Affiliation And Merger Agreement

EXHIBIT 10.8


AMENDED AND RESTATED


AFFILIATION AND MERGER AGREEMENT


AMONG


THE 1855 BANCORP


COMPASS BANK FOR SAVINGS


AND


SANDWICH BANCORP, INC.


THE SANDWICH CO-OPERATIVE BANK


MARCH 23, 1998


TABLE OF CONTENTS


ARTICLE I
CERTAIN DEFINITIONS

1.1 CERTAIN DEFINITIONS.......................................... 1

ARTICLE II
THE MERGER

2.1 THE MERGER................................................... 5
2.2 EFFECTIVE TIME............................................... 5
2.3 CHARTER AND BY-LAWS.......................................... 5
2.4 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.............. 6
2.5 DIRECTORS OF 1855 BANCORP AND COMPASS BANK................... 6
2.6 ADDITIONAL ACTIONS........................................... 6
2.7 EFFECTS OF THE MERGER........................................ 6
2.9 POSSIBLE ALTERNATIVE STRUCTURES.............................. 6

ARTICLE III
CONVERSION OF SHARES

3.1 MERGER CONSIDERATION......................................... 7
3.2 EMPLOYEE STOCK OPTIONS....................................... 8
3.3 DISSENTING SHARES............................................ 8
3.4 PROCEDURES FOR EXCHANGE OF SANDWICH COMMON STOCK............. 9
3.5 RESERVATION OF SHARES........................................ 11

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SANDWICH

4.1 CAPITAL STRUCTURE............................................ 11
4.2 ORGANIZATION, STANDING AND AUTHORITY OF SANDWICH............. 12
4.3 OWNERSHIP OF SANDWICH SUBSIDIARIES........................... 12
4.4 ORGANIZATION, STANDING AND AUTHORITY OF SANDWICH SUBSIDIAR... 12
4.5 AUTHORIZED AND EFFECTIVE AGREEMENT........................... 12
4.6 SECURITIES DOCUMENTS AND REGULATORY REPORTS.................. 14
4.7 FINANCIAL STATEMENTS......................................... 14
4.8 MATERIAL ADVERSE CHANGE...................................... 15
4.9 ENVIRONMENTAL MATTERS........................................ 15
4.10 TAX MATTERS.................................................. 15
4.11 LEGAL PROCEEDINGS............................................ 16
4.12 COMPLIANCE WITH LAWS......................................... 16
4.13 CERTAIN INFORMATION.......................................... 17
4.14 EMPLOYEE BENEFIT PLANS....................................... 17
4.15 CERTAIN CONTRACTS............................................ 18
4.16 BROKERS AND FINDERS.......................................... 19
4.17 INSURANCE.................................................... 20


4.18 LOAN PORTFOLIO............................................... 20
4.19 PROPERTIES................................................... 20
4.20 LABOR........................................................ 20
4.21 REQUIRED VOTE; INAPPLICABILITY OF ANTITAKOVER STATUTES....... 20
4.22 MATERIAL INTERESTS OF CERTAIN PERSONS........................ 21
4.23 CERTAIN TRANSACTIONS......................................... 21
4.24 DISCLOSURES.................................................. 21
4.27 POOLING OF INTERESTS......................................... 21

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF 1855 BANCORP

5.1 CAPITAL STRUCTURE............................................ 22
5.2 ORGANIZATION, STANDING AND AUTHORITY OF 1855 BANCORP......... 22
5.3 OWNERSHIP OF THE 1855 BANCORP SUBSIDIARIES................... 22
5.4 ORGANIZATION, STANDING AND AUTHORITY OF THE 1855 BANCORP
SUBSIDIARIES................................................. 23
5.5 AUTHORIZED AND EFFECTIVE AGREEMENT........................... 23
5.6 REGULATORY REPORTS........................................... 24
5.7 FINANCIAL STATEMENTS......................................... 24
5.8 MATERIAL ADVERSE CGE......................................... 25
5.9 ENVIRONMENTAL MATTERS........................................ 25
5.10 TAX MATTERS.................................................. 26
5.11 LEGAL PROCEEDINGS............................................ 26
5.12 COMPLIANCE WITH LAWS......................................... 26
5.13 CERTAIN INFORMATION.......................................... 27
5.14 EMPLOYEE BENEFIT PLANS....................................... 27
5.15 CERTAIN CONTRACTS............................................ 28
5.16 BROKERS AND FINDERS.......................................... 28
5.17 INSURANCE.................................................... 28
5.18 PROPERTIES................................................... 29
5.19 LABOR........................................................ 29
5.20 OWNERSHIP OF SANDWICH COMMON STOCK........................... 29
5.21 CERTAIN TRANSACTIONS......................................... 29
5.22 DISCLOSURES.................................................. 29
5.23 DISCLOSURE SCHEDULE.......................................... 30
5.24 POOLING OF INTERESTS......................................... 30
5.25 MERGER SUB................................................... 30

