the instruments and documents executed
pursuant hereto by Sellers do not and, subject to the receipt of
all Regulatory Approvals, the consummation of the transactions
contemplated by this Agreement will not constitute (a) a material
breach or violation of or default under any law, rule,
regulation, judgment, order, governmental permit or license of
Sellers or to which any Seller is subject, which breach,
violation, or default would prevent or materially delay Sellers
or Fleet from being able to perform their respective obligations
under this Agreement in all material respects or (b) a breach or
violation of or a default under the articles of association or
bylaws of any Seller or Fleet or any material contract to which
any Seller or Fleet is a party or by which any of them is bound,
which breach, violation or default would prevent or materially
delay Sellers or Fleet from being able to perform their
respective obligations under this Agreement in all material
respects.
Section 5.4. Compliance with Law. To the Knowledge of Sellers,
the business and operations of the Business are being conducted
in accordance with all applicable laws, rules and regulations of
all governmental authorities, other than those laws, rules and
regulations of governmental authorities the penalty or liability
for the violation of which, if imposed or asserted, would not
have a Material Adverse Effect.
Section 5.5. Legal Proceedings. There are no actions, suits, or
proceedings, whether civil, criminal or administrative, pending
as of the date of the Agreement or, to the Knowledge of Sellers,
threatened as of the date of the Agreement against or affecting
Sellers, (a) which would reasonably be expected to have a
Material Adverse Effect or (b) which would prevent or materially
delay Sellers or Fleet from being able to perform their
respective material obligations under this Agreement in all
material respects.
Section 5.6. Tenants; Branch Leases.
(a) Except for the tenants listed on Schedule 1.1(pp)
hereto, there are no tenants or, to the Knowledge of Sellers,
other occupants of the Facilities owned by Sellers.
(b) Except as set forth in Schedule 5.6(b) hereto, each
of the Branch Leases and ATM Lease Agreements is in full force
and effect, and to the Knowledge of Sellers, the Seller which is
a party to such Branch Lease or ATM Lease Agreement is not in
default under any of its obligations thereunder, except for such
defaults which would not have a Material Adverse Effect.
Section 5.7. Purchased Assets. (a) A Seller or an Affiliate
thereof is the lawful owner of each of the Purchased Assets
(other than the Real Property), free and clear of all Liens other
than Permitted Liens and, except for consents required to
transfer the Purchased Assets, on a Closing Date Sellers will
have the right to sell, convey, transfer, assign and deliver to
Purchaser all of the Purchased Assets.
(b) A Seller or an Affiliate thereof is the lawful owner
of the Real Property as shown on the title commitments related to
such Real Property previously delivered to Purchaser, free and
clear of all Liens except Liens shown on said title commitments,
Permitted Liens and easements and restrictions of record,
applicable zoning laws, and the right of any tenants.
Section 5.8. Loans.
(a) (i) Each Loan represents the legal, valid and
binding obligation of the related borrower, enforceable by the
holder thereof in accordance with its terms subject, as to
enforcement, to applicable bankruptcy, insolvency,
reorganization, liquidation and other similar laws and equitable
principles relating to or affecting the enforcement of creditors'
rights generally.
(ii) Each Loan (A) was originated or purchased by a
Seller, (B) to the extent secured is secured by a valid and
enforceable Lien in the collateral therefor, which Lien is
assignable, and (C) contains customary and enforceable provisions
such that the rights and remedies of the holder thereof shall be
adequate for practical realization against any collateral
therefor.
(iii) Each Loan complied at the time the Loan was
originated in all material respects with all applicable
requirements of applicable federal, state, and local laws, and
regulations thereunder.
(iv) The servicing practices of Sellers used with
respect to the Loans have been customary industry practices in
all material respects.
(b) Except as set forth in Section 5.8(a) above, neither
Sellers nor Fleet make any representation or warranty of any kind
to Purchaser relating to the Loans and neither Sellers nor Fleet
shall be responsible for (i) the due execution, legality,
validity, enforceability, genuineness, sufficiency, value or
collectibility of the Loans or any document, instrument or
agreement in the loan file, including, without limitation,
documents granting a Seller a security interest in any collateral
relating to a Loan, (ii) any representation, warranty or
statement made by an obligor or other party in or in connection
with any Loan, (iii) the financial condition or creditworthiness
of any primary or secondary obligor under any Loan or any
guarantor or surety or other obligor thereof, (iv) the
performance by the obligor or compliance with any of the terms or
provisions of any of the documents, instruments and agreements
relating to any Loan, (v) inspecting any of the property, books
or records of any obligor, or (vi) any of the warranties set
forth in Section 3-417 of the UCC.
Section 5.9. No Broker. Other than Credit Suisse First Boston
Corporation and Keefe Bruyette & Woods (each of whose fees and
expenses will be paid solely by Fleet), no broker or finder, or
other party or agent performing similar functions, has been
retained by Sellers or their Affiliates or is entitled to be paid
based on any arrangements, agreements or understandings made by
Sellers or their Affiliates in connection with the transactions
contemplated hereby, and no brokerage fee or other commission has
been agreed to be paid by Sellers or their Affiliates on account
of such transactions.
Section 5.10. Assumed Deposit Liabilities. The Deposit
Liabilities are insured by the FDIC through the Bank Insurance
Fund or the Savings Association Insurance Fund to the extent
permitted by law, and all premiums and assessments required to be
paid in connection therewith have been paid when due by Sellers.
Section 5.11. No Assessable Improvements. To the Knowledge of
Sellers, no material assessments for public improvements have
been made against the Real Property or the Facilities which
remain unpaid.
Section 5.12. No Adverse Notices. No notices or citations of
any applicable private restrictions or of the violation of any
zoning regulation or other law, rule, regulation or directive of
any governmental authority or authorities having jurisdiction
relating to the Real Property or the Facilities or any part
thereof have been received by Sellers relating to any material
matter affecting the Real Property or the Facilities. No notices
have been issued and served upon the Sellers or upon the Real
Property or the Facilities from or by any constituted authority
concerning the making of any required material alterations,
repairs or corrections of any condition or act affecting the Real
Property or the Facilities which remain uncomplied with or
unpaid.
Section 5.13. Licenses and Permits. Sellers have all material
licenses, permits, easements and rights of way, including proof
of dedication, building permits, certificates of occupancy and
occupancy permits which are required from any governmental
authority having jurisdiction over the Real Property and the
Facilities (other than permits or authorizations required
pursuant to Environmental Laws) or from private parties as
necessary to make use of the Real Property and the Facilities and
in order to insure adequate vehicular and pedestrian ingress and
egress to the Real Property and the Facilities, except where the
failure to hold such licenses, permits, easements and rights of
way would not result in a Material Adverse Effect.
Section 5.14. No Condemnation. To the Knowledge of Sellers,
there are no condemnation proceedings or other proceedings in the
nature of eminent domain with respect to the Real Property or the
Facilities.
Section 5.15. Regulatory Matters.
(a) The execution, delivery and performance of this
Agreement and the other agreements to be entered into in
connection herewith by Fleet and Sellers do not and will not
require any consent, approval, authorization or other order of,
action by, filing or registration with or notification to any
governmental authority except as set forth on Schedule 5.15
hereto ("Seller Regulatory Approvals").
(b) There are no pending, or to the Knowledge of
Sellers, threatened disputes or controversies between Sellers or
Fleet and any federal, state or local governmental authority,
including without limitation with respect to capital requirements
or year 2000 readiness that (i) would reasonably be expected to
prevent or materially delay Sellers or Fleet from being able to
perform their respective obligations under this Agreement or (ii)
would reasonably be expected to impair the validity or
consummation of this Agreement or the transactions contemplated
hereby. Neither Sellers nor Fleet has received any indication
from any federal, state or other governmental authority that such
governmental authority would oppose or refuse to grant or issue
its consent or approval, if required, with respect to the
transactions contemplated hereby.
Section 5.16. Interim Operations. From May 30, 1999 through the
date hereof, other than in connection with the transactions
contemplated by the Original Agreement, this Agreement or any
similar agreement relating to the divestiture of assets in
connection with the Merger and other than in connection with the
transactions contemplated by the Merger Agreement, each Seller
has conducted the Business in the usual, regular and ordinary
course consistent with past practices.
Section 5.17. Additional Residential Mortgage Loan. With
respect to each Additional Residential Mortgage Loan, on the day
on which such Additional Residential Mortgage Loan is purchased
by Purchaser pursuant to the terms hereof:
(a) The mortgage and the promissory note related to such
Additional Residential Mortgage Loan shall not have been assigned
or pledged, and, immediately prior to the purchase thereof by
Purchaser, a Seller has good and marketable title thereto, and a
Seller is the sole owner and holder of such Additional
Residential Mortgage Loan free and clear of any and all liens,
and has full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and
assign such Additional Residential Mortgage Loan pursuant to this
Agreement. Upon the purchase thereof by Purchaser, a Seller will
have taken all actions necessary on its part to be taken so that
Purchaser will have good indefeasible title to, and will be sole
owner of, the mortgage and the mortgage note related to such
Additional Residential Mortgage Loan, free and clear of any and
all Liens, subject to bankruptcy, insolvency, moratorium,
reorganization and similar laws relating or limiting the
enforcement of creditor's rights generally.
(b) The mortgage related to such Additional Residential
Mortgage Loan is a valid, subsisting and enforceable first lien
on the mortgaged property related to such Additional Residential
Mortgage Loan including all buildings, fixtures, installations
and improvements to the mortgaged property related to such
Additional Residential Mortgage Loan, and the mortgaged property
related to such Additional Residential Mortgage Loan is free and
clear of all Liens having parity with or priority over the first
lien of the mortgage except for (i) the Lien of current real
property taxes and assessments not yet due and payable, (ii) such
covenants, conditions and restrictions, rights of way, easements,
mineral right reservations and other matters of public record as
of the date of recording of such mortgage related to such
Additional Residential Mortgage Loan, as are generally acceptable
under prudent mortgage lending standards and either specifically
referred to in the lender's title insurance policy delivered to
the originator of the Additional Residential Mortgage Loan
specifically or reflected in the appraisal made in connection
with the origination of such Additional Residential Mortgage Loan
or which do not adversely affect the appraised value of the
mortgaged property related to such Additional Residential
Mortgage Loan, and (iii) other matters to which like properties
are commonly subject that do not materially interfere with the
value, use, enjoyment or marketability of the mortgaged property
related to such Additional Residential Mortgage Loan or which do
not adversely affect the appraised value of the mortgaged
property related to such Additional Residential Mortgage Loan.
There are no security agreements, chattel mortgages, or
equivalent documents related to the mortgage related to such
Additional Residential Mortgage Loan.
(c) The terms of the mortgage related to such Additional
Residential Mortgage Loan and the promissory note related to such
Additional Residential Mortgage Loan have not been impaired,
waived, altered, or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the
interest of Purchaser and which has been delivered to Purchaser.
(d) No instrument of release, waiver, alteration, or
modification has been executed in connection with such Additional
Residential Mortgage Loan, and no mortgagor of such Additional
Residential Mortgage Loan has been released, in whole or in part,
except in connection with an assumption agreement which is part
of the loan file related to such Additional Residential Mortgage
Loan.
(e) There is no default, breach, violation, or event of
acceleration existing under the mortgage related to such
Additional Residential Mortgage Loan or the promissory note
related to such Additional Residential Mortgage Loan and no event
which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute such a default,
breach, violation, or event of acceleration, and no Seller has
waived any such default, breach, violation, or event of
acceleration. No Seller has advanced funds, or induced,
solicited, or knowingly received any advance of funds by a party
other than the mortgagor for such Additional Residential Mortgage
Loan, directly or indirectly, for the payment of any amount
required by the mortgage related to such Additional Residential
Mortgage Loan or the promissory note related to such Additional
Residential Mortgage Loan.
(f) The mortgaged property related to such Additional
Residential Mortgage Loan is free of damage and waste and is in
good repair, and there is no proceeding pending or threatened for
the total or partial condemnation of the mortgaged property
related to such Additional Residential Mortgage Loan, nor has any
notice of any such pending or threatened proceeding been received
or is such a proceeding currently occurring, so as to adversely
impair the value or marketability of the mortgaged property
related to such Additional Residential Mortgage Loan.
(g) There are no mechanics' or similar liens or claims
which have been filed for work, labor, or material (and no rights
are outstanding that under law could give rise to such lien)
which are, or may be, liens prior or equal to, or coordinate
with, the lien of the mortgage related to such Additional
Residential Mortgage Loan.
(h) All of the improvements which were included for the
purpose of determining the appraised value of the mortgaged
property related to such Additional Residential Mortgage Loan
were completed at the time that such Additional Residential
Mortgage Loan was originated and lie wholly within the boundaries
and building restriction lines of the mortgaged property related
to such Additional Residential Mortgage Loan.
(i) A Seller and any of its affiliates that have had any
interest in the promissory note or mortgage related to such
Additional Residential Mortgage Loan, whether as mortgagee,
assignee, pledgee, or otherwise, are (or, during the period in
which they held and disposed of such interest, were) are (i) in
compliance with any and all applicable licensing requirements of
the laws of the state wherein the mortgaged property related to
such Additional Residential Mortgage Loan is located and (ii)(A)
organized under the laws of such state, (B) qualified to do
business in such state, (C) federal savings and loan associations
or national banks having principal offices in such state, (D) not
doing business in such state, (E) not required to qualify to do
business in such state, or (F) licensed to originate the
Additional Residential Mortgage Loans covered under this
Agreement in such state.
(j) Each of the documents in the loan file related to
each Additional Residential Mortgage Loan is genuine, true,
correct and complete and has not been altered or modified in any
way except as noted in the loan file and each is duly executed
and in due and proper form.
(k) The promissory note related to such Additional
Residential Mortgage Loan and the mortgage related to such
Additional Residential Mortgage Loan are genuine, and each is the
legal, valid and binding obligation of the maker thereof and each
party assuming liability therefor, enforceable in accordance with
its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other
similar laws affecting the enforcement of creditors' rights
generally and except that the equitable remedy of specific
performance and other equitable remedies are subject to the
discretion of the courts. All parties to the promissory note
related to such Additional Residential Mortgage Loan and the
mortgage related to such Additional Residential Mortgage Loan had
legal capacity to execute the promissory note related to such
Additional Residential Mortgage Loan and the mortgage related to
such Additional Residential Mortgage Loan and convey the estate
therein purported to be conveyed, and the promissory note related
to such Additional Residential Mortgage Loan and the mortgage
related to such Additional Residential Mortgage Loan have been
duly and properly executed by such parties or pursuant to a valid
power-of-attorney that has been recorded with the mortgage
related to such Additional Residential Mortgage Loan. The
mortgagor of each Additional Residential Mortgage Loan is a
natural person who is a party to the promissory note related to
such Additional Residential Mortgage Loan and the mortgage
related to such Additional Residential Mortgage Loan in an
individual capacity or in the capacity of a trustee. The
promissory note related to each Additional Residential Mortgage
Loan delivered to Purchaser is the original promissory note
related to such Additional Residential Mortgage Loan and is the
only promissory note related to such Additional Residential
Mortgage Loan evidencing the Additional Residential Mortgage Loan
that has been manually signed by the mortgagor.
(l) The transfer of the promissory note related to such
Additional Residential Mortgage Loan and the mortgage related to
such Additional Residential Mortgage Loan as and in the manner
contemplated by this Agreement is sufficient fully to transfer to
Purchaser all right, title and interest of a Seller thereto as
note holder and mortgagee subject to bankruptcy, insolvency,
moratorium, reorganization and similar laws relating to or
limiting the enforcement of creditors' rights generally.
(m) At origination of each Additional Residential
Mortgage Loan, any and all requirements of any federal, state, or
local law including, without limitation, proper licensing of the
originator, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity,
or disclosure laws applicable to such Additional Residential
Mortgage Loan had been complied with. The consummation of the
transactions contemplated by this Agreement will not cause the
violation of any such laws.
(n) The proceeds of each Additional Residential Mortgage
Loan have been fully disbursed, there is no requirement for, and
a Seller shall not make any, future advances thereunder. Any and
all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds for each
Additional Residential Mortgage Loan have been complied with.
All costs, fees and expenses incurred in making, or closing or
recording such Additional Residential Mortgage Loan have been
paid.
(o) Each Additional Residential Mortgage Loan is covered
by an ALTA mortgage title insurance policy or such other
generally used and acceptable form of policy, or insurance
acceptable to Federal National Mortgage Association or Federal
Home Loan Mortgage Association issued by and the valid and
binding obligation of a title insurer acceptable to the Federal
National Mortgage Association or the Federal Home Loan Mortgage
Association and qualified to do business in the jurisdiction
where the mortgaged property related to such Additional
Residential Mortgage Loan is located, insuring a Seller, and its
successors and assigns, as to the first priority lien of the
mortgage related to such Additional Residential Mortgage Loan in
the original principal amount of such Additional Residential
Mortgage Loan, and such mortgage title insurance policy is in
full force and effect. No claim has been made under such
lender's title insurance policy, and no prior holder of the
mortgage related to such Additional Residential Mortgage Loan,
including a Seller, has done, by act or omission, anything which
would impair the coverage of such lender's title insurance
policy. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress if the mortgaged
property related to such Additional Residential Mortgage Loan is
not bound by a public thoroughfare, and against encroachment by
or upon the mortgaged property related to such Additional
Residential Mortgage Loan or any interest therein.
(p) All improvements upon the mortgaged property related
to such Additional Residential Mortgage Loan are insured against
loss by fire, hazards of extended coverage and such other hazards
as are customary in the area where the mortgaged property related
to such Additional Residential Mortgage Loan is located, pursuant
to insurance policies conforming to the requirements of
Subsection 5.17 (o) by an insurer acceptable to Federal National
Mortgage Association or the Federal Home Loan Mortgage
Association. If the mortgaged property related to such
Additional Residential Mortgage Loan is located in an area
identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards (and such flood
insurance has been made available), such mortgaged property
related to such Additional Residential Mortgage Loan is covered
by flood insurance. Each individual insurance policy has been
validly issued and is in full force and effect. A Seller has
caused to be performed any and all acts required to preserve the
rights and interests of Purchaser in all insurance policies
required by this Agreement, including, without limitation,
notification of insurers, and assignment of policies or interests
therein. Each individual insurance policy contains a standard
mortgagee clause naming a Seller, and its successors and assigns,
as mortgagee and loss payee. All premiums thereon have been
paid. The mortgage related to each Additional Residential
Mortgage Loan obligates the mortgagor to maintain all such
insurance at the mortgagor's cost and expense, and upon the
mortgagor's failure to do so, authorizes Purchaser of the
mortgage related to such Additional Residential Mortgage Loan to
obtain and maintain such insurance at such mortgagor's cost and
expense and to seek reimbursement therefor from the mortgagor,
and a Seller has not acted or failed to act so as to impair the
coverage of any such insurance policy or the validity, binding
effect and enforceability thereof.
(q) There is no valid offset, defense, counterclaim or
right of rescission as to any promissory note related to such
Additional Residential Mortgage Loan or mortgage related to such
Additional Residential Mortgage Loan, including the obligation of
the mortgagor to pay the unpaid principal of or interest on such
promissory note related to such Additional Residential Mortgage
Loan.
(r) Each Additional Residential Mortgage Loan was
originated by a Seller or its affiliate mortgage company, or by a
savings and loan association, savings bank, commercial bank,
credit union, mortgage banking company or mortgage broker, or
similar institution that is supervised and examined by a federal
or state authority; or by a mortgagee approved by the Secretary
of Housing and Urban Development pursuant to Sections 203 and 211
of the National Housing Act or a mortgage banker or broker; each
of the aforementioned entities was at the time of origination
duly licensed and in compliance with all applicable laws of the
state in which the mortgaged property is located and where the
Additional Residential Mortgage Loan was originated as the
originator of the Additional Residential Mortgage Loan. Such
Additional Residential Mortgage Loan has not been sold by a
Seller to any Person other than Purchaser.
(s) Principal payments on such Additional Residential
Mortgage Loan commenced no more than sixty days after funds were
disbursed in connection with such Additional Residential Mortgage
Loan. The promissory note related to such Additional Residential
Mortgage Loan requires a monthly payment which is sufficient to
fully amortize the original principal balance over the remaining
term thereof and to pay interest thereon.
