AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

 

AGREEMENT AND PLAN OF MERGER

DATED AS OF JUNE 25, 2009

BY AND BETWEEN

UNITED FINANCIAL BANCORP, INC.

AND

CNB FINANCIAL CORP.

 

 

TABLE OF CONTENTS

 

 

EXHIBITS

ii

 

 

Agreement and Plan of Merger

This is an Agreement and Plan of Merger , dated as of the 25 ^th day of June, 2009 (“ Agreement ”), by and between United Financial Bancorp, Inc., a Maryland corporation (“ United Financial Bancorp ”), and CNB Financial Corp. , a Massachusetts corporation (“ CNB Financial ”).

Introductory Statement

The Board of Directors of each of United Financial Bancorp and CNB Financial has determined that this Agreement and the business combination and related transactions contemplated hereby are advisable and in the best interests of United Financial Bancorp or CNB Financial, as the case may be, and in the best long-term interests of the shareholders of United Financial Bancorp or CNB Financial, as the case may be.

The parties hereto intend that the Merger as defined herein shall qualify as a reorganization under the provisions of Section 368(a) of the IRC for federal income tax purposes.

United Financial Bancorp and CNB Financial each desire to make certain representations, warranties and agreements in connection with the business combination and related transactions provided for herein and to prescribe various conditions to such transactions.

As a condition and inducement to United Financial Bancorp’s willingness to enter into this Agreement, each of the members of the Board of Directors of CNB Financial have entered into an agreement dated as of the date hereof in the form of Exhibit A pursuant to which he or she will vote his or her shares of CNB Financial Common Stock in favor of this Agreement and the transactions contemplated hereby.

In consideration of their mutual promises and obligations hereunder, the parties hereto adopt and make this Agreement and prescribe the terms and conditions hereof and the manner and basis of carrying it into effect, which shall be as follows:

ARTICLE I

Definitions

The following terms are defined in this Agreement in the Section indicated:

 

 

“ Acquisition Proposal ” means any proposal or offer with respect to any of the following (other than the transactions contemplated hereunder): (i) any merger, consolidation, share exchange, business combination, or other similar transaction involving CNB Financial or any of its Subsidiaries; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 25% or more of CNB Financial’s consolidated assets in a single transaction or series of transactions; (iii) any tender offer or exchange offer for 25% or more of the outstanding shares of CNB Financial’s capital stock or the filing of a registration statement under the Securities Act of 1933, as amended, in connection therewith; or (iv) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in an any of the foregoing.

 

 

“ Agreement ” means this Agreement, as amended, modified or amended and restated from time to time in accordance with its terms.

           “ Berkshire Hills Bancorp Agreement ” means the Agreement and Plan of Merger, by and between CNB Financial and Berkshire Hills Bancorp, Inc. dated April 29, 2009, as amended on May 21, 2009.

“BHCA” means the Bank Holding Company Act of 1956, as amended.

“ CNB Financial Common Stock ” means the common stock, par value $1.00 per share, of CNB Financial.

“ CRA ” means the Community Reinvestment Act.

“ Environmental Law ” means any federal, state or local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, directive, executive or administrative order, judgment, decree, injunction, or agreement with any Governmental Entity relating to (i) the protection, preservation or restoration of the environment (which includes, without limitation, air, water vapor, surface water, groundwater, drinking water supply, soil, surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety as it relates to Hazardous Materials, or (ii) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of, Hazardous Materials, in each case as amended and as now in effect.  The term Environmental Law includes, without limitation, the Federal   Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970 as it relates to Hazardous Materials, the Federal Hazardous Substances Transportation Act, the Emergency Planning and Community Right-To-Know Act, the Safe Drinking Water Act, the Endangered Species Act, the National Environmental Policy Act, the Rivers and   Harbors Appropriation Act or any so-called “Superfund” or “Superlien” law, each as amended and as now in effect.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” means any entity that is considered one employer with CNB Financial under Section 4001(b)(1) of ERISA or Section 414 of the IRC.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

 

“ Excluded Shares ” shall consist of (i) Dissenters’ Shares and (ii) shares held directly or indirectly by United Financial Bancorp (other than shares held in a fiduciary capacity or in satisfaction of a debt previously contracted).

“ FDIC ” means the Federal Deposit Insurance Corporation.

“FRB” means the Federal Reserve Board.

“ GAAP ” means generally accepted accounting principles.

“ Government Regulator ” means any federal or state governmental authority charged with the supervision or regulation of depository institutions or depository institution holding companies or engaged in the insurance of bank deposits.

“ Governmental Entity ” means any court, administrative agency or commission or other governmental authority or instrumentality.

“ Hazardous Material ” means any substance (whether solid, liquid or gas) which is or could be detrimental to human health or safety or to the environment, currently or hereafter listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law, whether by type or by quantity, including any substance containing any such substance as a component. Hazardous Material includes, without limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, industrial substance, oil or petroleum, or any derivative or by-product thereof, radon, radioactive material, asbestos, asbestos-containing material, urea formaldehyde foam insulation, lead and polychlorinated biphenyl.

“ HOLA ” means the Home Owners’ Loan Act, as amended.

“ IRC ” means the Internal Revenue Code of 1986, as amended.

“ knowledge ” means, with respect to a party hereto, actual knowledge of the members of the Board of Directors of that party or any officer of that party with the title ranking not less than vice president.

“ Lien ” means any charge, mortgage, pledge, security interest, claim, lien or encumbrance.

“ Loan ” means a loan, lease, advance, credit enhancement, guarantee or other extension of credit.

“ Loan Property ” means any property in which the applicable party (or a subsidiary of it) holds a security interest and, where required by the context, includes the owner or operator of such property, but only with respect to such property.

 

 

“ Material Adverse Effect ” means an effect which is material and adverse to the business, financial condition or results of operations of CNB Financial or United Financial Bancorp, as the context may dictate, and its Subsidiaries taken as a whole; provided , however , that any such effect resulting from any (i) changes in laws, rules or regulations or generally accepted accounting principles or regulatory accounting requirements or interpretations thereof that apply to both United Financial Bancorp and CNB Financial, or to financial and/or depository institutions generally, (ii) changes in economic conditions affecting financial institutions generally, including but not limited to, changes in the general level of market interest rates, (iii) actions and omissions of United Financial Bancorp or CNB Financial taken with the prior written consent of the other (iv) direct effects of compliance with this Agreement on the operating performance of the parties, including expenses incurred by the parties in consummating the transactions contemplated by this Agreement, or (v) payment incurred in connection with CNB Financial’s obligations under the Section 7.2(a) of the Agreement with Berkshire Hills Bancorp, shall not be considered in determining if a Material Adverse Effect has occurred.  With respect to CNB Financial, a Material Adverse Effect shall also be deemed to have occurred in the event that (1) the level of non-performing assets (non-accrual, past due, other non-performing assets and restructured loans, as such items are defined by Industry Guide 3 of the SEC’s Securities Act Industry Guides) shall equal or exceed $8.0 million as of the month end prior to the Closing Date or (2) CNB Financial incurs net loan charge-offs in excess of $4.0 million subsequent to December 31, 2008.

“ MBCA ” shall mean the Massachusetts Business Corporation Act, MGL Chapter 156D, Section 1, et seq.

“MGCL” means the Maryland General Corporation Law

“OCC” means the Office of the Comptroller of the Currency.

“ OTS ” means the Office of Thrift Supervision.

“ Participation Facility ” means any facility in which the applicable party (or a Subsidiary of it) participates in the management (including all property held as trustee or in any other fiduciary capacity) and, where required by the context, includes the owner or operator of such property, but only with respect to such property.

“ person ” means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization or other entity.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Subsidiary ” means a corporation, partnership, joint venture or other entity in which CNB Financial or United Financial Bancorp, as the case may be, has, directly or indirectly, an equity interest representing 50% or more of any class of the capital stock thereof or other equity interests therein.

