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): January 6, 1995
SHAWMUT NATIONAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 1-10102 06-1212629
(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
777 Main Street, Hartford, Connecticut 06115
One Federal Street, Boston, Massachusetts 02211
(Address of principal executive offices) (Zip Codes)
(203) 986-2000
Registrant's telephone numbers, including area codes: (617) 292-2000
Not Applicable
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
Shawmut National Corporation ("SNC") and
Shawmut Bank Connecticut, National Association (the
"Bank), entered into a Purchase and Assumption Agreement,
dated as of November 12, 1994 (the "Asset Purchase
Agreement"), with Barclays Bank PLC ("Barclays") and
Barclays Business Credit Inc. ("Business Credit")
pursuant to which the Bank agreed to purchase
substantially all of the assets and to assume certain
liabilities of the Business Finance Division ("Finance
Division") of Business Credit.
The purchase price is equal to the net book
value of the assets to be acquired and the liabilities to
be assumed plus a premium of $290 million. The book value
of the assets to be acquired, totalling approximately $2.1
billion at September 30, 1994, include all of the business and
operations of Business Credit conducted through the Finance
Division, which includes, among other things, loans and loan
commitments; all property acquired by Business Credit in
connection with foreclosures on the property securing
non-performing loans; the leased office facilities at
which the Finance Division conducts business and
leasehold improvements thereon; all rights and interests
under the contracts relating to the Finance Division to
which Business Credit is a party; certain investments;
all books and records relating to the Finance Division;
and all unearned fees relating to the purchased loans and
loan commitments. The book value of the liabilities to
be assumed was approximately $10.5 million at September
30, 1994. SNC anticipates that the total funding
required for the transaction will be approximately $2.4
billion. The Finance Division, based in Glastonbury,
Connecticut, provides asset-based financing to middle
market companies throughout the United States through its
17 nationwide offices.
The Asset Purchase Agreement may be terminated
by either party if the closing has not taken place by
March 31, 1995. SNC currently anticipates that the acquisition
of the Finance Division will close on or before January 31,
1995, subject to the satisfaction of certain conditions, including
certain regulatory approvals.
SNC entered into an agreement with Northeast Federal
Corp. ("Northeast"), dated as of June 13, 1994, to acquire
Northeast for $172.1 million in SNC common stock (the "Merger
Agreement"). Northeast is a unitary savings and loan holding
company registered under the Home Owners' Loan Act of 1933, as
amended, which provides financial services through its subsidiary,
Northeast Savings, F.A. As of September 30, 1994,
Northeast had assets of $3.3 billion, deposits of $2.4
billion and stockholders' equity of $135.1 million.
Northeast has 33 offices located in Connecticut,
Massachusetts and the capital region of New York. Each
issued and outstanding share of Northeast common stock,
except for certain shares held by affiliates, will be
converted into and exchangeable for a number of shares of
SNC common stock equal to the exchange ratio (the
"Exchange Ratio") determined as follows:
(i) if the SNC Common Stock Average Price is
greater than or equal to $26.235, the
Exchange Ratio will be .415;
(ii) if the SNC Common Stock Average Price is
less than $26.235 but equal to or greater
than $21.465, the Exchange Ratio will be
(a) $10.875 divided by (b) the SNC Common
Stock Average Price; or
(iii) if the SNC Common Stock Average Price
is less than $21.465, the Exchange
Ratio will be .507; provided,
however, that, as described below,
under such circumstances Northeast
has the right to terminate the Merger
Agreement, subject to the right of
SNC to avoid such termination by an
increase in the Exchange Ratio.
The Merger Agreement may be terminated if the
transaction is not closed on or before June 30, 1995. In
addition, if the SNC Common Stock Average Price (defined as the
average daily closing price of SNC Common Stock as reported
on the New York Stock Exchange Composite Transaction reporting
system for the 15 consecutive full trading days prior to
the date on which the last regulatory approval is obtained
and all statutory waiting periods in respect thereof have
expired) is less than $21.465, Northeast's Board of Directors
may terminate the Merger Agreement pursuant to its terms,
whether before or after the approval of the merger by Northeast's
stockholders; provided, however, that SNC may avoid such
termination by increasing the Exchange Ratio so that the
shares of SNC Common Stock issued in exchange for each
share of Northeast's common stock have a value (valued at
the SNC Common Stock Average Price) of $10.875. At January 6,
1995, the closing price of SNC's Common Stock was $17.750 per
share. In addition, the transaction is subject to the
satisfaction of certain conditions, including certain regulatory
approvals and approval by Northeast stockholders.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(c) The following exhibits are filed with this Current
Report on Form 8-K:
EXHIBIT
NUMBER DESCRIPTION
99.1 Agreement and Plan of Merger by and
between Shawmut National Corporation
and Northeast Federal Corp. dated June
11, 1994.
99.2 Purchase and Assumption Agreement among
Barclays Business Credit Inc., Barclays
Bank PLC, Shawmut National Corporation
and Shawmut Bank Connecticut, N.A.
dated November 12, 1994.
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.
SHAWMUT NATIONAL CORPORATION
By:
Joel B. Alvord
Chairman and Chief Executive Officer
Dated: January 6, 1995
EXHIBIT INDEX
Exhibit
Number Description
99.1 Agreement and Plan of Merger by and
between Shawmut National Corporation
and Northeast Federal Corp. dated June
11, 1994.
99.2 Purchase and Assumption Agreement among
Barclays Business Credit Inc., Barclays
Bank PLC, Shawmut National Corporation
and Shawmut Bank Connecticut, N.A.
dated November 12, 1994.
EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
By and Between
SHAWMUT NATIONAL CORPORATION
and
NORTHEAST FEDERAL CORP.
Dated as of June 11, 1994
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . .
1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . .
1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . .
1.4 Conversion of Target Common Stock;
Target Preferred Stock . . . . . . . . . . . . . . . . .
1.5 Conversion of Merger Sub Common Stock . . . . . . . . . . .
1.6 Options and Warrants . . . . . . . . . . . . . . . . . . .
1.7 Certificate of Incorporation . . . . . . . . . . . . . . .
1.8 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . .
1.9 Directors and Officers . . . . . . . . . . . . . . . . . .
1.10 Tax Consequences . . . . . . . . . . . . . . . . . . . . .
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available . . . . . . . . . . . . . .
2.2 Exchange of Shares . . . . . . . . . . . . . . . . . . . . .
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TARGET
3.1 Corporate Organization . . . . . . . . . . . . . . . . . .
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . .
3.3 Authority; No Violation . . . . . . . . . . . . . . . . . . .
3.4 Consents and Approvals . . . . . . . . . . . . . . . . . . .
3.5 Loan Portfolio; Reports . . . . . . . . . . . . . . . . . . .
3.6 Financial Statements . . . . . . . . . . . . . . . . . . . .
3.7 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . .
3.8 Absence of Certain Changes or Events . . . . . . . . . . . .
3.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . .
3.10 Taxes and Tax Returns . . . . . . . . . . . . . . . . . . . .
3.11 Employees . . . . . . . . . . . . . . . . . . . . . . . . . .
3.12 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . .
3.13 Target Information . . . . . . . . . . . . . . . . . . . . .
3.14 Compliance with Applicable Law . . . . . . . . . . . . . . .
3.15 Certain Contracts . . . . . . . . . . . . . . . . . . . . . .
3.16 Agreements with Regulatory Agencies . . . . . . . . . . . . .
3.17 Investment Securities . . . . . . . . . . . . . . . . . . . .
3.18 Intellectual Property . . . . . . . . . . . . . . . . . . . .
3.19 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . .
3.20 Takeover Restrictions . . . . . . . . . . . . . . . . . . . .
3.21 Administration of Fiduciary Accounts . . . . . . . . . . . .
3.22 Environmental Matters . . . . . . . . . . . . . . . . . . . .
3.23 Derivative Transactions . . . . . . . . . . . . . . . . . . .
3.24 Accuracy of Information . . . . . . . . . . . . . . . . . . .
3.25 Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.26 Assistance Agreements . . . . . . . . . . . . . . . . . . . .
3.27 DEPCO Directors . . . . . . . . . . . . . . . . . . . . . . .
3.28 Qualified Thrift Lender . . . . . . . . . . . . . . . . . . .
3.29 Knowledge as to Conditions . . . . . . . . . . . . . . . . .
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . .
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . .
4.3 Authority; No Violation . . . . . . . . . . . . . . . . . . .
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . .
4.5 Financial Statements . . . . . . . . . . . . . . . . . . . .
4.6 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . .
4.7 Absence of Certain Changes or Events . . . . . . . . . . . .
4.8 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . .
4.9 Compliance with Applicable Law . . . . . . . . . . . . . . .
4.10 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . .
4.11 Parent Information . . . . . . . . . . . . . . . . . . . . .
4.12 Accuracy of Information . . . . . . . . . . . . . . . . . . .
4.13 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . .
4.14 Knowledge as to Conditions . . . . . . . . . . . . . . . . .
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of Target . . . . . . . . . . . . . . . . . . . . .
5.2 Covenants of Parent . . . . . . . . . . . . . . . . . . . . .
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters . . . . . . . . . . . . . . . . . . . . .
6.2 Access to Information . . . . . . . . . . . . . . . . . . . .
6.3 Stockholders Meeting . . . . . . . . . . . . . . . . . . . .
6.4 Legal Conditions to Merger . . . . . . . . . . . . . . . . .
6.5 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . .
6.6 Stock Exchange Listing . . . . . . . . . . . . . . . . . . .
6.7 Indemnification; Directors' and Officers' Insurance . . . . .
6.8 Subsequent Financial Statements . . . . . . . . . . . . . . .
6.9 Additional Agreements . . . . . . . . . . . . . . . . . . . .
6.10 Advice of Changes . . . . . . . . . . . . . . . . . . . . . .
6.11 Current Information . . . . . . . . . . . . . . . . . . . . .
6.12 Termination of Regulatory Agreements . . . . . . . . . . . .
6.13 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . .
6.14 Employee Benefit Plans; Existing Agreements . . . . . . . . .
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To
Effect the Merger . . . . . . . . . . . . . . . . . . . . .
(a) Stockholder Approval . . . . . . . . . . . . . . . .
(b) NYSE Listing . . . . . . . . . . . . . . . . . . . .
(c) Other Approvals . . . . . . . . . . . . . . . . . . .
(d) S-4 . . . . . . . . . . . . . . . . . . . . . . . . .
(e) No Injunctions or Restraints;
Illegality . . . . . . . . . . . . . . . . . . . .
(f) Federal Tax Opinion . . . . . . . . . . . . . . . . .
7.2 Conditions to Obligations of Parent . . . . . . . . . . . . .
(a) Representations and Warranties . . . . . . . . . . .
(b) Performance of Obligations of Target . . . . . . . .
(c) Consents Under Agreements . . . . . . . . . . . . . .
(d) No Pending Governmental Actions . . . . . . . . . . .
(e) DEPCO Directors . . . . . . . . . . . . . . . . . . .
(f) Accountant's Letter . . . . . . . . . . . . . . . . .
7.3 Conditions to Obligations of Target . . . . . . . . . . . . .
(a) Representations and Warranties . . . . . . . . . . .
(b) Performance of Obligations of Parent . . . . . . . .
(c) Consents Under Agreements . . . . . . . . . . . . . .
(d) No Pending Governmental Actions . . . . . . . . . . .
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . .
8.2 Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.3 Effect of Termination . . . . . . . . . . . . . . . . . . . .
8.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . .
8.5 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . .
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.2 Alternative Structure . . . . . . . . . . . . . . . . . . . .
9.3 Nonsurvival of Representations, Warranties
and Agreements . . . . . . . . . . . . . . . . . . . . . .
9.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
9.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.6 Interpretation . . . . . . . . . . . . . . . . . . . . . . .
9.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . .
9.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . .
9.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . .
9.10 Enforcement of Agreement . . . . . . . . . . . . . . . . . .
9.11 Severability . . . . . . . . . . . . . . . . . . . . . . . .
9.12 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . .
9.13 Assignment . . . . . . . . . . . . . . . . . . . . . . . . .
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 11, 1994
(this "Agreement"), by and between Shawmut National Corporation, a
Delaware corporation ("Parent"), and Northeast Federal Corp., a
Delaware corporation ("Target").
WHEREAS, the Boards of Directors of Parent and Target have
determined that it is in the best interests of their respective
companies and their shareholders to consummate the business
combination transaction provided for herein in which a subsidiary of
Parent ("Merger Sub") will, subject to the terms and conditions set
forth herein, merge (the "Merger") with and into Target; and
WHEREAS, the parties desire to make certain
representations, warranties and agreements in connection with the
Merger and also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of
this Agreement, in accordance with the Delaware General Corporation
Law (the "DGCL"), at the Effective Time (as defined in Section 1.2
hereof), Merger Sub shall merge with and into Target. Target shall be
the surviving corporation (hereinafter sometimes called the "Surviving
Corporation") in the Merger, and shall continue its corporate
existence under the laws of the State of Delaware as a wholly owned
subsidiary of Parent. Upon consummation of the Merger, the separate
corporate existence of Merger Sub shall terminate.
1.2 Effective Time. The Merger shall become effective as
set forth in the certificate of merger (the "Certificate of Merger")
which shall be filed with the Secretary of State of the State of
Delaware (the "Secretary") on the Closing Date (as defined in Section
9.1 hereof). The term "Effective Time" shall be the date and time
when the Merger becomes effective, as set forth in the Certificate of
Merger.
1.3 Effects of the Merger. At and after the Effective
Time, the Merger shall have the effects set forth in Sections 259 and
261 of the DGCL.
1.4 Conversion of Target Common Stock; Target Preferred
Stock. (a) At the Effective Time, subject to Section 2.2(e) hereof,
each share of the common stock, par value $0.01 per share, of Target
(the "Target Common Stock") issued and outstanding immediately prior
to the Effective Time (other than shares of Target Common Stock held
(x) in Target's treasury or (y) directly or indirectly by Parent or
Target or any of their respective Subsidiaries (as defined below)
(except for Trust Account Shares and DPC Shares, as such terms are
defined in Section 1.4(b) hereof)) shall, by virtue of this Agreement
and without any action on the part of the holder thereof, be converted
into the number of shares (the "Exchange Ratio") of common stock, par
value $.01 per share, of Parent ("Parent Common Stock") (together with
the number of Parent Rights (as defined in Section 4.2 hereof)
associated therewith) determined as follows:
(i) if the Parent Common Stock Average Price (as
defined in Section 8.1(g) hereof) is greater than
or equal to $26.235, the Exchange Ratio will be
.415;
(ii) if the Parent Common Stock Average Price is less
than $26.235 but equal to or greater than $21.465,
the Exchange Ratio will be (i) $10.875 divided by
(ii) the Parent Common Stock Average Price; or
(iii) if the Parent Common Stock Average Price is less
than $21.465, the Exchange Ratio will be .507.
All of the shares of Target Common Stock converted into
Parent Common Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to
exist, and each certificate (each a "Certificate") previously
representing any such shares of Target Common Stock shall thereafter
represent the right to receive (i) a certificate representing the
number of whole shares of Parent Common Stock and (ii) cash in lieu of
fractional shares into which the shares of Target Common Stock
represented by such Certificate have been converted pursuant to this
Section 1.4(a) and Section 2.2(e) hereof. Certificates previously
representing shares of Target Common Stock shall be exchanged for
certificates representing whole shares of Parent Common Stock and cash
in lieu of fractional shares issued, in consideration therefor upon
the surrender of such Certificates in accordance with Section 2.2
hereof, without any interest thereon. If prior to the Effective Time
Parent should split or combine its common stock, or pay a dividend or
other distribution in such common stock, then the Exchange Ratio shall
be appropriately adjusted to reflect such split, combination, dividend
or distribution.
(b) At the Effective Time, all shares of Target Common
Stock that are owned by Target as treasury stock and all shares of
Target Common Stock that are owned directly or indirectly by Parent or
Target or any of their respective Subsidiaries (other than shares of
Target Common Stock held directly or indirectly in trust accounts,
managed accounts and the like or otherwise held in a fiduciary
capacity that are beneficially owned by third parties (any such
shares, and shares of Parent Common Stock which are similarly held,
whether held directly or indirectly by Parent or Target or any of
their respective subsidiaries, as the case may be, being referred to
herein as "Trust Account Shares") and other than any shares of Target
Common Stock held by Parent or Target or any of their respective
Subsidiaries in respect of a debt previously contracted (any such
shares of Target Common Stock, and shares of Parent Common Stock which
are similarly held, whether held directly or indirectly by Parent or
Target or any of their respective subsidiaries, being referred to
herein as "DPC Shares")) shall be cancelled and shall cease to exist
and no stock of Parent or other consideration shall be delivered in
exchange therefor. All shares of Parent Common Stock that are owned
by Target or any of its Subsidiaries (other than Trust Account Shares
and DPC Shares) shall become treasury stock of Parent.
(c) At and after the Effective Time each share of the $8.50
Cumulative Preferred Stock, Series B, of Target (the "Target Series B
Preferred Stock"), outstanding shall remain outstanding.
1.5 Conversion of Merger Sub Common Stock. Each of the
100 shares of the common stock, par value $1.00 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time
shall by virtue of this Agreement and without any action on the part
of the holder thereof, be converted into and exchangeable for one
share common stock, par value $1.00, of the Surviving Corporation,
which shall thereafter constitute all of the issued and outstanding
shares of Common Stock of the Surviving Corporation.
1.6 Options and Warrants. At the Effective Time, each
option and warrant granted by Target to purchase shares of Target
Common Stock which is outstanding and unexercised immediately prior
thereto shall be converted automatically into an option or warrant, as
the case may be, to purchase shares of Parent Common Stock in an
amount and at an exercise price determined as provided below (and, in
the case of options, otherwise subject to the terms of the 1983 Stock
Option Plan of Target, The 1986 Stock Option Plan of Target, the
Target 1993 Stock Option Plan, or the Target 1993 Stock Option Plan
for Three Year Term Outside Directors, as the case may be (each a
"Target Stock Option Plan"; collectively the "Target Stock Option
Plans") or, in the case of warrants, otherwise subject to the terms of
the Stock Warrants, each dated April 22, 1992, of Target (the "Target
Warrants")):
(a) The number of shares of Parent Common Stock to be
subject to the new option or warrant shall be equal to the
product of the number of shares of Target Common Stock
subject to the original option or warrant and the Exchange
Ratio, provided that any fractional shares of Parent Common
Stock resulting from such multiplication shall be rounded to
the nearest whole share; and
(b) The exercise price per share of Parent Common Stock
under the new option or warrant shall be equal to the
exercise price per share of Target Common Stock under the
original option or warrant divided by the Exchange Ratio,
provided that such exercise price shall be rounded to the
nearest cent.
The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code")) shall be and is
intended to be effected in a manner which is consistent with Section
424(a) of the Code. The duration and other terms of the new option or
warrant shall be the same as the original option or warrant, except
that all references to Target shall be deemed to be references to
Parent.
1.7 Certificate of Incorporation. At the Effective Time,
the Certificate of Incorporation of Target, as in effect at the
Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation.
1.8 By-Laws. At the Effective Time, the By-Laws of Merger
Sub, as in effect immediately prior to the Effective Time, shall be
the By-Laws of the Surviving Corporation until thereafter amended in
accordance with applicable law.
1.9 Directors and Officers. The directors and officers of
Merger Sub immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and By-Laws
of the Surviving Corporation until their respective successors are
duly elected or appointed and qualified, provided that so long as the
Target Series B Preferred Stock is outstanding by the terms thereof,
and DEPCO or any Nominee (each as defined in Section 3.27) is entitled
to elect directors of Target pursuant to the terms of the Target
Series B Preferred Stock, the directors elected by the holders of the
Target Series B Preferred Stock shall be directors of the Surviving
Corporation.
1.10 Tax Consequences. It is intended that the Merger
shall constitute a reorganization within the meaning of Section 368(a)
of the Code, and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available. As of the Effective
Time, Parent shall deposit, or shall cause to be deposited, with a
bank or trust company selected by Parent (which may be a Subsidiary of
Parent) (the "Exchange Agent"), for the benefit of the holders of
Certificates, for exchange in accordance with this Article II,
certificates representing the shares of Parent Common Stock and the
cash in lieu of fractional shares (such cash and certificates for
shares of Parent Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as
the "Exchange Fund") to be issued pursuant to Section 1.4 and paid
pursuant to Section 2.2(a) in exchange for outstanding shares of
Target Common Stock.
2.2 Exchange of Shares. (a) As soon as practicable after
the Effective Time, the Exchange Agent shall mail to each holder of
record of a Certificate or Certificates a form letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon actual receipt of
the Certificates by the Exchange Agent) and instructions for use in
effecting the surrender of the Certificates in exchange for
certificates representing the shares of Parent Common Stock and cash
in lieu of fractional shares, if any, into which the shares of Target
Common Stock previously represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement.
Upon proper surrender to the Exchange Agent of a Certificate for
exchange and cancellation, together with such properly completed
letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor (x) a certificate
representing that number of whole shares of Parent Common Stock to
which such holder of Target Common Stock shall have become entitled
pursuant to the provisions of Article I hereof and (y) a check
representing the amount of cash in lieu of fractional shares, if any,
which such holder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions of this Article II,
and the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on the cash in lieu of fractional
shares and unpaid dividends and distributions, if any, payable to
holders of Certificates. Notwithstanding anything to the contrary
contained herein, no certificate representing Parent Common Stock or
cash in lieu of a fractional share interest shall be delivered to a
person who is an Affiliate (as defined in Section 6.5) of Target
unless such Affiliate has theretofore executed and delivered to Parent
the agreement referred to in Section 6.5.
(b) No dividends or other distributions payable after the
Effective Time with respect to Parent Common Stock shall be paid to
the holder of any unsurrendered Certificate until the holder thereof
shall duly surrender such Certificate in accordance with this Article
II. After the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled to receive any
dividends or other distributions, without any interest thereon, which
became payable with respect to the shares of Parent Common Stock
represented by such Certificate after the Effective Time but on or
before the time of such surrender. No holder of an unsurrendered
Certificate shall be entitled, until the surrender of such
Certificate, to vote the shares of Parent Common Stock into which his
or her Target Common Stock shall have been converted.
(c) If any certificate representing shares of Parent
Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall
be a condition of the issuance thereof that the Certificate so
surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such exchange shall pay to
the Exchange Agent in advance any transfer or other taxes required by
reason of the issuance of a certificate representing shares of Parent
Common Stock in any name other than that of the registered holder of
the Certificate surrendered, or required for any other reason, or
shall establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers
on the stock transfer books of Target of the shares of Target Common
Stock which were issued and outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates
representing such shares are presented for transfer to the Exchange
Agent, they shall be cancelled and exchanged for certificates
representing shares of Parent Common Stock as provided in this Article
II.
(e) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to Parent
Common Stock shall be payable on or with respect to any fractional
share, and such fractional share interests shall not entitle the owner
thereof to vote or to any other rights of a shareholder of Target. In
lieu of the issuance of any such fractional share, Parent shall pay to
each former stockholder of Target who otherwise would be entitled to
receive a fractional share of Parent Common Stock an amount in cash
determined by multiplying (i) the average of the closing-sale prices
of Parent Common Stock on the New York Stock Exchange as reported by
The Wall Street Journal for the five trading days immediately
preceding the date of the Effective Time by (ii) the fraction of a
share of Parent Common Stock to which such holder would otherwise be
entitled to receive pursuant to Section 1.4 hereof.
(f) Any portion of the Exchange Fund that remains
unclaimed by the stockholders of Target for six months after the
Effective Time shall be paid to Parent. Any stockholders of Target
who have not theretofore complied with this Article II shall
thereafter look only to Parent for payment of their shares of Parent
Common Stock, cash in lieu of fractional shares and unpaid dividends
and distributions on the Parent Common Stock deliverable in respect of
each share of Target Common Stock such stockholder holds as determined
pursuant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of Parent, Target, the
Exchange Agent or any other person shall be liable to any former
holder of shares of Target Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(g) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such person of a bond in
such amount as Parent may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Parent Common Stock and cash in lieu of
fractional shares and unpaid dividends and distributions on Parent
Common Stock deliverable in respect thereof pursuant to this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TARGET
Target hereby represents and warrants to Parent and Merger
Sub as follows:
3.1 Corporate Organization. (a) Target is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware. Target has the corporate power and
authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing
or qualification necessary, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect (as defined
below) on Target. As used in this Agreement, the term "Material
Adverse Effect" means, with respect to Parent, Target or the Surviving
Corporation, as the case may be, a material adverse effect on the
business, properties, assets, liabilities, prospects, results of
operations or financial condition of such party and its Subsidiaries
taken as a whole or the ability of any party to consummate the
transactions contemplated hereby on the terms hereof, it being
understood that a Material Adverse Effect will not include a change
with respect to, or effect on, such entity resulting from a change in
law, rule, regulation, generally accepted or regulatory accounting
principles, or a change with respect to, or effect on, such entity
resulting from any other matter affecting financial institutions or
their holding companies generally. As used in this Agreement, the
word "Subsidiary" when used with respect to any party means any
corporation, partnership or other organization, whether incorporated
or unincorporated, which is consolidated with such party for financial
reporting purposes or of which the party holds 25% or more of the
shares. Target is duly registered as a savings and loan holding
company under the Home Owners' Loan Act, as amended ("HOLA"). The
copies of the Certificate of Incorporation and By-laws of Target which
have previously been delivered to Parent are true, complete and
correct copies of such documents as in effect as of the date of this
Agreement.
(b) Northeast Savings, F.A. ("Target Bank") is a federal
savings and loan association or savings bank duly organized, validly
existing and in good standing under the laws of the United States.
The deposit accounts of Target Bank are insured by the Federal Deposit
Insurance Corporation (the "FDIC") through the Savings Association
Insurance Fund (the "SAIF") to the fullest extent permitted by law,
and all premiums and assessments required in connection therewith have
been paid by Target Bank. Target Bank is the only direct Subsidiary
of Target, and is the only Subsidiary of Target that is a "Significant
Subsidiary" as such term is defined in Regulation S-X promulgated by
the Securities and Exchange Commission (the "SEC"). Target Bank has
the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or
the character or the location of the properties and assets owned or
leased by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would not have a
Material Adverse Effect on Target. The copies of the Federal Stock
Charter and By-laws of Target Bank which have previously been
delivered to Parent are true, complete and correct copies of such
documents as in effect as of the date of this Agreement.
(c) The minute books of Target and Target Bank accurately
reflect in all material respects all corporate actions held or taken
since January 1, 1989 of their respective stockholders and Boards of
Directors (including committees of their respective Boards of
Directors).
3.2 Capitalization. (a) The authorized capital stock of
Target consists of 25,000,000 shares of Target Common Stock and
15,000,000 shares of preferred stock, par value $.01 per share
("Target Preferred Stock"). As of March 31, 1994, there are (x)
13,519,193 shares of Target Common Stock issued and outstanding and no
shares of Target Common Stock held in Target's treasury and 402,576
shares of Target Series B Preferred Stock issued and outstanding,
(y) no shares of Target Common Stock reserved for issuance upon
exercise of outstanding stock options or warrants or otherwise except
for (i) 1,497,292 shares of Target Common Stock reserved for issuance
pursuant to the Target Stock Option Plans and (ii) 800,000 shares of
Target Common Stock reserved for issuance pursuant to the Target
Warrants and (z), except for the 402,576 shares of Target Series B
Preferred Stock issued and outstanding and shares of such stock which
may be issued in payment for dividends on the Target Series B
Preferred Stock, no shares of Target Preferred Stock are issued or
outstanding or reserved for issuance. All of the issued and
outstanding shares of Target Common Stock and Target Series B
Preferred Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Except as
referred to above or reflected in Section 3.2(a) of the Disclosure
Schedule which is being delivered to Parent concurrently herewith (the
"Target Disclosure Schedule"), Target does not have and is not bound
by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of Target Common Stock or Target Preferred
Stock or any other equity security of Target or any securities
representing the right to purchase or otherwise receive any shares of
Target Common Stock or any other equity security of Target. The names
of the optionees, the date of each option to purchase Target Common
Stock granted, the number of shares subject to each such option, the
expiration date of each such option, and the price at which each such
option may be exercised under the Target Stock Option Plans are set
forth in Section 3.2(a) of the Target Disclosure Schedule. Except as
set forth in Section 3.2(a) of the Target Disclosure Schedule, since
March 31, 1994, Target has not issued any shares of its capital stock
or any securities convertible into or exercisable for any shares of
its capital stock, other than pursuant to the exercise of employee or
director stock options granted prior to such date and except for
Series B Preferred Stock issued in payment of dividends on outstanding
shares of Series B Preferred Stock. Section 3.2(a) of the Target
Disclosure Schedule sets forth the number of shares of Target Common
Stock issued and outstanding as of the date of this Agreement. Target
has reserved an adequate number of shares to cover exercise of options
under the currently outstanding options granted pursuant to the Target
Stock Option Plans.
(b) Section 3.2(b) of the Target Disclosure Schedule sets
forth a true and correct list of all of the Target Subsidiaries as of
the date of this Agreement. Except as set forth in Section 3.2(b) of
the Target Disclosure Schedule, Target owns, directly or indirectly,
all of the issued and outstanding shares of capital stock of each of
the Target Subsidiaries, free and clear of all liens, charges,
encumbrances and security interests whatsoever, and all of such shares
are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. Each Target Subsidiary
is duly organized and validly existing as a corporation or partnership
under the laws of its jurisdiction of organization. No Target
Subsidiary has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling
for the purchase or issuance of any shares of capital stock or any
other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Subsidiary.
Assuming compliance by Parent with Section 1.6 hereof and except
pursuant to the DEPCO Agreement (as defined in Section 3.27), at the
Effective Time, there will not be any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character
by which Target or any of its Subsidiaries will be bound calling for
the purchase or issuance of any shares of the capital stock of Target
or any of its Subsidiaries.
3.3 Authority; No Violation. (a) Target has full
corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved
by the Board of Directors of Target. The Board of Directors of Target
has directed that this Agreement and the transactions contemplated
hereby be submitted to Target's stockholders for approval at a meeting
of such stockholders and, except for the adoption of this Agreement by
the requisite vote of Target's stockholders, no other corporate
proceedings on the part of Target are necessary to approve this
Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by
Target and constitutes a valid and binding obligation of Target.
(b) Except as set forth in Section 3.3(b) of the Target
Disclosure Schedule, neither the execution and delivery of this
Agreement by Target nor the consummation by Target of the transactions
contemplated hereby or thereby, nor compliance by Target with any of
the terms or provisions hereof or thereof, will (i) violate any
provision of the Certificate of Incorporation or By-Laws of Target or
the certificate of incorporation, by-laws or similar governing
documents of Target Bank or (ii) assuming that the consents and
approvals referred to in Section 3.4 hereof are duly obtained, (x)
violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Target or Target Bank,
or any of their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Target
or Target Bank under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Target or Target
Bank is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of
clause (y) above) for such violations, conflicts, breaches or defaults
which, either individually or in the aggregate, would not have or be
reasonably likely to have a Material Adverse Effect on Target.
3.4 Consents and Approvals. Except for (a) the filing of
applications and notices, as applicable, with the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board") under the
Bank Holding Company Act of 1956, as amended (the "BHC Act") and
approval of such applications and notices, (b) the filing of
applications with the Office of Thrift Supervision (the "OTS") under
the HOLA and approval of such applications, (c) the filing of any
required applications or notices with any state agencies and approval
of such applications (the "State Approvals"), (d) the filing with the
SEC of a proxy statement in definitive form relating to any meeting of
Target's stockholders to be held in connection with this Agreement and
the transactions contemplated hereby (the "Proxy Statement"), (e) the
approval of this Agreement by the requisite vote of the stockholders
of Target, (f) the filing of the Certificate of Merger with the
Secretary pursuant to the DGCL, and (g) such filings, authorizations
or approvals as may be set forth in Section 3.4 of the Target
Disclosure Schedule, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or
other governmental authority or instrumentality (each a "Governmental
Entity") or with any third party are necessary in connection with
(1) the execution and delivery by Target of this Agreement and (2) the
consummation by Target of the Merger and the other transactions
contemplated hereby.