(t) Such Additional Residential Mortgage Loan is a
conventional residential mortgage loan having an original term to
maturity of not more than thirty years, with interest payable in
arrears on the first day of each month.
(u) The promissory note related to such Additional
Residential Mortgage Loan is not and has not been secured by any
collateral, pledged account, or other security except the lien of
the mortgage related to such Additional Residential Mortgage
Loan.
(v) The mortgage related to such Additional Residential
Mortgage Loan contains customary and enforceable provisions which
render the rights and remedies of Purchaser thereof adequate for
the realization against the mortgaged property related to such
Additional Residential Mortgage Loan of the benefits of the
security, including (i) in the case of a mortgage related to such
Additional Residential Mortgage Loan designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial
foreclosure. There is no homestead, dower, curtsey, or other
exemption or right available to the mortgagor of such Additional
Residential Mortgage Loan or any other person which would
interfere with the right to sell the mortgaged property related
to such Additional Residential Mortgage Loan at a trustee's sale
or the right to foreclose the mortgage related to such Additional
Residential Mortgage Loan. The mortgage related to such
Additional Residential Mortgage Loan contains customary and
enforceable provisions for the acceleration of the payment of the
unpaid principal balance of such Additional Residential Mortgage
Loan in the event all or any part of the related mortgaged
property related to such Additional Residential Mortgage Loan is
sold or otherwise transferred without the prior consent of
Purchaser thereunder.
(w) If the mortgage related to such Additional
Residential Mortgage Loan constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such
mortgage related to such Additional Residential Mortgage Loan,
and no fees or expenses are or will become payable by Purchaser
to the trustee under the deed of trust, except in connection with
a trustee's sale after default by the mortgagor of such
Additional Residential Mortgage Loan.
(x) The mortgaged property related to such Additional
Residential Mortgage Loan consists of a single parcel of real
property separately assessed for tax purposes, upon which is
erected a detached or an attached one-family residence, or an
individual condominium unit, or an individual unit in a planned
unit development. Such residence, dwelling, or unit is not (i) a
unit in a cooperative apartment, (ii) a property constituting
part of a syndication, (iii) a time share unit, (iv) a property
held in trust, (v) a property the mortgagor's ownership interest
in which consists of a leasehold estate, provided that the
mortgagor's ownership interest may include a ground lease if the
mortgaged property related to such Additional Residential
Mortgage Loan is in a location where ground leases are common and
such ground lease does not impair the value of the mortgaged
property related to such Additional Residential Mortgage Loan or
the lien of the mortgage related to such Additional Residential
Mortgage Loan, (vi) a mobile home or (vii) a recreational
vehicle.
(y) Such Additional Residential Mortgage Loan was
underwritten generally in accordance with the underwriting
guidelines of Federal National Mortgage Association or Federal
Home Loan Mortgage Association except for Additional Residential
Mortgage Loan size in effect at the time such Additional
Residential Mortgage Loan was originated.
(z) There exist no deficiencies in excess of Five
Hundred Dollars ($500) with respect to escrow deposits and
payments related to such Additional Residential Mortgage Loan, if
such are required, for which customary arrangements for repayment
thereof have not been made or which a Seller expects not to be
cured, and no escrow deposits or payments of other charges or
payments due a Seller have been capitalized under the mortgage
related to such Additional Residential Mortgage Loan or the
promissory note related to such Additional Residential Mortgage
Loan.
(aa) Such Additional Residential Mortgage Loan does not
have a shared appreciation feature or other contingent interest
feature.
(bb) The origination, servicing and collection
practices, if any, used by a Seller with respect to such
Additional Residential Mortgage Loan have been in all material
respects legal, proper, prudent and customary in the mortgage
origination and servicing business.
(cc) The mortgagor has received all disclosure materials, if
any, required by applicable law in connection with the
origination of the Additional Residential Mortgage Loan.
(dd) The information set forth on Schedule 1.1(ss) is
true and correct in all material respects.
(ee) The mortgage file contains an appraisal of the
related mortgaged property on forms and riders, signed prior to
the approval of the Additional Residential Mortgage Loan
application by an appraiser who had no interest, direct or
indirect, in the mortgaged property or in any loan made on the
security thereof, and whose compensation was not affected by the
approval or disapproval of the Additional Residential Mortgage
Loan and who met the minimum qualifications of Federal Home Loan
Mortgage Association and Federal Home Loan Mortgage Corporation
for appraisers.
(ff) If the Additional Residential Mortgage Loan has a
loan-to-value ratio in excess of eighty-percent (80%), such
Additional Residential Mortgage Loan is and will be subject to a
primary mortgage insurance policy issued by an insurer whose
claims paying ability was satisfactory to FNMA or FHLMC, who is
licensed to do business in the state in which the related
mortgaged property is located, which insures the insured and its
successors and assigns and provides coverage until the unpaid
principal balance of such Additional Residential Mortgage Loan is
reduced below eight-percent (80%) of the appraised value. All
provisions of such primary mortgage insurance policy have been
and are being complied with, such policy is in full force and
effect, and all premiums due thereunder have been paid. Any
mortgage subject to any such primary mortgage insurance policy
obligates the mortgagor thereunder to maintain such insurance and
to pay all premiums and charges in connection therewith.
Section 5.18. Limitations on and Disclaimer of Representations
and Warranties and Purchaser's Release in Connection Therewith
Except as otherwise expressly set forth in this Agreement:
(a) Neither Sellers nor Fleet make any representations
or warranties, express or implied, as to the physical condition
of the Fixed Assets or the Precious Metals, except that Sellers
and Fleet represent and warrant that the fineness of the Precious
Metals included in the Purchased Assets which are in the
possession of the Sellers shall be not less than the fineness set
forth in its respective definition set forth in Article I hereof.
(b) Neither Sellers nor Fleet make any representations
or warranty, express or implied, of any type or nature with
respect to the physical condition of the Facilities or Real
Property which are being sold "AS IS, "WHERE IS" without recourse
and with all faults, without any obligation on the part of the
Sellers. Except as otherwise expressly set forth in this
Agreement, by closing this transaction, Purchaser hereby releases
and agrees to hold harmless Sellers and Fleet and waives any
claims which Purchaser may now or hereafter have against Sellers
or Fleet relating to the physical condition of the Facilities or
the Real Property from and after the Closing, including without
limitation with respect to claims under Environmental Laws or
with respect to the presence of Hazardous Materials or with
respect to claims under the ADA.
(c) Neither Sellers nor Fleet make any representations
or warranties to Purchaser as to whether, or the length of time
during which, any accounts relating to Deposit Liabilities will
be maintained by the owners of such Deposit Liabilities at the
Branches after the assumption thereof by Purchaser.
(d) Except as specifically provided for in this
Agreement, Sellers and Fleet disclaim and make no representations
or warranties whatsoever with respect to the Business, Purchased
Assets or Assumed Liabilities, express or implied, including,
without limitation, any representations or warranties with
respect to merchantability, fitness, title, enforceability,
collectibility, documentation or freedom from Liens (in whole or
in part) and disclaim any liability and responsibility for any
negligent representation, warranty, statement or information
otherwise made or communicated, by oversight or information
otherwise made or communicated (orally or in writing), to
Purchaser in connection with the transactions contemplated hereby
(including without limitation, any opinion, information,
projection, statement or advice contained in the Offering
Memorandum or which may have been provided to Purchaser by any
employee, officer, agent, stockholder or other representative of
Sellers, Fleet or their Affiliates in connection with the
transactions contemplated hereby).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SOVEREIGN
Purchaser and Sovereign represent and warrant to Sellers as
follows:
Section 6.1. Organization. Purchaser is a federal savings bank
duly organized, validly existing and in good standing under the
laws of the United States and is a "qualified thrift lender", as
defined in 12 U.S.C. Section 1467a. Sovereign is a corporation
duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania.
Section 6.2. Authority. Each of Purchaser and Sovereign has the
power and authority to enter into and perform this Agreement and
any instruments or other documents executed pursuant
hereto. This Agreement and any instruments or other documents
executed pursuant hereto, and the execution, delivery and
performance hereof and thereof have been duly authorized and
approved by all necessary corporate action on the part of each of
Purchaser and Sovereign, and this Agreement constitutes a valid
and binding obligation of each of Purchaser and Sovereign,
enforceable against each of Purchaser and Sovereign in accordance
with its terms, except as enforcement may be limited by
receivership, conservatorship and supervisory powers of bank
regulatory agencies generally as well as bankruptcy, insolvency,
reorganization, moratorium or other laws of general applicability
relating to or affecting creditors' rights, or the limiting
effect of rules of law governing specific performance, equitable
relief and other equitable remedies or the waiver of rights or
remedies.
Section 6.3. Non-Contravention. The execution and delivery of
this Agreement and any instruments or other documents executed
pursuant hereto by Purchaser do not and, subject to the receipt
of all Regulatory Approvals, the consummation of the transactions
contemplated by this Agreement, will not constitute (a) a breach
or violation of or default under any law, rule, regulation,
judgment, order, governmental permit or license of Purchaser or
Sovereign or to which either is subject, which breach, violation
or default would prevent or materially delay Purchaser or
Sovereign from being able to perform their respective obligations
under this Agreement in all material respects, or (b) a breach or
violation of or a default under the charter or bylaws of
Purchaser or Sovereign or any material contract or other
instrument to which either of them is a party or by which either
of them is bound which breach, violation or default would prevent
Purchaser or Sovereign from performing its obligations under this
Agreement in all material respects.
Section 6.4. Legal Proceedings. There are no actions, suits, or
proceedings, whether civil, criminal or administrative, pending
or, to the knowledge of Purchaser or Sovereign threatened against
or affecting Purchaser or Sovereign which could prevent or
materially delay Purchaser or Sovereign from performing its
obligations under this Agreement in all material respects.
Section 6.5. Consents and Other Regulatory Matters.
(a) The execution, delivery and performance of this
Agreement and the other agreements to be entered into in
connection herewith by Purchaser and Sovereign do not and will
not require any consent, approval, authorization or other order
of, action by, filing or registration with or notification to (i)
any governmental authority except as set forth on Schedule 6.5(a)
hereto ("Purchaser Regulatory Approvals") or (ii) any other
party.
(b) There are no pending, or to the knowledge of
Purchaser, threatened disputes or controversies between Purchaser
or Sovereign and any federal, state or local governmental
authority, including without limitation with respect to capital
requirements or year 2000 readiness that (i) would reasonably be
expected to prevent or materially delay Purchaser or Sovereign
from being able to perform its obligations under this Agreement
or (ii) would reasonably be expected to impair the validity or
consummation of this Agreement or the transactions contemplated
hereby. Neither Purchaser nor Sovereign has received any
indication from any federal, state or other governmental
authority that such governmental authority would oppose or refuse
to grant or issue its consent or approval, if required, with
respect to the transactions contemplated hereby. Purchaser can
satisfy all capital and other regulatory requirements necessary
to obtain all Purchaser Regulatory Approvals.
(c) The deposits of Purchaser are insured by the FDIC in
accordance with the FDIA, and Purchaser has paid all premiums and
assessments when due and has filed all reports required to be
filed by it by the FDIC.
(d) As of the date of this Agreement, without giving
effect to the transactions contemplated hereby (and following the
transactions contemplated hereby), Purchaser: (i) is (or will be
following consummation of the transactions contemplated hereby)
at least "adequately capitalized", as defined in the FDIA; and
(ii) meets (or will meet following consummation of the
transactions contemplated hereby) all capital requirements,
standards and ratios required by each state or federal bank
regulator with jurisdiction over Purchaser, including without
limitation, any such higher requirement, standard or ratio as
applies to institutions engaging in the acquisition of insured
institution deposits, assets or branches, and assuming
consummation of the transactions contemplated hereby, no such
regulator is likely to, or has indicated that it will, condition
any of the Purchaser Regulatory Approvals upon an increase in
Purchaser's or Sovereign's capital or compliance with any capital
requirement, standard or ratio in excess of the Minimum Capital
Requirements.
(e) To the knowledge of Purchaser, it will not be
required to divest any of the Purchased Assets or Assumed
Liabilities or any other asset or liability as a condition to the
receipt of any of the Purchaser Regulatory Approvals.
(f) Purchaser was rated "Satisfactory" or "Outstanding"
following its most recent CRA examination by the regulatory
agency responsible for its supervision. Purchaser has received
no notice of and has no knowledge of any planned or threatened
objection by any community group to the transactions contemplated
hereby.
Section 6.6. WARN Act. Purchaser is not planning or
contemplating, and has not made or taken, any decisions or
actions concerning the Transferred Employees that would require
the service of notice under the WARN Act.
Section 6.7. Capital Transactions. (a) Sovereign and Purchaser
each have sufficient capital to support the acquisition of the
Business in accordance with the terms of this Agreement and to
perform their respective other obligations hereunder and under
any of the other documents executed in connection herewith.
Purchaser's obligation to purchase the Purchased Assets and to
assume the Assumed Liabilities and Sovereign's and Purchaser's
obligations to perform their respective other obligations
hereunder is not conditioned on raising any equity capital,
issuing any debt, obtaining specific financing thereof, obtaining
the consent of any lender or any other matter.
(b) For purposes of this Section 6.7, amounts deposited
in escrow pursuant to the Escrow Agreement shall be deemed to be
capital if the release of funds from escrow is subject only to
the condition that the parties hereto consummate the Third
Closing on or prior to July 31, 2000 in conformity in all
material respects with the terms and with satisfaction of all
material conditions of this Agreement in effect as of the date of
execution hereof without giving effect to any amendment, waiver
or other modification to any material term or condition;
provided, however, that notwithstanding the fact that any such
funds may be held in escrow, Fleet in its sole and absolute
discretion may determine that Purchaser and Sovereign do not have
such sufficient capital in which event Purchaser and Sovereign
shall be deemed to have materially breached their representations
and warranties under this Section.
(c) Sovereign has delivered to Fleet a true and complete
copy of all agreements, instruments or other documents, including
without limitation the Commitment Letter, evidencing any of the
Capital Transactions, which agreements, instruments or other
documents remain in full force and effect and have not been
amended, modified or supplemented in any way.
(d) To the extent any proceeds of the Capital
Transaction have been provided or advanced to Sovereign or any of
its Affiliates, such proceeds have been invested by Sovereign in
the common equity of Purchaser.
Section 6.8. No Broker. Other than Salomon Smith Barney, Inc.,
Lehman Commercial Paper, Inc. and Lehman Brothers, Inc. (whose
fees and expenses will be paid solely by Sovereign), no broker or
finder, or any other party or agent performing similar functions,
has been retained by Purchaser or its Affiliates or is entitled
to be paid based on any arrangements, agreements or
understandings made by Purchaser or its Affiliates in connection
with the transactions contemplated hereby and no brokerage fee or
other commission has been agreed to be paid by Purchaser or its
Affiliates on account of such transactions.
ARTICLE VII
COVENANTS OF SELLERS
Sellers covenant and agree with Purchaser as follows:
Section 7.1. Conduct of the Business. (a) From September 3,
1999 through the Third Closing Date, each Seller shall (i)
conduct its business relating to the Purchased Assets and Assumed
Liabilities in the usual, regular and ordinary course consistent
with past practice, (ii) use commercially reasonable efforts to
maintain and preserve intact its relationships generally with its
Business Employees and Customers, and (iii) take no action which
would adversely affect or delay the ability of any party hereto
to obtain the Purchaser Regulatory Approvals or the Seller
Regulatory Approvals or to perform its covenants and agreements
under this Agreement; provided, however that Sellers shall be
under no obligation to advertise or promote new or substantially
new customer services in the principal market area of, or for the
benefit of, the Business.
(b) Without limitation of the foregoing, from September
3, 1999 through the Third Closing Date no Seller shall:
(i) Sell, lease or transfer, or agree to sell,
lease or transfer any Purchased Assets except for Purchased
Assets sold, leased or transferred in the ordinary course of
business;
(ii) Solicit, encourage or induce a Customer to
transfer, before (A) the First Closing Date, with respect to
Customers whose Loans and/or Deposit Liabilities are being
transferred at the First Closing, (B) the Second Closing Date,
with respect to Customers whose Loans and/or Deposit Liabilities
are being transferred at the Second Closing or (C) the Third
Closing Date, with respect to Customers whose Loans and/or
Deposit Liabilities are being transferred at the Third Closing,
such Customer's business to a branch other than a Branch or
otherwise to transfer such Customer's business such that it will
not constitute part of the Business;
(iii) Make or grant (A) any increase in the
compensation payable or to become payable greater than four
percent (4%) of base salary, to any Business Employee or
Additional Employee, or (B) except in accordance with Sellers'
normal compensation practices, any increase in any contribution
or payment under any of the Sellers' employee benefit plans or
arrangements, except in either case in the ordinary course of
business;
(iv) With respect to the Loans, other than in the
usual, regular and ordinary course consistent with past practice,
amend the terms of any Loan to reduce the interest rate
applicable to such Loan to a rate that is below the market rate
of interest for similar loans with the same credit rating that
are originated by such Seller for its own portfolio at the time
of such amendment, if such amendment would, in the aggregate,
result in a change in the characteristics of such portfolio of
Loans that would have a material adverse effect on the Loan Value
of the Loans, taken as a whole; or
(v) With respect to the Deposit Liabilities other
than in the usual, regular and ordinary course consistent with
past practice, (A) solicit, encourage or induce a depositor to
transfer any Deposit Liability to a branch other than a Branch,
or (B) offer deposit accounts at a Branch at interest rates or on
other terms which are different than those offered by such Seller
at any branch other than a Branch if such actions described in
subsections (A) and (B), would, in the aggregate, have a Material
Adverse Effect.
Section 7.2. Purchaser Regulatory Approvals. Sellers shall use
their commercially reasonable efforts to assist Purchaser in
obtaining the Purchaser Regulatory Approvals. Sellers shall
provide Purchaser or the appropriate governmental authorities
with all information reasonably required to be submitted by
Sellers in connection with the Purchaser Regulatory Approvals.
Section 7.3. Branch and ATM Consents; Other Facilities Consents.
(a) Sellers shall use their commercially reasonable
efforts (which shall not require any Seller or its Affiliates to
pay any money or other consideration to any Person or to initiate
any claim or proceeding against any Person) to cause every
landlord of a Branch Lease or ATM Lease Agreement, the consent of
which is required under the terms of the applicable Branch Lease
or ATM Lease Agreement to the assignment of such Branch Lease or
ATM Lease Agreement to Purchaser, to execute in favor of
Purchaser a Landlord Consent.
(b) If, despite Sellers' commercially reasonable
efforts, a Landlord Consent to assignment of a Branch Lease or
ATM Lease Agreement cannot be obtained, or cannot be obtained
without the payment of an assignment fee or similar lump sum or
rent increase, Sellers shall, if permitted without the consent of
the Landlord under the Branch Lease or ATM Lease Agreement,
sublease the Branch or ATM location to Purchaser pursuant to a
sublease agreement which shall be for the remainder of the
existing term of the Branch Lease or ATM Lease Agreement, as
applicable, and which shall provide for Purchaser to perform all
of the obligations of Sellers under such Branch Lease or ATM
Lease Agreement and which otherwise shall contain mutually
agreeable terms (a "Sublease Agreement").