 

 

“ Superior Proposal ” means an unsolicited, bona fide written offer made by a third party to consummate an Acquisition Proposal that (i) CNB Financial’s Board of Directors determines in good faith, after consulting with its outside legal counsel and its financial advisor, would, if consummated, result in a transaction that is more favorable to the shareholders of CNB Financial than the transactions contemplated hereby (taking into account all legal, financial, regulatory and other aspects of the proposal and the entity making the proposal), (ii) is not conditioned on obtaining financing (and with respect to which United Financial Bancorp has received written evidence of such person’s ability to fully finance its Acquisition Proposal), (iii) is for 100% of the outstanding shares of CNB Financial Common Stock and (iv) is, in the written opinion of CNB Financial’s financial advisor, more favorable to the shareholders of CNB Financial from a financial point of view than the transactions contemplated hereby (including any adjustments to the terms and conditions of such transactions proposed by United Financial Bancorp in response to such Acquisition Proposal).

“ Taxes ” means all income, franchise, gross receipts, real and personal property, real property transfer and gains, wage and employment taxes.

“United Financial Bancorp Common Stock” means the common stock, par value $0.01 per share, of United Financial Bancorp.

ARTICLE II

The Merger

2.1      The Merger .  Upon the terms and subject to the conditions set forth in this Agreement, CNB Financial will merge with and into United Financial Bancorp (the “ Merger ”) at the Effective Time.  At the Effective Time, the separate corporate existence of CNB Financial shall cease.  United Financial Bancorp shall be the surviving corporation (hereinafter sometimes referred to in such capacity as the “ Surviving Corporation ”) in the Merger and shall continue to be governed by the MGCL and its name and separate corporate existence, with all of its rights, privileges, immunities, powers and franchises, shall continue unaffected by the Merger.

2.2      Closing .  The closing of the Merger (the “ Closing ”) will take place in the offices of Locke Lord Bissell & Liddell LLP, 401 9th Street, NW, Washington, D.C., or at such other location as is agreed to by the parties hereto, at 10:00 a.m. on the date designated by United Financial Bancorp within thirty days following satisfaction or waiver of the conditions to Closing set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing), or such later date as the parties may otherwise agree (the “ Closing Date ”).

2.3      Effective Time .  In connection with the Closing, United Financial Bancorp shall duly execute and deliver articles of merger (the “ Articles of Merger ”) to the Maryland Secretary of State for filing pursuant to the MGCL and to the Massachusetts Secretary of State for filing pursuant to the MBCA.  The Merger shall become effective at such time as the Articles of Merger are duly filed with the Maryland Secretary of State and the Massachusetts Secretary of State or at such later date or time as United Financial Bancorp and CNB Financial agree and specify in the Articles of Merger (the date and time the Merger becomes effective being the “ Effective Time ”).

 

 

2.4     Effects of the Merger .  The Merger will have the effects set forth in the MBCA and the MGCL.  Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, United Financial Bancorp shall possess all of the properties, rights, privileges, powers and franchises of CNB Financial and be subject to all of the debts, liabilities and obligations of CNB Financial.

2.5    Effect on Outstanding Shares of CNB Financial Common Stock .

(a)            Subject to the  allocation  and proration  procedures  set forth in Section  2.6,  each  share of CNB Financial Common Stock outstanding  immediately  prior  to  the Effective  Time,  other than Excluded Shares shall be  converted  into the right to receive,  at the election of the holder thereof:

Thereafter,  subject  to  Sections  2.7, 2.11 and  2.12,  each  outstanding certificate  representing  shares of CNB Financial Common Stock shall represent solely the right to receive the Per Share Stock Consideration, the Per Share Cash Consideration or a combination thereof.

If United Financial Bancorp declares a change in the number of shares of United Financial Common Stock issued and  outstanding  prior to the Effective Time as a result of a stock split,  stock dividend,  recapitalization, or similar  transaction with respect to such stock, and the record date therefore (in the case of a stock  dividend) or the effective date thereof (in the case of a stock  split  or  similar  recapitalization  for  which a  record  date is not established)  shall be at or prior to the Effective Time, or announces a special extraordinary  cash  dividend  with a record  date at or prior to the  Effective Time, the Per Share Stock Consideration shall be proportionately adjusted.

(a)           An election  form in such form as  United Financial Bancorp and CNB Financial shall mutually  agree (an “Election  Form”) shall be mailed to each holder of record of CNB Financial Common Stock as of the record date for  eligibility  to vote on the Merger.  United Financial Bancorp  shall make  available  as many  Election  Forms as may be reasonably  requested  by all persons who become  holders of  CNB Financial  Shares after the  record  date for  eligibility  to vote on the Merger and prior to the Election  Deadline (as defined  herein),  and  CNB Financial  shall  provide to the Exchange Agent (as defined herein) all information  reasonably  necessary for it to perform its obligations as specified herein.

 

 

  (b)           Each Election  Form shall  entitle the holder of shares of CNB Financial Common Stock (or the beneficial  owner through  appropriate and customary  documentation  and instructions) to (i) elect to receive the Per Share Stock Consideration for all of such  holder’s  shares (a “Stock  Election”),  (ii) elect to receive  the Per Share Cash  Consideration  for all of such holder’s shares (a “Cash  Election”), (iii) elect to receive the Per Share Stock  Consideration  for a portion of such holder’s shares as specified by such holder and the Per Share Cash Consideration for the remainder of such holder ’s  shares (a “Mixed  Election”) or (iv) make no election (a  “Non-election”).  Holders of record of  shares of CNB Financial Common Stock who hold such  shares  as  nominees,  trustees  or in other  representative  capacity  (a “Representative”) may  submit  multiple  Election  Forms,  provided  that  such Representative  certifies  that each such Election Form covers all of the shares of CNB Common Stock held by that  Representative  for a particular  beneficial owner.  The  shares of CNB Financial Common Stock  as to  which a Stock  Election  has  been  made (including  pursuant  to a Mixed  Election)  are  referred  to  herein as “Stock Election  Shares” and the aggregate  number thereof is referred to herein as the “Stock Election  Number.” The shares of CNB Financial Common Stock as to which a Cash Election has been made  (including  pursuant to a Mixed  Election)  are referred to herein as “Cash  Election  Shares” and the aggregate  number thereof is referred to as the “Cash Election Number”.  Shares of CNB Financial Common Stock as to which no election has been made are referred to as “Non-election Shares.”

(c)           To be  effective,  a  properly  completed  Election  Form  must  be received by an independent agent appointed by United Financial Bancorp (the “Exchange Agent”) on or  before  4:00  p.m.,  Eastern  Time on the  third  business  day  immediately preceding  CNB Financial’s  stockholders’ meeting to consider the Merger or on such other date or time as the Parties may mutually agree (the “Election  Deadline”).  An 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 CNB Financial Common Stock covered by such  Election  Form,  or the  guaranteed  delivery  of  such  certificates  (or customary affidavits and, if required by United Financial Bancorp, indemnification regarding the loss  or  destruction  of  such  certificates), together with duly completed transmittal materials.  Any CNB Financial stockholder may at any time prior to the Election  Deadline  change his or her election by written notice received by the Exchange  Agent  prior  to  the  Election  Deadline  accompanied  by a  properly completed and signed revised  Election Form.  Any CNB Financial stockholder may, at any time prior to the Election  Deadline,  revoke his or her election by written notice  received  by the  Exchange  Agent prior to the  Election  Deadline or by withdrawal prior to the Election Deadline of his or her certificates, or of the guarantee  of  delivery of such  certificates.  All  elections  shall be revoked automatically if the exchange agent is notified in writing by either Party that this Agreement has been terminated.  If a stockholder either (i) does not submit a properly  completed Election Form by the Election Deadline or (ii) revokes its Election Form prior to the Election  Deadline but does not submit a new properly executed Election Form prior to the Election Deadline,  the shares of Shares of CNB Financial Common Stock held by such  stockholder  shall be  designated as  Non-election  Shares.  Subject to the terms of this Agreement and the Election Form, the Exchange Agent shall have reasonable  discretion to determine whether any election,  revocation or change has been properly made and to  disregard  immaterial  defects  in any  Election  Form,  and any good  faith decisions  of the Exchange  Agent  regarding  such matters  shall be binding and conclusive.

