May 13, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir or Madam:
Re: NBB Bancorp, Inc. - File No. 1-10396
Report on Form 10-Q for Quarter Ended March 31, 1994
Attached to this transmittal letter is the Report on Form 10-Q of NBB Bancorp,
Inc. for the quarter ended March 31, 1994. As required by EDGAR rules, one
paper copy of this report and exhibits will be forwarded to you.
Please note that disclosure of a recent development, the signing of an
Agreement and Plan of Merger Dated May 9, 1994 By and Between Fleet
Financial Group, Inc. and NBB Bancorp, Inc. is included in Part II, Item 5
of the Form 10-Q. The full agreement is included as Exhibit 2 and the Press
Release for the announcement of that agreement is included as Exhibit 99.
Sincerely yours,
NBB Bancorp, Inc.
George J. Charette III
<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) of THE SECURITIES
EXCHANGE ACT OF 1934
FOR the quarter ended March 31, 1994
or
[ ] TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File No. 1-10396
NBB BANCORP,INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2997971
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
174 Union Street, New Bedford, Massachusetts 02740
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 996-5000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
At May 1, 1994, there were 8,662,394 shares of common stock, par value
$.10, issued and outstanding.
<PAGE>
<PAGE>
NBB Bancorp, Inc. and Subsidiary
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page No.
<S> <C>
Item 1.
Consolidated Balance Sheets at March 31, 1994
and December 31, 1993 3
Consolidated Statements of Income for the
three months ended March 31, 1994 and 1993 4
Consolidated Statements of Changes in
Stockholders' Equity for the three months
ended March 31, 1994 and 1993 5
Consolidated Statements of
Cash Flows for the three months ended
March 31, 1994 and 1993 6
Notes to Consolidated Financial Statements 7
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-20
PART II - OTHER INFORMATION 21
SIGNATURES 22
EXHIBITS
Exhibit 2 Agreement and Plan of Merger Dated as of
May 9, 1994 by and Between Fleet
Financial Group, Inc. and NBB Bancorp, Inc.
Exhibit 10(r) Amendment to Shareholder Rights Agreement
Exhibit 11 Computation of Per Share Earnings
Exhibit 99 Company Press Release
</TABLE>
<PAGE>
<PAGE>
NBB Bancorp, Inc. and Subsidiary
Consolidated Balance Sheets
(In Thousands, Except Share Data, Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
<S> <C> <C>
ASSETS:
Cash and due from banks $ 52,520 $ 65,876
Federal funds sold and overnight deposits 17,000 11,000
Total cash and cash equivalents 69,520 76,876
Securities available-for-sale: at fair value
3/31/94 and 12/31/93 (cost of $562,129 556,868 588,442
and $576,790)
Securities held-to-maturity: market value of
$405,631 and $409,713 405,068 399,453
Loans 1,333,137 1,319,287
Allowance for loan losses (29,238) (29,596)
Loans, net 1,303,899 1,289,691
Banking premises and equipment, net 22,747 22,794
Accrued interest receivable 19,376 18,949
Other real estate owned 19,883 21,236
Goodwill, core deposit and other intangibles 14,798 15,451
Segregated assets 9,735 8,922
Other assets 18,672 8,922
Total assets $2,440,566 $2,450,736
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits $2,168,192 $2,169,256
Mortgagors' escrow payments 6,941 5,621
Accrued interest payable 5,719 5,946
Accrued income taxes payable 994 7,202
Accrued expenses and other liabilities 8,301 7,761
Total liabilities 2,190,147 2,195,786
Stockholders' equity:
Serial preferred stock, $0.10 par value,
10,000,000 shares authorized; none issued -- --
Common stock, $0.10 par value, 40,000,000
shares authorized; 9,533,827 and 9,529,430
shares issued and outstanding 953 953
Additional paid-in capital 134,303 134,240
Retained earnings 128,155 122,926
Treasury stock, at cost, 873,433 shares (9,941) (9,941)
253,470 248,178
Net unrealized gain/(loss) on securities
available-for-sale (3,051) 6,772
Unearned compensation - ESOP -- --
Total stockholders' equity 250,419 254,950
Total liabilities and stockholders' equity $2,440,566 $2,450,736
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE>
NBB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Share Data, Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1994 1993
<S> <C> <C>
Interest and dividend income:
Interest and fees on loans $26,538 $29,531
Interest and dividends on securities 14,643 13,299
Other interest 108 125
Total interest and dividend income 41,289 42,955
Interest expense:
Interest on deposits 16,784 19,260
Total interest expense 16,784 19,260
Net interest income 24,505 23,695
Provision for loan losses 200 1,300
Net interest income after provision
for loan losses 24,305 22,395
Non-interest income:
Deposit and other banking fees 1,392 1,367
Gain on sales of securities, net 452 830
Other income 225 190
Total non-interest income 2,069 2,387
Operating expenses:
Salaries and employee benefits 5,464 5,028
Temporary help 41 257
Occupancy and equipment 1,279 1,659
Deposit insurance 1,250 1,205
Data processing 890 776
Amortization of goodwill, core deposit
and other intangibles 654 793
Professional fees 752 693
Office supplies, postage and
telephone 618 674
Customer account servicing 253 279
Marketing 225 171
Insurance 165 218
Other 357 403
Total operating expenses 11,948 12,156
Other expenses:
OREO expense 825 1,017
Equity in loss (income) of
unconsolidated subsidiary (22) 16
Total other expenses 803 1,033
Total expenses 12,751 13,189
Income before income taxes 13,623 11,593
Provision for income taxes 5,798 5,195
Net income $ 7,825 $ 6,398
Earnings per share $0.90 $0.74
Dividends per common share 0.30 0.24
Weighted average common shares
outstanding 8,657,119 8,600,995
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE>
NBB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(In Thousands, Except Per Share Data)
(UNAUDITED)
<TABLE>
<CAPTION>
Unrealized
Appreciation/
(Depreciation)
Additional Unearned on Securities
Common Paid-in Retained Treasury Compensation- Available for
Stock Capital Earnings Stock ESOP Sale Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1993 $953 $134,240 $122,926 ($9,941) $ -- $6,772 $254,950
Net income -- -- 7,825 -- -- -- 7,825
Issuance of common stock
under stock option plan
(4,397 shares) -- 63 -- -- -- -- 63
Cash dividends paid
($.30 per share) -- -- (2,596) -- -- -- (2,596)
Decrease in net unrealized
appreciation on securities
available-for-sale, net of
income tax benefit
of $7,088 -- -- -- -- -- (9,823) (9,823)
Balance at March 31, 1994 $953 $134,303 $128,155 ($9,941) $ -- ($3,051) $250,419
Balance at
December 31, 1992 $946 $133,274 $103,798 ($9,941) ($283) $ -- $227,794
Net income -- -- 6,398 -- -- -- 6,398
Issuance of common stock
under stock option plan
(14,853 shares) 2 155 -- -- -- -- 157
Cash dividends paid
($.24 per share) -- -- (2,065) -- -- -- (2,065)
Balance at March 31, 1993 $948 $133,429 $108,131 ($9,941) ($283) $ -- $232,284
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE>
NBB Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands) Three Months Ended March 31, 1994 1993
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 7,825 $ 6,398
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Provision for loan losses 200 1,300
Provision for OREO losses 651 817
Gain on sales of securities, net (452) (830)
Net accretion of investments, loans and deposits (119) (230)
Accretion of deferred loan fees (664) (500)
Amortization of goodwill, core deposit and
other intangibles 654 792
Depreciation expense 314 325
Increase in accrued interest
receivable and other assets, net (3,902) (6,831)
Increase in mortgagors' escrow payments 1,320 1,624
Increase (decrease) in accrued expenses and other
liabilities, net (5,894) 6,619
Net cash provided by (used in) operating activities (67) 9,484
Cash Flows from Investing Activities:
Purchase of securities available-for-sale (86,719) (83,515)
Proceeds from sales of securities available-for-sale 99,564 67,497
Proceeds from maturities, calls and paydowns of
securities available-for-sale 2,140 5,010
Purchase of securities held-to-maturity (28,261) (26,277)
Proceeds from sales of securities held-to-maturity - 1,421
Proceeds from maturities, calls and paydowns of
securities held-to-maturity 22,699 2,020
Decrease (increase) in loans, net (13,800) 10,911
Proceeds from loans sold 14 440
Additions to banking premises and equipment (267) (4,560)
Decrease (increase) in other real estate owned 702 (2,215)
Net cash used in investing activities (3,928) (29,268)
Cash Flows from Financing Activities:
Net increase (decrease) in deposits (828) 13,984
Proceeds from issuance of common stock 63 157
Dividends paid on common stock (2,596) (2,065)
Net cash provided by financing activities (3,361) 12,076
Net decrease (increase) in cash and cash equivalents (7,356) (7,708)
Cash and cash equivalents at beginning of year 76,876 73,635
Cash and cash equivalents at end of year $ 69,520 $ 65,927
Supplementary Cash Flow Information:
Interest paid on deposits $17,247 $17,978
Income taxes paid, net 12,084 7,864
Non-cash Investing Activities:
Foreclosures and in-substance foreclosures 1,893 2,294
Unrealized depreciation on securities
available-for-sale (9,823) -
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
<PAGE>
NBB BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited interim consolidated financial statements of NBB Bancorp,
Inc. (the Company) and Subsidiary presented herein should be read in
conjunction with the consolidated financial statements of NBB Bancorp,
Inc. and Subsidiary for the year ended December 31, 1993 filed on Form
10-K.
In the opinion of management, all of the adjustments (consisting of
normal recurring accruals, unless otherwise indicated) necessary for a
fair statement of the results of operations have been included in the
accompanying consolidated financial statements.
2. SECURITIES AVAILABLE-FOR-SALE AND HELD-TO-MATURITY
Securities classified as available-for-sale are reported at fair value,
with unrealized gains and losses excluded from earnings and reported as a
separate component of stockholders' equity. Debt securities that the
Company has the positive intent and ability to hold to maturity are
classified as held-to-maturity and reported at amortized cost.
3. EARNINGS PER SHARE
The earnings per share calculation for the periods ended March 31, 1994
and 1993 is based on weighted average shares outstanding. Weighted
average shares outstanding is computed based on common stock issued less
treasury stock held. The effect of outstanding stock options granted is
not material.
4. COMMITMENTS
At March 31, 1994, firm commitments to grant loans amounted to $28.1
million, commitments under standby letters of credit amounted to $116
thousand, unadvanced funds under construction loans amounted to $13.3
million, and unadvanced funds under commercial and home equity lines of
credit amounted to $28.5 million. There were no commitments to sell
loans at March 31, 1994.
5. DIVIDENDS
On April 14, 1994, NBB Bancorp, Inc. announced that a $.30 per share
dividend would be paid on May 13, 1994 to stockholders of record on April
30, 1994.
<PAGE>
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis of the consolidated results
of operations and financial condition of NBB Bancorp, Inc. (the
Company) should be read in conjunction with the consolidated
financial statements and related notes included in the 1993 Annual
Report to Stockholders.
Comparison of Results of Operations for the Three Months Ended
March 31, 1994 and 1993
OVERVIEW
Net income for the first quarter of 1994 was $7.8 million or $0.90
per share, 22 percent greater than the $6.4 million or $0.74 per
share earned from operations in the first quarter of 1993. Lower
deposit costs combined with increased average earning assets due
to deposit growth and a lower provision for loan losses had a
positive impact on the results of operations.
Net interest margin was 4.19% for the current quarter compared to
4.22% for the same quarter last year. Average earning assets
increased by $95 million reflecting deposit and equity growth
during the twelve-month period ended March 31, 1994.
The provision for loan losses declined by $1.1 million from the
first quarter of 1993 and $300 thousand from the fourth quarter of
1993 due to continued improvement in nonperforming assets.
Nonperforming assets decreased by $23.1 million compared to March
31, 1993 and totaled $33.1 million at March 31, 1994.
Total operating expenses amounted to $11.9 million for the quarter
ended March 31, 1994 compared to $12.2 million for the same
quarter last year. This represents a decrease of 2% and is the
result of the continued consolidation of operations from acquired
banks and the closing of four branch offices during the past
twelve months.
NET INTEREST INCOME
Net interest income is the difference between interest and fees
earned on the Company's loan and investment portfolios and the
interest paid on deposits and borrowed funds.
Net interest income increased $810 thousand from the same quarter
last year, to $24.5 million, for the first quarter of 1994, due
primarily to the increase in average earning assets. The decrease
of 3 basis points in the net interest margin was not material and
primarily reflects the fact that higher yielding assets, such as
loans, were a smaller percentage of interest-earning assets due to
the run-off of certain loans acquired as part of the Attleboro
Pawtucket acquisition in August, 1992. That bank was acquired
<PAGE>
<PAGE>
under a loss-sharing agreement with the FDIC and the loan run-off
has been in line with expectations.
The following table presents an analysis of average balances of
interest-earning assets and interest-bearing liabilities, yields
earned and rates paid:
CONSOLIDATED AVERAGE BALANCE SHEETS AND YIELDS EARNED AND RATES PAID
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1994 December 31, 1993 March 31, 1993
Average Average Average
Balance Rate Balance Rate Balance Rate
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Loans $1,327,470 8.01% $1,316,056 8.14% $1,355,659 8.73%
Securities 917,503 5.92 914,485 5.95 818,103 6.16
Mortgage-backed
securities 64,233 6.68 68,129 6.34 37,710 7.41
Federal funds sold and
overnight deposits 13,927 3.13 11,402 3.01 16,841 2.74
Total interest-
earning assets 2,323,133 7.12% 2,310,072 7.19% 2,228,313 7.72%
Allowance for loan
losses (29,660) -- (30,043) -- (34,831) --
Noninterest-earning
assets 161,370 -- 158,257 -- 156,251 --
Total assets $2,454,843 -- $2,438,286 -- $2,349,733 --
LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing liabilities:
Savings deposits $1,051,195 2.43% $1,055,915 2.54% $1,040,784 3.10%
Time certificates
of deposit 1,048,980 4.06 1,040,624 4.13 993,954 4.61
Long-term debt -- -- 94 -- 283 --
Total interest-
bearing liabilities 2,100,175 3.24% 2,096,633 3.33% 2,035,021 3.84%
Noninterest-bearing
liabilities 99,675 -- 97,968 -- 86,033 --
Total liabilities 2,199,850 -- 2,194,601 -- 2,121,054 --
Stockholders' equity 254,993 -- 243,685 -- 228,679 --
Total liabilities and
stockholders' equity $2,454,843 -- $2,438,286 -- $2,349,733 --
Interest rate spread 3.88% 3.87% 3.88%
Net interest margin 4.19% 4.17% 4.22%
</TABLE>
RATE/VOLUME ANALYSIS
The following table shows the change in interest and dividend
income, and interest expense, for each major category of
interest-earning assets and interest-bearing liabilities. The
<PAGE>
<PAGE>
amount of the change due to volume and rate has been allocated
proportionately to volume and rate for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended March 31, 1994 Compared to 1993
Increase Increase
(Decrease) (Decrease)
Due to Due to
(In Thousands) Volume Rate Total
<S> <C> <C> <C>
Interest, fees and dividend income:
Loans $ (557) $(2,436) $(2,993)
Securities 1,933 (589) 1,344
Other (22) 5 (17)
Total interest and dividend income 1,354 (3,020) (1,666)
Interest expense:
Savings deposits 79 (1,747) (1,668)
Time certificates of deposit 602 (1,410) (808)
Total interest expense 681 (3,157) (2,476)
Net interest income $ 673 $ 137 $ 810
</TABLE>
PROVISION FOR LOAN LOSSES
The provision for loan losses for the first quarter of 1994 was
$200 thousand, a $1.1 million decrease from the amount provided in
the first quarter of 1993. In determining the amount to provide
for loan losses, the key factor is the adequacy of the allowance
for loan losses. In making its decision, management considers a
number of factors, including prior experience relative to the loan
portfolio mix, economic conditions, especially regional economic
trends, internal analysis and the results of examinations
conducted by bank regulatory authorities. During the past twelve
months, the Company experienced a substantial decrease in
nonperforming loans. This, coupled with the reduction in the
total loans outstanding, particularly in the commercial loan
portfolio, resulted in the Company's decision to reduce its
provision for loan losses compared to prior periods. In spite of
this reduction in the provision, the Company maintains strong
asset-quality ratios, which reflect the risk inherent in a slow
economic recovery. As of March 31, 1994, the allowance for loan
losses was $29.2 million or 2.19% of total loans, compared to
$34.1 million or 2.54% at March 31, 1993. Nonperforming loans
represented .99% and 1.97% of the total loan portfolio at March
31, 1994 and 1993, respectively.
OTHER INCOME
The increase in other income from the first quarter of 1993 to the
first quarter of 1994, excluding securities gains, was due
primarily to deposit fees, the result of an increase in deposits
and increased fees charged for services offered.
Gains on sales of securities decreased $378 thousand from the
first quarter of 1993 reflecting a somewhat more stable rate
environment.
<PAGE>
<PAGE>
OPERATING EXPENSES
Operating expenses totaled $11.9 million for the first quarter of
1994 compared to $12.2 million in the first quarter of 1993. This
decrease came as a result of further consolidation of operations
from the two prior acquisitions and a critical review of the
branch network. Four branches were closed during the twelve month
period ended March 31, 1994. The overhead ratio for the first
quarter of 1994 was 1.97% compared to 2.10% for the first quarter
of 1993. Certain nonrecurring expenses were incurred in the first
quarter of 1993 as a result of the Attleboro Pawtucket acquisition
in August, 1992.
The $220 thousand increase in compensation was primarily the
result of general salary increases. The reductions in occupancy
and equipment, office supplies, postage and telephone and
insurance expense are the result of branch closings during the
preceding twelve months. Deposit insurance increased due to the
increase in the overall deposit base during the last twelve-month
period. Data processing and professional fees increased as a
result of growth and increased efforts to reduce nonperforming
assets. Amortization of goodwill, core deposit and other
intangibles decreased as the core deposit intangibles created as a
result of the two most recent acquisitions amortize on accelerated
methods triggering more expense in the earlier years. Marketing
increased as more resources were being expended to better promote
the products offered throughout the Bank's market area and to take
advantage of increased real estate loan demand created by the
current rate environment.
OTHER EXPENSES
OREO consists of properties acquired through foreclosure or
substantively foreclosed properties as well as an investment in a
condominium project from a previous acquisition. OREO expense
decreased $192 thousand from the first quarter of 1993 to $825
thousand in the first quarter of 1994. Provisions for OREO
properties totaled $651 thousand, a decrease of $167 thousand
compared to the same period last year. Operating expenses for
OREO properties also decreased by $25 thousand for the first
quarter of 1994 compared to the same period last year.
INCOME TAX EXPENSE
The effective income tax rate for the first quarter of 1994 was
42.6% compared to 44.8% for the same quarter in 1993. During the
fourth quarter of 1993, the Bank formed two securities
corporations to manage portions of the Bank's investment
portfolio. These are Massachusetts securities corporations and
receive favorable tax treatment under Massachusetts tax laws. The
reduction in the effective tax rate for the current quarter is the
result of the reduced tax rate on the income of these
corporations.