ARTICLE VI
COVENANTS OF SANDWICH

6.1 CONDUCT OF BUSINESS.......................................... 30
6.2 CURRENT INFORMATION.......................................... 33
6.3 ACCESS TO PROPERTIES AND RECORDS............................. 33
6.4 FINANCIAL AND OTHER STATEMENTS............................... 33
6.5 DISCLOSURE SUPPLEMENTS....................................... 34
6.6 CONSENTS AND APPROVALS OF THIRD PARTIES...................... 34
6.7 ALL REASONABLE EFFORTS....................................... 34


6.8 FAILURE TO FULFILL CONDITIONS................................ 34
6.9 NO SOLICITATION.............................................. 34
6.10 CEASE NEGOTIATIONS........................................... 35

ARTICLE VII
COVENANTS OF 1855 BANCORP

7.1 CONDUCT OF BUSINESS.......................................... 35
7.2 CURRENT INFORMATION.......................................... 36
7.3 ACCESS TO PROPERTIES AND RECORDS............................. 36
7.4 FINANCIAL AND OTHER STATEMENTS............................... 36
7.5 DISCLOSURE SUPPLEMENTS....................................... 37
7.6 CONSENTS AND APPROVALS OF THIRD PARTIES...................... 37
7.7 ALL REASONABLE EFFORTS....................................... 37
7.8 FAILURE TO FULFILL CONDITIONS................................ 37
7.9 EMPLOYEE BENEFITS............................................ 37
7.10 DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE......... 38
7.11 MERGER SUB................................................... 40

ARTICLE VIII
REGULATORY AND OTHER MATTERS

8.1 SANDWICH SPECIAL MEETING...................................... 40
8.2 PROXY STATEMENT-PROSPECTUS.................................... 40
8.3 1855 BANCORP CONVERSION FROM MUTUAL TO STOCK FORM............. 41
8.4 REGULATORY APPROVALS.......................................... 43
8.5 AFFILIATES; PUBLICATION OF COMBINED FINANCIAL RESULTS......... 43

ARTICLE IX
CLOSING CONDITIONS

9.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS UNDER THIS AGREEMENT... 43
9.2 CONDITIONS TO THE OBLIGATIONS OF 1855 BANCORP UNDER THIS
AGREEMENT..................................................... 45
9.3 CONDITIONS TO THE OBLIGATIONS OF SANDWICH UNDER THIS AGREEMENT. 46

ARTICLE X
THE CLOSING

10.1 TIME AND PLACE................................................ 47
10.2 DELIVERIES AT THE PRE-CLOSING AND THE CLOSING................. 47

ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER

11.1 TERMINATION.................................................. 47
11.2 EFFECT OF TERMINATION........................................ 49
11.4 SANDWICH CHANGE IN CONTROL EXPENSE FEE....................... 50
11.5 AMENDMENT, EXTENSION AND WAIVER.............................. 52


ARTICLE XII
MISCELLANEOUS


12.1 CONFIDENTIALITY............................................. 53
12.2 PUBLIC ANNOUNCEMENTS........................................ 53
12.3 SURVIVAL.................................................... 53
12.4 NOTICES..................................................... 53
12.5 PARTIES IN INTEREST......................................... 54
12.6 COMPLETE AGREEMENT.......................................... 54
12.7 COUNTERPARTS................................................ 54
12.8 SEVERABILITY................................................ 55
12.9 GOVERNING LAW............................................... 55
12.10 INTERPRETATION.............................................. 55


AMENDED AND RESTATED AFFILIATION AND MERGER AGREEMENT


This AMENDED AND RESTATED AFFILIATION AND MERGER AGREEMENT ("Agreement"), is dated as of March 23, 1998 by and among THE 1855 BANCORP, a Massachusetts mutual holding company ("1855 Bancorp"), its wholly-owned subsidiary, COMPASS BANK FOR SAVINGS, a Massachusetts savings bank ("Compass Bank"), SANDWICH BANCORP, INC., a Massachusetts corporation and bank holding company ("Sandwich"), and its wholly-owned subsidiary, THE SANDWICH CO-OPERATIVE BANK, a Massachusetts co-operative bank ("Sandwich Bank").