(c) If Sellers shall be unable to deliver (i) a Landlord
Consent with respect to a Branch Lease or ATM Lease Agreement or
(ii) a Sublease Agreement, Sellers shall (i) notify Purchaser no
later than five (5) Business Days prior to the Closing Date on
which such Branch or ATM location is to be transferred to
Purchaser and (ii) make available to Purchaser space at such
Branch or ATM location necessary for the operations of the
applicable Branch or ATM pursuant to a Use and Occupancy
Agreement substantially in the form of Exhibit O hereto, which
agreement Purchaser and the applicable Sellers shall execute at
the applicable Closing. Notwithstanding anything to the contrary
contained in this Agreement, a Seller's failure to deliver a
Landlord Consent from a landlord under a Branch Lease or ATM
Lease Agreement, after using reasonable efforts to obtain the
same, or a Sublease Agreement, shall not entitle Purchaser to
terminate this Agreement and Purchaser shall remain obligated to
perform all of its obligations hereunder with respect to the
applicable Branch or ATM, including without limitation the
assumption of the Deposit Liabilities relating thereto and the
payment of the full Purchase Price without any reduction or
adjustment, but excluding only its obligation to assume such
Branch Lease or ATM Lease Agreement. If (i) a Seller shall be
unable to deliver a Landlord Consent or a Sublease Agreement with
respect to a Branch Lease or ATM Lease Agreement, (ii) such
Seller shall have exhausted all of its legal remedies in an
effort to obtain for Purchaser such consent or sublease
arrangement, and (iii) as a result of Seller's failure to deliver
a Landlord Consent or a Sublease Agreement, Purchaser shall not
be permitted to occupy such Branch or ATM location pursuant to
the Use and Occupancy Agreement for the remainder of the term
under such Branch Lease or ATM Lease Agreement as in effect as of
the applicable Closing Date, then such Seller shall (x) use its
commercially reasonable efforts to assist Purchaser in obtaining
comparable space reasonably satisfactory to Purchaser in
reasonable proximity to such Branch location and (y) shall
indemnify and hold harmless Purchaser and Sovereign against any
cost and expense (including reasonable attorneys' fees) relating
to any claim, proceeding or action commenced by the applicable
landlord, which indemnification shall not be subject to any
limitation on liability set forth in Section 14.6 hereof.
(d) Anything contained in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement
to assign any Purchased Asset, contract, Deposit Liability or
other Assumed Liability, or any claim or right or any benefit
arising thereunder or resulting therefrom if an attempted
assignment thereof, without the consent of a third party thereto,
would constitute a breach thereof or in any way affect the rights
of any Seller thereunder or be contrary to applicable law. If
any such consent or approval is not obtained, Sellers will use
their commercially reasonable efforts (which shall not require
any Seller or its Affiliates to pay any money or other
consideration to any Person or to initiate any claim or
proceeding against any Person) to secure an arrangement
reasonably satisfactory to Purchaser insuring that Purchaser will
receive the benefits under the agreement for which such consent
is being sought following its assignment and assumption by
Purchaser; provided, however, that Sellers shall have no
obligation to obtain such consent or approval or to provide such
an alternative arrangement other than the undertaking to use
commercially reasonable efforts to obtain the same as set forth
in this Section 7.3 and Purchaser shall remain obligated to close
the transactions contemplated herein, subject to the other
provisions hereof, and shall have no remedy for Sellers' failure
to obtain any such consent or approval or to provide any such
alternative arrangement.
Section 7.4. Nonsolicitation. (a) For a period of two (2) years
following the First Closing Date, no Seller and no Affiliate of
any Seller shall use any list of Customers as a means to offer
the same or similar products and services of the Business as was
provided to such Customer by the Business immediately prior to
the First Closing Date to any Customer whose Loan or Deposit
Liability was transferred to Purchaser at the First Closing.
Notwithstanding the foregoing sentence, Sellers and their
respective Affiliates shall be permitted to (i) engage in
advertising, solicitations or marketing campaigns, programs or
other efforts not primarily directed to or targeted at such
Customers, including without limitation such campaigns, programs
or efforts in connection with lending, deposit, safe deposit,
trust or other financial services relationships with the public
(including the Customers generally), (ii) engage in other
lending, deposit, safe deposit, trust or other financial services
relationships, (iii) respond to unsolicited inquiries, and (iv)
provide notices or communications relating to the transactions
contemplated hereby in accordance with the provisions hereof.
(b) For a period of two (2) years following the Second
Closing Date, no Seller and no Affiliate of any Seller shall use
any list of Customers as a means to offer the same or similar
products and services of the Business as was provided to such
Customer by the Business immediately prior to the Second Closing
Date to any Customer whose Loan or Deposit Liability was
transferred to Purchaser at the Second Closing. Notwithstanding
the foregoing sentence, Sellers and their respective Affiliates
shall be permitted to (i) engage in advertising, solicitations or
marketing campaigns, programs or other efforts not primarily
directed to or targeted at such Customers, including without
limitation such campaigns, programs or efforts in connection with
lending, deposit, safe deposit, trust or other financial services
relationships with the public (including the Customers
generally), (ii) engage in other lending, deposit, safe deposit,
trust or other financial services relationships, (iii) respond to
unsolicited inquiries, and (iv) provide notices or communications
relating to the transactions contemplated hereby in accordance
with the provisions hereof.
(c) For a period of two (2) years following the Third
Closing Date, no Seller and no Affiliate of any Seller shall use
any list of Customers as a means to offer the same or similar
products and services of the Business as was provided to such
Customer by the Business immediately prior to the Third Closing
Date to any Customer whose Loan or Deposit Liability was
transferred to Purchaser at the Third Closing. Notwithstanding
the foregoing sentence, Sellers and their respective Affiliates
shall be permitted to (i) engage in advertising, solicitations or
marketing campaigns, programs or other efforts not primarily
directed to or targeted at such Customers, including without
limitation such campaigns, programs or efforts in connection with
lending, deposit, safe deposit, trust or other financial services
relationships with the public (including the Customers
generally), (ii) engage in other lending, deposit, safe deposit,
trust or other financial services relationships, (iii) respond to
unsolicited inquiries, and (iv) provide notices or communications
relating to the transactions contemplated hereby in accordance
with the provisions hereof.
Section 7.5. Nonsolicitation of Purchaser's Employees. (a) In
consideration of the consummation of the transactions
contemplated hereby, each Seller agrees that, for a period of two
(2) years following the First Closing Date, it shall not,
directly or indirectly, solicit for employment, retain as an
independent contractor or consultant, induce to terminate
employment with Purchaser or otherwise interfere with Purchaser's
employment relationship with any Person who becomes a Transferred
Employee as of the First Closing Date; provided, however, that
this Section 7.5(a) shall not apply (i) if any such employee has
been terminated by Purchaser or any of its Affiliates for any
reason or (ii) if such employee is hired by a Seller or any of
its Affiliates as a result of a general solicitation for
employment in newspaper advertisements or other periodicals of
general circulation not specifically targeted to employees of
Purchaser.
(b) In consideration of the consummation of the
transactions contemplated hereby, each Seller agrees that, for a
period of two (2) years following the Second Closing Date, it
shall not, directly or indirectly, solicit for employment, retain
as an independent contractor or consultant, induce to terminate
employment with Purchaser or otherwise interfere with Purchaser's
employment relationship with any Person who becomes a Transferred
Employee as of the Second Closing Date; provided, however, that
this Section 7.5(b) shall not apply (i) if any such employee has
been terminated by Purchaser or any of its Affiliates for any
reason or (ii) if such employee is hired by a Seller or any of
its Affiliates as a result of a general solicitation for
employment in newspaper advertisements or other periodicals of
general circulation not specifically targeted to employees of
Purchaser.
(c) In consideration of the consummation of the
transactions contemplated hereby, each Seller agrees that, for a
period of two (2) years following the Third Closing Date, it
shall not, directly or indirectly, solicit for employment, retain
as an independent contractor or consultant, induce to terminate
employment with Purchaser or otherwise interfere with Purchaser's
employment relationship with any Person who becomes a Transferred
Employee as of the Third Closing Date; provided, however, that
this Section 7.5(c) shall not apply (i) if any such employee has
been terminated by Purchaser or any of its Affiliates for any
reason or (ii) if such employee is hired by a Seller or any of
its Affiliates as a result of a general solicitation for
employment in newspaper advertisements or other periodicals of
general circulation not specifically targeted to employees of
Purchaser.
(d) For a period beginning on the First Closing Date and
ending on the second (2nd) anniversary of the Third Closing Date,
Sellers shall notify Purchaser in writing, within thirty (30)
days of the date of hire, of any Seller's hiring of any then
current employee of Purchaser or its Affiliates.
Section 7.6. Additional Employees. Sellers shall use
commercially reasonable efforts to designate employees of Sellers
to be interviewed by Purchaser for purposes of satisfying its
obligation to offer employment to the specified number of
Additional Employees pursuant to the Hiring Commitment and
Section 8.6, whose functional descriptions shall conform to those
previously provided by Purchaser to Sellers.
Section 7.7. Regulatory Approvals and Standards. Sellers filed
within sixty (60) days after the execution of the Original
Agreement all necessary applications of Sellers to obtain the
Seller Regulatory Approvals. Sellers shall supply to Purchaser,
at least five (5) Business Days prior to filing, copies of all
proposed regulatory applications and filings (other than the
confidential portions thereof) and will use commercially
reasonable efforts to reflect any material comments of Purchaser
in such filings. As of each Closing Date, Sellers will satisfy
any and all of the standards and requirements reasonably within
their control imposed as a condition to obtaining or necessary to
comply with the Seller Regulatory Approvals. Sellers shall pay
any fees charged by any governmental authorities to which they
must apply to obtain any of the Seller Regulatory Approvals.
Sellers shall not take any action which would adversely affect or
delay the ability of any other party hereto to obtain any
Regulatory Approval or to perform its covenants and agreements
under this Agreement. Sellers shall notify the Purchaser
promptly (and in no event later than twenty-four (24) hours
following notice) of any significant development with respect to
any application or notice filed by Sellers with any governmental
authority in connection with the transactions contemplated by
this Agreement.
Section 7.8. No Shop. (a) Except during any period during which
Fleet or any Seller are exercising their rights pursuant to
Section 7.8(b) hereof and except as otherwise agreed to by the
parties hereto in writing, neither Fleet nor any Seller nor any
of their Affiliates shall authorize or permit any of their
directors, officers, employees or agents, to directly or
indirectly respond to, solicit, initiate or encourage any
inquiries relating to, or the making of any proposal which
relates to, the sale or disposition of all or any portion of the
Purchased Assets, the Assumed Liabilities or the Business.
(b) In the event of (i) a breach by Purchaser or Sovereign
of any of the representations and warranties contained in Section
6.7 of this Agreement, (ii) the failure of Purchaser to obtain on
or before February 28, 2000 the Purchaser Regulatory Approvals,
or (iii) the failure of the First Closing to occur by March 24,
2000, the Second Closing to occur on June 16, 2000 or the Third
Closing to occur on July 21, 2000 (unless such failure is solely
as a result of Fleet's and Sellers' failure to satisfy the
conditions precedent to Sovereign's and Purchaser's obligations
pursuant to Section 12.2 and 12.4 hereof), notwithstanding
anything to the contrary contained herein or in any other
agreement, undertaking, instrument or other document to which any
of the parties hereto is a party, Fleet and Sellers may solicit
bids for and otherwise market all or any portion of the Purchased
Assets, the Assumed Liabilities or the Business and negotiate and
enter into agreements with respect to sale or other disposition
thereof to any Person and shall have no obligations or
liabilities to Purchaser or Sovereign with respect thereto or as
a result of any such actions or such a sale or other disposition
to any Person. If pursuant to the provisions of this Section
7.8(b) Fleet and Sellers enter into agreements with respect to
the sale or other disposition of all of the Purchased Assets, the
Assumed Liabilities or the Business, Fleet shall terminate this
Agreement pursuant to the provisions of Section 16.3(e) of this
Agreement.
ARTICLE VIII
COVENANTS OF PURCHASER AND SOVEREIGN
Purchaser and Sovereign covenant and agree with Sellers as
follows:
Section 8.1. Regulatory Approvals and Standards.
(a) Purchaser will use its commercially reasonable
efforts to obtain as expeditiously as possible the Purchaser
Regulatory Approvals and SBA Consents. Purchaser filed by
September 30, 1999 all necessary initial applications of
Purchaser to obtain the Purchaser Regulatory Approvals and will
obtain the Purchaser Regulatory Approvals on or before February
28, 2000. Purchaser filed within sixty (60) days after the
execution of the Original Agreement all necessary applications of
Purchaser to obtain the SBA Consents. Purchaser will supply to
Sellers, at least five (5) Business Days prior to filing, copies
of all proposed regulatory applications and filings (other than
the confidential portions thereof) and will use reasonable
efforts to reflect any material comments of Sellers in such
filings. As of each Closing Date, Purchaser will satisfy any and
all of the standards and requirements reasonably within its
control imposed as a condition to obtaining or necessary to
comply with the Purchaser Regulatory Approvals and the SBA
Consents. Purchaser shall pay any fees charged by any
governmental authorities to which it must apply to obtain any of
the Purchaser Regulatory Approvals or the SBA Consents.
Purchaser shall take no action which would adversely affect or
delay the ability of any other party hereto to obtain any
Regulatory Approval or to perform its covenants and agreements
under this Agreement. Purchaser shall notify Sellers promptly
(and in no event later than twenty-four (24) hours following
notice) of any significant development with respect to any
application or notice Purchaser files with any governmental
authority in connection with the transactions contemplated by
this Agreement.
(b) Purchaser shall use commercially reasonable efforts
to assist Sellers in obtaining any Seller Regulatory Approvals.
Purchaser shall provide Sellers or appropriate governmental
authorities with all information reasonably required to be
submitted by Purchaser in connection with the Seller Regulatory
Approvals.
(c) From September 3, 1999 through the Third Closing
Date, Purchaser shall (i) remain at least "adequately
capitalized", as defined in the FDIA, (ii) meet all capital
requirements, standards and ratios required by each state or
federal bank regulator with jurisdiction over Purchaser,
including without limitation, any such higher requirement,
standard or ratio as shall apply to institutions engaging in the
acquisition of insured institution deposits, assets or branches
and (iii) maintain its CRA ratings.
(d) Purchaser hereby confirms that after the First
Closing Date it is Purchaser's intention to conduct a banking
business at the Branches, and therefore as of the date of this
Agreement it is not expected that the transactions contemplated
by this Agreement will result in the closing, consolidation or
relocation of any of the Branches. Purchaser agrees that it
shall be solely responsible for complying with any required
branch closing or other notices to regulators and customers in
the event Purchaser should at any time determine to close,
consolidate or relocate any of the Branches or to close,
consolidate or relocate any branch of Purchaser in connection
with or relating to the transactions contemplated by this
Agreement.
Section 8.2. Consents; Compliance with Law. Purchaser shall
provide such financial and other information as shall be
reasonably requested by landlords under the Branch Leases and ATM
Lease Agreements and in connection with obtaining landlords'
consents to the Eastern MA Lease Agreements and CT/RI Lease
Agreements. Notwithstanding anything to the contrary contained
herein, Purchaser agrees that the form of Landlord Consent with
respect to a Branch Lease or an ATM Lease Agreement and in
connection with the Eastern MA Lease Agreements and the CT/RI
Lease Agreements, may be modified at the request of a landlord to
incorporate any and all conditions, terms and agreements such
landlord may require with respect to such landlord's required
consent to the assignment of such Branch Lease or ATM Lease
Agreement to Purchaser; provided that such conditions, terms and
agreements do not constitute a material or monetary modification
or alteration of the terms, covenants and conditions of such
Branch Lease or ATM Lease Agreement or to the respective Seller's
lease of those premises which will be subleased to Purchaser
pursuant to the Eastern MA Lease Agreements and CT/RI Lease
Agreements or otherwise impose any material burden on Sellers or
Purchaser not otherwise contemplated by such Branch Lease or ATM
Lease Agreement or by the Eastern MA Lease Agreements and CT/RI
Lease Agreements.
Section 8.3. Solicitation of Accounts. Prior to the Third
Closing Date, neither Purchaser nor any of its Affiliates shall
solicit Customers (other than Customers whose Loan or Deposit
Liability accounts were purchased or assumed by Purchaser at the
First Closing or the Second Closing) through advertising
specifically referencing or specifically targeted to such
Customers for the purpose of (a) inducing such Customers to close
Deposit Liability accounts and open deposit accounts directly
with Purchaser or any of its Affiliates, or (b) causing the
transfer of all or a portion of an existing Deposit Liability
from any Seller. Notwithstanding the foregoing sentence,
Purchaser and its Affiliates shall be permitted to (i) engage in
advertising, solicitations or marketing campaigns not primarily
directed to or targeted at such Customers, (ii) engage in
lending, deposit, safe deposit, trust or other financial services
relationships existing as of September 3, 1999 with such
Customers through branch offices of Purchaser, (iii) respond to
unsolicited inquiries by such Customers with respect to banking
or other financial services offered by Purchaser and (iv) provide
notices or communications relating to the transactions
contemplated hereby in accordance with the provisions hereof.
Section 8.4. Nonsolicitation of Sellers' Employees. (a) In
consideration of, among other things, the willingness of Sellers
to provide Purchaser with the opportunity to interview and hire
the Business Related Employees, Purchaser and its Affiliates
agree that, except in accordance with this Section 8.4, for a
period beginning on the First Closing Date and ending on the
second (2nd) anniversary of the Third Closing Date, they shall
not, directly or indirectly, solicit for employment, retain as an
independent contractor or consultant, induce to terminate
employment with Sellers or otherwise interfere with Sellers'
employment relationship with, any employee or officer of Sellers
or any of their respective Affiliates who is not employed by
Purchaser pursuant to Section 8.6; provided, however, that this
Section 8.4 shall not apply (i) if any such employee has been
terminated by Sellers or any of their Affiliates for any reason,
(ii) if such employee is hired by Purchaser or any of its
Affiliates as a result of a general solicitation for employment
in newspaper advertisements or other periodicals of general
circulation not specifically targeted to employees of Sellers, or
(iii) if Fleet indicates by written consent that it shall not
apply to any employee.
(b) For a period of two (2) years beginning on the First Closing
Date and ending on the second (2nd) anniversary of the Third
Closing Date, Purchaser shall notify Sellers in writing, within
(30) days of the date of hire, of Purchaser's hiring of any then
current employee of Sellers or their Affiliates.
Section 8.5. Recording of Instruments of Assignment
(a) No later than ten (10) Business Days following the
First Closing, Purchaser shall record all deeds relating to the
Real Property transferred to Purchaser at the First Closing. No
later than ten (10) Business Days following the Second Closing,
Purchaser shall record all deeds relating to the Real Property
transferred to Purchaser at the Second Closing. No later than
ten (10) Business Days following the Third Closing, Purchaser
shall record all deeds relating to the Real Property transferred
to Purchaser at the Third Closing.
(b) No later than six (6) months following the First
Closing, Purchaser shall have recorded all other instruments
required, necessary or desirable to evidence the acquisition,
assignment and assumption of the Purchased Assets and the Assumed
Liabilities transferred to Purchaser at the First Closing,
including, without limitation, all assignments of mortgage,
financing statements, and security agreements relating to the
Loans transferred to Purchaser at the First Closing.
(c) No later than six (6) months following the Second
Closing, Purchaser shall have recorded all other instruments
required, necessary or desirable to evidence the acquisition,
assignment and assumption of the Purchased Assets and the Assumed
Liabilities transferred to Purchaser at the Second Closing,
including, without limitation, all assignments of mortgage,
financing statements, and security agreements relating to the
Loans transferred to Purchaser at the Second Closing.
(d) No later than six (6) months following the Third
Closing, Purchaser shall have recorded all other instruments
required, necessary or desirable to evidence the acquisition,
assignment and assumption of the Purchased Assets and the Assumed
Liabilities transferred to Purchaser at the Third Closing,
including, without limitation, all assignments of mortgage,
financing statements, and security agreements relating to the
Loans transferred to Purchaser at the Third Closing.
Section 8.6. Transferred Employees. Purchaser covenants to
Sellers that it will do or cause the following to occur:
(a) No later than the Final Approval Date, Purchaser
shall offer employment beginning as of the First Closing Date to
those Business Employees which Purchaser and Sellers shall
mutually agree in good faith should be offered employment by
Purchaser beginning immediately after the First Closing upon
terms and conditions described in subsection (f) below and
subject to the First Closing.
(b) No later than the Final Approval Date, Purchaser
shall offer employment beginning as of the Second Closing Date to
all Business Employees which Purchaser and Sellers shall mutually
agree in good faith should be offered employment by Purchaser
beginning immediately after the Second Closing upon terms and
conditions described in subsection (f) below and subject to the
Second Closing.
(c) No later than the Final Approval Date, Purchaser
shall offer employment beginning as of the Third Closing Date to
all Business Employees which Purchaser and Sellers shall mutually
agree in good faith should be offered employment by Purchaser
beginning immediately after the Third Closing upon terms and
conditions described in subsection (f) below and no later than
the Third Closing Date Purchaser shall offer employment beginning
no later than the Third Closing Date to at least One Thousand
Three Hundred Fifty Two (1352) Additional Employees, including
all Auto Finance Employees and CAF Employees, upon terms and
conditions described in subsection (f) below.