 

 

(d)           The number of shares of CNB Financial Common Stock to be converted  into the right to receive the Per Share Cash Consideration  shall be equal to 50% of the number of Shares of CNB Financial Common Stock  outstanding  immediately prior to the Effective Time less the number of  Dissenting  Shares  (the  “Aggregate  Cash  Limit”) and the number of CNB Financial  Shares to be converted into the right to receive the Per Share Stock Consideration  shall  be  equal  to 50%  of  the  number  of  CNB Financial  Shares outstanding  immediately  prior to the  Effective  Time  (the  “Aggregate  Stock Limit”).

(e)           Within five  business days after the later to occur of the Election Deadline or the  Effective  Time,  United Financial Bancorp  shall cause the  Exchange  Agent to effect the  allocation  among holders of CNB Financial  Shares of rights to receive the Per Share Stock  Consideration  or the Per Share Cash  Consideration  and to distribute such as follows:

 

 

(f)           Notwithstanding any other provision of this Agreement, no fraction of a share of United Financial Bancorp Common Stock and no certificates or scrip therefor will be issued in the Merger; instead, United Financial Bancorp shall pay to each holder of CNB Financial Common Stock who would otherwise be entitled to a fraction of a share of United Financial Bancorp Common Stock an amount in cash, rounded to the nearest cent, determined by multiplying such fraction by the Per Share Cash Consideration.

(g)           As of the Effective Time, each Excluded Share, other than Dissenters’ Shares, shall be canceled and retired and shall cease to exist, and no exchange or payment shall be made with respect thereto.  All shares of United Financial Bancorp Common Stock that are held by CNB Financial, if any, other than shares held in a fiduciary capacity or in satisfaction of a debt previously contracted, shall be canceled and shall constitute authorized but unissued shares. In addition, no Dissenters’ Shares shall be converted into shares of United Financial Bancorp Common Stock pursuant to this Section 2.6 but instead shall be treated in accordance with the provisions set forth in Section 2.12 of this Agreement.

 

2.7     Exchange Procedures .

(a)           As promptly as practicable after the Effective  Time, the Exchange Agent  shall  send or cause to be sent to each  former  holder  of  record of  CNB Financial Common Stock who did not previously  submit a properly  completed  Election  Form (other than holders of Dissenting  Shares), appropriate transmittal materials (“ Letter of Transmittal ”) in a form satisfactory to United Financial Bancorp and CNB Financial.  A Letter of Transmittal will be deemed properly completed only if accompanied by certificates representing all shares of CNB Financial Common Stock (“ Certificate(s) ”)   to be converted thereby.

(b)           At and after the Effective Time, each Certificate (except as specifically set forth in Section 2.5 ) shall represent only the right to receive the Per Share Stock Consideration or the Per Share Cash Consideration or a combination thereof (hereinafter referred to as the “Merger Consideration”) in accordance with this Agreement.

(c)           Prior to the Effective Time, United Financial Bancorp shall (i) reserve for issuance with its transfer agent and registrar a sufficient number of shares of United Financial Bancorp Common Stock to provide for payment of the Aggregate Stock Limit and (ii) deposit, or cause to be deposited, with Registrar and Transfer Company (the “ Exchange Agent ”), for the benefit of the holders of shares of CNB Financial Common Stock, for exchange in accordance with this Section 2.6 , an amount of cash sufficient to the Aggregate Cash Limit and any cash in lieu of fractional shares pursuant to Section 2.6(f) .

 

 

(d)           The Letter of Transmittal shall (i) 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, (ii) be in a form and contain any other provisions as United Financial Bancorp may reasonably determine and (iii) include instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration.  Upon the proper surrender of the Certificates to the Exchange Agent, together with a properly completed and duly executed Letter of Transmittal, the holder of such Certificates shall be entitled to receive in exchange therefor a certificate representing that number of whole shares of United Financial Bancorp Common Stock and/or a check in the aggregate amount representing the amount of cash that such holder has the right to receive pursuant to Section 2.6 , cash in lieu of fractional shares, if any, that such holder has the right to receive pursuant to Section 2.6(f) , and any dividends or other distributions to which such holder is entitled pursuant to Section 2.7(e) .  Certificates so surrendered shall forthwith be canceled.  As soon as practicable following receipt of the properly completed Letter of Transmittal and any necessary accompanying documentation, the Exchange Agent shall distribute United Financial Bancorp Common Stock and cash as provided herein.  The Exchange Agent shall not be entitled to vote or exercise any rights of ownership with respect to the shares of United Financial Bancorp Common Stock held by it from time to time hereunder, except that it shall receive and hold all dividends or other distributions paid or distributed with respect to such shares for the account of the persons entitled thereto.  If there is a transfer of ownership of any shares of CNB Financial Common Stock not registered in the transfer records of CNB Financial, the Merger Consideration shall be issued to the transferee thereof if the Certificates representing such CNB Financial Common Stock are presented to the Exchange Agent, accompanied by all documents required, in the reasonable judgment of United Financial Bancorp and the Exchange Agent, to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid.

(e)           No dividends or other distributions declared or made after the Effective Time with respect to United Financial Bancorp Common Stock issued pursuant to this Agreement shall be remitted to any person entitled to receive shares of United Financial Bancorp Common Stock hereunder until such person surrenders his or her Certificates in accordance with this Section 2.7 .  Upon the surrender of such person’s Certificates, such person shall be entitled to receive any dividends or other distributions, without interest thereon, which subsequent to the Effective Time had become payable but not paid with respect to shares of United Financial Bancorp Common Stock represented by such person’s Certificates.

(f)           The stock transfer books of CNB Financial shall be closed immediately upon the Effective Time and from and after the Effective Time there shall be no transfers on the stock transfer records of CNB Financial of any shares of CNB Financial Common Stock.  If, after the Effective Time, Certificates are presented to United Financial Bancorp, they shall be canceled and exchanged for the Per Share Stock Consideration or Per Share Cash Consideration deliverable in respect thereof pursuant to this Agreement in accordance with the procedures set forth in this Section 2.7 .

 

 

(g)           Any portion of the aggregate amount of cash to be paid pursuant to Section 2.6 , any dividends or other distributions to be paid pursuant to this Section 2.7 or any proceeds from any investments thereof that remains unclaimed by the shareholders of CNB Financial for six months after the Effective Time shall be repaid by the Exchange Agent to United Financial Bancorp upon the written request of United Financial Bancorp.  After such request is made, any shareholders of CNB Financial who have not theretofore complied with this Section 2.7 shall look only to United Financial Bancorp for the Merger Consideration and cash in lieu of fractional shares, if any, deliverable in respect of each share of CNB Financial Common Stock such shareholder holds, as determined pursuant to Section 2.6 of this Agreement, without any interest thereon.  If outstanding Certificates are not surrendered prior to the date on which such payments would otherwise escheat to or become the property of any governmental unit or agency, the unclaimed items shall, to the extent permitted by any abandoned property, escheat or other applicable laws, become the property of United Financial Bancorp (and, to the extent not in its possession, shall be paid over to it), free and clear of all claims or interest of any person previously entitled to such claims.  Notwithstanding the foregoing, neither the Exchange Agent nor any party to this Agreement (or any affiliate thereof) shall be liable to any former holder of CNB Financial Common Stock for any amount delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.

(h)           United Financial Bancorp and the Exchange Agent shall be entitled to rely upon CNB Financial’s stock transfer books to establish the identity of those persons entitled to receive the Merger Consideration, which books shall be conclusive with respect thereto.  In the event of a dispute with respect to ownership of stock represented by any Certificate, United Financial Bancorp and the Exchange Agent shall be entitled to deposit any Merger Consideration and cash in lieu of fractional shares, if any, represented thereby in escrow with an independent third party and thereafter be relieved with respect to any claims thereto.

(i)           If 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 the Exchange Agent or United Financial Bancorp, the posting by such person of a bond in such amount as the Exchange Agent 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 Merger Consideration and cash in lieu of fractional shares, if any, deliverable in respect thereof pursuant to Section 2.6 .