WHEREAS, the Board of Trustees of 1855 Bancorp, the Board of Directors of Compass Bank and the Boards of Directors of Sandwich and Sandwich Bank have determined that it is in the best interests of their respective organizations and, with respect to Sandwich, its stockholders to consummate a business combination transaction among the parties, and on February 2, 1998, the parties entered into an Affiliation and Merger Agreement (the "Original Agreement") providing for the merger (the "Merger") of Sandwich with a newly-formed special- purpose subsidiary ("Merger Sub") of 1855 Bancorp, with Sandwich as the surviving corporation of the Merger;


WHEREAS, following the date of the Original Agreement, the parties determined that it was necessary to make certain amendments to the Original Agreement in order to consummate the Merger, including changes in the amount and nature of the consideration to be paid to the stockholders of Sandwich;


WHEREAS, as a condition and inducement to the 1855 Bancorp's willingness to enter into this Agreement, (i) Sandwich is concurrently entering into a Stock Option Agreement with 1855 Bancorp (the "Sandwich Option Agreement"), in the form attached hereto as Exhibit A, pursuant to which Sandwich is granting to 1855 Bancorp the option to purchase shares of Sandwich Common Stock (as defined herein) under certain circumstances and (ii) 1855 Bancorp and certain of the directors of Sandwich and Sandwich Bank are entering into voting agreements in the form attached hereto as Exhibit B;


WHEREAS, after consummation of the Merger, it is anticipated that Sandwich Bank will be merged with and into Compass Bank (the "Bank Merger");


WHEREAS, the parties desire to make certain representations, warranties and agreements in connection with the Merger and to prescribe certain conditions to the Merger;


NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements herein contained, and of other good and valuable consideration, the receipt and suffi ciency of which are hereby acknowledged, the parties hereto agree as follows:


ARTICLE I
CERTAIN DEFINITIONS


1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms have the following meanings (unless the context otherwise requires, both here and throughout this Agreement, refer ences to Articles and Sections refer to Articles and Sections of this Agreement).


"Bank Commissioner" shall mean the Commissioner of Banks of the Commonwealth of Massachusetts.


"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.


"BIF" means the Bank Insurance Fund administered by the FDIC or any successor thereto.


"Certificate" shall have the meaning set forth in Section 34 hereof.


"Code" shall mean the Internal Revenue Code of 1986, as amended.


"Compass Bank for Savings" shall mean Compass Bank, a Massachusetts- chartered savings bank and a wholly-owned subsidiary of 1855 Bancorp.


"Conversion" shall mean the conversion from mutual to stock form of the 1855 Bancorp.


"Conversion Prospectus" shall have the meaning set forth in Section 8.3.3.


"Depositors Insurance Fund" shall mean the Depositors Insurance Fund of the Mutual Savings Central Fund, Inc.


"Disclosure Schedule" shall mean a written, signed disclosure schedule delivered from the disclosing party to the other party specifically referring to the appropriate section of this Agreement and describing in reasonable detail the matters contained therein.


"Dissenting Shares" shall have the meaning set forth in Section 3.3 hereof.


"DOJ" shall mean the United States Department of Justice.


"Effective Date" shall mean the date on which the Effective Time occurs.


"Effective Time" shall mean the date and time specified pursuant to Section 2.2 hereof as the effective time of the Merger.


"Environmental Claim" means any written notice from any Governmental Entity or third party alleging potential liability (including, without limitation, potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries or penalties) arising out of, based on, or resulting from the presence, or release into the environment, of any Materials of Environmental Concern.