FINANCIAL CONDITION
Total assets decreased by $10.2 million from December 31, 1993 and
increased $65.6 million from March 31, 1993. Deposits decreased
<PAGE>
<PAGE>
by $1.1 million compared to December 31, 1993 and increased by
$59.9 million from March 31, 1993. The increase in deposits in
the past twelve-month period, lack of loan demand, the anticipated
runoff of shared-loss assets and the substantial improvement in
nonperforming assets contributed to a very strong, highly liquid
balance sheet at March 31, 1994. Return on average assets has
steadily increased since the fourth quarter of 1992 to 1.29% for
the first quarter of 1994. Return on average equity has also
steadily increased to 12.45% for the same period.
SECURITIES
Securities increased $78.7 million in the last twelve months but
have decreased $26.0 million since December 31, 1993 as a result
of an increase in residential loan demand and level deposit flows
during the last three months. Securities comprised 41.6% of
earning assets at March 31, 1994 compared to 42.6% at December 31,
1993. The Company adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," as of December 31,
1993. In complying with SFAS No. 115, the Company classified
$556.9 million, or 57.9% of its securities at March 31, 1994 as
available-for-sale.
Securities available-for-sale provide liquidity, facilitate
interest rate sensitivity management, and enhance the Company's
ability to respond quickly to the customers' needs should loan
demand increase and/or deposit growth slow. Securities held-to-
maturity, which totaled $405.1 million or 42.1% of securities at
March 31, 1994, are those securities which the Company has the
positive intent and ability to hold to maturity. Except in a
limited number of specific circumstances, SFAS No. 115 does not
allow for the transfer or sale of securities classified as held-
to-maturity.
LOANS
Total loans, as well as loans as a percentage of earning assets,
increased since December 31, 1993. The increase is the result of
more demand in residential loans. Commercial loans continued to
decrease. This decrease is driven by the dynamics of the loan
portfolio acquired as part of the Attleboro Pawtucket Savings Bank
(APSB) acquisition. Since the acquisition of APSB, there has been
an inherent loss of loans outstanding which impacts the overall
potential for loan growth. Former APSB loans which become
nonperforming are reclassified as Segregated Assets until they are
resolved, thus immediately reducing the appropriate loan category.
In addition, APSB was lending to certain lines of business which
the Company had chosen not to enter, or, in some cases, to reduce
total exposure, which meant that certain segments of the portfolio
were intentionally not being replaced. Commercial loan balances
have declined but residential loan balances have increased since
March 31, 1993.
ASSET QUALITY
Because of some of the unique elements of the agreement between
NBIS and the FDIC in conjunction with the APSB transaction, the
<PAGE>
<PAGE>
discussion of asset quality is divided into two sections. The
first pertains to NBIS and includes, where applicable, performing
loans from the APSB portfolio and related reserves. It excludes,
however, any APSB nonperforming loans covered by the loss-sharing
agreement. As a result of this, certain ratios related to
nonperforming assets and loans have been favorably impacted. APSB
nonperforming loans which fall under the loss-sharing agreement
have been designated as Segregated Assets throughout the
consolidated financial statements and are, along with the
associated allowances, charge-offs and recoveries, discussed
separately under that caption. Because of the structure of the
agreement, there have been very few APSB nonperforming assets that
are not covered by the agreement (nonperforming consumer loans
totaling $131 thousand), so for discussion purposes, the term
"shared-loss" will not be used when discussing APSB nonperforming
loans or Segregated Assets.
Under the terms of the three-year loss-sharing agreement, the FDIC
reimburses NBIS for 80% of any losses, net of recoveries,
associated with all commercial, commercial real estate,
residential mortgage and home equity loans that occur during the
three years following the acquisition. Effectively, only consumer
loans are excluded from the loss sharing. The agreement also
provides for reimbursement of carrying costs on nonperforming
assets at a previously agreed upon rate of interest, as well as
80% of direct collection costs for nonperforming assets.
During the fourth and fifth years following the acquisition, the
Bank will pay to the FDIC an amount equal to 80% of the gross
amount of recoveries during such period on charge-offs of
commercial, commercial real estate, residential mortgage and home
equity loans that occur during the three years following the
acquisition. If, at the end of the five-year period, total net
charge-offs exceed $49 million, the FDIC will pay the Bank an
amount equal to 15% of the difference between total net
charge-offs and $49 million. Net charge-offs on shared-loss
assets since the acquisition total $7.9 million, of which the
Company's share is 20%, or $1.6 million.
NONPERFORMING ASSETS
For the seventh consecutive quarter, the Company had a decrease in
the level of nonperforming assets. The level at March 31, 1994 of
$33.1 million decreased $23.7 million from December 31, 1992.
<PAGE>
<PAGE>
The following table shows the composition of nonperforming assets:
<TABLE>
<CAPTION>
March 31, December 31,
(In thousands) 1994 1993
<S> <C> <C>
Nonperforming Loans:
Residential real estate $ 6,661 $ 6,307
Commercial 6,334 9,096
Consumer 207 67
Total nonperforming loans 13,202 15,470
Other Real Estate Owned:
Real estate acquired by foreclosure 16,596 17,861
Real estate substantively foreclosed 2,375 2,375
Investment in condominium project 912 1,000
Total other real estate owned 19,883 21,236
Total nonperforming assets $33,085 $36,706
</TABLE>
Total nonperforming assets as
a percentage of total assets 1.4% 1.5%
Allowance for possible loan losses
as a percentage of total non-
performing loans 221% 191%
Restructured loans that are performing
and not included above $2,352 $6,182
Foregone interest on nonperforming and restructured loans totaled
approximately $210 thousand for the three months ended March 31,
1994 compared to $511 thousand for the first quarter of 1993.
While real estate values appear to have stabilized, weakness of the
regional economy leaves open the possibility of additional
provisions for losses being required in the future.
ALLOWANCE FOR LOAN LOSSES
The Company's methodology for determining the adequacy of the
allowance for loan losses is based on recurring evaluations of a
number of factors, including the composition of the portfolio,
historic loan loss experience for categories of loans, current and
anticipated economic conditions, nonperforming loan levels and
trends, specific credit reviews, and the results of regulatory
examinations, as well as subjective factors. Since the allowance is
established, in part, as a result of an analysis of the risk
elements of the various parts of the portfolio, an allocation of the
allowance to various loan categories results from the process.
However, while that allocation represents management's best
judgement as to risk, it should be understood that the allowance
itself is available as a single unallocated allowance to address any
problems that may occur in the portfolio.
<PAGE>
<PAGE>
The table below presents average loans, total loans and an
analysis of the allowance for loans losses, including charge-offs
and recoveries.
<TABLE>
<CAPTION>
Three Months Ended March 31, 1994 1993
<S> <C> <C>
(In thousands)
Average loans outstanding during
the period $1,327,470 $1,355,659
Loans outstanding, end of period 1,333,137 1,342,298
Allowance for loan losses,
beginning of period 29,596 34,588
Loans charged off:
Commercial (544) (963)
Real estate-residential (181) (312)
Consumer - (80)
Total (725) (1,355)
Recoveries:
Commercial 337 3
Real estate-residential 22 40
Consumer 5 2
Total 364 45
Net loans charged off (361) (1,310)
Transfer to segregated assets (197) (494)
Provision for loan losses 200 1,300
Allowance for loan losses
end of period 29,238 34,084
Net loans charged off as a percent-
age of average loans outstanding .03% .10%
</TABLE>
The decline in nonperforming loans, coupled with the decline in commercial
loans as a percentage of the loan portfolio, allowed the Company to decrease
the total allowance from $34.1 million at March 31, 1993 to $29.2 million at
March 31, 1994 while maintaining strong asset quality ratios. The allowance
totaled 2.19% of total loans at March 31, 1994 compared to 2.54% on the same
date last year, while the allowance equaled 221% of nonperforming loans
compared to 129% for those same respective dates.
SEGREGATED ASSETS
Because of the loss-sharing agreement with the FDIC, APSB assets acquired
that are covered by the loss-sharing agreement are disclosed separately on
the Company's balance sheets under the caption, "Segregated Assets."
Included in these amounts are nonperforming loans, OREO and in-substance
foreclosures, net of an allowance for losses which is deemed adequate to
cover Segregated Assets as indicated in the table below.
<PAGE>
<PAGE>
An analysis of Segregated Assets at March 31, follows:
(In thousands)
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Nonperforming loans $ 6,188 $ 7,656
In-substance foreclosures 2,014 4,073
Acquired by foreclosure 2,610 626
10,812 12,355
Allowance for losses (1,077) (1,161)
Total $ 9,735 $11,194
</TABLE>
At March 31, 1994, $10.8 million of Segregated Assets represented an
exposure to the Company of $2.2 million. An allowance of $1.1 million or
50% of the exposure was considered adequate by management. During the
quarter, $197 thousand of allowance was transferred to Segregated Assets and
$113 thousand of charge-offs were taken, representing the Company's 20%
share of the losses for the quarter. The credit loss experience to date on
the APSB portfolio has been satisfactory and it appears that the allowance
established as part of the APSB transaction is adequate to cover both shared
losses and the Company's exposure after the agreement expires.
OTHER ASSETS
Goodwill, core deposit and other intangibles decreased $3.0 million due to
amortization of the components since March 31, 1993. The other asset
category increased primarily due to the $7.1 million deferred income tax
impact of the market value change in securities available-for-sale.
DEPOSITS
Deposits decreased slightly from December 31, 1993. However, deposit growth
for the twelve-month period ended March 31, 1994 was $59.9 million or 2.8%.
The increase in the twelve-month period was achieved through a combination
of competitive pricing, increased marketing, and the convenience and service
offered to our very loyal customer base. Increases have continued to be
experienced in the Rhode Island market and its contiguous Massachusetts
communities.
STOCKHOLDERS' EQUITY
As a result of complying with SFAS No. 115, as of March 31, 1994,
stockholders' equity was decreased by approximately $3.1 million,
representing the unrealized loss on securities available-for-sale, less
applicable income taxes. As of December 31, 1993, stockholders' equity was
increased by approximately $6.8 million, representing the unrealized gain on
securities available-for-sale, less applicable income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity refers to a Bank's ability to meet funding needs for operations,
deposit outflows, loan growth and other commitments on a timely and cost
effective basis. The Bank's principal sources of liquidity are deposits,
loan payments and income and investment maturities and sales. In addition,
the Bank is a member of the Federal Home Loan Bank of Boston (FHLB), where
it has access to a pre-approved line of credit as well as additional
borrowing capacity. The Bank has had no borrowings from the FHLB since
1990. The marketability of certain assets, such as loans, that can be sold
or securitized provides another potential source of liquidity. During the
<PAGE>
<PAGE>
last three years, through a combination of acquisitions, limited loan growth
due to the recession, and the run-off of higher risk loans that were
acquired, the Bank has become increasingly liquid. At March 31, 1994 and
1993 the ratio of loans to deposits were 61% and 64%, respectively. Average
deposits and stockholders' equity were 90% and 11% of average earning
assets, respectively, for the first quarter of 1994 compared to 91% and 10%
for the first quarter of 1993. The Company's source of liquidity is
dividends from the Bank.
Total capital was $250.4 million at March 31, 1994, compared to $232.3
million at March 31, 1993. All capital ratios at March 31, 1994, of
both the Company and the Bank are well above the regulatory minimums
and are presented below:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Minimum
Regulatory
Bancorp Bank Requirement
<S> <C> <C> <C>
Tier 1 Capital ratio
to risk-weighted assets 19.7% 19.6% 4.0%
Total Risk-based Capital ratio 20.7% 20.7% 8.0%
Leverage Capital ratio 9.7% 9.6% 3.0 to 5.0%
</TABLE>
ASSET AND LIABILITY MANAGEMENT
Financial institutions are subject to interest rate risk to the
extent that their interest-bearing liabilities mature and reprice
more or less frequently than their interest earning assets. The
Bank's largest category of interest earning assets are fixed rate
mortgage loans which are held in its own portfolio. Historically,
these loans have had an actual life that was substantially less
than contractual maturity. At March 31, 1994, the Bank's one year
liability sensitive gap of $393.5 million represented 16.1% of
total assets.
<PAGE>
<PAGE>
The following table sets forth maturity and repricing information
relating to interest-sensitive assets and liabilities at March 31, 1994.
Fixed-rate loans and pass-through certificates are shown in the table in
the time periods corresponding to principal amortization which has been
computed based on their respective weighted average maturities and weighted
average rates. Adjustable-rate loans and securities are allocated to the
period in which the rates would be next adjusted. The table does not
reflect partial or full prepayment of loans and certain securities prior
to final contractual maturity. Analysis of the Bank's non-certificate
deposit accounts in 1993 shows that only a portion of savings, money market
deposit and NOW accounts are rate sensitive. Deposit balances have been
distributed accordingly in the 0 to 5-year time bands. In accordance
with the proposed Federal Reserve guidelines for risk-based capital
standards which account for interest rate risk, no amounts related to such
deposit accounts are placed beyond five years. A deficiency of
rate-sensitive assets over rate-sensitive liabilities will generally result
in increased net interest income during a period of falling interest rates
and in decreased net interest income during a period of rising interest rates.
<TABLE>
<CAPTION>
UP TO 1-3 3-5 5-10
YEAR YEARS YEARS YEARS THEREAFTER TOTAL
<S> <C> <C> <C> <C> <C> <C>
Interest sensitive assets:
Federal funds sold $ 17,000 $ - $ - $ - $ - $ 17,000
U. S. Government, U. S. agency
and other bond obligations 131,594 313,628 385,468 41,191 75 871,956
Mortgage-backed securities 5,085 7,249 8,050 19,748 21,796 61,928
Residential mortgage loans:
Adjustable-rate loans 217,525 81,061 1,078 - 118 299,782
Fixed-rate loan amortization 19,800 39,773 43,985 134,087 468,919 706,564
Construction mortgage loans:
Adjustable-rate loans 110 801 - - - 911
Fixed-rate loan amortization 169 377 434 1,399 11,155 13,534
Home equity loans 45,382 - 18 - - 45,400
Second mortgage loans 2,925 2,493 1,974 3,966 1,033 12,391
Consumer loans 17,071 5,260 1,601 1,034 6 24,972
Commercial loans:
Adjustable-rate loans 190,623 2,252 107 80 329 193,391
Fixed-rate loan amortization 18,788 10,423 4,081 1,915 803 36,010
Commercial construction loans:
Adjustable-rate loans 2,028 - - - - 2,028
Fixed-rate loan amortization 3,864 - - - - 3,864
Total $671,964 $463,317 $446,796 $203,420 $504,234 $2,289,731
Interest sensitive liabilities:
Money market deposits $ 121,099 $193,759 $169,539 $ - $ - $ 484,397
Time certificates 783,881 251,200 5,326 12 11 1,040,430
NOW 20,082 80,534 64,065 - - 164,681
Other savings 140,355 100,254 160,406 - - 401,015
Total $1,065,417 $625,747 $399,336 $12 $11 $2,090,523
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
UP TO 1-3 3-5 5-10
YEAR YEARS YEARS YEARS THEREAFTER TOTAL
<S> <C> <C> <C> <C> <C> <C>
Excess (deficiency) of rate
sensitive assets over rate
sensitive liabilities $(393,453) $(162,430) $47,460 $203,408 $504,223 $199,208
Cumulative excess (deficiency) of
rate sensitive assets over rate
sensitive liabilities $(393,453) $(555,883) $(508,423) $(305,015) $199,208
Cumulative excess (deficiency)
as a percentage of total assets (16.1)% (22.8)% (20.8)% (12.5)% 8.2%
</TABLE>
<PAGE>
<PAGE>
RECENT ACCOUNTING DEVELOPMENTS
In November 1992, the FASB issued SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." This new accounting standard became effective
for the Company on January 1, 1994 and requires accrual for postemployment
benefits during either employees' service lives or at the time a liability
is incurred. Postemployment benefits include salary continuation,
supplemental unemployment benefits, severance benefits, disability-related
benefits, job training and counseling, and continuation of benefits such as
health care and life insurance. The implementation of SFAS No. 112 did not
have a material effect on the Company's consolidated financial statements.
In May of 1993, the FASB issued Statement No. 114, "Accounting by Creditors
for Impairment of a Loan," which is effective for the Company on January 1,
1995. Generally, the quantification of the impairment of a loan under this
statement requires the discounting of expected future cash flows at the
loan's original effective rate as opposed to the utilization of a market
rate. In addition, the criteria for classifying a loan as an in-substance
foreclosure was modified so that such classification applies only when a
creditor has taken possession of the loan collateral. The effect of
adopting this statement has not been fully determined but is not expected to
have a material adverse effect on the Company's consolidated financial
statements.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Bancorp and its subsidiary are not involved in any pending
legal proceedings other than those in the ordinary course of
their businesses. Management believes that the resolution of
these matters will not materially affect their businesses or
the consolidated financial condition of Bancorp and its
subsidiary.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during
the reported period.
Item 5. Other Information.
DIVIDEND
A dividend of $.30 per common share was paid on February 11,
1994 to shareholders of record on January 30, 1994.
RECENT DEVELOPMENT
The Company entered into an Agreement and Plan of Merger
(the "Agreement") with Fleet Financial Group, Inc. ("Fleet") dated as of
May 9, 1994, pursuant to which the Company will be merged with and
into Fleet in a transaction in which Fleet will be the surviving entity
(the "Merger"). Following the Merger, Fleet intends to cause (a) the
transfer of certain assets and liabilities of the Bank to Fleet National
Bank, an indirect wholly-owned subsidiary of Fleet with its principal
office in the State of Rhode Island and (b) the consummation of the
merger (the "Bank Merger") of the Bank with and into Fleet Bank of
Massachusetts, N.A., a wholly-owned indirect subsidiary of Fleet
pursuant to a Bank Agreement and Plan of Merger.
In accordance with the terms of the Agreement, each outstanding
share of the Company common stock, $0.10 par value per share (the
"Company Common Stock") shall be converted into the right to receive
a number of Warrants equal to the Warrant Amount (as defined below)
and, at the election of the holder, subject to certain allocation provisions
of the Agreement, either (i) the number of shares of Fleet common
stock, $1.00 par value ("Fleet Common Stock") (together with the
number of associated rights under Fleet's Shareholder Rights
Agreement) rounded to the nearest thousandth of a share, determined by
dividing the Merger Consideration (as defined below) by the Average
Closing Price (as defined below) (the "Per Share Stock Consideration")
or (ii) cash in the amount of the Merger Consideration (as defined
below) (the "Per Share Cash Consideration"), provided, that the
aggregate number of shares of Fleet Common Stock to be issued in the
Merger shall not exceed the Aggregate Fleet Stock Amount (as defined
below). Accordingly, cash consideration is available to holders of
Company Common Stock only to the extent the stock consideration is
not sufficient to pay the entire consideration due.
Notwithstanding the foregoing, if the Average Closing Price is
equal to or less than $29.50, then the consideration payable shall consist
solely of cash in the amount of the Per Share Cash Consideration,
provided that Fleet may, at its option, pay part of such consideration in
the form of Fleet Common Stock valued at the Average Closing Price
up to the number of shares of the Aggregate Fleet Stock Amount which
consisted of shares of Fleet Common Stock previously repurchased by
Fleet to be used in payment of the Merger Consideration.