 

2.8      Effect on Outstanding Shares of United Financial Bancorp Common Stock.   At the Effective Time, each share of common stock of United Financial Bancorp issued and outstanding immediately prior to the Effective Time shall remain an issued and outstanding share of common stock of the Surviving Corporation and shall not be affected by the Merger.

2.9      Directors of Surviving Corporation After Effective Time .  Subject to Section 5.14 , immediately after the Effective Time, until their respective successors are duly elected or appointed and qualified, the directors of the Surviving Corporation shall consist of the directors of United Financial Bancorp serving immediately prior to the Effective Time.

 

 

2.10        Certificate of Incorporation and Bylaws .  The certificate of incorporation of United Financial Bancorp, as in effect immediately prior to the Effective Time, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with applicable law.  The bylaws of United Financial Bancorp, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with applicable law.

2.11        Treatment of Stock Options and Warrants .

(a)           Each option to purchase shares of CNB Financial Common Stock issued by CNB Financial and outstanding at the Effective Time pursuant to the CNB Financial Amended and Restated Stock Option Plan (formerly, the Commonwealth National Bank 2001 Stock Option Plan) or the CNB Financial Corp. 2008 Equity Incentive Plan (each, a “ CNB Financial Option ”) whose exercise price is less than $10.75 shall be cancelled, effective immediately prior to the Effective Time, and shall be converted into cash in an amount equal to $10.75 minus the exercise price of such option.

(b)           Each CNB Financial Option whose exercise price is equal to or greater than $10.75 shall be converted into an option to purchase shares of United Financial Bancorp Common Stock as follows:

(i)          The aggregate number of shares of United Financial Bancorp Common Stock issuable upon the exercise of the converted CNB Financial Option after the Effective Time shall be equal to the product of 0.8257 (the “Option Exchange Ratio”) multiplied by the number of shares of CNB Financial Common Stock issuable upon exercise of the CNB Financial Option immediately prior to the Effective Time, such product to be rounded to the nearest whole share of United Financial Common Stock; and

(ii)          the exercise price per share of each converted CNB Financial Option shall be equal to the quotient of the exercise price of such CNB Financial Option immediately prior to the Effective Time divided by the Option Exchange Ratio, such quotient to be rounded to the nearest whole cent; provided, however, that, in the case of any CNB Financial Option that is intended to qualify as an incentive stock option under Section 422 of the IRC, the number of shares of United Financial Bancorp Common Stock issuable upon exercise of and the exercise price per share for such converted CNB Financial Option determined in the manner provided above shall be further adjusted in such manner as may be necessary to conform to the requirements of Section 424(b) of the IRC.

Options to purchase shares of United Financial Bancorp Common Stock that arise from the operation of this Section 2.11 shall be referred to as “ Converted Options .”  All Converted Options shall be exercisable for the same period and shall otherwise have the same terms and conditions applicable to the CNB Financial Options that they replace.

(c)           Before the Effective Time, United Financial Bancorp will take all corporate action necessary to reserve for future issuance a sufficient additional number of shares of United Financial Bancorp Common Stock to provide for the satisfaction of its obligations with respect to the Converted Options.  United Financial Bancorp agrees to file, as soon as practicable after the Effective Time, a registration statement on Form S-8 (or any successor or other appropriate form) and make any state filings or obtain state exemptions with respect to the United Financial Bancorp Common Stock issuable upon exercise of the Converted Options.

 

 

(d)          Each member of the board of directors of CNB Financial or a CNB Financial Subsidiary who holds outstanding warrants issued by Commonwealth National Bank on November 19, 2001 (each a “ CNB Financial Warrant ”) shall agree to the cancellation of such CNB Financial Warrant, effective immediately prior to the Effective Time, and shall receive cash equal to the product of $10.75 minus the exercise price times the number of warrants held by such director.  All other CNB Financial Warrants shall be converted to warrants to purchase shares of United Financial Bancorp Common Stock on the same basis as CNB Financial Options are so converted under Section 2.11(a) above.

2.12      Dissenters’ Rights .  Notwithstanding any other provision of this Agreement to the contrary, shares of CNB Financial Common Stock that are outstanding immediately prior to the Effective Time and which are held by shareholders who shall have not voted in favor of the Merger or consented thereto in writing and who properly shall have demanded payment of the fair value for such shares in accordance with the MBCA (collectively, the “ Dissenters’ Shares ”) shall not be converted into or represent the right to receive the Merger Consideration. Such shareholders instead shall be entitled to receive payment of the fair value of such shares held by them in accordance with the provisions of the MBCA, except that all Dissenters’ Shares held by shareholders who shall have failed to perfect or who effectively shall have withdrawn or otherwise lost their rights as dissenting shareholders under the MBCA shall thereupon be deemed to have been converted into and to have become exchangeable, as of the Effective Time, for the right to receive, without any interest thereon, the Merger Consideration upon surrender in the manner provided in Section 2.7 of the Certificate(s) that, immediately prior to the Effective Time, evidenced such shares. CNB Financial shall give United Financial Bancorp (i) prompt notice of any written demands for payment of fair value of any shares of CNB Financial Common Stock, attempted withdrawals of such demands and any other instruments served pursuant to the MBCA and received by CNBFinancial relating to shareholders’ dissenters’ rights and (ii) the opportunity to participate in all negotiations and proceedings with respect to demands under the MBCA consistent with the obligations of CNB Financial thereunder.  CNB Financial shall not, except with the prior written consent of United Financial Bancorp, (x) make any payment with respect to such demand, (y) offer to settle or settle any demand for payment of fair value or (z) waive any failure to timely deliver a written demand for payment of fair value or timely take any other action to perfect payment of fair value rights in accordance with the MBCA.

2.13      Bank Merger .  Concurrently with or as soon as practicable after the execution and delivery of this Agreement, United Bank, a wholly owned subsidiary of United Financial Bancorp, and Commonwealth National Bank (“ Commonwealth National Bank ”), a wholly owned subsidiary of CNB Financial, shall enter into the Plan of Bank Merger, in the form attached hereto as Exhibit B , pursuant to which Commonwealth National Bank will merge with and into United Bank (the “ Bank Merger ”).  The parties intend that the Bank Merger will become effective simultaneously with or immediately following the Effective Time.

 

 

2.14          Alternative Structure .  Notwithstanding anything to the contrary contained in this Agreement, prior to the Effective Time, United Financial Bancorp may specify that the structure of the transactions contemplated by this Agreement, including whether or not to consummate the Bank Merger, be revised and the parties shall enter into such alternative transactions as United Financial Bancorp may reasonably determine to effect the purposes of this Agreement; provided, however, that such revised structure shall not (i) alter or change the amount or kind of the Merger Consideration or (ii) materially impede or delay the receipt of any regulatory approval referred to in, or the consummation of the transactions contemplated by, this Agreement.  In the event that United Financial Bancorp elects to make such a revision, the parties agree to execute appropriate documents to reflect the revised structure.

2.15         Absence of Control .  Subject to any specific provisions of this Agreement, it is the intent of the parties hereto that United Financial Bancorp by reason of this Agreement shall not be deemed (until consummation of the transactions contemplated hereby) to control, directly or indirectly, CNB Financial or to exercise, directly or indirectly, a controlling influence over the management or policies of CNB Financial.

ARTICLE III

Representations and Warranties

3.1     Disclosure Letters .  Prior to the execution and delivery of this Agreement, United Financial Bancorp and CNB Financial have each delivered to the other a letter (each, its “ Disclosure Letter ”) setting forth, among other things, facts, circumstances and events the disclosure of which is required or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more of their respective representations and warranties (and making specific reference to the Section of this Agreement to which they relate).