"Environmental Laws" means any federal, state or local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, judgment, decree, injunction or agreement with any governmental entity relating to (1) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface soil, subsurface soil, plant and animal life or any other natural resource), and/or (2) the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Materials of Environment Concern. The term Environmental Law includes without limitation (1) the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. (S)9601, et seq; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. (S)6901, et seq; the Clean Air Act, as amended, 42 U.S.C. (S)7401, et seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C. (S)1251, et seq; the Toxic Substances Control Act, as amended, 15 U.S.C. (S)9601, et seq; the Emergency Planning and Community Right to Know Act, 42 U.S.C. (S)1101, et seq; the Safe Drinking Water Act, 42 U.S.C. (S)300f, et seq; and all comparable state and local laws, and (2) any common law (including without limitation common law that may impose strict liability) that may impose liability or obligations for injuries or damages due to, or threatened


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as a result of, the presence of or exposure to any Materials of Environmental Concern.


"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.


"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.


"Exchange Agent" shall have the meaning set forth in Section 3.4.1.


"Exchange Ratio" shall have the meaning set forth in Section 3.1.1.


"FDIA" shall mean the Federal Deposit Insurance Act, as amended.


"FDIC" shall mean the Federal Deposit Insurance Corporation or any successor thereto.


"FHLB" shall mean Federal Home Loan Bank.


"FRB" means the Board of Governors of the Federal Reserve System or any successor thereto.


"Governmental Entity" shall mean any federal or state court, administrative agency or commission or other governmental authority or instrumentality.


"MBCL" shall mean the Massachusetts Business Corporation Law, as amended.


"MHPF" shall mean the Massachusetts Housing Partnership Fund.


"Massachusetts Board" shall mean the Massachusetts Board of Bank Incorporation.


"Material Adverse Effect" shall mean, with respect to the 1855 Bancorp or Sandwich, respectively, any effect that (i) is material and adverse to the financial condition, results of operations or business of 1855 Bancorp and its Subsidiaries taken as a whole or Sandwich and its Subsidiaries taken as a whole, respectively, or (ii) materially impairs the ability of either Sandwich, on the one hand, or 1855 Bancorp, on the other hand, to consummate the transactions contemplated by this Agreement; provided that "Material Adverse Effect" shall not be deemed to include the impact of (a) changes in laws and regulations particularly affecting banks, (b) changes in GAAP or regulatory accounting principles generally applicable to financial institutions and their holding companies, (c) actions and omissions of a party (or any of its Subsidiaries) taken with the prior written consent of the other party, (d) changes in interest rates, and (e) the direct effects of compliance with this Agreement on the operating performance of the parties including expenses incurred by the parties hereto in consummating the transactions contemplated by this Agreement, including without limitation the expenses associated with the termination of any of the Sandwich Employee Plans as and to the extent contemplated herein.


"Materials of Environmental Concern" means pollutants, contaminants, wastes, toxic substances, petroleum and petroleum products, and any other materials regulated under Environmental Laws.


"Merger" shall mean the merger of Merger Sub with and into Sandwich pursuant to the terms hereof.


"Merger Consideration" shall have the meaning set forth in Section 3.1 hereof.


"NASD" shall mean the National Association of Securities Dealers, Inc.


"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any successor thereto.


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"Previously Disclosed" shall mean disclosed in a Disclosure Schedule dated on or prior to the date hereof.


"Pre-Closing" shall have the meaning set forth in Section 101 hereof.


"Pre-Closing Date" shall be the date on which the Pre-Closing occurs.


"Proxy Statement-Prospectus" shall mean the proxy statement/prospectus, as amended or supplemented, to be delivered to shareholders of Sandwich in connection with the solicitation of their approval of this Agreement and the transactions contemplated hereby and the offering of the 1855 Common Stock to them as Merger Consideration.


"Rights" shall mean warrants, options, rights, convertible securities, stock appreciation rights and other arrangements or commitments which obligate an entity to issue or dispose of any of its capital stock or other ownership interests or which provide for compensation based on the equity appreciation of its capital stock.


"SAIF" means the Savings Association Insurance Fund administered by the FDIC or any successor thereto.


"SEC" shall mean the Securities and Exchange Commission.


"Sandwich Bank" shall mean Sandwich Co-operative Bank, a Massachusetts- chartered co-operative bank and a wholly-owned subsidiary of Sandwich.


