-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FdstxTguqNRphTnbNb3akBooOSOu9g1ysuVcsad20mROHge6L7pBmPGWEKeqgX1V wY8qyeDrPsPnNuUKdU4wWQ== 0000950135-96-003952.txt : 19960911 0000950135-96-003952.hdr.sgml : 19960911 ACCESSION NUMBER: 0000950135-96-003952 CONFORMED SUBMISSION TYPE: SC 13E4 PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19960910 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PEOPLES HERITAGE FINANCIAL GROUP INC CENTRAL INDEX KEY: 0000829750 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 010137770 STATE OF INCORPORATION: ME FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E4 SEC ACT: 1934 Act SEC FILE NUMBER: 005-39860 FILM NUMBER: 96628051 BUSINESS ADDRESS: STREET 1: ONE PORTLAND SQ STREET 2: P O BOX 9540 CITY: PORTLAND STATE: ME ZIP: 04112 BUSINESS PHONE: 2077618500 MAIL ADDRESS: STREET 1: P O BOX 9540 CITY: PORTLAND STATE: ME ZIP: 04112-9540 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: PEOPLES HERITAGE FINANCIAL GROUP INC CENTRAL INDEX KEY: 0000829750 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 010137770 STATE OF INCORPORATION: ME FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E4 BUSINESS ADDRESS: STREET 1: ONE PORTLAND SQ STREET 2: P O BOX 9540 CITY: PORTLAND STATE: ME ZIP: 04112 BUSINESS PHONE: 2077618500 MAIL ADDRESS: STREET 1: P O BOX 9540 CITY: PORTLAND STATE: ME ZIP: 04112-9540 SC 13E4 1 PEOPLES HERITAGE SCHEDULE 13E-4 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13E-4 Issuer Tender Offer Statement (Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934) Peoples Heritage Financial Group, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Peoples Heritage Financial Group, Inc. - -------------------------------------------------------------------------------- (Name of Person(s) Filing Statement) Common Stock, $.01 par value per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 711147 10 8 - -------------------------------------------------------------------------------- (CUSIP Number of Class of Securities) William J. Ryan Chairman, President and Chief Executive Officer Peoples Heritage Financial Group, Inc. P.O. Box 9540 One Portland Square Portland, Maine 04112-9540 With a Copy to: Gerard L. Hawkins, Esq. Elias, Matz, Tiernan & Herrick L.L.P. 734 15th Street, N.W. Washington, D.C. 20005 (202) 347-0300 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Person(s) Filing Statement) September 10, 1996 - -------------------------------------------------------------------------------- (Date Tender Offer First Published, Sent or Given to Security Holders) CALCULATION OF FILING FEE Transaction Valuation Amount of Filing Fee $60,000,000* $12,000 - --------------- * For purposes of calculating the fee only. Based on the offer for 2,500,000 shares of Common Stock at the maximum tender offer price of $24.00 per share.
/ / Check box if any part of the fee is offset as provided by Rule 240.0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Filing Party: ------------------------ ----------------- Form of Registration No.: Date Filed: ---------------------- ------------------- 2 This Issuer Tender Offer Statement on Schedule 13E-4 (the "Statement") relates to an offer by Peoples Heritage Financial Group, Inc. (the "Company"), a Maine corporation, pursuant to Rule 13e-4, to purchase up to 2,500,000 shares of its common stock, par value $.01 per share (together with the associated Preferred Stock Purchase Rights, the "Common Stock" or the "Shares"), at prices not greater than $24.00 nor less than $21.00 per Share upon the terms and conditions set forth in the Offer to Purchase and related Letter of Transmittal (which together constitute the "Offer"), copies of which are attached hereto as Exhibits 9(a)(1) and 9(a)(2), respectively. ITEM 1. SECURITY AND ISSUER (a) The name of the issuer is Peoples Heritage Financial Group, Inc. The principal executive offices of the Company are located at One Portland Square, Portland, Maine 04112-9540. (b) The class of securities to which this Statement relates is the Shares. Reference is made to the Cover Page of the Offer to Purchase and the sections entitled "Introduction," "The Offer -- Number of Shares; Proration" and "The Offer -- Interests of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares" in the Offer to Purchase, which are incorporated herein by reference. (c) Reference is made to the section entitled "The Offer -- Price Range of the Shares; Dividends" in the Offer to Purchase, which is incorporated herein by reference. (d) Not applicable. This Statement is being filed by the issuer. ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION (a) Reference is made to the section entitled "The Offer -- Source and Amount of Funds" in the Offer to Purchase, which is incorporated herein by reference. (b) Not applicable. ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE (a) Reference is made to the Cover Page of the Offer to Purchase and the sections entitled "Introduction," "The Offer -- Background of and Purpose of the Offer; Recommendation of the Board of Directors of the Company," "The Merger -- General" and "The Merger -- Reasons of the Company for the Merger" in the Offer to Purchase, which are incorporated herein by reference. (b) Reference is made to the Cover Page of the Offer to Purchase and the sections entitled "Introduction," "The Offer -- Background of and Purpose of the Offer; Recommendation of the Board of Directors of the Company," "The Merger -- General" and "The Merger -- Reasons of the Company for the Merger" in the Offer to Purchase, which are incorporated herein by reference. (c) Not applicable. (d) Reference is made to the section entitled "The Merger -- Interests of Certain Persons in the Merger" in the Offer to Purchase, which is incorporated herein by reference. (e) Reference is made to the sections entitled "Introduction," "The Merger -- General" and "Pro Forma Combined Consolidated Financial Information" in the Offer to Purchase, which are incorporated herein by reference. (f) Reference is made to the sections entitled "Introduction," "The Company" and "The Merger -- General" in the Offer to Purchase, which are incorporated herein by reference. (g) Not applicable. (h) Not applicable. (i) Not applicable. (j) Not applicable. 2 3 ITEM 4. INTEREST IN SECURITIES OF THE ISSUER Reference is made to the section entitled "The Offer -- Interests of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares" in the Offer to Purchase, which is incorporated herein by reference. ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE ISSUER'S SECURITIES Reference is made to the sections entitled "Introduction," "The Offer -- Interest of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares" and "The Merger -- Interests of Certain Persons in the Merger" in the Offer to Purchase, which are incorporated herein by reference. ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED Reference is made to the sections entitled "Introduction" and "The Offer -- Fees and Expenses" in the Offer to Purchase, which are incorporated herein by reference. ITEM 7. FINANCIAL INFORMATION (a) Reference is made to the section entitled "Selected Consolidated Financial Information of the Company" in the Offer to Purchase, which is incorporated herein by reference. (b) Reference is made to the section entitled "Pro Forma Combined Consolidated Financial Information" in the Offer to Purchase, which is incorporated herein by reference. ITEM 8. ADDITIONAL INFORMATION (a) Reference is made to the sections entitled "The Offer -- Interests of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares" and "The Merger -- Interests of Certain Persons in the Merger" in the Offer to Purchase, which are incorporated herein by reference. (b) Reference is made to the sections entitled "The Offer -- Certain Legal Matters; Regulatory Approvals" and "Miscellaneous" in the Offer to Purchase, which are incorporated herein by reference. (c) Reference is made to the section entitled "The Offer -- Certain Effects of the Offer on the Shares; Registration Under the Exchange Act" in the Offer to Purchase, which is incorporated herein by reference. (d) Not applicable (e) Reference is made to the Offer to Purchase and the related Letter of Transmittal, copies of which are attached hereto as Exhibits 9(a)(2), respectively, and each of which is incorporated herein by reference in its entirety. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS (a)(1) Offer to Purchase. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter from the Company to brokers, dealers, commercial banks, trust companies and other nominees. (a)(5) Letter to brokers' clients for use in obtaining instructions from beneficial owners of shares of Common Stock. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 3 4 (a)(7) Letter to stockholders from the Chairman, President and Chief Executive Officer of the Company, which is to accompany the Offer to Purchase and Letter of Transmittal. (a)(8) Letters to Participants in the Peoples Heritage Financial Group, Inc. Thrift Incentive Plan and Profit Sharing Employee Stock Ownership Plan and accompanying Direction Forms. (a)(9) Press release issued by the Company on September 10, 1996. (a)(10) Summary advertisement dated September 11, 1996. (b) Not applicable. (c)(1) Not applicable. (c)(2) Agreement and Plan of Merger, dated as of May 30, 1996, among the Company, Peoples Heritage Merger Corp. and Family Bancorp.* (c)(3) Stock Option Agreement, dated as of May 30, 1996, between the Company (as grantee) and Family Bancorp (as issuer).* (c)(4) Stock Option Agreement, dated as of May 30, 1996, between the Company (as issuer) and Family Bancorp (as grantee).* (d) Not applicable. (e) Not applicable. (f) Not applicable. - --------------- * Incorporated by reference to the Current Report on Form 8-K filed by the Company with the SEC on June 5, 1996. 4 5 SIGNATURE After due inquiry and to the best of my knowledge and belief, the undersigned hereby certifies that the information set forth in this statement is true, complete and correct. PEOPLES HERITAGE FINANCIAL GROUP, INC. By: /s/ WILLIAM J. RYAN ------------------------------------- William J. Ryan Chairman, President and Chief Executive Officer Date: September 10, 1996 5 EX-9.A1 2 OFFER TO PURCHASE 1 PEOPLES HERITAGE FINANCIAL GROUP, INC. OFFER TO PURCHASE FOR CASH UP TO 2,500,000 SHARES OF ITS COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) AT A PURCHASE PRICE NOT GREATER THAN $24.00 NOR LESS THAN $21.00 PER SHARE THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996, UNLESS THE OFFER IS EXTENDED. Peoples Heritage Financial Group, Inc. (the "Company"), a Maine corporation, hereby invites its shareholders to tender shares of its common stock, par value $0.01 per share (together with the associated Rights, as herein defined, the "Shares" or the "Common Stock") to the Company at prices, net to the seller in cash, not greater than $24.00 nor less than $21.00 per Share, specified by such shareholders, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). The Company will determine a single per Share price (not greater than $24.00 nor less than $21.00 per Share) (the "Purchase Price") that it will pay for Shares validly tendered pursuant to the Offer, taking into account the number of Shares so tendered and the prices specified by tendering shareholders. The Company will select the Purchase Price that will allow it to buy 2,500,000 Shares (or such lesser number of Shares as are validly tendered at prices not greater than $24.00 nor less than $21.00 per Share) pursuant to the Offer. All Shares validly tendered at prices at or below the Purchase Price and not withdrawn will be purchased at the Purchase Price, net to the seller in cash, upon the terms and subject to the conditions of the Offer, including the proration terms hereof. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED OR CONSUMMATION OF THE MERGER REFERRED TO BELOW, BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. See "The Offer -- Certain Conditions of the Offer." The Offer is being conducted by the Company in connection with its proposed acquisition of Family Bancorp ("Family"), a Massachusetts corporation, pursuant to an Agreement and Plan of Merger, dated as of May 30, 1996, by and among the Company, Peoples Heritage Merger Corp. ("Merger Corp."), a newly-formed, wholly-owned subsidiary of the Company, and Family (the "Agreement"). The Agreement provides, among other things, for (i) the merger of Family with and into Merger Corp. (the "Merger") and (ii) the conversion of each share of common stock, par value $0.10 per share, of Family (the "Family Common Stock") outstanding immediately prior to the Merger (other than any dissenting shares under Massachusetts law and certain shares held by the Company) into the right to receive 1.26 shares of Common Stock (the "Exchange Ratio"), subject to possible adjustment under certain circumstances, plus cash in lieu of any fractional share interest. Based on 4,259,336 shares of Family Common Stock outstanding as of August 31, 1996 and outstanding options to purchase 162,887 of such shares as of the same date, a maximum of 5,572,001 shares of Common Stock will be issuable upon consummation of the Merger. The shares of Common Stock to be issued to shareholders of Family pursuant to the Agreement are not eligible to be tendered in the Offer. The Offer is being conducted in advance of consummation of the Merger, and neither the Offer nor the Merger is conditioned upon consummation of the other. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED. ------------------------ The Dealer Manager for the Offer is: KEEFE, BRUYETTE & WOODS, INC. ------------------------ THE DATE OF THIS OFFER TO PURCHASE IS SEPTEMBER 10, 1996 2 IMPORTANT Any shareholder desiring to tender all or any portion of his or her Shares should either (1) complete and sign the Letter of Transmittal or a facsimile copy thereof in accordance with the instructions in the Letter of Transmittal, mail or deliver it and any other required documents to American Stock Transfer and Trust Company (the "Depositary"), and either mail or deliver his or her stock certificates for such Shares to the Depositary or follow the procedure for book-entry delivery set forth under "The Offer -- Procedure for Tendering Shares -- Book-Entry Delivery," or (2) request his broker, dealer, commercial bank, trust company or other nominee to effect the transaction for him or her. A shareholder having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact that broker, dealer, commercial bank, trust company or other nominee if such shareholder desires to tender such Shares. Shareholders who desire to tender Shares and whose certificates for such Shares are not immediately available or who cannot comply with the procedure for book-entry transfer by the expiration of the Offer must tender such Shares by following the procedures for guaranteed delivery set forth under "The Offer -- Procedure for Tendering Shares -- Guaranteed Delivery." SHAREHOLDERS MUST PROPERLY COMPLETE THE LETTER OF TRANSMITTAL, INCLUDING THE SECTION OF THE LETTER OF TRANSMITTAL, RELATING TO THE PRICE AT WHICH THEY ARE TENDERING SHARES, IN ORDER TO EFFECT A VALID TENDER OF THEIR SHARES. Questions and requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE COMPANY AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION, INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. 3 TABLE OF CONTENTS