(d) Purchaser may but shall not be obligated to offer
employment to any Business Related Employee on the same terms as
required hereunder for offers of employment to Business
Employees; provided, however, that Purchaser must offer
employment to such Business Related Employees no later than
thirty (30) days following the date on which a list of such
Business Related Employees is provided to Purchaser. The
position offered to each Business Employee, each Additional
Employee and each Business Related Employee must be a Comparable
Job. Subject to the provisions of this Section 8.6, Transferred
Employees will be subject to the employment terms, conditions and
rules applicable to other employees of Purchaser. Nothing
contained in this Agreement shall be construed as an employment
contract between Purchaser and any Transferred Employee.
(e) Effective as of the First Closing Date, Purchaser
shall assume the Fleet Boston Divestiture Severance Plan and all
obligations for all severance benefits payable pursuant to such
plan (the "Assumed Severance Obligations") to any Business
Employee, Auto Finance Employee and CAF Employee to whom
Purchaser does not provide a Comparable Job in accordance with
Section 8.6 hereof; provided, however, that transitional
assistance programs for which Purchaser shall be responsible
under the Fleet Boston Divestiture Severance Plan shall be
limited to outplacement services. For a period of one (1) year
following (i) the First Closing Date, with respect to Transferred
Employees whose hire date with Purchaser is the First Closing
Date, (ii) the Second Closing Date, with respect to Transferred
Employees whose hire date with Purchaser is the Second Closing
Date and (iii) the Third Closing Date, with respect to
Transferred Employees whose hire date with Purchaser is the Third
Closing Date, Purchaser shall provide severance benefits in
accordance with the terms of the Fleet Boston Divestiture
Severance Plan to any Transferred Employee who is terminated by
Purchaser on or after (i) the First Closing Date, with respect to
Transferred Employees whose hire date with Purchaser is the First
Closing Date, (ii) the Second Closing Date, with respect to
Transferred Employees whose hire date with Purchaser is the
Second Closing Date and (iii) the Third Closing Date, with
respect to Transferred Employees whose hire date with Purchaser
is the Third Closing Date, pursuant to the terms of the Fleet
Boston Divestiture Severance Plan. Purchaser shall compute
severance benefits by giving all Transferred Employees full
credit for all years of service with Sellers, their Affiliates
and predecessors. After the one (1) year periods provided for
herein, Purchaser shall provide Transferred Employees with
severance benefits in accordance with Purchaser's severance
policy, if any, crediting Transferred Employees with years of
service as provided under this Agreement.
(f) Each Business Employee, Additional Employee and
Business Related Employee shall be offered employment subject to
the following terms and conditions:
(i) Salary or base wages shall be equivalent to the
base salary or base wage paid by the applicable Seller to such
employee as of the close of business on (A) the First Closing
Date, with respect to Transferred Employees whose hire date with
Purchaser is the First Closing Date, (B) the Second Closing Date,
with respect to Transferred Employees whose hire date with
Purchaser is the Second Closing Date and (C) the Third Closing
Date, with respect to Transferred Employees whose hire date with
Purchaser is the Third Closing Date, until such time that
Purchaser's compensation policies would entitle such employee to
an increased salary or base wage.
(ii) Vacation benefits shall be equivalent to
vacation benefits provided by the applicable Seller to such
employee as of the close of business on (A) the First Closing
Date, with respect to Transferred Employees whose hire date with
Purchaser is the First Closing Date, (B) the Second Closing Date,
with respect to Transferred Employees whose hire date with
Purchaser is the Second Closing Date and (C) the Third Closing
Date, with respect to Transferred Employees whose hire date with
Purchaser is the Third Closing Date, until December 31, 2000.
Any vacation balance to which such employee is entitled in the
year of Closing shall carry over to Purchaser. As of January 1,
2001, Transferred Employees shall receive in the aggregate for
vacation, sick and personal days the amount of paid time off to
which they are entitled under Purchaser's policies as in effect
then and from time to time thereafter.
(iii) Purchaser shall provide each Transferred
Employee with the following:
(A) Each Transferred Employee will be eligible
to participate in any qualified profit sharing plan/40l(k) plan
or plans of Purchaser, based on each plan's eligibility criteria
as of the close of business on (i) the First Closing Date, with
respect to Transferred Employees whose hire date with Purchaser
is the First Closing Date, (ii) the Second Closing Date, with
respect to Transferred Employees whose hire date with Purchaser
is the Second Closing Date and (iii) the Third Closing Date, with
respect to Transferred Employees whose hire date with Purchaser
is the Third Closing Date. Purchaser shall credit each
Transferred Employee with the period of years of service with a
Seller, its Affiliates and predecessors in determining
eligibility to participate, vesting and level of matching
contributions in such plan or plans.
(B) Each Transferred Employee will be eligible
to participate in the Purchaser's qualified employee stock
ownership plan, based on such plan's eligibility criteria as of
the close of business on the First Closing Date. Purchaser shall
credit each Transferred Employee with the period of years of
service with a Seller, its Affiliates and predecessors in
determining eligibility to participate, vesting, benefit accrual
and eligibility to receive benefits in Purchaser's pension
plan(s); provided, however, that (i) such crediting of service
shall not operate to duplicate any benefit or the funding of any
benefit for any period of service and (ii) such Transferred
Employee shall become eligible to participate in Purchaser's
employee stock ownership plan on January 1, 2001 if he or she is
employed by Purchaser or one of its Affiliates as of such date.
(C) Each Transferred Employee will receive
credit for years of service with a Seller, its Affiliates and
predecessors for purposes of calculation of benefits and waiting
period eligibility (except as provided in subparagraph (iii)(B)
above) in Purchaser's other miscellaneous benefits programs,
including but not limited to, vacation, severance, leaves of
absence, education assistance, sick leave, short and long-term
disability plans and other similar benefits.
(D) (i) On the First Closing Date, with
respect to Transferred Employees whose hire date with Purchaser
is the First Closing Date, (ii) the Second Closing Date, with
respect to Transferred Employees whose hire date with Purchaser
is the Second Closing Date and (iii) the Third Closing Date, with
respect to Transferred Employees whose hire date with Purchaser
is the Third Closing Date, each Transferred Employee will become
immediately eligible to participate in Purchaser's health and
welfare plans, including but not limited to, dental, life
insurance and short and long-term disability plans, as such plans
may exist, on the same basis as other similarly-situated
employees of Purchaser. Purchaser shall waive any pre-existing
condition limitations with respect to such Transferred Employee
and his or her dependents. Purchaser shall cause each such
Transferred Employee to be eligible as of (i) the First Closing
Date, with respect to Transferred Employees whose hire date with
Purchaser is the First Closing Date, (ii) the Second Closing
Date, with respect to Transferred Employees whose hire date with
Purchaser is the Second Closing Date and (iii) the Third Closing
Date, with respect to Transferred Employees whose hire date with
Purchaser is the Third Closing Date, for at least the amount of
insurance coverage that he or she maintained under the applicable
Seller's plans, without requiring such Transferred Employee to
provide any evidence of insurability, except to the extent that
the amount of such Transferred Employee's insurance coverage
exceeds $680,000.
(E) Upon conclusion of his or her short term
disability or temporary leave of absence, subject to the terms
and conditions of Purchaser's plans and policies and applicable
law, each Transferred Employee on such leave as of (i) the First
Closing Date, with respect to Transferred Employees whose hire
date with Purchaser is the First Closing Date, (ii) the Second
Closing Date, with respect to Transferred Employees whose hire
date with Purchaser is the Second Closing Date and (iii) the
Third Closing Date, with respect to Transferred Employees whose
hire date with Purchaser is the Third Closing Date shall receive
the greater of the salary and vacation benefits in effect (y)
when he or she went on leave or (z) upon the conclusion of such
leave to the extent that such Transferred Employee is entitled to
any pay increase or vacation entitlement during such leave of
absence pursuant to the applicable Seller's leave of absence
policies, shall otherwise be treated as a Transferred Employee
and shall be offered by Purchaser the same or a substantially
equivalent position to his or her position with Sellers prior to
the leave.
(F) To the extent that Purchaser provides any
Transferred Employee with benefit or other plans and such plans
accept cash roll-overs, Purchaser shall allow such Transferred
Employee to roll over into such plans any cash distributions or
contributions received from Sellers or their respective plans,
including any outstanding loan balances from a Seller's qualified
or thrift retirement plan.
(g) No later than one (1) year following the Third
Closing Date Purchaser shall pay the Stay Bonus Payments.
(h) Purchaser shall be responsible for all obligations
(including obligations to provide notices) or liabilities, if
any, which may arise in connection with any Transferred Employee
under the WARN Act. Purchaser shall indemnify and hold Sellers
harmless for any WARN Act obligations or liabilities of Sellers
that are triggered by any mass layoff, plant closing or other
employment action by Purchaser between the First Closing Date and
ninety (90) days following the Third Closing Date.
Section 8.7. Interviews. Purchaser shall be solely responsible
for any acts or omissions which are wrongful, illegal or in
contravention of this Agreement made by it in connection with
interviewing or hiring the Business Employees, Additional
Employees and Business Related Employees. Purchaser shall
reimburse the Business Employees, Additional Employees and
Business Related Employees (if applicable) for transportation
costs to and from the location where Purchaser shall interview
such employees.
Section 8.8. Additional Requirements.
(a) In the event Sellers terminate the Agreement
pursuant to Section 16.3(b) by reason of the fact that Purchaser
has been denied the Purchaser Regulatory Approval by Final order
or pursuant to Sections 16.3 (c), (d), (e), (f) or (g) of this
Agreement, Purchaser shall pay to Sellers as liquidated damages
an amount equal to Two Hundred Million Dollars ($200,000,000).
Such liquidated damages shall be paid through the Earnest Money
Deposit.
(b) Purchaser and Sovereign hereby agree that in the
event that Fleet and Sellers exercise their rights under Section
7.8(b), neither Purchaser nor Sovereign will take any action
whatsoever to impede, adversely affect or otherwise interfere
with Fleet's and Sellers' exercise of their rights under Section
7.8(b), including, without limitation, the filing of any type of
court action (whether at law or in equity and whether on a
federal or state level) to prohibit the exercise of such rights.
Purchaser and Sovereign also agree that in the event that Fleet
and Sellers exercise their rights pursuant to Section 7.8(b),
Purchaser and Sovereign will take all actions requested by Fleet
and Sellers to confirm that Fleet and Sellers are entitled to (i)
solicit bids for and otherwise market all or any portion of the
Purchased Assets, the Assumed Liabilities or the Business and
(ii) negotiate and enter into agreements with respect to the sale
or other disposition of all or any portion of the Purchased
Assets, the Assumed Liabilities or the Business, including,
without limitation, the delivery by Sovereign of a certificate
from the Chairman and Chief Executive Officer of Sovereign so
confirming such rights of Fleet and Sellers.
(c) Upon execution of any agreement, instrument,
debenture, note, or other documentation with respect to any
Capital Transaction, or any amendment, modification or
termination thereof, and upon execution of any agreement,
instrument, debenture, note or other documentation with respect
to any other transaction the purpose of which is to raise
Purchaser's capital to support the acquisition of the Purchased
Assets or the Assumed Liabilities, Purchaser and Sovereign will
provide a copy thereof to Fleet, certified by the Chief Financial
Officer of Sovereign to be a true and correct copy thereof.
Section 8.9. No Other Transactions. Between September 3, 1999
and the Third Closing Date neither Purchaser nor Sovereign nor
any of their Affiliates will undertake or agree to undertake any
material acquisition of the business, assets (except loan
portfolios and other assets acquired in the ordinary course of
business) or equity interests of any Person, directly or
indirectly, whether by merger, consolidation, combination,
subscription, purchase or otherwise.
Section 8.10. Sovereign Bancorp, Inc. Guaranty. Subject to the
terms and conditions of the Agreement, Sovereign hereby
guarantees the performance by Purchaser of Purchaser's
obligations (a) hereunder, and (b) under any other agreements
made or documents executed in connection herewith.
Section 8.11. Release of Escrow Funds. Sovereign hereby agrees
that on or before the Third Closing Date, an officer of Sovereign
will deliver to Harris Trust and Savings Bank, as trustee under
the Escrow Agreement, the officer's certificate required pursuant
to the terms of the Escrow Agreement to release funds held in
escrow thereunder.
Section 8.12. Dividends. Purchaser hereby agrees that it will
not pay any dividends to Sovereign, or to any other Person, if,
after giving effect to the payment of such dividend, Purchaser
would fail to meet its Minimum Capital Requirement.
Section 8.13. Capital Infusion. Sovereign hereby agrees that
all proceeds of the Capital Transactions shall be immediately
invested by Sovereign in the common equity of Purchaser, except
as otherwise set forth in the pro forma projected financial
information which Sovereign delivered to Fleet on the date
hereof.
ARTICLE IX
ACCESS; EMPLOYEE AND CUSTOMER COMMUNICATIONS
Section 9.1. Access by Purchaser. Upon execution of this
Agreement and until the Third Closing Date, Sellers shall provide
Purchaser and its representatives, accountants and counsel
reasonable access during normal business hours and upon one (1)
Business Days notice to Sellers to the Facilities, Business
Employees, Additional Employees and Business Related Employees,
depository records, Loan files, books and records and all other
documents and other information relating to the Facilities, the
Business, the Purchased Assets, the Assumed Liabilities and the
Transferred Employees as Purchaser may reasonably request;
provided that a representative of Sellers shall be permitted to
be present at all times and provided further that with respect to
information concerning Business Employees, Additional Employees
and Business Related Employees, Sellers' sole obligation shall be
to provide Purchaser with information concerning the name,
position, date of hire and salary of the Business Employees,
Additional Employees and Business Related Employees and Sellers
shall not be required to provide Purchaser with access to or
copies of any personnel files or other individualized employee
files or documents, all of which shall remain the sole property
of Sellers. Notwithstanding the foregoing, in no event shall
Sellers be required to provide (a) any information that is not
available from Persons who are not Affiliates of Sellers on
commercially reasonable terms which Sellers', in their sole
discretion, deem proprietary, including without limitation,
Sellers' "credit scoring" system, branch or credit practices,
policies or procedures, or staffing models, (b) any information
which is protected by the attorney-client privilege, or (c) its
or any of its Affiliates' tax returns.
Section 9.2. Communications to Employees; Training
(a) Sellers and Purchaser shall mutually agree as to the
scope and content of all communications to the Business
Employees, Additional Employees and Business Related Employees.
Except as specifically provided in this Section 9.2, in no event
shall Purchaser contact any Business Employee, Additional
Employee or Business Related Employee without the prior written
consent of Sellers, which will not be unreasonably withheld.
(b) At mutually agreed upon times following the date
hereof, Purchaser shall be permitted to meet with the Business
Employees, Additional Employees and Business Related Employees to
discuss employment opportunities with Purchaser, provided that
representatives of Sellers shall be permitted to attend any such
meeting. From and after the Final Approval Date, Purchaser shall
also be permitted to conduct training sessions outside of normal
business hours or at other times as Sellers may agree, with the
Business Employees, Additional Employees and Business Related
Employees (if applicable) and may, with Sellers' consent, which
will not be unreasonably withheld, conduct such training seminars
at the Branches; provided that Purchaser will in good faith
attempt to schedule such training sessions in a manner which does
not unreasonably interfere with Sellers' normal business
operations. Purchaser shall reimburse the Business Employees,
Additional Employees and Business Related Employees (if
applicable) for transportation costs to and from the locations
where Purchaser shall train such employees and compensate the
Business Employees, Additional Employees and Business Related
Employees (if applicable) or reimburse Sellers at the Business
Employees, Additional Employees and Business Related Employees
(if applicable) respective applicable standard or overtime rates
for the time spent in such training.
Section 9.3. Communications with Customers.
(a) Purchaser shall send statements to the Customers
whose Loans or Deposit Liabilities are being purchased or assumed
by Purchaser at the First Closing announcing the transactions
contemplated hereby. Following the Final Approval Date but not
earlier than forty-five (45) days prior to the Second Closing
Date, Purchaser shall send statements to the Customers whose
Loans or Deposit Liabilities are being purchased or assumed by
Purchaser at the Second Closing announcing the transactions
contemplated hereby. Following the Final Approval Date but not
earlier than forty-five (45) days prior to the Third Closing
Date, Purchaser shall send statements to the Customers whose
Loans or Deposit Liabilities are being purchased or assumed by
Purchaser at the Third Closing announcing the transactions
contemplated hereby (such statements being herein called
"Customer Notices"). The form and content of each Customer
Notice shall be subject to the reasonable approval of both
parties and the cost of printing and mailing the Customer Notices
shall be borne solely by Purchaser (except as provided in Section
11.17 hereof). On or after the date hereof but prior to the
First Closing Date, with respect to Customers whose Loans and/or
Deposit Liability accounts are being transferred to Purchaser at
the First Closing, prior to the Second Closing Date, with respect
to Customers whose Loans and/or Deposit Liability accounts are
being transferred to Purchaser at the Second Closing and prior to
the Third Closing Date, with respect to Customers whose Loans
and/or Deposit Liability accounts are being transferred to
Purchaser at the Third Closing, Purchaser shall also be entitled
to provide solely at its own expense such other notices or
communications to Customers relating to the transactions
contemplated hereby as may be required by law; provided that the
text of any such notice or communication and the timing of such
notice or communication which is provided shall be approved in
advance by Sellers, which approval shall not unreasonably be
withheld or delayed.
(b) Except as specifically provided herein, in no event
will Purchaser or its Affiliates contact any Customers prior to
the Final Approval Date without the prior written consent of
Sellers which may be granted or withheld in their sole
discretion; provided that Purchaser may contact Customers in
connection with (i) advertising, solicitations or marketing
campaigns not primarily directed to or targeted at Customers,
(ii) lending, deposit, safe deposit, trust or other financial
services relationships of Purchaser with Customers through branch
offices of Purchaser existing as of September 3, 1999,
(iii) unsolicited inquiries by Customers to Purchaser with
respect to banking or other financial services provided by
Purchaser, and (iv) notices or communications relating to the
transactions contemplated hereby in accordance with the
provisions hereof.
ARTICLE X
CONNECTICUT TRANSFER ACT
Purchaser agrees that certain Real Property on which some or all
of the Facilities in Connecticut are located may be
"establishments" within the meaning of the CTA and that it is
Purchaser's sole and exclusive responsibility (a) to determine
the "establishment" status for each such property and Facility,
(b) to perform, at its sole cost and expense, including, without
limitation, preparing and executing appropriate forms and making
any other necessary filings required under the CTA, any
requirement under the CTA for investigations or assessments, and
any remediations of contamination at or emanating from such
property, and (c) to pay any transfer fees due the Connecticut
Department of Environmental Protection and other related fees or
costs; provided, that Sellers shall execute and deliver to
Purchaser and the Connecticut Department of Environmental
Protection such forms as may reasonably be required to be
executed by Sellers in conformance with the CTA and provided that
Purchaser shall have submitted to Sellers such assessments or
other supporting documentation as may reasonably be required to
support Sellers' certifications and execution of such forms.
Upon the consummation of the First Closing, Purchaser hereby
releases Sellers and their Affiliates and waives any claims which
Purchaser may now or hereafter have against Sellers or their
Affiliates arising under the CTA, including, without limitation,
Section 22a-134b thereof (regarding recovery of damages by a
transferee from a transferor).
ARTICLE XI
TRANSITIONAL MATTERS
Section 11.1. Payment of Deposit Liabilities.