3.5 Loan Portfolio; Reports. (a) Except as set forth in
Section 3.5(a) of the Target Disclosure Schedule, as of March 31,
1994, neither Target nor any of its Subsidiaries is a party to any
written or oral (i) loan agreement, note or borrowing arrangement
(including, without limitation, leases, credit enhancements,
commitments, guarantees and interest-bearing assets) (collectively,
"Loans"), other than Loans the unpaid principal balance of which does
not exceed $100,000, under the terms of which the obligor was, as of
March 31, 1994, over 90 days delinquent in payment of principal or
interest or in default under any other provision, or (ii) Loan to any
director, executive officer or ten percent stockholder of Target or
any of its Subsidiaries or, to the knowledge of Target, any person,
corporation or enterprise controlling, controlled by or under common
control with any of the foregoing. Section 3.5(a) of the Target
Schedule sets forth (i) all of the Loans of Target or any of its
Subsidiaries the unpaid principal amount in excess of (A) $100,000
that as of the date of this Agreement are internally classified as
"Substandard," "Doubtful," "Loss," or "Classified," (B) $100,000 that
as of the date of this Agreement are internally classified as
"Criticized," "Other Loans Especially Mentioned" or "Special Mention",
(C) $750,000 that as of the date of this Agreement are internally
classified as "Credit Risk Assets," "Concerned Loans," "Watch List" or
words of similar import, in each case together with the principal
amount of and accrued and unpaid interest on each such Loan and the
identity of the borrower thereunder, and (ii) by category of Loan
(i.e., commercial, consumer, etc.), all of the other Loans of Target
and its Subsidiaries that as of the date of this Agreement are
classified as such, together with the aggregate principal amount of
and accrued and unpaid interest on such Loans by category. Target
shall promptly inform Parent of any Loan that becomes classified in
the manner described in the previous sentence, or any Loan the
classification of which is changed, at any time after the date of this
Agreement. Target and its Subsidiaries have internally classified, in
the manner described above, all Loans that any auditor or government
examiner has criticized or classified, and the internal classification
of such Loans is at least as strict as the criticism or classification
thereof by an auditor or government examiner.
(b) Target and Target Bank have timely filed all reports,
registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since
January 1, 1990 with (i) the Federal Reserve Board, (ii) the FDIC,
(iii) the OTS, (iv) any state regulatory authority (each a "State
Regulator") and (v) any self-regulatory organization ("SRO")
(collectively "Regulatory Agencies"), and all other material reports
and statements required to be filed by them since January 1, 1989,
including, without limitation, any report or statement required to be
filed pursuant to the laws, rules or regulations of the United States,
any state, the Federal Reserve Board, the FDIC, the OTS, any State
Regulator or any SRO, and have paid all fees and assessments due and
payable in connection therewith. Except for normal examinations
conducted by a Regulatory Agency in the regular course of the business
of Target and its Subsidiaries, and except as otherwise disclosed in
Section 3.5(b) of the Target Disclosure Schedule, no Regulatory Agency
has initiated any proceeding or, to the best knowledge of Target,
investigation into the business or operations of Target or any of its
Subsidiaries since January 1, 1989. Except as otherwise disclosed in
Section 3.5(b) of the Target Disclosure Schedule, there is no material
unresolved violation, criticism, or exception by any Regulatory Agency
with respect to any report or statement relating to any examinations
of Target or any of its Subsidiaries.
3.6 Financial Statements. Target has previously delivered
to Parent copies of (a) the consolidated balance sheets of Target and
its Subsidiaries as of December 31, for the fiscal years ended
December 31, 1992 and 1993, and the related consolidated statements of
income, changes in stockholders' equity and cash flows for each of the
fiscal years in the three year period ended December 31, 1993, as
reported in Target's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993 filed with the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), accompanied by
the audit reports of Deloitte & Touche or Coopers & Lybrand,
independent public accountants with respect to Target, and (b) the
unaudited consolidated balance sheets of Target and its Subsidiaries
as of March 31, 1993 and March 31, 1994 and the related unaudited
consolidated statements of income, cash flows and changes in
stockholders' equity for the three month periods then ended as
reported in Target's Quarterly Report on Form 10-Q for the period
ended March 31, 1994 filed with the SEC under the Exchange Act. The
March 31, 1994 consolidated balance sheet of Target (including the
related notes, where applicable) fairly presents the consolidated
financial position of Target and its Subsidiaries as of the date
thereof, and the other financial statements referred to in this
Section 3.6 (including the related notes, where applicable) fairly
present, and the financial statements referred to in Section 6.8
hereof will fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and consolidated
financial position of Target and its Subsidiaries for the respective
fiscal periods or as of the respective dates therein set forth; each
of such statements (including the related notes, where applicable)
comply, and the financial statements referred to in Section 6.8 hereof
will comply, in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC
with respect thereto and each of such statements (including the
related notes, where applicable) has been, and the financial
statements referred to in Section 6.8 hereof will be, prepared in
accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except in the case
of unaudited statements, as permitted by Form 10-Q. The books and
records of Target and Target Bank have been, and are being, maintained
in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements and reflect only actual
transactions.
3.7 Broker's Fees. Neither Target nor any Target
Subsidiary nor any of their respective officers or directors has
employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of
the transactions contemplated by this Agreement, except that Target
has engaged, and will pay a fee or commission to, Lehman Brothers Inc.
("Lehman Brothers") in accordance with the terms of a letter agreement
between Lehman Brothers and Target, a true, complete and correct copy
of which has been previously delivered by Target to Parent.
3.8 Absence of Certain Changes or Events. (a) Except as
may be set forth in Section 3.8(a) of the Target Disclosure Schedule
or as disclosed in Target's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994, true, complete and correct copies of
which have previously been delivered to Parent, since December 31,
1993, (i) neither Target nor any of its Subsidiaries has incurred any
material liability, except in the ordinary course of its business
consistent with prudent banking practices, and (ii) no events have
occurred which have had, individually or in the aggregate, a Material
Adverse Effect on Target.
(b) Except as set forth in Section 3.8(b) of the Target
Disclosure Schedule or as disclosed in Target's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994, since December 31,
1993, Target and its Subsidiaries have carried on their respective
businesses in the ordinary and usual course consistent with prudent
banking practices.
(c) Except as set forth in Section 3.8(c) of the Target
Disclosure Schedule, since December 31, 1993, neither Target nor any
of its Subsidiaries has (i) except for normal increases in the
ordinary course of business consistent with past practice or except as
required by applicable law, increased the wages, salaries,
compensation, pension, or other fringe benefits or perquisites payable
to any executive officer, employee, or director from the amount
thereof in effect as of December 31, 1993, granted any severance or
termination pay, entered into any contract to make or grant any
severance or termination pay, or paid any bonus other than year-end
bonuses for fiscal 1993 and 1994 as listed in Section 3.8 of the
Target Disclosure Schedule or (ii) suffered any strike, work stoppage,
slow-down, or other labor disturbance.
3.9 Legal Proceedings. (a) Except as set forth in
Section 3.9(a) of the Target Disclosure Schedule, neither Target nor
any of its Subsidiaries is a party to any, and there are no pending
or, to the best of Target's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Target
or any of its Subsidiaries as to which there is a reasonable
probability of an adverse determination and (i) which, if adversely
determined, would, individually or in the aggregate, have a Material
Adverse Effect on Target or the Surviving Corporation or (ii)
challenging the validity or propriety of the transactions contemplated
by this Agreement.
(b) Except as otherwise disclosed in Section 3.9(b) of the
Target Disclosure Schedule, there is no injunction, order, judgment,
decree, or regulatory restriction imposed upon Target, any of its
Subsidiaries or the assets of Target or any of its Subsidiaries which
has had, or might reasonably be expected to have, a Material Adverse
Effect on Target or the Surviving Corporation.
(c) Section 3.9(c) of the Target Disclosure Schedule sets
forth all pending litigation involving any claim against the Target
Bank or any of its Subsidiaries, whether directly or by counterclaim,
involving a "lender liability" cause of action.
3.10 Taxes and Tax Returns. (a) Except as may be
reflected in Section 3.10 of the Target Disclosure Schedule or, in the
aggregate, otherwise would not have a Material Adverse Effect on
Target, Parent or the Surviving Corporation, each of Target and its
Subsidiaries has duly filed all Federal, state, and to the best of its
knowledge, county, local and foreign Tax returns (including, without
limitation, information returns and returns of estimated tax) required
to be filed by it on or prior to the date hereof (all such returns
being accurate and complete) and has duly paid or made adequate
provision for the payment of all Taxes (as defined below) that have
been incurred by it or are due or claimed to be due from it by
Federal, state, county, local or foreign taxing authorities on or
prior to the date of this Agreement (including, without limitation, if
and to the extent applicable, those due in respect of its properties,
income, business, capital stock, deposits, franchises, licenses, sales
and payrolls) other than Taxes that are being contested in good faith
(and which are set forth in Section 3.10 of the Target Disclosure
Schedule). The income tax returns of Target and its Subsidiaries have
been examined by the Internal Revenue Service (the "IRS") for all
years through and including 1979, and the deficiencies (if any)
asserted as a result of such examination either, in the aggregate,
were not material, or have been satisfied. Except as may be reflected
in Section 3.10 of the Target Disclosure Schedule there are no
material disputes pending, or claims asserted for, Taxes or
assessments upon Target or any of its Subsidiaries, nor does Target or
any of its Subsidiaries have outstanding any currently effective
waivers extending the statutory period of limitation applicable to any
Federal, state, county, local or foreign income tax return for any
period. In addition, (i) proper and accurate amounts have been
withheld by Target and its Subsidiaries from their employees,
customers, depositors, shareholders and others from whom they are
required to withhold Tax in compliance with all applicable Federal,
state, county, local and foreign laws, except where the failures to do
so would not, in the aggregate, have a Material Adverse Effect on
Target, Parent or the Surviving Corporation and (ii) there are no Tax
liens upon any property or assets of the Target or its Subsidiaries
except liens for current Taxes not yet due. Except as, in the
aggregate, would not have a Material Adverse Effect on Target, Parent
or the Surviving Corporation, or as disclosed in Section 3.10 of the
Target Disclosure Schedule, to the best of its knowledge, (i) no
property of Target or any of its Subsidiaries is property that Target
or any of its Subsidiaries is or will be required to treat as being
owned by another person pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954, as amended (as in
effect prior to its amendment by the Tax Reform Act of 1986) or is
"tax-exempt use property" within the meaning of Section 168(h) of the
Code; (ii) neither Target nor any of its Subsidiaries has been
required to include in income any adjustment pursuant to Section 481
of the Code by reason a voluntary change in accounting method
initiated by Target or any of its Subsidiaries, and the Internal
Revenue Service has not initiated or proposed any such adjustment or
change in accounting method; and (iii) neither Target nor any of its
Subsidiaries has entered into a transaction which is being accounted
for as an installment obligation under Section 453 of the Code.
(b) As used in this Agreement, the term "Tax" or "Taxes"
means all Federal, state, county, local, and foreign income, excise,
gross receipts, ad valorem, profits, gains, transfer gains, property,
sales, transfer, use, payroll, employment, severance, withholding,
backup withholding, intangibles, franchise, and other taxes,
governmental charges, levies or like assessments together with all
penalties and additions to Tax and interest thereon.
(c) Target Bank, at the close of its most recent taxable
year, qualified, and on the Closing Date will qualify either as a
"domestic building and loan association" within the meaning of
Section 7701(a)(19) of the Code or as a "mutual savings bank" within
the meaning of Section 591(b) of the Code that meets the requirements
of Section 7701(a)(19)(C) of the Code.
3.11 Employees. (a) The Target Reports (as defined in
Section 3.12 hereof) accurately describe all bonus, deferred
compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted
stock and stock option plans, all employment or severance contracts,
other material employee benefit plans and any applicable "change of
control" or similar provisions in any plan, contract or arrangement
which cover employees or former employees of Target or its
Subsidiaries (collectively, the "Compensation and Benefit Plans")
required to be described in such Target Reports. The Compensation and
Benefit Plans and all other benefit plans, contracts or arrangements
covering directors, employees or former employees of Target or its
Subsidiaries (the "Employees"), including, but not limited to,
"employee benefit plans" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
are listed in Section 3.11 of the Target Disclosure Schedule. True
and complete copies of all Compensation and Benefit Plans and such
other benefit plans, contracts or arrangements, including, but not
limited to, any trust instruments and/or insurance contracts, if any,
forming a part of any such plans and agreements, and all amendments
thereto, including but not limited to (i) the actuarial report for
such plan (if applicable) for each of the last two years, and (ii) the
most recent determination letter from the IRS (if applicable) for such
plan, have heretofore been delivered to Parent.
(b) All employee benefit plans, other than "multiemployer
plans" within the meaning of Sections 3(37) or 4001(a)(3) of ERISA,
covering Employees (the "Plans"), to the extent subject to ERISA, are
in substantial compliance with ERISA. Each Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA
("Pension Plan") and which is intended to be qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
has received a favorable determination letter from the IRS, and Target
is not aware of any circumstances likely to result in revocation of
any such favorable determination letter. The 1985 Target Employee
Stock Ownership Plan satisfies the requirements for an employee stock
ownership plan under Section 4975(e)(7) of the Code. There is no
material pending or threatened litigation relating to the Plans.
Neither Target nor any of its Subsidiaries has engaged in a
transaction with respect to any Plan that, assuming the taxable period
of such transaction expired as of the date hereof, could subject
Target or any of its Subsidiaries to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA in an
amount which would be material.
(c) No liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by Target or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the single-
employer plan of any entity which is considered one employer with
Target or any of its Subsidiaries under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). Target and its
Subsidiaries have not incurred and do not expect to incur any
withdrawal liability with respect to a multiemployer plan under
Subtitle E of Title IV of ERISA (regardless of whether based on
contributions of an ERISA Affiliate). No notice of a "reportable
event", within the meaning of Section 4043 of ERISA for which the 30-
day reporting requirement has not been waived, has been required to be
filed for any Pension Plan or by any ERISA Affiliate within the 12-
month period ending on the date hereof.
(d) All contributions required to be made under the terms
of any Plan have been timely made. Neither any Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412
of the Code or Section 302 of ERISA. Neither Target nor its
Subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
(e) Under each Pension Plan which is a single-employer
plan, as of the last day of the most recent plan year ended prior to
the date hereof, the actuarially determined present value of all
"benefit liabilities", within the meaning of Section 4001(a)(16) of
ERISA (as determined on the basis of the actuarial assumptions
contained in the Plan's most recent actuarial valuation), did not
exceed the then current value of the assets of such Plan, and there
has been no material change in the financial condition of such Plan
since the last day of the most recent Plan Year. The withdrawal
liability of Target and its Subsidiaries under each Benefit Plan which
is a multiemployer plan to which Target, its Subsidiaries or an ERISA
Affiliate has contributed during the preceding 12 months, determined
as if a "complete withdrawal", within the meaning of Section 4203 of
ERISA, had occurred as of the date hereof, does not exceed $100,000.
(f) Neither Target nor its Subsidiaries has any
obligations for retiree health and life benefits under any Plan,
except as set forth in Section 3.11 of the Target Disclosure Schedule.
Except as set forth in Section 3.11 of the Target Disclosure
Schedule, there are no restrictions on the rights of Target or its
Subsidiaries to amend or terminate any such Plan without incurring any
liability thereunder.
(g) Target and its Subsidiaries have no material unfunded
liabilities with respect to any Pension Plan which covers foreign
Employees.
(h) Neither Target nor any of its Subsidiaries is a party
to, or is bound by, any collective bargaining agreement, contract, or
other agreement or understanding with a labor union or labor
organization, nor is Target or any of its Subsidiaries the subject of
any material proceeding asserting that Target or any such Subsidiary
has committed an unfair labor practice or seeking to compel Target or
such Subsidiary to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike involving Target or
any of its Subsidiaries pending or, to the best of Target's knowledge,
threatened, nor is Target aware of any activity involving its or any
of its Subsidiaries' employees seeking to certify a collective
bargaining unit or engaging in any other organizational activity.
3.12 SEC Reports. Target has made or will make available
to Parent an accurate and complete copy of each (a) registration
statement, prospectus, report, schedule, proxy statement, information
statement or other stockholder communication used, circulated or filed
after January 1, 1990 by Target, and no such registration statement,
prospectus, report, schedule, proxy statement, information statement
or communication, each in the form (including exhibits and amendments
thereto) filed with the SEC (or if not so filed, in the form first
used or circulated) (collectively, the "Target Reports"), contained,
as of its date, any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in
which they were made, not misleading. Target has timely filed, and
will timely file, all Target Reports and other documents required to
be filed by it under the Securities Act of 1933, as amended (the
"Securities Act") and the Exchange Act, and, as of their respective
dates, all Target Reports complied in all material respects with the
published rules and regulations of the SEC with respect thereto.
3.13 Target Information The information relating to or
provided by Target and its Subsidiaries to be contained or
incorporated by reference in the Proxy Statement and the registration
statement on Form S-4 (the "S-4") in which the Proxy Statement will be
included as a prospectus, or in any other document filed with any
other regulatory agency in connection herewith, will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading. The Proxy
Statement (except for such portions thereof that relate only to Parent
or any of its Subsidiaries) will comply in all material respects with
the provisions of the Exchange Act and the rules and regulations
thereunder.
3.14 Compliance with Applicable Law. Except as disclosed
in Section 3.14 of the Target Disclosure Schedule, Target and each of
its Subsidiaries hold, and have at all times held, all material
licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses under and pursuant to
all, and have complied with and are not in default in any respect
under any, applicable laws, statutes, orders, rules, regulations,
policies and/or guidelines of any Governmental Entity relating to
Target or any of its Subsidiaries, except where the failure to hold
such license, franchise, permit or authorization or such noncompliance
or default would not, individually or in the aggregate, have a
Material Adverse Effect on Target or the Surviving Corporation, and
neither Target nor any of its Subsidiaries knows of, or has received
notice of, any violations of any of the above.
3.15 Certain Contracts. (a) Except as set forth in
Section 3.15(a) of the Target Disclosure Schedule, neither Target nor
any of its Subsidiaries is a party to or bound by any contract,
arrangement, commitment or understanding (whether written or oral)
(i) with respect to the employment of any directors, officers,
employees or consultants, (ii) which, upon the consummation of the
transactions contemplated by this Agreement will (either alone or upon
the occurrence of any additional acts or events) result in any payment
(whether of severance pay or otherwise) becoming due from Parent,
Target, Target Bank, the Surviving Corporation or any of their
respective Subsidiaries to any officer or employee thereof,
(iii) which is a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in the
Target Reports filed with the SEC during 1994, (iv) which is a
consulting agreement (including data processing, software programming
and licensing contracts) not terminable on 60 days or less notice
involving the payment of more than $100,000 per annum, in the case of
any such agreement with an individual, or $500,000 per annum, in the
case of any other such agreement, (v) which materially restricts the
conduct of any line of business by Target or Target Bank, or
(vi) (including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan) any of the benefits of
which will be increased, or the vesting of the benefits of which will
be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of
which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Target has previously delivered to
Parent true and correct copies of all employment, consulting and
deferred compensation agreements which are in writing and to which
Target or any of its Subsidiaries is a party. Each contract,
arrangement, commitment or understanding of the type described in this
Section 3.15(a), whether or not set forth in Section 3.15(a) of the
Target Disclosure Schedule, is referred to herein as a "Target
Contract," and neither Target nor any of its Subsidiaries knows of, or
has received notice of, any material violation of the above.
(b) Except as set forth in Section 3.15(b) of the Target
Disclosure Schedule, (i) each Target Contract is valid and binding and
in full force and effect, (ii) Target and each of its Subsidiaries has
in all material respects performed all obligations required to be
performed by it to date under each Target Contract, except where such
noncompliance, individually or in the aggregate, would not have a
Material Adverse Effect on Target, and (iii) no event or condition
exists which constitutes or, after notice or lapse of time or both,
would constitute, a material default on the part of Target or any of
its Subsidiaries under any such Target Contract, except where such
default, individually or in the aggregate, would not have a Material
Adverse Effect on Target.
3.16 Agreements with Regulatory Agencies. Except as
disclosed in the Target Reports or as set forth in Section 3.16 of the
Target Disclosure Schedule, neither Target nor any of its Subsidiaries
is subject to any cease-and-desist or other order issued by, or is a
party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted
any board resolutions at the request of (each, whether or not set
forth on Section 3.16 of the Target Disclosure Schedule, a "Regulatory
Agreement"), any Regulatory Agency or other Governmental Entity that
restricts the conduct of its business or that in any manner relates to
its capital adequacy, its credit policies, its management or its
business, nor has Target or any of its Subsidiaries been advised by
any regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
3.17 Investment Securities. Section 3.17 of the Target
Disclosure Schedule sets forth the book and market value as of
March 31, 1994 of the investment securities, mortgage backed
securities and securities held for sale of Target and its
Subsidiaries. Section 3.17 of the Target Disclosure Schedule sets
forth an investment securities report which includes security
descriptions, CUSIP numbers, pool face values, book values, coupon
rates, market values, book yields and weighted average coupon, in each
case as of March 31, 1994.
3.18 Intellectual Property. Except where there would be
no Material Adverse Effect on Target, Target and each of its
Subsidiaries owns or possesses valid and binding licenses and other
rights to use without payment all material patents, copyrights, trade
secrets, trade names, servicemarks and trademarks used in its
businesses and neither Target nor any of its Subsidiaries has received
any notice of conflict with respect thereto that asserts the right of
others. Target and each of its Subsidiaries have in all material
respects performed all the obligations required to be performed by
them and are not in default in any material respect under any
contract, agreement, arrangement or commitment relating to any of the
foregoing, except where such nonperformance or default would not,
individually or in the aggregate, have a Material Adverse Effect on
Target.
3.19 Undisclosed Liabilities. Except (a) as set forth in
Section 3.19 of the Target Disclosure Schedule, (b) for those
liabilities that are fully reflected or reserved against on the
consolidated balance sheet of Target included in its Form 10-Q for the
period ended March 31, 1994 and (c) for liabilities incurred in the
ordinary course of business consistent with past practice since
March 31, 1994, neither Target nor any of its Subsidiaries has
incurred any liability of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether due or to become due)
that, either alone or when combined with all similar liabilities, is,
or could reasonably be expected to have, a Material Adverse Effect on
Target or the Surviving Corporation.
3.20 Takeover Restrictions. (a) The Board of Directors
of Target has approved the transactions contemplated by this Agreement
such that the supermajority vote provisions of Section 203 of the DGCL
and Section 8 of Target's Certificate of Incorporation will not apply
to this Agreement or any of the transactions contemplated hereby.
(b) No "business combination", "moratorium", "control
share", or other federal or state antitakeover statute or regulation
(collectively, "Antitakeover Provisions") other than HOLA or the
Federal Deposit Insurance Act (i) prohibits or restricts Target's
ability to perform its obligations under this Agreement, or its
ability to consummate the transactions contemplated hereby, (ii) would
have the effect of invalidating or voiding this Agreement, or any
provision hereof, (iii) would subject Parent or Merger Sub to any
material impediment or condition in connection with the exercise of
any of its rights under this Agreement, or (iv) would provide any
rights to, or permit the exercise of rights by, Target's stockholders.
3.21 Administration of Fiduciary Accounts. Each of Target
and Target Bank has properly administered in all material respects all
accounts for which it acts as a fiduciary, including but not limited
to accounts for which it serves as a trustee, agent, custodian,
personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents and applicable
state and federal law and regulation and common law. Neither Target
nor Target Bank nor any of their respective directors, officers or
employees has committed any breach of trust with respect to any such
fiduciary account which has had or could reasonably be expected to
have a Material Adverse Effect on Target, and the accountings for each
such fiduciary account are true and correct in all material respects
and accurately reflect the assets of such fiduciary account.
3.22 Environmental Matters. Except as set forth in
Section 3.22 of the Target Disclosure Schedule, to the knowledge of
Target:
(a) Each of Target, its Subsidiaries, the Participation
Facilities and the Loan/Fiduciary Properties (each as hereinafter
defined) are, and have been, in compliance with all applicable laws,
rules, regulations, standards and requirements of all federal, state,
local and foreign laws and regulations relating to pollution or
protection of human health or the environment (including without
limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of Hazardous Material or petroleum or
petroleum products, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Material or petroleum or petroleum products),
except for violations which, either individually or in the aggregate,
have not had and cannot reasonably be expected to have a Material
Adverse Effect on Target;
(b) There is no suit, claim, action, proceeding,
investigation or notice pending or threatened (or past or present
actions, activities, circumstances, conditions, events or incidents
that could form the basis of any such suit, claim, action, proceeding,
investigation or notice), before any Governmental Entity or other
forum in which Target, any of its Subsidiaries, any Participation
Facility or any Loan/Fiduciary Property (or person or entity whose
liability for any such suit, claim, action, proceeding, investigation
or notice Target, any of its Subsidiaries, Participation Facility or
Loan/Fiduciary Property has or may have retained or assumed either
contractually or by operation of law), has been or, with respect to
threatened suits, claims, actions, proceedings, investigations or
notices may be, named as a defendant (x) for alleged noncompliance
(including by any predecessor), with any environmental law, rule or
regulation or (y) relating to the release or threatened release into
the environment of any Hazardous Material (as hereinafter defined) or
petroleum or petroleum products whether or not occurring at or on a
site owned, leased or operated by Target or any of its Subsidiaries,
any Participation Facility or any Loan/Fiduciary Property, except
where such noncompliance or release has not had, and cannot be
reasonably expected to have, either individually or in the aggregate,
a Material Adverse Effect on Target;
(c) During the period of (x) Target's or any of its
Subsidiaries' ownership or operation of any of their respective
current properties, (y) Target's or any of its Subsidiaries'
participation in the management of any Participation Facility, or (z)
Target's or any of its Subsidiaries' holding of a security or other
interest in a Loan/Fiduciary Property, there has been no release of
Hazardous Material or petroleum or petroleum products in, on, under or
affecting any such property, except where such release or threatened
release has not had and cannot reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on Target.
Prior to the period of (x) Target's or any of its Subsidiaries'
ownership or operation of any of their respective current properties,
(y) Target's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) Target's or any of
its Subsidiaries' holding of a security or other interest in a
Loan/Fiduciary Property, there was no release or threatened release of
Hazardous Material or petroleum or petroleum products in, on, under or
affecting any such property, Participation Facility or Loan/Fiduciary
Property, except where such release has not had and cannot be
reasonably expected to have, either individually or in the aggregate,
a Material Adverse Effect on Target; and
(d) The following definitions apply for purposes of this
Section 3.22: (x) "Loan/Fiduciary Property" means any property owned
or controlled by Target or any Target Subsidiary or in which Target or
any of its Subsidiaries holds a security or other interest, and, where
required by the context, said term means the owner or operator of such
property; (y) "Participation Facility" means any facility in which
Target or any of its Subsidiaries participates in the management and,
where required by the context, said term means the owner or operator
of such property; and (z) "Hazardous Material" means any pollutant,
contaminant, waste or hazardous or toxic substance.
3.23 Derivative Transactions. Section 3.23 of the Target
Disclosure Schedule sets forth the market value, as of May 31, 1994,
of all holdings by Target or any of its Subsidiaries of positions in
forwards, futures, options on futures, swaps and any other instrument
within the scope of Target's Board-approved investment policy
("Derivative Instruments"). Except as set forth in Section 3.23 of
the Target Disclosure Schedule, since December 31, 1993 neither Target
nor any of its Subsidiaries has engaged in any transactions in or
involving Derivative Instruments except as agent on the order and for
the account of others. None of the counterparties to any contract or
agreement with respect to any such instrument is in default with
respect to such contract or agreement and no such contract or
agreement, were it to be a Loan held by Target or any of its
Subsidiaries, would be classified as "Other Loans Especially
Mentioned," "Special Mention," "Substandard," "Doubtful," "Loss,"
"Classified," "Criticized," "Credit Risk Assets," "Concerned Loans" or
words of similar import. The financial position of Target and its
Subsidiaries on a consolidated basis under or with respect to each
such instrument has been reflected in the books and records of Target
and such Subsidiaries in accordance with GAAP consistently applied,
and no open exposure of Target or any of its Subsidiaries with respect
to any such instrument (or with respect to multiple instruments with
respect to any single counterparty) exceeds $500,000.
3.24 Accuracy of Information. The statements contained in
this Agreement, the Target Disclosure Schedules or in any other
written document delivered by or on behalf of Seller pursuant to the
terms of this Agreement are true and correct, and such statements and
documents do not omit any fact necessary to make the statements
contained therein not misleading.
3.25 Opinion. Target has received an opinion, dated the
date of this Agreement, from Lehman Brothers to the effect that,
subject to the terms, conditions and qualifications set forth therein,
as of the date thereof the consideration to be received by the
stockholders of Target pursuant to the Merger is fair to such
stockholders from a financial point of view.
3.26 Assistance Agreements. Except as set forth in
Section 3.26 of the Target Disclosure Schedule, neither Target nor any
of its Subsidiaries is a party to any agreement or arrangement entered
into in connection with the consummation of a federally or state
assisted acquisition of a depository institution pursuant to which
Target or any of its Subsidiaries is entitled to receive financial
assistance or indemnification from any governmental agency.
3.27 DEPCO Directors. On the date hereof, (i) the Rhode
Island Depositors Economic Protection Corporation ("DEPCO") or any
"Nominee" as defined in the Stock and Warrant Purchase Agreement dated
as of April 21, 1992, by and between DEPCO and Target (the "DEPCO
Agreement") (A) owns all of the issued and outstanding shares of
Target's Series B Preferred Stock and (B) has the right to elect and
has elected at least one current member of Target's Board of Directors
and (ii) on the date hereof, and at all times through and including
the Effective Date, the Directors elected by DEPCO or any "Nominee" as
defined in the DEPCO Agreement pursuant to the terms of the Target
Series B Preferred Stock shall represent less than 20% of the members
of Target's Board of Directors.
3.28 Qualified Thrift Lender. Target Bank is a "qualified
thrift lender" within the meaning set forth in Section 10(m) of HOLA.
3.29 Knowledge as to Conditions. Target knows of no
reason why the Requisite Regulatory Approvals (as defined below)
should not be obtained.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent hereby represents and warrants to Target as follows:
4.1 Corporate Organization. (a) Parent is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware. Parent has the corporate power and
authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing
or qualification necessary, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect on Parent.
Parent is duly registered as a bank holding company under the BHC Act.
The Certificate of Incorporation and By-laws of Parent, copies of
which have previously been made available to Target, are true,
complete and correct copies of such documents as in effect as of the
date of this Agreement.
(b) Merger Sub is or will be a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(c) Each Significant Subsidiary of Parent is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Significant Subsidiary of
Parent has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it
or the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would not have a
Material Adverse Effect on Parent.
4.2 Capitalization. (a) The authorized capital stock of
Parent consists of 150,000,000 shares of Parent Common Stock and
10,000,000 shares of preferred stock, without par value ("Parent
Preferred Stock"). At the close of business on March 31, 1994 there
were 95,927,307 shares of Parent Common Stock, 700,000 shares of
Parent Preferred Stock (of stated value of $50.00 per share), and
5,750,000 shares of Parent Depositary Shares (each representing a one-
tenth interest in a share of 9.30% cumulative preferred stock ($250
stated value)) issued and outstanding, and 543 shares of Parent Common
Stock held in Parent's treasury. On March 31, 1994, no shares of
Parent Common Stock or Parent Preferred Stock were reserved for
issuance, except that 13,052,807 shares of Parent Common Stock were
reserved for issuance pursuant to Parent's dividend reinvestment and
stock purchase plans, 6,115,251 shares of Parent Common Stock were
reserved for issuance upon the exercise of stock options pursuant to
the Parent Stock Option and Restricted Stock Award Plan and the Parent
1989 Nonemployee Directors' Restricted Stock Plan (collectively, the
"Parent Stock Plans"), 9,357,452 shares of Parent Common Stock were
reserved for issuance upon consummation of the merger of New Dartmouth
Bank ("New Dartmouth") with a Subsidiary of Parent, pursuant to the
Agreement and Plan of Merger, dated as of March 23, 1993, as amended,
between Parent and New Dartmouth, 8,453,445 shares of Parent Common
Stock were reserved for issuance upon consummation of the merger of
Peoples Bancorp of Worcester, Inc. ("Peoples") with a Subsidiary of
Parent, pursuant to the Agreement and Plan of Merger dated as of
August 26, 1993, as amended, between Parent and Peoples, 7,627,301
shares of Parent Common Stock were reserved for issuance upon
consummation of the merger of Gateway Financial Corporation
("Gateway") with a Subsidiary of Parent, pursuant to the Agreement and
Plan of Merger between Parent, Shawmut Service Corporation and Gateway
dated as of November 5, 1993, and 1,500,000 shares of Parent Series A
Junior Participating Preferred Stock were reserved for issuance upon
exercise of the rights (the "Parent Rights") distributed to holders of
Parent Common Stock pursuant to the Shareholder Rights Agreement,
dated as of February 28, 1989, between Parent and Manufacturers
Hanover Trust Company, as Rights Agent (the "Parent Shareholder Rights
Agreement"). In addition, Parent has issued and outstanding 1,329,115
warrants to purchase Parent Common Stock. All of the issued and
outstanding shares of Parent Common Stock and Parent Preferred Stock
have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of this
Agreement, except as referred to above or reflected in Section 4.2(a)
of the Disclosure Schedule which is being delivered by Parent to
Target herewith (the "Parent Disclosure Schedule") and except for the
Parent Shareholder Rights Agreement, Parent does not have and is not
bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of Parent Common Stock or Parent Preferred
Stock or any other equity securities of Parent or any securities
representing the right to purchase or otherwise receive any shares of
Parent Common Stock or Parent Preferred Stock. The shares of Parent
Common Stock to be issued pursuant to the Merger will be duly
authorized and validly issued and, at the Effective Time, all such
shares will be fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof.