PAGE ---- Introduction.......................................................................... 1 The Offer............................................................................. 3 Number of Shares; Proration......................................................... 3 Tenders by Owners of Fewer Than 100 Shares.......................................... 4 Procedure for Tendering Shares...................................................... 5 Proper Tender of Shares.......................................................... 5 Signature Guarantees and Method of Delivery...................................... 5 Federal Income Tax Backup Withholding............................................ 5 Book-Entry Delivery.............................................................. 6 Guaranteed Delivery.............................................................. 6 Determination of Validity; Rejection of Shares; Waiver of Defects; No Obligation to Give Notice of Defects....................................................... 6 Profit Sharing Employee Stock Ownership Plan and Thrift Incentive Plan........... 7 Dividend Reinvestment Plan....................................................... 7 Rule 14e-4....................................................................... 7 Withdrawal Rights................................................................... 7 Purchase of Shares; Payment of Purchase Price....................................... 8 Certain Conditions of the Offer..................................................... 9 Extension of the Offer; Termination; Amendment...................................... 10 Price Range of the Shares; Dividends................................................ 11 Source and Amount of Funds.......................................................... 12 Background of and Purpose of the Offer; Recommendation of the Board of Directors of the Company...................................................................... 12 Interests of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares............................................................ 13 Certain Effects of the Offer on the Shares; Registration Under the Exchange Act..... 14 Certain Legal Matters; Regulatory Approvals......................................... 14 Certain Federal Income Tax Consequences............................................. 15 Fees and Expenses................................................................... 17 The Merger............................................................................ 18 General............................................................................. 18 Background of the Merger............................................................ 18 Reasons of the Company for the Merger............................................... 20 Assumption of Family Stock Options.................................................. 21 Representations and Warranties...................................................... 21 Conditions to the Merger............................................................ 21 Regulatory Approvals................................................................ 22 Business Pending the Merger......................................................... 24 Effective Time of the Merger; Termination and Amendment............................. 24 Interests of Certain Persons in the Merger.......................................... 26 Certain Employee Matters............................................................ 26 Accounting Treatment of the Merger.................................................. 26 Expenses of the Merger.............................................................. 27 Stock Option Agreements............................................................. 27 Certain Regulatory Considerations................................................... 27 The Company........................................................................... 29 Family................................................................................ 30 Selected Consolidated Financial Data of the Company................................... 31 Pro Forma Combined Consolidated Financial Information................................. 33 Available Information................................................................. 39 Miscellaneous......................................................................... 39
i 4 TO THE HOLDERS OF COMMON STOCK OF PEOPLES HERITAGE FINANCIAL GROUP, INC.: INTRODUCTION The Company hereby invites it shareholders to tender Shares to the Company at prices, net to the seller in cash, not greater than $24.00 nor less than $21.00 per Share, specified by such shareholders, upon the terms and subject to the conditions set forth in the Offer. The Company will determine a single per Share Purchase Price (not greater than $24.00 nor less than $21.00 per Share) that it will pay for Shares validly tendered pursuant to the Offer taking into account the number of Shares so tendered and the prices specified by tendering shareholders. The Company will select the Purchase Price which will allow it to buy 2,500,000 Shares (or such lesser number of Shares as are validly tendered at prices not greater than $24.00 nor less than $21.00 per Share) pursuant to the Offer. All Shares validly tendered at prices at or below the Purchase Price will be purchased at the Purchase Price, net to the seller in cash, upon the terms and subject to the conditions of the Offer, including the proration terms described below. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED OR CONSUMMATION OF THE MERGER, BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. See "The Offer -- Certain Conditions of the Offer." If, before the Expiration Date (as defined under "The Offer -- Number of Shares; Proration") more than 2,500,000 Shares (or such greater number of Shares as the Company may elect to purchase) are validly tendered at or below the Purchase Price, the Company will accept Shares for purchase on a pro rata basis from all shareholders who validly tender Shares at or below the Purchase Price. See "The Offer -- Number of Shares; Proration." The Company will return all Shares not purchased under the Offer, including Shares tendered and not withdrawn at prices greater than the Purchase Price and Shares not purchased because of proration. Tendering shareholders will not be obligated to pay brokerage fees or commissions, solicitation fees or, subject to Instruction 7 of the Letter of Transmittal, stock transfer taxes on the Company's purchase of Shares pursuant to the Offer. In addition, the Company will pay all fees and expenses of Keefe, Bruyette & Woods, Inc. (the "Dealer Manager"), American Stock Transfer and Trust Company (the "Depositary") and Morrow & Co., Inc. (the "Information Agent") in connection with the Offer. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED. The Offer is being conducted by the Company in connection with its proposed acquisition of Family pursuant to the Agreement, which provides, among other things, for (i) the merger of Family with and into Merger Corp. and (ii) the conversion of each share of Family Common Stock outstanding immediately prior to the Merger (other than any dissenting shares under Massachusetts law and certain shares held by the Company) into the right to receive 1.26 shares of Common Stock, subject to possible adjustment under certain circumstances, plus cash in lieu of any fractional share interest. Based on 4,259,336 shares of Family Common Stock outstanding as of August 31, 1996 and outstanding options to purchase 162,887 of such shares as of the same date, a maximum of 5,572,001 shares of Common Stock will be issuable upon consummation of the Merger. The shares of Common Stock to be issued to shareholders of Family pursuant to the Agreement are not eligible to be tendered in the Offer. The Offer is being conducted in advance of the Effective Time of the Merger (as defined under "The Merger -- Effective Time of the Merger; Termination and Amendment"), and neither the Offer nor the Merger is conditioned upon consummation of the other. For a description of the conditions to the Offer and the Merger, see "The Offer -- Certain Conditions of the Offer" and "The Merger -- Conditions to the Merger," respectively. The Offer will enable shareholders to sell a portion of their Shares while retaining a continuing equity interest in the Company if they so desire. The Offer will increase the Company's leverage, with an attendant 5 increase in the risks and rewards for shareholders who retain a continuing equity interest in the Company. In addition, shareholders who determine not to accept the Offer will realize a proportionate increase in their relative equity interest in the Company, and thus in the Company's future earnings and assets, subject to increased risks and rewards resulting from higher leverage and to the Company's ability to issue additional Shares or other equity securities in the future. The Offer may provide shareholders who are considering a sale of all or a portion of their Shares the opportunity to determine the price or prices (not greater than $24.00 nor less than $21.00 per Share) at which they are willing to sell their Shares and, if any such Shares are purchased pursuant to the Offer, to sell those Shares for cash without the usual transaction costs associated with open-market sales. The Offer also may give shareholders the opportunity to sell Shares at prices greater than market prices prevailing prior to announcement of the Offer. As of August 31, 1996, there were 25,198,791 Shares outstanding and 1,368,195 Shares issuable upon exercise of outstanding stock options under the Company's stock option plans. The 2,500,000 Shares that the Company is offering to purchase represent approximately 9.9% of the Shares outstanding as of August 31, 1996 and approximately 8.1% of the sum of such number of shares and the maximum number of shares of Common Stock to be issued pursuant to the Agreement upon consummation of the Merger. The Company plans to obtain the funds needed for the Offer from cash and securities on hand of approximately $60.3 million. See "The Offer -- Source and Amount of Funds." 2 6 THE OFFER NUMBER OF SHARES; PRORATION Upon the terms and subject to the conditions of the Offer, the Company will accept for payment and purchase 2,500,000 Shares, or such lesser number of Shares as are validly tendered on or prior to the Expiration Date, at a price (determined in the manner set forth below) not greater than $24.00 nor less than $21.00 per Share. The term "Expiration Date" means 5:00 p.m., New York City time, on Monday, October 7, 1996, unless the Company, in its sole discretion, shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall refer to the latest time and date at which the Offer, as so extended by the Company, shall expire. See "The Offer -- Extension of the Offer; Termination; Amendment" for a description of the Company's right to extend the time during which the Offer is open and to delay, terminate or amend the Offer. If the Offer is oversubscribed, Shares tendered at or below the Purchase Price prior to the Expiration Date will be subject to proration. The proration period also expires on the Expiration Date. The Company will, upon the terms and subject to the conditions of the Offer, determine the Purchase Price (not greater than $24.00 nor less than $21.00 per Share) that it will pay for Shares validly tendered pursuant to the Offer taking into account the number of Shares so tendered and the prices specified by tendering shareholders. The Company will select a single per Share Purchase Price that will allow it to buy 2,500,000 Shares (or such lesser number as are validly tendered at prices not greater than $24.00 nor less than $21.00 per Share) pursuant to the Offer. The Company reserves the right, in its sole discretion, to purchase more than 2,500,000 Shares pursuant to the Offer. If (i) the Company increases or decreases the price to be paid for Shares, increases the number of Shares being sought and any such increase in the number of Shares being sought exceeds 2% of the outstanding Shares, or decreases the number of Shares being sought, and (ii) the Offer is scheduled to expire less than ten business days from and including the date that notice of such increase or decrease is first published, sent or given in the manner specified under "The Offer -- Extension of the Offer; Termination; Amendment," the Offer will be extended for ten business days from and including the date of such notice. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. In accordance with Instruction 5 of the Letter of Transmittal, each shareholder desiring to tender Shares must specify the price or prices (not greater than $24.00 nor less than $21.00 per Share) at which such shareholder is willing to have the Company purchase his or her Shares. All Shares purchased pursuant to the Offer will be purchased at the Purchase Price. All Shares not purchased pursuant to the Offer, including Shares tendered at prices greater than the Purchase Price and Shares not purchased because of proration, will be returned to the tendering shareholders at the Company's expense as promptly as practicable following the Expiration Date. If the number of Shares validly tendered prior to the Expiration Date at or below the Purchase Price is less than or equal to 2,500,000 Shares (or such greater number of Shares as the Company may elect to purchase pursuant to the Offer), the Company will, upon the terms and subject to the conditions of the Offer, purchase at the Purchase Price all Shares so tendered. Upon the terms and subject to the conditions of the Offer, in the event that prior to the Expiration Date more than 2,500,000 Shares (or such greater number of Shares as the Company elects to purchase) are validly tendered at or below the Purchase Price, the Company will accept Shares for purchase in the following order of priority: (a) first, all Shares validly tendered at or below the Purchase Price prior to the Expiration Date by any Odd Lot Owner (as defined under "The Offer -- Tenders by Owners of Fewer Than 100 Shares") who: (1) tenders all Shares beneficially owned by such Odd Lot Owner at or below the Purchase Price (partial tenders will not qualify for this preference); and 3 7 (2) completes the box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery; and (b) then, after the purchase of all of the foregoing Shares, all other Shares validly tendered at or below the Purchase Price before the Expiration Date on a pro rata basis, if necessary. Proration for each shareholder tendering Shares will be based on the ratio of the number of Shares tendered by such shareholder to the total number of Shares tendered by all shareholders. In any proration, appropriate adjustments will be made to avoid the exchange of fractions of shares of Common Stock and if a shareholder is entitled to have a portion of a share of tendered Common Stock exchanged, an entire share of Common Stock will be exchanged if the fraction is .5 or more and no share of Common Stock will be exchanged by virtue of such fractional share if the fractional interest is less than .5. In the event that proration of tendered Shares is required, the Company will determine the final proration factor as promptly as practicable after the Expiration Date. Although the Company does not expect to be able to announce the final results of such proration until approximately seven over-the-counter ("OTC") trading days after the Expiration Date, it will announce preliminary results of proration by press release as promptly as practicable after the Expiration Date. Shareholders may obtain such preliminary information from the Information Agent and may be able to obtain such information from their brokers or financial advisors. On September 12, 1989, the Company's Board of Directors declared a dividend distribution of one Preferred Stock Purchase Right ("Right") for each Share outstanding on September 25, 1989 (the "Record Date"). Shares issued subsequent to the Record Date automatically receive the Rights. The Rights expire on September 25, 1999 unless redeemed earlier by the Company. Each Right entitles the registered holder to purchase from the Company a unit consisting of one one-hundredth of a share of Series A Junior Participating Preferred Stock of the Company at an exercise price of $90, subject to adjustment to prevent dilution. The Rights will not become exercisable or separately tradeable as a result of the Offer. Absent circumstances causing the Rights to become exercisable or separately tradeable prior to the Expiration Date, the tender of any Shares pursuant to the Offer will include the tender of the associated Rights. No separate consideration will be paid for such Rights. Upon the purchase of Shares by the Company pursuant to the Offer, the sellers of the Shares so purchased will no longer own the Rights associated with such Shares. As described under "The Offer -- Certain Federal Income Tax Consequences," the number of Shares that the Company will purchase from a shareholder may affect the federal income tax consequences to the shareholder of such purchase and therefore may be relevant to a shareholder's decision whether to tender Shares. TENDERS BY OWNERS OF FEWER THAN 100 SHARES The Company, upon the terms and subject to the conditions of the Offer, will accept for payment, without proration, all Shares validly tendered on or prior to the Expiration Date at or below the Purchase Price by or on behalf of shareholders who beneficially held, as of the close of business on September 9, 1996, and continue to own beneficially as of the Expiration Date, an aggregate of fewer than 100 Shares ("Odd Lot Owners"). To avoid proration, however, an Odd Lot Owner must validly tender at or below the Purchase Price all Shares that such Odd Lot Owner beneficially owns; partial tenders will not qualify for this preference. This preference is not available to holders of 100 or more Shares, even if such holders have separate stock certificates for fewer than 100 Shares. Any Odd Lot Owner wishing to tender all Shares beneficially owned by him free of proration pursuant to this Offer must complete the section captioned "Odd Lots" in the Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery. By accepting the Offer, a shareholder owning fewer than 100 Shares would not only avoid the payment of brokerage commissions but would also avoid any applicable odd lot discounts payable on a sale of Shares in a transaction effected on a securities exchange. The special Odd Lot purchase rules described above do not apply to any Shares held in the Company's Profit Sharing Employee Stock Ownership Plan or its Thrift Incentive Plan. 4 8 PROCEDURE FOR TENDERING SHARES PROPER TENDER OF SHARES. For Shares to be validly tendered pursuant to the Offer: (a) the certificates for such Shares (or confirmation of receipt of such Shares pursuant to the procedures for book-entry transfer set forth below), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees, and any other documents required by the Letter of Transmittal, must be received on or before the Expiration Date by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase; or (b) the tendering shareholder must comply with the guaranteed delivery procedure set forth below. As specified in Instruction 5 of the Letter of Transmittal, each shareholder desiring to tender Shares pursuant to the Offer must properly indicate in the section captioned "price (In Dollars) Per Share At Which Shares Are Being Tendered" on the Letter of Transmittal or facsimile thereof the price (in multiples of $.25) at which his or her Shares are being tendered; provided, however, that a shareholder may check the box in that section indicating that he or she is tendering all of his or her Shares at the Purchase Price. Shareholders desiring to tender Shares at more than one price must complete separate Letters of Transmittal for each price at which Shares are being tendered, except that the same Shares cannot be tendered (unless properly withdrawn previously in accordance with the terms of the Offer) at more than one price. In order to validly tender Shares, one and only one price box must be checked in the appropriate section on each Letter of Transmittal. SIGNATURE GUARANTEES AND METHOD OF DELIVERY. No signature guarantee is required on the Letter of Transmittal (i) if the Letter of Transmittal is signed by the registered holder of the Shares exactly as the name of the registered holder appears on the certificate (which term, for purposes hereof, includes any participant in The Depository Trust Company or the Philadelphia Depository Trust Company (collectively, the "Book-Entry Transfer Facilities") whose name appears on a security position listing as the holder of the Shares) tendered therewith, and payment and delivery are to be made directly to such registered holder, or (ii) if Shares are tendered for the account of a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc. or a commercial bank, trust company, savings association or credit union having an office, branch or agency in the United States (each such entity, an "Eligible Institution"). In all other cases, all signatures on the Letter of Transmittal must be Medallion guaranteed by an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a certificate representing Shares is registered in the name of a person other than the signer of a Letter of Transmittal, or if payment is to be made, or Shares not purchased or tendered are to be issued, to a person other than the registered holder, the certificate must be endorsed or accompanied by an appropriate stock power, in either case signed exactly as the name of the registered holder appears on the certificate, with the signature on the certificate or stock power Medallion guaranteed by an Eligible Institution. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (or a timely confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees and any other documents required by the Letter of Transmittal. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING STOCK CERTIFICATES, THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. FEDERAL INCOME TAX BACKUP WITHHOLDING. Unless an exemption applies under the applicable law and regulations concerning "backup withholding" of federal income tax, the Depositary will be required to withhold, and will withhold, 31% of the gross proceeds otherwise payable to a shareholder or other payee pursuant to the Offer unless the shareholder or other payee provides such person's taxpayer identification number (social security number or employer identification number) and certifies that such number is correct. If the Depositary is not provided with the correct taxpayer identification number, the Internal Revenue Service may subject the shareholder or other payee to a $50 penalty. Each tendering shareholder, other than a 5 9 noncorporate foreign shareholder, should complete and sign the main signature form and the Substitute Form W-9 included as part of the Letter of Transmittal so as to provide the information and certification necessary to avoid backup withholding, unless an applicable exemption exists and is proved in a manner satisfactory to the Company and the Depositary. Noncorporate foreign shareholders may be required to complete and sign a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. In the case of any foreign shareholder, the Depositary will withhold 30% of the gross proceeds paid to such shareholder in order to satisfy certain withholding requirements, unless such foreign shareholder proves in a manner satisfactory to the Company and the Depositary that (i) the sale of its Shares pursuant to the Offer will qualify as a sale or exchange, rather than a dividend, for Federal income tax purposes (see "The Offer -- Certain Federal Income Tax Consequences"), in which case no withholding will be required, (ii) the foreign shareholder is eligible for a reduced tax treaty rate with respect to dividend income, in which case the Depositary will withhold at the reduced treaty rate, or (iii) no withholding is otherwise required. EACH SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO WHETHER SUCH SHAREHOLDER IS SUBJECT TO OR EXEMPT FROM FEDERAL INCOME TAX BACKUP WITHHOLDING. BOOK-ENTRY DELIVERY. The Depositary will establish an account with respect to the Shares at each of the Book-Entry Transfer Facilities for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of the Shares by causing such facility to transfer such Shares into the Depositary's account in accordance with such facility's procedure for such transfer. Even though delivery of Shares may be effected through book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities, a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees and other required documents must, in any case, be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the guaranteed delivery procedure set forth below must be followed. DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO ONE OF THE BOOK-ENTRY TRANSFER FACILITIES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to the Offer and such shareholder's certificates are not immediately available (or the procedures for book-entry transfer cannot be completed on a timely basis) or time will not permit all required documents to reach the Depositary by the Expiration Date, such Shares may nevertheless be tendered provided that all of the following conditions are satisfied: (a) such tender is made by or through an Eligible Institution; (b) the Depositary receives (by hand, mail, telegram or facsimile transmission), on or prior to the Expiration Date, a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form the Company has provided with this Offer to Purchase (indicating the price at which the Shares are being tendered) and includes a guarantee by an Eligible Institution in the form set forth in such Notice; and (c) the certificates for all tendered Shares in proper form for transfer (or confirmation of book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by the Letter of Transmittal, are received by the Depositary within five OTC trading days after the date the Depositary receives such Notice of Guaranteed Delivery. DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of Shares to be accepted, the price to be paid therefor, the form of documents and the validity, form eligibility (including the time of receipt) and acceptance for payment of any tender of Shares will be determined by the Company, in its sole discretion, which determination shall be final 6 10 and binding on all parties. The Company reserves the absolute right to reject any or all tenders it determines not to be in proper form or the acceptance of or payment for which may be unlawful. The Company also reserves the absolute right to waive any of the conditions of the Offer or any defect or irregularity in the tender of any particular Shares. No tender of Shares will be deemed to be validly made until all defects and irregularities have been cured or waived. None of the Company, the Dealer Manager, the Depositary, the Information Agent or any other person is or will be obligated to give notice of any defects or irregularities in tenders, and none of them will incur any liability for failure to give such notice. PROFIT SHARING EMPLOYEE STOCK OWNERSHIP PLAN AND THRIFT INCENTIVE PLAN. As of August 31, 1996, the Company's Profit Sharing Employee Stock Ownership Plan ("ESOP") and Thrift Incentive Plan ("TIP") owned approximately 341,456 Shares and approximately 251,442 Shares, respectively, all of which were allocated to the accounts of the respective participants. Shares allocated to participants' accounts will, subject to the limitations of the Employee Retirement Income Security Act of 1974, as amended, and applicable regulations thereunder ("ERISA"), be tendered by the trustee of the respective plans according to the instructions of participants to the applicable trustee. Each trustee will make available to the respective participants whose accounts hold allocated Shares all documents furnished to shareholders of the Company in connection with the Offer generally and will provide additional information in separate letters with respect to the operations of the Offer to the participants of each of the ESOP and the TIP. Each such participant also will receive a form upon which the participant may instruct the trustee regarding the Offer. Each participant may direct that all, some or none of the Shares allocated to the participants' account be