The "Merger Consideration" shall be equal to $48.50, provided,
however, that in the event that the effective time of the Merger has not
occurred on or prior to March 31, 1995, this amount shall be increased
at the rate of $0.25 per share per month for each full month (prorated
on a daily basis for each partial month) thereafter until the effective
time. The "Average Closing Price" shall mean the average closing sale
price per share of Fleet Common Stock on the New York Stock
Exchange (as reported by the Wall Street Journal or, if not reported
thereby, another authoritative source), for the 10 consecutive trading
days ending on and including the fifth trading day immediately
preceding (but not including) the Effective Time. The "Aggregate Fleet
Stock Amount" shall equal such number of shares of Fleet Common
Stock not less than 5,700,000 (or such lesser number of shares that
would enable Fleet to pay the total consideration for the Merger) and
not more than 6,300,000 as shall be determined by Fleet prior to the
Effective Time, plus such additional number of shares of Fleet Common
Stock as may be required so that the aggregate portion of the
consideration for the Merger attributable to Fleet Common Stock is
equal to at least 45% of the total consideration for the Merger. For
purposes of calculating the total consideration for the Merger, dissenting
shares will be deemed to have received the Per Share Cash Consideration and
the receipt of the Warrants shall be deemed the receipt of cash.
At the effective time of the Merger, Fleet will issue and deliver
a total of 2,500,000 warrants (the "Warrants"). Each Warrant shall
entitle the holder thereof to purchase one share of Fleet Common Stock
at a price of $43.875 per share at any time during the period beginning
on the first anniversary of the effective time of the Merger and ending
on the sixth anniversary of the effective time. The Warrant Amount
means a fraction, the numerator of which is 2,500,000, and the
denominator of which is the sum of the number of shares of Company
Common Stock which are being converted plus the number of shares of
Company Common Stock underlying the then outstanding company
stock options under the Company's stock option plan which are being
converted into options under Fleet's stock option plan.
In connection with the Merger, shareholders of the Company
shall have dissenters' rights in accordance with Delaware General
Corporation Law.
In connection with the Merger, the Company entered into an
amendment dated as of May 9, 1994 (the "Rights Amendment") to its
Shareholder Rights Agreement dated as of November 14, 1989, between
the Company and The First National Bank of Boston, as Rights Agent
(the "Company Rights Agreement"), which, among other things,
provides that a Distribution Date, as such term is defined in the
Company Rights Agreement, shall not have occurred, and, as a
consequence of which the Company Rights, as defined in the Company
Rights Agreement, shall not have become nonredeemable and the
Company Rights shall not become exercisable for capital stock of Fleet
upon consummation of the Merger.
The Board of Directors of the Company approved the Agreement
and the transactions contemplated thereby at a meeting held on May 8, 1994.
The Merger is intended to be treated as a tax-free reorganization
under the Internal Revenue Code of 1986, as amended, unless the
Average Closing Price is equal to or less than $29.50 in which case the
Merger is intended to be treated as a taxable transaction. If the Merger
is a tax-free reorganization, then the receipt of the stock portion of the
consideration will be tax-free to the Company's shareholders. In either
case, the Merger is intended to be accounted for as a purchase transaction.
Completion of the Merger is subject to certain conditions,
including (a) approval by the shareholders of the Company, (b) approval
of the appropriate bank regulatory authorities and (c) other closing
conditions customary in transactions of this type.
The Agreement may be terminated (a) by mutual consent, (b)
under certain conditions if a required regulatory approval has not been
obtained, (c) if the Merger shall not have been consummated on or
before May 31, 1995, (d) if the approval of the Company's shareholders
is not obtained or (e) in the event of an uncured material breach of the
Agreement. In addition, the Agreement may be terminated if the
Company's Board of Directors fail to recommend approval of the
Merger to the Company's shareholders, if the Board has concluded with
the advice of counsel that such action is required to prevent such Board
from breaching its fiduciary obligations to the shareholders of the
Company. In certain circumstances, where the Agreement is terminated
when there is another proposal to acquire the Company, the Company
will pay to Fleet a termination fee of $8 million.
The Agreement also provides that in the event the Merger cannot
be consummated due to the failure to obtain the required bank
regulatory approvals, Fleet will reimburse the Company for its costs and
expenses in connection with the Agreement and transactions
contemplated thereby up to $1.5 million.
As a result of the Merger and upon the effectiveness of the
Merger, all of the Company Common Stock will be delisted from the
New York Stock Exchange, will not be listed on any national securities
exchange or quoted in any inter-dealer quotation system and will be
eligible for termination of registration pursuant to Section 12(g)(4) of
the Securities Exchange Act of 1934 as amended.
The Agreement is attached as Exhibit 2 to this 10-Q, the Rights
Amendment is attached as Exhibit 10(r) and the Press Release of the
Company issued on May 9, 1994 is attached as Exhibit 99, each of
which is incorporated herein by reference.
The foregoing summary of the Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of
the Agreement.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits- Exhibit 2 Agreement and Plan of Merger Dated as
of May 9, 1994 by and Between Fleet Financial
Group, Inc. and NBB Bancorp, Inc.
- Exhibit 10(r) Amendment to Shareholder Rights Agreement
- Exhibit 11 Computation of Per Share Earnings
- Exhibit 99 Company Press Release
b. Reports on Form 8-K - None
<PAGE>
<PAGE>
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 thereunto duly authorized.
NBB Bancorp, Inc.
(Registrant)
Date: May 12, 1994 By /s/ Robert McCarter
Robert McCarter
Chairman, President and CEO
Date: May 12, 1994 By /s/ Irving J. Goss
Irving J. Goss
Senior Vice President, Treasurer and CFO
(Principal Financial and Accounting Officer)
EXHIBIT 2
_______________________________
_______________________________
AGREEMENT AND PLAN OF MERGER
By and Between
FLEET FINANCIAL GROUP, INC.
and
NBB BANCORP, INC.
Dated as of May 9, 1994
_______________________________
_______________________________
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 The Merger . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Effective Time . . . . . . . . . . . . . . . . . . . . . . 2
1.03 Effects of the Merger. . . . . . . . . . . . . . . . . . . 2
1.04 Conversion of Company Common Stock . . . . . . . . . . . . 2
1.05 Dissenters' Rights . . . . . . . . . . . . . . . . . . . . 4
1.06 Options. . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.07 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.08 ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.09 Articles of Incorporation. . . . . . . . . . . . . . . . . 6
1.10 By-Laws. . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.11 Directors and Officers . . . . . . . . . . . . . . . . . . 6
1.12 Tax Consequences . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.01 Parent to Make Shares and Cash Available . . . . . . . . . 6
2.02 Election and Exchange Procedures.. . . . . . . . . . . . . 7
ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . . . . . . . 10
3.01 Corporate Organization . . . . . . . . . . . . . . . . . . 10
3.02 Capitalization . . . . . . . . . . . . . . . . . . . . . . 11
3.03 Authority; No Violation. . . . . . . . . . . . . . . . . . 12
3.04 Consents and Approvals . . . . . . . . . . . . . . . . . . 13
3.05 Loan Portfolio . . . . . . . . . . . . . . . . . . . . . . 14
3.06 Financial Statements . . . . . . . . . . . . . . . . . . . 14
3.07 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . 15
3.08 Absence of Certain Changes or Events . . . . . . . . . . . 15
3.09 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 16
3.10 Taxes and Tax Returns. . . . . . . . . . . . . . . . . . . 16
3.11 Employees. . . . . . . . . . . . . . . . . . . . . . . . . 17
3.12 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . 17
3.13 Company Information. . . . . . . . . . . . . . . . . . . . 18
3.14 Compliance with Applicable Law . . . . . . . . . . . . . . 18
3.15 Certain Contracts. . . . . . . . . . . . . . . . . . . . . 18
3.16 Agreements with Regulatory Agencies. . . . . . . . . . . . 19
3.17 Investment Securities. . . . . . . . . . . . . . . . . . . 19
<PAGE>
<PAGE>
3.18 Environmental Matters. . . . . . . . . . . . . . . . . . . 19
3.19 Assistance Agreements. . . . . . . . . . . . . . . . . . . 19
3.20 Properties . . . . . . . . . . . . . . . . . . . . . . . . 20
3.21 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 20
3.22 Material Interests of Certain Persons. . . . . . . . . . . 20
3.23 Regulatory Approvals . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
REPRESENTATIONS AND WARRANTIES OF PARENT . . . . . . . . . . . . . . . . 21
4.01 Corporate Organization . . . . . . . . . . . . . . . . . . 21
4.02 Capitalization . . . . . . . . . . . . . . . . . . . . . . 21
4.03 Authority; No Violation. . . . . . . . . . . . . . . . . . 23
4.04 Consents and Approvals . . . . . . . . . . . . . . . . . . 24
4.05 Financial Statements . . . . . . . . . . . . . . . . . . . 24
4.06 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . 25
4.07 Absence of Certain Changes or Events . . . . . . . . . . . 25
4.08 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 25
4.09 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . 25
4.10 Parent Information . . . . . . . . . . . . . . . . . . . . 26
4.11 Compliance with Applicable Law . . . . . . . . . . . . . . 26
4.12 Ownership of Company Common Stock; Affiliates and Associates26
4.13 Agreements with Regulatory Agencies. . . . . . . . . . . . 26
4.14 Regulatory Approvals . . . . . . . . . . . . . . . . . . . 26
ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
COVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . 26
5.01 Covenants of the Company . . . . . . . . . . . . . . . . . 26
5.02 No Solicitation. . . . . . . . . . . . . . . . . . . . . . 29
5.03 Covenants of Parent. . . . . . . . . . . . . . . . . . . . 30
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.01 Regulatory Matters . . . . . . . . . . . . . . . . . . . . 30
6.02 Access to Information. . . . . . . . . . . . . . . . . . . 31
6.03 Shareholder Meeting. . . . . . . . . . . . . . . . . . . . 33
6.04 Legal Conditions to Merger . . . . . . . . . . . . . . . . 33
6.05 Restrictions on Resale . . . . . . . . . . . . . . . . . . 33
6.06 Stock Exchange Listing . . . . . . . . . . . . . . . . . . 34
6.07 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 34
6.08 Employee Termination And Other Benefits. . . . . . . . . . 35
<PAGE>
<PAGE>
6.09 Indemnification; Directors' and Officers' Insurance. . . . 35
6.10 Subsequent Interim and Annual Financial Statements . . . . 37
6.11 Additional Agreements. . . . . . . . . . . . . . . . . . . 37
6.12 Disclosure Supplements . . . . . . . . . . . . . . . . . . 37
6.13 Current Information. . . . . . . . . . . . . . . . . . . . 38
6.14 ALCO Management. . . . . . . . . . . . . . . . . . . . . . 38
6.15 Execution and Authorization of Bank Merger Agreement . . . 38
ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.01 Conditions to Each Party's Obligation to Effect the Merger .39
(a) Shareholder Approval. . . . . . . . . . . . . . . . . .39
(b) Stock Exchange Listing. . . . . . . . . . . . . . . . 39
(c) Other Approvals . . . . . . . . . . . . . . . . . . . 39
(d) S-4 . . . . . . . . . . . . . . . . . . . . . . . . . 39
(e) No Injunctions or Restraints; Illegality. . . . . . . 39
7.02 Conditions to Obligations of Parent. . . . . . . . . . . . 39
(a) Representations and Warranties. . . . . . . . . . . . 39
(b) Performance of Obligations of the Company . . . . . . 40
(c) Consents Under Agreements . . . . . . . . . . . . . . 40
(d) Legal Opinion . . . . . . . . . . . . . . . . . . . . 40
(e) Accountant's Letter . . . . . . . . . . . . . . . . . 40
7.03 Conditions to Obligations of the Company . . . . . . . . . 40
(a) Representations and Warranties. . . . . . . . . . . . 40
(b) Performance of Obligations of Parent. . . . . . . . . 41
(c) Consents Under Agreements . . . . . . . . . . . . . . 41
(d) Federal Tax Opinion . . . . . . . . . . . . . . . . . 41
(e) Legal Opinion . . . . . . . . . . . . . . . . . . . . 41
(f) Opinion of Financial Advisor. . . . . . . . . . . . . 41
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
TERMINATION AND AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . 42
8.01 Termination. . . . . . . . . . . . . . . . . . . . . . . . 42
8.02 Effect of Termination; Expenses. . . . . . . . . . . . . . 43
8.03 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . 45
8.04 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . 45
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
<PAGE>
<PAGE>
9.01 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.02 Non-Survival of Representations, Warranties and Agreements 46
9.03 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.04 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.05 Interpretation . . . . . . . . . . . . . . . . . . . . . . 47
9.06 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 47
9.07 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 47
9.08 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 47
9.09 Jurisdiction and Venue . . . . . . . . . . . . . . . . . . 47
9.10 Enforcement of Agreement . . . . . . . . . . . . . . . . . 47
9.11 Severability . . . . . . . . . . . . . . . . . . . . . . . 48
9.12 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . 48
9.13 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
<PAGE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 9,
1994 by and between NBB BANCORP, INC., a Delaware corporation (the
"Company") and FLEET FINANCIAL GROUP, INC., a Rhode Island
corporation ("Parent"). (The Company and Parent are herein sometimes
collectively referred to herein as the "Constituent Corporations.")
WHEREAS, the Boards of Directors of Parent and the Company
have determined that it is in the best interests of their respective companies
and their shareholders to consummate the business combination transaction
provided for herein in which the Company will, subject to the terms and
conditions set forth herein, merge with and into Parent (the "Merger"); and
WHEREAS, as soon as practicable after the execution and delivery
of this Agreement, Fleet Bank of Massachusetts, N.A., a national banking
association and an indirect wholly-owned subsidiary of Parent
("Massachusetts Bank," and sometimes referred to herein as the "Surviving
Bank"), and New Bedford Institution for Savings, a Massachusetts savings
bank and a wholly owned subsidiary of the Company (the "Bank"), will
enter into a Bank Agreement and Plan of Merger (the "Bank Merger
Agreement"), providing for the merger (the "Bank Merger") of the Bank
with and into Massachusetts Bank; and
WHEREAS, promptly following the consummation of the Merger,
Parent intends to cause (i) the transfer of certain assets and liabilities of
the Bank to Fleet National Bank, an indirect wholly-owned subsidiary of
Parent and (ii) the Bank Merger to be consummated; 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
1.01 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Delaware General Corporation Law
(the "DGCL") and the Rhode Island Business Corporation Law (the
"RIBCL"), at the Effective Time (as defined in Section 1.02 hereof), the
Company shall merge with and into Parent. Parent 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 Rhode Island. The name of the Surviving Corporation shall
continue to be Fleet Financial Group, Inc. Upon consummation of the
Merger, the separate corporate existence of the Company shall terminate.
<PAGE>
<PAGE>
1.02 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
"Delaware Secretary") and the articles of merger (the "Articles of Merger")
which shall be filed with the Secretary of State of the State of Rhode
Island (the "Rhode Island Secretary"), in each case on the Closing Date (as
defined in Section 9.01 hereof). The term "Effective Time" shall be the
date and time when the Merger becomes effective, as set forth in the
Certificate of Merger and the Articles of Merger.
1.03 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 and Section 7-1.1-69 of the RIBCL.
1.04 Conversion of Company Common Stock.
(a) At the Effective Time, subject to Sections 2.02(b)
and (d) hereof, each share of the common stock, par value $0.10 per share,
of the Company (the "Company Common Stock") issued and outstanding
immediately prior to the Effective Time and all rights attached thereto
(other than shares of Company Common Stock held (x) in the Company's
treasury or (y) directly or indirectly by Parent or the Company or any of
their respective Subsidiaries (as defined below) (except for Dissenting
Shares (as such term is defined in Section 1.05 hereof) and Trust Account
Shares and DPC Shares (as such terms are defined in Section 1.04(d)
hereof)) shall, by virtue of this Agreement and without any action on the
part of the holder thereof, be converted into and exchangeable for the right
to receive at the election of the holder thereof as provided in Section 2.02,
(i) the number of Warrants (as defined in Section 1.04(d)) determined in
accordance with Section 1.04(d) and (ii) either:
(x) a number of shares of the common stock of Parent,
par value $1.00 per share (the "Parent Common Stock") (together
with the number of Parent Rights (as defined in Section 4.02(a)
hereof) associated therewith), rounded to the nearest thousandth of
a share, determined by dividing the Merger Consideration, as
defined below, by the Average Closing Price, as defined below (the
"Per Share Stock Consideration"), or
(y) cash in the amount of the Merger Consideration, as
defined below (the "Per Share Cash Consideration"),
provided, that, the aggregate number of shares of Parent Common Stock
that shall be issued in the Merger pursuant to Section 1.04(a)(ii)(x) shall
be equal to the "Aggregate Parent Stock Amount" as defined below.
Accordingly, consideration pursuant to Section 1.04(a)(ii)(y) shall be
available to holders of Company Common Stock only to the extent the
consideration pursuant to Section 1.04(a)(ii)(x) is not sufficient to pay the
entire consideration due under Section 1.04(a)(ii).
Notwithstanding the foregoing, if the Average Closing Price is
equal to or less than $29.50, then, notwithstanding anything to the contrary
in this Agreement, it will not be a condition to the Company's obligations
under this Agreement that the Merger constitute a reorganization as
described in Section 1.12 and the consideration payable pursuant to Section
1.04(a)(ii) shall consist solely of cash in the amount of the Per Share Cash
Consideration, provided that Parent may, at its option, pay part of such
consideration in the form of Parent Common Stock valued at the Average
Closing Price up to the number of shares of the Aggregate Parent Stock
Amount which consisted of shares of Parent Common Stock previously
repurchased by Parent to be used in payment of the Merger Consideration
under Section 1.04(a)(ii)(x). Upon occurrence of the circumstances
described in the preceding sentence, which shall be referred to herein as
a "Taxable Transaction," all of the obligations of Parent and the Company
under this Agreement will continue in full force and effect except for those
covenants, agreements and conditions relating to the tax treatment of the
transaction with respect to the Company and its shareholders. In such
event, if shares of Parent Common Stock are being delivered, then, for
purposes of the election procedures in Section 2.02, the number of shares
of Parent Common Stock actually delivered by Parent will be deemed to
be the Aggregate Parent Stock Amount.
The "Merger Consideration" shall be equal to $48.50, provided, however,
that in the event that the Effective Time has not occurred on or prior to
March 31, 1995, this amount shall be increased at the rate of $0.25 per
share per month for each full month (prorated on a daily basis for each
partial month) thereafter until the Effective Time. The "Average Closing
Price" shall mean the average closing sale price per share of Parent
Common Stock on the New York Stock Exchange (the "Stock Exchange")
(as reported by the Wall Street Journal or, if not reported thereby, another
authoritative source), for the 10 consecutive Stock Exchange trading days
ending on and including the fifth trading day immediately preceding (but
not including) the Effective Time. The "Aggregate Parent Stock Amount"
shall equal such number of shares of Parent Common Stock not less than
5,700,000 (or such lesser number of shares that would enable Parent to pay
the total consideration for the Merger pursuant to Section 1.04(a)(ii)) and
not more than 6,300,000 as shall be determined by Parent prior to the
Effective Time, plus such additional number of shares of Parent Common
Stock as may be required so that the aggregate portion of the
consideration for the Merger attributable to Parent Common Stock is equal
to at least 45% of the total consideration for the Merger, it being
understood that for purposes of calculating the total consideration for the
Merger, Dissenting Shares will be deemed to have received the Per Share
Cash Consideration and the receipt of the Warrants shall be deemed the
receipt of cash.