(b) Section 4.2(b) of the Parent Disclosure Schedule sets
forth a true and correct list of all of the Parent Subsidiaries as of
the date of this Agreement. Except as set forth in Section 4.2(b) of
the Parent Disclosure Schedule, Parent owns, directly or indirectly,
all of the issued and outstanding shares of capital stock of each of
the Parent Subsidiaries, free and clear of all liens, charges,
encumbrances and security interests whatsoever, and all of such shares
are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. No Parent Subsidiary
has or is bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character with any party that
is not a direct or indirect Subsidiary of Parent calling for the
purchase or issuance of any shares of capital stock or any other
equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or
any other equity security of such Subsidiary.
4.3 Authority; No Violation. (a) Parent has full
corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved
by the Board of Directors of Parent, and no other corporate
proceedings on the part of Parent are necessary to consummate the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Parent and constitutes a valid and
binding obligation of Parent.
(b) Except as set forth in Section 4.3(b) of the Parent
Disclosure Schedule, neither the execution and delivery of this
Agreement by Parent, nor the consummation by Parent or Merger Sub, as
the case may be, of the transactions contemplated hereby or thereby,
nor compliance by Parent or Merger Sub with any of the terms or
provisions hereof or thereof, will (i) violate any provision of the
Certificate of Incorporation or By-Laws of Parent or the Certificate
of Incorporation or By-Laws of Merger Sub, as the case may be, or
(ii) assuming that the consents and approvals referred to in
Section 4.4 are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Parent or any of its Significant Subsidiaries
or any of their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under,
or result in the termination of or a right of termination or
cancellation under, accelerate the performance required by, or result
in the creation of any lien, pledge, security interest, charge or
other encumbrance upon any of the respective properties or assets of
Parent or any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which
Parent or any of its Subsidiaries is a party, or by which they or any
of their respective properties or assets may be bound or affected,
except (in the case of clause (y) above) for such violations,
conflicts, breaches or defaults which either individually or in the
aggregate will not have a Material Adverse Effect on Parent.
4.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Federal Reserve
Board under the BHC Act and approval of such applications and notices,
(ii) the filing of applications with the OTS under HOLA and approval
of such applications, (iii) the State Approvals, (iv) the filing with
the SEC of the S-4, (v) the approval of this Agreement by Parent as
the sole stockholder of Merger Sub, (vi) the filing of the Certificate
of Merger with the Secretary pursuant to the DGCL, (vii) such filings
and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Parent Common Stock pursuant to this
Agreement, and (viii) such filings, authorizations or approvals as may
be set forth in Section 4.4 of the Parent Disclosure Schedule, no
consents or approvals of or filings or registrations with any
Governmental Entity or with any third party are necessary in
connection with (1) the execution and delivery by Parent of this
Agreement and (2) the consummation by Parent and Merger Sub of the
Merger and the other transactions contemplated hereby. The
affirmative vote of the holders of the outstanding shares of Parent
Common Stock is not required to approve this Agreement or the
transactions contemplated hereby.
4.5 Financial Statements. Parent has previously delivered
to Target copies of (a) the consolidated balance sheets of Parent and
its Subsidiaries as of December 31 for the fiscal years 1992 and 1993
and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the fiscal years 1991 through
1993, inclusive, as reported in Parent's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 filed with the SEC under
the Exchange Act, in each case accompanied by the audit report of
Price Waterhouse, independent public accountants with respect to
Parent, and (b) the unaudited consolidated balance sheet of Parent and
its Subsidiaries as of March 31, 1994 and March 31, 1993 and the
related unaudited consolidated statements of income, changes in
shareholders' equity and cash flows for the three month periods then
ended as reported in Parent's Quarterly Report on Form 10-Q for the
period ended March 31, 1994 filed with the SEC under the Exchange Act.
The December 31, 1993 consolidated balance sheet of Parent (including
the related notes, where applicable) fairly presents the consolidated
financial position of Parent and its Subsidiaries as of the date
thereof, and the other financial statements referred to in this
Section 4.5 (including the related notes, where applicable) fairly
present and the financial statements referred to in Section 6.8 hereof
will fairly present (subject, in the case of the unaudited statements,
to recurring audit adjustments normal in nature and amount), the
results of the consolidated operations and changes in shareholders'
equity and consolidated financial position of Parent and its
Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth; each of such statements (including the
related notes, where applicable) comply, and the financial statements
referred to in Section 6.8 hereof will comply, in all material
respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; and
each of such statements (including the related notes, where
applicable) has been, and the financial statements referred to in
Section 6.8 hereof will be, prepared in accordance with GAAP
consistently applied during the periods involved, except as indicated
in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of Parent and its
Significant Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable
legal and accounting requirements and reflect only actual
transactions.
4.6 Broker's Fees. Neither Parent, Merger Sub nor any
Parent Subsidiary, nor any of their respective officers or directors,
has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of
the transactions contemplated by this Agreement, except that Parent
has engaged, and will pay a financial advisory service fee to, Morgan
Stanley & Co. Incorporated.
4.7 Absence of Certain Changes or Events. Except as may
be set forth in Section 4.7 of the Parent Disclosure Schedule, or as
disclosed in Parent's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994 or in any Current Reports of Parent on Form 8-K
filed prior to the date of this Agreement, true, complete and correct
copies of which have previously been delivered to Target, since
December 31, 1993, no event has occurred which has had or is
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Parent.
4.8 Legal Proceedings. Except as set forth in Section 4.8
of the Parent Disclosure Schedule or in Parent's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994, neither Parent nor any
of its Subsidiaries is a party to any and there are no pending or, to
the best of Parent's knowledge, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or governmental or
regulatory investigations of any nature against Parent or any of its
Subsidiaries as to which there is a reasonable probability of an
adverse determination and (i) which, if adversely determined, would,
individually or in the aggregate, have a Material Adverse Effect on
Parent or (ii) challenging the validity or propriety of the
transactions contemplated by this Agreement. There is no injunction,
order, judgment, decree, or regulatory restriction imposed upon
Parent, any of its Subsidiaries or the assets of Parent or any of its
Subsidiaries which has had, or might reasonably be expected to have, a
Material Adverse Effect on Parent.
4.9 Compliance with Applicable Law. Parent and each of
its Subsidiaries hold, and have at all times held, all material
licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses under and pursuant to
all, and have complied with and are not in default in any respect
under any, applicable laws, statutes, orders, rules, regulations,
policies and/or guidelines of any Governmental Entity relating to
Parent or any of its Subsidiaries, except where the failure to hold
such license, franchise, permit or authorization or such non-
compliance or default would not, individually or in the aggregate,
have a Material Adverse Effect on Parent, and neither Parent nor any
of its Subsidiaries knows of, or has received notice of violation of,
any material violations of any of the above.
4.10 SEC Reports. Parent has made or will make available
to Target an accurate and complete copy of each (a) registration
statement, prospectus, report, schedule, proxy statement, information
statement or other stockholder communication used, circulated or filed
after January 1, 1990 by Parent, and no such registration statement,
prospectus, report, schedule, proxy statement, information statement
or other stockholder communication used, each in the form (including
exhibits and amendments thereto) filed with the SEC (or if not so
filed, in the form first used or circulated) (collectively, the
"Parent Reports"), contained, as of its date, any untrue statement of
a material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances in which they were made, not misleading.
Parent has timely filed, and will timely file, all Parent Reports and
other documents required to be filed by it under the Securities Act
and the Exchange Act, and, as of their respective dates, all Parent
Reports complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
4.11 Parent Information. The information relating to or
provided by Parent and its Subsidiaries to be contained or
incorporated by reference in the Proxy Statement and the S-4, or in
any other document filed with any other regulatory agency in
connection herewith, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein not misleading. The S-4 (except for such portions
thereof that relate only to Target or any of its Subsidiaries) will
comply in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder.
4.12 Accuracy of Information. The statements contained in
this Agreement, the Parent Disclosure Schedule or in any other written
document delivered by or on behalf of Parent pursuant to the terms of
this Agreement are true and correct in all material respects, and such
statements and documents do not omit any material fact necessary to
make the statements contained therein not misleading.
4.13 Undisclosed Liabilities. Except (a) as set forth in
Section 4.13 of the Parent Disclosure Schedule, (b) for those
liabilities that are fully reflected or reserved against on the
consolidated balance sheet of Parent included in its Form 10-Q for the
quarter ended March 31, 1994 and (c) for liabilities incurred in the
ordinary course of business consistent with past practice, since
December 31, 1993, neither Parent nor any of its Subsidiaries has
incurred any liability of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether due or to become due)
that, either alone or when combined with all similar liabilities, is,
or could reasonably be expected to have a Material Adverse Effect.
4.14 Knowledge as to Conditions. Parent knows of no
reason why the Requisite Regulatory Approvals should not be obtained.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of Target. During the period from the date
of this Agreement and continuing until the Effective Time, except as
expressly contemplated or permitted by this Agreement or with the
prior written consent of Parent, Target and its Subsidiaries shall
carry on their respective businesses in the ordinary course and
consistent with prudent banking practice. Target will, and will use
its best efforts to cause each of its Subsidiaries, to (x) preserve
intact its and their business organizations, (y) keep available to
itself and Parent the present services of its and their employees and
(z) preserve intact for itself and Parent the goodwill of its and
their customers and others with whom business relationships exist.
Without limiting the generality of the foregoing, and except as
consented to in writing by Parent, Target shall not, and shall not
permit any of its Subsidiaries to:
(a) solely in the case of Target, declare or pay any
dividends on, or make other distributions in respect of, any of its
capital stock except for regular dividends on Target Series B
Preferred Stock;
(b) (i) adjust, split, combine or reclassify any shares
of its capital stock or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock (other than payment of regular dividends
on Target Series B Preferred Stock) or grant any stock appreciation
rights except upon the exercise or fulfillment of rights or options
issued or existing pursuant to employee or director benefit plans,
programs or arrangements, all to the extent outstanding and in
existence on the date of this Agreement and listed in Section 3.11 of
the Target Disclosure Schedule, or (ii) repurchase, redeem or
otherwise acquire (except for the acquisition of Trust Account Shares
and DPC Shares, as such terms are defined in Section 1.4(b) hereof or
as required by the DEPCO Agreement) any shares of the capital stock of
Target or any Target Subsidiary, or any securities convertible into or
exercisable for any shares of the capital stock of Target or any
Target Subsidiary;
(c) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock (other
than payment of regular dividends on Target Series B Preferred Stock)
or any securities convertible into or exercisable for, or any rights,
warrants or options to acquire, any such shares, or enter into any
agreement with respect to any of the foregoing, other than the grant
of options required pursuant to the Subsequent Grant provision of the
Target 1993 Stock Option Plan For Three Year Term Outside Directors
(the "Subsequent Options") and the issuance of Target Common Stock
upon exercise of Subsequent Options, the issuance of Target Common
Stock upon exercise of Subsequent Options, the issuance of Target
Common Stock pursuant to stock options or similar rights to acquire
Target Common Stock granted pursuant to the Target Stock Option Plans
and outstanding prior to the date of this Agreement or pursuant to the
Target Warrants, in each case in accordance with their terms on the
date hereof;
(d) amend its Certificate of Incorporation, By-laws or
other similar governing documents;
(e) authorize or permit any of its officers, directors,
employees or agents directly or indirectly to solicit, initiate or
encourage any inquiries relating to, or other making of any proposal
which constitutes, a "takeover proposal" (as defined below), or,
except to the extent legally required for the discharge of the
fiduciary duties of the Board of Directors of Target as advised in
writing by such Board's outside counsel, recommend or endorse any
takeover proposal, or participate in any discussions or negotiations,
or provide third parties with any nonpublic information, relating to
any such inquiry or proposal or otherwise facilitate any effort or
attempt to make or implement a takeover proposal; provided, however,
that Target may communicate information about any such takeover
proposal to its stockholders if, in the judgment of Target's Board of
Directors with the written advice of such Board's outside counsel,
such communication is required under applicable law. Target will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations previously conducted with any parties
other than Parent with respect to any of the foregoing and shall
demand the return of any confidential information provided to any
other person and will enforce its rights, under any confidentiality
agreement, to the return of any confidential information in the event
any such other person does not return such information. Target will
take all actions necessary or advisable to inform the appropriate
individuals or entities referred to in the first sentence of this
Section 5.1(e) of the obligations undertaken in this Section 5.1(e).
Target will notify Parent immediately if any such inquiries or
takeover proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to be
initiated or continued with, Target, and Target will promptly inform
Parent in writing of all of the relevant details with respect to the
foregoing. As used in this Agreement, "takeover proposal" shall mean
any tender or exchange offer, proposal for a merger, consolidation or
other business combination involving Target or any Subsidiary of
Target or any proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets or deposits
of, Target or any Subsidiary of Target other than the transactions
contemplated or permitted by this Agreement;
(f) except as set forth in Section 5.1 of the Target
Disclosure Schedule, make any capital expenditures other than in the
ordinary course of business, as necessary to maintain existing assets
in good repair or capital expenditures contemplated by the Target
Business Plan dated as of April 15, 1994 previously furnished to
Parent (the "Business Plan");
(g) enter into any new, or materially alter or expand any
present line of business other than new lines of businesses, or
material alterations or expansions of present lines of business
contemplated by the Business Plan;
(h) acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other
business organization or division thereof or (other than in the
ordinary course of business) otherwise acquire any assets, other than
in connection with foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings in the ordinary course of
business consistent with prudent banking practices, which would be
material, individually or in the aggregate, to Target or Target Bank,
as the case may be;
(i) except as required by law, take any action that is
intended or could reasonably be expected to result in any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect, or in any of the conditions
to the Merger set forth in Article VII not being satisfied, or in a
violation of any provision of this Agreement;
(j) change its methods of accounting in effect at
March 31, 1994, except as required by changes in GAAP or regulatory
accounting principles as concurred in by Target's independent
auditors;
(k) except as set forth in Section 5.1 of the Target
Disclosure Schedule, (i) except as required by applicable law or to
maintain qualification pursuant to the Code, adopt, amend, renew (for
a term longer than the prior term) or terminate any Plan or any
agreement, arrangement, plan or policy between Target or any
Subsidiary of Target and one or more of its current or former
directors, officers or employees or (ii) except as set forth in
Section 5.1 of the Target Disclosure Schedule, except for normal
increases in the ordinary course of business consistent with past
practice or except as required by applicable law, increase in any
manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan or agreement as
in effect as of the date hereof (including, without limitation, the
granting of stock options, stock appreciation rights, restricted
stock, restricted stock units or performance units or shares) or
(iii) enter into, modify or renew (for a term longer than the prior
term) any contract, agreement, commitment or arrangement providing for
the payment to any director, officer or employee of such party of
compensation or benefits contingent, or the terms of which are
materially altered, upon the occurrence of any of the transactions
contemplated by this Agreement;
(l) take or cause to be taken any action which would
disqualify the Merger as a tax free reorganization under Section 368
of the Code;
(m) other than activities in the ordinary course of
business consistent with prudent banking practice, sell, lease,
encumber, assign or otherwise dispose of, or agree to sell, lease,
encumber, assign or otherwise dispose of, any of its material assets,
properties or other rights or agreements;
(n) other than in the ordinary course of business
consistent with prudent banking practice or to cover expenses and
obligations under this Agreement, incur any indebtedness for borrowed
money, assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other individual,
corporation or other entity;
(o) file any application to relocate or terminate the
operations of any office of it or any of its Subsidiaries (other than
the previously announced move of Target's head office to Farmington,
Connecticut);
(p) commit any act or omission which constitutes a breach
or default by Target or any of its Subsidiaries under any Regulatory
Agreement or a material breach or default by Target or any of its
Subsidiaries under any material contract or material license to which
Target or any of its Subsidiaries is a party or by which any of them
or their respective properties is bound;
(q) make any equity investment or commitment to make such
an investment in real estate or in any real estate development
project, other than in connection with foreclosure, settlements in
lieu of foreclosure or troubled loan or debt restructurings in the
ordinary course of business consistent with prudent banking practices;
(r) create, renew, amend or terminate or give notice of a
proposed renewal, amendment or termination of, any material contract,
agreement or lease for goods, services or office space to which Target
or any of its Subsidiaries is a party or by which Target or any of its
Subsidiaries or their respective properties is bound except that
Target may renew contracts, agreements or leases in the ordinary
course of business after consultation with Parent;
(s) settle any claim, action or proceeding involving any
liability of Target or any Subsidiary of Target for material money
damages or material restrictions upon the operation of Target or any
Subsidiary of Target;
(t) take any other action that would materially adversely
affect or materially delay the ability of Parent or Target to obtain
the Requisite Regulatory Approvals (as defined below) or otherwise
materially adversely affect Parent's ability to consummate the
transactions contemplated by this Agreement; or
(u) authorize or enter into any agreement or commitment to
do any of the foregoing.
5.2 Covenants of Parent. During the period from the date
of this Agreement and continuing until the Effective Time, except as
expressly contemplated or permitted by this Agreement or with the
prior written consent of Target, Parent and its Subsidiaries shall
carry on their respective businesses in the ordinary course consistent
with prudent banking practice. Without limiting the generality of the
foregoing, and except as consented to in writing by Target, Parent
shall not, and shall not permit any of its Subsidiaries to:
(a) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material
respect, or in any of the conditions to the Merger set forth in
Article VII not being satisfied or in a violation of any provision of
this Agreement, except, in every case, as may be required by
applicable law;
(b) take or cause to be taken any action which would
disqualify the Merger as a tax free reorganization under Section 368
of the Code;
(c) take any other action that would materially adversely
affect or materially delay the ability of Parent or Target to obtain
the Requisite Regulatory Approvals or otherwise materially adversely
affect Parent's ability to consummate the transactions contemplated by
this Agreement;
(d) solely in the case of Parent, declare or pay any
dividend on, or make any other distributions in respect of, the Parent
Common Stock except for regular dividends and dividends or
distributions in Parent Common Stock;
(e) consolidate with or merge into any other person or
convey, transfer or lease its properties and assets substantially as
an entirety to any person unless such person shall expressly assume
the obligations of Parent hereunder; or
(f) authorize or enter into any agreement or commitment to
do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) Target shall promptly
prepare and file with the SEC the Proxy Statement and Parent shall
promptly prepare and file with the SEC the S-4, in which the Proxy
Statement will be included as a prospectus. Each of Parent and Target
shall use all reasonable efforts to have the S-4 declared effective
under the Securities Act as promptly as practicable after such filing,
and Target shall thereafter mail the Proxy Statement to its
stockholders. Parent shall also use all reasonable efforts to obtain
all necessary state securities law or "Blue Sky" permits and approvals
required to carry out the transactions contemplated by this Agreement,
and Target shall furnish all information concerning Target and the
holders of Target Common Stock as may be reasonably requested in
connection with any such action.
(b) The parties hereto shall cooperate with each other and
use their reasonable best efforts promptly to prepare and file all
necessary documentation, to effect all applications, notices,
petitions and filings, and to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all third parties
and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including
without limitation the Merger) (it being understood that any
amendments to the S-4 or a resolicitation of proxies as a consequence
of an acquisition agreement by Parent or any of its Subsidiaries shall
not violate this covenant). Target and Parent shall have the right to
review in advance, and to the extent practicable each will consult the
other on, in each case subject to applicable laws relating to the
exchange of information, all the information relating to Target or
Parent, as the case may be, and any of their respective Subsidiaries,
which appear in any filing made with, or written materials submitted
to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement; provided, however, that
nothing contained herein shall be deemed to provide either party with
a right to review any information provided to any Governmental Entity
on a confidential basis in connection with the transactions
contemplated hereby. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable.
The parties hereto agree that they will consult with each other with
respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the
status of matters relating to completion of the transactions
contemplated herein.
(c) Parent and Target shall, upon request, furnish each
other with all information concerning themselves, their Subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Proxy
Statement, the S-4 or any other statement, filing, notice or
application made by or on behalf of Parent, Target or any of their
respective Subsidiaries to any Governmental Entity in connection with
the Merger and the other transactions contemplated by this Agreement.
(d) Parent and Target shall promptly advise each other
upon receiving any communication from any Governmental Entity whose
consent or approval is required for consummation of the transactions
contemplated by this Agreement which causes such party to believe that
there is a reasonable likelihood that any Requisite Regulatory
Approval will not be obtained or that the receipt of any such approval
will be materially delayed.
6.2 Access to Information. (a) Upon reasonable notice
and subject to applicable laws relating to the exchange of
information, Target shall, and shall cause each of its Subsidiaries
to, afford to the officers, employees, accountants, counsel and other
representatives of Parent, access, during normal business hours during
the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, Target
shall, and shall cause its Subsidiaries to, make available to Parent
(i) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the
requirements of Federal securities laws or Federal or state banking,
savings and loan or savings association laws (other than reports or
documents which Target is not permitted to disclose under applicable
law) and (ii) all other information concerning its business,
properties and personnel as Parent may reasonably request. Neither
Target nor any of its Subsidiaries shall be required to provide access
to or to disclose information where such access or disclosure would
violate or prejudice the rights of Target's customers, jeopardize the
attorney-client privilege of the institution in possession or control
of such information or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into
prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply. Parent will
hold all such information in confidence to the extent required by, and
in accordance with, the provisions of the confidentiality agreement
between Parent and Target (the "Confidentiality Agreement").
(b) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, Parent shall, and shall cause
its Subsidiaries to, afford to the officers, employees, accountants,
counsel and other representatives of Target, access, during normal
business hours during the period prior to the Effective Time, to such
information regarding Parent and its Subsidiaries as shall be
reasonably necessary for Target to fulfill its obligations pursuant to
this Agreement to prepare the Proxy Statement or which may be
reasonably necessary for Target to confirm that the representations
and warranties of Parent contained herein are true and correct and
that the covenants of Parent contained herein have been performed in
all material respects. Neither Parent nor any of its Subsidiaries
shall be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights
of Parent's customers, jeopardize the attorney-client privilege of the
institution in possession or control of such information or contravene
any law, rule, regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date of this Agreement.
The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(c) All information furnished by Parent to Target or its
representatives pursuant hereto shall be treated as the sole property
of Parent and, if the Merger shall not occur, Target and its
representatives shall return to Parent all of such written information
and all documents, notes, summaries or other materials containing,
reflecting or referring to, or derived from, such information. Target
shall, and shall use its best efforts to cause its representatives to,
keep confidential all such information, and shall not directly or
indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information
confidential shall continue for five years from the date the proposed
Merger is abandoned and shall not apply to (i) any information which
(x) was legally in Target's possession prior to the disclosure thereof
by Parent; (y) was then generally known to the public; or (z) was
disclosed to Target by a third party not bound by an obligation of
confidentiality or (ii) disclosures made as required by law. It is
further agreed that, if in the absence of a protective order or the
receipt of a waiver hereunder Target is nonetheless, in the written
opinion of its outside counsel, compelled to disclose information
concerning Parent to any tribunal or governmental body or agency or
else stand liable for contempt or suffer other censure or penalty,
Target may disclose such information to such tribunal or governmental
body or agency without liability hereunder.
(d) No investigation by either of the parties or their
respective representatives shall affect the representations and
warranties of the other set forth herein.
(e) Within ten business days of the date of this
Agreement, Target shall deliver to Parent amended Section 3.17 of the
Target Disclosure Statement setting forth an investment securities
report which includes pay down factors, paydown speeds, durations, and
weighted average life, in each case as of March 31, 1994.
6.3 Stockholders Meeting. Target shall take all steps
necessary to duly call, give notice of, convene and hold a meeting of
its stockholders to be held as soon as is reasonably practicable after
the date on which the S-4 becomes effective for the purpose of voting
upon the approval of this Agreement. Target will, through its Board
of Directors, except to the extent legally required for the discharge
of the fiduciary duties of such board as advised in writing by such
Board's outside counsel, recommend to its stockholders approval of
this Agreement and the transactions contemplated hereby and such other
matters as may be submitted to its stockholders in connection with
this Agreement. Target and Parent shall coordinate and cooperate with
respect to the foregoing matters.
6.4 Legal Conditions to Merger. Each of Parent and Target
shall, and shall cause its subsidiaries to, use their reasonable best
efforts (a) to take, or cause to be taken, all actions necessary,
proper or advisable to comply promptly with all legal requirements
which may be imposed on such party or its Subsidiaries with respect to
the Merger and, subject to the conditions set forth in Article VII
hereof, to consummate the transactions contemplated by this Agreement
and (b) to obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party which is required to
be obtained by Target or Parent or any of their respective
Subsidiaries in connection with the Merger and the other transactions
contemplated by this Agreement.
6.5 Affiliates. Target shall use its best efforts to
cause each director, executive officer and other person who is an
"affiliate" (for purposes of Rule 145 under the Securities Act) of
Target (each an "Affiliate") to deliver to Parent, as soon as
practicable after the date of this Agreement, and prior to the date of
the stockholders meeting called by Target to approve this Agreement, a
written agreement, in substantially the form of Exhibit 6.5 hereto.
6.6 Stock Exchange Listing. Parent shall use its best
efforts to cause the shares of Parent Common Stock to be issued in the
Merger to be approved for listing on the New York Stock Exchange, Inc.
(the "NYSE"), subject to official notice of issuance, prior to the
Effective Time.
6.7 Indemnification; Directors' and Officers' Insurance.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action,
suit, proceeding or investigation in which any person who is now, or
has been at any time prior to the date of this Agreement, or who
becomes prior to the Effective Time, a director or officer or employee
of Target or any of its Subsidiaries (the "Indemnified Parties") is,
or is threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to any action or
omission by such person in his or her capacity as a director, officer
or employee of Target, any of the Target Subsidiaries or any of their
respective predecessors, whether in any case asserted or arising
before or after the Effective Time, the parties hereto agree to
cooperate and use their best efforts to defend against and respond
thereto. It is understood and agreed that after the Effective Time,
Parent shall indemnify and hold harmless, as and to the fullest extent
provided in Target's Certificate of Incorporation and Bylaws and
permitted by Delaware law, each such Indemnified Party against any
losses, claims, damages, liabilities, costs, expenses (including, to
the extent so provided and permitted, reasonable attorney's fees and
expenses in advance of the final disposition of any claim, suit,
proceeding or investigation upon receipt of any undertaking required
by applicable law or Target's Certificate of Incorporation or Bylaws),
judgments, fines and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding or
investigation, and in the event of any such threatened or actual
claim, action, suit, proceeding or investigation (whether asserted or
arising before or after the Effective Time), an Indemnified Party may
retain counsel reasonably satisfactory to him or her after
consultation with Parent; provided, however, that (1) Parent shall
have the right to assume the defense thereof and upon such assumption
Parent shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred
by any Indemnified Party in connection with the defense thereof,
except that if Parent elects not to assume such defense or counsel for
the Indemnified Parties reasonably advises the Indemnified Parties
that there are issues which raise conflicts of interest between Parent
and the Indemnified Parties, the Indemnified Parties may retain
counsel reasonably satisfactory to them after consultation with
Parent, and Parent shall pay the reasonable fees and expenses of such
counsel for the Indemnified Parties, (2) Parent shall be obligated
pursuant to this paragraph to pay for only one firm of counsel for all
Indemnified Parties, (3) Parent shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld) and (4) Parent shall have no obligation
hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall
have become final and nonappealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited
under applicable law. Any Indemnified Party wishing to claim
Indemnification under this Section 6.7, upon learning of any such
claim, action, suit, proceeding or investigation, shall notify Parent
thereof, provided that the failure to so notify shall not affect the
obligations of Parent under this Section 6.7 except to the extent such
failure to notify materially prejudices Parent. Parent's obligations
under this Section 6.7 continue in full force and effect for a period
of six (6) years from the Effective Time; provided, however, that all
rights to indemnification in respect of any claim (a "Claim") asserted
or made within such period shall continue until the final disposition
of such Claim.
(b) Parent shall use its best efforts to cause the persons
serving as officers and directors of Target immediately prior to the
Effective Time to be covered for a period of four (4) years from the
Effective Time by the directors' and officers' liability insurance
policy maintained by Target (provided that Parent may substitute
therefor policies of at least the same coverage and amounts containing
terms and conditions, including limits, deductibles and prior acts
coverage, which are not less advantageous than such policy) with
respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity
as such; provided, however, that, in the event that the annual amount
Parent would be required to expend would be more than 200% of the
current annual amount expended by Target (the "Insurance Amount") to
maintain insurance coverage for such persons under Target's current
policies, Parent may self insure; and further provided that if Parent
is unable to maintain or obtain the insurance called for by this
Section 6.7(b), Parent shall use its best efforts to obtain as much
comparable insurance as available for the Insurance Amount. Nothing
in this Section 6.7(b) shall be deemed to modify any existing
contractual obligations under any agreements of Target or any of its
Subsidiaries.
(c) In the event Parent or any of its successors or
assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then,
and in each such case, to the extent necessary, proper provision shall
be made so that the successors and assigns of Parent assume the
obligations set forth in this section.
(d) The provisions of this Section 6.7 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified
Party and his or her heirs and representatives.
6.8 Subsequent Financial Statements. As soon as
reasonably available, but in no event more than 45 days after the end
of each fiscal quarter ending after the date of this Agreement, Parent
will deliver to Target and Target will deliver to Parent their
respective Quarterly Reports on Form 10-Q, as filed with the SEC under
the Exchange Act.
6.9 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, or to vest the Surviving
Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the
Merger, the proper officers and directors of each party to this
Agreement and their respective Subsidiaries shall take all such
necessary action as may be reasonably requested by, and at the sole
expense of, Parent.
6.10 Advice of Changes. Parent and Target shall promptly
advise the other party of any change or event having a Material
Adverse Effect on it or which it believes would or would be reasonably
likely to cause or constitute a material breach of any of its
representations, warranties or covenants contained herein. From time
to time prior to the Effective Time, each party will promptly
supplement or amend the Disclosure Schedules delivered in connection
with the execution of this Agreement to reflect any matter which, if
existing, occurring or known at the date of this Agreement, would have
been required to be set forth or described in such Disclosure
Schedules or which is necessary to correct any information in such
Disclosure Schedules which has been rendered inaccurate thereby. No
supplement or amendment to such Disclosure Schedules shall have any
effect for the purpose of determining satisfaction of the conditions
set forth in Section 7.2(a) or 7.3(a) hereof, as the case may be, or
the compliance by Target or Parent, as the case may be, with the
respective covenants set forth in Sections 5.1 and 5.2 hereof.
6.11 Current Information. During the period from the date
of this Agreement to the Effective Time, Target will cause one or more
of its designated representatives to confer on a regular and frequent
basis (not less than monthly) with representatives of Parent and to
report (i) the general status of the ongoing operations of Target and
its Subsidiaries and (ii) the status of, and the action proposed to be
taken with respect to, those Loans held by Target or any Target
Subsidiary which, individually or in combination with one or more
other Loans to the same borrower thereunder, have an unpaid principal
amount of $100,000 or more and are non-performing assets. Target will
promptly notify Parent of any material change in the normal course of
business or in the operation of the properties of Target or any of its
Subsidiaries and of any governmental complaints, investigations or
hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of significant
litigation involving Target or any of its Subsidiaries, and will keep
Parent fully informed of such events.
6.12 Termination of Regulatory Agreements. Target shall,
and shall cause Target Bank to, use its reasonable best efforts in
cooperation with Parent to confirm that all Regulatory Agreements to
which Target or Target Bank is or becomes subject to will be
terminated and of no further force and effect at or prior to the
Effective Time.
6.13 Tax Returns. Target shall prepare and file, as
approved and directed by Parent, any Tax returns (including, without
limitation, New York Real Property Transfer and Transfer Gains Tax
pre-clearance forms) with respect to the Merger as Parent shall
reasonably request.