tendered. Participants also will be afforded withdrawal rights. See "The Offer -- Withdrawal Rights." Under ERISA the Company will be prohibited from purchasing any Shares from either the ESOP or the TIP (including Shares allocated to the accounts of participants) if the Purchase Price is less than the prevailing market price of the Shares on the date the Shares are accepted for payment pursuant to the Offer. If Shares tendered from either the ESOP or the TIP would have been accepted pursuant to the terms of the Offer except for this prohibition, such Shares shall automatically be deemed to be withdrawn. DIVIDEND REINVESTMENT PLAN. Shareholders who participate in the Company's Dividend Reinvestment Plan who want to tender Shares held under that plan pursuant to the Offer should mark the appropriate box on the Letter of Transmittal and follow the relevant instructions set out there. RULE 14E-4. It is a violation of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for a person (directly or indirectly) to tender shares for his or her own account unless, at the time of tender and at the end of the proration period (including any extension thereof), the person so tendering (i) has a net long position equal to or greater than the amount of (x) Shares tendered or (y) other securities immediately convertible into, exercisable or exchangeable for the amount of Shares tendered and will acquire such Shares for tender by conversion, exercise or exchange of such other securities and (ii) will cause such Shares to be delivered in accordance with the terms of the Offer. Rule 14e-4 provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. The tender of Shares pursuant to any one of the procedures described above will constitute the tendering shareholder's acceptance of the terms and conditions of the Offer as well as the tendering shareholder's representation and warranty that (i) such shareholder has a net long position in the Shares being tendered within the meaning of Rule 14e-4 and (ii) the tender of such Shares complies with Rule 14e-4. The Company's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering shareholder and the Company upon the terms and subject to the conditions of the Offer. WITHDRAWAL RIGHTS Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by the Company, also may be withdrawn after 12:00 midnight, New York City time, on Tuesday, November 5, 1996. Once accepted for payment, tenders of Shares made pursuant to the Offer are irrevocable. For a withdrawal to be effective, the Depositary must timely receive (at one of its addresses set forth on the back cover of this Offer to Purchase) a written, telegraphic or facsimile transmission notice of withdrawal. 7 11 Such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares. If the certificates have been delivered or otherwise identified to the Depositary, then, prior to the release of such certificates, the tendering shareholder must also submit the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn and the signature on the notice of withdrawal must be Medallion guaranteed by an Eligible Institution (except in the case of Shares tendered by an Eligible Institution). If Shares have been tendered pursuant to the procedure for book-entry transfer described under "The Offer -- Procedure for Tendering Shares," the notice of withdrawal must specify the name and the number of the account at the applicable Book-Entry Transfer Facility to be credited with the withdrawn Shares and otherwise comply with the procedures of such facility. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Company, in its sole discretion, which determination shall be final and binding on all parties. None of the Company, any of its affiliates, the Dealer Manager, the Depositary, the Information Agent or any other person is or will be obligated to give notice of any defects or irregularities in any notice of withdrawal, and none of them will incur any liability for failure to give such notice. Any Shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. Withdrawn Shares may, however, be retendered by the Expiration Date by again following any of the procedures described under "The Offer -- Procedure for Tendering Shares." If the Company extends the Offer, is delayed in its purchase of Shares or is unable to purchase Shares pursuant to the Offer for any reason, then, without prejudice to the Company's rights under the Offer, the Depositary may, subject to applicable law, retain on behalf of the Company all tendered Shares, and the Shares may not be withdrawn except to the extent tendering shareholders are entitled to withdrawal rights as described above. PURCHASE OF SHARES; PAYMENT OF PURCHASE PRICE Upon the terms and subject to the conditions of the Offer, the Company will determine the Purchase Price it will pay for validly tendered Shares taking into account the number of Shares tendered and the prices specified by tendering shareholders and will accept for payment (and thereby purchase) Shares validly tendered at or below the Purchase Price as soon as practicable after the Expiration Date. For purposes of the Offer, the Company will be deemed to have accepted for payment (and therefore purchased), subject to proration, Shares which are tendered at or below the Purchase Price and not withdrawn when, as and if it gives oral or written notice to the Depositary of its acceptance of such Shares for payment pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, the Company will purchase and pay a single per Share Purchase Price for 2,500,000 Shares (subject to increase or decrease as provided under "The Offer -- Number of Shares; Proration" and "-- Extension of the Offer; Termination; Amendment") or such lesser number of Shares as are validly tendered at prices not greater than $24.00 or less than $21.00 per Share, as promptly as practicable after the Expiration Date. Payment for Shares purchased pursuant to the Offer will be made by depositing the aggregate Purchase Price therefor with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payment from the Company and transmitting payment to the tendering shareholders. In the event of proration, the Company will determine the proration factor and pay for those tendered Shares accepted for payment as soon as practicable after the Expiration Date; however, the Company does not expect to be able to announce the final results of any such proration until approximately seven OTC trading days after the Expiration Date. Certificates for all Shares not purchased, including all Shares tendered at prices greater than the Purchase Price and Shares not purchased due to proration, will be returned (or, in the case of Shares tendered by book-entry transfer, such Shares will be credited to the account maintained with one of the Book-Entry Transfer Facilities by the participant therein who so delivered such Shares) as soon as practicable after the Expiration Date or termination of the Offer without expense to the tendering shareholder. Under no circumstances will the Company pay interest on the Purchase Price. In addition, if certain events occur, the Company may not be obligated to purchase Shares pursuant to the Offer. See "The Offer -- Certain Conditions of the Offer." 8 12 The Company will pay all stock transfer taxes, if any, payable on the transfer to it of Shares purchased pursuant to the Offer, provided, however, that (i) if payment of the Purchase Price is to be made to, or (ii) (in the circumstances permitted by the Offer) if unpurchased Shares are to be registered in the name of, any person other than the registered owner, or if tendered certificates are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of all stock transfer taxes, if any (whether imposed on the registered owner or such other person), payable on account of the transfer to such person will be deducted from the Purchase Price unless evidence satisfactory to the Company of the payment of such taxes or exemption therefrom is submitted. See Instruction 7 of the Letter of Transmittal. ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL (OR, IN THE CASE OF A FOREIGN INDIVIDUAL, FORM W-8 OBTAINABLE FROM THE DEPOSITARY) MAY BE SUBJECT TO REQUIRED FEDERAL INCOME TAX BACKUP WITHHOLDING. SEE "THE OFFER -- PROCEDURE FOR TENDERING SHARES -- FEDERAL INCOME TAX BACKUP WITHHOLDING." CERTAIN CONDITIONS OF THE OFFER Notwithstanding any other provision of the Offer, the Company shall not be required to accept for payment, purchase or pay for any Shares tendered, and may terminate or amend the Offer or may postpone (subject to the requirements of the Exchange Act for prompt payment for or return of Shares) the acceptance for payment of, the purchase of and the payment for, Shares tendered if, in the sole judgment of the Company, at any time on or after September 10, 1996, and at or before the time of purchase of any such Shares, any of the following events shall have occurred (or shall have been determined by the Company to have occurred) which, regardless of the circumstances (including any action or omission to act by the Company), makes it inadvisable to proceed with the Offer or with such purchase or payment: (a) there shall have been threatened, instituted or pending any action or proceeding by any government or governmental, regulatory or administrative agency or authority or tribunal or any other person, domestic or foreign, or before any court or governmental, regulatory or administrative authority or agency or tribunal, domestic or foreign, which: (1) challenges the making of the Offer, the acquisition of Shares pursuant to the Offer or otherwise relates in any manner to the Offer or (2) in the Company's sole judgment, could materially affect the business, condition (financial or other), income operations or prospects of the Company and its subsidiaries, taken as a whole, or otherwise materially impair in any way the contemplated future conduct of the business of the Company or any of its subsidiaries or materially impair the Offer's contemplated benefits to the Company; or (b) there shall have been any action threatened or taken, or approval withheld, or any statute, rule, regulation, judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or the Company or any of its subsidiaries, by any court or any government or governmental, regulatory or administrative authority or agency or tribunal, domestic or foreign, which, in the Company's sole judgment, would or might directly or indirectly: (1) make the acceptance for payment of, or payment for, some or all of the Shares illegal or otherwise restrict or prohibit consummation of the Offer, (2) delay or restrict the ability of the Company, or render the Company unable, to accept for payment or pay for some or all of the Shares, (3) materially impair the contemplated benefits of the Offer to the Company or (4) materially affect the business, condition (financial or other), income, operations or prospects of the Company and its subsidiaries, taken as a whole, or otherwise materially impair in any way the contemplated future conduct of the business of the Company or any of its subsidiaries; or (c) there shall have occurred: (1) the declaration of any banking moratorium or suspension of payments in respect of banks in the United States, (2) any general suspension of trading in, or limitation on prices for, securities on any United States national securities exchange or in the over-the-counter market, (3) the commencement or escalation of a war, armed hostilities or any other national or international crisis directly or indirectly involving the United States, (4) any limitation (whether or not 9 13 mandatory) by any governmental, regulatory or administrative agency or authority on, or any event which, in the Company's sole judgment, might affect, the extension of credit by banks or other lending institutions in the United States, (5) any significant decrease in the market price of the Shares or in the general level of market prices of equity securities in the United States or abroad or any change in the general political, market, economic or financial conditions in the United States or abroad that could have a material adverse effect on the Company's business, operations or prospects or the trading in the Shares or that, in the sole judgment of the Company, makes it inadvisable to proceed with the Offer or (6) in the case of any of the foregoing existing at the time of the commencement of the Offer, in the Company's sole judgment, a material acceleration or worsening thereof; or (d) any change shall have occurred or be threatened in the business, condition (financial or other), income, operations, Share ownership or prospects of the Company and its subsidiaries, taken as a whole, which, in the Company's sole judgment, is or may be material to the Company or any other event shall have occurred which, in the Company's sole judgment, materially impairs the Offer's contemplated benefits; or (e) a tender or exchange offer for any or all of the Shares (other than the Offer), or any merger, business combination or other similar transaction with or involving the Company or any subsidiary (other than the proposed acquisition of Family and related transactions), shall have been proposed, announced or made by any person; or (f) any event shall have occurred which, in the Company's sole judgment, could prevent a condition to a party's obligation under the Agreement to consummate the Merger not being fulfilled (see "The Merger -- Conditions to the Merger"). The foregoing conditions are for the Company's sole benefit and may be asserted by the Company regardless of the circumstances giving rise to any such condition (including any action or inaction by the Company) or may be waived by the Company in whole or in part. The Company's failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by the Company concerning the above-described events shall be final and shall be binding on all parties. EXTENSION OF THE OFFER; TERMINATION; AMENDMENT The Company expressly reserves the right, at any time or from time to time, in its sole discretion, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary and making a public announcement thereof. The Company also expressly reserves the right, in its sole discretion, to terminate the Offer and not accept payment or pay for any Shares not theretofore accepted for payment or paid for or, subject to applicable law, to postpone payment for Shares upon the occurrence of any of the conditions specified under "The Offer -- Certain Conditions of the Offer" by giving oral or written notice of such termination or postponement to the Depositary and making a public announcement thereof. The Company's reservation of the right