3.2    Representations and Warranties of CNB Financial .  CNB Financial represents and warrants to United Financial Bancorp that, except as disclosed in CNB Financial’s Disclosure Letter:

(a)            Organization and Qualification .  CNB Financial is a corporation duly organized and validly existing under the laws of the Commonwealth of Massachusetts and is registered with the FRB as a bank holding company.  CNB Financial has all requisite corporate power and authority to own, lease and operate its properties and to conduct the business currently being conducted by it. CNB Financial is duly qualified or licensed as a foreign corporation to transact business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing would not have a Material Adverse Effect on CNB Financial.  CNB Financial engages only in activities (and holds properties only of the types) permitted to bank holding companies by the BHCA and the rules and regulations of the FRB promulgated thereunder.

 

 

(b)            Subsidiaries .

(i)           CNB Financial’s Disclosure Letter sets forth with respect to each of CNB Financial’s Subsidiaries its name, its jurisdiction of incorporation, CNB Financial’s percentage ownership, the number of shares of stock owned or controlled by CNB Financial and the name and number of shares held by any other person who owns any stock of the Subsidiary. CNB Financial owns of record and beneficially all the capital stock of each of its Subsidiaries free and clear of any Liens. There are no contracts, commitments, agreements or understandings relating to CNB Financial’s right to vote or dispose of any equity securities of its Subsidiaries.  CNB Financial’s ownership interest in each of its Subsidiaries is in compliance with all applicable laws, rules and regulations relating to equity investments by bank holding companies or national banking associations.

(ii)           Each of CNB Financial’s Subsidiaries is a corporation duly organized and validly existing under the laws of its jurisdiction of incorporation, has all requisite corporate power and authority to own, lease and operate its properties and to conduct the business currently being conducted by it and is duly qualified or licensed as a foreign corporation to transact business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing would not have a Material Adverse Effect on such Subsidiary.

(iii)           The outstanding shares of capital stock of each Subsidiary have been validly authorized and are validly issued, fully paid and nonassessable.  No shares of capital stock of any Subsidiary of CNB Financial are or may be required to be issued by virtue of any options, warrants or other rights, no securities exist that are convertible into or exchangeable for shares of such capital stock or any other debt or equity security of any Subsidiary, and there are no contracts, commitments, agreements or understandings of any kind for the issuance of additional shares of capital stock or other debt or equity security of any Subsidiary or options, warrants or other rights with respect to such securities.

(iv)           No Subsidiary of CNB Financial other than Commonwealth National Bank is an “insured depository institution” as defined in the Federal Deposit Insurance Act, as amended, and the applicable regulations thereunder.  Commonwealth National Bank’s deposits are insured by the FDIC to the fullest extent permitted by law.  Commonwealth National Bank is a member in good standing of the Federal Home Loan Bank of Boston.  Commonwealth National Bank engages only in activities (and holds properties only of the types) permitted by the National Bank Act and the rules and regulations of the OCC promulgated thereunder.

 

 

(c)            Capital Structure .

(i)           The authorized capital stock of CNB Financial consists of: (A) 10,000,000 shares of CNB Financial Common Stock; and (B) 1,000,000 shares of preferred stock, par value $1.00 per share .

(ii)           As of the date of this Agreement: (A) 2,283,208 shares of CNB Financial Common Stock are issued and outstanding, all of which are validly issued, fully paid and nonassessable and were issued in full compliance with all applicable federal and state securities laws; (B) no shares of CNB Financial preferred stock are issued and outstanding; (C) 356,895 shares of CNB Financial Common Stock are reserved for issuance pursuant to outstanding CNB Financial Options; and (D) 92,500 shares of CNB Financial Common Stock are reserved for issuance pursuant to outstanding CNB Financial Warrants.

(iii)           Set forth in CNB Financial’s Disclosure Letter is a complete and accurate list of all outstanding CNB Financial Options and CNB Financial Warrants, including the names of the optionees and warrant holders, dates of grant, exercise prices, dates of vesting, dates of termination, shares subject to each grant and whether stock appreciation, limited or other similar rights were granted in connection with such options or warrants.

(iv)           No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which shareholders of CNB Financial may vote are issued or outstanding.

(v)           Except as set forth in this Section 3.2(c) , as of the date of this Agreement, (A) no shares of capital stock or other voting securities of CNB Financial are issued, reserved for issuance or outstanding and (B) neither CNB Financial nor any of its Subsidiaries has or is bound by any outstanding subscriptions, options, warrants, calls, rights, convertible securities, commitments or agreements of any character obligating CNB Financial or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, any additional shares of capital stock of CNB Financial or obligating CNB Financial or any of its Subsidiaries to grant, extend or enter into any such option, warrant, call, right, convertible security, commitment or agreement.  As of the date hereof, there are no outstanding contractual obligations of CNB Financial or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of CNB Financial or any of its Subsidiaries.

(d)            Authority .  CNB Financial has all requisite corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement.  The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate actions on the part of CNB Financial’s Board of Directors, and no other corporate proceedings on the part of CNB Financial are necessary to authorize this Agreement or to consummate the transactions contemplated by this Agreement other than the approval and adoption of this Agreement by the affirmative vote of the holders of two thirds of the outstanding shares of CNB Financial Common Stock.  This Agreement has been duly and validly executed and delivered by CNB Financial and constitutes a valid and binding obligation of CNB Financial, enforceable against CNB Financial in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights and remedies generally and to general principles of equity, whether applied in a court of law or a court of equity.

 

 

(e)            No Violations .  The execution, delivery and performance of this Agreement by CNB Financial do not, and the consummation of the transactions contemplated by this Agreement will not, (i) assuming all required governmental approvals have been obtained and the applicable waiting periods have expired, violate any law, rule or regulation or any judgment, decree, order, governmental permit or license to which CNB Financial or any of its Subsidiaries (or any of their respective properties) is subject, (ii) violate the articles of organization or bylaws of CNB Financial or the similar organizational documents of any of its Subsidiaries or (iii) constitute a breach or violation of, or a default under (or an event which, with due notice or lapse of time or both, would constitute a default under), or result in the termination of, accelerate the performance required by, or result in the creation of any Lien upon any of the properties or assets of CNB Financial or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, indenture, deed of trust, loan agreement or other agreement, instrument or obligation to which CNB Financial or any of its Subsidiaries is a party, or to which any of their respective properties or assets may be subject except, in the case of (iii), for any such breaches, violations or defaults that would not, individually or in the aggregate, have a Material Adverse Effect on CNB Financial.

(f)            Consents and Approvals.   No con­sents or approvals of, or filings or registra­tions with, any Governmental Entity or any third party arerequired to be made or obtained in connection with the execution and delivery by CNB Financial of this Agreement or the consummation by CNB Financial of the Merger and the other transactions contemplated by this Agreement, including the Bank Merger, except for filings of applications and notices with, receipt of approvals or nonobjections from, and expiration of the related waiting period required by, federal and state banking authorities.  As of the date hereof, CNB Financial has no knowledge of any reason pertaining to CNB Financial why any of the approvals referred to in this Section 3.2(f) should not be obtained without the imposition of any material condition or restriction described in Section 6.1(b) .

(g)            Securities Filings .  CNB Financial has filed with the SEC all reports, schedules, registration statements, definitive proxy statements and other documents that it has been required to file under the Securities Act or the Exchange Act since December 31, 2005 (collectively, “ CNB Financial’s SEC Reports ”).   None of CNB Financial’s SEC Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading.  As of their respective dates, all of CNB Financial’s SEC Reports complied in all material respects with the applicable requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder.  Each of the financial statements (including, in each case, any notes thereto) of CNB Financial included in CNB Financial’s SEC Reports complied as to form, as of their respective dates of filing with the SEC, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto.