(b) The Per Share Stock Consideration, the Per Share Cash
Consideration, the Aggregate Parent Stock Amount and the number of
Warrants to be issued pursuant to Section 1.04(d) shall be subject to
appropriate adjustments in the event that, subsequent to the date of this
Agreement but prior to the Effective Time, the outstanding Parent
Common Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities through
reorganization, recapitalization, reclassification, stock dividend, stock
split, or other like changes in Parent's capitalization.
(c) At the Effective Time, all shares of Company Common
Stock that are owned by the Company as treasury stock and all shares of
Company Common Stock that are owned directly or indirectly by Parent
or the Company or any of their respective Subsidiaries (other than shares
of Company Common Stock held directly or indirectly in trust accounts,
managed accounts and the like or otherwise held in a fiduciary capacity
that are beneficially owned by third parties (any such shares, and shares
of Parent Common Stock which are similarly held, whether held directly
or indirectly by Parent or the Company, as the case may be, being referred
to herein as "Trust Account Shares") and other than any shares of
Company Common Stock held by Parent or the Company or any of their
respective Subsidiaries in respect of a debt previously contracted (any such
shares of Company Common Stock, and shares of Parent Common Stock
which are similarly held, whether held directly or indirectly by Parent or
the Company, being referred to herein as "DPC Shares")) shall be
cancelled and shall cease to exist and no Parent Common Stock, cash,
Warrants or other consideration shall be delivered in exchange therefor.
All shares of Parent Common Stock and Parent Preferred Stock that are
owned by the Company or any of its Subsidiaries (other than Trust
Account Shares and DPC Shares) shall become treasury stock of Parent.
(d) At the Effective Time, Parent shall issue and deliver in
accordance with the provisions of Article II a total of 2,500,000 warrants
(the "Warrants") as follows:
(i) Each holder of a share of Company Common Stock
which is being converted in accordance with Section 1.04(a) shall
have the right to receive a number of Warrants equal to the
Warrant Amount, and
(ii) Each holder of a stock option issued under the
Company Stock Plan (as defined in Section 1.06) (a "Company
Stock Option") which is converted into a stock option under the
Parent Stock Plan pursuant to Section 1.06 shall have the right to
receive a number of Warrants equal to the Warrant Amount
multiplied by the number of shares of Company Common Stock
underlying such Company Stock Option.
Each Warrant shall entitle the holder thereof to purchase one share of
Parent Common Stock at a price of $43.875 per share at any time during
the period beginning on the first anniversary of the Effective Time and
ending on the sixth anniversary of the Effective Time. The Warrant
Amount means a fraction, the numerator of which is 2,500,000, and the
denominator of which is the sum of the number of shares of Company
Common Stock which are being converted in accordance with Section
1.04(a) plus the number of shares of Company Common Stock underlying
the Company Stock Options. For purposes of this Agreement, the
"Warrant Shares" shall mean the shares of Parent Common Stock issuable
upon exercise of the Warrants.
1.05 Dissenters' Rights. Notwithstanding anything in this
Agreement to the contrary and unless otherwise provided by applicable
law, shares of Company Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are owned by
shareholders who, pursuant to applicable law, (a) deliver to the Company,
before the taking of the vote of the Company's shareholders on the
Merger, written demand for the appraisal of their shares, and (b) whose
shares are not voted in favor of the Merger, nor consented thereto in
writing (the "Dissenting Shares"), shall not be converted into Parent
Common Stock and/or cash and Warrants, unless and until such holders
shall have failed to perfect or shall have effectively withdrawn or lost their
right of appraisal and payment under applicable law. If any such holder
shall have failed to perfect or shall have effectively withdrawn or lost such
right of appraisal, the Company Common Stock of such holder shall
thereupon be deemed to have been converted into the right to receive and
become exchangeable for, at the Effective Time, that number of whole
shares of Parent Common Stock and/or cash and Warrants determined
pursuant to Section 1.04 and Section 2.02(c) hereof. Holders of Company
Common Stock who become entitled pursuant to the provisions of Section
262 of the DGCL to payment for their shares of Company Common Stock
under the provisions thereof shall receive payment therefor from the
Surviving Corporation and such shares of Company Common Stock shall
be cancelled.
1.06 Options. Commencing at least 15 days prior to the
Effective Time, each holder of a then outstanding stock option to purchase
shares of Company Common Stock pursuant to the NBB Bancorp, Inc.
Stock Option Plan (the "Company Stock Plan") shall be entitled to exercise
such option (whether or not such option would otherwise have been
exercisable) at the exercise price therefor, and if such options are not so
exercised prior to the Effective Time, at or immediately prior to the
Effective Time each such holder shall be entitled, upon election, to receive
from the Company in cancellation of such option a cash payment from the
Company in an amount equal to the excess of the Per Share Cash
Consideration over the per share exercise price of such option, multiplied
by the number of shares covered by such option, subject to any required
withholding of taxes. At the Effective Time, any option which has not
been so exercised or cancelled shall be converted automatically into (a) the
number of Warrants determined in accordance with Section 1.04(d) and
(b) an option under the Fleet Financial Group, Inc. 1992 Employee Stock
Option and Restricted Stock Plan (the "Parent Stock Plan") to purchase
shares of Parent Common Stock in an amount and at an exercise price
determined as provided below and otherwise subject to the terms of the
Parent Stock Plan and the provisions of the Company Stock Plan providing
for immediate vesting as a result of the Merger:
(a) The number of shares of Parent Common Stock to
be subject to the new option shall be equal to the product of the
number of shares of Company Common Stock subject to the
original option and the Per Share Stock Consideration, provided,
that any fractional shares of Parent Common Stock resulting from
such multiplication shall be rounded to the nearest share; and
(b) The exercise price per share of Parent Common
Stock under the new option shall be equal to the exercise price per
share of Company Common Stock under the original option divided
by the Per Share Stock Consideration, provided, that such exercise
price shall be rounded up 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 shall be the same
as the original option, except that all references to the Company shall be
deemed to be references to Parent.
1.07 Rights. The Board of Directors of the Company has
approved, and shall enter into and keep in effect, an amendment to the
Shareholder Rights Agreement dated as of November 14, 1989, between
the Company and The First National Bank of Boston, as Rights Agent (the
"Company Rights Agreement"), which, among other things, shall provide
that a Distribution Date, as such term is defined in the Company Rights
Agreement, shall not have occurred, and, as a consequence of which the
Company Rights shall not have become nonredeemable and the Company
Rights shall not become exercisable for capital stock of Parent upon
consummation of the Merger (the "Rights Amendment").
1.08 ESOP. The parties hereto agree that, effective as of the
Effective Time (or as soon thereafter as practicable), the New Bedford
Institution for Savings Employee Stock Ownership Plan and Trust (the
"Bank ESOP") will be terminated in accordance with applicable law and
regulations.
1.09 Articles of Incorporation. At the Effective Time, the
Articles of Incorporation of Parent, as in effect at the Effective Time, shall
be the Articles of Incorporation of the Surviving Corporation.
1.10 By-Laws. At the Effective Time, the By-Laws of Parent,
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.
1.11 Directors and Officers. The directors and officers of
Parent immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation, each to hold office in accordance
with the Articles of Incorporation and By-Laws of the Surviving
Corporation until their respective successors are duly elected or appointed
and qualified.
1.12 Tax Consequences. Unless the Merger becomes a Taxable
Transaction pursuant to Section 1.04, 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
2.01 Parent to Make Shares and Cash Available. At or prior
to the Effective Time, Parent shall deposit, or shall cause to be deposited,
with a bank or trust company selected by Parent (and reasonably
acceptable to the Company) (the "Exchange Agent"), for the benefit of the
holders of certificates of Company Common Stock (the "Certificates"), for
exchange in accordance with this Article II, certificates representing the
shares of Parent Common Stock and the Warrants and cash which together
constitute the consideration for the Merger (such cash and certificates for
shares of Parent Common Stock and Warrants, together with any dividends
or distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") to be issued and paid, respectively, pursuant to Section
1.04 and Section 2.02 in exchange for outstanding shares of Company
Common Stock.
2.02 Election and Exchange Procedures.
(a) As soon as practicable after the Effective Time, and
in no event later than three business days thereafter (which date shall be
referred to as the "Mailing Date"), Parent shall cause the Exchange Agent
to mail to each holder of record of a Certificate or Certificates at the
Effective Time (1) a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent)
containing instructions for use in effecting the surrender of the
Certificates and (2) an election form (the "Election Form"). The Company
shall have the right to approve the form of both the letter of transmittal
and the Election Form.
(b) Each Election Form shall permit the holder (or in the
case of nominee record holders, the beneficial owner through appropriate
and customary documentation and instructions) to elect to receive Parent
Common Stock with respect to each share of such holder's Company
Common Stock ("Stock Election Shares"), to elect to receive cash with
respect to each share of such holder's Company Common Stock ("Cash
Election Shares") or to indicate that such holder makes no election ("No
Election Shares"). Any shares of Company Common Stock with respect
to which the holder (or the beneficial owner, as the case may be) shall not
have submitted to the Exchange Agent, an effective, properly completed
Election Form on or before 5:00 p.m., on the 20th day following the
Mailing Date (or such other time and date as Parent and the Company may
mutually agree) (the "Election Deadline") shall also be deemed to be "No
Election Shares".
Any such election shall have been properly made only if the
Exchange Agent shall have actually received a properly completed Election
Form by the Election Deadline. An Election Form shall be deemed
properly completed only if accompanied by one or more Certificates
representing all shares of Company Common Stock covered by such
Election Form, together with duly executed transmittal materials included
with the Election Form. Any Election Form may be revoked or changed
by the person submitting such Election Form at or prior to the Election
Deadline by written notice to the Exchange Agent, which notice must be
received by the Exchange Agent at or prior to the Election Deadline. In
the event an Election Form is revoked prior to the Election Deadline, the
shares of Company Common Stock represented by such Election Form
shall become No Election Shares. Subject to the terms of this Agreement
and of the Election Form, Parent or the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation or
change has been properly or timely made and to disregard immaterial
defects in the Election Forms, and any good faith decisions of Parent or
the Exchange Agent regarding such matters shall be binding and
conclusive. Neither Parent nor the Exchange Agent shall be under any
obligation to notify any person of any defect in an Election Form.
If the aggregate number of Stock Election Shares does not equal the
Stock Conversion Number (as defined below), within five business days
after the Election Deadline, Parent shall cause the Exchange Agent to
allocate among holders of Company Common Stock the right to receive,
with respect to each such share, Parent Common Stock or cash in the
Merger as follows:
(i) if the number of Stock Election Shares is less than
the Stock Conversion Number, then
(A) all Stock Election Shares shall be converted into the
right to receive Parent Common Stock,
(B) the Exchange Agent will select, on a pro rata basis,
first from among the holders of No-Election Shares and
then (if necessary) from among the holders of Cash
Election Shares, a sufficient number of such shares ("Stock
Designee Shares") such that the number of Stock Designee
Shares will, when added to the number of Stock Election
Shares, equal as closely as practicable the Stock Conversion
Number, and all Stock Designee Shares will be converted
into the right to receive Parent Common Stock, and
(C) any Cash Election Shares and any No-Election
Shares not so selected as Stock Designee Shares will be
converted into the right to receive cash; or
(ii) if the aggregate number of Stock Election Shares is
greater than the Stock Conversion Number, then
(A) all Cash Election Shares will be converted into the
right to receive cash,
(B) the Exchange Agent will select, on a pro rata basis,
first from among the holders of No-Election Shares and
then (if necessary) from among the holders of Stock
Election Shares, a sufficient number of such shares ("Cash
Designee Shares") such that the number of Cash Designee
Shares will, when added to the number of Cash Election
Shares, equal as closely as practicable the Cash Conversion
Number (as defined below), and all Cash Designee Shares
will be converted into the right to receive cash, and
(C) any Stock Election Shares and any No-Election
Shares not so selected as Cash Designee Shares will be
converted into the right to receive Parent Common Stock.
"Stock Conversion Number" means the Aggregate Parent Stock
Amount divided by the Per Share Stock Consideration. "Cash Conversion
Number" means the difference between the number of shares of Company
Common Stock outstanding as of the Effective Time and the Stock
Conversion Number.
The selection process to be used by the Exchange Agent shall
consist of such processes as shall be mutually determined by the Company
and Parent as shall be further described in the Election Form.
Upon surrender of a Certificate for exchange and cancellation to the
Exchange Agent, together with the Election Form, duly executed, the
holder of such Certificates shall be entitled to receive in exchange therefor
(x) a certificate representing that number of whole shares of Parent
Common Stock to which such holder of Company Common Stock shall
have become entitled pursuant to the provisions of Articles I and II hereof,
(y) a check representing the amount of cash, if any, which such holder has
the right to receive in respect of the Certificate surrendered pursuant to the
provisions of Articles I and II, and (z) a certificate representing the number
of Warrants to which such holder is entitled pursuant to the provisions of
Article I and the Certificate so surrendered shall forthwith be cancelled.
No interest will be paid or accrued on the cash and unpaid dividends and
distributions, if any, payable to holders of Certificates.
(c) After the Effective Time, there shall be no transfers
on the stock transfer books of the Company of the shares of Company
Common Stock which were issued and outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates representing
such shares are presented for transfer to the Exchange Agent, they shall be
cancelled and exchanged for certificates representing shares of Parent
Common Stock and/or cash and certificates representing Warrants as
provided in this Article II.
(d) 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 the Company. In lieu of the issuance
of any such fractional share, Parent shall pay to each former shareholder
of the Company who otherwise would be entitled to receive a fractional
share of Parent Common Stock, an amount in cash determined by
multiplying (i) the Average Closing Price by (ii) the fraction of a share of
Parent Common Stock to which such holder would otherwise be entitled
to receive pursuant to Articles I and II hereof.
(e) Any portion of the Exchange Fund that remains
unclaimed by the shareholders of the Company for twelve months after the
Effective Time shall be paid to Parent. Any shareholders of the Company
who have not theretofore complied with this Article II shall thereafter look
only to Parent for payment of their Warrants, shares of Parent Common
Stock, cash and unpaid dividends and distributions of the Parent Common
Stock deliverable in respect of each share of Company Common Stock
such shareholder holds as determined pursuant to this Agreement, in each
case, without any interest thereon. Notwithstanding the foregoing, none
of Parent, the Company, the Exchange Agent nor any other person shall
be liable to any former holder of shares of Company Common Stock for
any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(f) 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 Warrants,
shares of Parent Common Stock and cash deliverable in respect thereof
pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent as follows:
3.01 Corporate Organization.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. The Company has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is
now being conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where the failure
to be so licensed or qualified would not have a Material Adverse Effect (as
defined below) on the Company and its Subsidiaries taken as a whole. As
used in this Agreement, the term "Material Adverse Effect" means, with
respect to Parent or the Company, as the case may be, a material adverse
change in or effect on the business, financial condition or results of
operations of such party and its subsidiaries taken as a whole, other than
any such effect attributable to or resulting from changes in interest rates
or general economic conditions. As used in this Agreement, the word
"Subsidiary" when used with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated,
which is consolidated with such party for financial purposes. The
Company is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). The
Certificate of Incorporation and By-laws of the Company, copies of which
have previously been made available to Parent, are true and complete
copies of such documents as in effect as of the date of this Agreement.
(b) The Bank is a savings bank duly organized, validly
existing and in good standing under the laws of The Commonwealth of
Massachusetts. The deposit accounts of the Bank are insured by the
Federal Deposit Insurance Corporation (the "FDIC") through the Bank
Insurance Fund (the "BIF") or the Savings Association Insurance Fund (the
"SAIF") and by the Mutual Savings Central Fund, Inc. (the "Central
Fund"), through the Deposit Insurance Fund, to the fullest extent permitted
by law, and all premiums and assessments required in connection therewith
have been paid by the Bank. Each of the Company's other Subsidiaries
that is a "Significant Subsidiary" (defined for purposes of this Agreement
to mean subsidiaries other than those that are either inactive or have an
immaterial amount of assets) is a corporation, partnership or business trust
duly organized and, in the case of any such corporation, is validly existing
and in good standing under the laws of its jurisdiction of incorporation.
Each Significant Subsidiary of the Company has the power and authority
to own or lease all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted
by it or the character or the location of the properties and assets owned or
leased by it makes such licensing or qualification necessary, except where
the failure to be so licensed or qualified would not have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole.
The Amended and Restated Charter and By-laws of the Bank and the
Articles of Organization and By-laws of each other Significant Subsidiary
of the Company, copies of which have previously been made available to
Parent, are true and complete copies of such documents as in effect as of
the date of this Agreement.
(c) The minute books of the Company and the Bank
contain true and complete records in all material respects of all meetings
since January 1, 1988 of their respective shareholders and Boards of
Directors.
3.02 Capitalization.
(a) The authorized capital stock of the Company consists
of 40,000,000 shares of Company Common Stock and 10,000,000 shares
of preferred stock, par value $0.10 per share (the "Company Preferred
Stock"). As of the date of this Agreement, there are (x) 8,660,394 shares
of Company Common Stock issued and outstanding and 873,433 shares of
Company Common Stock held in the Company's treasury, (y) no shares
of Company Common Stock reserved for issuance, except for 686,701
shares of Company Common Stock reserved for issuance upon exercise of
stock options (368,701 with respect to outstanding stock options as of the
date hereof) pursuant to the Company Stock Plan, and (z) no shares of
Company Preferred Stock issued or outstanding, held in the Company's
treasury or reserved for issuance, except for 150,000 shares of Company
Series A Junior Participating Cumulative Preferred Stock reserved for
issuance upon exercise of the rights (the "Company Rights") distributed to
holders of Company Common Stock pursuant to the Company Rights
Agreement. All of the issued and outstanding shares of Company
Common Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights. Except as referred to
above or reflected in Section 3.02 of the Disclosure Schedule which is
being delivered to Parent concurrently herewith (the "Company Disclosure
Schedule"), and except for the Company Stock Plan and the Company
Rights Agreement, the Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any
shares of Company Common Stock or Company Preferred Stock or any
other equity security of the Company or any securities representing the
right to purchase or otherwise receive any shares of Company Common
Stock, Company Preferred Stock or any other equity security of the
Company. The names of the optionees, the date of each option to
purchase Company Common Stock granted, the number of shares subject
to each such option, and the price at which each such option may be
exercised under the Company Stock Plan are set forth in Section 3.02 of
the Company Disclosure Schedule.
(b) The authorized capital stock of the Bank consists of
40,000,000 shares of common stock, par value $0.10 per share (the "Bank
Common Stock") and 10,000,000 shares of preferred stock, par value $0.10
per share (the "Bank Preferred Stock"). As of the date of this Agreement,
there are (x) 10,000 shares of Bank Common Stock issued and outstanding
and no shares of Bank Common Stock held in the Bank's treasury, (y) no
shares of Bank Common Stock reserved for issuance, and (z) no shares of
Bank Preferred Stock issued or outstanding. Section 3.02 of the Company
Disclosure Schedule sets forth a true and correct list of all of the Company
Subsidiaries as of the date of this Agreement. Except as set forth in
Section 3.02 of the Company Disclosure Schedule, the Company owns,
directly or indirectly, all of the issued and outstanding shares of capital
stock of each of the Company Subsidiaries (or, in the case of Company
Subsidiaries that are not corporations, all of the outstanding partnership
interests or beneficial interests, as the case may be), free and clear of all
liens, charges, encumbrances and security interests whatsoever, and all of
such shares of capital stock are duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights. No Company
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 with
Sections 1.06 and 1.07 hereof, at the Effective Time, there will not be any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character by which the Company or any of its
Subsidiaries will be bound calling for the purchase or issuance of any
shares of the capital stock of the Company or any of its Subsidiaries, other
than shares reserved for issuance under the Company Rights.