to delay payment for Shares which it has accepted for payment is limited by Rules 13e-4(f)(2) and 13e-4(f)(5) promulgated under the Exchange Act. Rule 13e-4(f)(2) requires that the Company permit Shares tendered pursuant to the Offer to be withdrawn: (i) at any time during the period the Offer remains open; and (ii) if not yet accepted for payment, after the expiration of forty business days from the commencement of the Offer. Rule 13e-4(f)(5) requires that the Company must either pay the consideration offered or return the Shares tendered promptly after the termination or withdrawal of the Offer. Subject to compliance with applicable law, the Company further reserves the right, in its sole discretion, at any time or from time to time to amend the Offer in any respect, including increasing or decreasing the number of Shares the Company may purchase or the range of prices it may pay pursuant to the Offer. Amendments to the Offer may be made at any time or from time to time effected by public announcement thereof, such announcement, in the case of an extension, to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Any public announcement made pursuant to the Offer will be disseminated promptly to shareholders in a manner reasonably designed to inform shareholders of such change. Without limiting the manner in which 10 14 the Company may choose to make a public announcement, except as required by applicable law, the Company shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. If (i) the Company increases or decreases the price to be paid for Shares, or the Company increases the number of Shares being sought and any such increase in the number of Shares being sought exceeds 2% of the outstanding Shares, or the Company decreases the number of Shares being sought, and (ii) the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that notice of such increase or decrease is first published, sent or given, the Offer will be extended until the expiration of such period of ten business days. If the Company otherwise materially changes the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated under the Exchange Act. These rules require that the minimum period during which an offer must remain open following material changes in the terms of the offer or information concerning the offer (other than a change in price or a change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of such terms or information. PRICE RANGE OF THE SHARES; DIVIDENDS The following table sets forth during the periods indicated the high and low sales prices of a share of Common Stock as reported on the Nasdaq Stock Market's National Market and the dividends declared per share of Common Stock.
MARKET PRICE DIVIDENDS ------------------- DECLARED HIGH LOW PER SHARE ------- ------- --------- 1996 First Quarter................................. $22.75 $19.00 $ .14 Second Quarter................................ 22.25 19.375 .17 Third Quarter (through September 9)........... 22.375 19.00 .17 1995 First Quarter................................. 14.00 11.75 .09 Second Quarter................................ 16.75 12.375 .12 Third Quarter................................. 20.50 15.25 .12 Fourth Quarter................................ 22.875 18.25 .13 1994 First Quarter................................. 12.50 10.125 .01 Second Quarter................................ 14.00 10.125 .05 Third Quarter................................. 15.00 12.25 .08 Fourth Quarter................................ 15.125 10.375 .09
On May 30, 1996, the last trading day preceding public announcement of the Agreement and the Company's intention to repurchase shares of Common Stock in connection with the Merger, the high and low sales prices of a share of Common Stock were $20.00 and $19.625, respectively. On June 19, 1996, the last trading day preceding public announcement by the Company that it was likely to repurchase shares of Common Stock in connection with the Merger by means of a tender offer, the high and low sales prices of a share of Common Stock were $20.625 and $20.375, respectively. On September 9, 1996, the most recent practicable date prior to the printing of this Offer to Purchase, the high and low sales prices of a share of Common Stock were $22.375 and $22.00, respectively. Shareholders are urged to obtain current market quotations for the Common Stock. 11 15 SOURCE AND AMOUNT OF FUNDS Assuming that the Company purchases 2,500,000 Shares pursuant to the Offer at a price of $24.00 per share, the Company estimates that the maximum aggregate cost of the Offer, including all fees and expenses applicable to the Offer, would be approximately $60.3 million. The Company plans to obtain the funds needed for the Offer from cash and securities held by the Company. BACKGROUND OF AND PURPOSE OF THE OFFER; RECOMMENDATION OF THE BOARD OF DIRECTORS OF THE COMPANY The Offer is being conducted in connection with the Company's pending acquisition of Family. See "The Merger -- Background of the Merger." In connection with its evaluation of this transaction, management of the Company determined that a repurchase of shares of Common Stock could improve the anticipated financial performance of the Company following an acquisition of Family. Subsequent to announcement on May 31, 1996 of the Agreement and the Company's general intention to repurchase shares of Common Stock in connection therewith, the Company determined, after consultation with its financial advisor, that an issuer tender offer likely would be the most effective means of acquiring the desired number of shares of Common Stock and issued a press release to this effect on June 20, 1996. The Company determined that the repurchase of shares of Common Stock in connection with the Merger would be beneficial because of its estimated effects on earnings per share. Based on the assumptions set forth under "Pro Forma Combined Consolidated Financial Information," management of the Company estimates that the pro forma earnings per share of Common Stock for the six months ended June 30, 1996 and the year ended December 31, 1995 would be $0.85 and $1.71, respectively, if it is assumed that both the Merger and the Offer were consummated at the beginning of such periods, as compared to $0.82 and $1.64, respectively, if it is assumed that only the Merger was consummated as of the beginning of such periods. (As noted under "Pro Forma Combined Consolidated Financial Information," none of the foregoing estimates give effect to anticipated cost savings in connection with the Merger.) Following completion of the Offer and the Merger, the Company and each of its banking subsidiaries will continue to have strong capital positions. In this regard, the Company's leverage capital ratio and risk-based capital ratios will continue to exceed the thresholds established by the federal banking agencies under the prompt corrective action scheme set forth in Section 38 of the Federal Deposit Insurance Act, and each of the Company's banking subsidiaries will continue to qualify as "well capitalized" institutions under the same. Based on the assumptions set forth under "Pro Forma Combined Consolidated Financial Information," management of the Company estimates that the Company's Tier I leverage capital ratio and total risk-based capital ratio as of June 30, 1996 would amount to 6.57% and 11.48%, respectively, if it is assumed that both the Merger and the Offer were consummated as of such date. The Offer will enable shareholders to sell a portion of their Shares while retaining a continuing equity interest in the Company if they so desire. The Offer will increase the Company's leverage, with an attendant increase in the risks and rewards for persons who retain a continuing equity interest in the Company. In addition, persons who determine not to accept the Offer will realize a proportionate increase in their relative equity interest in the Company, and thus in the Company's future earnings and assets, subject to increased risks and rewards resulting from higher leverage and to the Company's ability to issue additional Shares or other equity securities in the future. The Offer may provide shareholders who are considering a sale of all or a portion of their Shares the opportunity to determine the price or prices (not greater than $24.00 nor less than $21.00 per Share) at which they are willing to sell their Shares and, if any such Shares are purchased pursuant to the Offer, to sell those Shares for cash without the usual transaction costs associated with open-market sales. The Offer also may give shareholders the opportunity to sell Shares at prices greater than market prices prevailing prior to announcement of the Offer. See "The Offer -- Price Range of the Shares; Dividends." To the extent the purchase of Shares in the Offer results in a reduction in the number of shareholders of record, the costs of the Company for services to shareholders may be reduced. 12 16 THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL OF SUCH SHAREHOLDER'S SHARES AND HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED. Following completion of the Offer, the Company may repurchase additional Shares in the open market, in privately negotiated transactions or otherwise, but currently intends to do so only to the extent of the excess, if any, of the 2,500,000 Shares sought to be purchased in the Offer over the actual number of Shares acquired pursuant to the Offer. Any such purchases may be on the same terms or on terms which are more or less favorable to shareholders than the terms of the Offer. Rule 13e-4 under the Exchange Act prohibits the Company and its affiliates from purchasing any Shares, other than pursuant to the Offer, until at least ten business days after the Expiration Date. Any possible future purchases by the Company will depend on many factors, including the market price of the Shares, the results of the Offer, the Company's business and financial position and general economic and market conditions. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES As of August 31, 1996, the directors and executive officers of the Company and their affiliates in the aggregate beneficially owned 944,215 Shares (including 378,825 Shares which may be acquired upon the exercise of outstanding stock options which may be exercised within 60 days of such date), or 3.7% of the outstanding Shares (including Shares subject to such stock options). In addition, as of August 31, 1996, the Company's ESOP and TIP held of record 341,456 Shares and 251,442 Shares, respectively, which represent 1.4% and 1.0%, respectively, of the outstanding Shares. With the exception of Davis Thurber, a director of the Company who may tender up to 50,000 Shares but has not yet made a decision in this regard, the Company has been advised that no director or executive officer intends to tender any Shares pursuant to the Offer. Decisions as to whether Shares held in the ESOP and the TIP will be tendered pursuant to the Offer will be made as described under "The Offer -- Procedure for Tendering Shares." If the Company purchases 2,500,000 Shares (or approximately 9.9% of the Shares outstanding at August 31, 1996) pursuant to the Offer, the directors and executive officers of the Company and their affiliates as a group would beneficially own approximately 4.1% (3.9% in the event Mr. Thurber tenders 50,000 Shares) of the outstanding Shares (including Shares issuable upon the exercise of outstanding stock options which may be exercised within 60 days of August 31, 1996) and, assuming that none of the Shares held in the ESOP and the TIP are tendered, such plans would hold approximately 1.5% and 1.1% of the outstanding Shares, respectively. Except as set forth on Schedule A, based upon the Company's records and upon information provided to the Company by its directors, executive officers and affiliates, neither the Company nor any of its subsidiaries nor, to the best of the Company's knowledge, any of the directors or executive officers of the Company, nor any associates of any of the foregoing, has effected any transactions in the Shares during the 40 business day period prior to the date hereof. Except as set forth in this Offer to Purchase, neither the Company nor, to the best of the Company's knowledge, any of its affiliates, directors or executive officers, or any of the executive officers or directors of its subsidiaries, is a party to any contract, arrangement, understanding or relationship with any other person relating, directly or indirectly, to the Offer with respect to any securities of the Company (including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies, consents or authorizations). 13 17 CERTAIN EFFECTS OF THE OFFER ON THE SHARES; REGISTRATION UNDER THE EXCHANGE ACT The Company's purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise be traded publicly and may reduce the number of shareholders. Nonetheless, the Company believes that there will be a sufficient number of Shares outstanding and publicly traded following consummation of the Offer to ensure a continued trading market for the Shares. Based upon published guidelines of the Nasdaq Stock Market's National Market, the Company does not believe that its purchase of Shares pursuant to the Offer will cause the Company's remaining Shares to be delisted from the Nasdaq Stock Market's National Market. The Shares are currently "margin securities" under the rules of the Board of Governors of the Federal Reserve System ("FRB"). This has the effect, among other things, of allowing brokers to extend credit to their customers using such Shares as collateral. The Company believes that, following the purchase of Shares pursuant to the Offer, the Shares will continue to be "margin securities" for purposes of the FRB's margin regulations. Shares the Company acquires pursuant to the Offer will be held in the Company's treasury and will be available for the Company to issue without further shareholder action (except as may be required by applicable law or the rules of the Nasdaq Stock Market's National Market). Shares acquired pursuant to the Offer could be issued without shareholder approval for general or other corporate purposes, including stock splits or dividends, the acquisition of other businesses, the raising of additional capital for use in the Company's business and the implementation of employee benefits plans. It is the current intention of the Company to issue Shares acquired by it pursuant to the Offer in connection with the pending acquisition of Family pursuant to the Agreement. See "The Merger." If the Merger is consummated pursuant to the Agreement, the Company believes that its purchase of Shares pursuant to the Offer will not prevent it from accounting for any acquisitions which it may effect during the two-year period following the Expiration Date as a "pooling of interests" under generally accepted accounting principles or otherwise affect prior acquisitions of the Company accounted for on this basis. See "The Company." If the Merger is not consummated pursuant to the Agreement, the Company intends to promptly reissue, in an underwritten offering managed by the Dealer Manager, a number of Shares purchased pursuant to the Offer which it believes is sufficient to not have the foregoing effects regarding the ability of the Company to account for acquisitions by it as a "pooling of interests." The Shares are registered under the Exchange Act, which requires, among other things, that the Company furnish certain information to its shareholders and the Securities and Exchange Commission (the "Commission") and comply with the Commission's proxy rules in connection with meetings of the Company's shareholders. See "Available Information." The Company believes that its purchase of Shares pursuant to the Offer will not result in the Shares becoming eligible for deregistration under the Exchange Act. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS As a registered bank holding company under the Bank Holding Company Act of 1956, as amended ("BHCA"), the Company is subject to regulation and supervision by the FRB, and as a financial institution holding company under Part 10 of Title 9-B, Maine Revised Statutes Annotated, the Company is subject to regulation and supervision by the Superintendent of Banking of the State of Maine (the "Superintendent"). In addition, the Company will register as a savings and loan holding company under the Home Owners' Loan Act, as amended ("HOLA"), upon consummation of the Merger, and as a result will become subject to certain regulation and supervision by the Office of Thrift Supervision ("OTS"). See "The Merger -- Certain Regulatory Considerations." Except for a notice to the Superintendent under Maine law, which has been provided by the Company, the Company is not aware of any approval or other action by any government or governmental, administrative or regulatory authority or agency that would be required for the Company's purchase of Shares pursuant to the Offer. Should any such approval or other action be required, the Company currently contemplates that it will seek such approval or other action. The Company cannot predict whether it may be required to delay the 14 18 acceptance for payment of, or payment for, Shares tendered pursuant to the Offer pending the outcome of any such matter. There can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that the failure to obtain any such approval or other action might not result in adverse consequences to the Company's business. The Company's obligations under the Offer to accept for payment and pay for Shares is subject to certain conditions. See "The Offer -- Certain Conditions of the Offer." Each of the BHCA and the Change in Bank Control Act set forth thresholds with respect to the ownership of voting shares of a bank holding company of 5% and 10%, respectively, over which the owner of such voting shares may be determined to control such bank holding company, and Maine banking law sets forth a threshold with respect to the ownership of voting shares of a financial institution holding company of 5%, over which the owner of such voting shares may be determined to control such financial institution holding company. In addition, similar thresholds are applicable to the ownership of voting shares of a savings and loan holding company under provisions of the HOLA and the Change in Bank Control Act, which will become applicable to the Company upon consummation of the Merger. If, as a result of the Offer, the ownership interest of any shareholder in the Company is increased over these thresholds, such shareholder may be required to reduce its ownership interest in the Company. Each shareholder whose ownership interest may be so increased is urged to consult the shareholder's own legal counsel with respect to the consequences to the shareholder of the Offer. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The United States federal income tax discussion set forth below summarizes the principal federal income tax consequences to domestic shareholders of sales of stock pursuant to the Offer and is included for general information only. The discussion does not address all aspects of federal income taxation that may be relevant to a particular shareholder or any state, local, foreign or other tax laws which may be applicable. Certain shareholders (including, but not limited to, insurance companies, tax-exempt entities, foreign persons, financial institutions, broker dealers, employee benefit plans, personal holding companies and persons who acquired their Shares upon the exercise of employee stock options or as compensation) may be subject to special rules not discussed below. The discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations promulgated thereunder and Internal Revenue Service rulings and pronouncements and judicial decisions thereunder, all as in effect on the date hereof and all of which are subject to change at any time, possibly with retroactive effect. EACH TENDERING SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR TO DETERMINE THE ACTUAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES, AND ANY STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES, TO SUCH TENDERING SHAREHOLDER OF A DISPOSITION OF SHARES PURSUANT TO THE OFFER. GENERAL. In general, a sale of Shares pursuant to the Offer will be a taxable transaction for federal income tax purposes. Such sale will constitute a "redemption" within the meaning of Section 317 of the Code. Each tendering shareholder will recognize either gain or loss from a sale of Shares or dividend income, depending upon the application of Section 302 of the Code to the shareholder's particular facts and circumstances. If the redemption qualifies as a sale of Shares under Section 302, the cash received pursuant to the Offer will be treated as a distribution from the Company in part or full payment in exchange for the Shares surrendered. Sale treatment will result in the shareholder's recognizing gain or loss equal to the difference between (i) the cash received pursuant to the Offer and (ii) the shareholder's tax basis in the Shares surrendered. If the redemption does not qualify as a sale of Shares under Section 302, the shareholder will not be treated as having sold Shares but will be treated as having received a dividend taxable as ordinary income in an amount equal to the cash received pursuant to the Offer. SALE TREATMENT. Under Section 302 of the Code, a sale of Shares pursuant to the Offer will be treated as a sale of such Shares for federal income tax purposes if such sale of Shares (i) is a "substantially disproportionate redemption" with respect to the shareholder, (ii) results in a "complete redemption" of all of 15 19 the shareholder's stock in the Company or (iii) is "not essentially equivalent to a dividend" with respect to the shareholder. In determining whether any of these three tests under Section 302 (the "Section 302 tests") is satisfied, shareholders must take into account not only Shares that they actually own, but also any shares that they are treated as owning pursuant to the constructive ownership rules of Section 318 of the Code. Pursuant to these constructive ownership rules, a shareholder is deemed to constructively own any Shares that are owned by certain related individuals and entities and any Shares that the shareholder has a right to acquire by exercise of an option or by conversion or exchange of a security. THE SECTION 302 TESTS. One of the following tests must be satisfied in order for the exchange of Shares pursuant to the Offer to be treated as a sale rather than as a dividend distribution. Substantially Disproportionate Redemption Test. A tendering shareholder's sale of Shares pursuant to the Offer will be a "substantially disproportionate redemption" with respect to the shareholder if the percentage of Shares actually and constructively owned by the shareholder compared to all the outstanding Shares immediately following the sale of Shares pursuant to the Offer (treating as not outstanding all Shares sold by shareholders pursuant to the Offer) is less than 80% of the percentage of Shares actually and constructively owned by the shareholder compared to all the outstanding Shares immediately before the sale of Shares pursuant to the Offer (treating as outstanding all Shares sold by shareholders pursuant to the Offer). This test will be applied to each shareholder individually, regardless of the effect of the redemption on other shareholders. Complete Redemption Test. A tendering shareholder's exchange of Shares pursuant to the Offer will generally result in a "complete redemption" of all the shareholder's stock in the Company if, pursuant to the Offer, the Company purchases all of the Shares actually owned by the shareholder and subsequently the shareholder does not constructively own any Shares. If the shareholder's sale of Shares pursuant to the Offer would satisfy the complete redemption requirement but for the shareholder's constructive ownership of Shares held by certain family members, such shareholder may, under certain circumstances, be entitled to waive such constructive ownership, provided that the shareholder complies with the provisions of Section 302(c) of the Code. If a tendering shareholder actually owns no Shares after selling his or her Shares pursuant to the Offer, constructively owns only Shares owned by certain family members and the shareholder qualifies to and does waive constructive ownership of Shares owned by certain family members, that redemption of Shares should qualify as a "complete redemption." Not Essentially Equivalent to a Dividend Test. A tendering shareholder's sale of Shares pursuant to the Offer will "not be essentially equivalent to a dividend" if, as a result of the sale of Shares pursuant to the Offer, the shareholder experiences a "meaningful reduction" in his or her proportionate interest in the Company, including the shareholder's voting rights, participation in earnings and liquidation rights and taking into account the constructive ownership rules. In certain circumstances, even a small reduction in a shareholder's proportionate stock interest may satisfy this test. For example, the Internal Revenue Service has indicated in a published ruling that a 3.3% reduction in the proportionate stock interest of a small (substantially less than 1%) shareholder in a publicly-held corporation who exercised no control over corporate affairs constitutes such a "meaningful reduction." A shareholder's ability to satisfy any of the Section 302 tests may be affected by proration pursuant to the Offer. Thus, a shareholder can be given no assurance, even if he or she tenders all of the Shares actually and constructively owned by him or her, that the Company will purchase a sufficient number of such Shares to permit him or her to satisfy any of the Section 302 tests. A tendering shareholder may be able to take into account acquisitions or dispositions of Shares which are substantially contemporaneous with the Offer in determining whether any of the Section 302 tests is satisfied. Tendering shareholders are strongly advised to consult their own tax advisors regarding the tax consequences of such transactions in their particular circumstances. If any of the Section 302 tests if satisfied, the tendering shareholder will recognize gain or loss equal to the difference between the amount of cash received by the shareholder pursuant to the Offer and the shareholder's tax basis in the Shares sold. Such gain or loss must be determined separately for each block of Shares sold (i.e., Shares acquired at the same time in a single transaction), and will be capital gain or loss, 16 20 assuming the Shares were held by the shareholder as a capital asset. Capital gain or loss will be long-term capital gain or loss if, at the time the Company accepts the Shares for payment, the Shares were held by the shareholder for more than one year. DIVIDEND TREATMENT. If none of the Section 302 tests is satisfied, the tendering shareholder generally will be treated as having received a dividend taxable as ordinary income in an amount equal to the total cash received by the shareholder pursuant to the Offer, provided that the Company has sufficient accumulated or current earnings and profits. The Company expects that its current and accumulated earnings and profits will be sufficient to cover the amount of all distributions pursuant to the Offer, if any, that are treated as dividends. To the extent that the purchase of Shares from any shareholder pursuant to the Offer is treated as a dividend, such shareholder's tax basis in any Shares which the shareholder actually or constructively retains after consummation of the Offer will be increased by the shareholder's tax basis in the Shares surrendered pursuant to the Offer. TREATMENT OF DIVIDEND INCOME FOR CORPORATE SHAREHOLDERS. In the case of a corporate shareholder, if the cash received for Shares pursuant to the Offer is treated as a dividend, the dividend income may be eligible for the 70% dividends-received deduction under Section 243 of the Code. The dividends-received deduction is subject to certain limitations and may not be available if the corporate shareholder does not satisfy certain holding period requirements with respect to the Shares or if the Shares are treated as "debt-financed portfolio stock." The Company believes that the Offer will not result in a pro rata distribution to all shareholders. Consequently, dividends received by corporate shareholders pursuant to the Offer likely will be treated as "extraordinary dividends" as defined by Section 1059 of the Code. Corporate shareholders should consult their tax advisors as to the availability of the dividends-received deduction and the application of Section 1059 of the Code. FEES AND EXPENSES The Company has retained Keefe, Bruyette & Woods, Inc. as Dealer Manager in connection with the Offer. The Dealer Manager will receive a fee of $0.10 per Share purchased by the Company pursuant to the Offer. The Company also will reimburse the Dealer Manager for its reasonable out-of-pocket expenses relating to the Offer, including reasonable fees and expenses of counsel. The Company has agreed to indemnify the Dealer Manager against certain liabilities in connection with the Offer, including certain liabilities under the federal securities