6.14 Employee Benefit Plans; Existing Agreements. (a)
Except as otherwise provided herein, the employees of Target and its
Subsidiaries (the "Target Employees") shall be entitled to participate
in Parent's employee benefit plans in which similarly situated
employees of Parent participate, to the same extent as comparable
employees of Parent. As soon as administratively practicable after
the Effective Time, Parent shall permit the Target Employees to
participate in Parent's group hospitalization, medical, life and
disability insurance plans, defined benefit pension plan, thrift plan,
severance plan and similar plans, on the same terms and conditions as
applicable to comparable employees of Parent and its Subsidiaries
(including the waiver of pre-existing condition prohibitions), giving
effect to years of service with Target and its Subsidiaries (to the
extent Target gave effect) as if such service were with Parent, for
purposes of eligibility and vesting, but not for benefit accrual
purposes (except as regards to vacation, severance and short-term
disability accruals or for purposes of determining employer
contributions for retiree medical benefits). Notwithstanding anything
in this Section 6.14 to the contrary, participation by Target
Employees in employee benefit plans and programs of Parent with
respect to which eligibility for employees of Parent to participate is
at the discretion of Parent shall be at the sole discretion of Parent.
(b) Following the Effective Time, Parent shall honor and
shall cause the Surviving Corporation to honor in accordance with
their terms all individual employment, severance and other
compensation agreements existing prior to the execution of this
Agreement, which are between Target and any director, officer or
employee thereof and which have been disclosed in the Target
Disclosure Schedule.
(c) To the extent not duplicative of any agreement or
arrangement described in paragraph (b) above, Parent agrees to make
the payments and provide the benefits set forth on Exhibit 6.14(c)(1)
to the employees of Target or Target Bank (the names of which shall be
set forth on Section 3.11 of the Target Disclosure Schedule). Parent
further agrees to honor and cause the Surviving Corporation to honor
the retirement plan, in substantially the form attached as Exhibit
6.14(c)(2) hereto, previously adopted for the members of the board of
directors of Target.
(d) Notwithstanding anything in this Section 6.14 to the
contrary, Parent shall have sole discretion with respect to the
determination as to whether to terminate, merge or continue any
employee benefit plans and programs of Target; provided, however, that
Parent shall continue to maintain Target plans (other than stock-based
or incentive plans) until Target Employees are permitted to
participate in Parent's plans.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time
of the following conditions:
(a) Stockholder Approval. This Agreement shall have been
approved and adopted by the affirmative vote of the holders of at
least a majority of the outstanding shares of Target Common Stock
entitled to vote thereon.
(b) NYSE Listing. The shares of Parent Common Stock which
shall be issued to the stockholders of Target upon consummation of the
Merger shall have been authorized for listing on the NYSE, subject to
official notice of issuance.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been
obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired; and the parties
shall have procured all other regulatory approvals, consents or
waivers of governmental authorities that are necessary to the
consummation of this Agreement (other than immaterial consents, the
failure to obtain which would not have a Material Adverse Effect on
Parent (on a combined basis giving effect to the Merger)); provided,
however, that no approval, consent or waiver referred to in this
Section 7.1(c) shall be deemed to have been received if it shall
include any condition or requirement that, in the opinion of Parent,
would so materially adversely affect the economic or business benefits
of the transactions contemplated by this Agreement to Parent as to
render inadvisable the consummation of the Merger; provided further,
that no condition or requirement which does no more than subject
Parent or Target to legal requirements generally applicable to a bank
holding company under the BHC Act or savings and loan holding company
under HOLA as a matter of law shall be deemed to affect materially and
adversely the economic or business benefits of the transactions
contemplated by this Agreement (all such approvals and the expiration
of all such waiting periods being referred to herein as the "Requisite
Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the
S-4 shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions
contemplated by this Agreement (an "Injunction") shall be in effect.
No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental
Entity which prohibits, restricts or makes illegal consummation of the
Merger.
(f) Federal Tax Opinion. Parent and Target shall have
received an opinion of Sullivan & Cromwell, counsel to Parent, in form
and substance reasonably satisfactory to Parent and Target, dated as
of the Closing Date, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion, the
Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368 of the Code and that
accordingly:
(i) No gain or loss will be recognized by Parent, Merger
Sub or Target as a result of the Merger; and
(ii) No gain or loss will be recognized by the
stockholders of Target who or which exchange their Target
Common Stock solely for Parent Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a
fractional share interest in Parent Common Stock).
In rendering such opinion, Sullivan & Cromwell may require
and rely upon representations contained in certificates of officers of
Parent, Merger Sub, Target and others.
7.2 Conditions to Obligations of Parent. The obligation
of Parent to effect the Merger is also subject to the satisfaction or
waiver by Parent at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations
and warranties of Target set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of
the Closing Date. Parent shall have received a certificate signed on
behalf of Target by the Chief Executive Officer and the Chief
Financial Officer of Target to the foregoing effect.
(b) Performance of Obligations of Target. Target shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on behalf of
Target by the Chief Executive Officer and the Chief Financial Officer
of Target to such effect.
(c) Consents Under Agreements. The consent, approval or
waiver of each person (other than the Governmental Entities referred
to in Section 7.1(c)) whose consent or approval shall be required in
order to permit the succession by the Surviving Corporation pursuant
to the Merger to any obligation, right or interest of Target or any
Subsidiary of Target under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument
shall have been obtained, except where the failure to obtain such
consent, approval or waiver would not materially adversely affect the
economic or business benefits of the transactions contemplated by this
Agreement to Parent as to render inadvisable the consummation of the
Merger.
(d) No Pending Governmental Actions. No proceeding
initiated by any Governmental Entity seeking an Injunction shall be
pending.
(e) DEPCO Directors. (i) DEPCO or any "Nominee" as
defined in the DEPCO Agreement (A) shall own all of the issued and
outstanding shares of Target Series B Preferred Stock and (B) shall
have the right to elect and shall have elected at least one current
member of Target's Board of Directors and (ii) the Directors elected
by DEPCO or any "Nominee" as defined in the DEPCO Agreement pursuant
to the Target Series B Preferred Stock shall represent less than 20%
of the number of Target's Board of Directors.
(f) Accountant's Letter. Target shall have caused to be
delivered to Parent letters from Target's independent public
accountants dated the date on which the S-4 or last amendment thereto
shall become effective, and dated the Closing Date, and addressed to
Parent and Target, with respect to Target's consolidated financial
position and results of operation, which letters shall be based upon
SAS 72 and certain agreed upon procedures to be specified by Parent,
which procedures shall be consistent with applicable professional
standards for letters delivered by independent accountants in
connection with comparable transactions.
7.3 Conditions to Obligations of Target. The obligation
of Target to effect the Merger is also subject to the satisfaction or
waiver by Target at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations
and warranties of Parent set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of
the Closing Date. Target shall have received a certificate signed on
behalf of Parent by the Chief Executive Officer and the Chief
Financial Officer of Parent to the foregoing effect.
(b) Performance of Obligations of Parent. Parent shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date,
and Target shall have received a certificate signed on behalf of
Parent by the Chief Executive Officer and the Chief Financial Officer
of Parent to such effect.
(c) Consents Under Agreements. The consent or approval of
each person (other than the Governmental Entities referred to in
Section 7.1(c)) whose consent or approval shall be required in
connection with the transactions contemplated hereby under any loan or
credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument to which Parent or any of its Subsidiaries is
a party or is otherwise bound, except those for which failure to
obtain such consents and approvals would not, individually or in the
aggregate, have a material adverse effect on the business, operations
or financial condition of Parent and its Subsidiaries taken as a whole
(after giving effect to the transactions contemplated hereby), shall
have been obtained.
(d) No Pending Governmental Actions. No proceeding
initiated by any Governmental Entity seeking an Injunction shall be
pending.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of
the matters presented in connection with the Merger by the
stockholders of Target:
(a) by mutual consent of Parent and Target in a written
instrument, if the Board of Directors of each so determines by a vote
of a majority of the members of its entire Board;
(b) by either Parent or Target upon written notice to the
other party (i) ninety (90) days after the date on which any request
or application for a Requisite Regulatory Approval shall have been
denied or withdrawn at the request or recommendation of the
Governmental Entity which must grant such Requisite Regulatory
Approval, unless within the 90-day period following such denial or
withdrawal a petition for rehearing or an amended application has been
filed with the applicable Governmental Entity, provided, however, that
no party shall have the right to terminate this Agreement pursuant to
this Section 8.1(b)(i) if such denial or request or recommendation for
withdrawal shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein or (ii) if any Governmental
Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the
consummation of any of the transactions contemplated by this
Agreement;
(c) by either Parent or Target if the Merger shall not
have been consummated on or before June 30, 1995, unless the failure
of the Closing to occur by such date shall be due to the failure of
the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein;
(d) by either Parent or Target (provided that if the
terminating party is Target, Target shall not be in material breach of
any of its obligations under Section 5.1(e) or 6.3) if any approval of
the stockholders of Target required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of stockholders or at any
adjournment or postponement thereof;
(e) by either Parent or Target (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the
representations or warranties set forth in this Agreement on the part
of the other party, which breach is not cured within forty-five (45)
days following written notice to the party committing such breach, or
which breach, by its nature, cannot be cured prior to the Closing;
(f) by either Parent or Target (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of the
other party, which breach shall not have been cured within forty-five
(45) days following receipt by the breaching party of written notice
of such breach from the other party hereto; or
(g) (i) by Target, if (either before or after the approval
by the stockholders of this Agreement) its Board of Directors
so determines by a vote of a majority of the members of its
entire Board, at any time during the five-day period
commencing with the Determination Date, if the Parent Common
Stock Average Price on the Determination Date shall be less
than $21.465; subject, however, to subsection (g)(ii).
(ii) If Target elects to exercise its termination right
pursuant to subsection (g)(i), it shall give prompt written
notice to Parent (provided that such notice of election to
terminate may be withdrawn at any time within the
aforementioned five-day period). During the three-day period
commencing with its receipt of such notice, Parent shall have
the option of increasing the consideration to be received by
holders of Target Common Stock hereunder by adjusting the
Exchange Ratio to equal a number equal to $10.875 divided by
the Parent Common Stock Average Price. If Parent makes an
election contemplated by this subsection (g)(ii) within such
three-day period, it shall give prompt written notice to
Target of such election and the revised Exchange Ratio,
whereupon no termination shall have occurred pursuant to this
subsection (g) and this Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall
have been so modified), and any references in this Agreement
to "Exchange Ratio" shall thereafter be deemed to refer to
the Exchange Ratio as adjusted pursuant to this subsection
(g).
For purposes of this subsection (g), the following terms
shall have the meanings indicated:
"Determination Date" means the date on which the last
regulatory approval required to consummate the Merger has
been obtained and all statutory waiting periods in respect
thereof have expired.
"Parent Common Stock Average Price" means the average of
the daily closing sales prices of Parent Common Stock as
reported on the NYSE Composite Transactions reporting system
(as reported by The Wall Street Journal or, if not reported
thereby, another authoritative source as chosen by Parent)
for the 15 consecutive full trading days in which such shares
are traded on the NYSE ending at the close of trading on the
trading day immediately prior to the Determination Date.
8.2 Fee. (a) Target hereby agrees to pay Parent and
Parent shall be entitled to payment of, a fee (the "Fee") of
$11,000,000 following the occurrence of a Purchase Event (as defined
below); provided that Parent shall have sent written notice of such
entitlement within 90 days following such Purchase Event. Such
payment shall be made in immediately available funds within five
business days after delivery of such notice. The right to receive the
Fee shall terminate if any of the following (a "Fee Termination
Event") occurs prior to a Purchase Event: (i) the Effective Time of
the Merger, (ii) termination of this Agreement in accordance with the
provisions hereof if such termination occurs prior to the occurrence
of a Preliminary Purchase Event, except a termination by Parent
pursuant to Sections 8.1(e) or (f) hereof (unless the breach by Target
is non-volitional), or (iii) if termination of this Agreement follows
the occurrence of a Preliminary Purchase Event (x) the passage of
twenty-four months after termination of this Agreement (eighteen
months in the case of a Preliminary Purchase Event listed in
subsection (c)(iv) or (c)(v)) if such termination is by Parent
pursuant to Sections 8.1(e) or (f) of this Agreement (unless the
breach by Target is non-volitional) or pursuant to Section 8.1(d), or
(y) if such termination is otherwise pursuant to Section 8.1. The
"Last Preliminary Purchase Event" shall mean the last Preliminary
Purchase Event to expire.
(c) The term "Preliminary Purchase Event" shall mean any of
the following events or transactions occurring after the date hereof:
(i) Target or any of the Target Subsidiaries without having
received Parent's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as
defined below) with any person (the term "person" for
purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Securities Exchange
Act") and the rules and regulations thereunder) other than
Parent or any of the Parent Subsidiaries or the Board of
Directors of Target shall have recommended that the
shareholders of Target approve or accept any Acquisition
Transaction with any person other than Parent or any Parent
Subsidiary. For purposes of this Agreement, "Acquisition
Transaction" shall mean (A) a merger or consolidation, or any
similar transaction, involving Target or any Target
Significant Subsidiary, (B) a purchase, lease or other
acquisition of all or substantially all of the assets or
deposits of Target or any Target Significant Subsidiary,
(C) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of
Target or a Target Significant Subsidiary; provided that the
term "Acquisition Transaction" does not include any internal
merger or consolidation involving only Target and/or Target
Subsidiaries;
(ii) (A) Any person (other than Parent or any Parent
Subsidiary) shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the
outstanding shares of Target Common Stock (the term
"beneficial ownership" for purposes of this Agreement having
the meaning assigned thereto in Section 13(d) of the
Securities Exchange Act, and the rules and regulations
thereunder), or (B) any group (as such term "group" is
defined in Section 13(d)(3) of the Securities Exchange Act),
other than a group of which Parent or any Parent Subsidiary
is a member, shall have been formed that beneficially owns
10% or more of the Target Common Stock then outstanding;
(iii) Any person other than Parent or any Parent
Subsidiary shall have made a bona fide proposal to Target or
its shareholders, by public announcement or written
communication that is or becomes the subject of public
disclosure, to engage in an Acquisition Transaction
(including, without limitation, any situation which any
person other than Parent or any Parent Subsidiary shall have
commenced (as such term is defined in Rule 14d-2 under the
Securities Exchange Act) or shall have filed a registration
statement under the Securities Act with respect to, a tender
offer or exchange offer to purchase any shares of Target
Common Stock such that, upon consummation of such offer, such
person would own or control 10% or more of the then
outstanding shares of Target Common Stock (such an offering
referred to herein as a "Tender Offer" or an "Exchange
Offer", respectively));
(iv) After a proposal is made by a third party to
Target or its shareholders to engage in an Acquisition
Transaction, or such third party states its intention to
Target to make such a proposal if the Plan terminates, Target
shall have breached any representation, covenant or
obligation contained in this Agreement and such breach would
entitle Parent to terminate this Agreement under Sections
8.01(e) or (f) of this Agreement (without regard to the cure
periods provided for therein unless such cure is promptly
effected without jeopardizing consummation of the Merger
pursuant to the terms of this Agreement); or
(v) the holders of Target Common Stock shall not have
approved this Agreement at the meeting of such stockholders
held for the purpose of voting on this Agreement or such
meeting shall not have been held or shall have been canceled
prior to termination of this Agreement, in each case after
any person (other than Parent or any Parent Subsidiary) shall
have (A) made, or disclosed an intention to make, a bona fide
proposal to engage in an Acquisition Transaction or (B)
commenced a Tender Offer or filed a registration statement
under the Securities Act with respect to an Exchange Offer.
(d) The Term "Purchase Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person, other than Parent or any
Parent Subsidiary, alone or together with such person's
affiliates and associates, or any group (as defined in
Section 13(d)(3) of the Securities Exchange Act), of
beneficial ownership of 50% or more of the Target Common
Stock; or
(ii) The occurrence of a Preliminary Purchase Event
described in Section 8.2(c)(i) except that the percentage
referred to in clause (C) shall be 50%.
(e) Target shall notify Parent promptly in writing of its
knowledge of the occurrence of any Preliminary Purchase Event or
Purchase Event; provided, however, that the giving of such notice by
Target shall not be a condition to the right of Parent to the Fee.
8.3 Effect of Termination. (a) In the event of
termination of this Agreement by either Parent or Target as provided
in Section 8.1, this Agreement shall forthwith become void and have no
effect except (i) the last sentence of Section 6.2(a), and Sections
6.2(c), 8.2, 8.3, 9.3 and 9.4, shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained
in this Agreement, no party shall be relieved or released from any
liabilities or damages arising out of its willful breach of any
provision of this Agreement.
8.4 Amendment. Subject to compliance with applicable law,
this Agreement may be amended by the parties hereto, by action taken
or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with
the Merger by the common stockholders of Target; provided, however,
that after any approval of the transactions contemplated by this
Agreement by Target's common stockholders, there may not be, without
further approval of such stockholders, any amendment of this Agreement
which reduces the amount or changes the form of the consideration to
be delivered to the Target stockholders hereunder other than as
contemplated by this Agreement. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the
parties hereto.
8.5 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their
respective Board of Directors, may, to the extent legally allowed, (a)
extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein; provided, however, that
after any approval of the transactions contemplated by this Agreement
by Target's common stockholders, there may not be, without further
approval of such stockholders, any extension or waiver of this
Agreement or any portion thereof which reduces the amount or changes
the form of the consideration to be delivered to the Target
stockholders hereunder other than as contemplated by this Agreement.
Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed
on behalf of such party, but such extension or waiver or failure to
insist on strict compliance with an obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect
to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") will take place
at 10:00 a.m. on a date to be selected by Parent, which shall be the
tenth business day after the satisfaction or waiver (subject to
applicable law) of the latest to occur of the conditions set forth in
Article VII hereof (the "Closing Date"), at the offices of Parent,
unless another time, date or place is agreed to in writing by the
parties hereto.
9.2 Alternative Structure. Notwithstanding anything to
the contrary contained in this Agreement, prior to the Effective Time,
Parent shall be entitled to revise the structure of the Merger and
related transactions provided that each of the transactions comprising
such revised structure shall (i) not subject any of the stockholders
of Target to adverse tax consequences or change the amount of
consideration to be received by such stockholders and (ii) be capable
of consummation without material delay. This Agreement and any
related documents shall be appropriately amended in order to reflect
any such revised structure.
9.3 Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and
agreements in this Agreement or in any instrument delivered pursuant
to this Agreement shall survive the Effective Time, except for those
covenants and agreements contained herein and therein which by their
terms apply in whole or in part after the Effective Time.
9.4 Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall he paid by the party incurring such expense, provided,
however, that the costs and expenses of printing and mailing the Proxy
Statement, and all filing and other fees paid to the SEC in connection
with the Merger, shall be borne equally by Parent and Target,
provided, further, however, that in the event of termination of this
Agreement in accordance with the provisions hereof, except a
termination by Parent pursuant to Section 8.1(e) or (f) hereof, Parent
shall pay for the accountant's letters pursuant to Section 7.2(f).
9.5 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (with confirmation), mailed by registered or
certified mail (return receipt requested) or delivered by an express
courier (with confirmation) to the parties at the following addresses
(or at such other address for a party as shall be specified by like
notice):
(a) if to Parent, to:
Shawmut National Corporation
777 Main Street
Hartford, CT 06115
Fax: (203) 728-4205
Attn: Chief Executive Officer
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Fax: (212) 558-3588
Attn: Donald J. Toumey, Esq.
and
(b) if to Target, to:
Northeast Federal Corp.
50 State House Square
Hartford, CT 06103
Fax: (203) 280-0008
Attn: Chief Executive Officer
with a copy to:
Muldoon, Murphy & Faucette
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Fax: (202) 966-9409
Attn: Thomas J. Haggerty, Esq.
9.6 Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be
to a Section of or Exhibit or Schedule to this Agreement unless
otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the
words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation."
9.7 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.
9.8 Entire Agreement. This Agreement (including the
documents and the instruments referred to herein) constitutes the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect
to the subject matter hereof, other than the Confidentiality
Agreement.
9.9 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware
applicable to agreements made and wholly to be performed in such
state.
9.10 Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that the provisions
contained in the last sentence of Section 6.2(a) and in Section 6.2(c)
of this Agreement were not performed in accordance with its specific
terms or was otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent
breaches of the last sentence of Section 6.2(a) and Section 6.2(c) of
this Agreement and to enforce specifically the terms and provisions
thereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
9.11 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
9.12 Publicity. Except as otherwise required by law or the
rules of the NYSE or the National Association of Securities Dealers,
so long as this Agreement is in effect, neither Parent nor Target
shall, or shall permit any of its Subsidiaries to, issue or cause the
publication of any press release or other written statement for
general circulation with respect to the transactions contemplated by
this Agreement, without the consent of the other party, which consent
shall not be unreasonably withheld.
9.13 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties, and any purported such
assignment shall be null and void. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and
assigns. Except as otherwise specifically provided in Section 6.7
hereof, this Agreement (including the documents and instruments
referred to herein) is not intended to, and shall not, confer upon any
person other than the parties hereto any rights or remedies hereunder.
IN WITNESS WHEREOF, Parent and Target have caused this
Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
SHAWMUT NATIONAL CORPORATION
By
Name:
Title:
NORTHEAST FEDERAL CORP.
By
Name:
Title:
EXHIBIT 99.2
PURCHASE AND ASSUMPTION AGREEMENT
DATED AS OF NOVEMBER 12, 1994
among
BARCLAYS BUSINESS CREDIT INC.,
BARCLAYS BANK PLC,
SHAWMUT NATIONAL CORPORATION
and
SHAWMUT BANK CONNECTICUT, N.A.
TABLE OF CONTENTS
Page
Article 1. Definitions . . . . . . . . . . . . . . . . .
Article 2. Purchase of Assets; Assumption of
Liabilities . . . . . . . . . . . . . . . .
2.1 Sale and Purchase of Assets . . . . . . . . .
2.2 Conveyance of Assets . . . . . . . . . . . . .
2.3 Assets Excluded . . . . . . . . . . . . . . .
2.4 Transfer and Assumption of Liabilities . . . .
2.5 Manner of Assumption . . . . . . . . . . . . .
Article 3. Consideration . . . . . . . . . . . . . . . .
3.1 Purchase Price . . . . . . . . . . . . . . . .
3.2 Asset and Liability Schedules . . . . . . . .
Article 4. Closing; Time and Place . . . . . . . . . . .
Article 5. Representations and Warranties of
the Seller and Parent . . . . . . . . . . .
5.1 Corporate Organization and Authority . . . . .
5.2 No Conflict; Licenses and Permits;
Compliance with Laws and
Regulations . . . . . . . . . . . . . . . .
5.3 Approvals and Consents . . . . . . . . . . . .
5.4 Title to Assets, Etc. . . . . . . . . . . . .
5.5 Leases . . . . . . . . . . . . . . . . . . . .
5.6 Contracts and Defaults . . . . . . . . . . . .
5.7 Loans and Loan Commitments . . . . . . . . . .
5.8 List of Transferred Offices . . . . . . . . .
5.9 Environmental Matters . . . . . . . . . . . .
5.10 Labor Contracts and Relations . . . . . . . .
5.11 Financial Statements . . . . . . . . . . . . .
5.12 Litigation . . . . . . . . . . . . . . . . . .
5.13 Brokers' Fees . . . . . . . . . . . . . . . .
5.14 Employee Benefits . . . . . . . . . . . . . .
5.15 Undisclosed Liabilities . . . . . . . . . . .
5.16 Taxes . . . . . . . . . . . . . . . . . . . .
5.17 Loan Portfolio . . . . . . . . . . . . . . . .
5.18 Accounting Records . . . . . . . . . . . . . .
5.19 Technology . . . . . . . . . . . . . . . . . .
5.20 Absence of Certain Chances or Events . . . . .
5.21 Investments . . . . . . . . . . . . . . . . .
Article 6. Representations and Warranties of
Shawmut and Purchaser . . . . . . . . . . .
6.1 Corporate Organization and Authority . . . . .
6.2 No Conflict, Licenses and Permits,
Compliance with Laws and
Regulations . . . . . . . . . . . . . . . .
6.3 Approvals and Consents . . . . . . . . . . . .
6.4 Brokers' Fees . . . . . . . . . . . . . . . .
6.5 Litigation and Liabilities . . . . . . . . . .
6.6 No Implied Representation . . . . . . . . . .
6.7 Disclosure . . . . . . . . . . . . . . . . . .
Article 7. Covenants . . . . . . . . . . . . . . . . . .
7.1 Conduct of Business . . . . . . . . . . . . .
7.2 Investigation . . . . . . . . . . . . . . . .
7.3 Best Efforts; Taking of Necessary Action. . .
7.4 Expenses. . . . . . . . . . . . . . . . . . .
7.5 Use of Names, Trademarks and Service Marks . .
7.6 Post-Closing Cooperation. . . . . . . . . . .
7.7 Employee-Related Matters. . . . . . . . . . .
7.8 Letters of Credit of ISG. . . . . . . . . . .
7.9 Non-Compete; Non-Solicitation of Employees . .
7.10 Independent Third Parties. . . . . . . . . . .
7.11 Payments. . . . . . . . . . . . . . . . . . .
7.12 Limitation on Dealings with Loans. . . . . . .
7.13 Further Assurances. . . . . . . . . . . . . .
7.14 Small Equipment Leasing Portfolio. . . . . . .
7.15 ISG Loan Portfolio. . . . . . . . . . . . . .
7.16 Transfer of Administration. . . . . . . . . .
Article 8. Taxes . . . . . . . . . . . . . . . . . . . .
8.1 Liability for Taxes. . . . . . . . . . . . . .
8.2 Sales and Transfer Taxes. . . . . . . . . . .
8.3 Parent of Amounts Due under Article 8 . . . .
8.4 Refunds or Credits. . . . . . . . . . . . . .
8.5 Tax Returns. . . . . . . . . . . . . . . . . .
8.6 Assistance and Cooperation . . . . . . . . . .
8.7 Document Retention. . . . . . . . . . . . . .
8.8 Allocation of Purchase Price. . . . . . . . .
8.9 Notices, Etc. . . . . . . . . . . . . . . . .
8.10 Tax Indemnities. . . . . . . . . . . . . . . .
Article 9. Conditions to the Closing . . . . . . . . . .
9.1 Conditions of Obligation of Each Party. . . .
9.2 Additional Conditions to the
Obligations of Purchaser. . . . . . . . . .
9.3 Additional Conditions to the
Obligations of the Seller . . . . . . . . .
Article 10. Termination, Amendment and Waiver . . . . . .
10.1 Termination . . . . . . . . . . . . . . . . .
10.2 Effect of Termination . . . . . . . . . . . .
Article 11. General Provisions . . . . . . . . . . . . . .
11.1 Survival of Representations and
Warranties and Covenants . . . . . . . . .
11.2 Indemnification . . . . . . . . . . . . . . .
11.3 Schedules . . . . . . . . . . . . . . . . . .
11.4 Notices . . . . . . . . . . . . . . . . . . .
11.5 Interpretation . . . . . . . . . . . . . . . .
11.6 Amendment . . . . . . . . . . . . . . . . . .
11.7 Extension; Waiver . . . . . . . . . . . . . .
11.8 Entire Agreement . . . . . . . . . . . . . . .
11.9 Third Party Beneficiaries . . . . . . . . . .
11.10 Assignment . . . . . . . . . . . . . . . .
11.11 Publicity Notice . . . . . . . . . . . . .
11.12 Governing Law . . . . . . . . . . . . . . .
11.13 Counterparts . . . . . . . . . . . . . . .
11.14 Consent to Jurisdiction; Service of Process
11.15 Waiver of Jury Trial . . . . . . . . . . .
11.16 Confidentiality Agreement . . . . . . . . .
PURCHASE AND ASSUMPTION AGREEMENT, dated as of November
12, 1994 among BARCLAYS BUSINESS CREDIT INC., a Connecticut
corporation ("Seller"), BARCLAYS BANK PLC, a public limited
company organized in England ("Parent"), Shawmut National
Corporation, a Delaware corporation ("Shawmut"), and Shawmut Bank
Connecticut, N.A., a national banking association ("Purchaser").
WHEREAS, Seller is engaged through its Business Finance
Division ("BFD") in the business of providing asset-based
financing and related financial services;
WHEREAS, Purchaser, directly or acting through a to-be-
formed wholly owned subsidiary or any assignee designated in
accordance with Section 11.10, seeks to acquire certain of the
assets and assume certain of the liabilities of BFD on the terms
and conditions described herein; and
WHEREAS, the respective Boards of Directors of Parent,
Seller, Shawmut and Purchaser have approved or will soon approve
such transactions;
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
1.1 "Accounting Manual": the BFD Accounting
Policy/Procedure Statement, as in effect from time to time, a
complete and correct copy of which as of September 30, 1994 is
attached as Schedule 1.1.
1.2 "Accrued Interest": with respect to any Loan at
any time, the amount of earned and unpaid interest payable by the
Debtor accrued on or with respect to such Loan.
1.3 "Acquired Assets": the collective reference to
those assets and/or businesses of BFD to be acquired by the
Purchaser pursuant to Section 2.1.
1.4 "Adjustment": the difference between the Final
Amount and the Interim Amount.
1.5 "Affiliate" means any individual, partnership,
corporation or other organization or entity directly or
indirectly controlling, controlled by, or under common control
with, the subject entity through the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such entity whether through the
ownership of voting securities, by contract or otherwise.
Without limiting the foregoing, the ownership, direct or
indirect, or a 10% interest in such entity shall be deemed to be
control.
1.6 "Agreement": this Purchase and Assumption
Agreement as the same may be amended, supplemented or otherwise
modified.
1.7 "Allowance for Credit Losses Reserve": as defined
in the BFD Accounting Principles.
1.8 "Assigned Leases": the leases or subleases
relating to Transferred Offices set forth on Schedule 1.8.
1.9 "Assigned Software": the collective reference to
the Software described on Schedule 1.9.
1.10 "Assumed Contracts and Other Obligations": those
Contracts and all other obligations or liabilities of the Seller
relating to or arising from the BFD Acquired Business or the
Acquired Assets in all cases which are identified on Schedule
1.10 and any other Contracts relating to the BFD Acquired
Business or the Acquired Assets entered into between the date
hereof and the Closing Date by Seller consistent with the terms
of this Agreement except, in each case, those expiring or
terminating between the date hereof and the Closing Date.
1.11 "Assumed Liabilities": those liabilities to be
assumed by the Purchaser pursuant to Section 2.4.
1.12 "Bank Plans": as defined in Section 5.14(a).
1.13 "BFD Accounting Principles" means the accounting
principles set forth in the Accounting Manual.
1.14 "BFD Acquired Business": as defined in Section
2.1.
1.15 "Book Value": with respect to each asset and
liability indicated in the Interim or Final Asset and Liability
Schedule as being transferred in whole or in part to the
Purchaser, the dollar amount of such transferred asset or
liability stated on the Books of the Seller as of the relevant
date calculated in accordance with the BFD Accounting Principles.
The Book Value of the KB Investment shall be its Book Value as
reflected on the Books of the Seller as of the close of business
on the Closing Date plus the amount specified in Schedule 1.45.
1.16 "Books": with respect to any Person, the general
ledger of such Person and any related subsidiary ledger.
1.17 "Closing": as defined in Section 4.
1.18 "Closing Date": as defined in Section 4.
1.19 "Code": the Internal Revenue Code of 1986, as
amended.
1.20 "Communications": as defined in Section 7.2(b).
1.21 "Confidentiality Agreement": the Confidentiality
Agreement dated May 10, 1994, as amended, between Seller and
Shawmut.
1.22 "Contract": any arrangement, note, bond,
commitment, franchise, guarantee, indemnity, indenture,
instrument, lease, license or other agreement, understanding,
instrument or obligation, whether written or oral, and all rights
and interests arising thereunder or in connection therewith.
1.23 "Covered Employees": as defined in Section
7.7(a).
1.24 "Debtors" means the Person or Persons obligated on
or in respect to a Loan or Loan Commitment, including any
guarantor, hypothecator or other provider of security.
1.25 "Diligence Group" means the officers and employees
of the Purchaser set forth on Schedule 1.25.
1.26 "Employee Benefit Losses": as defined in Section
7.7(i).
1.27 "ERISA": the Employee Retirement Income Security
Act of 1974, as amended.
1.28 "Excluded Assets": those assets described in
Section 2.3.
1.29 "Excluded Liabilities": those liabilities not
assumed by the Purchaser pursuant to this Agreement.