3.03 Authority; No Violation.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly approved by
the Board of Directors of the Company. The Board of Directors of the
Company has directed that this Agreement and the transactions
contemplated hereby be submitted to the Company's shareholders for
consideration at a meeting of such shareholders and, except for the
adoption of this Agreement by the requisite vote of the Company's
shareholders, no other corporate proceedings on the part of the Company
are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by the Company and (assuming adoption
of the Agreement by the requisite vote of the Company's shareholders and
the due authorization, execution and delivery by Parent) constitutes a valid
and binding obligation of the Company, enforceable against the Company
in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court
of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(b) The Bank has all necessary corporate power and
authority to execute and deliver the Bank Merger Agreement and to
consummate the transactions contemplated thereby. Upon the due and
valid approval of the Bank Merger Agreement by the Board of Directors
of the Bank and by the shareholders of the Bank, no other corporate
proceedings on the part of the Bank will be necessary to consummate the
transactions contemplated thereby. The Bank Merger Agreement, upon
execution and delivery by the Bank, will be duly and validly executed and
delivered by the Bank and will (assuming adoption of the Bank Merger
Agreement by the requisite vote of the shareholders of the Bank and
Massachusetts Bank and the due authorization, execution and delivery by
Massachusetts Bank) constitute a valid and binding obligation of the Bank,
enforceable against the Bank in accordance with its terms, except as
enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally.
(c) Except as set forth in Section 3.03 of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement
by the Company or the Bank Merger Agreement by the Bank, nor the
consummation by the Company or the Bank, as the case may be, of the
transactions contemplated hereby or thereby, nor compliance by the
Company or the Bank with any of the terms or provisions hereof or
thereof, will (i) violate any provision of the Certificate of Incorporation or
By-Laws of the Company or the Amended and Restated Charter or By-
laws of the Bank, (ii) assuming that the consents and approvals referred to
in Section 3.04 hereof are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Company or the Bank, or (y) violate, result in a breach
of any provision of, constitute a default under, or result in the creation of
any material lien, pledge, security interest, charge or other encumbrance
upon any of the respective properties or assets of the Company or any of
its Significant Subsidiaries under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which the Company or any
of its Significant Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected, except with
respect to clause ii(x) and (y) above, for such violations, breaches, defaults
or creation of encumbrances which would not have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
3.04 Consents and Approvals. Except for (A) the filing of
applications and notices with, and the consents and approvals of, as
applicable, (i) the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), (ii) the Office of the Comptroller of the
Currency (the "Comptroller"), (iii) the Board of Bank Incorporation of The
Commonwealth of Massachusetts (the "Massachusetts Board" or the "State
Banking Approval"), (iv) the Central Fund, (v) the Commissioner of Banks
of The Commonwealth of Massachusetts (the "Commissioner"), and
(vi) the Massachusetts Housing Partnership Fund (the "MHP Consent"),
(B) the filing with the Securities and Exchange Commission (the "SEC")
of a registration statement on Form S-4 (the "S-4") of which the proxy
statement in definitive form relating to the meeting of the Company's
shareholders to be held in connection with this Agreement and the
transactions contemplated hereby (the "Proxy Statement") will be included
as a prospectus, (C) the approval of this Agreement by the requisite vote
of the shareholders of the Company, (D) the filing of the Certificate of
Merger with the Delaware Secretary pursuant to the DGCL and the
Articles of Merger with the Rhode Island Secretary pursuant to the RIBCL,
and (E) the approval of the Bank Merger Agreement by the requisite vote
of the Board of Directors and the shareholders of the Bank, and except for
such filings, authorizations or approvals as may be set forth in
Section 3.04 of the Company 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 the Company of this
Agreement and the consummation by the Company of the Merger and the
other transactions contemplated hereby, and (2) the execution and delivery
by the Bank of the Bank Merger Agreement and the consummation by the
Bank of the transactions contemplated thereby, except where the failure to
obtain such consents or approvals, or to make such filings or registrations,
would not prevent or significantly delay the Merger or the Bank Merger
or otherwise prevent the Company or the Bank from performing their
respective obligations under this Agreement, or would not have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole.
3.05 Loan Portfolio. Section 3.05 of the Company Disclosure
Schedule sets forth all of the Loans in original principal amount in excess
of $100,000 of the Company or any of its Subsidiaries that as of the date
of this Agreement are classified by the Bank or any bank regulatory
examiner as "Special Mention", "Substandard", "Doubtful", "Loss" or
"Classified," together with the aggregate principal amount of and accrued
and unpaid interest on such loans by category. Except for normal
examinations conducted by (i) the Federal Reserve Board, (ii) the FDIC,
and (iii) the Commissioner or any other state bank regulatory authority
(collectively, "Regulatory Agencies"), in the regular course of the business
of the Company and its Subsidiaries, no Regulatory Agency has initiated
any proceeding into the business or operations of the Company or any of
its Subsidiaries during the last two years.
3.06 Financial Statements. The Company has previously made
available to Parent copies of the consolidated balance sheets of the
Company 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 the Company'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"). The
December 31, 1993 consolidated balance sheet of the Company (including
the related notes, where applicable) fairly presents in all material respects
the consolidated financial position of the Company and its Subsidiaries as
of the date thereof, and the other financial statements referred to in this
Section 3.06 (including the related notes, where applicable) fairly present
in all material respects, and the financial statements referred to in Section
6.10 hereof will fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount) in
all material respects, the results of the consolidated operations and changes
in shareholders' equity and consolidated financial position of the Company
and its Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth and each of such statements (including the related
notes, where applicable) has been, and the financial statements referred to
in Section 6.10 hereof will be, prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied during the
periods involved, except as indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q.
3.07 Broker's Fees. Neither the Company nor any Company
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 or the Bank Merger Agreement, except
that the Company has engaged, and will pay a fee or commission to
Salomon Brothers Inc in accordance with the terms of a letter agreement
between Salomon Brothers Inc and the Company.
3.08 Absence of Certain Changes or Events.
(a) Except as may be set forth in Section 3.08 of the
Company Disclosure Schedule or otherwise disclosed herein or in the
Company Reports, since December 31, 1993:
(i) there has not been any Material Adverse
Effect on the Company and its Subsidiaries taken as a whole;
(ii) there has not been any incurrence by the
Company of any liability that has had, or to the knowledge of the
Company any liability that could reasonably be expected to have,
a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole;
(iii) there has not been any agreement, contract or
commitment entered into, or agreed to be entered into, except for
those in the ordinary course of business, none of which has had a
Material Adverse Effect on the Company and its Subsidiaries taken
as a whole;
(iv) there has not been any change in any of the
accounting methods or practices of the Company or any of its
Subsidiaries other than changes required by applicable law or
generally accepted accounting principles.
(b) Except as set forth in Sections 3.08 or 5.01 of the
Company Disclosure Schedule, or as consented to by Parent, and except
for any increase, grant, payment or arrangement that, if effected after the
date hereof, would be permitted pursuant to Section 5.01, since
December 31, 1993, neither the Company nor any of its Subsidiaries has
(i) 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 (which
amounts have been previously disclosed to Parent), granted any severance
or termination pay, entered into or amended any contract to make or grant
any employment, severance or termination pay, or paid any bonus or
(ii) suffered any material strike, work stoppage, slow-down, or other labor
disturbance.
3.09 Legal Proceedings. Except as set forth in Section 3.09 of
the Company Disclosure Schedule, there are no pending or to the
knowledge of the Company, threatened, legal, administrative, arbitral or
other proceedings, claims, actions or governmental investigations of any
nature against the Company or any Significant Subsidiary of the Company,
as to which there is a reasonable likelihood of adverse determination and
which if adversely determined, would (i) have a Material Adverse Effect
on the Company and its Subsidiaries taken as a whole, or (ii) as of the
date hereof, prevent or materially and adversely affect the Company's
ability to consummate the transactions contemplated hereby.
3.10 Taxes and Tax Returns. Each of the Company and its
Subsidiaries has filed all Federal, state and, to the best of the Company's
knowledge, material local, information returns and tax returns required to
be filed by it on or prior to the date hereof (all such returns being true and
complete in all material respects) and has paid or made provisions for the
payment of all taxes and other governmental charges, except where the
non-filing of which or the non-payment of which would not have a
Material Adverse Effect on the Company and its Subsidiaries taken as a
whole, and which have been incurred or are due or claimed to be due from
it by Federal, state, county or local taxing authorities on or prior to the
date hereof other than taxes or other charges which (i) are not yet
delinquent or are being contested in good faith and (ii) have not been
finally determined. The amounts set up as reserves for taxes on the
consolidated balance sheet of the Company included in its Form 10-K for
the period ended December 31, 1993 for the payment of all unpaid
Federal, state, county and local taxes (including any interest or penalties
thereon), whether or not disputed, accrued or applicable, for the period
ended December 31, 1993 or for any year or period prior thereto, and for
which the Company or any of its Subsidiaries may be liable in its own
right or as transferee of the assets of, or successor to, any corporation,
person, association, partnership, joint venture or other entity, are adequate
under GAAP and are sufficient to cover all such taxes due, except where
the failure to so accrue would not have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole. The Company has not
received any written notice of any pending tax examinations or audits,
material disputes or claims asserted for taxes or assessments upon the
Company or any of its Subsidiaries, nor has the Company or any of its
Subsidiaries been requested to give any currently effective waivers
extending the statutory period of limitation applicable to any Federal, state,
county or local income tax return for any period.
3.11 Employees.
(a) Section 3.11 of the Company Disclosure Schedule
sets forth a true and complete list of each employee benefit plan,
arrangement or agreement that is maintained as of the date of this
Agreement (the "Plans") by the Company, any of its Significant
Subsidiaries or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), all of which together with the Company would be
deemed a "single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(b) The Company has heretofore made available to
Parent true and complete, in all material respects, copies of each of the
Plans and all related documents, including but not limited to (i) the most
recent actuarial report for such Plan (if applicable), and (ii) the most recent
determination letter from the Internal Revenue Service (if applicable) for
such Plan.
(c) Each of the Plans has been operated and
administered in all material respects in accordance with applicable laws,
including but not limited to ERISA and the Code, (ii) each of the Plans
intended to be "qualified" within the meaning of Section 401(a) of the
Code is so qualified, (iii) with respect to each Plan which is subject to
Title IV of ERISA, the present value of accrued benefits under such Plan,
based upon reasonable actuarial assumptions used for funding purposes,
did not, as of its latest valuation date, exceed the then current value of the
assets of such Plan allocable to such accrued benefits, (iv) no liability
under Title IV of ERISA has been incurred by the Company, its
Significant Subsidiaries or any ERISA Affiliate that has not been satisfied
in full, (v) no Plan is a "multiemployer pension plan," as such term is
defined in Section 3(37) of ERISA, (vi) all contributions or other amounts
payable by the Company or its Significant Subsidiaries as of the Effective
Time with respect to each Plan in respect of current or prior plan years
have been paid or accrued in accordance with generally accepted
accounting practices and Section 412 of the Code, and (vii) neither the
Company, its Significant Subsidiaries nor any ERISA Affiliate has engaged
in a transaction in connection with which the Company, its Significant
Subsidiaries or any ERISA Affiliate could be subject to either a civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax
imposed pursuant to Section 4975 or 4976 of the Code, except in each
case above, where the failure to do so would not have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
3.12 SEC Reports. The Company has previously made available
to Parent a true and complete, in all material respects, copy of each
(a) final registration statement, prospectus, report, schedule and definitive
proxy statement filed since January 1, 1990 by the Company with the SEC
pursuant to the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act (the "Company Reports"), and (b) communication
mailed by the Company to its shareholders since January 1, 1990, and, as
of their respective dates, no such Company Reports contained any untrue
statement of a material fact or omitted to state any material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances in which they were made, not misleading.
3.13 Company Information. The information provided in
writing by the Company for inclusion in the Proxy Statement and the S-4
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading.
3.14 Compliance with Applicable Law. The Company 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 under any, applicable law, statute, order, rule
or regulation of any Governmental Entity relating to the Company or any
of its Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default would not have
a Material Adverse Effect on the Company and its Subsidiaries taken as
a whole, and neither the Company nor any of its Subsidiaries has received
notice of any material violations of any of the above.
3.15 Certain Contracts.
(a) Except as set forth in Sections 6.07, 6.08, 6.09 of
this Agreement or in Sections 3.15 or 5.01 of the Company Disclosure
Schedule or in the Company Reports, neither the Company nor any of its
Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (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 or the
Bank Merger Agreement will result in any payment becoming due from
Parent, the Company, the Surviving Corporation, the Surviving Bank 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
Company Reports, (iv) which is a consulting or other agreement (including
agreements entered into in the ordinary course and data processing,
software programming and licensing contracts) not terminable on 60 days
or less notice involving the payment of more than $250,000 per annum,
(v) which materially restricts the conduct of any line of business by the
Company or any of its Significant Subsidiaries, or (vi) with or to a labor
union or guild (including any collective bargaining agreement). 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 of the
Company Disclosure Schedule, is referred to herein as a "Company
Contract".
(b) Each of the Company and its Subsidiaries has
performed in all material respects all obligations required to be performed
by it to date under each Company Contract, except where such
noncompliance would not have a Material Adverse Effect on the Company
and its Subsidiaries taken as a whole, and 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 the Company or any of its Subsidiaries
under any such Company Contract, except where such default would not
have a Material Adverse Effect on the Company and its Subsidiaries taken
as a whole.
3.16 Agreements with Regulatory Agencies. Except as set
forth in Section 3.16 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries is subject to any cease-and-desist or
other order issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding (each a "Regulatory
Agreement"), with any Regulatory Agency or other Governmental Entity
that restricts in any material respect the conduct of its business or that
relates to its capital adequacy, its credit policies or its management, nor
has the Company or any of its Subsidiaries been notified 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 Company
Disclosure Schedule sets forth the book and market value as of April 30,
1994 of the investment securities, mortgage backed securities and securities
held for sale of the Company and its Subsidiaries.
3.18 Environmental Matters. Except as set forth in Section
3.18 of the Company Disclosure Schedule:
(a) Each of the Company and its Subsidiaries is in
compliance, and for the last three years has been in compliance, with all
applicable laws, rules, regulations, standards and requirements adopted or
enforced by the United States Environmental Protection Agency (the
"EPA") and of state and local agencies with jurisdiction over pollution or
protection of the environment, except where such noncompliance or
violations would not have a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole; and
(b) There is no suit, claim, action or proceeding pending
before any court or Governmental Entity in which the Company or any of
its Subsidiaries has been named as a defendant (x) for alleged
noncompliance with any environmental law, rule or regulation or (y)
relating to the release into the environment of any Hazardous Material (as
hereinafter defined) or oil at or on a site presently or formerly owned,
leased or operated by the Company or any of its Subsidiaries or, to the
knowledge of the senior officers of the Company, on a site with respect to
which the Company has made a commercial real estate loan and has a
mortgage or security interest in, except where such noncompliance or
release would not have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole. "Hazardous Material" means any pollutant,
contaminant, or hazardous substance under the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C.
[SECTION]9601 et seq., or any similar state law. With respect to the items
described in Section 3.18 of the Company Disclosure Schedule, neither the
Company nor any Subsidiary has taken any action which would result in
any of them being deemed to be "owners" or "operators" under any
environmental law, rule or regulation, except where any such action would
not have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole.
3.19 Assistance Agreements. Except as set forth in Section 3.19
of the Company Disclosure Schedule or in the Company Reports, neither
the Company nor any of its Subsidiaries is a party to any agreement or
arrangement entered into in connection with the consummation of a
federally assisted acquisition of a depository institution pursuant to which
the Company or any of its Subsidiaries is entitled to receive financial
assistance or indemnification from any governmental agency.
3.20 Properties. The Company and each Company Subsidiary
has good and marketable title to all the real property and all other property
owned by it and included in the December 31, 1993 consolidated balance
sheet of the Company (the "Balance Sheet"), other than property disposed
of in the ordinary course of business after December 31, 1993, except
where the failure to so have title would not have a Material Adverse Effect
on the Company and its Subsidiaries taken as a whole, and owns such
property subject to no encumbrances, liens, mortgages, security interests
or pledges, except (a) those items that secure liabilities that are reflected
in the Balance Sheet or the notes thereto or incurred in the ordinary course
of business after the date of the Balance Sheet, (b) statutory liens for
amounts not yet delinquent or which are being contested in good faith, (c)
those items that secure public or statutory obligations or any discount with,
borrowing from, or other obligations to, any Federal Reserve Bank or
Federal Home Loan Bank, inter-bank credit facilities, or any transaction
by a subsidiary acting in a fiduciary capacity, and (d) such encumbrances,
liens, mortgages, security interests, and pledges that do not have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole.
Neither the Company nor any Company Subsidiary has received any notice
of violation of any applicable zoning regulation, ordinance or other law,
order, regulation or requirement relating to its properties, except such
violations which would not have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole.
3.21 Insurance. To the knowledge of the Company, all of the
policies relating to insurance maintained by the Company or any
Significant Subsidiary with respect to its property and the conduct of its
business (or any comparable policies entered into as a replacement
therefor) are in full force and effect and neither the Company nor any
Significant Subsidiary has received any notice of cancellation with respect
thereto.
3.22 Material Interests of Certain Persons. Except as
disclosed in the Company's proxy statement for its 1994 annual meeting
of shareholders, no officer or director of the Company, or any "associate"
(as such term is defined in Rule 14a-1 under the Exchange Act) of any
such officer or director, has any material interest in any material contract
or property (real or personal), tangible or intangible, used in or pertaining
to the business of the Company or any of the Company's Subsidiaries that
would be required to be disclosed in a proxy statement to shareholders
under Regulation 14A of the Exchange Act.
3.23 Regulatory Approvals. The Company is not, as of the date
hereof, aware of any reason why the regulatory approvals required to be
obtained by it or any of its Subsidiaries to consummate the Merger and the
Bank Merger would not be satisfied within the time frame customary for
transactions of the nature contemplated thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Company as follows:
4.01 Corporate Organization.
(a) Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Rhode Island.
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 Restated Articles of Incorporation and By-laws of Parent,
copies of which have previously been made available to the Company, are
true and complete copies of such documents as in effect as of the date of
this Agreement.
(b) Massachusetts Bank is a national banking association
duly organized, validly existing and in good standing under the laws of the
United States. The deposit accounts of the Bank are insured by the FDIC
through the BIF to the fullest extent permitted by law, and all premiums
and assessments required in connection therewith have been paid by
Massachusetts Bank. Massachusetts Bank has the power and authority to
own or lease all of its properties and assets and to carry on its business as
it is now being conducted, and is duly licensed or qualified to do business
in each jurisdiction in which the nature of the business conducted by it or
the character or the location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified would not have a Material Adverse
Effect on Massachusetts Bank. The Articles of Association and By-laws
of Massachusetts Bank, copies of which have previously been made
available to the Company, are true and complete copies of such documents
as in effect as of the date of this Agreement.