laws. The Dealer Manager and the Company are party to a retainer agreement pursuant to which the Dealer Manager renders investment banking and advisory services to the Company during 1996 in exchange for a retainer of $50,000. The Dealer Manager also has rendered various investment banking and advisory services to the Company in the past, for which it has received customary compensation. The Company has retained Morrow & Co., Inc. as Information Agent and American Stock Transfer and Trust Company as Depositary in connection with the Offer. The Information Agent may contact shareholders by mail, telephone, telex, telegraph and personal interviews, and may request brokers, dealers and other nominee shareholders to forward materials relating to the Offer to beneficial owners. The Depositary and the Information Agent will receive reasonable and customary compensation for their services. The Company also will reimburse the Depositary and the Information Agent for out-of-pocket expenses, including reasonable attorneys' fees, and has agreed to indemnify the Depositary and the Information Agent against certain liabilities in connection with the Offer, including certain liabilities under the federal securities laws. Neither the Information Agent nor the Depositary has been retained to make solicitations or recommendations in connection with the Offer. The Company will not pay fees or commissions to any broker, dealer, commercial bank, trust company or other person (other than the Dealer Manager) for soliciting any Shares pursuant to the Offer. The Company will, however, on request through the Information Agent, reimburse such persons for customary handling and mailing expenses incurred in forwarding materials in respect of the Offer to the beneficial owners for which they act as nominees. No such broker, dealer, commercial bank or trust company has been authorized to act as 17 21 the Company's agent for purposes of the Offer. The Company will pay (or cause to be paid) any stock transfer taxes on its purchase of Shares, except as otherwise provided in Instruction 7 of the Letter of Transmittal. For information regarding expenses relating to the Merger, see "The Merger -- Expenses of the Merger." THE MERGER The following information relating to the Merger does not purport to be complete and is qualified in its entirety by reference to the Agreement, a copy of which has been incorporated by reference in the Schedule 13E-4 of which this Offer to Purchase is a part. The Agreement may be inspected or obtained in the manner set forth under "Available Information." GENERAL In accordance with the terms of and subject to the conditions set forth in the Agreement, Family will be merged with and into Merger Corp., with Merger Corp. as the surviving corporation of the Merger. Upon consummation of the Merger, Merger Corp. shall succeed to all the rights, obligations and properties of Family, the separate corporate existence of which shall cease as a result of the Merger. The Agreement provides that at the Effective Time each outstanding share of Family Common Stock (other than (i) any dissenting shares under Massachusetts law and (ii) any shares held by the Company or a subsidiary thereof other than in a fiduciary capacity or in satisfaction of a debt previously contracted) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive 1.26 shares of Common Stock, subject to possible adjustment under certain circumstances, plus cash in lieu of any fractional share interest. No fractional shares of Common Stock shall be issued in the Merger to holders of shares of Family Common Stock. Each holder of shares of Family Common Stock who otherwise would have been entitled to a fraction of a share of Common Stock shall receive in lieu thereof, at the time of surrender of the certificate or certificates representing such holder's shares of Family Common Stock, an amount of cash (without interest) determined by multiplying the fractional share interest to which such holder would otherwise be entitled by the closing per share price of the Common Stock on the Nasdaq Stock Market's National Market on the business day preceding the Effective Time. Each of the Board of Directors of the Company and the Board of Directors of Family has unanimously approved the Agreement and the transactions contemplated thereby and believes that the Merger is fair to and in the best interests of the Company and Family, respectively, and its respective shareholders. The shareholders of the Company and the shareholders of Family approved the Agreement at special meetings of shareholders of the Company and Family, respectively, held on August 22, 1996 (the "Company Special Meeting" and the "Family Special Meeting," respectively). BACKGROUND OF THE MERGER Over the past several years, the Board of Directors of Family and its senior executive officers have regularly reviewed Family's strategic alternatives with the assistance of Family's financial advisor. These reviews have focused on assessing Family's opportunities for increasing long-term shareholder value, including opportunities for enhancing earnings internally and for growth through possible strategic acquisitions or affiliations with other financial institutions. Although Family enjoyed record earnings of approximately $8.0 million in 1995, Family recognized that its ability to continually produce increasing earnings growth in the future would be difficult for a number of reasons, including intense competition for loans in Family's market, the fact that Family's operating expenses had already been reduced to a level below peer averages and the reduced availability of small in-market banks that might be acquisition targets. In early 1996, after an extensive review of the banking environment, Family's management and Board of Directors concluded that, while Family was poised to continue earning a good return for its shareholders, it was appropriate to explore whether a strategic combination with another financial 18 22 institution might have the potential for creating even greater shareholder value. Exploring possible strategic alliances seemed especially advisable following the late 1995 announcements of two significant New Hampshire bank acquisitions (including the Company's acquisition of Bank of New Hampshire Corporation ("BNHC")), which resulted in increasing attention being focused on Merrimack Valley financial institutions as potential acquisition targets. Given the Company's recent acquisition activity in New Hampshire (contiguous to Family's New Hampshire franchise), its financial strength, and its community banking focus, it appeared to Family that the Company might have a strong strategic interest in Family's franchise and that an affiliation with the Company might be possible on terms that would enhance long-term, shareholder value. Therefore, after consulting with members of the Family Board's Mergers and Acquisitions Committee, Family's President, David D. Hindle, scheduled a meeting for January 16, 1996 with the Company's President, William J. Ryan. At that meeting, Mr. Hindle and Mr. Ryan spoke in general terms about the two companies' business philosophies, their complementary geographic and product franchises and the rationale for a potential business combination between them. At that meeting, Mr. Ryan indicated that the Company was interested in moving into northern Massachusetts and that, although there were other possible targets in Family's market, Family appeared to be the most attractive vehicle for an entrance into northern Massachusetts for a variety of reasons, including Family's geographic franchise and earnings performance. Following the initial meeting between the two presidents, the Board of Directors of Family met on January 19, 1996 to discuss strategic alternatives available to Family, including the pursuit of potential acquisition targets, adopting a "wait and see" attitude toward the consolidation activity in the New England market, pursuing a "merger of equals" with another similarly-sized institution or exploring a strategic affiliation with a larger institution such as the Company. After much discussion of various options available to Family, the Board of Directors of Family agreed that it made sense to keep the lines of communication open with the Company, with the understanding that the Company was not in a position to engage in serious negotiations at that time in light of its pending acquisition of BNHC. To that end, Mr. Hindle and Mr. Ryan continued their informal discussions at two subsequent meetings, on February 22, 1996 and March 14, 1996. During this period, Family's management, with the assistance of its financial advisor, McConnell, Budd & Downes, Inc., continued to consider whether or not there were other possible strategic partners that seemed as potentially attractive as the Company from a shareholder, employee, and strategic "fit" perspective. Based upon its analysis, Family confirmed its earlier judgment that the Company appeared to be the most logical potential partner, and would be most likely to be in a position to enter into a strategic alliance on terms that would be attractive to Family's shareholders, employees, customers and community. At a meeting of the Board of Directors of Family on March 25, 1996, representatives of Family's financial advisor and legal counsel made presentations to the Board of Directors of Family outlining various factors to be considered in evaluating various strategic alternatives, including remaining an independent entity, seeking to acquire smaller institutions, seeking a merger of equals and entering into a strategic combination with a larger institution. Family's financial advisor also reviewed with the Board of Directors of Family an analysis of the Company and the other New England financial institutions that appeared to have the financial capacity to consider a transaction with Family. After the presentations and lengthy discussions, the Board of Directors of Family authorized Mr. Hindle to seek a nonbinding expression of interest from the Company, outlining the proposed terms of a possible business combination. On March 28, 1996, the Company sent to Family a letter which indicated the Company's interest in discussing a transaction with Family and proposed in general terms the structure of a possible transaction and potential plans for integrating the combined companies. The March 28 letter summarized the informal discussions that Mr. Hindle and Mr. Ryan had held, but did not constitute an offer or propose any financial terms of a possible transaction. The March 28 letter included a Confidentiality Agreement, which the parties signed as of April 3, 1996. During the month of April, Family and the Company were occupied with other matters, including preparing for their respective annual shareholders meetings, and as a result the parties held no further meetings until May 3, 1996. At the May 3 meeting, Family and the Company exchanged and discussed certain confidential financial information to enable the parties to further assess the viability of a business 19 23 combination between them. Over the next several days, officers of the Company and Family continued to exchange confidential financial and operational data. On May 15, 1996, the Company sent a letter to Family setting forth a proposed exchange ratio and other terms of a possible combination. Over the next several days, senior management and financial advisors of each of Family and the Company continued to discuss the financial and other terms of the proposed merger, including the Exchange Ratio, and issues relating to the management and operations of the parties following the Merger. During this period the Exchange Ratio was determined on the basis of arms'-length negotiations between the parties. On May 22, 1996, the Board of Directors of Family met to discuss the terms of the proposal. Mr. Hindle reviewed with the Board of Directors of Family the reasons for and the potential benefits of the Merger, and Family's financial and legal advisors made further presentations about the terms of the proposal, the available alternatives and the factors to be considered. After a lengthy discussion, the Board of Directors of Family authorized management to move forward to negotiate the terms of a definitive merger agreement for presentation to the Board of Directors of Family at a meeting the following week. Over the next week, the parties and their representatives conducted due diligence with respect to the other's financial condition and other relevant matters. Also during that week, the parties and their legal counsel negotiated the terms of the definitive Agreement and related Stock Option Agreements. Family representatives met with Family's legal and financial advisors on May 27, 1996 to discuss a draft Agreement and the provisions requiring further negotiation. After discussing various provisions with the Company representatives by phone and circulating written comments by fax, the parties and their legal and financial advisors met on May 28 to negotiate the remaining issues in the Agreement. On May 28, 1996, at a meeting of the Board of Directors of the Company, management of the Company reviewed with the Board of Directors the reasons for and potential benefits of the proposed Agreement and related agreements. In addition, the Company's financial advisor, the Dealer Manager, made a detailed presentation regarding the financial terms of the Merger, and advised the Board of Directors of the Company that, in its opinion, and based on facts known to it at that date, the Exchange Ratio was fair, from a financial point of view, to the shareholders of the Company as of that date. After a thorough discussion, the Board of Directors of the Company unanimously approved the Agreement and the related Stock Option Agreements and the transactions contemplated thereby. At a meeting on May 30, 1996, the Board of Directors of Family met to consider the Agreement in final form. The Board of Directors of Family heard detailed reports on the results of the due diligence on the financial condition and operations of the Company, including its recently-acquired subsidiary, Bank of New Hampshire ("BNH"). Family's legal counsel reviewed the terms of the Agreement and the related Stock Option Agreements. Representatives of Family's financial advisor made a detailed presentation regarding the financial terms of the Merger, and advised the Board of Directors of Family that, in its opinion, and based on facts known to it at that date, the Exchange Ratio was fair, from a financial point of view, to the Family shareholders as of that date. After several hours of discussion, the Board of Directors