 

 

(h)            Financial Statements .  CNB Financial’s Disclosure Letter contains copies of (i) the consolidated balance sheets of CNB Financial and its Subsidiaries as of December 31, 2008 and 2007 and related consolidated statements of operations, stockholders’ equity and cash flows for each of the years in the two-year period ended December 31, 2008, together with the notes thereto, accompanied by the audit report of CNB Financial’s independent public auditors, (ii) the unaudited consolidated balance sheet of CNB Financial and its Subsidiaries as of March 31, 2009 and the related consolidated statements of operations and changes in stockholders’ equity for the three months ended March 31, 2009, and (iii) the consolidated report of condition and income filed with the FDIC by Commonwealth National Bank for the period ended March 31, 2009.  Such financial statements were prepared from the books and records of CNB Financial and its Subsidiaries, fairly present the consolidated financial position of CNB Financial and its Subsidiaries in each case at and as of the dates indicated and the consolidated results of operations, retained earnings and cash flows of CNB Financial and its Subsidiaries for the periods indicated, and, except as otherwise set forth in the notes thereto, were prepared in accordance with GAAP consistently applied throughout the periods covered thereby; provided , however , that the unaudited financial statements for interim periods are subject to normal year-end adjustments (which will not be material individually or in the aggregate) and lack a statement of cash-flows and footnotes.  The books and records of CNB Financial and its Subsidiaries have been, and are being, maintained in all respects in accordance with GAAP and any other legal and accounting requirements and reflect only actual transactions.

(i)            Undisclosed Liabilities .  Neither CNB Financial nor any of its Subsidiaries has incurred any material debt, liability or obligation of any nature whatsoever (whether accrued, contingent, absolute or otherwise and whether due or to become due) other than liabilities reflected on or reserved against in the consolidated financial statements of CNB Financial as of December 31, 2008, except for (i) liabilities incurred since December 31, 2008 in the ordinary course of business consistent with past practice that, either alone or when combined with all similar liabilities, have not had, and would not reasonably be expected to have, a Material Adverse Effect on CNB Financial and (ii) liabilities incurred for legal, accounting, financial advising fees and out-of-pocket expenses in connection with the transactions contemplated by this Agreement.

(j)            Absence of Certain Changes or Events .  Since December 31, 2008:

(i)           CNB Financial and its Subsidiaries have conducted their respective businesses only in the ordinary and usual course of such businesses consistent with their past practices;

(ii)           there has not been any event or occurrence that has had, or is reasonably expected to have, a Material Adverse Effect on CNB Financial;

 

 

(iii)           CNB Financial has not declared, paid or set aside any dividends or distributions with respect to the CNB Financial Common Stock;

(iv)           except for supplies or equipment purchased in the ordinary course of business, neither CNB Financial nor any of its Subsidiaries have made any capital expenditures exceeding individually or in the aggregate $20,000;

(v)           there has not been any write-down or specific reserve established by Commonwealth National Bank in excess of $25,000 with respect to any of its Loans or other real estate owned;

(vi)           there has not been any sale, assignment or transfer of any assets by CNB Financial or any of its Subsidiaries in excess of $20,000 other than in the ordinary course of business or pursuant to a contract or agreement disclosed in CNB Financial’s Disclosure Letter;

(vii)           there has been no increase in the salary, compensation, pension or other benefits payable or to become payable by CNB Financial or any of its Subsidiaries to any of their respective directors, officers or employees, other than in conformity with the policies and practices of such entity in the usual and ordinary course of its business;

(viii)         neither CNB Financial nor any of its Subsidiaries has paid or made any accrual or arrangement for payment of bonuses or special compensation of any kind or any severance or termination pay to any of their directors, officers or employees; and

(ix)            there has been no change in any accounting principles, practices or methods of CNB Financial or any of its Subsidiaries other than as required by GAAP.

(k)            Litigation.   Other than for matters incidental to the business of CNB Financial, which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on CNB Financial, there are no suits, actions or legal, administrative or arbitration proceedings pending or, to the knowledge of CNB Financial, threatened against or affecting CNB Financial or any of its Subsidiaries or any property or asset of CNB Financial or any of its Subsidiaries.  To the knowledge of CNB Financial, there are no investigations, reviews or inquiries by any court or Governmental Entity pending or threatened against CNB Financial or any of its Subsidiaries.  There are no judgments, decrees, injunctions, orders or rulings of any Governmental Entity or arbitrator outstanding against CNB Financial or any of its Subsidiaries that have not been satisfied or that enjoin CNB Financial or any of its Subsidiaries from taking any action.

(l)            Absence of Regulatory Actions .  Since December 31, 2005, neither CNB Financial nor any of its Subsidiaries has been a party to any cease and desist order, written agreement or memorandum of understanding with, or any commitment letter or similar undertaking to, or has been subject to any action, proceeding, order or directive by any Government Regulator, or has adopted any board resolutions at the request of any Government Regulator, or has been advised by any Government Regulator that it is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such action, proceeding, order, directive, written agreement, memorandum of understanding, commitment letter, board resolutions or similar undertaking.  There are no unresolved violations, criticisms or exceptions by any Government Regulator with respect to any report or statement relating to any examinations of CNB Financial or its Subsidiaries.

 

 

(m)            Compliance with Laws .  CNB Financial and each of its Subsidiaries conducts its business in compliance in all material respects with all statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable to it.  CNB Financial and each of its Subsidiaries has all permits, licenses, certificates of authority, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Entities that are required in order to permit it to carry on its business as it is presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect, and no suspension or cancellation of any of them is threatened.  Neither CNB Financial nor any of its Subsidiaries has been given notice or been charged with any violation of, any law, ordinance, regulation, order, writ, rule, decree or condition to approval of any Governmental Entity which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on CNB Financial.

(n)            Taxes .  All federal, state, local and foreign Tax returns required to be filed by or on behalf of CNB Financial or any of its Subsidiaries have been timely filed or requests for extensions have been timely filed and any such extension shall have been granted and not have expired, and all such filed returns are complete and accurate in all material respects.  All Taxes shown on such returns, all Taxes required to be shown on returns for which extensions have been granted and all other taxes required to be paid by CNB Financial or any of its Subsidiaries have been paid in full or adequate provision has been made for any such Taxes on CNB Financial’s balance sheet (in accordance with GAAP).  There is no audit examination, deficiency assessment, tax investigation or refund litigation with respect to any Taxes of CNB Financial or any of its Subsidiaries, and no claim has been made in writing by any authority in a jurisdiction where CNB Financial or any of its Subsidiaries do not file Tax returns that CNB Financial or any such Subsidiary is subject to taxation in that jurisdiction.  All Taxes, interest, additions and penalties due with respect to completed and settled examinations or concluded litigation relating to CNB Financial or any of its Subsidiaries have been paid in full or adequate provision has been made for any such Taxes on CNB Financial’s balance sheet (in accordance with GAAP).  CNB Financial and its Subsidiaries have not executed an extension or waiver of any statute of limitations on the assessment or collection of any Tax due that is currently in effect.  CNB Financial and each of its Subsidiaries has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party, and CNB Financial and each of its Subsidiaries has timely complied with all applicable information reporting requirements under Part III, Subchapter A of Chapter 61 of the IRC and similar applicable state and local information reporting requirements.  Neither CNB Financial nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted or would result, individually or in the aggregate, in connection with this Agreement in the payment of any “excess parachute payments” within the meaning of Section 280G of the IRC.

 

 

(o)            Agreements .

(i)           CNB Financial’s Disclosure Letter lists, and CNB Financial has previously delivered or made available to United Financial Bancorp a complete and correct copy of, any contract, arrangement, commitment or understanding (whether written or oral) to which CNB Financial or any of its Subsidiaries is a party or is bound:

(A)           with any executive officer or other key employee of CNB Financial or any of its Subsidiaries the benefits of which are contingent, or the terms of which are materially altered, upon the occurrence of a transaction involving CNB Financial or any of its Subsidiaries of the nature contemplated by this Agreement;

(B)           with respect to the employment of any directors, officers, employees or consultants;

(C)           any of the benefits of which will be increased, or the vesting or payment of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement, or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement (including any stock option plan, phantom stock or stock appreciation rights plan, restricted stock plan or stock purchase plan);

(D)           containing covenants that limit the ability of CNB Financial or any of its Subsidiaries to compete in any line of business or with any person, or that involve any restriction on the geographic area in which, or method by which, CNB Financial (including any successor thereof) or any of its Subsidiaries may carry on its business (other than as may be required by law or any regulatory agency);

(E)           pursuant to which CNB Financial or any of its Subsidiaries may become obligated to invest in or contribute capital to any entity;

(F)           that relates to borrowings of money (or guarantees thereof) by CNB Financial or any of its Subsidiaries in excess of $50,000, other than advances from the Federal Home Loan Bank of Boston or securities sold under agreements to repurchase with a maturity of thirty-one days or less and entered into in the ordinary course of business; or

(G)           which is a lease or license with respect to any property, real or personal, whether as landlord, tenant, licensor or licensee, involving a liability or obligation as obligor in excess of $25,000 on an annual basis.