1.30 "Excluded Loans": those Loans or Loan Commitments
(together with all of Seller's right, title and interest in and
to all related Loan Documents) subject to a restriction on
assignability and as to which Seller shall not on or prior to the
Closing Date have obtained the consent or consents to transfer
such Loans or Loan Commitments to Purchaser which Seller
reasonably concludes are necessary for its representation in
Section 5.2 to be true on the Closing Date.
1.31 "Exposure": as defined in Section 2.4.
1.32 "Federal Funds Rate": for any date, the rate for
such date as set forth in the weekly statistical release
designated "H.15(519)" or any successor publication of the Board
of Governors of the Federal Reserve System.
1.33 "Final Amount": an amount equal to (a) the Book
Value of the Acquired Assets as reflected on the Final Asset and
Liability Schedule, less (b) the Book Value of the Assumed
Liabilities as reflected on the Final Asset and Liability
Schedule as being assumed by Purchaser, plus (c) $290,000,000.
1.34 "Final Asset and Liability Schedule": the
Schedule to be prepared in accordance with Section 3.2(b).
1.35 "GAAP": generally accepted accounting principles
in effect from time to time in the United States.
1.36 "HSR Act": the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
1.37 "ICG": the International Corporate Group of
Parent, London, England.
1.38 "Interim Amount": an amount equal to (a) the Book
Value of the Acquired Assets as reflected on the Interim Asset
and Liability Schedule, less (b) the Book Value of the Assumed
Liabilities as reflected on the Interim Asset and Liability
Schedule as being assumed by Purchaser, plus (c) $290,000,000.
1.39 "Interim Asset and Liability Schedule": the
Schedule to be prepared in accordance with Section 3.2(a).
1.40 "Interim Date": the latest month end date as of
which an asset and liability schedule of the Seller shall, as of
the date which is two weeks prior to the Closing Date, be
available.
1.41 "Investments": any investments or other interests
in securities other than Loans, including, without limitation,
partnership interests, warrants, rights, options and other
similar securities.
1.42 "ISG": the International Services Group, a
division of Barclays Bank PLC, Atlanta Agency.
1.43 "ISG L/C's": those letters of credit issued by
ISG on behalf of Debtors of BFD in connection with Loans or Loan
Commitments included in the Acquired Assets.
1.44 "ISG Portfolio": those Loans held in ISG and
described in Schedule 7.15 which are to be transferred to BFD
pursuant to Section 7.15.
1.45 "KB Investment": the investment of BFD described
in Schedule 1.45.
1.46 "knowledge": as applied in this Agreement to the
Seller or BFD means the actual knowledge of a Senior Officer of
the Seller.
1.47 "Leasehold Improvements": the permanent fixtures
and improvements located at the Transferred Offices which are
indicated in Schedule 5.8 as being leased by BFD.
1.48 "Licenses": as defined in Section 5.2.
1.49 "Liens": any mortgage, lien, pledge, charge,
assignment for security purposes, security interest, or
encumbrance of any kind with respect to an Acquired Asset,
including any unconditional sale agreement or capital lease or
other title retention agreement relating to such Acquired Asset.
1.50 "Loan Commitments": the collective reference to
each commitment or obligation on the part of Seller relating to
BFD to extend credit to any Person (including pursuant to a
letter of credit or banker's acceptance) or to participate
therein, including without limitation, the obligations of Seller
relating to BFD as a participant in letters of credit issued by
ISG on behalf of Seller relating to BFD, whether or not such
commitment, obligation or participation has been accepted or
utilized by such Person.
1.51 "Loan Documents": the agreements, instruments,
certificates, or other documents at any time evidencing or
otherwise relating to, governing, or executed in connection with,
or as security for, a Loan or Loan Commitment, including without
limitation, notes, bonds, loan agreements, letter of credit
applications, letters of credit, lease financing contracts,
bankers' acceptances, drafts, guarantees, deeds of trust,
mortgages, assignments, security agreements, pledges,
subordination or priority agreements, lien priority agreements,
undertakings, security instruments, financing statements,
certificates, documents, legal opinions, participation and
assignment agreements and inter-creditor agreements, and all
amendments, modifications, renewals, extensions, rearrangements,
and substitutions with respect to any of the foregoing.
1.52 "Loan Transfer Documents": as defined in Section
2.2.
1.53 "Loans": all of the following owed to or held by
Seller relating to BFD (including those Loans included in the ISG
Portfolio) as of the Closing Date (including any of the following
fully or partially charged off the Books of Seller):
(i) loans, advances or other extensions of credit,
including interests in loan participations and assignments,
customer liabilities on letters of credit, bankers,
acceptances and participations in letters of credit
(including in all cases loans made to pay interest accruing
on loans, whether or not due or payable (sometimes referred
to as capitalized interest);
(ii) all Liens, rights (including rights of set-off),
remedies, powers, privileges, demands, priorities, equities
and benefits owned or held by, or accruing or to accrue to
or for the benefit of, the holder of the obligations or
instrument being referred to in clause (i) above, including
but not limited to those arising under or based upon the
Loan Documents, casualty insurance policies and binders,
standby letters of credit, mortgagee title insurance
policies and binders, payment bonds and performance bonds at
any time and from time to time existing with respect to any
of the obligations or instruments referred to in clause (i)
above; and
(iii) all amendments, modifications, renewals,
extensions, refinancings and refundings of or for any of the
foregoing.
1.54 "Losses": as defined in Section 7.7(n).
1.55 "Material Adverse Effect": any effect that is
materially adverse to the Acquired Assets and the Assumed
Liabilities taken as a whole or the business or financial
condition of the BFD Acquired Business taken as a whole. For
purposes of Section 5.2, Material Adverse Effect shall include
the material impairment of the parties' ability to consummate the
transactions contemplated by this Agreement, but shall exclude in
all respects the occurrence or effects of changes in general
economic conditions.
1.56 "Non-Performing Loan": refers to Loans classified
as "non-performing" in accordance with BFD Accounting Principles.
1.57 "Permitted Encumbrances": as defined in Section
5.4(c).
1.58 "Permitted Liens": as defined in Section 5.4(b).
1.59 "Person": any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or
political subdivision thereof.
1.60 "Personal Property": the furniture, furnishings,
equipment, trade fixtures, supply inventory and other tangible
personal property owned or leased by Seller at the Transferred
Offices.
1.61 "Purchaser Plans": as defined in Section 7.7(c).
1.62 "Purchaser's Retirement Plan": as defined in
Section 7.7(e).
1.63 "Purchaser Welfare Plans": as defined in Section
7.7(d).
1.64 "Records": all documents, microfiche, microfilm
and computer records (including but not limited to, magnetic
tape, disc storage, card forms and printed copy) of BFD generated
or maintained by BFD or the Seller that relate to the Acquired
Assets, Assumed Liabilities and/or the BFD Acquired Business,
including without limitation the Assumed Contracts and Other
Obligations and the Loan Documents.
1.65 "Repossessions": all property, both real and
personal, tangible and intangible, acquired by BFD pursuant to
any Lien securing a Loan included in the Acquired Assets.
1.66 "Seller's Savings Plan": as defined in Section
7.7(f).
1.67 "Senior Officer": any senior vice president or
higher officer of the Seller.
1.68 "Servicing Agreement": the Servicing Agreement to
be entered into on the Closing Date among Purchaser, Seller and
Parent substantially in the form of Exhibit A.
1.69 "Software": computer programs, software, and
related documentation.
1.70 "Straddle Period": as defined in Section 8.1(c).
1.71 "Successor Plan": as defined in Section 7.7(f).
1.72 "Sundry Receivables": fees, expenses and other
charges payable by Debtors with respect to Loans and Loan
Commitments or by other Persons with respect to Loans and Loan
Commitments comprising the Acquired Assets.
1.73 "Tax Returns": any return or other report
required to be filed with respect to any Tax, including
declaration of estimated tax and information returns.
1.74 "Taxes": any federal, state, local or foreign
taxes, including but not limited to taxes on or measured by
income, estimated income, alternative or add-on minimum tax,
gross receipts, sales, use, ad valorem, franchise, capital stock,
transfer, gains, profit, license, employees' withholding, foreign
person withholding, backup withholding, social security,
occupation, unemployment, disability, excise, severance, stamp,
premium, value added taxes, taxes on services, real property,
personal property, inventory and merchandise, business privilege,
or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty, addition to tax or
additional amount imposed by any governmental authority
responsible for the imposition of such tax whether or not
disputed.
1.75 "Transferred Offices": the collective reference
to each of the offices of BFD identified in Schedule 5.8.
1.76 "Unearned Fees": the amount of unearned fees
relating to Loans included in the Acquired Assets or relating to
ISG L/Cs and reflected on the Interim and Final Asset and
Liability Schedules, as the case may be.
1.77 "Vacation Policy": as defined in Section 7.7(g).
1.78 "WARN": as defined in Section 7.7(h).
ARTICLE 2. PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 SALE AND PURCHASE OF ASSETS. On the terms and
subject to the conditions of this Agreement, on the Closing Date
the Seller shall sell, transfer, assign, convey and deliver to
the Purchaser, and the Purchaser shall purchase and acquire from
the Seller, subject to the exclusions set forth in Section 2.3,
all of the business and operations of the Seller conducted
through BFD (such business and operations being referred to
herein as the "BFD Acquired Business") and all right, title and
interest of Seller as of the Closing Date in and to the assets,
rights, properties, claims and contracts in respect of the BFD
Acquired Business as they appear on the Books and Records of
Seller as of the close of business on the Closing Date, including
without limitation the following:
(a) Loans and Loan Commitments, including the
Allowance for Credit Losses Reserves in respect of
all Loans and Loan Commitments;
(b) Repossessions;
(c) Accrued Interest;
(d) Sundry Receivables;
(e) Assigned Leases;
(f) all Personal Property and Leasehold Improvements
located on or associated with the Transferred
Offices or otherwise utilized in the BFD Acquired
Business;
(g) all prepaid expenses relating to the BFD Acquired
Business;
(h) Assumed Contracts and Other Obligations;
(i) the trademark "We Build Relationships";
(j) Records;
(k) Assigned Software;
(l) the KB Investment;
(m) any cash, bank deposits and other cash equivalents
securing or otherwise relating to Loans or Loan
Commitments included in the Acquired Assets;
(n) the right to receive from ICG fees in respect of
the guaranty obligation of BFD being assumed by
Purchaser pursuant to Section 2.4(g);
(o) a non-exclusive license to use the letter of
credit application and processing software of ISG;
(p) Unearned Fees in respect of Loans and Loan
Commitments; and
(q) all client relationship value, goodwill, going
concern value and other customer based intangible
assets attributable to the BFD Acquired Business
(except as such items may relate to the Excluded
Assets).
2.2 CONVEYANCE OF ASSETS. The sale, transfer,
assignment, conveyance and delivery of the Acquired Assets
described in Section 2.1 (other than the Loans and Loan
Commitments) shall be made, as necessary, by the Seller's
delivery, at the closing, of assignments, bills of sale or
assignments of leases or subleases, as the case may be. With
respect to the Loans and Loan Commitments included in the
Acquired Assets, the Seller shall execute and deliver such
instruments and documents of conveyance (in each instance as
prepared by the Seller and in form and substance satisfactory to
the Purchaser) as are necessary or advisable (collectively, the
"Loan Transfer Documents") to transfer to and vest in the
Purchaser the full legal and equitable title of Seller in and to
the assets transferred to the Purchaser under this Agreement,
including without limitation, valid and perfected liens and
security interests in all collateral and other security
arrangements securing each of the Loans and Loan Commitments;
provided that the Loan Transfer Documents shall not expressly or
impliedly include, or be deemed to include, any representations
or warranties as to the effectiveness of such transfers,
conveyances or assignments beyond these explicitly set forth in
this Agreement. The documents and instruments referred to in
this section shall be prepared, and the costs relating thereto
shared, in the manner set forth in Section 7.13. Seller and
Purchaser shall at the Closing enter into the Servicing Agreement
with respect to each Excluded Loan, and Seller and Purchaser
agree to fulfill their obligations under the Servicing Agreement
and under any other agreement entered into in connection with the
Servicing Agreement.
2.3 ASSETS EXCLUDED. Notwithstanding anything to the
contrary contained in this Agreement, the Purchaser shall not
acquire under this Agreement:
(a) any cash, bank deposits and other cash equivalents
(other than any of the same which secure or are
otherwise related to Loans or Loan Commitments
included in the Acquired Assets);
(b) all rights of the Seller under the Confidentiality
Agreement and this Agreement and the
consideration, agreements, instruments and
certificates delivered in connection with this
Agreement;
(c) any claims of the Seller against current or former
officers or directors of the Seller or its
Affiliates;
(d) Seller's charter documents, non-transferable
licenses, permits, charters, corporate seals,
minute books, stock books and other corporate
records having to do with the corporate
organization and capitalization of Seller, and all
records relating to Taxes, including but not
limited to all books, records and other
documentation which are or may be pertinent to any
examination, audit or other inquiry relating to
Taxes concerning any period prior to and including
the Closing Date;
(e) Seller's personnel records pertaining to any
employees of Seller not hired by Purchaser,
personnel references and security or background
investigation materials which were prepared or
obtained at the time of hiring with respect to
employees of Seller and any other books and
records which Seller is required by law to retain,
provided that the Acquired Assets shall include
copies of any portions of such retained books and
records that relate to the BFD Acquired Business
or any of the Acquired Assets or Assumed
Liabilities;
(f) any claim, right or interest of Seller in and to
any refund or credit for foreign, federal, state
or local income or other taxes for periods ending
on or prior to the Closing Date, including any
deferred tax asset;
(g) the assets and rights described on Schedule
2.3(g);
(h) all amounts owed by any Seller Affiliate to Seller
and all rights of Seller under agreements or
relationships with any Seller Affiliate, including
without limitation in connection with interest
rate hedging transaction;
(i) reserves and accruals on the Records of Seller
relating to Excluded Assets or Excluded
Liabilities;
(j) Investments other than the KB Investment;
(k) Excluded Loans; and
(l) any other rights relating to any Excluded Asset.
2.4 TRANSFER AND ASSUMPTION OF LIABILITIES. In
addition to performing the obligations and agreements required to
be performed by it under the terms of this Agreement, on the
Closing Date Purchaser shall, on the terms and subject to the
conditions of this Agreement (including without limitation
Article 11 hereof), assume, agree to pay, perform and discharge
when due all of the following liabilities of BFD as of the
Closing Date:
(a) obligations under Loans and Loan Commitments
included in the Acquired Assets;
(b) obligations under Loan Documents relating to such
Loans and Loan Commitments;
(c) obligations of Seller under the Assigned Leases
and Assumed Contracts and Other Obligations;
(d) obligations in respect of Repossessions, including
without limitation obligations in respect of ad
valorem taxes relating to real property and
personal property taxes relating to Personal
Property comprising the Repossessions;
(e) liabilities to trade creditors of BFD to the
extent reflected on the Final Asset and Liability
Schedule;
(f) liabilities that may arise in connection with any
litigation that has been or may be brought against
(i) Seller or (ii) Seller and any of its
Affiliates (but excluding in the case of clause
(ii) any proportionate share of such liabilities
relating to the actions and omissions of any such
Affiliate), in any case in connection with or
arising out of the BFD Acquired Business,
including without limitation those claims against
Seller described in Schedule 2.4(f)-A, but
excluding the litigation described in Schedule
2.4(f)-B;
(g) obligations arising in connection with the
guarantee by BFD of Loans and Loan Commitments
made or extended by ICG as set forth on Schedule
2.4(g);
(h) obligations of BFD to reimburse ISG for drawdowns
on letters of credit issued by ISG on behalf of
Debtors of BFD in connection with Loans and Loan
Commitments included in the Acquired Assets as set
forth on Schedule 2.4(h);
(i) obligations arising under participation
arrangements sold to third parties with respect to
Loans and Loan Commitments included in the
Acquired Assets as set forth on Schedule 2.4(i);
and
(j) all other liabilities and obligations relating to
in any manner or arising out of the Acquired
Assets, the Assumed Liabilities or the BFD
Acquired Business transferred pursuant to this
Agreement as conducted through the Closing Date,
whether primary or secondary, direct or indirect,
absolute or contingent, contractual, tortious or
otherwise, excluding only those liabilities of
Seller which are reflected on Schedule 2.4(j) as
being retained by Seller.
Notwithstanding the foregoing, Purchaser shall not assume (i) any
liability or obligation in respect of any indebtedness of Seller
to any of its Affiliates, (ii) any liability or obligation of
Seller to any of its Affiliates in connection with any contract
or arrangement, including without limitation, interest rate
hedging transactions (except as expressly set forth in Sections
2.4(g) and (h)), (iii) except as expressly provided in Article 8
hereof, any liability for Taxes including, without limitation,
any liability for Taxes imposed on the Seller pursuant to
Treasury Regulation Section 1.1502-6 (and any comparable state,
local or foreign law or regulation) as a result of being a member
of an affiliated group of corporations as defined in Section 1504
of the Code and any liability for Taxes arising from any Tax
sharing agreement or similar arrangement, (iv) any liability for
the payment of an "excess parachute payment", as defined in
Section 280G of the Code, (v) except as specifically provided in
Section 7.7 hereof, any liabilities arising under any employee
benefit plan, program, arrangement or agreement maintained or
contributed to by Seller, BFD or their respective Affiliates, or
(vi) any liability for which indemnification is provided pursuant
to clause (iv), (v), (vi) or (vii) of Section 11.2(a).
Except as expressly provided in this Section 2.4,
neither Purchaser nor any of its Affiliates is assuming, and none
of them shall be deemed to have assumed, any liabilities,
obligations or duties of Seller or any of Seller's Affiliates of
any kind or nature whatsoever (whether primary or secondary,
direct or indirect, absolute or contingent, contractual, tortious
or otherwise), and Seller or its Affiliates, as the case may be,
shall remain and be solely and exclusively liable with regard to
such liabilities and obligations.
2.5 MANNER OF ASSUMPTION. (a) The Seller and the
Purchaser shall execute and deliver at the Closing an assumption
agreement in form and substance reasonably satisfactory to the
Purchaser and the Seller and such other assignments and
assumption agreements as may be necessary and appropriate to
effect the assumption by the Purchaser of the obligations and
liabilities assumed by the Purchaser under this Agreement and the
transfer to the Purchaser of all rights and obligations, to the
extent possible, of the Seller under the Assigned Leases and all
Assumed Contracts and Other Obligations.
(b) On and after the Closing Date, the Purchaser shall
give such further assurances to the Seller, and shall execute,
acknowledge and deliver all such acknowledgements and other
instruments, as the Seller shall reasonably request to
effectively relieve and discharge the Seller from any obligations
assumed by the Purchaser pursuant to this Agreement.
ARTICLE 3. CONSIDERATION
3.1 PURCHASE PRICE. (a) At the Closing, Purchaser
shall pay to Seller to such account as Seller shall have
designated in writing to Purchaser at least two business days
prior to the Closing Date funds immediately available in New York
City in an amount equal to the Interim Amount.
(b) Upon the availability of the Final Asset and
Liability Schedule prepared pursuant to Section 3.2(a), and
subject to the terms and conditions of Section 3.2, the Seller
and Purchaser shall calculate the amount of the Adjustment. If
the Adjustment is a positive number, Purchaser shall promptly pay
to the Seller the amount of such Adjustment, together with
interest from the Closing Date to the date of payment at the
average of the Federal Funds Rate or Rates in effect from time to
time during such period. If the Adjustment is a negative number,
the Seller shall promptly pay to Purchaser the absolute value of
the amount of such Adjustment, together with interest from the
Closing Date to the date of payment at the average of the Federal
Funds Rate or Rates in effect from time to time during such
period.
3.2 ASSET AND LIABILITY SCHEDULES. (a) The Seller
shall cause to be prepared a schedule (the "Interim Asset and
Liability Schedule") prepared in accordance with the BFD
Accounting Principles as in effect on September 30, 1994 and
substantially in the form of Schedule 3.2(d) setting forth (i)
the Book Value of all Acquired Assets and (ii) the Book Value of
all Assumed Liabilities, in each case through and including the
close of business on the Interim Date. The Seller shall provide
a copy of such Schedule to the Purchaser no later than seven
business days prior to the Closing Date, and such Schedule shall,
absent manifest error, serve as the basis for the calculation of
the Interim Amount payable on the Closing Date.
(b) As promptly as practicable but no later than 30
days after the Closing Date, the Seller shall cause to be
prepared a schedule (the "Final Asset and Liability Schedule")
prepared in accordance with the BFD Accounting Principles as in
effect on September 30, 1994 and substantially in the form set
forth on Schedule 3.2(d) setting forth (i) the Book Value of all
Acquired Assets and (ii) the Book Value of all Assumed
Liabilities, in each case through the close of business on the
Closing Date. Purchaser shall cooperate with Seller in
connection with the preparation of the Final Asset and Liability
Schedule, and shall give Seller full access to the Books and
Records of the BFD Acquired Business to the extent necessary or
appropriate in order to facilitate such preparation, and provide
Seller with such other information as it may reasonably request
in connection with such preparation. Upon the availability of
the Final Asset and Liability Schedule, the Seller shall deliver
same to the Purchaser, together with a duly completed and
executed certificate of a senior officer of Seller to the effect
that, to the best knowledge of such officer, such Schedule has
been prepared in accordance with the requirements of this
Agreement.
(c) (i) Purchaser shall promptly review the Final
Asset and Liability Schedule and work papers of Seller
related to its preparation and shall make inquiries with
respect thereto of representatives of Seller as Purchaser
shall deem necessary or appropriate. In the event of any
disagreement concerning the Final Asset and Liability
Schedule (or the computation or determination in accordance
with the terms of this Agreement of any item or amount),
Purchaser shall notify Seller in writing thereof not later
than thirty (30) days after delivery of the Final Asset and
Liability Schedule to Purchaser, specifying in reasonable
detail the disagreement and the basis therefor. In the
event there is no such disagreement or in the event that
Purchaser so notifies Seller of a disagreement as to any
such item or amount, then any payment based on the Final
Asset and Liability Schedule required to be made under this
Agreement shall initially be made no later than thirty (30)
days after delivery of the Final Asset and Liability
Schedule to Purchaser, all on the basis of such items or
amounts as to which the parties do not disagree.
(ii) In the event that any disagreement notified to
Seller by Purchaser in accordance with the foregoing
procedures is not resolved pursuant to a written agreement
between the parties prior to the close of business in New
York City on the eighth business day following the date
seller received such notification of such disagreement,
either Seller or Purchaser shall thereupon be entitled to
request KPMG Peat Marwick or any other firm mutually agreed
to by the parties ("Peat") to determine, in accordance with
the provisions of this Agreement, the disputed item or
amount (or computation or determination thereof). Any such
request shall be in writing and shall specify with
particularity the disputed items, amounts or computations
being submitted for determination, and the requesting party
shall furnish the other parties hereto with a copy of such
request at the same time it is submitted to the independent
accountants.
(iii) Peat shall as promptly as practicable determine,
in accordance with the provisions of this Agreement and the
BFD Accounting Principles in effect on September 30, 1994,
the proper amount of any disputed item or other amount, or
the computation thereof, and such determination shall be
final, conclusive and binding on all parties hereto. Seller
and Purchaser shall cooperate fully in assisting such firm
in making any determination requested hereunder, including
giving such firm full access to all files, books and records
relevant thereto and providing such other information as
such firm may reasonably request in connection with the
determination to be made by it hereunder. Peat shall
promptly and substantially simultaneously notify Purchaser
and Seller in writing of any determination by it hereunder.
The fees and disbursements in connection with such firm's
determination shall be borne (i) by Purchaser, if Seller's
position with respect to the disputed payment amount is
fully upheld by such determination, (ii) by Seller, if
Purchaser's position with respect to the disputed payment is
fully upheld by such determination and (iii) otherwise by
Purchaser and Seller based upon the relative portions of the
disputed payment amount resolved against such party by such
determination.
(iv) In the event that a payment is required to be
made by any party pursuant to the terms of this Section,
such payment shall be made promptly (and in any event within
5 days after the date of an agreement between the parties or
of receipt by the parties of written notice of a
determination by Peat pursuant to this Section, as the case
may be), together with interest accrued pursuant to Section
3.1(b). Purchaser and Seller agree that the settlement of
amounts payable pursuant to this Section will not be
considered to be a claim for indemnification pursuant to the
provisions of Section 11.2, and will not limit or affect
their respective rights thereunder.
(d) In order to illustrate the parties' intent with
respect to the amounts payable by Purchaser pursuant to this
Agreement, attached hereto as Schedule 3.2(d) is a schedule which
sets forth the Book Value of all of the Acquired Assets and
Assumed Liabilities as of, and calculates the amount that would
have been payable by Seller pursuant to this Agreement if, the
Closing Date was September 30, 1994.
(e) The parties hereto agree that the Interim and
Final Asset and Liability Schedules shall not reflect a reserve
or allowance in respect of any contingent liabilities relating to
pending or threatened litigation, provided that the foregoing
does not diminish or otherwise adversely affect the Purchaser's
right to seek indemnification under Section 11.2. The parties
further agree that the Allowance for Credit Losses Reserve
reflected on the Interim and Final Asset and Liability Schedules
shall be established in accordance with the BFD Accounting
Principles as in effect on September 30, 1994; provided that
since September 30, 1994 the Seller has not effected and will not
effect any discretionary increase or decrease in the Allowance
for Credit Losses Reserve.
ARTICLE 4. CLOSING; TIME AND PLACE.
Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned
pursuant to the provisions of Section 10.1, and subject to the
conditions of Article 9 hereof, the closing (the "Closing") of
the purchase and assumption of the assets and liabilities shall
take place at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York on January 31, 1995,
provided, that in the event the conditions set forth in Article 9
are not satisfied on such date, the Closing shall occur on the
next succeeding month-end date on which such conditions are
satisfied, or at such other place, time and date as the parties
may mutually agree. The date and time of such Closing are herein
referred to as the "Closing Date." For purposes of this
Agreement, the Closing shall be deemed to be effective
immediately following the close of business on the month-end date
to which the Closing relates.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND
PARENT.
The Seller and Parent represent and warrant as follows:
5.1 CORPORATE ORGANIZATION AND AUTHORITY. The Seller
is a corporation organized under the laws of Connecticut, duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, and the Seller has the
requisite power and authority to conduct the businesses being
transferred pursuant to this Agreement, to maintain the Assumed
Liabilities and to own, lease and/or operate, as the case may be,
the Acquired Assets. Parent is a public limited company duly
organized, validly existing and in good standing under the laws
of England. Parent has the corporate power and authority to
carry on its business as it is now being conducted and to own,
lease and/or operate, as the case may be, all of its properties
and assets. Each of Parent and the Seller has the requisite
corporate power and authority and has taken or, in the case of
Seller, will prior to the Closing Date take, all corporate action
necessary in order to duly and validly execute and deliver this
Agreement, the Servicing Agreement and each of the other
agreements entered into in connection herewith and therewith to
which it is a party, to consummate the transactions contemplated
hereby and thereby and to perform all of the terms of this
Agreement, the Servicing Agreement and each of the agreements
entered into in connection herewith and therewith to be performed
by it hereunder and thereunder. This Agreement, the Servicing
Agreement and each of the agreements entered into in connection
herewith and therewith has been duly and validly executed and
delivered by each of Seller and Parent where it is a party and
(subject in the case of Seller to the taking of the corporate
action referred to above) is a valid and binding agreement of
each of the Seller and Parent enforceable against Seller and
Parent in accordance with its terms except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors rights generally
and by general equitable principles.
5.2 NO CONFLICT; LICENSES AND PERMITS; COMPLIANCE WITH
LAWS AND REGULATIONS. Except as set forth on Schedule 5.2, the
execution, delivery and performance by the Seller and Parent of
this Agreement, the Servicing Agreement and the other agreements
entered into in connection herewith and therewith to which it is
a party, do not and will not (i) violate any provision of the
certificates of incorporation or by-laws of the Seller or Parent
or (ii) violate, conflict with, or constitute a breach of, or
default (or event which, with notice or lapse of time, or both,
would constitute a default) under, or the loss of any benefit
under, or result in the termination of or a right of termination
or cancellation of, or accelerate the performance required by, or
result in the creation of any Liens under, any law, rule,
regulation, judgment, decree, ruling or order of any court,
government or governmental agency applicable to the Seller or
Parent or any of the respective properties or assets of Seller or
Parent or under any agreement, instrument or obligation of the
Seller or Parent or to which the Seller or Parent is subject or
is a party or by which the Seller or Parent is otherwise bound or
affected (including the Assumed Contracts and Other Obligations),
or to which any of their respective properties or assets
(including the Acquired Assets) are subject, other than, in each
case described in clause (ii) above, violations, breaches,
defaults and other events which, individually or in the
aggregate, have not had and could not reasonably be expected to
have a Material Adverse Effect. The Seller has all licenses,
franchises, permits, certificates of public convenience, orders
and other authorizations (collectively, "Licenses") of all
federal, state and local governments and governmental authorities
necessary for the lawful ownership and use of Acquired Assets and
the conduct of its business as now conducted other than Licenses
the absence of which, individually or in the aggregate, has not
had and could not reasonably be expected to have a Material
Adverse Effect, and all such Licenses are valid and in good
standing and are not subject to any suspension, modification or
revocation or proceedings related thereto except where the
invalidity, lack of good standing, suspension, modification or
proceeding, individually or in the aggregate, has not had and
could not reasonably be expected to have a Material Adverse
Effect. The Seller is in compliance with all applicable laws,
rules, regulations, ordinances, statutes and consent decrees of
all federal, state and local governments to which BFD's
operations at the Transferred Offices are subject except where
the failure to be in compliance, individually or in the
aggregate, has not had and could not reasonably be expected to
have a Material Adverse Effect.
5.3 APPROVALS AND CONSENTS. Except as described in
Schedule 5.3, no notices, reports or other filings are required
to be made by the Seller or Parent with, nor are any consents,
registrations, approvals, permits or authorizations required to
be obtained by the Seller or Parent from, any governmental or
regulatory authorities of the United States or the several States
or any other Persons in connection with the execution and
delivery of this Agreement by the Seller or Parent and the
consummation by the Seller or Parent of the transactions
contemplated hereby.
5.4 TITLE TO ASSETS, ETC. (a) The Seller has or will
have at Closing, and will convey to the Purchaser at Closing,
good title to the Loans, Loan Commitments and Loan Documents and
all of the other Acquired Assets (other than those Acquired
Assets leased by Seller) which pursuant to this Agreement are to
be transferred to Purchaser, subject only to (i) the matters
specifically set forth on Schedule 5.4(a), (ii) liens for taxes
being contested in good faith by appropriate proceedings, (iii)
liens of carriers and warehousemen incurred in the ordinary
course of business for sums not yet due, (iv) liens incurred or
deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids,
leases, performance and return-of-money bonds and similar
obligations and (v) other matters affecting such title which do
not, in any case covered by clauses (i) through (v), individually
or in the aggregate, materially impair the value of, or interfere
with the Purchaser's ability to use in substantially the same
manner as it is currently used by the Seller, such Acquired Asset
or otherwise materially impair the business operations of the BFD
Acquired Business (the matters described in clauses (i) through
(v), collectively, the "Permitted Liens"). Seller has not
granted or transferred to any other party any interest in the
Personal Property owned or leased by Seller other than pursuant
to the Permitted Liens.
(b) The Seller has or will have at the Closing, and
will convey to Purchaser at Closing, a valid leasehold interest
in the Transferred Offices which pursuant to this Agreement are
to be transferred to Purchaser, subject to (i) the matters
specifically set forth on Schedule 5.4(b), (ii) liens of
mechanics and materialmen incurred in the ordinary course of
business which are being contested in good faith by appropriate
proceedings or which are bonded, (iii) matters of record
(including easements, restrictions, covenants and other
exceptions to title) which do not materially impair the value of,
or interfere with the present use of, such Transferred Office or
otherwise materially impair the business operations of the
Seller, (iv) matters affecting the landlord's title and (v) other
exceptions to title which do not, in any case covered by clauses
(i) through (v), individually or in the aggregate, materially
impair the value of, such Transferred Office or interfere with
the Purchaser's ability to use such Transferred Office in
substantially the same manner as currently used by the Seller, or
otherwise materially impair the business operations of the BFD
Acquired Business (the matters described in clauses (i) through
(v), collectively the "Permitted Encumbrances"). The Seller has
not granted or transferred to any other party any interest in its
leasehold estate in a Transferred Office other than Permitted
Encumbrances.
(c) To the best of Seller's knowledge, all of the
Transferred Offices and Leasehold Improvements conform in all
material respects to all applicable health and safety ordinances;
provided that no representation or warranty is made with respect
to compliance with the Americans with Disabilities Act and
regulations issued thereunder or similar state and local rules,
statutes and ordinances.