"Sandwich Common Stock" shall mean the common stock, par value $1.00 per share, of Sandwich.


"Sandwich Employee Plans" shall have the meaning set forth in Section 4.14.1 hereof.


"Sandwich Financial Statements" shall mean the audited consolidated balance sheets (including related notes and schedules, if any) of Sandwich or Sandwich Bank, as the case may be, as of December 31, 1997, 1996 and 1995 and the consolidated statements of operations, changes in stockholders' equity and cash flows (including related notes and schedules, if any) of Sandwich or Sandwich Bank, as the case may be, for each of the three years ended December 31, 1997, 1996 and 1995 as filed by Sandwich or Sandwich Bank, as the case may be, in its Securities Documents.


"Sandwich Options" shall mean options to purchase shares of Sandwich Common Stock granted pursuant to the Sandwich Option Plans or as otherwise Previously Disclosed.


"Sandwich Option Plans" shall mean the following stock option plans of Sandwich, as amended and as in effect as of the date hereof: The Sandwich Bank 1986 Stock Option Plan and The Sandwich Bank 1994 Stock Option and Incentive Plan.


"Sandwich Preferred Stock" shall mean the shares of preferred stock, par value $1.00 per share, of Sandwich.


"Securities Act" shall mean the Securities Act of 1933, as amended.


"Securities Documents" shall mean all reports, offering circulars, proxy statements, registration statements and all similar documents filed, or required to be filed, pursuant to the Securities Laws.


"Securities Laws" shall mean the Securities Act; the Exchange Act; the Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940, as amended; the Trust Indenture Act of 1939, as amended, and the rules and regulations of the SEC promulgated thereunder.


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"Share Insurance Fund" shall mean the share insurance fund of the Co- operative Central Bank.


"Stock Exchange" shall mean the Nasdaq National Market.


"Subsidiary" shall have the meanings set forth in Rule 1-02 of Regulation S-X of the SEC.


"Surviving Corporation" shall have the meaning set forth in Section 2.1 hereof.


"1855 Bancorp Employee Plans" shall have the meaning set forth in Section 5.14.1 hereof.


"1855 Bancorp Financial Statements" shall mean the audited consolidated statements of financial condition (including related notes and schedules) of 1855 Bancorp as of October 31, 1997, 1996 and 1995 and the consolidated statements of operations, shareholders' equity and cash flows (including related notes and schedules, if any) of 1855 Bancorp for each of the three years ended October 31, 1997, 1996 and 1995 as set forth in 1855 Bancorp's annual report for the year ended October 31, 1997, a copy of which has been provided to Sandwich.


"1855 Common Stock" shall mean the common stock, par value to be determined, of 1855 Bancorp.


"1855 Trading Price" shall have the meaning set forth in Section 3.1.2 hereof.


Other terms used herein are defined in the preamble and elsewhere in this Agreement.
ARTICLE II


THE MERGER


2.1 THE MERGER. As promptly as practicable following the satisfaction or waiver of the conditions to the parties' respective obligations hereunder, and subject to the terms and conditions of this Agreement, at the Effective Time: (a) unless theretofore done, 1855 Bancorp shall cause Merger Sub to be organized as a wholly-owned subsidiary of 1855 Bancorp in accordance with Massa chusetts law; (b) Merger Sub shall be merged with and into Sandwich, with Sandwich as the surviving corporation (the "Surviving Corporation"); and (c) the separate existence of Merger Sub shall cease and all of the rights, privileges, powers, franchises, properties, assets, liabilities and obligations of Merger Sub shall be vested in and assumed by Sandwich.


2.2 EFFECTIVE TIME. The Merger shall be effected by the filing of Articles of Merger with the Secretary of State of The Commonwealth of Massachusetts in accordance with Massachusetts law to become effective on the day of the closing ("Closing Date") provided for in Article X hereof (the "Closing"). The term "Effective Time" shall mean the time on the Closing Date (or a subsequent date not later than the opening of business on the next business day) when the Merger becomes effective as set forth in the Articles of Merger.


2.3 CHARTER AND BY-LAWS. The Articles of Organization and By-laws of the Surviving Corporation shall be the Articles of Organization, as amended, and By- laws of Sandwich as in e ...