(a) Purchaser shall (i) pay all properly drawn and
presented checks, negotiable orders of withdrawal, drafts, debits
and other withdrawal orders presented to Purchaser by Deposit
Liability account customers whose Deposit Liabilities Purchaser
has assumed pursuant to the terms hereof, whether drawn on
checks, negotiable orders of withdrawal, drafts, or other
withdrawal order forms provided by Sellers or by Purchaser and
(ii) in all other respects discharge, in the usual course of the
banking business, all of the duties and obligations of Sellers
with respect to the balances due and owing to the Customers who
have Deposit Liability accounts whose Deposit Liabilities
Purchaser has assumed pursuant to the terms hereof. If any
Customer who has a Deposit Liability account that Purchaser has
assumed draws checks, drafts, or negotiable orders of withdrawal
against the Deposit Liabilities which are presented or delivered
to Sellers not later than ninety (90) days after the assumption
of such Deposit Liability by Purchaser, Sellers shall use their
commercially reasonable efforts to batch all such checks, drafts,
negotiable orders of withdrawal, or other withdrawal order forms
and to deliver the same to Purchaser at Purchaser's sole expense.
Purchaser acknowledges that any delay, failure, or inability on
its part to comply with the obligations imposed upon it as a
depository institution under applicable federal or state law,
with regard to such checks, drafts, negotiable orders of
withdrawal or other withdrawal orders shall not result in any
liability or obligation of Sellers and shall not affect any of
the rights of Sellers or Fleet under this Agreement. Sellers
shall not be deemed to have made any representations or
warranties to Purchaser with respect to any such checks, drafts,
negotiable orders of withdrawal or other withdrawal orders and
any such representations or warranties implied by law are hereby
disclaimed and are the responsibility of Purchaser, except that
Sellers shall be chargeable with the warranties and
representations implied by law with respect to any such check,
draft, negotiable orders of withdrawal order, or other withdrawal
order, which is paid by Sellers over the counter.
(b) Purchaser hereby acknowledges that if any Customer
who has a Deposit Liability account which Purchaser has assumed
pursuant to the terms of this Agreement, instead of accepting the
obligation of Purchaser to pay the Deposit Liabilities (including
Accrued Interest thereon) shall demand payment from Sellers for
all or any part of any such Deposit Liabilities (including
Accrued Interest thereon), Sellers shall not be liable or
responsible for making such payment.
(c) It is Sellers' intent that all Deposit Liability
transactions will be referred to Purchaser; provided, however
that, if, after any Closing Date, Sellers honor and pay any
Deposit Liabilities which Purchaser has assumed pursuant to the
terms of this Agreement which are presented to Sellers for
payment, pay any check, draft, negotiable order of withdrawal or
other withdrawal order, Purchaser shall upon demand by Sellers
reimburse Sellers for such payment. Any payment made under this
Section 11.1 shall be made within three (3) Business Days after
demand by Sellers, by wire transfer of immediately available
funds to an account designated by Sellers.
Section 11.2. Delivery of Purchaser's Check Forms Following the
Final Approval Date, but not less than fifteen (15) days prior to
the applicable Closing Date, Purchaser shall, at its sole cost
and expense, notify all Customers who have a Deposit Liability
account that will be assumed by Purchaser on such Closing Date,
by letter, in a form reasonably acceptable to Sellers, of
Purchaser's upcoming assumption of the Deposit Liabilities (other
than Excluded Deposits) (which shall include a notification to
those Deposit Liability account Customers whose accounts are then
covered by any type of overdraft protection offered by Sellers,
including but not limited to Advance Lines, that from and after
such Closing Date all such overdraft protection from Sellers
shall terminate) and furnish each such Customer with checks,
deposit tickets, or other similar instruments using the forms of
Purchaser, which shall be appropriately encoded with Purchaser's
routing number and with accurate account numbers, and with
instructions to the customer to utilize such checks, deposit
tickets, or other similar instruments on Purchaser's forms on and
after such Closing Date and thereafter to destroy any unused
checks on Sellers' forms; such notice and such delivery of checks
by Purchaser shall be by first class U.S. mail.
Section 11.3. Uncollected Checks Returned to Sellers. Purchaser
shall promptly pay to Sellers an amount equivalent to the amount
of any checks, negotiable orders of withdrawal, drafts, or any
other withdrawal orders (net of the applicable deposit premium
paid by Purchaser with respect to the Deposit Liabilities
represented by any such instrument) credited as of the close of
business on any Closing Date to any Deposit Liability accounts
which are returned uncollected to Sellers after such Closing Date
and which shall include an amount equivalent to holds placed upon
such Deposit Liability accounts for Items cashed by Sellers (net
of the applicable deposit premium paid by Purchaser with respect
to the Deposit Liabilities represented by any such instrument) as
of the close of business on such Closing Date which Items are
subsequently dishonored; provided, however, that if Sellers shall
have failed to make or properly reflect in the information
provided to Purchaser any provisional credit or hold on any such
Deposit Liability accounts in respect of uncollected funds
represented by any such Item, Purchaser's obligations under this
Section 11.3 in respect of such Item shall be limited to the
amount of collected funds in such Deposit Liability accounts.
Section 11.4. Default on Loan Payments to Sellers. If the
balance due on any Loan has been reduced by Sellers as a result
of a payment by check or draft received prior to the close of
business on the day such Loan is purchased by Purchaser pursuant
to the terms hereof, which Item is returned to Sellers after the
day such Loan is purchased by Purchaser pursuant to the terms
hereof, the Loan Value of such Loan shall be correspondingly
increased and an amount in cash equal to such increase shall be
promptly paid by Purchaser to Sellers within three (3) Business
Days after demand by Sellers by wire transfer of immediately
available funds to an account designated by Sellers.
Section 11.5. Notices to Obligors on Loans.
(a) Purchaser shall, following the Final Approval Date,
but no later than fifteen (15) days prior to a Closing Date,
prepare and transmit, at Purchaser's sole cost and expense, to
each obligor on each Loan that will be purchased by Purchaser on
such Closing Date, a notice in a form satisfying all legal
requirements and reasonably acceptable to Sellers to the effect
that the Loan will be transferred to Purchaser and directing that
payments be made after such Closing Date to Purchaser at any
address of Purchaser specified by Purchaser, with Purchaser's
name as payee on any checks or other instruments used to make
such payments, and, with respect to all such Loans on which
payment notices or coupon books have been issued, to issue new
notices or coupon books reflecting the name and address of
Purchaser as the person to whom and the place at which payments
are to be made. To the extent that Purchaser's notice pursuant
to the prior sentence shall be legally insufficient, Sellers
agree, at Purchaser's sole expense, to provide all Loan obligors
with all required notices of the assignment and transfer of the
Loans.
(b) To the extent that any of the Loans transferred from
Sellers to Purchaser involve a transfer of servicing as defined
and governed by the Real Estate Settlement Procedures Act (12
U.S.C. Section 2601 et seq.), Sellers and Purchaser will jointly
coordinate any appropriate required Customer notices.
Section 11.6. New Telephone Numbers. For each Facility
transferred to Purchaser at a Closing, Purchaser shall, no later
than ten (10) days prior to the Closing Date for such Closing,
obtain new telephone numbers for such Facilities in Purchaser's
name; provided that Sellers shall undertake reasonable
operational measures and such other actions as may reasonably be
requested by Purchaser to permit the existing telephone numbers
to be utilized by Purchaser following the day on which such
Facility is transferred to Purchaser pursuant to the terms of
this Agreement.
Section 11.7 New ATM/Debit Cards. Following the Final Approval
Date, but no later than five (5) days prior to the applicable
Closing Date, furnish ATM/Debit cards to Customers who have
Deposit Liability accounts to replace Sellers' ATM/Debit cards.
Purchaser shall, no later than five (5) days prior to such
Closing Date, notify affected Customers to destroy the Sellers'
ATM/Debit cards as of such Closing Date and shall notify such
Customers of Purchaser's withdrawal limits immediately following
the day on which such Customers' Deposit Liabilities are assumed
by Purchaser pursuant to the terms hereof by form of notice
reasonably acceptable to Sellers. Sellers shall undertake
reasonable operational measures and such other actions as may
reasonably be requested by Purchaser to provide existing personal
identification numbers of Customers in encrypted format to
Purchaser not later than five (5) Business Days prior to the day
on which such Customers' Deposit Liabilities are assumed by
Purchaser pursuant to the terms hereof.
Section 11.8. Installation of Equipment by Purchaser.
Subsequent to the Final Approval Date, Sellers shall cooperate
with and permit Purchaser, at Purchaser's option and sole cost
and expense, to make provision for the installation of teller
equipment in the Branches; provided, however, that Purchaser
shall arrange for the installation of such equipment at such
times and in a manner that does not significantly interfere with
the normal business activities and operation of the Branches and
after obtaining the consent of the landlord of any Branch Lease,
if a landlord's consent to such installation is required under
the applicable Branch Lease.
Section 11.9. Deactivation of ATMs and ATM/Debit Cards. Sellers
shall deactivate all ATM/Debit cards issued with respect to all
Deposit Liability accounts assumed by Purchaser on any Closing
Date no later than the first (1st) Business Day following such
Closing Date, and shall electronically block access of those
cards to the Deposit Liability accounts, and shall deactivate the
ATMs not later than 8:00 a.m. on the first (1st) Business Day
following the date on which Purchaser purchased the ATMs. Point
of sale transactions shall be settled between Purchaser and
Sellers for a period of forty-five (45) days after each Closing
Date.
Section 11.10. Signage.
(a) During the seven (7) day period immediately
preceding each Closing Date, Sellers shall cooperate with any
commercially reasonable request of Purchaser directed to
accomplishing the installation of signage of Purchaser's choosing
at the Facilities that will be transferred to Purchaser on such
Closing Date; provided, however, that all such installations
shall be at the sole cost and expense of Purchaser, that such
installation shall be performed in such a manner that does not
significantly interfere with the normal business activities and
operations of the Facilities, that such signage complies with the
applicable Branch Lease and all applicable zoning and permitting
laws and regulations, that such signage has, if necessary,
received the prior approval of the owner or landlord of the Real
Property, and that all such installed signage shall be covered in
such a way as to be unreadable at all times prior to the transfer
of the Branch to Purchaser pursuant to the terms of this
Agreement. Immediately following each Closing, Sellers shall, at
their sole cost and expense, cover all of its signage relating to
the Branches transferred to Purchaser at such Closing, in such a
way as to be unreadable after such Closing and shall commence
activities directed to accomplishing the removal of all of
Sellers' existing signage at the Facilities and will diligently
pursue such activities in good faith so that such removal may be
effected as promptly as practicable following each Closing.
(b) For a period of thirty (30) days following the
conversion of information from data systems of BBNA to data
systems of FNB, Sellers shall not change the signage on any BBNA
branch whose data systems have been so converted.
Section 11.11. Letters of Credit and Liquidity Support
Agreements.
(a) It is the intention of the parties that Purchaser
assume all risks and obligations arising or accruing after the
close of business on each Closing Date with respect to the
Letters of Credit and Liquidity Support Agreements relating to
Loans transferred on such Closing Date. Accordingly, Purchaser
agrees to use its commercially reasonable efforts to obtain prior
to each Closing Date on which the related Loan is purchased by
Purchaser pursuant to the terms hereof and, in any event, no
later than three (3) months following each Closing Date on which
the related Loan is purchased by Purchaser pursuant to the terms
hereof, (i) the consent of the beneficiary (if necessary) to the
assumption of (and the resulting release of the issuing Seller
from) the Letters of Credit and/or to issue replacement letters
of credit for those Letters of Credit which are standby Letters
of Credit, and (ii) the consent of all necessary Persons (whether
or not parties thereto), including without limitation, all
applicable rating agencies, to the assumption of (and the
resulting release of the applicable Seller from) the Liquidity
Support Agreements and/or to enter into replacement liquidity
support agreements (and the resulting termination of the
applicable Liquidity Support Agreements).
(b) Until such time as there are no Letters of Credit
and/or Liquidity Support Agreements, Sellers hereby grant to
Purchaser, and Purchaser hereby agrees and commits to acquire, as
of each Closing Date, from Sellers a participation in the Letters
of Credit and Liquidity Support Agreements relating to Loans
transferred on such Closing Date equal to one hundred percent
(100%) of the amount thereof.
(c) Sellers agree that, with respect to each request by
a beneficiary for a draw under or payment of a Letter of Credit,
(a "Request"), it will (i) promptly provide, by facsimile sent to
Purchaser, copies of documents submitted to support any Request;
(ii) wait twenty-four (24) hours, or such shorter time period as
may be required under such Letter of Credit, after sending the
facsimile before acting on a Request; (iii) act in accordance
with ISP98, UCP 500 and/or UCC Article 5, as applicable, in
deciding whether or not to honor the Request unless directed in
writing by Purchaser to otherwise honor or dishonor a Request,
which written direction from Purchaser shall set forth
Purchaser's specific reasons for honor or dishonor, as the case
may be; provided, however, in the event Purchaser has directed
Sellers in writing to dishonor a Request which Sellers deem
should be honored, Purchaser's written direction must be
accompanied by an indemnification from Purchaser holding Sellers
harmless from and against any and all claims, damages, losses,
liabilities, costs or expenses whatsoever (including reasonably
attorney's fees and expenses) which a Seller may incur arising
from Purchaser's direction to dishonor (nothing in this
Subsection 11.11(c) is intended to limit Purchaser's
reimbursement obligation set forth in Subsection 11.11(d) and the
indemnity herein shall not be subject to the time limitations or
basket limitations set forth in Sections 14.8 and 14.6,
respectively), and if such indemnification is not provided to
Sellers in writing in a timely fashion, Sellers may honor such
Request; (iv) provide notice to Purchaser that the Request has
been honored and the amount of the Letter of Credit Disbursement
that may become due pursuant to Subsection 11.11(d), below; and
(v) after honoring a Request, send the documents submitted by the
beneficiary in support of a Request as directed by Purchaser.
(d) In the event Sellers notify Purchaser that a Letter
of Credit Disbursement has been made and that either (A) the
affected Customer has failed to immediately reimburse such Letter
of Credit Disbursement pursuant to its Reimbursement Agreement or
(B) the related Reimbursement Agreement does not require that the
affected Customer immediately reimburse Seller for such Letter of
Credit Disbursement, then, Purchaser agrees to pay to Sellers on
the day so notified by Sellers, an amount equal to the Letter of
Credit Disbursement; provided, however, if such notice was not
given by Sellers to Purchaser prior to 2 p.m. on such day, then
such amount shall be paid by Purchaser not later than 10:00 a.m.
on the next Business Day. Whenever any amounts are due and
payable by Purchaser pursuant to this Subsection 11.11(d),
Sellers agree to submit a draw request to Purchaser in accordance
with the terms of the Purchaser's Letter of Credit stating the
amount due hereunder. Purchaser agrees to pay Sellers any
amounts due under this Subsection 11.11(d) by wire transfer of
immediately available funds to an account previously designated
by Sellers.
(e) Sellers agree that, with respect to each request for
an extension of credit or other financial accommodation under a
Liquidity Support Agreement (a "Support Request"), they will
(i) promptly provide by facsimile sent to Purchaser, copies of
all documents relating to any such Support Request; (ii) wait
twenty-four (24) hours, or such shorter time period as may be
required under such Liquidity Support Agreement, before acting on
a Support Request; (iii) act in accordance with the terms and
provisions of the applicable Liquidity Support Agreement; and
(iv) provide notice to Purchaser that Sellers have made a
Liquidity Support Disbursement and the amount of the Liquidity
Support Disbursement that may become due pursuant to subsection
(f) below.
(f) In the event Sellers notify Purchaser that a
Liquidity Support Disbursement has been made and that either (A)
the affected Customer has failed to immediately repay such
Liquidity Support Disbursement pursuant to its Liquidity Support
Agreement or (B) the related Liquidity Support Agreement does not
require that the affected Customer immediately repay Sellers for
such Liquidity Support Disbursement, then Purchaser agrees to pay
to Sellers on the day so notified by Sellers an amount equal to
the amount of such Liquidity Support Disbursement; provided,
however, if such notice was not given to Purchaser prior to 2:00
p.m. on such day, then such amount shall be paid by Purchaser not
later than 10:00 a.m. on the next Business Day. Whenever any
amounts are due and payable by Purchaser pursuant to this
Subsection 11.11(f), Sellers agree to submit a draw request to
Purchaser in accordance with the terms of the Purchaser's Letter
of Credit stating the amount due hereunder. Purchaser agrees to
pay Sellers any amounts due under this Subsection 11.11(f) by
wire transfer of immediately available funds to an account
previously designated by Sellers.
(g) Purchaser also agrees to pay Sellers (i) interest on
any and all amounts unpaid by Purchaser when due under
Subsections 11.11(d) and (f), above, from the date such amounts
become due until payment in full, such interest being payable on
demand and accruing at a fluctuating interest rate per annum
(computed on the basis of a year of 365 days for the actual
number of days elapsed) which shall at all times be equal to the
Federal Funds Rate during each day until such amounts are paid in
full (but such fluctuating interest rate shall in no event be
higher than the maximum rate permitted by then applicable law)
and (ii) any and all costs and expenses (including, without
limitation, reasonable attorneys' fees) reasonably incurred by
Sellers in exercising or enforcing any rights or performing any
obligations under Sections 11.11(d), (f) and (g).
(h) So long as Purchaser is not in default of its
obligations under this Section 11.11, Sellers shall promptly
remit to Purchaser any amounts subsequently received by Sellers
from Customers in respect of all Letter of Credit Disbursements
and Liquidity Support Disbursements.
(i) Sellers further agree that they will not, without
the prior written consent of Purchaser, amend or modify the terms
of any Letter of Credit, Reimbursement Agreement or Liquidity
Support Agreement; provided, however, Sellers shall not be
obligated to amend any Letter of Credit, Reimbursement Agreement
or Liquidity Support Agreement to increase the Outstanding Credit
Obligation thereunder. Purchaser and Sellers acknowledge and
agree that with respect to all Letters of Credit the expiry date
of which is, by the terms thereof, automatically extended, (x)
Sellers shall give notice in accordance with the terms of such
Letters of Credit that Sellers will not extend such expiry date
beyond the current expiry date unless Purchaser and Sellers
mutually agree to permit the extension of such Letter of Credit
and (y) Sellers shall not be obligated to extend a Letter of
Credit and, in any event, any such extension shall not be made
without Purchaser's consent. Purchaser and Sellers further
acknowledge and agree that with respect to all Liquidity Support
Agreements the expiry date of which is, by the terms thereof,
automatically extended, (x) Sellers shall give notice in
accordance with the terms of such Liquidity Support Agreements,
(y) Sellers will not extend such expiry date beyond the current
expiry date unless Purchaser and Sellers mutually agree to permit
the extension of such Liquidity Support Agreements and
(z) Sellers shall not be obligated to extend a Liquidity Support
Agreement and, in any event, any such extension shall not be made
without Purchaser's consent.
(j) After the Closing, Purchaser shall be entitled to
any and all fees paid under the terms of any Letter of Credit or
Liquidity Support Agreement, including, on a prorated basis, any
such fees paid prior to the Closing, if such fees are paid in
connection with any Letter of Credit, (including any replacement
issued by Purchaser therefor) or any Liquidity Support Agreement
(including any replacement issued by Purchaser therefor) which is
outstanding as of the close of business on the Closing Date, but
only to the extent Sellers shall not be obligated to refund any
portion of such fees upon termination of any replaced Letter of
Credit. Purchaser shall pay to Fleet a fee with respect to the
Outstanding Credit Exposure computed (on the basis of a year of
365 days for the actual number of days elapsed) at a rate per
annum equal to one and one half percent (1.5%) of the Outstanding
Credit Exposure; provided that, for purposes of this Section
11.11, any Letter of Credit or Liquidity Support Agreement with
respect to which Purchaser has not received all fees paid
thereunder for periods following the Closing Date shall be
excluded from Outstanding Credit Exposure. Such fee shall be
payable quarterly in arrears on each June 30, September 30,
December 31 and March 31, commencing on the quarter end
immediately following the Closing Date, and shall be calculated
on the average daily Outstanding Credit Exposure during each such
period. The initial fee shall be appropriately pro-rated.
Section 11.12. Actions With Respect to IRA, Keogh Plan and
Employee Pension Plan Deposit Liabilities.