5.5 LEASES. Each Assigned Lease is the valid and
binding obligation of the Seller and, to the knowledge of the
Seller, each of the other parties thereto, and there does not
exist with respect to the Seller's obligations thereunder or, to
the knowledge of the Seller, with respect to the obligation of
the lessor thereof, any material default, or event or condition
which constitutes, or after notice or passage of time or both
would constitute, a material default on the part of the Seller or
the lessor under any Assigned Lease. All rents, expenses and
charges which are or shall as of the Closing Date be due and
payable by the Seller have been or as of the Closing Date shall
have been paid or fully accrued on the Final Asset and Liability
Schedule pursuant to the terms of each Assigned Lease.
5.6 CONTRACTS AND DEFAULTS. Schedule 1.10 includes a
list of all of the Assumed Contracts and Other Obligations in
effect as of the date hereof. True and complete copies of all
such Assumed Contracts and Other Obligations have been made
available to the Purchaser. Except as set forth in Schedule
1.10, all of the Assumed Contracts and Other Obligations (whether
or not disclosed to the Purchaser pursuant to this Section 5.6)
are valid and binding obligations of Seller and, to the knowledge
of Seller, all of the other parties thereto, and are in full
force and effect and are enforceable in accordance with their
respective terms, and no event has occurred and remains uncured
which constitutes a material default or breach or results in a
right of acceleration, termination or any similar right by any
party (or would, with the passage of time or the giving of
notice, constitute a material default or breach or result in such
a right of acceleration, termination or similar right) under any
such contract, agreement or commitment, and Seller has duly
performed all its obligations under each such contract, agreement
or commitment to the extent such obligations have accrued, other
than such defaults, breaches or results as have not had and could
not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
5.7 LOANS AND LOAN COMMITMENTS. (a) Each Loan or
Loan Commitment being transferred to Purchaser pursuant to this
Agreement was made or acquired by BFD in the ordinary course of
business at the time such Loan or Loan Commitment was made or
acquired, as the case may be. Schedule 5.7(a) contains the
following true and correct information (as of three days
preceding the date of this Agreement with respect to clauses (i)
and (ii) and as of September 30, 1994 with respect to clause
(iii)) with respect to each Loan or Loan Commitment being
transferred to Purchaser hereby: (i) the unpaid principal
balance of each such Loan as well as the aggregate amount of each
Loan Commitment, (ii) the payment status of each such Loan and
(iii) the schedule of principal and interest payments of each
such Loan and the amounts thereof.
(b) Except as described on Schedule 5.7(b), with
respect to each Loan or Loan Commitment being transferred to
Purchaser pursuant to this Agreement:
(1) Each Loan Document constitutes a valid, legal and
binding obligation of the obligor thereunder, enforceable in
accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium, laws governing
fraudulent conveyance or equitable subordination and other
similar laws of general applicability relating to or
affecting creditors' rights generally and to general
principles of equity; each Loan Document contains customary
and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization
(including realization by judicial foreclosure) of the
benefits intended to be provided by the security interest or
lien created and granted by such Loan Document, subject to
bankruptcy, insolvency, reorganization, moratorium, laws
governing fraudulent conveyance or equitable subordination
and other similar laws of general applicability relating to
or affecting creditors' rights generally and to general
principles of equity; and except as set forth on Schedule
5.7(b)(1), all Liens granted to the Seller in any collateral
described in each Loan Commitment and Loan Document as
security for each Loan and Loan Commitment constitute valid
and perfected Liens in such collateral (assuming the
relevant Debtor has rights in the collateral as to permit
attachment), subject to (x) bankruptcy, insolvency,
reorganization, moratorium, laws governing fraudulent
conveyance or equitable subordination and other similar laws
of general applicability relating to or affecting creditors'
rights generally and to general principles of equity
provided that the effect of all such laws would not have
more than a de minimis adverse impact on the value and
benefits of the collateral, taken as a whole, securing the
Loans and Loan Commitments and (y) federal and state laws
relating to fraudulent conveyances and preferences;
(2) All Loans, Loan Commitments and related Loan
Documents were issued, made and maintained in accordance
with applicable law; under existing law, there is no valid
claim against Seller with respect to, or valid defense to
the enforcement of, such Loan or Loan Commitment and neither
the Seller nor any of its Affiliates has taken or failed to
take any action that would entitle any Debtor or other party
to assert successfully any claim or defense against the
Seller or the Purchaser (including without limitation any
right not to repay any such obligation or any part thereof);
(3) Such Loan or Loan Commitment was made
substantially in accordance with BFD's standard underwriting
and documentation guidelines as in effect at the time of its
origination and has been administered substantially in
accordance with BFD's standard loan servicing and operating
procedures as in effect from time to time. Appended hereto
as Exhibit 5.7(b)(3) are copies of (x) BFD's standard
underwriting and documentation guidelines currently in
effect and (y) BFD's current standard loan servicing and
operating procedures; and
(4) None of the rights or remedies under the Loan
Documents in favor of the Seller have been amended,
modified, waived, supplemented, subordinated or otherwise
altered by Seller or BFD other than in good faith and in the
ordinary course of business and all writings and other
documents relating to any such amendment, modification,
waiver, supplement, subordination or other alteration of any
Loan or Loan Commitment are included among the Loan
Documents to be transferred to Purchaser pursuant to Section
2.2.
(c) There are no intentional misrepresentations of
material facts made by officers or employees of the Seller in the
credit files relating to the Loans and Loan Commitments, provided
that the term "facts" shall not include judgments or opinions
(including, without limitation, industry analyses) of such
officers or employees which were made in good faith; the
classification assigned to a Loan or Loan Commitment and in
effect as of September 30, 1994 has been designated in accordance
with the standards of the BFD Acquired Business then in effect.
(d) Schedule 5.7(d) lists all Loans owned by BFD
classified as Non-Performing Loans as of September 30, 1994.
(e) Since September 30, 1994 no Loan or Loan
Commitment (or any interest therein) which would otherwise be
included in the Acquired Assets or Excluded Loans has been
assigned or sold in any manner, except in the ordinary course of
business or as scheduled on Schedule 5.7(e).
(f) Schedule 5.7(f) identifies all separate accounts,
including, but not limited to, all lockboxes, escrow accounts,
cash collateral accounts, investment accounts and security
deposits held or maintained by or on behalf of Seller or any
Debtor in connection with any Loan or Loan Commitment.
(g) Upon the payment of the Interim Amount on the
Closing Date and the execution, delivery and, if necessary,
filing and/or recording of the Loan Transfer Documents, Seller
will have validly transferred and assigned to Purchaser all of
Seller's right, title and interest in all Loans, Loan Commitments
and Loan Documents and all rights relating thereto, including,
without limitation, all of Seller's Liens and security interests
in any and all collateral described in any Loan Document as
security for the related Loan; provided that the representation
and warranty of Seller in this Section 5.7(g) shall only become
applicable to the Excluded Loans upon the full transfer thereof
by Seller to Purchaser following receipt of all requisite
consents.
(h) Each file of Loan Documents pertaining to each
Loan includes all documents relating to each such Loan that are
necessary to enforce such Loan.
(i) Except as set forth in Schedule 5.7(i), since
January 1, 1990 neither Seller nor BFD has assigned, transferred
or conveyed (by participation or otherwise) any Loans or Loan
Commitments (i) at a discount from its outstanding principal
balance at the time of such sale (except for such discounts
attributable solely to the interest rate of such loan) or (ii) to
any Affiliate of BFD (including without limitation to another
division of Seller).
(j) To the best knowledge of the Seller, Schedule
5.7(j)-A and Schedule 5.7(j)-B lists all Loans and Loan
Commitments which, as of the Closing Date, will be Excluded Loans
unless all required consents are obtained.
(k) Without in any way limiting Seller's liability
with respect to any breach of or misrepresentation under any
other provisions of this Agreement, the Seller makes no
representation or warranty with respect to the amount that may
ultimately be collected or the credit quality of the Loans and
Loan Commitments comprising the Acquired Assets, the value or
condition of any collateral securing such Loans and Loan
Commitments, the creditworthiness or financial condition of the
Debtors under such Loans and Loan Commitments or, subject to
subsection 5.7(c), with respect to the evaluations contained or
conclusions reached in any credit analyses delivered to the
Purchaser.
5.8 LIST OF TRANSFERRED OFFICES. Schedule 5.8
contains a list, complete and accurate in all material respects,
setting forth as of a recent date identified in Schedule 5.8 the
address of each Transferred Office which is leased by the Seller
and Schedule 1.8 contains a complete and accurate list as of the
date hereof of each such lease agreement and all material
amendments thereto.
5.9 ENVIRONMENTAL MATTERS. (a) For purposes of this
Section 5.9, the following terms shall have the indicated
meaning:
"Environmental Law" means any applicable federal, state
or local statute, law, ordinance, rule, or regulation, now
existing, relating to pollution or protection of the
environment, including natural resources or the exposure to
materials in the environment or workplace. For the purposes
of this definition the term "Environmental Law" shall
include, without limiting the foregoing, (A) the following
statutes, as amended:
(i) the Clean Air Act, as amended, 42 U.S.C.
SECTION 7401 et seq.;
(ii) the Federal Water Pollution Control Act, as
amended, 33 U.S.C. SECTION 1251 et seq.;
(iii) the Resource Conservation and Recovery Act
of 1976, as amended, 42 U.S.C. SECTION 6901 et seq.;
(iv) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended
(including, the Superfund Amendments and
Reauthorization Act of 1986, "CERCLA"), 42 U.S.C.
SECTION 9601 et seq.;
(v) the Toxic Substances Control Act, as amended,
15 U.S.C. SECTION 2601 et seq.;
(vi) the Occupational Safety and Health Act, as
amended, 29 U.S.C. SECTION 651;
(vii) the Emergency Planning and Community Right-
to-Know Act of 1986, 42 U.S.C. SECTION 11001 et seq.;
(viii) the Safe Drinking Water Act, 42 U.S.C.
SECTION 300f et seq.; and
(ix) all comparable state and local laws and
regulations; and
(B) the terms and conditions of any permit, license,
authority, settlement or other obligation applicable to BFD
under Environmental Law.
"Real Property" means real property classified by BFD
as Repossessions.
(b) To the Seller's knowledge, there are no pending or
threatened claims, actions or proceedings under Environmental Law
against Seller involving BFD relating to:
(i) an asserted liability of Seller under
Environmental Law; or
(ii) the handling, storage, use or disposal of
materials;
(iii) the actual or threatened discharge, release
or emission of materials from, on or under or within
the Real Property or any other property; or
(iv) personal injuries or damage to property
(including, without limitation, nuisance, diminished
enjoyment and diminished value) related to or arising
out of exposure to materials discharged, released or
emitted from or into, or transported from or to, the
Real Property.
(c) To the Seller's knowledge, and other than with
respect to matters which, individually or in the aggregate, have
not had or could not reasonably be expected to have a Material
Adverse Effect, no conditions exist or acts have occurred which
form the basis for claims, actions or proceedings under Section
5.09(b).
5.10 LABOR CONTRACTS AND RELATIONS. With respect to
employees of BFD, the Seller is not party to any collective
bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization, nor is
the Seller the subject of a proceeding asserting it has committed
an unfair labor practice or seeking to compel it to bargain with
any labor organization as to wages and conditions of employment,
nor is any such proceeding threatened, nor is there any strike or
other labor dispute by employees of BFD, pending or threatened,
nor is the Seller aware of any activity involving any employees
of BFD seeking to certify a collective bargaining unit or
engaging in any other union organizational activity.
5.11 FINANCIAL STATEMENTS. Schedule 5.11 contains the
balance sheets of BFD as of December 31, 1993, 1992 and 1991 and
as of September 30, 1994 (the "Balance Sheets") and the related
statements of income for the years ended December 31, 1993, 1992
and 1991 and the nine months ended September 30, 1994 (the
"Income Statements"; together with the Balance Sheets, the
"Financial Statements"). The Financial Statements have been
prepared in accordance with BFD Accounting Principles applied on
a consistent basis except as may be stated therein and in all
material respects present fairly, with respect to the Balance
Sheets, the financial position of BFD as of the dates set forth
therein, and with respect to the Income Statements, the results
of their operations for each of the periods set forth therein,
subject, where appropriate, to normal year-end adjustments. The
Allowance for Credit Losses Reserves as of the date of each of
the Balance Sheets has been prepared in accordance with BFD
Accounting Principles; however, no representation or warranty is
made as to the adequacy of the Allowance for Credit Losses
Reserve.
5.12 LITIGATION. Except as set forth on Schedule
5.12, as of the date hereof, Seller is not a party to any
pending, and to Seller's knowledge, there are no threatened,
legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any
nature against or affecting Seller, the Acquired Assets
(excluding collateral), the Assumed Liabilities or the BFD
Acquired Business.
5.13 BROKERS' FEES. Except for BZW Division of
Barclays Bank PLC ("BZW"), the Seller has not employed any broker
or finder or incurred any liability for any brokerage fees,
commissions or finders' fee in connection with the transactions
contemplated by this Agreement. The Seller will pay the fees of
BZW.
5.14 EMPLOYEE BENEFITS. (a) Schedule 5.14 lists each
"employee benefit plan" (within the meaning of section 3(3) of
ERISA) and any other employee plan or agreement maintained by the
Seller for the benefit of the employees of BFD (the "Bank
Plans"). Copies or descriptions of the Bank Plans have been or
will be made available to the Purchaser.
(b) Each Bank Plan is in substantial compliance with
ERISA and the Code where such failure to comply would have a
Material Adverse Effect. Each Bank Plan with respect to which
assets and liabilities are to be transferred to an employee
benefit plan maintained by Purchaser, if intended to be qualified
under the Code, is so qualified. A favorable determination
letter has been obtained from the Internal Revenue Service for
any other Bank Plan which is intended to be qualified under the
Code.
(c) No "accumulated funding deficiency" (as such term
is used in section 412 or 4971 of the Code) has heretofore
occurred with respect to any Bank Plan which would have a
Material Adverse Effect.
(d) No litigation or administrative or other
proceeding involving any Bank Plan has occurred or, to the
knowledge of Seller or BFD, been threatened where an adverse
determination would have a Material Adverse Effect.
(e) BFD does not contribute to any "multiemployer
plan" (within the meaning of section 3(37) of ERISA) and neither
BFD nor any member of its Controlled Group (defined as any
organization which is a member of a controlled group of
organizations within the meaning of Code section 414(b) or (c))
has incurred any withdrawal liability which remains unsatisfied
in an amount which, individually or in the aggregate, have had or
could reasonably be expected to have a Material Adverse Effect.
(f) Except as set forth in Section 7.7 and Schedule
5.14(f), the consummation of the transactions contemplated hereby
will not cause any benefits which are payable by the Purchaser to
be vested, increased, or payable on an accelerated basis.
5.15 UNDISCLOSED LIABILITIES. Except (a) as set forth
in Schedule 5.15, (b) for those liabilities that are fully
reflected or reserved against on Schedule 3.2(d) and (c) for
liabilities incurred since September 30, 1994 in the ordinary
course of business consistent with past practice, Seller has not
incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to
become. due).
5.16 TAXES. There are no liens for Taxes upon any of
the properties of the BFD Acquired Business other than liens for
Taxes not yet due or payable or liens for Taxes being contested
in good faith by appropriate proceedings.
5.17 LOAN PORTFOLIO. Schedule 5.17 sets forth, with
respect to each Loan or Loan Commitment owned by BFD as of the
date of this Agreement, the most recent rating or classification
of such Loan in accordance with BFD internal standards. Seller
shall promptly inform Purchaser if the rating or classification
of any such Loan or Loan Commitment (including without limitation
any new Loan or Loan Commitment) should be changed at any time
after the date of this Agreement.
5.18 ACCOUNTING RECORDS. Seller maintains records
which accurately reflect transactions in reasonable detail, and
maintains accounting controls, policies and procedures sufficient
to ensure that such transactions are (i) executed in accordance
with management's general or specific authorization, as
applicable, and (ii) recorded in a manner which permits the
preparation of financial statements in accordance with BFD
Accounting Principles, and the documentation pertaining thereto
is retained, protected and duplicated in accordance with prudent
business practices and applicable regulatory requirements.
5.19 TECHNOLOGY. (a) Schedule 5.19(a) contains a
true and complete list and description of each of the electronic
data processing, communications, telecommunications and other
computer systems which are material to the BFD Acquired Business
or the operation of the Transferred Offices (collectively, the
"Technology Systems"), including (i) a description of any
computer hardware or Assigned Software leased or owned by Seller
that is included in the operation of the Technology Systems and
(ii) a list of any contracts pursuant to which Seller is granted
rights which are used in the operation of the Technology Systems,
including Assigned Software licenses and similar agreements.
Since January 1, 1993, there has not been any material
malfunction with respect to any of the Technology Systems.
(b) Except as set forth in Schedule 5.19(b), Seller
has the right to use the Assigned Software in accordance with the
terms of the relevant contracts governing such use, free and
clear of any claims by any Person (other than the claims of any
licensors under licensing or similar agreements), and the
consummation of the transactions contemplated by this Agreement
will not alter or impair the unrestricted right of Purchaser to
use the Assigned Software, free and clear of any claims by any
Person (other than the claims of any licensors under licensing or
similar agreements). No claims have been asserted by any Person
with respect to the use by Seller of the Assigned Software or
challenging or questioning the validity or effectiveness of any
license or similar agreement with respect thereto, and, to the
knowledge of Seller, there is no basis or any such claim. The
Assigned Software is not subject to any outstanding order,
judgment, decree, stipulation or agreement restricting the use
thereof by Seller.
5.20 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
set forth in Schedule 5.20, since December 31, 1993 Seller has
not: (i) other than in the ordinary course of business
consistent with past practice, increased the wages, salaries,
compensation, pension, or other fringe benefits or perquisites
payable to any executive officer, employee, or director or
granted any severance or termination pay, entered into any
contract to make or grant any severance or termination pay, or
paid any bonus to any such person; or (ii) changed its accounting
principles, practices or methods except as required by GAAP (all
of which changes, including those required by GAAP, to the extent
made or implemented prior to the date of this Agreement, are
described in Schedule 5.20).
5.21 INVESTMENTS. Except for KB Investment, there
were no Investments as of September 30, 1994.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF SHAWMUT AND
PURCHASER
Shawmut and Purchaser represent and warrant to Seller
as follows:
6.1 CORPORATE ORGANIZATION AND AUTHORITY. Shawmut is
a corporation organized under the laws of Delaware, duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its organization. The Purchaser is a
national banking association organized under the laws of the
United States, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization.
Purchaser has the corporate power and authority to carry on its
business as it is now being conducted and to own, lease or
operate, as the case may be, all of its properties and assets.
Shawmut and Purchaser each has the requisite corporate power and
authority and franchises, permits, licenses and registrations and
has taken (or in the case of an assignee, will take) all
corporate action necessary in order to duly and validly execute
and deliver this Agreement, the Servicing Agreement and each of
the agreements entered into in connection herewith and therewith,
to consummate the transactions contemplated hereby and thereby
and to perform all of the terms of this Agreement, the Servicing
Agreement and each of the agreements to be entered into in
connection herewith and therewith to be performed by it hereunder
and thereunder. Any assignee of Purchaser pursuant to Section
11.10 will at the time of such assignment be a corporation duly
organized under the laws of its jurisdiction of incorporation,
validly existing and in good standing under the laws of the
jurisdiction of its organization. Any such assignee will at the
time of such assignment have the requisite corporate power and
authority and franchises, permits, licenses and registrations and
will take all corporate action necessary in order to duly and
validly conduct the businesses being transferred to it pursuant
to this Agreement, to maintain the Assumed Liabilities and to
own, lease or operate, as the case may be, the Acquired Assets.
Each of this Agreement, the Servicing Agreement and each of the
agreements to be entered into in connection herewith and
therewith has been (or will be, in the case of any such assignee)
duly and validly executed and delivered by the Purchaser and
Shawmut (or such assignee) where it is a party and is (or will
be, in the case of any such assignee) a valid and binding
agreement of Purchaser and Shawmut (or any such assignee)
enforceable against Purchaser (or any such assignee) and Shawmut
in accordance with their respective terms except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to, or affecting creditors' rights
generally and by general equity principles.
6.2 NO CONFLICT, LICENSES AND PERMITS, COMPLIANCE WITH
LAWS AND REGULATIONS. The execution, delivery and performance by
the Purchaser (and any assignee of Purchaser pursuant to Section
11.10) and Shawmut of this Agreement, the Servicing Agreement and
each of the agreements entered into in connection herewith and
therewith to which it is a party does not, and will not, (i)
violate any provision of the certificate of incorporation or by-
laws of Purchaser (or the assignee of Purchaser pursuant to
Section 11.10) and Shawmut or (ii) violate, conflict with, or
constitute a breach of, or default (or event which, with notice
or lapse of time, or both, would constitute a default) under, or
the loss of any benefit under, or result in the termination of or
a right of termination or cancellation of, or accelerate the
performance required by, or result in the creation of any Liens
under, any law, rule, regulation, order, judgment, decree or
ruling or order of any government, governmental authority or
court applicable to the Purchaser (or the assignee of Purchaser
pursuant to Section 11.10) and Shawmut or any of their respective
properties or assets or under any agreement, instrument or
obligation of the Purchaser (or the assignee of Purchaser
pursuant to Section 11.10) and Shawmut or to which the Purchaser
(or the assignee of Purchaser pursuant to Section 11.10) and
Shawmut are subject or are a party or by which the Purchaser (or
the assignee of Purchaser pursuant to Section 11.10) and Shawmut
are otherwise bound or affected or to which any of their
respective properties or assets are subject, which violation,
breach, contravention or default, individually or in the
aggregate, (1) could reasonably be expected to prevent or impair
the ability of the Purchaser to perform its obligations under
this Agreement in any material respect or (2) could reasonably be
expected to impair the validity or consummation of this Agreement
or the transactions contemplated hereby in any material respect.
6.3 APPROVALS AND CONSENTS. Other than the prior
approval of the Office of the Comptroller of the Currency and the
filing of the premerger notification required by the HSR Act and
the expiration of the required waiting period thereunder, no
notices, reports or other filings are required to be made by the
Purchaser with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by the
Purchaser from, any governmental or regulatory authorities of the
United States, the several States or any foreign jurisdictions or
any other Persons in connection with the execution and delivery
of this Agreement by the Purchaser and any assignee of Purchaser
pursuant to Section 11.10 and the consummation of the
transactions contemplated hereby by the Purchaser and any such
assignee.
6.4 BROKERS' FEES. Except for Morgan Stanley & Co.,
Incorporated, the Purchaser has not employed any broker or finder
or incurred any liability for any brokerage fees, commissions or
finders fees in connection with the transactions contemplated by
this Agreement. Purchaser will pay the fees of Morgan Stanley &
Co. Incorporated.
6.5 LITIGATION AND LIABILITIES. There are no actions,
suits or proceedings pending, or, to the best knowledge of the
management of the Purchaser, threatened against the Purchaser,
violations of law or regulation, or obligations or liabilities,
whether or not accrued, contingent or otherwise, or any facts or
circumstances of which the management of the Purchaser is aware,
including, without limitation, those relating to environmental
and occupational safety and health matters, that questions the
legality or propriety of the transactions contemplated by this
Agreement or could result in any claims against or obligations or
liabilities of the Purchaser that, individually or in the
aggregate, (i) could reasonably be expected to prevent or impair
the ability of the Purchaser to perform its obligations under
this Agreement in any material respect or (ii) could reasonably
be expected to impair the validity or consummation of this
Agreement or the transactions contemplated hereby in any material
respect.
6.6 NO IMPLIED REPRESENTATION. Notwithstanding
anything contained in this Article 6 or any other provision of
this Agreement, in entering into this Agreement, the Purchaser
has not been induced by and has not relied upon any
representations, warranties or statements, whether express or
implied, made by the Seller or any agent, employee or other
representative of the Seller or by any broker or any other person
representing or purporting to represent the Seller, which are not
expressly set forth in this Agreement, whether or not any such
representations, warranties or statements were made in writing or
orally. It is understood that any cost estimates, projections or
other predictions as to future events or results contained or
referred to in this Agreement or which otherwise have been
provided to the Purchaser are not and shall not be deemed to be
representations or warranties of the Seller. The Purchaser
acknowledges that there are uncertainties inherent in attempting
to make such estimates, projections and other predictions, that
the Purchaser is familiar with such uncertainties, that the
Purchaser is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all estimates,
projections and other predictions so furnished to it, and that
Purchaser shall have no claim against anyone with respect
thereto.
6.7 DISCLOSURE. The Diligence Group has not
intentionally withheld from the Seller any information discovered
in the course of its due diligence investigation of the Seller
prior to the date of this Agreement (other than those
representations and warranties relating to any consents required
to assign Loans, Assigned Leases or Assumed Contracts and Other
Obligations) that would indicate that one or more of the
representations and warranties of the Seller contained in this
Agreement are inaccurate.
ARTICLE 7. COVENANTS
7.1 CONDUCT OF BUSINESS. During the period from the
date hereof to the Closing Date, without the prior written
consent of the Purchaser or except as specifically contemplated
by this Agreement or as set forth on Schedule 7.1 hereof, the
Seller agrees that:
(a) the business of BFD will be operated in the
ordinary course consistent with past practice;
(b) other than in the ordinary course consistent with
past practice applicable to employees of BFD generally, (A)
no increase in the compensation payable or to become payable
by Seller to any officer, employee or agent of BFD shall be
made, (B) no bonus, percentage of compensation or other like
benefit shall be accrued to or for the credit of any
officer, employee or agent of Seller, and (C) no bonus,
stock option, profit sharing, pension, retirement or other
similar arrangement or plan affecting BFD shall be
instituted or changed;
(c) the Seller shall use its reasonable best efforts
to th&extent permitted by law to keep available to the
Purchaser the opportunity to retain the services of the
present employees of BFD, but in no event shall the Seller
be obligated to expend monies or other items of value beyond
current levels of compensation to retain employees.
Similarly, the Seller shall use its reasonable best efforts
and work in good faith to preserve its relationships with
customers and others having business relations with BFD;
(d) the Seller will duly comply with the material
legal requirements applicable to it and to the conduct of
the business of BFD;
(e) there shall be no material change in BFD's
internal auditing program, bookkeeping and recordkeeping
practices or BFD Accounting Principles (except as required
pursuant to regulatory accounting or capital requirements);
(f) the Seller shall not amend or extend, seek to
amend or extend or take any action in connection with
amending or extending any Assigned Lease other than to
effect the purposes of this Agreement or ordinary renewals
of such Assigned Leases;
(g) the Seller shall not initiate litigation (other
than actions incidental to loan recovery efforts) involving
a claim in excess of $100,000, which litigation would
otherwise be assumed by the Purchaser pursuant to this
Agreement, without the prior consent of the Purchaser, which
consent shall not be unreasonably withheld;
(h) the Seller shall not, with respect to the Acquired
Assets, Assumed Liabilities or the BFD Acquired Business,
engage or participate in any material transaction, or incur
or sustain any material obligation, except in the ordinary
course of business;
(i) the Seller shall not make any improvements to or
capital expenditures on any Transferred Office, except
pursuant to commitments for such made before the date of
this Agreement (all of which commitments are described on
Schedule 7.1(i)) and normal maintenance or refurbishing made
in the ordinary course of business or as necessary to
maintain existing assets in good repair or as required by
the Assigned Leases;
(j) the Seller shall not deviate in any material
respect from policies and procedures existing as of the date
hereof with respect to (I) classification and rating of
assets (except as required by regulatory authorities), (II)
accrual of interest on assets, and (III) underwriting or
originating loans;
(k) BFD shall not purchase any assets from, or sell
any assets to, any Affiliate of Seller that would become, or
would have been absent such sale, Acquired Assets;
(l) the Seller shall not take action or fail to take
any action that would, or could reasonably be expected to
(I) result in any of Seller's representations and warranties
set forth in this Agreement being or becoming untrue in any
material respect; (II) result in any of the conditions to
the Closing set forth in Article 9 not being satisfied;
(III) result in a material violation of any provision of
this Agreement; or (IV) otherwise be inconsistent with the
terms and provisions of this Agreement, except, in every
case, as may be required by applicable law;
(m) BFD shall not enter into any new line of business;
(n) the Seller shall continue to provide for credit
losses on the financial statements of BFD in accordance
with, and at the rate prescribed by, the BFD Accounting
Principles (including for any portion of a calendar quarter
in the event the Closing shall not occur as of the end of a
calendar quarter) and shall make no discretionary changes to
the level of the Allowance for Credit Losses Reserves
(including without limitation by way of reversals of such
reserves) which reduce the level thereof;
(o) between the date of this Agreement and the Closing
Date, the Seller shall not amend, modify, waive, supplement,
subordinate or otherwise alter any of the rights or remedies
under the Loan Documents in favor of Seller other than in
good faith and in the ordinary course of business and all
writings and other documents relating to any such amendment,
modification, waiver, supplement, subordination or other
alteration of any Loan, Loan Commitment or related Loan
Document shall be included among the Loan Documents to be
transferred to the Purchaser pursuant to Section 2.2; and
(p) the Seller shall not agree to do any of the
matters set forth in paragraph (b), (e), (f), (g), (h), (i),
(j), (k), (l), (m) or (o) of this Section 7.1.
7.2 INVESTIGATION. (a) Between the date of this
Agreement and the Closing Date, the Seller shall afford to the
Purchaser and its authorized agents and representatives
reasonable access, upon reasonable notice and during normal
business hours, to the Transferred Offices and to Records and all
other information within the Seller's possession relating to the
Acquired Assets, the Assumed Liabilities and the BFD Acquired
Business. Any request for such access will be coordinated with
the Parent. The Seller shall cause its personnel to cooperate
with the Purchaser and provide to the Purchaser reasonable
assistance in the Purchaser's investigation of matters relating
to such Acquired Assets, the Assumed Liabilities and the BFD
Acquired Business and the Purchaser's preparation for an orderly
transition. Notwithstanding the foregoing, the parties agree
that (i) the Purchaser's investigations and preparations for the
transition shall be conducted in a manner which does not
unreasonably interfere with the Seller's normal operations,
customers and employee relations, and (ii) subject to the
provisions of Section 7.2(b) hereof, prior to the Closing Date
the Purchaser shall not use the names and addresses of customers
of the Seller for any purpose and shall not communicate or
otherwise solicit such customers for any reason. No
investigation by Purchaser or its representatives pursuant to
this Section 7.2(a) or otherwise shall affect or limit the
representations, warranties or covenants of Seller set forth
herein or be considered in determining whether any closing
condition in Purchaser's favor shall have been satisfied or
Purchaser shall have the right to be indemnified for any matter
pursuant to this Agreement. Prior to the Closing Date, the
Purchaser shall promptly notify the Seller upon any member of the
Diligence Group becoming aware of any information (other than
those representations and warranties relating to any consents
required to assign Loans, Assigned Leases or Assumed Contracts
and Other Obligations) that any such member shall have discovered
that would indicate to such member that any of the
representations and warranties of Seller contained herein are
inaccurate.
(b) Purchaser shall be permitted, at its own expense,
to communicate with, and deliver information, brochures,
bulletins, press releases, and other communications
(collectively, "Communications") to, Loan borrowers and other
customers of BFD and BFD's employees concerning the transactions
contemplated by this Agreement and concerning the business and
operations of Purchaser; provided that, Purchaser shall inform
the Seller of its plans to communicate with customers and
employees in advance of any such Communication and all such
Communications shall be subject to the prior review and approval
of Seller (such approval not to be unreasonably withheld).
Seller, if so requested by Purchaser, shall on behalf and at the
expense of Purchaser, furnish such Communications to Loan
borrowers and other customers of BFD and BFD's employees in the
manner and time period requested by Purchaser.
(c) In the event Purchaser or any of its Affiliates is
required pursuant to applicable legal or regulatory requirements
to have available audited financial statements relating to the
BFD Acquired Business, and the date by which such audited
financial statements must be available requires that their
preparation (including the related audit) be commenced prior to
the Closing Date, Parent shall, at the request of the Purchaser,
engage Shawmut's auditor for such purpose, but at the sole
expense of Purchaser. Seller and Purchaser shall, at the expense
of the Purchaser, take such actions as are customary to assist
such auditors in the preparation of such required audited
financial statements, including assistance after the Closing Date
with reasonable requests for financial information not included
in the records of BFD. Prior to the Closing Date, in connection
with any sale or distribution of securities (whether registered
or otherwise) made by Purchaser or any of its Affiliates or the
Purchaser's or any of its Affiliates' efforts to comply with any
applicable legal or regulatory requirements, Seller further
agrees to (i) make available on a timely basis such financial
information of the BFD Acquired Business, the Acquired Assets and
the Assumed Liabilities as is readily available and may
reasonably be requested, (ii) cooperate with reasonable requests
for other information concerning the BFD Acquired Business, the
Acquired Assets and the Assumed Liabilities and (iii) request to
be provided, at the Purchaser's expense, "cold comfort" letters
and updates thereof from Seller's independent certified public
accountants.