4.02 Capitalization.
(a) The authorized capitalized stock of Parent consists
of: (i) 300,000,000 shares of Parent Common Stock, of which at March
31, 1994, 137,617,952 shares were issued and outstanding, (ii) 16,000,000
shares of Preferred Stock, par value $1.00 per share, ("Parent Preferred
Stock"), of which at March 31, 1994, (A) with respect to Cumulative and
Adjustable Dividends, 1,000,000 shares were designated and no shares
were issued and outstanding, (B) 12,553 shares were designated and 2,155
shares were issued and outstanding as Series I 12% Cumulative
Convertible Preferred Stock, (C) 96,000 shares were designated and no
shares were issued and outstanding as Series II 6 1/2% Cumulative
Convertible Preferred Stock, (D) 1,100,000 shares were designated and
519,758 shares were issued and outstanding as Series III 10.12% Perpetual
Preferred Stock, (E) 1,000,000 shares were designated and 478,838 shares
were issued and outstanding as Series IV 9.375% Preferred Stock,
(F) 1,500,000 shares were designated and no shares were issued and
outstanding as Cumulative Participating Junior Preferred Stock pursuant to
the Parent's Shareholder Rights Agreement ("Parent Rights"), and
(G) 1,415,000 shares were designated and outstanding as Dual Convertible
Preferred Stock and (iii) 1,500,000 shares of Preferred Stock, par value
$20.00 (the "Parent $20 Par Value Preferred Stock"), with Cumulative and
Adjustable Dividends, of which at such date, no shares were issued and
outstanding. As of March 31, 1994, there were 32,522,975 shares reserved
for issuance in connection with employee benefit, stock option, dividend
reinvestment, and stock purchase plans, warrants, the 6 1/2 Cumulative
Convertible Preferred Stock, the 12% Convertible Preferred Stock and the
Dual Convertible Preferred 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. As of the date of this Agreement, except as referred to
above or reflected 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
(the "Parent 1993 10-K"), 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, Parent Preferred Stock or Parent $20 Par
Value Preferred Stock or any other equity security of Parent or any
securities representing the right to purchase or otherwise receive any shares
of Parent Common Stock, Parent Preferred Stock or Parent $20 Par Value
Preferred Stock or any other equity security of Parent. 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. The
Warrants and Warrant Shares have been duly authorized and when issued
will be fully paid, nonassessable and free of preemptive rights. As of the
Effective Time, Parent will have reserved 2,500,000 authorized but
unissued shares of Parent Common Stock for issuance upon exercise of the
Warrants.
(b) The authorized capital stock of Massachusetts Bank
consists of 1,000,000 shares of common stock, par value $15.00 per share,
1,000,000 of which are issued and outstanding. Fleet Banking Group, Inc.,
a wholly-owned subsidiary of Parent, owns all of the issued and
outstanding shares of capital stock of Massachusetts Bank, free and clear
of all liens, charges, encumbrances and security interests whatsoever, and
all of such shares of capital stock are duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights.
Massachusetts Bank does not have and is not 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 Massachusetts Bank or any securities representing
the right to purchase or otherwise receive any shares of capital stock or
any other equity security of Massachusetts Bank.
4.03 Authority; No Violation.
(a) Parent has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and the consummation by Parent 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 (assuming adoption of the Agreement by the requisite vote of
the Company's shareholders and the due authorization, execution and
delivery by the Company) constitutes a valid and binding obligation of
Parent, enforceable against Parent in accordance with its terms, except as
enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally.
(b) Massachusetts Bank has all necessary corporate
power and authority to execute and deliver the Bank Merger Agreement
and to consummate the transactions contemplated thereby. Upon the due
and valid approval of the Bank Merger Agreement by Parent as the sole
shareholder of Massachusetts Bank, and by the Board of Directors of
Massachusetts Bank, no other corporate proceedings on the part of
Massachusetts Bank will be necessary to consummate the transactions
contemplated thereby. The Bank Merger Agreement, upon execution and
delivery by Massachusetts Bank, will be duly and validly executed and
delivered by Massachusetts Bank and will (assuming adoption of the Bank
Merger Agreement by the requisite vote of the shareholders of the Bank
and Massachusetts Bank and the due authorization, execution and delivery
by the Bank) constitute a valid and binding obligation of Massachusetts
Bank, enforceable against Massachusetts Bank in accordance with its
terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by
bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(c) Neither the execution and delivery of this Agreement
by Parent or the Bank Merger Agreement by Massachusetts Bank, nor the
consummation by Parent or Massachusetts Bank, as the case may be, of
the transactions contemplated hereby or thereby, nor compliance by Parent
or Massachusetts Bank with any of the terms or provisions hereof or
thereof, will (i) violate any provision of the Restated Articles of
Incorporation or By-Laws of Parent or the Articles of Association or
By-laws or similar governing documents of Massachusetts Bank, as the
case may be, or (ii) assuming that the consents and approvals referred to
in Section 4.04 are duly obtained, (x) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to
Parent or Massachusetts Bank or any of Parent's Significant Subsidiaries,
or (y) violate, result in a breach of any provision of, constitute a default
under, or result in the creation of any material lien, pledge, security
interest, charge or other encumbrance upon any of the respective properties
or assets of Parent or Massachusetts Bank or any of Parent's Significant
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 Massachusetts Bank or any of
Parent's Significant Subsidiaries is a party, or by which they or any of
their respective properties or assets may be bound or affected, except with
respect to clause ii(x) and (y) above, for such violations, breaches or
defaults which would not have a Material Adverse Effect on Parent.
4.04 Consents and Approvals. Except for (A) the filing of
applications and notices with, and the consents and approvals of, as
applicable (i) the Federal Reserve Board, (ii) the Comptroller, (iii) the
State Banking Approval, (iv) the Commissioner, (v) the Central Fund,
(vi) the MHP Consent, (B) the filing with the SEC of the S-4 of which the
Proxy Statement will be included as a prospectus, (C) the filing of the
Certificate of Merger with the Delaware Secretary and the filing of
Articles of Merger with the Rhode Island Secretary, (D) the approval of
the Bank Merger Agreement by the requisite vote of the Board of
Directors and sole shareholder of Massachusetts Bank, and except for 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, Warrants and Warrant
Shares pursuant to this Agreement and such filings, authorizations or
approvals as may be set forth in Section 4.04 of the Disclosure Schedule
which is being delivered by Parent to the Company herewith (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 the consummation by Parent of the Merger and the
other transactions contemplated hereby, and (2) the execution and delivery
by Massachusetts Bank of the Bank Merger Agreement and the
consummation by Massachusetts Bank of the transactions contemplated
thereby, except where the failure to obtain such consents or approvals, or
to make such filings or registrations, would not prevent or delay the
Merger or the Bank Merger or otherwise prevent Parent or Massachusetts
Bank from performing their respective obligations under this Agreement,
or would not have a Material Adverse Effect on Parent. The vote of the
holders of the outstanding shares of Parent Common Stock is not required
to approve this Agreement or the transactions contemplated hereby.
4.05 Financial Statements. Parent has previously made
available to the Company copies of 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 the Parent 1993 10-K. The December 31, 1993
consolidated balance sheet of Parent (including the related notes, where
applicable) fairly presents in all material respects the consolidated financial
position of Parent and its Subsidiaries as of the date thereof, and the other
financial statements referred to in this Section 4.05 (including the related
notes where applicable) fairly present in all material respects, and the
financial statements referred to in Section 6.10 hereof will fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount) in all material respects, the
results of the consolidated operations and changes in shareholders' equity
and consolidated financial position of Parent and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth and
each of such statements (including the related notes, where applicable) has
been, and the financial statements referred to in Section 6.10 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.
4.06 Broker's Fees. Neither Parent, Massachusetts Bank or 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 or the Bank Merger
Agreement.
4.07 Absence of Certain Changes or Events.
(a) Since December 31, 1993:
(i) there has not been any Material Adverse
Effect on Parent and its Subsidiaries taken as a whole;
(ii) there has not been any incurrence by Parent
of any liability that has had, or to the knowledge of Parent could
reasonably be expected to have, a Material Adverse Effect on
Parent and its Subsidiaries taken as a whole;
(iii) there has not been any agreement, contract or
commitment entered into, or agreed to be entered into, except for
those in the ordinary course of business none of which has had a
Material Adverse Effect on Parent and its Subsidiaries taken as a
whole;
(iv) there has not been any change in any of the
accounting methods or practices of Parent or any of its Subsidiaries
other than changes required by applicable law or generally accepted
accounting principles.
4.08 Legal Proceedings. There are no pending or to the
knowledge of Parent, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental investigations of any nature
against Parent or any Significant Subsidiary of Parent, as to which there
is a reasonable likelihood of adverse determination and which if adversely
determined, would (i) have a Material Adverse Effect on Parent and its
Subsidiaries taken as a whole, or (ii) as of the date hereof, prevent or
materially and adversely affect Parent's ability to consummate the
transactions contemplated hereby.
4.09 SEC Reports. Parent has previously made available to the
Company a true and complete, in all material respects, copy of each
(a) final registration statement, prospectus, report, schedule and definitive
proxy statement filed since January 1, 1990 by Parent with the SEC
pursuant to the Securities Act or the Exchange Act (the "Parent Reports")
and (b) communication mailed by Parent to its shareholders since
January 1, 1990, and, as of their respective dates, no such Parent Reports
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made,
not misleading.
4.10 Parent Information. The information provided in writing
by Parent for inclusion in the Proxy Statement and the S-4 will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances in
which they are made, not misleading.
4.11 Compliance with Applicable Law. Parent and each of its
Subsidiaries holds, and have at all times held, all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of
their respective businesses under and pursuant to all, and have complied
with and are not in default under any, applicable law, statute, order, rule
or regulation 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 noncompliance or default would not have
a Material Adverse Effect on Parent, and neither Parent nor any of its
Subsidiaries has received notice of any material violations of any of the
above.
4.12 Ownership of Company Common Stock; Affiliates and
Associates. Neither Parent nor any of its affiliates or associates (as such
terms are defined under the Exchange Act), (i) beneficially own, directly
or indirectly, or (ii) is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of, in each case, any shares of capital stock of the Company (other than
Trust Account Shares and DPC Shares). Neither Parent nor any of its
Subsidiaries is an "affiliate" (as such term is defined in DGCL [SECTION]
202(c)(1)) or an "associate" (as such term is defined in DGCL
[SECTION]203(C)(2)) of the Company.
4.13 Agreements with Regulatory Agencies. Except as set
forth in Section 4.13 of the Parent Disclosure Schedule or as disclosed in
Parent's Annual Report on Form 10-K for the year ended December 31,
1993, neither Parent nor any of its Subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any Regulatory
Agreement with any Regulatory Agency or other Governmental Entity that
restricts in any material respect the conduct of its business or that relates
in any manner to its capital adequacy, its credit policies or its
management, nor has Parent or any of its Subsidiaries been notified by any
Regulatory Agency or other Governmental Entity that it is considering
issuing or requesting any Regulatory Agreement.
4.14 Regulatory Approvals. Parent is not, as of the date hereof,
aware of any reason why the regulatory approvals required to be obtained
by it or any of its Subsidiaries to consummate the Merger and the Bank
Merger would not be satisfied within the time frame customary for
transactions of the nature contemplated thereby.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.01 Covenants of the Company. 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 the Bank
Merger Agreement or with the prior written consent of Parent, the
Company and its Subsidiaries shall carry on their respective businesses in
the ordinary course consistent with past practice. The Company will use
all reasonable efforts to (x) preserve its business organization and that of
its Significant Subsidiaries intact, (y) keep available to itself and Parent the
present services of the employees of the Company and its Significant
Subsidiaries and (z) preserve for itself and Parent the goodwill of the
customers of the Company and its Significant Subsidiaries and others with
whom business relationships exist. Without limiting the generality of the
foregoing, and except as set forth in Section 5.01 of the Company
Disclosure Schedule or as otherwise contemplated by this Agreement or
consented to in writing by Parent, the Company shall not, and shall not
permit any of its Subsidiaries to:
(a) solely in the case of the Company, declare or pay
any dividends on, or make other distributions in respect of, any of
its capital stock, except (i) for the declaration and payment of
regular quarterly cash dividends in an amount not to exceed $0.30
per share of Company Common Stock, provided, however, that the
Company's regular quarterly cash dividend may be increased by up
to ten percent per share beginning in the first quarter of 1995, and
(ii) that the parties agree (x) to consult with respect to the amount
of the last Company quarterly dividend payable prior to the
Effective Time with the objective of assuring that the shareholders
of the Company do not experience a shortfall based on the record
and payment dates of their last dividend prior to the Merger and
(y) that the Company may pay a special dividend to holders of
record of Company Common Stock immediately prior to the
Effective Time consistent with the objective described in clause (x)
above;
(b) (i) split, combine or reclassify any shares of its
capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares
of its capital stock except upon the exercise or fulfillment of rights
or options issued or existing pursuant to employee benefit plans,
programs or arrangements, all to the extent outstanding and in
existence on the date of this Agreement, or (ii) repurchase, redeem
or otherwise acquire (except for the acquisition of shares pursuant
to the Bank ESOP or of Trust Account Shares and DPC Shares),
any shares of the capital stock of the Company or any Company
Subsidiary, or any securities convertible into or exercisable for any
shares of the capital stock of the Company or any Company
Subsidiary;
(c) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into or exercisable for, or any rights, warrants
or options to acquire, any such shares, or enter into any agreement
with respect to any of the foregoing, other than (i) the issuance of
Company Common Stock pursuant to stock options or similar
rights to acquire Company Common Stock granted pursuant to the
Company Stock Plan and outstanding prior to the date of this
Agreement, or (ii) the sale of Company Common Stock under the
Bank ESOP, in accordance with their present terms;
(d) amend its Certificate of Incorporation or By-laws;
(e) enter into any real property lease for a term longer
than one year;
(f) make any capital expenditures in excess of $500,000
in the aggregate;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any
assets, other than in connection with foreclosures, settlements in
lieu of foreclosure or troubled loan or debt restructurings in the
ordinary course of business, which would be material to the
Company;
(i) take any action that is intended or would result in
any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect, or in any of the
conditions to the Merger set forth in Article VII not being satisfied,
or in a violation of any provision of this Agreement or the Bank
Merger Agreement, except, in every case, as may be required by
applicable law;
(j) change its methods of accounting in effect at
December 31, 1993, except as required by changes in GAAP or
regulatory accounting principles as concurred to by the Company's
independent auditors;
(k) except as required by applicable law or to maintain
qualification pursuant to the Code, (i) adopt, amend, renew or
terminate any Plan or any agreement, arrangement, plan or policy
between the Company or any Company Subsidiary and one or more
of its current or former directors, officers or employees or
(ii) except for normal increases in the ordinary course of business
consistent with past practice or as set forth in Section 5.01 of the
Company Disclosure Schedule, 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);
(l) except in the case that the Merger becomes a
Taxable Transaction pursuant to Section 1.04, knowingly 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 prior practice, sell, lease, encumber, assign
or otherwise dispose of, or agree to sell, lease, encumber, assign or
otherwise dispose of, any of its material assets, properties or other
rights or agreements;
(n) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for borrowed
money, assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or other entity;
(o) file any application to open, relocate or terminate the
operations of any banking office of the Bank;
(p) make any equity investment or commitment to make
such an investment in real estate or in any real estate development
project, other than in connection with foreclosures, settlements in
lieu of foreclosure or troubled loan or debt restructurings in the
ordinary course of business;
(q) purchase or sell loans in bulk;
(r) foreclose upon or take deed or title to any
commercial real estate without first conducting a Phase I
environmental assessment of the property; or foreclose upon such
commercial real estate if such environmental assessment indicates
the presence of hazardous material in amounts which, if such
foreclosure were to occur, would be reasonably likely to result in
a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole;
(s) subject to Section 6.14, change the Company's
policies and practices with respect to asset liability management in
any material respect; or
(t) agree to do any of the foregoing.
5.02 No Solicitation. Neither the Company nor any Company
Subsidiary nor any of the directors, officers, employees, representatives or
agents of the Company or other persons controlled by the Company shall,
except to the extent required by applicable law relating to fiduciary
obligations of directors, upon advice of counsel, solicit or hold discussions
or negotiations with, or assist or provide any information to, any person,
entity, or group (other than Parent) concerning any merger, disposition of
a significant portion of its assets, or acquisition of a significant portion of
its capital stock or similar transactions involving the Company or any
Company Subsidiary. Nothing contained in this Section 5.02 shall prohibit
the Company or its Board of Directors from taking and disclosing to the
Company's shareholders a position with respect to a tender offer by a third
party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange
Act or making such other disclosure to the Company's shareholders which,
in the judgment of the Board of Directors, based upon the advice of
counsel, may be required under applicable law. The Company will
promptly communicate to Parent the terms of any proposal, discussion,
negotiation, or inquiry relating to a merger or disposition of a significant
portion of its capital stock or similar transaction involving the Company
or any Company Subsidiary and the identity of the party making such
proposal or inquiry, which it receives with respect to any such transaction.
5.03 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 the Company, Parent and its Subsidiaries shall carry on
their respective businesses in the ordinary course consistent with past
practice and use all reasonable efforts to preserve intact their present
business organizations and relationships. Without limiting the generality
of the foregoing and as otherwise contemplated by this Agreement or
consented to in writing by the Company, Parent shall not, and shall not
permit any of its Subsidiaries to:
(a) take any action that is intended or would result in
any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect, or in any of the
conditions to the Merger set forth in Article VII not being satisfied,
or in a violation of any provision of this Agreement or the Bank
Merger Agreement, except, in every case, as may be required by
applicable law;
(b) change its methods of accounting in effect at
December 31, 1993, except in accordance with changes in GAAP
or regulatory accounting principles as concurred to by Parent's
independent auditors;
(c) except in the case that the Merger becomes a
Taxable Transaction pursuant to Section 1.04 knowingly take or
cause to be taken any action which would disqualify the Merger as
a tax free reorganization under Section 368 of the Code;
(d) take or cause to be taken any action which would,
or may reasonably be expected to, significantly delay or otherwise
adversely affect the regulatory approvals required to consummate
the Merger; or
(e) agree to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Regulatory Matters.
(a) The Company shall promptly prepare 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. The S-4
will constitute the Registration Statement registering the issuance of the
Warrants and Parent Common Stock pursuant to this Agreement and the
issuance of the Warrant Shares upon exercise of the Warrants. Each of the
Parent and the Company shall use their best efforts to have the S-4
declared effective under the Securities Act as promptly as practicable after
such filing, and the Company shall thereafter promptly mail the Proxy
Statement to its shareholders. Parent shall also use its best efforts to
obtain all necessary state securities law or "Blue Sky" permits and
approvals required to carry out the transactions contemplated by this
Agreement and the Bank Merger Agreement, and the Company shall
furnish all information concerning the Company and the holders of the
Company Common Stock as may be reasonably requested in connection
with any such action.
(b) The parties hereto shall cooperate with each other
and use their best efforts to promptly 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 and the Bank
Merger). The Company and Parent shall have the right to review in
advance, and to the extent practicable each will consult with the other on,
in each case subject to applicable laws relating to the exchange of
information, all the information relating to the Company 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. 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 the Company shall, upon request, furnish
each other with all information concerning themselves, their respective
Subsidiaries, directors, officers and shareholders and such other matters as
may be reasonably necessary or advisable in connection with the Proxy
Statement, the S-4 or any other statement, filing, notice or application
made by or on behalf of Parent, the Company or any of their respective
Subsidiaries to any Governmental Entity in connection with the Merger
and the other transactions contemplated hereby.