(a) On or before each Closing Date, Sellers shall (i)
resign as the trustee or custodian, as applicable, of each IRA,
Keogh Plan and Employee Pension Plan of which it is the trustee
or custodian and whose Deposit Liabilities are being assumed by
Purchaser as of such Closing Date, (ii) to the extent permitted
by the documentation governing each such IRA, Keogh Plan or
Employee Pension Plan and applicable law, appoint Purchaser as
successor trustee or custodian, as applicable, of each such IRA,
Keogh Plan or Employee Pension Plan, and Purchaser hereby accepts
each such trusteeship or custodianship under the terms and
conditions of Purchaser's plan documents for its IRA, Keogh Plans
and Employee Pension Plan, and assumes all fiduciary and
custodial obligations with respect thereto as of the close of
business the day on which the Deposit Liabilities of such IRA,
Keogh Plans and Employee Pension Plans are being assumed by
Purchaser pursuant to the terms hereof, and (iii) deliver to the
IRA grantor or Keogh Plan or Employee Pension Plan named
fiduciary of each such IRA, Employee Pension Plan or Keogh Plan
such notice of the foregoing as is required by the documentation
governing each such IRA, Employee Pension Plan or Keogh Plan or
applicable law. Purchaser shall be solely responsible for
delivering its IRA, Employee Pension Plan and Keogh Plan
documents to the applicable IRA grantor and Keogh Plan or
Employee Pension Plan named fiduciary, including but not limited
to a beneficiary designation form to be completed by the
applicable IRA grantor or Keogh Plan or Employee Pension Plan
participant; provided, however, that in the event that an IRA
grantor or Keogh Plan or Employee Pension Plan participant dies
before such time as Purchaser receives a properly completed
beneficiary designation form, Sellers shall make available to
Purchaser such information as may exist in Sellers' files
regarding any beneficiary designation it may have regarding such
decedent. If, pursuant to the terms of the documentation
governing any such IRA or Keogh Plan or Employee Pension Plan or
applicable law, (x) Sellers are not permitted to appoint
Purchaser as successor trustee or custodian, or the IRA grantor
or Keogh Plan or Employee Pension Plan named fiduciary objects in
writing to such designation, or is entitled to, and does, in
fact, name a successor trustee or custodian other than Purchaser,
or (y) such IRA or Keogh Plan or Employee Pension Plan includes
assets which are not Deposit Liabilities and are not being
transferred to Purchaser, or the assumption of such deposit
liabilities included in such IRA or Keogh Plan or Employee
Pension Plan would result in a loss of qualification of such IRA
or Keogh Plan or Employee Pension Plan under the Code or
applicable IRS regulations, all deposit liabilities of Sellers
held under such IRA or Keogh Plan or Employee Pension Plan shall
be excluded from the Deposit Liabilities (such excluded deposits
liabilities being herein called the "Excluded IRA/Keogh/Employee
Pension Plan Deposits"). Upon appointment as a successor
custodian for such IRA Deposit Liabilities or as a successor
trustee for such IRAs or Keogh Plans or Employee Pension Plans,
Purchaser shall perform the services and carry out the duties and
obligations required of it under the applicable plans, the Code
and applicable Federal and state laws and regulations.
(b) To the extent that the Deposit Liabilities include
certain IRAs, Keogh Plans and Employee Pension Plans that are
required to make certain periodic distributions to the IRA
account owner or Keogh Plan or Employee Pension Plan participant
(or beneficiary) either at the account owner's or participant's
request or because the account owner or participant has attained
age 70-1/2, effective as of the date on which such Deposit
Liabilities are assumed by Purchaser pursuant to the terms of
this Agreement, Purchaser agrees to continue to make such
periodic distributions in accordance with the distribution
instructions forwarded by Sellers to Purchaser. Purchaser hereby
assumes the obligation to pay each minimum distribution required
by federal law by December 31 of the calendar year in which such
Deposit Liabilities are assumed by Purchaser pursuant to the
terms of this Agreement occurs and, in consideration thereof,
Sellers agree not to withhold the amount of such distributions
from the aggregate amount of the Deposit Liabilities.
Section 11.13. Cash Management Agreements. Sellers shall give
Customers who have cash management agreements with Sellers all
notices required under the terms of such Sellers' cash management
agreements to terminate such agreements with the Customers as of
the close of business on the Closing Date on which such
Customer's cash management business will be purchased by
Purchaser pursuant to the terms of this Agreement, in order to
permit Purchaser to enter into its own cash management agreements
with such Customers effective as of the Closing Date on which
such Customer's cash management business will be purchased by
Purchaser pursuant to the terms of this Agreement. Such notice
shall be given no later than fifteen (15) days prior to the
applicable Closing Date.
Section 11.14. Bulk Transfer Laws. Sellers and Purchaser hereby
waive compliance with any applicable bulk transfer laws. If by
reason of any applicable bulk sales law any claims are asserted
by creditors of Sellers, such claims shall be the responsibility
of Purchaser in the case of claims arising under any of the
Purchased Assets or Assumed Liabilities.
Section 11.15. CRA Commitments. (a) Purchaser agrees that it
shall use its best efforts to obtain the consent of all Persons
necessary to transfer to Purchaser, and release Sellers from
Sellers' obligations with respect to, the CRA Commitments.
(b) In the event that Purchaser is unable to obtain the
consent of the CRA Groups to the transfer of the CRA Commitments
in accordance with Section 11.15(a) hereof, Purchaser agrees that
it will use its best efforts to enter into new CRA commitments
with the CRA Groups, effective as no later than the Third Closing
Date and on terms no less favorable than those contained in the
CRA Commitments.
Section 11.16. Ancillary Agreements.
(a) At the First Closing, Purchaser and one or more of
the Sellers will enter into the CT/RI Lease Agreements, a
Servicing Agreement (if Fleet Residential Mortgage Loans are
included among the Purchased Assets purchased at the First
Closing), an Additional Residential Mortgage Loan Servicing
Agreement (if Additional Residential Mortgage Loans are included
among the Purchased Assets purchased at the First Closing), a
Purchaser's Letter of Credit, and a Collateral Agency Agreement
(if such agreement is required pursuant to the terms hereof.)
(b) At the Second Closing, Purchaser and one or more of
the Sellers will enter into the Eastern MA Lease Agreements, the
License Agreement, a Servicing Agreement (if Fleet Residential
Mortgage Loans are included among the Purchased Assets purchased
at the Second Closing), an Additional Residential Mortgage Loan
Servicing Agreement (if Additional Residential Mortgage Loans are
included among the Purchased Assets purchased at the Second
Closing), a Purchaser's Letter of Credit and a Collateral Agency
Agreement (if such agreements are required pursuant to the terms
hereof).
(c) At the Third Closing, Purchaser and one or more of
the Sellers will enter into a Servicing Agreement (if Residential
Mortgage Loans are included among the Purchased Assets purchased
at the Third Closing), an Additional Residential Mortgage Loan
Servicing Agreement (if Additional Residential Mortgage Loans are
included among the Purchased Assets purchased at the Third
Closing), a Purchaser's Letter of Credit, and a Collateral Agency
Agreement (if such agreement is required pursuant to the terms
hereof).
Section 11.17. Certain Expenses. Upon receipt of supporting
evidence therefor which shall be reasonably satisfactory to
Sellers, Sellers shall reimburse Purchaser one-half of the
aggregate cost of (a) printing and mailing of any notices by
Purchaser sent pursuant to and in accordance with Sections 9.3,
11.2, 11.5, 11.7, 11.12 and 11.13 and (b) increased rent under
the Branch Leases or ATM Leases and payments, fees or charges
payable to Landlords in connection with obtaining the Landlord
Consents, up to One Million Five Hundred Thousand Dollars
($1,500,000).
Section 11.18. Data Processing.
(a) All tasks and obligations concerning the provision
of data processing services to or for the Purchased Assets and
Assumed Liabilities after each Closing Date, other than those
specifically set forth in Section 13.1 hereof, shall be performed
solely and exclusively by Purchaser. Purchaser acknowledges its
assumption of all such tasks and obligations, and further
acknowledges that any delay, failure, or inability on its part to
perform such tasks or to comply with such obligations, except as
and to the extent attributable to any delay, failure, or
inability on the part of any Seller in performing those tasks or
complying with those obligations specifically set forth in
Section 13.1 hereof shall not result in any liability or
obligation of any Seller and shall not affect any of the rights
of any Seller under this Agreement.
(b) As soon as practicable following the date of this
Agreement, Sellers shall provide Purchaser with applicable
product functions maintained at the Branches to be transferred to
Purchaser hereunder (such Loan and Deposit Liability accounts and
safety deposit business, if applicable, hereinafter called the
"Accounts") and specifications relating to the data processing
support required for the Accounts. At a mutually agreeable time
prior to each Closing Date, Sellers shall provide to Purchaser
file formats relating to the Accounts being transferred on that
Closing Date and test tapes relating to the Accounts being
transferred on that Closing Date formatted as defined by the file
formats previously delivered. The data files defined by the file
formats shall be extracts of current master files as they exist
on Sellers' system.
(c) As early as practicable after each Closing Date,
Sellers shall use commercially reasonable efforts to produce the
production/ divestiture file tapes and a trial balance of records
of account containing the pertinent data and descriptive
information relating to the Accounts transferred on that Closing
Date and provide such data and information to Purchaser provided,
however, that such data and information shall not include either
detailed transaction history or overdraft protection information.
Sellers shall bear all customary and normal and reasonable costs
and expenses relating to the performance of their obligations
pursuant to this paragraph, but shall be promptly reimbursed for
any such costs and expenses that are not customary, normal or
reasonable. Sellers shall have no responsibility for the
difference, if any, between its methods of accrual of interest or
other amounts payable with respect to Accounts and Purchaser's
methods of accrual of interest and other amounts payable with
respect to deposit, loan, and safety deposit accounts and
business.
(d) Sellers will have no liability to Purchaser or its
customers for providing services or failing to provide services
under this paragraph except for intentional misconduct on the
part of an employee of a Seller or its Affiliates.
ARTICLE XII
CONDITIONS TO CLOSING
Section 12.1. Conditions to Obligations of Sellers and Fleet to
Consummate First Closing. The obligations of Sellers and Fleet
to consummate the First Closing are subject to the satisfaction
(or, if applicable, waiver in the sole discretion of Sellers,
except as to the condition described in 12.1(c)) on or before the
First Closing Date, of each of the following conditions:
(a) All of the covenants and other agreements required
by this Agreement to be complied with and performed by Purchaser
and/or Sovereign on or before the First Closing Date shall have
been duly complied with and performed in all material respects;
(b) The representations and warranties made by Purchaser
and/or Sovereign herein or in any certificate or other document
delivered pursuant to the provisions hereof or in connection with
the transactions contemplated hereby shall be true and correct in
all material respects, on and as of the First Closing Date, with
the same force and effect as though such representations and
warranties had been made on the First Closing Date; provided,
however, that the representations and warranties of Purchaser
and/or Sovereign herein or in any certificate or other document
delivered pursuant to the provisions hereof shall be deemed to be
true and correct in all material respects on and as of the First
Closing Date, with the same force and effect as though made on
the First Closing Date, unless the failure to be so true and
correct would have a material adverse effect on Purchaser's
ability to consummate the transactions contemplated by the
Agreement;
(c) The Seller Regulatory Approvals shall have been
obtained and shall be Final;
(d) No court or governmental or regulatory authority of
competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order (whether temporary, preliminary
or permanent) which is in effect to enjoin, or which prohibits,
consummation of the transactions contemplated hereby; and
(e) Sellers shall have received the items to be
delivered by Purchaser pursuant to Section 2.3 hereof.
Section 12.2. Conditions to Obligations of Purchaser and
Sovereign to Consummate First Closing. The obligations of
Purchaser and Sovereign to consummate the First Closing are
subject to the satisfaction (or, if applicable, waiver in the
sole discretion of Purchaser, except as to the condition
described in Section 12.2(c)) on or before the First Closing
Date, of each of the following conditions;
(a) All of the covenants and agreements required by this
Agreement to be complied with and performed by Sellers and/or
Fleet on or before the First Closing Date shall have been duly
complied with and performed in all material respects; provided,
however, that Fleet and Sellers shall be deemed to have duly
complied with and performed such covenants and agreements in all
material respects unless the failure to so perform or comply
would have a Material Adverse Effect.
(b) The representations and warranties made by Sellers
and/or Fleet herein or in any certificate or other document
delivered pursuant to the provisions hereof or in connection with
the transactions contemplated hereby shall be true and correct in
all material respects, on and as of the First Closing Date, with
the same force and effect as though such representations and
warranties had been made on the First Closing Date; provided,
however, that the representations and warranties made by Sellers
and/or Fleet herein or in any certificate or other document
delivered pursuant to the provisions hereof shall be deemed to be
true and correct in all material respects on and as of the First
Closing Date, with the same force and effect as though made on
the First Closing Date, unless the failure to be so true and
correct would have a Material Adverse Effect;
(c) The Purchaser Regulatory Approvals shall have been
obtained and shall be Final;
(d) No court or governmental or regulatory authority of
competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order (whether temporary, preliminary
or permanent) which is in effect to enjoin, or which prohibits,
consummation of the transactions contemplated hereby; and
(e) Purchaser shall have received the items to be
delivered by Sellers pursuant to Section 2.3 hereof.
Section 12.3. Conditions to Obligations of Fleet and Sellers to
Consummate Second Closing and Third Closing. There are no
conditions to the performance of Fleet's and Sellers' obligations
to consummate the Second Closing except for the consummation of
the First Closing (unless the failure of the First Closing to
occur is due to the failure of Fleet and Sellers to satisfy their
obligations under Section 12.2 of this Agreement), the passage of
time, receipt of the Second Closing Purchase Price and receipt of
the items to be delivered by Purchaser pursuant to Section 2.5
hereof. There are no conditions to the performance of Fleet's
obligations and Sellers' obligations to consummate the Third
Closing except the consummation of the First Closing and the
Second Closing (unless the failure of the First Closing to occur
is due to the failure of Fleet and Sellers to satisfy their
obligations under Section 12.2 of this Agreement and/or unless
the failure of the Second Closing to occur is due to the failure
of Fleet and Sellers to satisfy their obligations under Section
12.4), the passage of time, receipt of the Third Closing Purchase
Price and receipt of the items to be delivered by Purchaser
pursuant to Section 2.7 hereof.
Section 12.4. Conditions to the Obligations of Sovereign and
Purchaser to Consummate Second Closing and Third Closing. There
are no conditions to the performance of Sovereign's and
Purchaser's obligations to consummate the Second Closing other
than the consummation of the First Closing (unless the failure of
the First Closing to occur is due to the failure of Purchaser and
Sovereign to satisfy its obligations under Section 12.1 of this
Agreement), the passage of time and receipt of the items to be
delivered by Fleet and Sellers pursuant to Section 2.5 hereof.
There are no conditions to the performance of Sovereign's and
Purchaser's obligations to consummate the Third Closing except
the consummation of the First Closing and the Second Closing
(unless the failure of the First Closing to occur is due to the
failure of Purchaser and Sovereign to satisfy their obligations
under Section 12.1 of this Agreement and/or unless the failure of
the Second Closing to occur is due to the failure of Sovereign or
Purchaser to satisfy its obligations under Section 12.3), the
passage of time and receipt of the items to be delivered by Fleet
and Sellers pursuant to Section 2.7 hereof.
ARTICLE XIII
CONVERSION
Section 13.1. Conversion.
(a) Sellers will convert the account information as to
the Deposit Liabilities and the Loans transferred to Purchaser at
the First Closing to Purchaser or Purchaser's data processing
provider on the weekend following the First Closing Date, will
convert the account information as to the Deposit Liabilities and
the Loans transferred to Purchaser at the Second Closing to
Purchaser or Purchaser's data processing provider on the weekend
following the Second Closing Date, and will convert the account
information as to the Deposit Liabilities and the Loans
transferred to Purchaser at the Third Closing to Purchaser or
Purchaser's data processing provider on the weekend following the
Third Closing Date. The parties shall work diligently to be able
to complete conversion on the respective Closing Dates, and
Sellers will provide commercially reasonable cooperation to
assist Purchaser and any designated service provider in effecting
the conversions.
(b) All tasks and obligations concerning the provision
of data processing services with respect to Purchased Assets and
Assumed Liabilities transferred to Purchaser shall be performed
solely and exclusively by the Purchaser. Purchaser acknowledges
its assumption of all such tasks and obligations, and further
acknowledges that any delay, failure, or inability on its part to
perform such tasks or to comply with such obligations (to the
extent not solely attributable to any failure on the part of
Fleet or any Seller to cooperate with Purchaser pursuant to
Section 13.1(a) above) shall not result in any liability or
obligation of any Seller or Fleet and shall not affect any of the
rights of any Seller or Fleet under this Agreement.
ARTICLE XIV
INDEMNITY
Section 14.1. Fleet's Indemnity. Fleet shall indemnify, hold
harmless and defend Purchaser, its Affiliates, and their
respective successors, permitted assigns, directors,
shareholders, officers, agents and employees from and against all
claims, losses, liabilities, demands and obligations of any
nature whatsoever (including reasonable legal fees and expenses)
(collectively, "Damages") which Purchaser or any of its
Affiliates or their respective successors, permitted assigns,
directors, shareholders, officers, agents or employees shall
receive, suffer or incur, arising out of or resulting from:
(a) Any liability of Sellers which is not an Assumed
Liability;
(b) A breach of the representations made by the Sellers
in Section 5.7(a) and in Section 5.17 of this Agreement;
(c) The breach of any covenant or other agreement made
by a Seller or Fleet in this Agreement; or
(d) Except for Assumed Liabilities, all liabilities
under all pension and welfare benefit plans (as defined in
Sections 3(1) and (2) of ERISA), or any supplemental unemployment
benefit, deferred compensation, or other employee benefit plan of
Sellers or their Affiliates with respect to any and all periods
prior to and subsequent to any Closing Date, including without
limitation, all liabilities under ERISA, any liabilities for any
accumulated funding deficiency as such term is defined in Section
302 of ERISA and Section 412 of the Code and for any liability to
the Pension Benefit Guaranty Corporation, the IRS, participants,
beneficiaries, employees, or any other public or private person,
incurred with respect to or attributable to any plan of Sellers.
Section 14.2. Sovereign's Indemnity. Sovereign shall indemnify,
hold harmless and defend Sellers, their Affiliates and their
respective successors, permitted assigns, directors,
shareholders, officers, agents and employees from and against all
Damages which Sellers or any of their Affiliates or their
respective successors, permitted assigns, directors,
shareholders, officers, agents or employees shall receive, suffer
or incur, arising out of or resulting from:
(a) Any Assumed Liability;
(b) Any actions taken or omitted to be taken by
Purchaser from and after September 3, 1999 with respect to the
Business Employees, the Additional Employees, and the Business
Related Employees, and any suits or proceedings commenced in
connection therewith;
(c) Any actions taken or omitted to be taken by
Purchaser with respect to the Purchased Assets, the Assumed
Liabilities, or the Transferred Employees on or after the date on
which such Purchased Asset, Assumed Liability or Transferred
Employee is transferred to Purchaser pursuant to the terms hereof
and any suits or proceedings commenced in connection therewith
(other than proceedings to prevent or limit the consummation of
the transactions contemplated by this Agreement);
(d) The breach of any representation or warranty made by
Purchaser or Sovereign in this Agreement;
(e) The breach of any covenant or other agreement made
by Purchaser or Sovereign in this Agreement;
(f) Any claims arising under any of the Purchased Assets
or Assumed Liabilities made by creditors of Sellers under any
applicable bulk sales laws; or
(g) Any failure by Purchaser, Sovereign, Sellers or
Fleet to notify the Customers of the assumption of the Deposit
Liabilities by Purchaser within the time periods specified by law
or any claim asserted against Purchaser, Sovereign, Sellers or
Fleet alleging that any notices sent to the Customers related to
the assumption of the Deposit Liabilities were defective in any
respect.
Section 14.3. Additional Indemnification and Release. (a) In
addition to the provisions of Section 14.2 hereof, in
consideration of the assistance of certain employees of Sellers
designated by mutual agreement of the parties (the "Designated
Employees") in connection with the Capital Transactions and any
other transaction of Purchaser, Sovereign or both to raise
capital in connection with the transactions contemplated hereby
(the "Other Capital Transactions"), Purchaser, on behalf of
itself, its Affiliates, predecessors, successors, directors,
officers, agents, employees, shareholders and assigns
(collectively "Releasing Parties") does hereby release and
forever discharge Fleet, Sellers, Designated Employees, their
Affiliates, predecessors, successors, directors, officers,
agents, employees, shareholders and assigns (collectively
"Released Parties") from any and all Damages arising out of or
relating to the activities, participation, assistance or
involvement of Designated Employees in connection with the
Capital Transactions or the Other Capital Transactions; except
for Damages which arise out of materially false or misleading
factual information provided in writing by the Released Parties
to the Releasing Parties for the express purpose of being used in
connection with the Capital Transactions or the Other Capital
Transactions.