(ii)           Neither CNB Financial nor any of its Subsidiaries is in default under (and no event has occurred which, with due notice or lapse of time or both, would constitute a default under) or is in violation of any provision of any note, bond, indenture, mortgage, deed of trust, loan agreement, lease or other agreement to which it is a party or by which it is bound or to which any of its respective properties or assets is subject and, to the knowledge of CNB Financial, no other party to any such agreement (excluding any loan or extension of credit made by CNB Financial or any of its Subsidiaries) is in default in any respect thereunder, except for such defaults or violations that would not, individually or in the aggregate, have a Material Adverse Effect on CNB Financial.

 

 

(p)            Intellectual Property .  CNB Financial and each of its Subsidiaries owns or possesses valid and binding licenses and other rights to use without payment all patents, copyrights, trade secrets, trade names, service marks and trademarks material to its business. CNB Financial’s Disclosure Letter sets forth a complete and correct list of all material trademarks, trade names, service marks and copyrights owned by or licensed to CNB Financial or any of its Subsidiaries for use in its business, and all licenses and other agreements relating thereto and all agreements relating to third party intellectual property that CNB Financial or any of its Subsidiaries is licensed or authorized to use in its business, including without limitation any software licenses (collectively, the “ Intellectual Property ”).  With respect to each item of Intellectual Property owned by CNB Financial or any of its Subsidiaries, the owner possesses all right, title and interest in and to the item, free and clear of any Lien.  With respect to each item of Intellectual Property that CNB Financial or any of its Subsidiaries is licensed or authorized to use, the license, sublicense or agreement covering such item is legal, valid, binding, enforceable and in full force and effect.  Neither CNB Financial nor any of its Subsidiaries has received any charge, complaint, claim, demand or notice alleging any interference, infringement, misappropriation or violation with or of any intellectual property rights of a third party (including any claims that CNB Financial or any of its Subsidiaries must license or refrain from using any intellectual property rights of a third party).  To the knowledge of CNB Financial, neither CNB Financial nor any of its Subsidiaries has interfered with, infringed upon, misappropriated or otherwise come into conflict with any intellectual property rights of third parties and no third party has interfered with, infringed upon, misappropriated or otherwise come into conflict with any intellectual property rights of CNB Financial or any of its Subsidiaries.

(q)            Labor Matters .  CNB Financial and its Subsidiaries are in material compliance with all applicable laws respecting employment, retention of independent contractors, employment practices, terms and conditions of employment, and wages and hours.  Neither CNB Financial nor any of its Subsidiaries is or has ever been a party to, or is or has ever been bound by, any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization with respect to its employees, nor is CNB Financial or any of its Subsidiaries the subject of any proceeding asserting that it has committed an unfair labor practice or seeking to compel it or any such Subsidiary to bargain with any labor organization as to wages and conditions of employment nor has any such proceeding been threatened, nor is there any strike, other labor dispute or organizational effort involving CNB Financial or any of its Subsidiaries pending or, to the knowledge of CNB Financial, threatened. Ÿ

 

 

(r)            Employee Benefit Plans .

(i)           CNB Financial’s Disclosure Letter contains a complete and accurate list of all pension, retirement, stock option, stock purchase, stock ownership, savings, stock appreciation right, profit sharing, deferred compensation, consulting, bonus, group insurance, severance and other benefit plans, contracts, agreements and arrangements, including, but not limited to, “employee benefit plans,” as defined in Section 3(3) of ERISA, incentive and welfare policies, contracts, plans and arrangements and all trust agreements related thereto with respect to any present or former directors, officers or other employees of CNB Financial or any of its Subsidiaries (hereinafter referred to collectively as the “ CNB Financial Employee Plans ”).  CNB Financial has previously delivered or made available to United Financial Bancorp true and complete copies of each agreement, plan and other documents referenced in CNB Financial’s Disclosure Letter, along with, where applicable, copies of the IRS Form 5500 or 5500-C for the most recently completed year.  There has been no announcement or commitment by CNB Financial or any of its Subsidiaries to create an additional CNB Financial Employee Plan, or to amend any CNB Financial Employee Plan, except for amendments required by applicable law which do not materially increase the cost of such CNB Financial Employee Plan.  To the Knowledge of CNB Financial, each CNB Financial Employee Plan has been operated and administered in all material respects in accordance with its terms and with applicable law, including, but not limited to, ERISA, the IRC, the Securities Act, the Exchange Act, the Age Discrimination in Employment Act, COBRA, the Health Insurance Portability and Accountability Act and any regulations or rules promulgated thereunder, and all material filings, disclosures and notices required by ERISA, the IRC, the Securities Act, the Exchange Act, the Age Discrimination in Employment Act and any other applicable law have been timely made or any interest, fines, penalties or other impositions for late filings have been paid in full.

(ii)           There is no pending or threatened litigation, administrative action or proceeding relating to any CNB Financial Employee Plan.  All of the CNB Financial Employee Plans comply in all material respects with all applicable requirements of ERISA, the IRC and other applicable laws.  There has occurred no “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the IRC) with respect to the CNB Financial Employee Plans which is likely to result in the imposition of any penalties or taxes upon CNB Financial or any of its Subsidiaries under Section 502(i) of ERISA or Section 4975 of the IRC.

(iii)           Each CNB Financial Employee Plan that is an “employee pension benefit plan” (as defined in Section 3(2) of ERISA) and which is intended to be qualified under Section 401(a) of the IRC (a “ CNB Financial Qualified Plan ”) has received a favorable determination letter from the IRS, and CNB Financial and its Subsidiaries are not aware of any circumstances likely to result in revocation of any such favorable determination letter.  No CNB Financial Qualified Plan is an “employee stock ownership plan” (as defined in Section 4975(e)(7) of the IRC).   Neither CNB Financial nor any Subsidiary of CNB Financial or any ERISA Affiliate has ever sponsored a CNB Financial Qualified Plan that is subject to Title IV of ERISA (any such plan shall be referred to herein as a “ CNB Financial Pension Plan ”).  Neither CNB Financial nor its Subsidiaries or any ERISA Affiliate has contributed to any “multiemployer plan,” as defined in Section 3(37) of ERISA, on or after September 26, 1980.

 

 

(iv)           With respect to each CNB Financial Employee Plan that is a “multiple employer plan” (as defined in Section 4063 of ERISA): (A) none of CNB Financial or any of its Subsidiaries, nor any of their respective ERISA Affiliates, has received any notification, nor has any actual knowledge, that if CNB Financial or any of its Subsidiaries or any of their respective ERISA Affiliates were to experience a withdrawal or partial withdrawal from such plan it would incur withdrawal liability that would be reasonably likely to have a Material Adverse Effect on CNB Financial; and (B) none of CNB Financial or any of its Subsidiaries, nor any of their respective ERISA Affiliates, has received any notification, nor has any reason to believe, that any CNB Financial Employee Plan is in reorganization, has been terminated, is insolvent, or may be in reorganization, become insolvent or be terminated.

(v)           Each CNB Financial Employee Plan that is a “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the IRC) and which has not been terminated has been operated since January 1, 2005 in good faith compliance with Section 409A of the IRC and the regulations issued under Section 409A of the IRC.

(vi)           Neither CNB Financial nor any of its Subsidiaries has any obligations for post-retirement or post-employment benefits under any CNB Financial Employee Plan that cannot be amended or terminated upon 60 days’ notice or less without incurring any liability thereunder, except for coverage required by Part 6 of Title I of ERISA or Section 4980B of the IRC, or similar state laws, the cost of which is borne by the insured individuals.