(d) Parent and the Company shall promptly furnish each
other with copies of written communications received by Parent or the
Company, as the case may be, or any of their respective Subsidiaries from,
or delivered by any of the foregoing to, any Governmental Entity in
respect of the transactions contemplated hereby.
6.02 Access to Information.
(a) Upon reasonable notice and subject to applicable
laws relating to the exchange of information, the Company 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, the Company 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 laws (other than reports or documents which the Company is not
permitted to disclose under applicable law) and (ii) all other information
concerning its business, properties and personnel as Parent may reasonably
request (other than information which the Company is not permitted to
disclose under applicable law). Neither the Company 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 the Company'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, dated April 11, 1994, between Parent and the Company (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 the Company and the Bank, 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 the Company to fulfill its obligations pursuant to
this Agreement to prepare the Proxy Statement or which may be
reasonably necessary for the Company 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. During the period from the
date of this Agreement to the Effective Time, Parent will cause one or
more of its designated representatives to confer on a regular and frequent
basis (not less than monthly) with representatives of the Company and the
Bank and to report the general status of the ongoing operations of Parent
and its Subsidiaries.
(c) All information furnished by Parent to the Company
or its representatives pursuant hereto shall be treated as the sole property
of Parent and, if the Merger shall not occur, the Company and its
representatives shall return to Parent or destroy all of such written
information and all documents, notes, summaries or other materials
containing, reflecting or referring to, or derived from, such information.
The Company shall, and shall use its reasonable 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 from the date the proposed Merger is abandoned and shall
not apply to (i) any information which (x) was already in the Company's
possession prior to the disclosure thereof by Parent; (y) was then generally
known to the public; or (z) was disclosed to the Company 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 the Company is nonetheless, in
the opinion of its 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, the Company may disclose
such information to such tribunal or governmental body or agency without
liability hereunder.
6.03 Shareholder Meeting. The Company shall take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
shareholders to be held as soon as is reasonably practicable after the date
on which the S-4 becomes effective for the purpose of voting upon the
approval of this Agreement. The Company will, through its Board of
Directors, recommend to its shareholders approval of this Agreement and
the transactions contemplated hereby and such other matters as may be
submitted to its shareholders in connection with this Agreement; provided,
however, that nothing contained in this Section 6.03 or elsewhere in this
Agreement shall prohibit the Company's Board of Directors from failing
to make such recommendation or modifying or withdrawing its
recommendation, if such Board shall have concluded in good faith with the
advice of counsel that such action is required to prevent such Board from
breaching its fiduciary duties to the shareholders of the Company, and no
such action shall constitute a breach of this Agreement.
6.04 Legal Conditions to Merger. Each of Parent and the
Company shall, and shall cause each of its Subsidiaries to, use its best
efforts (a) to take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements which may be
imposed on such party or its Subsidiaries with respect to the Merger or the
Bank 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 the Company or Parent or any of their respective Subsidiaries
in connection with the Merger and the Bank Merger and the other
transactions contemplated by this Agreement. Parent also agrees to accept
any conditions related to savings bank life insurance, the discontinuation
of impermissible activities or the divestiture of the Company's or the
Bank's direct or indirect interests in real estate or other investments which
are required by any Regulatory Agency in connection with procuring the
regulatory approvals required to consummate the Merger and the Bank
Merger.
6.05 Restrictions on Resale. The Company shall use all
reasonable efforts to cause each director, executive officer and other person
of the Company who, at the time of the shareholder's meeting called by
the Company to approve this Agreement, is an "affiliate" of the Company
(for purposes of Rule 145 under the Securities Act) and who has indicated
to the Company that such person intends to elect to receive Parent
Common Stock pursuant to the Merger, to execute "affiliate letters" prior
to the Effective Time providing that such person will not sell, pledge,
transfer or otherwise dispose of any shares of Parent Common Stock
received by such person in the Merger except in compliance with the
applicable provisions of the Securities Act and the rules and regulations
thereunder. Parent shall use all reasonable efforts to comply with Rule
144(c) under the Securities Act in order that all such persons may resell
such Parent Common Stock pursuant to Rule 145(d) under the Securities
Act.
6.06 Stock Exchange Listing. Parent shall cause the Warrants
and the shares of Parent Common Stock to be issued in the Merger and the
Warrant Shares to be approved for listing on the Stock Exchange, subject
to official notice of insurance, prior to the Effective Time.
6.07 Employee Benefit Plans.
(a) From and after the Effective Time and subject to
applicable law, the Surviving Corporation and the Surviving Bank shall
provide the employees of the Company ("Company Employees") with the
same benefits provided to its own employees; provided, that Parent shall
not treat any such employee as a "new" employee for purposes of any
exclusion for an existing condition under any health, dental or similar plan
of Parent, the Surviving Corporation, or the Surviving Bank.
Notwithstanding anything to the contrary herein, with respect to benefits
payable to employees who shall have retired from the Company and its
Subsidiaries, whether before or after the Effective Time, the Surviving
Corporation and the Surviving Bank shall in no event take any action to
reduce such benefits and shall take such action as it deems appropriate
from time to time with respect to possible increases in the level of such
benefits, taking into consideration among other factors any similar
increases which Parent shall have effected with respect to its retired
employees.
(b) With respect to the provision of benefits to the
Company's employees pursuant to Section 6.07(a) hereof, to the extent that
Company Employees become participants in any employee benefit plans
maintained by the Surviving Corporation, the Surviving Bank, Parent or
any of its Subsidiaries ("Parent Plans"), Company Employees shall be
credited under the Parent Plans for all prior years of service with the
Company and any Subsidiary of the Company (and any entities acquired
by the Company or the Bank to the same extent as the Company or the
Bank recognize such service) for all purposes, including but not limited to
eligibility and vesting, vacation time and 401(k) plans, but excluding
benefit accrual under the qualified defined benefit pension plan of the
Surviving Corporation, the Surviving Bank, Parent or any of its
Subsidiaries, to the extent of any duplication in benefits, to the extent such
service was recognized by the Company or any Subsidiary of the Company
under any of its plans.
(c) The provisions of this Section 6.07 are expressly
intended to be for the irrevocable benefit of, and shall be enforceable by,
each officer and employee covered hereby and his or her heirs and
representatives.
6.08 Employee Termination And Other Benefits.
(a) Following the Effective Time, Parent shall honor and
shall cause the Company and the Bank, or any of their respective
successors, including without limitation, the Surviving Corporation and the
Surviving Bank, to honor in accordance with their terms all employment,
severance and other compensation agreements and arrangements which are
between the Company or the Bank and any director, officer or employee
thereof and which have been disclosed in Section 5.01 of the Company
Disclosure Schedule, and to assume all duties, liabilities and obligations
under such agreements. Parent agrees for itself and its Subsidiaries that
the consummation of the transactions contemplated hereby is a "Change
in Control" as defined in the Special Termination Agreements between the
Company and/or the Bank and certain officers as disclosed in the Company
Disclosure Schedule.
(b) Parent agrees to offer, or cause the Surviving Bank
to offer, continued comparable employment on and after the Effective
Time to all employees of the Company or the Company Subsidiaries who
were such immediately prior to the Effective Time. Employees of the
Company or the Company Subsidiaries who are terminated on or within
two years after the Effective Time shall be provided, in addition to all
other applicable benefits, severance and other benefits set forth in Section
5.01 of the Company Disclosure Schedule, with the following:
(i) the greater or more favorable of the severance
and other benefits set forth in (x) Fleet Financial Group, Inc.'s
Severance Pay and Benefits Plan appended to Section 6.08 of the
Parent Disclosure Schedule, or (y) Parent's severance pay and
benefits plan policy existing on the date of termination; and
(ii) continuation of health benefits for one year
after termination on the same terms and conditions as though they
had remained active employees of Parent or the Surviving
Corporation or the Surviving Bank (provided, that such employees
shall not be treated as "new" employees for purposes of any
exclusion for an existing condition under any health or similar
plan), and thereafter shall be entitled to continuation benefits (such
as COBRA) for an additional eighteen month period determined as
though their employment had terminated at the end of such one-
year period.
(c) The provisions of this Section 6.08 are expressly
intended to be for the irrevocable benefit of, and shall be enforceable by,
each officer and employee covered hereby and his or her heirs and
representatives.
6.09 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 the Company 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 (i) the fact that he is or was a director, officer or employee
of the Company, any of the Company Subsidiaries or any of their
respective predecessors or (ii) this Agreement or any of the transactions
contemplated hereby, 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 the Company shall indemnify and hold harmless and that after
the Effective Time, the Surviving Corporation and Parent shall indemnify
and hold harmless, as and to the fullest extent permitted by applicable law,
each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's fees and
expenses), 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), (i) the Company, and the Surviving
Corporation and Parent after the Effective Time, shall promptly pay
expenses in advance of the final disposition of any claim, action, suit,
proceeding or investigation to each Indemnified Party to the full extent
permitted by law, (ii) the Indemnified Parties may retain counsel
satisfactory to them, and the Company, and the Surviving Corporation and
Parent after the Effective Time, shall pay all fees and expenses of such
counsel for the Indemnified Parties within thirty days after statements
therefor are received, and (iii) the Company, the Surviving Corporation
and Parent will use their respective best efforts to assist in the vigorous
defense of any such matter; provided, that none of the Company, the
Surviving Corporation or Parent shall be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld); and provided further, that the Surviving Corporation and 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 non-appealable, that
indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable law. Any Indemnified Party wishing to
claim indemnification under this Section 6.09, upon learning of any such
claim, action, suit, proceeding or investigation, shall notify the Company
and, after the Effective Time, the Surviving Corporation and Parent,
thereof, provided, that the failure to so notify shall not affect the
obligations of the Company, the Surviving Corporation and Parent, except
to the extent such failure to notify materially prejudices such party.
(b) Parent agrees that all rights to indemnification
existing in favor, and all limitations on the personal liability, of the
Indemnified Parties provided for in the Company's Certificate of
Incorporation or By-laws or the Charter or By-laws or similar
organizational documents of any of its Subsidiaries as in effect as of the
date hereof with respect to matters occurring prior to the Effective Time
shall survive the Merger and shall continue in full force and effect for a
period of not less than 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
disposition of such Claim.
(c) Parent shall cause the persons serving as officers and
directors of the Company immediately prior to the Effective Time to be
covered for a period of three (3) years from the Effective Time by the
directors' and officers' liability insurance policy maintained by the
Company (provided, that Parent may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions which are
not less advantageous than such policy) with respect to acts or omissions
occurring at or prior to the Effective Time which were committed by such
officers and directors in their capacity as such; provided, however, that in
no event shall Parent be required to expend more than the amount (the
"Insurance Amount") equal to 200% of the current amount expended by
the Company and the Bank to maintain or procure insurance coverage
pursuant hereto.
(d) In the event Parent or the Surviving Corporation 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 proper provision shall be made so that the successors and
assigns of Parent or the Surviving Corporation, as the case may be, assume
the obligations set forth in this section.
(e) The provisions of this Section 6.09 are expressly
intended to be for the irrevocable benefit of, and shall be enforceable by,
each Indemnified Party and his or her heirs and representatives.
6.10 Subsequent Interim and Annual Financial Statements.
As soon as reasonably available, but in no event more than 45 days after
the end of each fiscal quarter ending after December 31, 1993, Parent will
deliver to the Company and the Company will deliver to Parent their
respective Quarterly Reports on Form 10-Q, as filed with the SEC under
the Exchange Act. As soon as reasonably available, but in no event later
than April 1, 1995, Parent will deliver to the Company and the Company
will deliver to Parent their respective Annual Reports on Form 10-K for
the fiscal year ended December 31, 1994, as filed with the SEC under the
Exchange Act.
6.11 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purpose of this Agreement, or the Bank Merger Agreement, or to vest the
Surviving Corporation or the Surviving Bank with full title to all
properties, assets, rights, approvals, immunities and franchises of any of
the parties to the Merger or the Bank 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.
6.12 Disclosure Supplements. From time to time prior to the
Effective Time, each party will promptly supplement or amend the
Disclosure Schedules delivered in connection with the execution of this
Agreement to reflect any matter which, if existing, occurring or known at
the date of this Agreement, would have been required to be set forth or
described in such Disclosure Schedules or which is necessary to correct
any information in such Disclosure Schedules which has been rendered
inaccurate thereby. No supplement or amendment to such Disclosure
Schedules shall have any effect for the purposes of determining satisfaction
of the conditions set forth in Sections 7.02(a) or 7.03(a) hereof, as the case
may be, or the compliance by the Company or Parent, as the case may be,
with the respective covenants set forth in Sections 5.01 and 5.03 hereof.
6.13 Current Information.
(a) During the period from the date of this Agreement
to the Effective Time, the Company will cause one or more of its
designated representatives to be available to confer on a regular and
frequent basis (not less than monthly) with representatives of Parent and
to report the general status of the ongoing operations of the Company and
its Subsidiaries. The Company will promptly notify Parent of any material
change in the normal course of business of the Company or any of its
Subsidiaries and of any governmental complaints, investigations or
hearings or the institution of significant litigation involving the Company
or any of its Subsidiaries and will keep Parent reasonably informed of such
events.
(b) Parent will promptly notify the Company of any
material change in the normal course of business of Parent or any of its
Subsidiaries and of any governmental complaints, investigations or
hearings, or the institution of significant litigation involving Parent or any
of its Subsidiaries, and will keep the Company reasonably informed of
such events.
6.14 ALCO Management. The Company agrees that during the
period from the date of this Agreement to the Effective Time, the
Company will consult and cooperate with Parent in the development and
implementation of a program to manage the Company's interest rate
sensitive assets and liabilities.
6.15 Execution and Authorization of Bank Merger
Agreement. As soon as reasonably practicable after the date of this
Agreement, (a) Parent shall (i) cause the Board of Directors of
Massachusetts Bank to approve the Bank Merger Agreement, (ii) cause
Massachusetts Bank to execute and deliver the Bank Merger Agreement,
and (iii) approve the Bank Merger Agreement as the sole shareholder of
Massachusetts Bank, and (b) the Company shall (i) cause the Board of
Directors of the Bank to approve the Bank Merger Agreement, and
(ii) cause the Bank to execute and deliver the Bank Merger Agreement.
The Bank Merger Agreement shall contain terms that are normal and
customary in light of the transactions contemplated hereby and necessary
to carry out the purposes of this Agreement.
ARTICLE VII
CONDITIONS PRECEDENT
7.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Shareholder Approval. This Agreement shall have
been approved and adopted by the affirmative vote of the holders of at
least a majority of the outstanding shares of Company Common Stock
entitled to vote thereon.
(b) Stock Exchange Listing. The Warrants, shares of
Parent Common Stock which shall be issued to the shareholders of the
Company upon consummation of the Merger and the Warrant Shares shall
have been authorized for listing on the Stock Exchange, subject to official
notice of issuance.
(c) Other Approvals. All regulatory approvals required
to consummate the Merger and the Bank Merger shall have been obtained
and shall remain in full force and effect and all statutory waiting periods
in respect thereof shall have expired.
(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 (an "Injunction") preventing the consummation of the Merger
or the other transactions contemplated by this Agreement shall be in effect.
No statute, rule, regulation, order, injunction or decree shall have been
enacted or enforced by any Governmental Entity which prohibits or makes
illegal consummation of the Merger.
7.02 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 the Company 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; provided, however, that, for purposes hereof, such
representations and warranties shall be deemed to be true and correct in all
material respects unless the failure or failures of such representations and
warranties to be so true and correct represent, in the aggregate, a Material
Adverse Effect (as defined in Section 3.01 hereof). Parent shall have
received a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to the
foregoing effect.
(b) Performance of Obligations of the Company. The
Company 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 the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company to such effect.
(c) Consents Under Agreements. The consent,
approval or waiver of each person (other than of the Governmental Entities
with responsibility for the regulatory approvals referred to in Section
7.01(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 the Company or any Company Subsidiary
of the Company 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 have a Material Adverse Effect on the Company or its
Subsidiaries taken as a whole.
(d) Legal Opinion. Parent shall have received the
opinion of Goodwin, Procter & Hoar, counsel to the Company, dated the
Closing Date, in a form that is customary for transactions of this type. As
to any matter in such opinion which involves matters of fact or matters
relating to laws other than Federal securities law, such counsel may rely
upon the certificates of officers and directors of the Company and its
Subsidiaries and of public officials and opinions of local counsel,
reasonably acceptable to Parent.
(e) Accountant's Letter. The Company shall have
caused to be delivered to Parent letters from KPMG Peat Marwick,
independent public accountants with respect to the Company, dated the
date on which the Registration Statement or last amendment thereto shall
become effective, and dated the date of the Closing, and addressed to
Parent and the Company, with respect to the Company's consolidated
financial position and results of operations, which letters shall be based
upon 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.
7.03 Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver by the Company 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; provided, however, that, for purposes hereof, such
representations and warranties shall be deemed to be true and correct in all
material respects unless the failure or failures of such representations and
warranties to be so true and correct represent, in the aggregate, a Material
Adverse Effect (as defined in Section 3.01 hereof). The Company 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 each performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
the Company 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 of the Governmental Entities with
responsibility for the regulatory approvals referred to in Section 7.01(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 have a Material Adverse Effect on Parent and its Subsidiaries taken as
a whole (after giving effect to the transactions contemplated hereby).
(d) Federal Tax Opinion. Except in the case the
Merger becomes a Taxable Transaction pursuant to Section 1.04, the
Company shall have received from its counsel, an opinion dated as of the
Effective Time, in form and substance reasonably satisfactory to the
Company, rendered on the basis of facts, representations, and assumptions
set forth in such opinion or in writing elsewhere and referred to therein,
substantially to the effect that for federal income tax purposes (i) the
Merger constitutes a reorganization within the meaning of Section 368(a)
of the Code, and (ii) Parent and the Company each will be a party to the
reorganization within the meaning of Section 368(b) of the Code (noting,
however, that the nontaxability of the shareholders of the Company
resulting from such reorganization does not extend to cash received as Per
Share Cash Consideration, cash in lieu of a fractional shares interest in
Parent Common Stock, cash received by the holders of Dissenting Shares
or the Warrants, if any). In rendering any such opinion, such counsel may
require and, to the extent they deem necessary or appropriate may rely
upon, opinions of other counsel and upon representations made in
certificates of officers of the Company, Parent, affiliates of the foregoing,
and others.
(e) Legal Opinion. The Company shall have received
the opinion of Edwards & Angell, counsel to Parent, dated the Closing
Date, in a form that is customary for transactions of this type. As to any
matter in such opinion which involves matters of fact or matters relating
to laws other than Federal securities law, Rhode Island law or Delaware
corporate law, such counsel may rely upon the certificates of officers and
directors of Parent and of public officials and opinions of local counsel,
reasonably acceptable to the Company.