7.3 BEST EFFORTS; TAKING OF NECESSARY ACTION.
(a) Each of the parties hereto agrees to use its reasonable best
efforts promptly to take or cause to be taken all action and
promptly to do or cause to be done all things necessary, proper
or advisable to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or
restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated
hereby, provided, however, that neither party shall be required
to make any payment to any landlord or agree to any material
increase in rent under any Assigned Lease in connection with
obtaining such landlord's consent to the assignment of such lease
without the consent of the Purchaser. In case at any time after
the Closing Date any further action is necessary, proper or
advisable to carry out the purposes of this Agreement, as soon as
reasonably practicable each party to this Agreement shall cause
its proper officers and/or directors to take all such necessary
action.
(b) Without limiting the foregoing, the Purchaser
agrees to promptly prepare and file all applications and other
notices required in connection with, and to use its reasonable
best efforts to obtain promptly and comply with all conditions
contained in, all necessary regulatory approvals and any other
consent, approval or other action by, or notice to or
registration or filing with, any governmental or administrative
agency or authority required or necessary to be made, obtained or
complied with, as the case may be, by the Purchaser in connection
with the performance of this Agreement by the Purchaser or the
consummation of the transactions contemplated hereby. In
connection therewith, the Purchaser shall submit to the relevant
regulatory authorities such capital plans, description of
operating procedures, financial information (including
projections) and such other information as may be necessary to
obtain such consents and approvals and to address those issues
that may arise in connection therewith. The Purchaser shall
refrain from taking any action that could reasonably be expected
to impair or materially delay its ability to obtain the
regulatory approval described in Schedule 6.3 and to consummate
the transactions contemplated hereby, including action that could
frustrate or cause the denial of any applications or other
notices required in connection with such regulatory approval. To
the extent that any application filed in connection with
obtaining any such approval contains any significant information
relating to the Seller, prior to submitting such application to
any regulatory agency, the Purchaser will permit the Seller to
review such information and will consider in good faith the
suggestions of the Seller with respect thereto. The Purchaser
shall use its reasonable best efforts to ensure that any
information provided by the Seller to be submitted in connection
with submissions to governmental or administrative agencies or
authorities receives confidential treatment if so requested by
the Seller. Seller shall cooperate with Purchaser in its efforts
to obtain all necessary regulatory approvals.
(c) Seller agrees to use its reasonable best efforts
(excluding the payment of cash or other consideration) to obtain
as promptly as practicable all permits, consents, approvals,
waivers and authorizations of all third parties with whom Seller
or its Affiliates is in contractual privity which are necessary
or desirable to consummate the transactions contemplated by this
Agreement, and after the Closing Date, shall cooperate, at the
Purchaser's expense, with reasonable requests to execute and
acknowledge consents, approvals, waivers and authorizations
obtained by the Purchaser in connection with the Loan Documents.
(d) Except to the extent prohibited by applicable law,
the Purchaser shall provide to the Seller copies of all
applications and other notices required in connection with any
prior regulatory approvals and any other consent, approval or
other action by, or notice to, or registration or filing with,
any governmental or administrative authority or agency in
connection with the transaction contemplated by this Agreement
within five days of such submissions. Except to the extent
prohibited by applicable law, the Purchaser shall provide copies
of any comments, requests or actions by governmental or
administrative agencies or authorities to the Seller within five
days of the Purchaser's receipt. Information provided under this
paragraph shall be held by the Seller subject to confidentiality
restrictions substantially similar to those applicable to the
Purchaser and Shawmut under the Confidentiality Agreement with
respect to confidential information received from the Seller.
Nothing contained herein shall be deemed to provide Seller with a
right to review any information provided to any governmental or
administrative agency or authority on a confidential basis in
connection with the transactions contemplated hereby, except that
the Seller shall retain the right to review confidential
information to the extent necessary to review the context of
references to Seller and its Affiliates.
(e) Purchaser and Seller shall, upon request, furnish
each other with all information concerning themselves, their
subsidiaries, directors, officers and stockholders and such other
matters as may be reasonably necessary or advisable in connection
with any statement, filing, notice or application made by or on
behalf of Purchaser and Seller or any of their respective
subsidiaries to any governmental or administrative agency or
authority in connection with the transactions contemplated by
this Agreement (except to the extent that such information would
be, or relates to information that would be, filed under a claim
of confidentiality).
(f) The Seller shall permit the Purchaser to engage in
negotiations with Senior Officers for the retention of such
Senior Officer's services after the Closing; provided that the
standard form of such employment contracts and employment
contracts materially different than such standard form shall be
subject to the prior approval of Parent, which approval shall not
be unreasonably withheld; provided further that such employment
contracts disclosed to Parent may delete the amount of
compensation or other payments to be made pursuant to such
agreement.
(g) Promptly after the execution of this Agreement,
the Seller shall request, and shall use commercially reasonable
efforts to obtain, the consent of the landlord under any Assigned
Lease which requires consent for assignment thereof. If the
consent of the landlord under any Assigned Lease cannot be
obtained, the Seller shall cooperate with the Purchaser in
attempting to reach a mutually satisfactory arrangement regarding
occupancy by Purchaser of the space demised under such Assigned
Lease; provided, however, that the failure of the Seller to
obtain any consent to assignment after the exercise of
commercially reasonable efforts or the inability of the Purchaser
to occupy space demised under any Assigned Lease shall not give
rise to any right on the part of the Purchaser or the Seller to
terminate this Agreement or to cause a reduction in the purchase
price hereunder and the Seller shall have no liability to the
Purchaser as a result thereof. Any assignment fee specified in
any Assigned Lease required to be paid to the relevant lessee in
connection with the related assignment hereunder shall be borne
equally by Purchaser and Seller.
7.4 EXPENSES. Whether or not the transactions
contemplated hereby are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall, except as otherwise provided herein,
be paid by the party incurring such expenses.
7.5 USE OF NAMES, TRADEMARKS AND SERVICE MARKS. (a)
Anything herein to the contrary notwithstanding, no interest in
or right to use any logo, name, trademark or service mark
presently or previously used by the Seller (with the exception of
the trademark "We Build Relationships") is being conveyed
pursuant to this Agreement. The Purchaser agrees that on and
after the Closing Date neither it nor any of its Affiliates
(including the Transferred Offices) will use the names "Barclay"
or "Barclays", the "BCI" initials, the eagle symbol used by
Affiliates of Seller or the shade of blue used by Affiliates of
Seller (samples of which will be furnished to Purchaser)
(collectively, the "Retained Names") in connection with any
business or activity engaged in by the Purchaser and its
Affiliates, except that (x) for a period of six months after the
Closing, Purchaser may refer to the BFD Acquired Business in
correspondence with existing BFD customers as "formerly known as
Barclays Business Credit Inc." or "formerly known as BCI" or any
similar designation and (y) Purchaser or its Affiliates or
advisers may make "tombstone" advertisements announcing
consummation of transactions contemplated hereby; provided that
the Purchaser shall not refer to any Retained Name to advertise,
market or solicit prospective new customers, or the agents
thereof, or otherwise to engage in any business. Promptly after
the Closing Date, the Purchaser shall commence the removal of the
trade names, names, service marks, logos, insignia, slogans,
emblems, symbols, designs, and other identifying characteristics
("names") from all premises, equipment, signs, interior decor
items, fixtures and furnishings, and from all printed materials
and related business literature associated with the Transferred
Offices, Personal Property and Leasehold Improvements acquired.
Such removal shall be at the sole expense of Purchaser. Nothing
in this Section 7.5 shall require the Purchaser, except in the
ordinary course of business or as required by the terms thereof,
to reissue or replace the Loan Documents transferred pursuant to
this Agreement.
(b) Notwithstanding anything to the contrary contained
in Section 7.5(a), Purchaser and its Affiliates shall have the
non-transferable and non-sublicensable right, for a period of
ninety (90) days following the Closing Date, to use any materials
or property existing on the Closing Date that bear any Retained
Name where the removal of the Retained Name would be impractical
(excluding letterhead, marketing materials or other means of
communication with present or prospective customers that are not
unduly burdensome to replace); provided, however, that as of the
Closing Date Purchaser shall, to the extent practicable, place a
stamp, mark or other notation on any such material or property
that identifies the BFD Acquired Business as a business of
Purchaser (and not of Seller).
7.6 POST-CLOSING COOPERATION. The Purchaser agrees
that the Seller and/or its independent auditors shall have
reasonable access upon reasonable notice to Purchaser to the
Books and Records of the Purchaser and its Affiliates as they
relate to the business of BFD and its predecessors applicable to
the period ending on the Closing Date and have the reasonable
assistance and cooperation of the appropriate personnel of the
Purchaser and its Affiliates in the review of such Books and
Records. Parent shall provide to Purchaser comparable access,
assistance and cooperation with respect to the Books and Records
of Seller relating to the BFD Acquired Business which are not
included in the Acquired Assets.
7.7 EMPLOYEE-RELATED MATTERS. (a) Continuity of
Employment. The parties hereto intend that there shall be
continuity of employment with respect to all employees of BFD,
including any employees of Seller's Administration division named
on Schedule 7.7(a). The Purchaser shall employ, commencing on
the Closing Date, all employees, including those on vacation,
leave of absence, or short-term disability (including workers'
compensation), but not long-term disability, who were employed by
BFD (including such scheduled Administration Division employees)
immediately prior to Closing, on the same terms (including
salary, job responsibility and location) as those provided to
such employees immediately prior to Closing. All such employees
who are employed by BFD or who are so scheduled shall hereafter
be referred to as "Covered Employees".
(b) Severance. For purposes of severance benefits, if
after Closing a Covered Employee is offered employment in a
location which is not within a reasonable commute, as determined
by Purchaser in accordance with its practice under Purchaser's
Salary Continuation Procedure, and such Covered Employee's
employment terminates due to his or her refusal to work in such
new location, such Covered Employee shall be entitled to
severance payments in accordance with Section 7.7(c) hereof.
(c) Benefit Plans -- General. Effective as of the
Closing Date, Covered Employees shall cease participation in all
plans, programs, policies and arrangements maintained for their
benefit by the Seller or any of its Affiliates. Commencing on
the Closing Date and continuing thereafter, Purchaser shall
provide to Covered Employees such plans, programs, policies and
arrangements, including but not limited to those providing
severance benefits, which are the same as the Bank Plans provided
to Covered Employees immediately prior to the Closing Date,
subject to the terms and conditions thereof as in effect on the
date of this Agreement except for ordinary course and other
changes permitted under Section 7.1 hereof ("Purchaser Plans").
As of the Closing Date, Purchaser shall provide credit for each
Covered Employee's service with BFD or its Affiliates prior to
the Closing Date (including periods of employment with any other
employer which are taken into account under the corresponding
benefit plan maintained for the benefit of such Covered Employee
prior to Closing) for all purposes including without limitation
(i) eligibility for, participation in, vesting and early
retirement under Purchaser Plans, and (ii) determining vacation,
sick leave, disability benefits, severance benefits and plan
accruals under Purchaser Plans (except accruals under any defined
benefit plan).
(d) Welfare Benefit Plans. Notwithstanding anything
to the contrary contained herein, as of the Closing Date,
Purchaser shall provide Covered Employees with immediate coverage
under Purchaser Plans that are welfare benefit plans (as defined
in section 3(1) of ERISA) (the "Purchaser Welfare Plans").
Purchaser shall (i) cause there to be waived any preexisting
condition restrictions otherwise applicable under any Purchaser
Welfare Plan to any Covered Employee or his or her covered
dependents and (ii) give effect, in determining any deductible
and maximum out-of-pocket limitations, to claims incurred,
amounts paid by and amounts reimbursed to Covered Employees with
respect to similar plans maintained for their benefit immediately
prior to the Closing Date. The Seller or its Affiliates will
retain responsibility for and continue to pay all medical, life
insurance, disability and other welfare plan expenses and
benefits for each Covered Employee with respect to claims
incurred by such Covered Employee or their covered dependents
prior to the Closing Date. Expenses and benefits with respect to
claims incurred by such Covered Employees or their covered
dependents on or after the Closing Date shall be the
responsibility of the Purchaser. For purposes of this paragraph,
a claim is deemed incurred when, in the case of medical benefits,
the medical or other services giving rise to the claim are
performed, in the case of life insurance, on the date of death
and with respect to disability, on each day of such disability.
The Seller shall be responsible for all legally mandated
continuation of health care coverage for all Covered Employees
and their covered dependents who have a loss of health care
coverage due to a qualifying event with respect to periods before
the Closing Date.
(e) Defined Benefit Plan. No assets or liabilities
with respect to Covered Employees and their beneficiaries shall
be transferred as a result of this Agreement from the Restated
Retirement Plan of the Seller (the "Seller's Retirement Plan") to
any plan or arrangement established or maintained by Purchaser or
any other employer for the benefit of such Covered Employees and
their beneficiaries. After the Closing, no further benefit shall
accrue under the Seller's Retirement Plan with respect to Covered
Employees. All Covered Employees who are members of the Seller's
Retirement Plan shall become fully vested in their accrued
benefits thereunder as of the Closing Date. Benefits payable to
Covered Employees under the Seller's Retirement Plan shall be
payable to such Covered Employees pursuant to the terms of, and
at the time and in the amounts provided under, the Seller's
Retirement Plan based upon each such Covered Employee's years of
service with BFD or its Affiliates (including periods of
employment with any employer which are taken into account under
the Seller's Retirement Plan), and compensation received from BFD
or its Affiliates through the Closing Date. Purchaser shall
provide the Seller with a list, no less frequently than
semi-annually, of Covered Employees who have terminated
employment with Purchaser or its Affiliates. Effective on the
Closing Date, a qualified defined benefit plan containing
substantially the same provisions as the Seller's Retirement Plan
(the "Purchaser's Retirement Plan") shall include as participants
those Covered Employees who were participants in the Seller's
Retirement Plan immediately before the Closing Date. The
remaining Covered Employees shall become participants in the
Purchaser's Retirement Plan in accordance with its terms.
(f) Savings Plan. All Covered Employees who are
participants in the Seller's Thrift-Savings Plan ("Seller's
Savings Plan") shall become fully vested in their account
balances as of the Closing Date. The Seller shall (i) cause the
Seller's Savings Plan to segregate, in accordance with the
spin-off provisions set forth under section 414(l) of the Code,
the assets of such Plan representing the full account balances of
Covered Employees as of the first day of the month following the
Closing Date, (ii) make any required filings and submissions to
appropriate governmental agencies and (iii) make any necessary
amendments to the Seller's Savings Plan and the related trust
agreement to provide for such segregation and the transfer of
assets described below. Prior to the Closing Date, Purchaser or
its designated affiliate shall (i) establish or designate a plan
that is substantially similar to the Seller's Savings Plan,
including provision for the same level of matching contributions
and qualified under sections 401(a) and 401(k) of the Code for
the benefit of Covered Employees (the "Successor Plan") and
furnish Seller with the most recent favorable determination
letter from the Internal Revenue Service relating to such
Successor Plan, (ii) take any necessary action to qualify tee
Successor Plan under the applicable provisions of the Code and
(iii) make any filings and submissions to appropriate
governmental agencies required of it in connection with a
transfer of assets as described below. As soon as practicable
following the Closing Date and receipt of such determination
letter, the Seller shall cause the trustee of the Seller's
Savings Plan to transfer in cash (and, in the case of outstanding
participant loans, Notes) the full account balances of all
Covered Employees, which account balances shall have been
credited with appropriate earnings attributable to the period
from the Closing Date to the valuation date of the Seller's
Savings Plan last preceding the date of transfer described
herein, reduced by any benefit or withdrawal payments in respect
of Covered Employees occurring during the period from the Closing
Date to the date of transfer described herein, to the trustee
designated under the trust agreement forming a part of the
Successor Plan. In consideration for such transfer of assets,
Purchaser shall, effective as of the date of transfer, assume all
of the obligations of the Seller or its Affiliates to Covered
Employees in respect of the Seller's Savings Plan. Each of the
parties hereto shall pay its own expenses in connection with such
transfer. Purchaser or its Affiliates shall, effective as of the
Closing Date, amend or adopt any Successor Plan to the extent
necessary to effectuate the foregoing.
(g) Vacation Pay. With respect to any accrued but
unused vacation time to which any Covered Employee is entitled
pursuant to the vacation policy applicable to such employee
immediately prior to the Closing Date (the "Vacation Policy"),
provided that the liability with respect thereto is fully
reflected on the Final Asset and Liability Schedule, Purchaser
shall allow such Covered Employee to use such accrued vacation,
for which Purchaser shall pay such Covered Employee at his/her
then salary.
(h) WARN. Purchaser shall not on, or at any time
prior to 90 days after the Closing Date, effectuate a "plant
/closing" or "mass layoff", as those terms are defined in the
Worker Adjustment and Retraining Notification Act of 1988
("WARN"), affecting in whole or in part any site of employment,
facility, operating unit or employee, without notifying BFD and
the Seller in advance and without complying with the notice
requirements and other provisions of WARN.
(i) Other Benefits. During the five-year period
following the Closing Date, Seller shall continue to provide to
Covered Employees who are participants in Seller's Executive
Split Dollar Life program as of the Closing Date such benefits as
may be provided under the terms of such program as in effect on
the date of this Agreement.
(j) Bonuses. Amounts due, whether prior to, on or
after the Closing Date, to any Covered Employee under the
Barclays Business Credit Inc. Management Incentive Plan shall be
payable by Seller. Seller shall pay any amounts due prior to the
Closing Date to any Covered Employee under the Barclays Business
Credit Inc. Business Development Officer Bonus Plan (the "BDO
Plan"). Purchaser shall pay any amounts due on and after the
Closing Date to any Covered Employee under the BDO Plan provided
that the liability with respect thereto is fully reflected on the
Final Asset and Liability Schedule.
(k) Thrift Restoration Plan. Purchaser shall assume
the Barclays Bank PLC Thrift Savings Restoration Plan with
respect to Covered Employees and pay any amounts due to any
Covered Employee thereunder in accordance with the terms thereof
provided that the liability with respect thereto is fully
reflected on the Final Asset and Liability Schedule.
(l) Retention Bonuses. Parent shall use its best
efforts to cause the executives named on the attached Schedule
7.7(l) to enter into retention incentive agreements for which
Parent shall remain solely liable and which, if executed, shall
supersede in all respects any applicable executive security
agreement; provided, however, that the individual named on
Schedule 7.7(l) shall enter into a retention incentive agreement
for which Purchaser shall, on and after the Closing Date, be
solely liable provided that the liability with respect thereto is
fully reflected on the Final Asset and Liability Schedule.
(m) Deferred Compensation Plan. All amounts payable
to the individual named on Schedule 7.7(l) under the Barclays
Bank PLC Deferred Compensation Plan (the "Deferred Compensation
Plan") shall be paid by Purchaser in accordance with the terms of
such plan and his prior election to defer such compensation
provided that the liability with respect thereto is fully
reflected on the Final Asset and Liability Schedule. During the
period of deferral, all such deferred compensation shall remain
subject to the terms of, and Purchaser shall assume with respect
to the individual named on Schedule 7.7(l), the Deferred
Compensation Plan.
(n) Indemnity by Purchaser. Purchaser shall
indemnify, defend and hold the Seller and BFD and their
Affiliates harmless from and against any and all claims, actions,
suits, demands, proceedings, losses, expenses, damages,
obligations and liabilities (including costs of collection,
reasonable out-of-pocket attorney's fees and other costs of
defense) (collectively, "Losses") arising out of or otherwise in
respect of (i) Purchaser's failure to offer employment to or to
employ any employee of BFD on the Closing Date; (ii) termination
of any Covered Employee on or after the Closing Date; (iii)
failure of Purchaser to comply with any of its obligations to
Covered Employees including, but not limited to, any statutory
obligations and obligations under this Section; (iv) any claim
made by any Covered Employee for severance pay other than a claim
incurred prior to the Closing Date; (v) any claim made pursuant
to WARN relating to events occurring on or after the Closing
Date; (vi) benefits or claims incurred on or after the Closing
Date by Covered Employees but not including any benefits accrued
prior to the Closing Date ("Employee Benefit Losses"); provided
that none of such Employee Benefit Losses results directly or
indirectly from a breach by the Seller of any of its respective
representations, warranties, covenants or agreements in this
Agreement.
7.8 LETTERS OF CREDIT OF ISG. Following the Closing,
Purchaser may attempt to cause itself or any other financial
institution to be substituted in all respects for ISG under each
ISG L/C the reimbursement obligation for which is being assumed
by Purchaser pursuant to Section 2.4(h). For so long as ISG
remains obligated under any such ISG L/C and Purchaser does not
substitute itself or another financial institution as issuer
under such ISG L/C so that the ISG/LC is cancelled, ISG shall
remain the Administrative Agent and Letter of Credit Agent under
such ISG L/C, and Purchaser shall pay to ISG a fronting fee,
payable quarterly, in respect of each such ISG L/C, as set forth
on Schedule 7.8, prorated for any unexpired term of the
applicable ISG L/C. Parent agrees that any letter of credit fees
payable by the account parties under such letters of credit
directly to ISG shall be for the account of and paid over to
Purchaser.
7.9 NON-COMPETE; NON-SOLICITATION OF EMPLOYEES. (a)
For a period of two years following the Closing Date, neither
Seller nor Parent, nor any of their Affiliates, shall employ any
person who is an employee of BED as of the date of this
Agreement, except with the written consent of the Purchaser.
Until the second anniversary of the Closing Date, neither Seller
nor Parent, nor any of their Affiliates, shall seek to persuade
any such employee not to accept employment with Purchaser or
discontinue employment with Purchaser from and after the Closing
Date.
(b) For a period of three years following the Closing
Date, except as agreed to in writing by Purchaser or with respect
to loans in which Purchaser or one of its Affiliates and Seller
or one of its Affiliates each has or will have a partial
interest, neither Seller nor Parent, nor any of their Affiliates,
shall engage in any lending activities in the United States with
any Person on a basis where (x) a substantial portion of the
collateral would consist of accounts receivable or inventory, and
(y) which activities are subject to agreements which include
terms and conditions with respect to borrowing base requirements,
and (z) which collateral is subject to periodic audit by the
lender's personnel or its agents. The foregoing is not intended
to preclude Parent or its Affiliates from engaging in its current
strategic investment banking businesses, including without
limitation structured financing, mezzanine financing, asset
securitization and bank financing and private placement
activities. Neither Parent nor any of its Affiliates shall for a
period of three years following the Closing Date provide any
loans or other credit-related products to any Person which is a
customer of Seller or any of its Subsidiaries as of the Closing
Date unless there is a preexisting relationship. The foregoing
restrictions shall not prevent any business combination or
similar transactions involving Parent or any of its Affiliates
and any non-asset-based lender. A-non-asset-based lender is any
Person whose assets attributable to loans where a substantial
portion of the collateral would consist of accounts receivable or
inventory, where the loans are subject to agreements which
include terms with respect to borrowing base requirements and
which collateral would be subject to periodic review by such
Person's personnel or its agents, constitute less than 25% of
such Person's total consolidated assets. Following any such
business combination or similar transaction, the less than 25%
asset-based lending activities engaged in by such non-asset-based
lender may continue to be engaged in without violating this
Agreement. Seller's retention of the Excluded Loans in and of
itself, shall not be deemed to constitute a violation of the
foregoing. Without limiting the foregoing, Seller will not use
the name Business Credit Inc. at any time following the Closing
in any advertising or marketing efforts, provided, however, that
nothing contained herein shall preclude Seller from using such
name in correspondence with or other actions taken in the
ordinary course of business with respect to the obligors under
the loans included in Seller's workout division or with respect
to the Excluded Loans.
(c) If any of the restrictions set forth in Section
7.9(b) should, for any reason whatsoever, be declared invalid by
a court of competent jurisdiction, the validity or enforcement of
the remainder of such restrictions and covenants shall not
thereby be adversely affected. Seller, Parent and Purchaser
agree that, if any provisions of this Section 7.9 should be
adjudicated to be invalid or unenforceable, such provisions shall
be deemed deleted herefrom with respect, and only with respect,
to the operation of such provision in the particular jurisdiction
in which such adjudication was made; provided, however, that to
the extent any such provision may be made valid and enforceable
in such jurisdiction by limitations on the scope of the
activities, geographical area or time period covered, Seller,
Parent and Purchaser agree that such provision instead shall be
deemed limited to the extent, and only to the extent, necessary
to make such provision enforceable to the fullest extent
permissible under the laws and public policies applied in such
jurisdiction.
7.10 INDEPENDENT THIRD PARTIES. Seller will identify
and use its reasonable best efforts to make available upon
reasonable notice and during normal business hours, to Purchaser,
at Purchaser's request and sole expense, any independent third
parties retained by Seller to assist Seller in the preparation of
any Loan Documents or the making or maintaining of any Loan
Commitment. In addition, Seller will instruct such parties to
cooperate with Purchaser and make available to Purchaser any and
all documents relating to the Loans and the Loan Commitments in
such parties' possession and upon request of Purchaser will waive
any applicable privilege provided by law that would prevent such
third parties from cooperating with the Purchaser or making such
documents available to the Purchaser.
7.11 PAYMENTS. Any interest, commissions, fees and
other payments received by Seller after the Closing Date in any
capacity (except fees earned by Seller or its Affiliates in
providing services to the Purchaser after the Closing Date),
regardless of when accrued, with respect to any Loan or Loan
Commitment included in the Acquired Assets shall as of the
Closing Date be for the account of Purchaser. Any such amounts
received by Seller after the Closing Date shall be received by
Seller in trust for the Purchaser and Seller will immediately pay
such amounts to Purchaser upon receipt thereof.
7.12 LIMITATION ON DEALINGS WITH LOANS. Without the
Purchaser's prior written consent, Seller shall not renew, extend
the maturity of, acquire a participation in, reacquire an
interest in a participation sold with respect to, or alter any of
the material terms of any Loan or Loan Commitment, other than in
the ordinary course of business, consistent with Seller's
standard loan servicing and operating procedures in effect as of
the date hereof.
7.13 FURTHER ASSURANCES. Without in any way limiting
any representation, warranty or covenant of Seller contained
herein, Seller and Purchaser shall jointly retain the services of
legal counsel to prepare the financing statements, amendments,
continuation statements, assignments, certificates and other
documents with respect to Purchaser's security interest in the
collateral relating to the Loans as may be necessary or requested
by Purchaser to enable Purchaser to obtain the valid assignment
of and to maintain the perfection of such security interest, each
in form satisfactory to Purchaser. Seller and Purchaser shall
each be responsible for the payment of one-half of all fees,
costs and expenses incurred in the performance of the preceding
sentence. Seller hereby authorizes and empowers Purchaser after
the Closing to file any or all such financing statements,
amendments, continuation statements, assignments, certificates
and other documents pursuant to the Uniform Commercial Code and
otherwise without its signature and hereby irrevocably appoints
Purchaser as Seller's attorney-in-fact to execute, deliver and
file any such financing statements, amendments, continuation
statements, assignments, certificates and other documents in
Seller's name and to perform all other acts necessary to perfect
Seller's security interest in the Acquired Assets and to obtain
the valid assignment of and to maintain the perfection of any
security interest in the collateral securing the Loans.
7.14 SMALL EQUIPMENT LEASING PORTFOLIO. Prior to the
Closing Date, Seller shall have caused one of its Affiliates to
transfer the small equipment leasing portfolio described on
Schedule 7.14 to Seller. The Book Value of the assets in such
small equipment leasing portfolio as of September 30 is set forth
on Schedule 7.14.
7.15 ISG LOAN PORTFOLIO. Prior to the Closing Date,
Parent shall have transferred the ISG Portfolio of ISG described
on Schedule 7.15 to Seller. The Book Value of the assets in such
ISG Portfolio as of September 30 is set forth on Schedule 7.15.
At the Closing, Parent shall provide for the benefit of Purchaser
a guaranty (the "Guaranty") of collection as to the Loans
included in the ISG Loan Portfolio set forth in the form of
Exhibit B. Purchaser agrees to service the Loans in the ISG
Portfolio in the same manner it services the other Loans included
in the Acquired Assets.
7.16 TRANSFER OF ADMINISTRATION. Prior to the Closing
Date Seller shall transfer to BFD that portion of its
Administration Division that the parties agree pertains to the
business of BFD.
ARTICLE 8. TAXES
8.1 LIABILITY FOR TAXES. (a) Liability of the
Seller. Except as set forth in Section 8.2 below, with respect
to the Acquired Assets, Assumed Liabilities and Transferred
Offices transferred at the Closing, the Seller shall be liable
for and indemnify the Purchaser for all Taxes imposed on such
Acquired Assets or any income therefrom (including all net income
taxes imposed on any gain recognized by the Seller as a result of
the sale of such Acquired Assets pursuant to this Agreement),
such Assumed Liabilities or any payments in respect thereof, or
the operation of such Transferred Offices (including employment
taxes) for (i) any taxable year or period that ends on or before
the Closing Date and (ii), with respect to any taxable year or
period beginning before and ending after the Closing Date, the
portion of such taxable year or period ending on and including
the Closing Date.
(b) Liability of the Purchaser. Except as set forth
in Section 8.2 below, with respect to the Acquired Assets,
Assumed Liabilities and Transferred Offices transferred at the
Closing, the Purchaser shall be liable for and indemnify the
Seller for all Taxes imposed on such Acquired Assets or any
income therefrom, such Assumed Liabilities or any payments in
respect thereof, or the operation of such Transferred Offices for
(i) any taxable year or period that begins after the Closing Date
and (ii), with respect to any taxable year or period beginning
before and ending after the Closing Date, the portion of such
taxable year beginning after the Closing Date.
(c) Proration of Taxes. All Taxes for any portion of
a taxable year or period that begins before and ends after the
Closing Date shall be apportioned between the Seller and the
Purchaser using an interim-closing-of-the- books method on the
assumption that such taxable period ended on and included the
Closing Date, except that (i) all standard deductions,
exemptions, allowances, progressivity in rates and other similar
items shall be apportioned based on a per diem basis and (ii)
real, personal and intangible property Taxes shall be apportioned
between the Seller and the Purchaser in accordance with the
principles set forth in Section 164(d) of the Code.
(d) Limitation on the Liability of the Purchaser. The
Seller and the Purchaser expressly acknowledge and agree that (i)
the Purchaser is not assuming, expressly or by implication, any
other Taxes of the Seller (and specifically is not assuming
liability for any income or franchise taxes measured by the
Seller's or any Affiliate of the Seller's net income)
attributable to the conduct of the Seller's business or to its
assets or liabilities and (ii) the Seller and Parent shall
indemnify and hold the Purchaser harmless from and against any
Taxes not described in subsection (b) above or Section 8.2 below.
8.2 SALES AND TRANSFER TAXES. All excise, sales, use
and transfer taxes that are payable or that arise as a result of
the consummation of the purchase and sale contemplated by this
Agreement (including, without limitation, New York State and City
real property transfer taxes and New York State real property
transfer gains tax) shall be borne equally by the Purchaser and
Seller. The Seller will prepare any Tax Returns that must be
filed in connection with such taxes and will use its reasonable
best effort to provide such returns to the Purchaser for the
Purchaser's review at least 10 days before the date such returns
are due. The Purchaser and Seller shall jointly execute any tax
return as required by applicable law. The Seller and the
Purchaser shall consult during the preparation of such returns
and the Purchaser shall provide to the Seller, upon Seller's
reasonable request, such information regarding the value of the
property being transferred hereunder as is in the Purchaser's
possession at the time of the request. The Seller will pay the
full amount of such taxes shown on such returns to the applicable
Tax authorities on or before the date such taxes are due (the
"Payment Date") and will indemnify the Purchaser for any interest
or penalties resulting from any failure to pay such taxes when
due. The Purchaser will reimburse the Seller on the Payment Date
in immediately available funds for one-half of the taxes paid by
the Seller.
8.3 PARENT OF AMOUNTS DUE UNDER ARTICLE 8. Any
payment by the Seller to the Purchaser, or to the Seller from the
Purchaser, under this Article 8 (other than payments required
under Section 8.2 of this Agreement) to the extent due at the
Closing may be offset against any payment due the other party at
the Closing. All subsequent payments under this Article 8 shall
be made as soon as determinable and shall be made and bear
interest from the date due to the date of payment at the average
of the Federal Funds Rate or Rates in effect from time to time
during such period.