(b) Releasing Parties hereby agree, jointly and
severally, to indemnify, defend and hold the Released Parties
harmless from and against any and all Damages arising out of or
relating to the activities, participation, assistance or
involvement of Designated Employees in connection with the
Capital Transactions and the Other Capital Transactions; except
for Damages which arise out of materially false or misleading
factual information provided in writing by the Released Parties
to the Releasing Parties for the express purpose of being used in
connection with the Capital Transactions or the Other Capital
Transactions.
Section 14.4. Indemnification Procedure. If a party entitled to
indemnification hereunder ("Indemnified Party") is aware that a
claim, demand or other circumstance exists that has given or may
reasonably be expected to give rise to a right of indemnification
under this Article XIV (whether or not the amount of the claim is
then quantifiable), such Indemnified Party shall promptly give
written notice thereof to the other party ("Indemnitor"), and the
Indemnified Party will thereafter keep the Indemnitor reasonably
informed with respect thereto, provided that failure of the
Indemnified Party to give the Indemnitor prompt notice as
provided herein shall not relieve the Indemnitor of its
obligations hereunder except to the extent, if any, that the
Indemnitor's rights shall have been prejudiced or the
Indemnitor's liability shall have been materially increased
thereby. In case any such action, suit or proceeding is brought
against an Indemnified Party, the Indemnitor shall be entitled to
participate in (and, in its discretion, to assume) the defense
thereof with counsel reasonably satisfactory to the Indemnified
Party, provided, however, that the Indemnified Party shall be
entitled to participate in any such action, suit or proceeding
with counsel of its own choice at the expense of the Indemnitor
if, in the good faith judgment of the Indemnified Party's
counsel, representation by the Indemnitor's counsel may present a
conflict of interest or there may be defenses available to the
Indemnified Party which are different from or in addition to
those available to the Indemnitor. The Indemnitor will not
settle any claim, action, suit or proceeding which would give
rise to the Indemnitor's liability under its indemnity unless
such settlement includes as an unconditional term thereof the
giving by the claimant or plaintiff of a release of the
Indemnified Party, in form and substance reasonably satisfactory
to the Indemnified Party and its counsel, from all liability with
respect to such claim, action, suit or proceeding. If the
Indemnitor assumes the defense of any claim, action, suit or
proceeding as provided in this Section 14.4, the Indemnified
Party shall be permitted to join in the defense thereof with
counsel of its own selection and at its own expense. If the
Indemnitor shall not assume the defense of any claim, action,
suit or proceeding, the Indemnified Party may defend against such
claim, action, suit or proceeding in such manner as it may deem
appropriate, provided that an Indemnified Party shall not settle
any claim, action, suit or proceeding which would give rise to
the Indemnitor's liability under its indemnity without the prior
written consent of the Indemnitor, which consent shall not be
unreasonably withheld.
Section 14.5. Nonsolicitation. Notwithstanding anything to the
contrary contained herein, if a Seller shall breach the covenants
set forth in Section 7.4, Purchaser will notify such Seller in
writing, which notice shall set forth in reasonable detail the
basis upon which Purchaser believes that such Seller has violated
such covenants. Such Seller shall promptly investigate and shall
within three (3) Business Days of receipt of Purchaser's notice
respond to Purchaser in writing, which response will state
whether or not such Seller agrees that such covenants have been
violated, and if so, such Seller shall immediately cease and
desist from committing any further violation. If such Seller so
ceases and desists, Purchaser shall have no further remedy
against such Seller. If such Seller either (a) fails to respond
to Purchaser's notice within three (3) Business Days after
receipt thereof or (b) concludes that it has not violated such
covenants (and if Purchaser disagrees with such Seller's
conclusion), or if such Seller agrees that it has violated such
covenants but does not immediately cease and desist, then in any
such event, Purchaser shall be free to pursue any remedy, at law
or in equity, which it may have against such Seller or any other
Person.
Section 14.6. Limitations on Liability.
(a) Notwithstanding anything to the contrary contained
in this Article XIV, no party shall be entitled to
indemnification pursuant to Section 14.1(b) or 14.2(d) until its
aggregate Damages shall be in excess of Fifteen Million Dollars
($15,000,000), at which time such party shall be entitled to
indemnification for the full amount of its Damages to the extent
such Damages exceed such amount. In no event shall the Damages
payable by Fleet in the aggregate exceed One Hundred Million
Dollars ($100,000,000) and in no event shall any party be
entitled to any incidental, consequential, special, exemplary or
punitive Damages.
(b) Notwithstanding the provisions of Section 14.1(a)
hereof, neither Sovereign nor Purchaser shall be entitled to
indemnification pursuant to Sections 14.1(b) or 14.1(c) until the
entire amount of the Deferred Contingent Amount, together with
accrued and unpaid interest thereon, has been paid to Sellers.
Section 14.7. General.
(a) Each Indemnified Party shall be obligated in
connection with any claim for indemnification under this Article
XIV to use all commercially reasonable efforts to obtain any
insurance proceeds available to such Indemnified Party with
regard to the applicable claims. The amount which any Indemnitor
is or may be required to pay to any Indemnified Party pursuant to
this Article XIV shall be reduced (retroactively, if necessary)
by any insurance proceeds or other amounts actually recovered
(net of any direct relevant collections costs) by or on behalf of
such Indemnified Party in reduction of the related Damages. If
an Indemnified Party shall have received the payment required by
this Agreement from the Indemnitor in respect of Damages and
shall subsequently receive insurance proceeds or other amounts in
respect of such Damages, then such Indemnified Party shall
promptly repay to the Indemnitor a sum equal to the amount of
such insurance proceeds or other amounts actually received (net
of any direct relevant collection costs). The amount of any
Damages arising from a breach by a Seller of the representation
set forth in Section 5.7(a) due to the existence of a Lien which
is not in respect of borrowed money and does not materially
impair the continued use and operation of any of the Purchased
Assets shall be limited to the lesser of (i) the cost of
satisfying or removing such Lien and (ii) the actual impairment
to the Purchased Asset caused by the existence of such Lien.
(b) In addition to the requirements of paragraph (a)
above, each Indemnified Party shall be obligated in connection
with any claim for indemnification under this Article XIV to use
commercially reasonable efforts to mitigate Damages upon and
after becoming aware of any event which could reasonably be
expected to give rise to such Damages.
(c) Subject to the rights of existing insurers of an
Indemnified Party, an Indemnitor shall be subrogated to any right
of action which the Indemnified Party may have against any other
Person with respect to any matter giving rise to a claim for
indemnification from such Indemnitor hereunder.
(d) Except for the parties' rights to specific
performance and injunctive relief as described in Section 16.14,
the indemnification provided in this Article XIV shall be the
exclusive post-Closing Date remedy available to any Indemnified
Party with respect to any breach of any representation, warranty,
covenant or agreement made by Purchaser or Sellers in this
Agreement, absent fraud. The parties hereto further acknowledge
that no indemnity shall be payable for any Damages with respect
to any breach of representations or warranties in this Agreement
if prior to the First Closing such party receives a written
notice from the other party (i) disclosing such breach or
breaches and (ii) informing such party that such breach or
breaches constitute a Material Adverse Effect.
(e) All indemnification payments under this Article XIV
shall be deemed adjustments to the Purchase Price as defined in
Section 3.1 of Article III.
Section 14.8. Survival.
(a) No representation or warranty contained in or made
by Sellers or Fleet pursuant to this Agreement shall survive the
First Closing except the representations contained in
Section 5.7(a), which shall survive the execution and delivery of
this Agreement and shall continue in full force and effect for a
period of eighteen (18) months after the First Closing Date and
thereafter shall terminate, except as to any claim for which
written notice shall have been given prior to such date, and
except the representations contained in Section 5.17 hereof,
which shall survive the execution and delivery of this Agreement
and shall continue in full force and effect for a period of six
(6) months after the First Closing Date, except as to any claim
for which written notice shall have been given prior to such
date.
(b) All representations and warranties of Sovereign and
Purchaser contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the
First Closing and shall continue in full force and effect for a
period of eighteen (18) months after the First Closing Date and
thereafter shall terminate, except as to any claim for which
written notice shall be given prior to such date.
(c) All covenants and agreements of the parties which by
their terms are to be performed after the First Closing Date
shall survive until fully discharged.
ARTICLE XV
POST-CLOSING MATTERS
Section 15.1. Further Assurances. From and after the First
Closing:
(a) Except as specifically provided otherwise herein,
Sellers shall assist Purchaser in the orderly transition of the
operations of the Business and shall give such further assurances
and execute, acknowledge and deliver all such instruments as may
be necessary and appropriate to effectively vest in Purchaser
title in the Purchased Assets in the manner contemplated hereby;
provided that Sellers need not incur any out-of-pocket costs or
expenses in connection with its agreements in this Section 15.1
unless such costs or expenses are reimbursed by Purchaser.
(b) Except as specifically provided otherwise herein,
Purchaser shall give such further assurances to Sellers and shall
execute, acknowledge and deliver all such acknowledgments and
other instruments and take such further action as may be
necessary and appropriate to effectively relieve and discharge
Sellers from any obligations remaining with respect to the
Deposit Liabilities or other Assumed Liabilities; provided that
Purchaser need not incur any out-of-pocket costs or expenses in
connection with its agreements in this Section 15.1 unless such
costs or expenses are reimbursed by Sellers.
Section 15.2. Access to and Retention of Books and Records. For
a period of six (6) years from the First Closing Date, each party
shall have commercially reasonable access to any books and
records of the other party relating to the Purchased Assets and
the Assumed Liabilities, and the requesting party, at its own
expense, may make copies and extracts when such copies and
extracts are required by regulatory authorities, for litigation
purposes, or for tax or accounting purposes; provided that in the
event that as of the end of such period, any tax year of the
Sellers is under examination by any taxing authority, such books
and records shall be maintained by Purchaser until a final
determination of the tax liability of Sellers for that year has
been made. If such copies or extracts require use of a party's
equipment or facilities, the user shall reimburse the other party
for all costs incurred, including without limitation employee
expenses.
Section 15.3. Deposit Histories. In case of any dispute with or
inquiry by any Customer whose Deposit Liability account is
included in the Assumed Liabilities, which dispute or inquiry
relates to the servicing of such account by Sellers prior to the
date for which a deposit history has been provided to Purchaser,
Sellers will provide Purchaser, where available and to the extent
reasonably requested by Purchaser and not already provided to
Purchaser, information regarding the Deposit Liability account
and copies of pertinent documents or instruments with respect to
such dispute or inquiry so as to permit Purchaser to respond to
such Customer within a period of time and in a manner which would
comply with standard banking practices and customs and all
applicable laws.
ARTICLE XVI
MISCELLANEOUS
Section 16.1. Expenses.
(a) Except as otherwise provided herein, Sellers and
Purchaser shall each pay all of their own out-of-pocket expenses
in connection with this Agreement, including investment banking,
appraisal, accounting, consulting, professional and legal fees,
if any, whether or not the transactions contemplated by this
Agreement are consummated.
(b) Purchaser shall pay all (i) recording, filing or
other fees, cost and expenses (including without limitation fees,
costs and expenses for (A) preparation of title commitments,
abstracts or searches, surveys, inspections, environmental audits
or other investigations, (B) filing of any forms (including
without limitation tax forms) with governmental authorities in
connection with the transfer of the Real Property or Fixed
Assets, (C) recording instruments or documents evidencing any
transfers of interests in real property), and (D) any real
property transfer stamps or taxes imposed on any transfers or
interest in Real Property and any fees or charges payable to
landlords in connection with Landlord Consents or the CT/RI Lease
Agreements or the Eastern MA Lease Agreements; provided that
Sellers shall pay all such fees, costs or expenses with respect
to matters described in (B), (C) and (D) which Sellers are
required by law to pay and which are customarily paid by sellers
of property in the applicable jurisdictions; and (ii) costs and
expenses relating to the preparation, execution and recording of
assignments of mortgages, financing statements, notes, security
agreements or other instruments applicable to or arising in
connection with the transfer, assignment or assumption of the
Purchased Assets and Assumed Liabilities including, but not
limited to, fees payable to the SBA in connection with the
transfer to Purchaser of the SBA Loans.
Section 16.2. Trade Names and Trademarks.
(a) Purchaser acknowledges and agrees that
notwithstanding anything to the contrary contained herein, it
has, and following the First Closing shall have, no interest in
or to the names "Fleet", "BankBoston", "Fleet Boston",
"FleetBoston", or any trade name, trademark or service mark, logo
or corporate name of any Seller, Fleet, BankBoston or any of
their respective Affiliates, including, without limitation, the
tradenames and trademarks listed on Schedule 16.2 hereto.
Sovereign shall not permit Purchaser or any of its Affiliates to
use any of the trade names, trademarks, service marks, logos or
corporate names of any Seller, Fleet, BankBoston or any of their
respective Affiliates, including, without limitation, the
tradenames and trademarks listed on Schedule 16.2 hereto.
(b) Purchaser shall not use any forms or other documents
bearing any Seller's name or logo, or the name or logo of any
Affiliate of Sellers, without the prior written consent of
Sellers, which consent may be denied or given in Sellers' sole
discretion. If such consent is given, Purchaser hereby agrees
that all forms or other documents to which such consent relates
will be stamped or otherwise marked in such a way that identifies
Purchaser as the party using the form or document.
Section 16.3. Termination; Extension of Closing Date. This
Agreement shall terminate and shall be of no further force or
effect as between the parties hereto, except as provided in
Section 8.8(a) hereof and except for liability for actual direct
damages due to a willful breach of any material representation,
warranty, covenant or agreement occurring or arising prior to the
date of termination, upon the occurrence of any of the following:
(a) Upon mutual agreement of the parties;
(b) Upon written notice by either Purchaser or Sellers
to the other parties immediately upon receipt by Purchaser or
Sellers of notice from any governmental authority that Purchaser
or Sellers, as the case may be, has been denied any Regulatory
Approval by Final order;
(c) Upon written notice by either Purchaser or Sellers
to the other parties, if the Third Closing has not occurred by
July 31, 2000 or such later date as may be deemed by the DOJ, the
Board and the Massachusetts Attorney General to be the latest
date for the completion of the Third Closing (the earliest of any
later dates required by the DOJ, the Board and the Massachusetts
Attorney General to be the final date for purposes of this
Section 16.3(c) but in no event shall such later date be later
than September 30, 2000), provided, however, that the right to
terminate this Agreement under this Section 16.3(c) shall not be
available to any party whose failure to fulfill any of its
obligations under this Agreement shall have been the primary
cause of, or shall have resulted in, the failure of the Third
Closing to occur on or prior to such date.
(d) By either Purchaser or Sellers (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, warranties, covenants or other agreements set
forth in this Agreement on the part of any other party, which
breach is not cured within thirty (30) days following written
notice to the party committing such breach, or which breach, by
its nature, cannot be cured prior to the First Closing; provided
however, that Purchaser shall not have the right to terminate
this Agreement pursuant to this Section 16.3(d) unless the breach
of representation, warranty, covenant, or other agreement
together with all other such breaches would have a Material
Adverse Effect;
(e) By Sellers upon written notice if Purchaser or
Sovereign (i) shall have breached the representations and
warranties contained in Section 6.7 hereof, (ii) shall not have
satisfied their obligations under Section 8.8 hereof, or (iii) on
or before February 28, 2000 shall not have obtained the Purchaser
Regulatory Approvals;
(f) By Sellers at any time by notice to Purchaser if
Fleet in its sole and absolute discretion shall determine that
(i) Purchaser or Sovereign shall not have sufficient capital to
support the acquisition of the Business and to perform
Purchaser's and Sovereign's other obligations hereunder or (ii)
if any funds held in escrow pursuant to the terms of the Escrow
Agreement are released from escrow and as a result of such
release Fleet in its sole and absolute discretion shall determine
that Purchaser or Sovereign shall not have sufficient capital to
support the acquisition of the Business and to perform
Purchaser's and Sovereign's other obligations hereunder;
(g) By Sellers at any time by notice to Purchaser if the
Senior Credit Facility is terminated, unless Purchaser and
Sovereign shall have sufficient capital for purposes of
supporting the acquisition of the Business; provided that Fleet
in its sole and absolute discretion may determine that Purchaser
and Sovereign shall not have such sufficient capital, in which
event Sellers shall be entitled to terminate this Agreement
pursuant to this Section 16.3(g); or
(h) By Sellers at any time by notice to Purchaser if
Sellers have failed to satisfy a condition imposed by the DOJ or
the Board requiring the divestiture of the Business within a
specified period of time and, as a result of such failure,
Sellers are required by the Board or the DOJ to terminate the
Agreement.
Section 16.4. Modification and Waiver. No modification of any
provision of this Agreement shall be binding unless in writing
and executed by the party or parties sought to be bound thereby.
Performance of or compliance with any covenant given herein or
satisfaction of any condition to the obligations of either party
hereunder may be waived by the parties to whom such covenant is
given or whom such condition is intended to benefit, except as
otherwise provided in this Agreement or to the extent any such
condition is required by law; provided, that, any such waiver
must be in writing.
Section 16.5. Binding Effect; Assignment. This Agreement shall
be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns;
provided, however, that neither this Agreement nor any rights,
privileges, duties or obligations of the parties hereto may be
assigned without the prior written consent of the other parties
hereto.
Section 16.6. Confidentiality.
(a) From and after September 3, 1999, the parties hereto
and their Affiliates shall keep confidential the terms of this
Agreement and the Original Agreement, the negotiations relating
hereto and thereto, all documents and information obtained by a
party from another party in connection with the transactions
contemplated hereby and thereby, except (i) to the extent this
Agreement and such negotiations need to be disclosed to obtain a
Regulatory Approval, (ii) for disclosures made in accordance with
the terms of this Agreement, and (iii) to the extent required by
applicable law, regulations or rules of any applicable national
securities exchange. This section shall survive any termination
of this Agreement.
(b) Except as otherwise required by law, regulations or
rules, including the rules of any self regulatory organization
(as defined in the Securities Exchange Act of 1934, as amended),
the parties hereto shall each furnish to the other the text of
all notices and communications, written or oral, proposed to be
sent by the furnishing party regarding the transactions
contemplated hereby. Except as otherwise required by law,
regulations or rules of any national stock exchange, the
furnishing party shall not send or transmit such notices or
communications or otherwise make them public unless and until the
consent of the other parties is received, which consent shall not
be unreasonably withheld or delayed. This section shall survive
any termination of this Agreement.
(c) Sovereign and Fleet shall issue mutually agreed upon
press releases on the date of this Agreement and on the First
Closing Date, the Second Closing Date and the Third Closing Date,
or the first Business Day after the First Closing Date, the first
Business Day after the Second Closing Date and the first Business
Day after the Third Closing Date.
Section 16.7. Entire Agreement; Governing Law. This Agreement,
together with the exhibits and schedules attached hereto and made
a part hereof, contains the entire agreement between the parties
hereto with respect to the transactions covered and contemplated
hereunder, and supersedes all prior agreements or understandings
between the parties hereto relating to the subject matter hereof,
including but not limited to the Original Agreement provided that
the terms of the Confidentiality Agreement, to the extent not
inconsistent with the terms hereof, shall continue to apply and
provided further that the terms of that certain letter agreement
dated September 3, 1999 among Fleet, Sellers and Sovereign shall
continue to apply. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts (without reference to conflicts or choice of law
provisions).
Section 16.8. Consent to Jurisdiction; Waiver of Jury Trial.