(f) Opinion of Financial Advisor. The Company shall
have received an opinion, dated as of the date of the Proxy Statement,
from Salomon Brothers Inc to the effect that as of the date thereof the
consideration to be received by the shareholders of the Company pursuant
to the Merger is fair to such shareholders from a financial point of view.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.01 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the shareholders of the
Company:
(a) by mutual consent of Parent and the Company in a
written instrument, if the Board of Directors of each so determines
by a vote of a majority of the members of its entire Board;
(b) by either Parent or the Company upon written notice
to the other party (i) ninety days after the date on which any
request or application for a regulatory approval required to
consummate the Merger shall have been denied or withdrawn at the
request or recommendation of the Governmental Entity which must
grant such requisite regulatory approval, unless within the ninety
day period following such denial or withdrawal a petition for
rehearing or an amended application has been filed with the
applicable Governmental Entity, provided, however, that no party
shall have the right to terminate this Agreement pursuant to this
Section 8.01(b)(i) if such denial or request or recommendation for
withdrawal shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein, or (ii) if any
Governmental Entity of competent jurisdiction shall have issued a
final nonappealable order enjoining or otherwise prohibiting the
consummation of any of the transactions contemplated by this
Agreement;
(c) by either Parent or the Company if the Merger shall
not have been consummated on or before May 31, 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 in any material respect the covenants and agreements of
such party set forth herein;
(d) by either Parent or the Company if (i) any approval
of the shareholders of the Company required for the consummation
of the Merger shall not have been obtained by reason of the failure
to obtain the required vote at a duly held meeting of shareholders
or at any adjournment or postponement thereof, or (ii) the
Company's Board of Directors determines that it will not
recommend to its shareholders approval, or modifies or withdraws
its recommendation, of this Agreement and the transactions
contemplated hereby and such other matters as may be submitted
to its shareholders in connection with this Agreement, if such
Board shall have concluded with the advice of counsel that such
action is required to prevent such Board from breaching its
fiduciary obligations to the shareholders of the Company;
(e) by either Parent or the Company (provided, that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the
representations or warranties set forth in this Agreement on the part
of the other party, which breach shall not have been cured within
forty-five days following receipt by the breaching party of written
notice of such breach from the other party hereto, or which breach,
by its nature, cannot be cured prior to the Closing; or
(f) by either Parent or the Company (provided, that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of
the other party, which breach shall not have been cured within
forty-five days following receipt by the breaching party of written
notice of such breach from the other party hereto.
8.02 Effect of Termination; Expenses.
(a) In the event of termination of this Agreement by
either Parent or the Company as provided in Section 8.01, this Agreement
shall forthwith become void and have no effect except (i) Sections 6.02(c),
8.02 and 9.03 and the last sentence of Section 6.02(a) (except as noted in
Section 8.02(c)), shall survive any termination of this Agreement, and
(ii) no party shall be relieved or released from any liabilities or damages
arising out of its willful breach of any provision of this Agreement.
(b) If this Agreement is terminated, expenses of the
parties hereto shall be determined as follows:
(i) Any termination of this Agreement pursuant
to Section 8.01(a) or Section 8.01(d) hereof shall be without cost,
expense or liability on the part of any party to the other. Any
termination of this Agreement pursuant to Section 8.01(e) or
Section 8.01(f) hereof shall also be without cost, liability or
expense on the part of any party to the others, unless the breach of
a representation or warranty or the breach of a covenant or
agreement is caused by the willful conduct or gross negligence of
a party in which event said party shall be liable to the other party
for all out-of-pocket costs and expenses, including, without
limitation, reasonable legal, accounting and investment banking
fees and expenses, incurred by such other party in connection with
the entering into of this Agreement and the carrying out of any and
all acts contemplated hereunder ("Expenses").
(ii) If this Agreement is terminated pursuant to
Section 8.01(b) or Section 8.01(c) or the transactions contemplated
hereby otherwise fail to be consummated, in any such case because
of the failure to receive any required regulatory approval, Parent
shall reimburse the Company for all Expenses up to a maximum of
$1,500,000.
(iii) The payment of Expenses is not an exclusive
remedy, but is in addition to any other rights or remedies available
to the parties hereto at law or in equity and no party shall be
relieved or released from any liabilities or damages arising out of
its willful breach of any provisions of this Agreement.
(c) In order to induce Parent to enter into this
Agreement and to reimburse Parent for incurring the costs and expenses
related to entering into this Agreement and consummating the transactions
contemplated by this Agreement, the Company will make a cash payment
to Parent of $8,000,000 (the "Expense Fee") if and only if :
(i) (x) the Company has terminated this Agreement
pursuant to Section 8.01(d) or (y) Parent has terminated this
Agreement pursuant to Sections 8.01(e) or 8.01(f) and the breach
of the representation, warranty, covenant or agreement was caused
by the willful conduct or gross negligence of the Company, and
(ii) (x) within six (6) months of any such termination,
(A) the Company shall have entered into an agreement to engage
in an Acquisition Transaction with any person other than Parent or
any subsidiary or affiliate of Parent or (B) the Board of Directors
of the Company shall have approved an Acquisition Transaction or
recommended that shareholders of the Company approve or accept
any Acquisition Transaction with any person other than Parent or
any subsidiary or affiliate of Parent, or (y) in the case of a
termination pursuant to Section 8.01(d), at the time of such
termination any person other than Parent or any subsidiary or
affiliate of Parent, shall have made a bona fide proposal to the
Company or its shareholders to engage in an Acquisition
Transaction by public announcement or written communication that
shall be or become the subject of public disclosure.
Any payment required by the previous sentence will be (i) payable by the
Company to Parent (by wire transfer of immediately available funds to an
account designated by Parent) within five business days after demand by
Parent and (ii) net of any other payments made by the Company to Parent
pursuant to the provisions of Section 8.02(b)(i). In the event of a
termination under circumstances that would trigger a payment under this
Section 8.02(c), the standstill provisions contained in the Confidentiality
Agreement shall terminate.
Notwithstanding anything to the contrary set forth in this
Agreement, if the Company pays Parent the Expense Fee, the Company
will have no further obligations or liabilities to Parent with respect to this
Agreement or the transactions contemplated by this Agreement.
For purposes of this Agreement, "Acquisition Transaction" shall
mean (i) a merger, consolidation or other similar transaction with the
Company, (ii) any sale, lease or other disposition of 25% or more of the
assets of the Company and its subsidiaries, taken as a whole, in a single
transaction or series of transaction, or (iii) any tender or exchange offer for
25% or more of the outstanding shares of Company Common Stock.
8.03 Amendment. Subject to compliance with applicable law,
this Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or
after approval of the matters presented in connection with the Merger by
the shareholders of the Company; provided, however, that after any
approval of the transactions contemplated by this Agreement by the
Company's shareholders, there may not be, without further approval of
such shareholders, any amendment of this Agreement which reduces the
amount or changes the form of the consideration to be delivered to the
Company's shareholders 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.
8.04 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Board of Directors, may, to the extent legally allowed, (a) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any of the agreements or conditions
contained herein; provided, however, that after any approval of the
transactions contemplated by this Agreement by the Company's
shareholders, there may not be, without further approval of such
shareholders, 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 Company's shareholders 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 shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.01 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") will take place at the
offices of Goodwin, Procter & Hoar, One Exchange Place, Boston,
Massachusetts 02109, at 10:00 a.m. on a date selected by Parent, which
shall be not more than five business days after the satisfaction of the
conditions set forth in Section 7.01 hereof or at such other date, time and
place as is mutually agreed upon by the Company and Parent. The date
on which such Closing takes place is referred to herein as the "Closing
Date". Parent shall provide the Company written notice of the date
selected by it as the Closing Date at least five business days prior to such
date.
9.02 Non-Survival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and
agreements in this Agreement or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time, except for those
covenants and agreements contained herein and therein which by their
terms apply in whole or in part after the Effective Time.
9.03 Expenses. Except as provided by Section 8.02(b) hereof,
whether or not the Merger is consummated, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expense, provided,
however, that the costs and expenses of printing and mailing the Proxy
Statement, and all filing and other fees paid to the SEC or any other
Governmental Entity in connection with the Merger, the Bank Merger and
the other transactions contemplated hereby, shall be borne by Parent,
provided, however, that nothing contained herein shall limit either party's
rights under Section 8.02 hereof, including, but not limited to, the right to
recover any liabilities or damages arising out of the other party's willful
breach of any provision of this Agreement.
9.04 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopies (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:
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, Rhode Island 02903-2305
Attn: William C. Mutterperl, General Counsel
with a copy to:
Edwards & Angell
2700 Hospital Trust Plaza
Providence, Rhode Island 02903-2305
Attn: Duncan Johnson, Esq.
(b) if to the Company, to:
NBB Bancorp, Inc.
174 Union Street
New Bedford, MA 02740
Attn: Robert McCarter, Chairman
with a copy to:
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Attn: Paul W. Lee, P.C.
Regina M. Pisa, P.C.
9.05 Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to
a Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation." The phrases
"the date of this Agreement," "the date hereof" and terms of similar
import, unless the context otherwise requires, shall be deemed to be May
9, 1994.
9.06 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.
9.07 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.
9.08 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without
regard to any applicable conflicts of law.
9.09 Jurisdiction and Venue. The parties consent to the
jurisdiction of all federal and state courts in Massachusetts, and agree that
venue shall lie exclusively in Boston, Suffolk County, Massachusetts.
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 6.02(a) and in Section 6.02(c) of
this Agreement were not performed in accordance with their specific terms
or were 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 6.02(a) and Section 6.02(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 Stock Exchange, so long as this Agreement is in effect, neither
Parent nor the Company shall, or shall permit any of its Subsidiaries to,
issue or cause the publication of any press release or other public
announcement with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement without the
consent of the other party, which consent shall not be unreasonably
withheld.
9.13 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. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as
otherwise expressly provided herein, this Agreement (including the
documents and instruments referred to herein) is not intended to confer
upon any person other than the parties hereto any rights or remedies
hereunder.
<PAGE>
IN WITNESS WHEREOF, the Company and Parent have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
NBB BANCORP, INC.
By: /s/ Robert McCarter
Title: Chairman and President
Attest:
By: /s/ Carol E. Correia
Title: Secretary
FLEET FINANCIAL GROUP, INC.
By: /s/ H. Jay Sarles
Attest: Title: Vice Chairman
By: /s/ Brian T. Moynihan
Title: Vice President
79338.c1
5/11/94
<PAGE>
<PAGE>
DISCLOSURE SCHEDULES
In accordance with Item 601 of Regulation S-K, the Schedules to
the Agreement identified below have been omitted but will be made
available to the Securities and Exchange Commission upon request.
Company Disclosure Schedule
Section 3.02 Capitalization, Options and
Subsidiaries
Section 3.03 No Violation
Section 3.04 Consents and Approvals
Section 3.05 Classified Loans and
Regulatory Proceedings
Section 3.08 Certain Changes or Events
Section 3.09 Legal Proceedings
Section 3.11 Employee Benefit Plans
Section 3.15 Certain Contracts
Section 3.16 Agreements with Regulatory
Agencies
Section 3.17 Investments
Section 3.18 Environmental Matters
Section 3.19 Assistance Agreements
Section 5.01 Conduct of Business By the
Company Pending
the Merger
Parent Disclosure Schedule
Section 4.04 Consents and Approvals
Section 6.08 Employee Termination and
Other Benefits
79338.c1
5/11/94
EXHIBIT 10(r)
AMENDMENT TO
SHAREHOLDER RIGHTS AGREEMENT
Amendment, dated as of May 9, 1994, to the Shareholder Rights
Agreement, dated as of November 14, 1989 (the "Rights Agreement"),
between NBB Bancorp, Inc., a Delaware corporation (the "Company"),
and The First National Bank of Boston, a national banking association,
as Rights Agent (the "Rights Agent").
W I T N E S S E T H
WHEREAS, in accordance with the terms of the Rights
Agreement, the Company deems it desirable to make certain
amendments to the Rights Agreement; and
WHEREAS, Section 27 of the Rights Agreement provides that
prior to the Distribution Date (as defined therein), the Company and the
Rights Agent shall, if the Company so directs, amend or supplement
any provision of the Rights Agreement as the Company may deem
necessary or desirable without the approval of holders of the Company's
common stock, par value $.10 per share (the "Common Stock");
WHEREAS, the Company intends to enter into an Agreement
and Plan of Merger (the "Merger Agreement") with Fleet Financial
Group, Inc. (the "Purchaser") pursuant to which the Company will be
merged with and into the Purchaser (the "Merger"), and each
outstanding share of Common Stock, by virtue of the Merger, shall be
cancelled and converted solely into the right to receive the consideration
set forth in the Merger Agreement;
WHEREAS, prior to entering into the Merger Agreement, the
Company desires to amend certain provisions of the Rights Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree that the
Rights Agreement is hereby amended as follows:
1. Section 1(a) of the Rights Agreement is amended by
adding the following new paragraph at the end of Section 1(a):
Notwithstanding anything in this Agreement to the
contrary, neither Fleet Financial Group, Inc. (the "Purchaser")
nor any of its Affiliates or Associates shall be deemed to be an
"Acquiring Person," and no Stock Acquisition Date, Distribution
Date, Section 11(a)(ii) Event or Section 13 Event shall occur, as
a result of (i) the execution and delivery of the Agreement and
Plan of Merger, dated as of May 9, 1994 by and between the
Purchaser and the Company, as the same may be amended from
time to time (the "Merger Agreement"); (ii) any action taken by
the Purchaser or any of its Affiliates or Associates in accordance
with the provisions of the Merger Agreement; or (iii) the
consummation of the Merger in accordance with the provisions
of the Merger Agreement.
2. Section 7(a) of the Rights Agreement is amended by
deleting it in its entirety and substituting therefor the following:
(a) Subject to Section 7(e) hereof, the registered
holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office or offices of the
Rights Agent designated for such purpose, together with payment
of the aggregate Exercise Price for the total number of one one-
hundredths of a share of Preferred Stock (or other securities,
cash or other assets, as the case may be) as to which such
surrendered Rights are then being exercised, prior to the earlier
of (i) the close of business on November 14, 1999 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed
as provided in Section 23 hereof or (iii) the Effective Time (as
such term is defined in the Merger Agreement) of the Merger
(the earlier of (i), (ii) or (iii) being herein referred to as the
"Expiration Date"). Except as set forth in Section 7(e) and
Section 7(f) hereof and notwithstanding any other provision of
this Agreement, any Person who prior to the Distribution Date
becomes a record holder of shares of Common Stock may
exercise all of the rights of a registered holder of a Right
Certificate with respect to the Rights associated with such shares
of Common Stock in accordance with the provisions of this
Agreement, as of the date such Person becomes a record holder
of shares of Common Stock.<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the day and year first above
written. This Amendment may be executed in one or more counterparts
all of which shall be considered one and the same amendment and each
of which shall be deemed to be an original.
NBB BANCORP, INC.
By: /s/ Robert McCarter
Name: Robert McCarter
Title: Chairman, President
and Chief Executive Officer
THE FIRST NATIONAL BANK OF BOSTON
as Rights Agent
By: /s/ Darlene M. DioDato
Name: Darlene M. DioDato
Title: Vice President
Exhibit 11
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
For the Quarter Ended March 31, 1994
(Dollars in thousands except per share amounts)
The information below is presented to comply with Regulation S-K Item
601. The computation is not used or required in the consolidated
statements of income as its dilutive effect on simple earnings per share
is less than 3%.
<TABLE>
<CAPTION>
Primary EPS Fully Diluted EPS
<S> <C> <C>
Weighted average shares 8,657,063 8,657,063
Common Stock Equivalents (CSE)
Stock options 147,099 147,099
Primary weighted average shares 8,804,162 8,804,162
Additional CSE 18,066
Fully diluted weighted average shares 8,822,228
Net Income $ 7,825 $ 7,825
Earnings Per Share $ 0.89 $ 0.89
</TABLE>
Exhibit 99
Contact: Irving J. Goss
SVP, Treasurer, and CFO
(508) 996-5000
NBB Bancorp Inc., Parent of
New Bedford Institution for Savings,
Agrees to be Acquired by Fleet Financial Group
NEW BEDFORD, MASSACHUSETTS, May 9, 1994: NBB Bancorp (NYSE-NBB),
parent company of New Bedford Institution for Savings (NBIS),
today agreed to be acquired by Fleet Financial Group (NYSE-FLT),
Providence, RI, for $420 million in cash and Fleet common stock,
plus warrants to acquire 2.5 million shares of Fleet common stock.
Under the terms of the agreement, the NBB per share consideration
is $48.50, plus approximately .277 warrants to purchase Fleet
common stock at a strike price of $43.875 per share during the
five-year period beginning one year after closing. The warrants
have an estimated value of approximately $2.00 per NBB share on
the date hereof, based upon the evaluation of NBB's financial
advisor. The actual value on the closing date is subject to the
price of Fleet common stock, among other things, on that date.
Based on the value of stock, cash and warrants offered in the
transaction, the total consideration for the acquisition is
estimated at $50.50 per share on the date hereof. The transaction
is intended to be tax-free to those NBB shareholders who exchange
their shares for Fleet stock. The stock portion is subject to a
floating exchange ratio.
Fleet intends to repurchase approximately 6 million common shares
prior to the closing for issuance to NBB shareholders. Funding
for the repurchase of Fleet stock and the cash portion of
consideration at the closing will be provided through the issuance
of term debt.
The proposed acquisition, which is subject to approval by NBB's
shareholders and various federal and state regulatory agencies,
was announced by Robert McCarter, NBB's chairman and chief
executive officer, and Terrence Murray, Fleet's chairman and chief
executive officer. They said the transaction is expected to be
closed early in 1995.
McCarter said, "I am very pleased that we have completed
negotiations with Fleet to become a part of their fine
organization. We believe the terms of the transaction are very
favorable to our stockholders. We view this merger as another
positive accomplishment in our effort to provide our communities
with a quality financial organization that can make a valuable
contribution to the economy of the area."
<PAGE>
<PAGE>
"We are extremely pleased to add to our franchise the communities
served by NBB Bancorp," Murray said. "Our franchise will be
extended to our branch banking network east from Providence to
Cape Cod, adding more than 200,000 households and small businesses
to our customer base. This will make Fleet the banking leader in
Bristol County, which includes the Greater New Bedford area, Fall
River, Taunton, the Attleboros, and Seekonk. It also will augment
our existing franchises in Rhode Island and on Cape Cod."
NBIS's consumer and small business banking franchise of 52 offices
extends throughout Cape Cod, southeastern Massachusetts and into
Rhode Island. NBIS is the largest savings bank in Massachusetts
and the dominant bank in Bristol County with a 23% deposit share.
NBIS is also a leading mortgage originator in southeastern
Massachusetts. Following the acquisition, Fleet will be the
market leader in Bristol County and will substantially expand its
presence on Cape Cod.
"We look forward to providing Fleet's expanded consumer and small
business products throughout these markets. Current New Bedford
Institution for Savings customers, and prospective customers, will
discover that Fleet offers an outstanding array of services, many
of which they have not been able to access easily," Murray said.
"Consumers will benefit from Fleet's network of more than 800
branches and 850 ATMs throughout the Northeast, our Galaxy family
of mutual funds, discount brokerage services, home equity credit,
our debit card and proprietary credit card, and a broad range of
other services that distinguish Fleet from our competitors,"
Murray said.
"Small businesses will find that Fleet has both the resources and
the willingness to lend," Murray added. "We expect our new Easy
Business Banking program to be particularly welcome and
advantageous for entrepreneurs trying to grow their businesses.
We also offer a complete line of business services ranging from
cash management and deposit products to investment and trade
services."
Fleet Financial Group is a $46 billion diversified financial
services company listed on the New York Stock Exchange, with
approximately 1,200 offices nationwide. Its lines of business
include commercial and consumer banking, mortgage banking,
consumer finance, asset-based lending, equipment leasing,
investment management, and student loan processing.
###