8.4 REFUNDS OR CREDITS. If any refunds or credits of
Taxes of the Seller described in Section 2.3(g) of this Agreement
(including any deferred tax assets) are received or utilized by
the Purchaser, or any of its Affiliates, the Purchaser shall pay
to the Seller the amount of such refund or credit within five (5)
business days after the Purchaser, or any of its Affiliates, as
the case may be, receives such refund or utilizes such credit.
8.5 TAX RETURNS. Except as provided in Section 8.2 or
as otherwise agreed to by the parties, with respect to the
Acquired Assets and Transferred Offices transferred at the
Closing, (a) the Seller shall file or cause to be filed when due
all Tax Returns that are required to be filed with respect to
such Acquired Assets or such Transferred Offices for taxable
years or periods ending on or before the Closing Date and shall
pay any Taxes due in respect of such Tax Returns, and (b) the
Purchaser shall file or cause to be filed when due all Tax
Returns with respect to such Acquired Assets or such Transferred
Offices for taxable years or periods ending after the Closing
Date (excluding any Tax Returns that must be filed by the Seller
with respect to net income or franchise taxes of the Seller) and
shall remit any Taxes due in respect of such Tax Returns. If the
Seller or the Purchaser shall be liable hereunder for any portion
of the Taxes shown due on any Tax Return prepared by the other
party, the party preparing the Tax Return shall deliver a copy to
the party so liable for its review and approval not less than 30
days prior to the date on which such Tax Return is due to be
filed (taking into account any applicable extensions). The
Seller or the Purchaser, as the case may be, shall pay in
immediately available funds the Taxes for which it is liable
pursuant to Section 8.1(a) or 8.1(b), respectively, but which are
payable with Tax Returns to be filed by the other party pursuant
to the previous sentence on the due date for the payment of such
Taxes. If the party not preparing the Returns objects to any
items reflected on such Tax Returns, the Purchaser and the Seller
shall attempt to resolve the disagreement. If the Purchaser and
the Seller cannot resolve the disagreement, the dispute shall be
referred to a nationally recognized independent accounting firm
mutually acceptable to the Seller and the Purchaser whose
determination shall be binding upon the parties. The fees and
expenses of such accounting firm shall be borne equally by the
Purchaser and the Seller.
8.6 ASSISTANCE AND COOPERATION. (a) The Seller and
the Purchaser shall:
(i) assist (and cause their respective Affiliates to
assist) the other party in preparing any Tax Returns which
such other party is responsible for preparing and filing in
accordance with this Article 8;
(ii) cooperate fully in preparing for any audits of,
or disputes with taxing authorities regarding, any Tax
Returns with respect to the Acquired Assets or income
therefrom or the Assumed Liabilities or payments in respect
thereof;
(iii) make available to the other and to any taxing
authority as reasonably requested all relevant information,
records, and documents relating to Taxes with respect to the
Acquired Assets or income therefrom or the Assumed
Liabilities or payments in respect thereof;
(iv) provide timely notice to the other in writing of
any pending or proposed audits or assessments with respect
to Taxes for which the other may have a liability under this
Article 8; and
(v) furnish the other with copies of all relevant
correspondence received from any taxing authority in
connection with any such audit or assessment, including,
without limitation, any information document requests
received with respect to any such audit.
(b) The party requesting assistance or cooperation
under paragraph (a) above shall bear the other party's reasonable
out-of-pocket expenses in complying with such request to the
extent that those expenses are attributable to fees and other
costs of unaffiliated third-party service providers which
third-party service providers may be used if the party whose
assistance or cooperation is requested reasonably determines that
it would be burdensome to comply with such request without the
use of such third-party service providers; provided, that
notwithstanding the foregoing, if only one party is responsible
for the payment of a Tax, then such party shall be responsible
for the payment of any out-of-pocket expenses for fees and costs
of third-party servicers.
8.7 DOCUMENT RETENTION. The Purchaser and Seller each
agree to retain in accordance with its records retention policies
applicable to its own documents of a similar nature any Books and
Records that could be necessary or useful in connection with the
Seller's preparation or the Purchaser's preparation, as the case
may be, of any Tax Return, form or report or any audit,
examination, other review or proceeding by any Tax authority;
provided, however, that, for purposes of applying its records
retention policies, the Purchaser shall treat the Seller's
taxable year ending December 31, 1988, and all subsequent taxable
years as open years until such time as the Seller notifies the
Purchaser in accordance with Section 8.9 that all audits for any
such year have been finally settled or the applicable statute of
limitations has passed.
8.8 ALLOCATION OF PURCHASE PRICE. The parties to this
Agreement agree to allocate the Purchase Price in accordance with
the rules under Section 1060 of the Code, and the Treasury
Regulations promulgated thereunder. Such allocation shall be
based on the fair market value of the Acquired Assets to be sold.
The Purchaser agrees to provide the Seller with a schedule
allocating the Purchase Price and with a properly completed
Internal Revenue Service Form 8594 within 60 days of the
determination of the Purchase Price but in no event later than 90
days before the due date, including extensions, for the
consolidated federal income tax return that includes the Seller
for the taxable year including the Closing Date. If the Seller
objects to any items reflected on such schedule, the Seller shall
notify the Purchaser in writing of such objection and describe in
reasonable detail its reasons for objecting, in which case the
Purchaser and the Seller shall attempt to resolve the
disagreement. If the Purchaser and the Seller cannot resolve the
disagreement, the allocation shall be determined by a nationally
recognized independent appraiser selected by the Purchaser and
reasonably acceptable to the Seller. The fees and expenses of
such appraiser shall be borne equally by the Seller and
Purchaser. The Seller and the Purchaser agree to act in
accordance with the computations and allocations contained in the
schedule as finally agreed or determined by such independent
appraiser (including any modifications thereto reflecting any
post-closing adjustments) in any relevant Tax Returns or similar
filings (including any forms or reports required to be filed
pursuant to Section 1060 of the Code or the Treasury Regulations
promulgated thereunder ("1060 Forms")) and to file such 1060
Forms in the manner required by applicable law. The Purchaser
and the Seller will promptly notify each other in accordance with
Section 8.9 of any challenge by any Tax authority to such
computations or allocations. The Seller agrees that a "Big Six"
accounting firm (other than the accounting firm regularly used by
the Purchaser or the Seller) is a nationally recognized
independent appraiser that is reasonably acceptable to the Seller
for purposes of making the computations and allocations described
above.
8.9 NOTICES, ETC. Without limiting the provisions of
Section 8.6, the notification and contest provisions of Article
11 shall apply to claims for indemnification under this Article
8; provided, however, that notice of claim for indemnification
pursuant to this Article 8 shall be given prior to the expiration
of the applicable statute of limitations (as extended) for the
assertion of the claims for Taxes by the relevant Tax authority;
and further provided that a copy of any notices required under
this Article 8 shall be provided to the following parties:
(A) if to the Purchaser, to:
Shawmut National Corporation
777 Main Street
Hartford, Connecticut 06115
Attn: Susan E. Lester
Chief Financial Officer
(B) if to the Seller, to:
Barclays Group Inc. (U.S.A.)
222 Broadway
New York, N.Y. 10038
Attn: Mr. Rick Steineger
Head of Group Tax
8.10 TAX INDEMNITIES. Except as provided in Section
8.9 of this Agreement, both the Seller's and the Purchaser's
obligations to indemnify the other party for Taxes shall be
governed by this Article 8 and such obligations shall survive
Closing until the expiration of the relevant statute of
limitations period has expired for the assertion of claims for
any such Taxes by the relevant Tax authority.
ARTICLE 9. CONDITIONS TO THE CLOSING
9.1 CONDITIONS OF OBLIGATION OF EACH PARTY. The
respective obligations of each party to effect the Closing are
subject to the fulfillment at or prior to the Closing Date of the
condition precedent that (a) no injunction, order, decree or
ruling issued by a court of competent jurisdiction or by a
government, regulatory or administrative agency or commission nor
any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority shall be in effect
enjoining, making illegal or otherwise materially impairing or
restricting the consummation of the transactions contemplated by
this Agreement and (b) the parties thereto shall have executed
and delivered the Servicing Agreement and any other agreement
contemplated to be entered into in connection therewith and
Parent shall have executed the Guaranty.
9.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF
PURCHASER. The obligations of the Purchaser are also subject to
fulfillment (or waiver by the Purchaser) at or prior to the
Closing Date of each of the following conditions precedent:
(a) Representations and Warranties True. The
representations and warranties of the Seller contained in
Article 5 of this Agreement shall be true and correct in all
material respects as of the Closing Date as though made at
and as of the Closing Date (except to the extent that they
expressly refer to an earlier time, in which case they must
be true as of such earlier date), except for (i) changes
resulting from (A) actions expressly consented to in writing
by the Purchaser or (B) changed circumstances occurring as a
result of operations of the Seller in the ordinary course of
business do not adversely affect the Acquired Assets (taken
as a whole) or the BFD Acquired Business or (ii)
inaccuracies in the representation and warranty contained in
Section 5.15 hereof which could not reasonably be expected
to have a Material Adverse Effect.
(b) Performance of Covenants. The Seller shall have
duly performed and complied in all material respects with
each covenant, agreement and condition required by this
Agreement to be performed or complied with by them prior to
or on the Closing Date.
(c) Officer's Certificate. The Purchaser shall have
received from a duly authorized senior executive officer of
the Seller a certificate as to the matters described in
Sections 9.2(a) and 9.2(b).
(d) Regulatory Approvals. The regulatory approvals
described in Schedule 6.3 shall have been obtained and be in
full force and effect and all required waiting periods and
any extensions thereof shall have expired or been
terminated.
(e) No Restraint or Litigation. The waiting period
under the HSR Act shall have expired or terminated, and no
action, suit, investigation or proceeding by any
governmental agency or authority shall have been instituted
or threatened to restrain or prohibit or otherwise challenge
the legality or validity of the transactions contemplated
hereby.
(f) Legal Opinion. The receipt by Purchaser of legal
opinions as to the (i) due incorporation, valid existence
and good standing of Seller and Parent, (ii) the corporate
power and authority of Seller and Parent to make, deliver
and perform its obligations under the Agreement, the
Guaranty, the Servicing Agreement and the agreements entered
into thereunder, (iii) the taking of all necessary corporate
action by the Seller and Parent to execute, deliver and
perform its obligations under the Agreement, the Guaranty,
the Servicing Agreement, and the agreements entered into
thereunder, (iv) the execution and delivery of the
Agreement, the Guaranty, the Servicing Agreement, and the
agreements entered into thereunder by the Seller and Parent
and that each of the Agreements, the Guaranty, the Servicing
Agreement, and the agreements entered into thereunder
constitutes the legally binding and valid obligation of each
of the Seller and Parent enforceable in accordance with its
terms (subject to exceptions for bankruptcy and necessary
exceptions arising from the indemnification provisions) and
(v) the execution, delivery and performance by the Seller
and Parent of this Agreement, the Guaranty, the Servicing
Agreement and the agreements entered into thereunder will
not violate their respective certificates of incorporation
or by-laws, the law of the jurisdiction of incorporation or
similar law or any provision of any other law or statute
with all necessary exceptions.
(g) Allowance for Credit Losses Reserve. The
Allowance for Credit Losses Reserve on the Final Asset and
Liability Schedule shall have been established in accordance
with BFD Accounting Principles.
(h) Material Adverse Change. Subsequent to September
30, 1994, no event, condition, development or circumstance
shall have occurred which, individually or in the aggregate,
has had or could reasonably be expected to have a Material
Adverse Effect.
9.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE
SELLER. The obligations of the Seller are also subject to
fulfillment (or waiver by the Seller) at or prior to the Closing
Date of each of the following conditions precedent:
(a) Representations and Warranties True. The
representations and warranties of the Purchaser contained in
Article 6 of this Agreement shall be true and correct as of
the Closing Date (other than any inaccuracies which would
not have a Material Adverse Effect) as though made at and as
of the Closing Date, except to the extent they expressly
refer to an earlier time.
(b) Performance of Covenants. The Purchaser shall
have duly performed and complied in all material respects
with each covenant, agreement and condition required by this
Agreement to be performed or complied with by each of them
prior to or on the Closing Date.
(c) No Restraint or Litigation. The waiting period
under the HSR Act shall have expired or terminated, and no
action, suit, investigation or proceeding by any
governmental agency or authority shall have been instituted
or threatened to restrain or prohibit or otherwise challenge
the legality or validity of the transactions contemplated
hereby.
(d) Officer's Certificate. The Seller shall have
received from a duly authorized senior officer of the
Purchaser a certificate as to the matters described in
Sections 9.3(a) and 9.3(b).
(e) Legal Opinion. The receipt by Seller of legal
opinions as to the (i) due organization, valid existence and
good standing of Purchaser, (ii) the corporate power and
authority of Purchaser to make, deliver and perform its
obligations under the Agreement, the Servicing Agreement and
the agreements entered into thereunder, (iii) the taking of
all necessary corporate action by the Purchaser to execute,
deliver and perform its obligations under the Agreement, the
Servicing Agreement and the agreements entered into
thereunder, (iv) the execution and delivery of the Agreement
by the Purchaser and that the Agreement, the Servicing
Agreement and the agreements entered into thereunder
constitute the legally binding and valid obligation of the
Purchaser enforceable in accordance with its terms (subject
to exceptions for bankruptcy and necessary exceptions
arising from the indemnification provisions) and (v) the
execution, delivery and performance by the Purchaser will
not violate its articles of association or by-laws, the
federal banking laws or any provision of any other law or
statute, with all necessary exceptions.
ARTICLE 10. TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION. This Agreement may be terminated at
any time prior to the Closing:
(a) By written mutual agreement of the Seller and the
Purchaser;
(b) By the Purchaser or the Seller upon notice given
to the other party in the event that the other party shall
have materially breached any of its representations and
warranties or agreements in this Agreement (including
without limitation its agreement to consummate the Closing
contemplated hereby upon the satisfaction of the conditions
to its obligations contained herein) which breach is not
cured within thirty days after notice to cure such breach is
given by the non-breaching party; provided that the party
seeking to terminate the Agreement shall not have materially
breached any of its representations or warranties, covenants
or agreements hereunder;
(c) By the Purchaser or the Seller upon notice given
to the other if the Closing shall not have taken place for
any reason by March 31, 1995, or it is manifestly apparent
that the Closing will not take place because of the
inability to satisfy the condition described in Section
9.2(d) on or before March 31, 1995, provided, that, in
either case, the failure of the Closing to occur on or
before such date (or the inability to satisfy such
condition) is not the result of the breach of the covenants,
agreements, representations or warranties hereunder of the
party seeking such termination; or
(d) By the Purchaser or the Seller upon written notice
to the other party if any court or governmental authority of
competent jurisdiction shall have issued a final permanent
order, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and the time for appeal or
petition for reconsideration of such order shall have
expired.
10.2 EFFECT OF TERMINATION. In the event of the
termination of this Agreement as provided in Section 10.1, this
Agreement shall forthwith become wholly void and of no further
force and effect and, other than in the event of a termination
pursuant to Section 10.1(b) or (c) at a time when there exists a
wilful breach of any of the covenants, there shall be no
liability on the part of the Purchaser or the Seller or their
respective officers or directors (except as set forth in this
Section 10.2 and Section 7.4). In the event of the termination
by any party of this Agreement pursuant to Section 10.1(b) or (c)
at a time when there exists a willful breach of any of the
covenants, agreements, representations or warranties set forth
herein by the other party hereto, then the terminating party
shall be entitled to institute an action for breach of contract
and shall be indemnified by the other party for any or all
damages, costs and expenses sustained or incurred as a result of
such breach. The obligations of the parties to this Agreement
under this Section 10.2 and Section 7.4, as well as under the
Confidentiality Agreement, shall survive any such termination.
ARTICLE 11. GENERAL PROVISIONS
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
COVENANTS. The representations and warranties set forth in
Articles 5 and 6 of this Agreement shall survive until the date
which is 15 months after the Closing Date, and all other
representations and warranties of the parties contained in this
Agreement or in any certificate delivered pursuant hereto shall
not survive the Closing; provided that the representation and
warranty contained in Section 5.4(a) shall not expire and shall
last indefinitely. No action or claim pursuant to Section 11.2
hereof resulting from breaches of the representations and
warranties of any of the parties hereto or any claim for
indemnity in respect thereof shall be brought or made unless,
prior to the expiration of the survival period for the applicable
representation or warranty as set forth above, the action or
claim shall have been the subject of a good faith written notice
from either party hereto to the other party which notice
specifies in reasonable detail the nature of the claim (it being
understood that such written notice may be delivered prior to the
incurrence or suffering of a Loss by an indemnified party if
facts are described in sufficient detail in such notice as to
warrant the delivery of a good faith notice in which case the
party giving such notice shall be entitled to indemnification in
accordance with the provisions hereof notwithstanding that such
Loss may occur after the expiration of the applicable survival
period). Any covenant contained herein which by its terms is to
be performed in whole or in part after the Closing Date shall
survive the Closing Date.
11.2 INDEMNIFICATION. (a) The Seller and Parent agree
to indemnify and hold the Purchaser harmless against and in
respect of any Loss incurred or sustained by the Purchaser as a
result of (i) any breach by the Seller or Parent of their
respective representations or warranties contained herein (it
being agreed that solely for purposes of establishing whether any
matter is indemnifiable pursuant to this clause (i), the accuracy
of the representations and warranties made by Seller and Parent
shall be determined without giving effect to the qualifications
to such representations and warranties concerning "Material
Adverse Effect", (ii) any breach by the Seller or Parent of its
covenants contained herein, (iii) the Excluded Assets (other than
Excluded Loans and related Loan Commitments) or Excluded
Liabilities, (iv) any claim made by any employee or former
employee of Seller, BFD or their respective Affiliates for
severance pay other than a claim incurred on or after the Closing
Date, (v) any claim made pursuant to WARN relating to events
occurring prior to the Closing Date, (vi) benefits or claims
incurred prior to the Closing Date by employees or former
employees of Seller, BFD or their respective Affiliates (other
than liabilities for accrued benefits specifically assumed by
Purchaser in Section 7.7), and (vii) liabilities arising under
Title IV of ERISA, Section 412 or 4980B of the Code or Section
302 of ERISA with respect to any employee benefit plans, programs
or arrangements maintained, sponsored, contributed to or required
to be contributed to by Seller, BFD or any of their respective
Affiliates or any trade or business, whether or not incorporated,
that together with Seller, BFD or any of their respective
Affiliates would be deemed a "single employer" within the meaning
of Section 4001(b) of ERISA (other than liabilities for accrued
benefits specifically assumed by Purchaser in Section 7.7).
Notwithstanding the foregoing, Losses in any year attributable to
out-of-pocket attorney's fees or litigation expenses which are
not in excess of $250,000 shall be borne by Purchaser and shall
not be indemnifiable. The parties acknowledge that with respect
to any litigation not set forth on Schedule 5.12 (whether arising
prior to, on or after the Closing Date) which arises out of any
act or omission of Seller or any of its Affiliates on or prior to
the Closing Date, all Losses incurred or sustained by Purchaser
in connection with such litigation (other than litigation
expenses related to the portion of such litigation brought for
purposes of loan recovery efforts) shall be considered to be
outside of the ordinary course of business for purposes of
Section 5.15 hereof. Accordingly, subject to the terms of the
second preceding sentence and the Basket, such Losses shall be
indemnifiable under this Article 11 to the extent that Purchaser
shall have given a notice of claim for indemnification meeting
the requirements of Section 11.1 hereof with respect to such
litigation or with respect to the facts, events or circumstances
giving rise thereto. In the case of any indemnification claim
involving a credit loss where a representation, warranty or
covenant of the Seller is alleged to have been breached, it is
understood that the Purchaser shall not be entitled to
indemnification under this Article 11 for any damage, loss,
liability or expense arising out of or based upon a breach or
event referred to in clause (i) of the first sentence of this
paragraph relating to a Loan or Loan Commitment included in the
Acquired Assets or to the related Loan Document, which Loan is
not collected in full, if and to the extent the Seller
demonstrates that such damage, loss, liability or expense would
have occurred, notwithstanding such breach, by reason of the
Debtor being unable or unwilling to pay and discharge such Loan
in full and the collateral securing such Loan otherwise having
inadequate value. The Purchaser agrees that it will take
commercially reasonable actions consistent with its general
policies and practices to mitigate Losses (including, without
limitation, taking commercially reasonable steps to cure any
documentation or security interest defect upon the discovery
thereof), and in the event any such Loss is sustained and an
indemnification claim is made against the Seller hereunder, the
Purchaser will provide the Seller with such information in the
credit and other files of the Purchaser relating to the relevant
loan and the administration thereof as may be reasonably
requested by the Seller for purposes of determining whether such
Loss would have otherwise occurred. The costs incurred by
Purchaser pursuant to the previous sentence shall (subject to the
Basket in the case of mitigation of Losses resulting from any
breach of the representations and warranties of Seller and Parent
contained herein) be indemnifiable by Seller pursuant to this
Article 11. Notwithstanding the foregoing, in no event shall the
Purchaser be required to initiate any litigation against any
third party in connection with its mitigation obligation unless
the Seller requests the Purchaser do so and reimburse the
Purchaser for all expenses incurred by the Purchaser in
connection with such litigation as such expenses are incurred.
Regardless of any breach of a representation or warranty, the
Seller shall not be responsible for any loss or portion thereof
to the extent it results from the act or omission of the
Purchaser. In no event shall indemnification be provided in
respect of any loss, liability or damages arising from or
relating to any matter described in Schedule 5.12.
(b) The Purchaser agrees to indemnify and hold the
Seller harmless against and in respect of any Loss incurred or
sustained by the Seller as a result of (i) any Assumed Liability,
(ii) any breach by the Purchaser of its representations or
warranties contained herein, (iii) any breach by the Purchaser of
its covenants contained herein and (iv) acts or omissions of the
Seller taken at the direction of the Purchaser whether occurring
before or after the Closing Date.
(c) No indemnifying party shall be liable for.any
loss, liability or damage based on the indemnification provisions
of clause (i) of subsection (a) or clause (ii) of subsection (b)
above except to the extent that the aggregate of such losses,
liabilities or damages exceeds $8 million, in which event the
indemnified party shall be entitled to recover only those losses,
liabilities or damages in excess of $8 million (the "Basket"),
provided, however, that the $8 million limitation contained in
this Section 11.2(c) shall not apply to, and Purchaser's
indemnified parties shall be entitled to dollar-for-dollar
recovery with respect to, Losses resulting from breaches of the
representations contained in Section 5.4(a) hereof. The
indemnifying party shall not be liable for any breach of
representation or warranty hereunder if the loss, liability or
damage therefrom, in any individual case, amounts to $10,000 or
less, and such losses, liabilities or damages shall not be
included in calculating the $8 million threshold established in
the immediately preceding sentence, provided, however, that in
the case of any Loss exceeding $10,000, subject to the $8 million
limitation described above, the entire Loss, and not solely the
portion of such Loss in excess of $10,000, shall be indemnifiable
by Seller and provided further, however, that where a number of
Losses are each individually less than $10,000, but the aggregate
of such Losses exceeds $10,000, and all such Losses are based
upon, arise from or are attributable to the same or a series of
closely related matters, then subject to the $8 million
limitation, such Losses shall be indemnifiable by Seller pursuant
to Section 11(a)(i).
(d) Promptly after receipt by an indemnified party
under this Section 11.2 of notice of any claim or the
commencement of any action, the indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying
party under this Section 11.2, notify the indemnifying party in
writing of the claim or the commencement of that action, provided
that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have to the
indemnified party under this Section 11.2 unless and only to the
extent such failure is materially prejudicial to the indemnifying
party. If any such claim shall be brought in respect of which
any indemnification claim may be made, the indemnifying party
shall be entitled to participate therein and to assume the
defense thereof (or the defense of the portion thereof for which
the indemnifying party is potentially responsible) with counsel
reasonably satisfactory to the indemnified party, and to settle
and compromise any such claim or action (or such portion
thereof), such settlement or compromise shall be effected only
with the consent of the indemnified party, which consent shall
not be unreasonably withheld; provided, that the indemnified
party shall reimburse the indemnifying party for all costs and
expenses incurred by the indemnifying party in connection with
such defense to the extent that such costs and expenses do not
exceed the remaining availability, if any, under the Basket in
the case of indemnification claims resulting from any breach of
representations and warranties of Seller and Parent contained
herein; and provided further, however, that if the indemnified
party has elected to be represented by separate counsel at its
own expense (or, pursuant to the proviso to the penultimate
sentence of this paragraph, at the expense of the indemnifying
party), such settlement or compromise shall be effected only with
the consent of the indemnified and indemnifying parties, which
consent shall not be unreasonably withheld. If the indemnifying
party elects not to assume the defense in connection with any
such claim or portion thereof, the indemnified party may not
settle or compromise any such claim or portion thereof without
the consent of the indemnifying party, which consent shall not be
unreasonably withheld. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of
such claim or action or portion thereof, the indemnifying party
shall not be liable to the indemnified party under this Section
11.2 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other
than reasonable costs of investigation, provided, however, that
the indemnified party shall have the right to employ counsel to
represent it if, in the indemnified party's reasonable judgment,
it is advisable, because of a reasonably apparent conflict of
interest between the indemnifying party and the indemnified party
or because there are specific defenses available to the
indemnified party which are different from or additional to those
available to the indemnifying party and which could be materially
adverse to the indemnifying party, for the indemnified party to
be represented by separate counsel, which separate counsel shall
have the right to assume and direct the indemnified party's
defense and enter into settlements or compromises with the
consent of the indemnifying party, and in that event the
reasonable fees and expenses of one such separate counsel shall
(to the extent no portion of the Basket remains available in the
case of indemnification claims resulting from any breach of
representations and warranties of Seller and Parent contained
herein) be paid by the indemnifying party. In addition, the
parties agree to render to each other such assistance as may
reasonably be requested in order to insure the proper and
adequate defense of any such claim or proceeding. The parties
hereto agree that the procedures set forth in this Section
11.2(d) shall not apply to claims for indemnification between
such parties.
(e) Absent claims based on fraud or bad faith, the
indemnity provided in this Section 11.2 shall be the sole and
exclusive remedy of the indemnified party against the
indemnifying party for any matter arising in connection with this
Agreement. Except as may otherwise be required by law, any
indemnity payments pursuant to this Agreement shall constitute
and shall be reported by the parties as adjustments to the
purchase price hereunder.
11.3 SCHEDULES. Disclosures included in any schedule
to this Agreement shall be considered to be made for purposes of
all schedules. Inclusion of any matter in any schedule to this
Agreement does not imply that such matter would, under the
provisions of this Agreement, have to be included in such
schedule.
11.4 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally or transmitted by telex or telegram or
mailed by registered or certified mail (returned receipt
requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(A) if to the Purchaser or Shawmut, to:
Shawmut National Corporation
Executive Offices
One Federal Street
Boston, Massachusetts 02211
Attention: J. Michael Shepherd
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, N.Y. 10022
Attention: William S. Rubenstein
(B) if to Seller or Parent to:
Barclays Group Inc. (USA)
222 Broadway
New York, N.Y. 10038
Attention: John Freeman
Telecopy: 212-412-3862
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, N.Y. 10017-3954
Attention: Wilson S. Neely
11.5 INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
11.6 AMENDMENT. This Agreement and the Exhibits and
Schedules hereto may be amended by the parties hereto, but may
not be amended except by an instrument or instruments in writing
signed and delivered on behalf of each of the parties hereto.
11.7 EXTENSION; WAIVER. At any time prior to the
Closing Date, any party hereto which is entitled to the benefits
hereof may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive
any inaccuracy in the representations and warranties of the other
party hereto contained herein or in any Schedule hereto or in any
document delivered pursuant hereto, and (c) waive compliance with
any of the agreements of the other party hereto or conditions
contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid if set forth in an
instrument in writing signed and delivered on behalf of such
party.
11.8 ENTIRE AGREEMENT. This Agreement (including the
Exhibits, Annexes, Schedules, documents and instruments referred
to herein) and the Confidentiality Agreement constitute the
entire agreement and supersede all other prior agreements and
understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof.
11.9 THIRD PARTY BENEFICIARIES. This Agreement is not
intended to confer upon any other person any rights or remedies
hereunder.
11.10 ASSIGNMENT. This Agreement shall not be
assigned, and any attempted assignment shall be void; provided,
however, that Purchaser may assign its right to purchase any
Acquired Asset and/or to assume any Assumed Liability, together
with Purchaser's rights under this Agreement with respect
thereto, to any of its Affiliates only if such Affiliate of the
Purchaser and the Purchaser agree to be bound jointly and
severally hereunder and such Affiliate executes a counterpart of
this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and
assigns.
11.11 PUBLICITY NOTICE. Except (i) as required or
expressly permitted by this Agreement, (ii) as may be necessary
in order to give the notices to obtain the prior regulatory
approval described in Schedule 6.3, (iii) as necessary to consult
with attorneys, accountants, employees, or other advisors
retained in connection with the transactions contemplated hereby,
(iv) as required by court order or otherwise mandated by law or
the rules of the New York Stock Exchange, or by contract in which
the Seller or the Purchaser is a party, or (v) in connection with
disclosure documents prepared by the Seller, the Purchaser or a
subsidiary or parent of either, neither party shall issue any
news release or other public notice or communication or otherwise
make any disclosure to third parties concerning this Agreement or
the transactions contemplated hereby without the prior consent of
the other party, which consent will not be unreasonably withheld.
Even in cases where such prior consent is not required each party
will, to the extent practicable under the circumstances, give
prior notice to the other of the contents of such releases in
order to provide a reasonable opportunity to the other party to
prepare a corresponding or other similar release.
Notwithstanding the foregoing, if the parties hereto issue a news
release after the execution of this Agreement announcing the
proposed sale it must specifically state that such sale is
subject to prior regulatory approval.
11.12 GOVERNING LAW. This Agreement shall be
governed in all respects, including validity, interpretation and
effect, by the laws of the State of New York.
11.13 COUNTERPARTS. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an
original, but which together shall constitute a single agreement.
11.14 CONSENT TO JURISDICTION; SERVICE OF PROCESS.
(a) The parties hereto hereby exclusively and irrevocably submit
to the jurisdiction of the federal and state courts of New York
over any action arising out of or relating to this Agreement, the
Servicing Agreement and any of the agreements entered into in
connection herewith and therewith and Parent, Seller, Shawmut and
Purchaser hereby irrevocably agree that all claims in respect of
such suit, action or proceeding shall be heard and determined in
such courts. The parties hereby irrevocably waive, to the
fullest extent permitted by applicable law, any objection which
they may now or thereafter have to the laying of venue of any
such suit, action or proceeding brought in such court or any
defense of inconvenient forum for the maintenance of such suit,
action or proceeding. Each of the parties hereto agrees that a
judgment in any such action or proceeding may be enforced in
other jurisdictions by suit on the judgment or in any manner
provided by law.
(b) Each of the parties hereto hereby consents to
process being served by any party to this Agreement in any suit,
action or proceeding of the nature specified in subsection (a)
above by the mailing of a copy thereof in accordance with the
provisions of Section 11.4 of this Agreement.
11.15 WAIVER OF JURY TRIAL. The parties to the
Agreement hereby irrevocably and unconditionally waive trial by
jury in any legal action or proceeding relating to the Agreement,
the Servicing Agreement and the agreements entered into in
connection herewith and therewith and any amendment, waiver,
consent or other document that amends, waives, supplements or
otherwise modifies the Agreement, the Servicing Agreement or any
of the agreements entered into in connection herewith and
therewith.
11.16 CONFIDENTIALITY AGREEMENT. Parties agree
that on the Closing Date, the provisions of the Confidentiality
Agreement shall terminate and be of no further force and effect,
except to the extent that Shawmut or Purchaser has received
confidential information of Seller unrelated to the BFD Acquired
Business, the Acquired Assets or the Assumed Liabilities.
IN WITNESS WHEREOF, the Seller, Parent, Shawmut and
Purchaser have caused this Agreement to be executed on their
behalf by their respective officers hereunto duly authorized all
as of the date first written above.
BARCLAYS BUSINESS CREDIT INC.
By /s/ Richard Webb
BARCLAYS BANK PLC
By /s/ Richard Webb
SHAWMUT NATIONAL CORPORATION
By /s/ J. Michael Shepherd
SHAWMUT BANK CONNECTICUT, N.A.
By /s/ Susan E. Lester