(vii)           All contributions required to be made with respect to any CNB Financial Employee Plan by applicable law or regulation or by any plan document or other contractual undertaking, and all premiums due or payable with respect to insurance policies funding any CNB Financial Employee Plan, for any period through the date hereof have been timely made or paid in full, or to the extent not required to be made or paid on or before the date hereof, have been fully reflected in the financial statements of CNB Financial.  All anticipated contributions and funding obligations are accrued on CNB Financial’s consolidated financial statements to the extent required by GAAP.  Each CNB Financial Employee Plan that is an employee welfare benefit plan under Section 3(1) of ERISA either (A) is funded through an insurance company contract and is not a “welfare benefit fund” within the meaning of Section 419 of the IRC or (B) is unfunded.

(s)            Properties .

(i)           A list and description of all real property owned or leased by CNB Financial or a Subsidiary of CNB Financial is set forth in CNB Financial’s Disclosure Letter.  CNB Financial and each of its Subsidiaries has good and marketable title to all real property owned by it (including any property acquired in a judicial foreclosure proceeding or by way of a deed in lieu of foreclosure or similar transfer), in each case free and clear of any Liens except (i) liens for taxes not yet due and payable and (ii) such easements, restrictions and encumbrances, if any, as are not material in character, amount or extent, and do not materially detract from the value, or materially interfere with the present use of the properties subject thereto or affected thereby.   Each lease pursuant to which CNB Financial or any of its Subsidiaries is lessee, leases real or personal property is valid and in full force and effect and neither CNB Financial nor any of its Subsidiaries, nor, to CNB Financial’s knowledge, any other party to any such lease, is in default or in violation of any material provisions of any such lease.  A complete and correct copy of each such lease has been provided or made available to United Financial Bancorp.  All real property owned or leased by CNB Financial or any of its Subsidiaries are in a good state of maintenance and repair (normal wear and tear excepted), conform with all applicable ordinances, regulations and zoning laws and are considered by CNB Financial to be adequate for the current business of CNB Financial and its Subsidiaries.  To the knowledge of CNB Financial, none of the buildings, structures or other improvements located on any real property owned or leased by CNB Financial or any of its Subsidiaries encroaches upon or over any adjoining parcel or real estate or any easement or right-of-way.

 

 

(ii)           CNB Financial and each of its Subsidiaries has good and marketable title to all tangible personal property owned by it, free and clear of all Liens except such Liens, if any, as are not material in character, amount or extent, and do not materially detract from the value, or materially interfere with the present use of the properties subject thereto or affected thereby.  With respect to personal property used in the business of CNB Financial and its Subsidiaries that is leased rather than owned, neither CNB Financial nor any of its Subsidiaries is in default under the terms of any such lease.

(t)            Fairness Opinion .  CNB Financial has received the opinion of Keefe, Bruyette & Woods, Inc. to the effect that, as of the date hereof, the Merger Consideration is fair, from a financial point of view, to CNB Financial’s shareholders.

(u)            Fees .  Other than for financial advisory services performed for CNB Financial by Keefe, Bruyette & Woods, Inc. pursuant to an agreement dated January 15, 2009, a true and complete copy of which has been previously delivered or made available to United Financial Bancorp, neither CNB Financial nor any of its Subsidiaries, nor any of their respective officers, directors, employees or agents, has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for CNB Financial or any of its Subsidiaries in connection with this Agreement or the transactions contemplated hereby.

(v)            Environmental Matters .

(i)           Each of CNB Financial and its Subsidiaries, the Participation Facilities, and, to the knowledge of CNB Financial, the Loan Properties are, and have been, in substantial compliance with all Environmental Laws.

(ii)           There is no suit, claim, action, demand, executive or administrative order, directive, investigation or proceeding pending or, to the knowledge of CNB Financial, threatened, before any court, governmental agency or board or other forum against CNB Financial or any of its Subsidiaries or any Participation Facility (A) for alleged noncompliance (including by any predecessor) with, or liability under, any Environmental Law or (B) relating to the presence of or release into the environment of any Hazardous Material, whether or not occurring at or on a site owned, leased or operated by CNB Financial or any of its Subsidiaries or any Participation Facility.

 

 

(iii)           To the knowledge of CNB Financial, there is no suit, claim, action, demand, executive or administrative order, directive, investigation or proceeding pending or threatened before any court, governmental agency or board or other forum relating to or against any Loan Property (or CNB Financial or any of its Subsidiaries in respect of such Loan Property) (A) relating to alleged noncompliance (including by any predecessor) with, or liability under, any Environmental Law or (B) relating to the presence of or release into the environment of any Hazardous Material, whether or not occurring at a Loan Property.

(iv)           Neither CNB Financial nor any of its Subsidiaries has received any notice, demand letter, executive or administrative order, directive or request for information from any Governmental Entity or any third party indicating that it may be in violation of, or liable under, any Environmental Law.

(v)           There are no underground storage tanks at any properties owned or operated by CNB Financial or any of its Subsidiaries or any Participation Facility.  Neither CNB Financial nor any of its Subsidiaries nor, to the knowledge of CNB Financial, any other person or entity, has closed or removed any underground storage tanks from any properties owned or operated by CNB Financial or any of its Subsidiaries or any Participation Facility.

(vi)           During the period of (A) CNB Financial’s or its Subsidiary’s ownership or operation of any of their respective current properties or (B) CNB Financial’s or its Subsidiary’s participation in the management of any Participation Facility, there has been no release of Hazardous Materials in, on, under or affecting such properties.  To the knowledge of CNB Financial, prior to the period of (A) CNB Financial’s or its Subsidiary’s ownership or operation of any of their respective current properties or (B) CNB Financial’s or its Subsidiary’s participation in the management of any Participation Facility, there was no contamination by or release of Hazardous Material in, on, under or affecting such properties.

(w)            Loan Portfolio; Allowance for Loan Losses .

(i)           With respect to each Loan owned by CNB Financial or its Subsidiaries in whole or in part:

(A)           The note and the related security documents are each legal, valid and binding obligations of the maker or obligor thereof, enforceable against such maker or obligor in accordance with their terms;

(B)           neither CNB Financial nor any of its Subsidiaries, nor any prior holder of a Loan, has modified the note or any of the related security documents in any material respect or satisfied, canceled or subordinated the note or any of the related security documents except as otherwise disclosed by documents in the applicable Loan file;

 

 

(C)           CNB Financial or a Subsidiary of CNB Financial is the sole holder of legal and beneficial title to each Loan (or CNB Financial’s or its Subsidiary’s applicable participation interest, as applicable), except as otherwise referenced on the books and records of CNB Financial or a Subsidiary of CNB Financial;

(D)           the original note and the related security documents are included in the Loan files, and copies of any documents in the Loan files are true and correct copies of the documents they purport to be and have not been suspended, amended, modified, canceled or otherwise changed except as otherwise disclosed by documents in the applicable Loan file; and

(E)           with respect to a Loan held in the form of a participation, the participation documentation is legal, valid, binding and enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(ii)           Neither the terms of any Loan, any of the documentation for any Loan, the manner in which any Loans have been administered and serviced, nor CNB Financial’s practices of approving or rejecting Loan applications, violate any federal, state, or local law, rule or regulation applicable thereto, including, without limitation, the Truth In Lending Act, Regulations O and Z of the Federal Reserve Board, the CRA, the Equal Credit Opportunity Act, and any state laws, rules and regulations relating to consumer protection, installment sales and usury.

(iii)           The allowance for loan losses reflected in CNB Financial’s audited balance sheet at December 31, 2008 was, and the allowance for loan losses shown on the balance sheets in CNB Financial’s SEC Reports for periods ending after such date, in the opinion of management, was or will be adequate, as of the dates thereof, under GAAP.

(x)            Anti-takeover Provisions Inapplicable .  CNB Financial and its Subsidiaries have taken all actions required to exempt United Financial Bancorp, the Agreement, the Plan of Bank Merger, the Merger and the Bank Merger from any provisions of an anti-takeover nature contained in CNB Financial and its Subsidiaries organizational documents, and the provisions of any federal or state “anti-takeover,&rdq