EACH PARTY HERETO, TO THE EXTENT IT MAY LAWFULLY DO SO, HEREBY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS AND THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF MASSACHUSETTS, AS WELL AS TO THE JURISDICTION OF ALL
COURTS FROM WHICH AN APPEAL MAY BE TAKEN OR OTHER REVIEW SOUGHT
FROM THE AFORESAID COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR
OTHER PROCEEDING ARISING OUT OF SUCH PARTY'S OBLIGATIONS UNDER OR
WITH RESPECT TO THIS AGREEMENT OR ANY OF THE AGREEMENTS,
INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY (OTHER THAN THE
CONFIDENTIALITY AGREEMENT), AND EXPRESSLY WAIVES ANY AND ALL
OBJECTIONS IT MAY HAVE AS TO VENUE IN ANY OF SUCH COURTS.
EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONCERNED
WITH THIS AGREEMENT OR ANY OF THE AGREEMENTS, INSTRUMENTS OR
DOCUMENTS CONTEMPLATED HEREBY. NO PARTY HERETO, NOR ANY ASSIGNEE
OR SUCCESSOR OF A PARTY HERETO SHALL SEEK A JURY TRIAL IN ANY
LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION
PROCEDURE BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF
THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY. NO
PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY
TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS
HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN
ANYWAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE
PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
Section 16.9. Waiver of Certain Damages. Each of the parties
hereto to the fullest extent permitted by law irrevocably waives
any rights that they may have to punitive, special, incidental,
exemplary or consequential damages in respect of any litigation
based upon, or arising out of, this agreement or any related
agreement or any course of conduct, course of dealing, statements
or actions of any of them relating thereto.
Section 16.10. Severability. In the event that any provision of
this shall be held invalid, illegal, or unenforceable in any
respect, the validity, legality, and enforceability of the
remaining provisions contained in this Agreement shall not in any
way be affected or impaired thereby, and this Agreement shall
otherwise remain in full force and effect.
Section 16.11. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties hereto.
Section 16.12. Notices. All notices, consents, requests,
instructions, approvals, waivers, stipulations and other
communications provided for herein to be given by one party
hereto to the other party shall be deemed validly given, made or
served, if in writing and delivered personally or sent by
certified mail, return receipt requested, nationally recognized
overnight delivery service, or facsimile transmission, if to
Sellers or to Fleet addressed to:
Fleet Boston Corporation
One Federal Street
37th Floor
Boston, MA 02110
Attention: Brian T. Moynihan
Facsimile number: (617) 346-0137
with copies to:
William C. Mutterperl, Esq.
Executive Vice President, General Counsel and Secretary
Fleet Boston Corporation
One Federal Street
37th Floor
Boston, MA 02110
Facsimile number: (617) 346-0131
and to:
V. Duncan Johnson, Esq.
Edwards & Angell, LLP
2800 BankBoston Plaza
Providence, RI 02903-2499
Facsimile number: (401) 276-6625
and if to Purchaser or Sovereign addressed to:
Jay S. Sidhu
President and Chief Executive Officer
Sovereign Bancorp, Inc.
1130 Berkshire Blvd.
Wyomissing, PA 19610
Facsimile number: (610) 208-6143
with a copy to:
Joseph M. Harenza, Esq.
Stevens & Lee
111 N. Sixth Street
Reading, PA 19603
Facsimile number: (610) 376-5610
Notice by certified mail shall be deemed to be received three (3)
Business Days after mailing of the same. Either party may change
the persons or addresses to whom or to which notices may be sent
by written notice to the others.
Section 16.13. Interpretation. Article titles, headings to
sections and any table of contents are inserted for convenience
of reference only and are not intended to be a part of or to
affect the meaning or interpretation hereof. The Schedules and
Exhibits referred to herein shall be construed with and as an
integral part of this Agreement to the same extent as if they
were set forth verbatim herein. As used herein, "include",
"includes" and "including" are deemed to be followed by "without
limitation" whether or not they are in fact followed by such
words or words of like import; "writing", "written" and
comparable terms refer to printing, typing, lithography and other
means of reproducing words in a visible form; references to a
person are also to its successors and assigns; except as the
context may otherwise require, "hereof", "herein", "hereunder"
and comparable terms refer to the entirety hereof and not to any
particular article, section or other subdivision hereof or
attachment hereto; references to any gender include the other;
except as the context may otherwise require, the singular
includes the plural and vice versa; references to any agreement
or other document are to such agreement or document as amended
and supplemented from time to time; references to "Article",
"Section" or another subdivision or to an "Exhibit" or "Schedule"
are to an article, section or subdivision hereof or an "Exhibit"
or "Schedule". The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the
normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be
employed in the interpretation, construction and enforcement of
this Agreement or any amendment, schedule or exhibit hereto.
Section 16.14. Specific Performance. The parties hereto
acknowledge that monetary damages could not adequately compensate
either party hereto in the event of a breach of this Agreement by
the other, that the non-breaching party would suffer irreparable
harm in the event of such breach and that the non-breaching party
shall have, in addition to any other rights or remedies it may
have at law or in equity, specific performance and injunctive
relief as a remedy for the enforcement hereof.
Section 16.15. No Third Party Beneficiaries. The parties hereto
intend that this Agreement shall not benefit or create any right
or cause of action in or on behalf of any person other than the
parties hereto. No future or present employee or customer of
either of the parties not their affiliates, successors or assigns
or other person shall be treated as a third party beneficiary in
or under this Agreement.
Section 16.16. Survival. Except for Articles XIV and XV and
Sections 16.1 and 16.2 and Sections 16.4 through 16.16, no
representations, warranties, covenants or agreements made by the
parties herein shall survive termination of this Agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed, by their duly authorized representatives, as of
the day and year first above written.
FLEET BOSTON CORPORATION
By: /s/ H. Jay Sarles
Name: H. Jay Sarles
Title: Vice Chairman
FLEET NATIONAL BANK
By: /s/ H. Jay Sarles
Name: H. Jay Sarles
Title: Executive Vice
President
FLEET BANK - NH
By: /s/ Michael C. Whitney
Name: Michael C. Whitney
Title: President
BANKBOSTON, N.A.
By: /s/ H. Jay Sarles
Name: H. Jay Sarles
Title: Vice Chairman
SOVEREIGN BANCORP, INC.
By: /s/ Dennis S. Marlo
Name: Dennis S. Marlo
Title: Chief Financial
Officer
SOVEREIGN BANK
By: /s/ Dennis S. Marlo
Name: Dennis S. Marlo
Title: Chief Financial
Officer
1
SL1 48328v2/07352.204
03/01/00/SL1 48328v2/07352.204
SL1 48328v2/07352.204
Exhibit 99.1
Sovereign Bancorp News Release
FOR IMMEDIATE RELEASE
CONTACT:
Jay S. Sidhu President and Chief Executive Officer
(610) 320 8416 [email protected]
Dennis S. Marlo Chief Financial Officer and Treasurer
(610) 320-8437 [email protected]
Mark R. McCollom Chief Accounting Officer
(610) 208-6426 [email protected]
Sovereign Website Sovereignbank.com
February 29, 2000
Corporate Headquarters: 2000 Market Street, Philadelphia, PA
SOVEREIGN AND FLEETBOSTON ANNOUNCE
RESTRUCTURED TRANSACTION
- - America's largest branch transaction involving acquisition of
285 branches and certain lines of businesses approved by
regulators
- - Sovereign to make staggered payments to FleetBoston for the
acquisition, dependent upon Fleet's compliance with its
non-compete obligations
- - Sovereign Bancorp Tier 1 capital dramatically improves
- - Creates 27th largest bank in United States; 3rd largest in New
England
Philadelphia, PA...Sovereign Bancorp, Inc. ("Sovereign")
(NASDAQ/NMS: SVRN) announced today that it has restructured the
terms of its agreement to purchase approximately $12 billion in
deposits, $9 billion in loans and 285 community banking offices
from FleetBoston Financial ("Fleet"). The acquisition, which
results in the creation of Sovereign Bank New England, the third
largest bank in New England, includes the following: the entire
former Fleet Bank community banking franchise in eastern
Massachusetts; the entire former BankBoston community banking
franchise in Rhode Island; and select community banking offices
of Fleet Bank in southern New Hampshire and BankBoston in
Connecticut. In addition, Sovereign is acquiring a substantial
portion of the middle market and small business-lending group
from Fleet in Massachusetts and New Hampshire, and from
BankBoston in Rhode Island and Connecticut. The acquisition
includes the purchase of fully functioning business units, with
the necessary management, relationship officers, support staffs,
and other infrastructure for the acquired loans and deposits to
be fully serviced. Sovereign has obtained the receipt of all
required regulatory approvals for this acquisition.
Acquisition Timetable
Date Divested Units Deposits Branches Loans
March 24, 2000 Rhode Island $4.0 B 90 $3.2 B
Connecticut
Western Mass
(BankBoston)
June 16, 2000 Eastern Mass $4.0 B 86 $3.5 B
Rhode Island
(Fleet)
July 21, 2000 Central Mass $4.0 B 109 $2.4 B
New Hampshire
(Fleet)
TOTAL $12.0 B 285 $9.1 B
Payment Terms and Improved Capital Ratios
As previously announced, the total potential consideration
for the entire consumer and business banking franchise is 12% of
acquired deposits, or approximately $1.4 billion. Sovereign
will pay approximately $1.1 billion as the purchases are
completed according to the above schedule. Sovereign will pay
the remaining $340 million in periodic installments between
January 2001 and October 2001 if Fleet complies with its non-
compete obligations under the agreement.
"We are pleased to have restructured this transaction and
to have received the necessary regulatory approvals to complete
our acquisition of Sovereign Bank New England," stated Sidhu.
"The conversion timetable that Sovereign and Fleet have agreed
to provides the best solution for our new customers, minimizes
execution risk for both companies, will reduce confusion in the
marketplace and ensures Sovereign that Fleet will honor its
covenant not to solicit any of its customers or employees for a
two year period."
"As an added benefit of the new transaction structure, we
will show significant improvement in our capital ratios, with
Sovereign Bank expecting over 5% Tier 1 capital and Sovereign
Bancorp expecting 3% Tier 1 capital on each of the closing dates
and thereafter. As a result of these capital ratios, we are
expecting higher credit ratings and higher P/E ratios for the
company," Sidhu continued.
Acquisition Integration on Track
Sovereign continues to make significant progress with its
integration plans for Sovereign Bank New England, and is fully
on track for the three scheduled conversions. The staggered
closing plan as shown above will enhance Sovereign's ability to
provide a smooth transition for its new customers in New
England. The revised schedule also allows Sovereign to provide
additional training for its new team members in advance of the
closing dates.
Management in Place
Sovereign has assembled a very experienced and talented
management team to lead Sovereign Bank New England. The Office
of the Chairman of Sovereign Bank New England will be led by
John P. Hamill as Chairman and Chief Executive Officer and
Joseph P. Campanelli as President and Chief Operating Officer.
Mr. Hamill most recently served as a regional President for
Fleet Bank in Massachusetts. Mr. Hamill is also the past
President and Vice Chairman of Shawmut National Corporation, a
predecessor company of Fleet Bank. Mr. Hamill has in excess of
35 years of commercial banking experience, and over 20 years in
New England.
Mr. Campanelli most recently served as President of
Sovereign Bank's Structured Finance Group headquartered in
Boston, Massachusetts. Prior to joining Sovereign Bank in
September of 1997, Mr. Campanelli spent almost 20 years serving
in a variety of senior positions with Fleet Bank and Shawmut
Bank. His previous responsibilities included oversight of
commercial banking activities in Massachusetts, Rhode Island,
and New Hampshire.
In addition to Mr. Hamill and Mr. Campanelli, the
management team of Sovereign Bank New England will include
several seasoned New England banking professionals who will
create a solid foundation as Sovereign enters the New England
market. Sovereign Bank New England will be headquartered in
Boston and will employ over 3,500 team members throughout the
markets that it serves. As its New England presence grows,
Sovereign will continue to recruit top talent with relationships
already in place throughout New England to provide the high
level of personal service that its existing customers have come
to expect.
"We are extremely pleased with the management team that we
have built to lead Sovereign Bank New England. John Hamill, Joe
Campanelli and the other members of senior management are
committed to the New England marketplace, and we are confident
of their ability to grow the franchise," said Jay Sidhu,
Sovereign's President and Chief Executive Officer.
Profile
Including the anticipated acquisition of Sovereign Bank New
England, Sovereign is a pro forma $35 billion financial
institution with approximately 600 community banking offices and
over 1,000 ATMs in Pennsylvania, Delaware, New Jersey,
Connecticut, New Hampshire, Rhode Island and Massachusetts. Pro
forma Sovereign is the 27th largest financial institution in the
United States and the third largest bank headquartered in
Pennsylvania, the closing price of Sovereign's common stock on
Monday, February 28, 2000 was $7.44 per share.
-END-
Note:
This presentation contains estimates of future operating results
for 2000 and beyond for Sovereign Bancorp, Inc. as well as
estimates of financial condition, operating efficiencies and
revenue creation. These estimates constitute forward-looking
statements (within the meaning of the Private Securities
Litigation Reform Act of 1995), which involve significant risks
and uncertainties. Actual results may differ materially from
the results discussed in these forward-looking statements.
Factors that might cause such a difference include, but are not
limited to, general economic conditions, changes in interest
rates, deposit flows, loan demand, real estate values and
competition; changes in accounting principles, policies, or
guidelines; changes in legislation or regulation; and other
economic, competitive, governmental, regulatory, and
technological factors affecting the Company's operations,
pricing, products and services.
4
03/02/00/SL1 47649v1/07352.204
Exhibit 99.2
Fleet Boston Divestiture
Amended Terms- Addressing the Market's Concerns
February 29, 2000
Forward Looking Statement
- This presentation contains statements of Sovereign's
strategies, plans and objectives, as well as estimates
of future operating results for Sovereign Bancorp, Inc.
as well as estimates of financial condition, operating
efficiencies and revenue creation
- These statements and estimates constitute forward-
looking statements (within the meaning of the Private
Securities Litigation Reform Act of 1995), which involve
significant risks and uncertainties. Actual results may
differ materially from the results discussed in these
forward-looking statements
- Factors that might cause such a difference include, but
are not limited to, general economic conditions; our
ability to successfully complete and integrate our New
England acquisition and retain the related customer
base; changes in interest rates, deposit flows, loan
demand, real estate values and competition; changes in
accounting principles, policies, or guidelines; changes
in legislation or regulations or the application
thereof; and other economic, competitive, governmental,
regulatory, and technological factors affecting the
Company's operations, pricing, products and services
The New Sovereign - A Less Risky Investment
- 3 primary risk factors identified in our SEC disclosure
documents were:
(1) Low holding company tangible capital ratios
(2) Integration Risk from the large size of the
transaction
(3) Retention of management and customers
- Amended transaction addresses all 3 of these risks head-
on
- Sovereign now has several hundred million of
additional capital "cushion" in 2000, and will have
less Holding Co. debt at costly rates
- Sovereign now is performing 3 integrations of 85-110
branches each - we have experience completing
conversions of this size successfully (CoreStates -
93; SVRN - 180 during 1998)
- New England Management team is fully in place
Management Team is in Place
- Office of the Chairman created (Sovereign Bank New
England)
- John Hamill - CEO and Chairman, SBNE
- Former President and Vice-Chairman of Shawmut;
President of Fleet Bank in MA
- Over 35+ years commercial banking experience;
20 years in New England
- Joe Campanelli - President and COO
- Most recently served as President of Sovereign
Bank's Structured Finance Group
- Over 20 years commercial banking experience in New
England
Revised Transaction Terms
- Multiple closings/multiple conversions instead of single
closing
- Earn-out of $340 million - accounted for as non-compete
covenant
Multiple Closings
- Expected staging of the multiple closings and systems
conversions are as follows:
Closing #1 Closing #2 Closing #3
Date March 24 June 16 July 21
Location CT/RI Eastern MA Central MA/NH
# Branches 90 86 109
Deposits $4.0 B $4.0 B $4.0 B
Loans $3.2 B $3.5 B $2.4 B
Changes to Loan Mix
($ in billions) At Signing Today
Consumer $0.5 $1.2
Small Business 0.8 0.8
Commercial 2.8 2.3
Residential 3.8 4.8
Totals $7.9 $9.1
WAC 7.7% 8.0%
Changes to Deposit Mix
($ in billions) At Signing Today
DDA/NOW $ 3.9 $ 4.1
Savings 2.0 2.1
MMDA 2.4 2.4
Time 3.5 3.4
Totals $11.8 $12.0
Weighted Avg. Rate 2.50% 2.65%
Earn-out of $340 Million
- Accounted for as a covenant not to compete
- Payable to Fleet Boston over 5 quarters, contingent on
their compliance with covenant each quarter
- Treated as non-operating expense each quarter commencing
3Q00 until fully expensed
- Contingent nature of the earn-out results in $340
million less goodwill recorded, resulting in $340
million of higher tangible capital at each closing and
beyond
- Earn-out structure accelerates over $100 million of
permanent tangible capital by 3Q01 through the
realization of the tax benefit of the $340 million
Earn-out of $340 Million (cont'd)
- Earn-out structure creates 260 bp of incremental
tangible capital at July 21 closing over previous
transaction
- Resulting Tier 1 Leverage ratio at Sovereign Bancorp is
3.00% or higher at all times; Sovereign Bank is 5.25% or
higher
- Staggered closings reduce integration and run-off risk,
and increase franchise value
Financial Impact of Earn-out
- Anticipated non-operating expense recognition is as
follows:
Recorded
($ in Recorded Expense
millions) Expense (after-tax)
3Q 00 $ 49 $ 32
4Q 00 73 48
1Q 01 73 48
2Q 01 73 48
3Q 01 73 48
4Q 01 24 16
- Earn-out has no impact to 2000 and 2001 operating
earnings
- Earn-out will impact 2000 and 2001 GAAP earnings by
approximately $0.35 and $0.71, respectively
Capital Impact
- Sovereign Bancorp and Sovereign Bank have permanently
enhanced capital ratios:
Pro Forma Capital Ratios
@ Final Closing
Nov. '99(1) Today
Sovereign Bancorp
GAAP Equity/Assets 5.23% 5.39%
Tier 1 Leverage 0.38% 3.01%
Tangible Equity/Assets* 1.50% 2.91%
Sovereign Bank
GAAP Equity/Assets 6.28% 8.65%
Tier 1 Leverage 4.62% 5.26%
Tangible Equity/Assets* 6.20% 6.22%
Additionally, Sovereign Bancorp will achieve over 5.00% Tier 1
capital (tax-adjusted basis) and 4.00% Tier 1 capital by 4Q01,
less than 18 months after closing
* tax-effected basis
(1) Derived from single closing, pro forma data provided in
Nov. 1999 registration statement
Transaction Status
- Revised agreement executed February 28, 2000
- Addresses tangible capital and execution risk concerns
- Staggered closing and systems conversions occur
March 24, June 16 and July 21
- OTS approval received
- DOJ, Fed status - verbal approval received by Fleet;
formal sign-off shortly
- Better deal for Sovereign stakeholders than previously
announced
"WORD"
Long Document Name:
Exhibit 99.2: Fleet Boston Divestiture -
Amended Terms Addressing the Market's
Concerns
System Document Number:
47511_1 PFG
Additional Information:
CONVERTED FROM POWER POINT BY JUDY BEDNAR -
EDGAR FORMAT USED - PLEASE DO NOT
CHANGE ANY STYLES OR FORMATTING IN
THIS DOCUMENT
You will have line numbers down the side of each draft document unless
you indicate otherwise. 1.5 line spacing will be used on all drafts
unless you indicate otherwise.
Return To:
Location:
Return: _____draft _____final _____redlined _____stapled
Line Spacing: _____ same _____ 1.0 _____ 1.5 _____ 2.0
Duplicate: _____ yes _____ no (New Client/Matter No: _)
Save New Version For Redlining Prior To Revisions: _____ yes _____ no
Caret Method _____ Standard Method _____
Notes:
I cut and pasted this document from a Powerpoint Presentation. /JCB
EDGAR FORMAT USED - PLEASE DO NOT CHANGE ANY STYLES
OR FORMATTING IN THIS DOCUMENT
Origination Date:
February 28, 2000
Author's Initials:
pfg/wjr
Last Revised By:
JCB/laz/dlg
Last Revision Date:
2/28/00;2-28;3-2;
Quick Fill Numbering:
5
03/02/00/SL1 47511v1/07352.204
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03/02/00/SL1 47511v1/07352.204