of Family unanimously voted to approve the Agreement and the Stock Option Agreements and the transactions contemplated thereby. REASONS OF THE COMPANY FOR THE MERGER In reaching its determination to approve and adopt the Agreement and the transactions contemplated thereby, the Board of Directors of the Company considered a number of factors, including, without limitation, the following: (i) the Board of Directors of the Company's review, with the assistance of management and its financial advisor, of the financial condition, results of operations, business and overall prospects of Family; (ii) the fact that Family's strong banking franchise is contiguous to the Company's existing banking franchise in New Hampshire and that the Merger would result in the Company having a significant presence in important markets in northern Massachusetts; (iii) the enhanced ability of the combined entity to compete against larger competitors; (iv) the financial presentations of senior management and the Company's financial advisor and the opinion of its financial advisor as to the fairness of the Exchange Ratio from a financial point of view to the Company's shareholders; (v) the anticipated cost savings and operating efficiencies available to 20 24 the combined institution from the Merger; (vi) the expectation that the Merger will be a tax-free transaction to the Company and its subsidiaries; (vii) the nature of, and likelihood of obtaining, the regulatory approvals that would be required with respect to the Merger; and (viii) the estimated effects of a program to repurchase shares of Common Stock in connection with the acquisition of Family. The foregoing discussion of the information and factors discussed by the Board of Directors of the Company are not meant to be exhaustive but is believed to include all material factors considered by the Board of Directors. The Board of Directors did not quantify or attach any particular weight to the various factors that it considered in reaching its determination that the Merger is in the best interests of the Company and its shareholders. ASSUMPTION OF FAMILY STOCK OPTIONS Directors, officers and employees of Family have been granted options (the "Family Options") to purchase shares of Family Common Stock, generally pursuant to Family's 1995 Incentive and Nonqualified Stock Option Plan, 1986 Incentive and Nonqualified Stock Option Plan and 1986 Nonemployees Nonqualified Stock Option Plan (collectively, the "Family Stock Option Plans"). Under the Agreement, each Family Option which is outstanding at the Effective Time, whether or not exercisable, shall cease to represent a right to acquire shares of Family Common Stock and shall be converted into an option to purchase shares of Common Stock, and the Company shall assume each Family Option, in accordance with the terms of the applicable Family Stock Option Plan and stock option or other agreement by which it is evidenced, except that from and after the Effective Time, (i) the Company and the Human Resources Committee of its Board of Directors shall be substituted for Family and the committee of Family's Board of Directors (including, if applicable, the entire Board of Directors of Family) administering such Family Stock Option Plan, (ii) each Family Option assumed by the Company may be exercised solely for shares of Common Stock, (iii) the number of shares of Common Stock subject to such Family Option shall be equal to the number of shares of Family Common Stock subject to such Family Option immediately prior to the Effective Time multiplied by the Exchange Ratio, provided that any fractional shares of Common Stock resulting from such multiplication shall be rounded down to the nearest share, and (iv) the per share exercise price under each such Family Option shall be adjusted by dividing the per share exercise price under each such Family Option by the Exchange Ratio, provided that such exercise price shall be rounded up to the nearest cent. As of the date of the Agreement, there were Family Options to purchase an aggregate of 233,606 shares of Family Common Stock outstanding at prices which range from $3.33 per share to $17.50 share. REPRESENTATIONS AND WARRANTIES In the Agreement each of the Company and Family made customary representations and warranties relating to, among other things, (i) corporate organization and similar corporate matters; (ii) capital structure; (iii) authorization, execution, delivery, performance and enforceability of the Agreement; (iv) the absence of material conflicts or violations with organizational documents, applicable laws or material contracts or agreements; (v) required regulatory approvals; (vi) the absence of a Material Adverse Effect, as defined, since March 31, 1996; (vii) the absence of material litigation; (viii) compliance with applicable laws; (ix) the accuracy of documents filed with the Commission and banking authorities; (x) employee benefit plans and related matters; (xi) tax returns and payment of taxes; (xii) environmental matters; (xiii) brokers' and finders' fees; and (xiv) the accuracy of information relating to it in the prospectus/joint proxy statement mailed to shareholders of the Company and Family in connection with their consideration of the Agreement at the Company Special Meeting and the Family Special Meeting, respectively. CONDITIONS TO THE MERGER The Agreement provides that consummation of the Merger is subject to the satisfaction of certain conditions, or the waiver of such conditions by the party or parties entitled to do so, at or before the Effective Time. Each of the parties' obligations under the Agreement is subject to the following conditions: (i) all corporate action (including without limitation approval by the requisite votes of the shareholders of the Company and Family, which were obtained on August 22, 1996) necessary to authorize the execution and 21 25 delivery of the Agreement and consummation of the transactions contemplated thereby shall have been duly and validly taken; (ii) the receipt of all necessary regulatory approvals and consents required to consummate the Merger by any governmental authority, and the expiration of all notice periods and waiting periods with respect thereto, provided, however, that no required approval or consent shall be deemed to have been received if it shall include any condition or requirement that, individually or in the aggregate, would so materially reduce the economic or business benefits of the transactions contemplated by the Agreement to the Company that had such condition or requirement been known the Company, in its reasonable judgment, would not have entered into the Agreement; (iii) none of the Company or Family or their respective subsidiaries shall be subject to any statute, rule, regulation, order or decree which prohibits, restricts or makes illegal the consummation of the Merger; (iv) the Registration Statement on Form S-4 (the "Registration Statement") filed by the Company with the Commission pursuant to the Agreement shall have become effective under the Securities Act of 1933, as amended (the "Securities Act"), and the Company shall have received all permits, authorizations or exemptions necessary under all state securities laws to issue Common Stock in connection with the Merger, and neither the Registration Statement nor any such permit, authorization or exemption shall be subject to a stop order or threatened stop order by any governmental authority; (v) the shares of Common Stock to be issued in connection with the Merger shall have been approved for quotation on the Nasdaq Stock Market's National Market; and (vi) each of the Company and Family shall have received an opinion of its respective counsel to the effect that the Merger qualifies as a reorganization within the meaning of Section 368 of the Code and, in the case of Family, with respect to certain other related federal income tax considerations. In addition to the foregoing conditions, the obligations of the Company and Merger Corp. under the Agreement are conditioned upon (i) the accuracy in all material respects as of the date of the Agreement and as of the Effective Time of the representations and warranties of Family set forth in the Agreement, except as to any representation or warranty which specifically relates to an earlier date and except as otherwise contemplated by the Agreement; (ii) the performance in all material respects of all covenants and obligations required to be complied with and satisfied by Family; (iii) the receipt of a certificate from specified officers of Family with respect to compliance with the conditions relating to (i) and (ii) immediately above as set forth in the Agreement; (iv) the receipt of an opinion from Family's legal counsel covering specified matters; (v) any dissenting shares of Family Common Stock under Massachusetts law shall constitute not more than 10% of the outstanding shares of Family Common Stock prior to the Effective Time; (vi) the receipt of "comfort" letters from the independent public accountants of Family as of specified dates; and (vii) the receipt by the Company of such certificates of Family's officers or others and such other documents to evidence fulfillment of the conditions relating to Family as the Company may reasonably request. Any of the foregoing conditions may be waived by the Company and Merger Corp. In addition to the other conditions set forth above, Family's obligations under the Agreement are conditioned upon (i) the accuracy in all material respects as of the date of the Agreement and as of the Effective Time of the representations and warranties of the Company set forth in the Agreement, except as to any representation or warranty which specifically relates to an earlier date and except as otherwise contemplated by the Agreement; (ii) the performance in all material respects of all covenants and obligations required to be complied with and satisfied by the Company and Merger Corp.; (iii) the receipt of a certificate from specified officers of the Company with respect to compliance with the conditions relating to (i) and (ii) immediately above as set forth in the Agreement; (iv) the receipt of an opinion from legal counsel to the Company covering specified matters; and (v) the receipt by Family of such certificates of the Company's or Merger Corp.'s officers or others and such other documents to evidence fulfillment of the conditions relating to them as Family may reasonably request. Any of the foregoing conditions may be waived by Family. REGULATORY APPROVALS Consummation of the Merger is subject to prior receipt of all required approvals and consents of the Merger by all applicable federal and state regulatory authorities. In order to consummate the Merger, the Company must obtain the prior consent and approval, as applicable, of the FRB, the OTS, the Superintendent and the Massachusetts Board of Bank Incorporation ("Massachusetts Board"), the approval of which may not 22 26 be granted until it has received notice from the Massachusetts Housing Partnership Fund ("MHPF") that the Company and the MHPF have made the arrangements required by Massachusetts law. The Merger is subject to the prior approval of the FRB under Section 4 of the BHCA, which requires the Company to provide the FRB written notice of the Merger at least 60 days before its consummation. In connection with such notice, the FRB shall consider whether the acquisition of Family by the Company can reasonably be expected to produce benefits to the public such as greater convenience, increased competition or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices. The Merger is subject to the prior approval of the OTS under Section 10(e) of the HOLA, and regulations of the OTS thereunder. The OTS may deny an application by an acquiror to acquire control of a savings association if (i) the OTS finds that the financial and managerial resources and future prospects of the acquiror and the savings association would be detrimental to the savings association or the insurance risk to the Federal Deposit Insurance Corporation ("FDIC") or (ii) the acquiror fails or refuses to furnish information requested by the OTS. Pursuant to the applicable provisions of the HOLA and regulations thereunder, the OTS may not approve an acquisition of control of a savings association if (i) such transaction would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in any part of the United States; (ii) the effect of such transaction, in any section of the country, may be to substantially lessen competition, or tend to create a monopoly, or in any other manner to restrain trade, in each case unless the OTS finds that the anticompetitive effects of the proposed transaction are clearly outweighed in the public interests by the probable effect of the transaction in meeting the convenience and needs of the community to be served; or (iii) the acquiror fails to provide adequate assurances to the OTS that the acquiror will make available to the OTS such information on the operations or activities of the acquiror and any affiliate thereof as the OTS determines to be appropriate to determine and enforce compliance with the HOLA. Consideration of the managerial resources of an acquiror or savings association shall include consideration of the competence, experience and integrity of the directors, officers and controlling shareholders of the acquiror and the savings association. Consummation of the Merger also requires the approval of the Superintendent under Part 10 of Title 9-B of the Maine Revised Statutes. The Superintendent shall not approve an application for such a transaction unless he determines, after a consideration of all relevant evidence, that it would contribute to the financial strength and success of the applicant and promote the convenience and advantage of the public. The factors to be considered by the Superintendent in this regard are substantially similar to those to be considered by federal banking agencies, as discussed above. The Merger also is subject to approval of the Massachusetts Board under Sections 2 and 4 of Chapter 167A of the Massachusetts General Laws. Massachusetts law requires that the Massachusetts Board find that the Merger would not unreasonably affect competition among banking institutions and that it would promote public convenience and advantage. In making such a determination, the Massachusetts Board must consider, among other things, a showing of net new benefits, including initial capital investments, job creation plans, consumer and business services, commitments to maintain and open branch offices within Family Bank's statutorily delineated local community, and such other matters as the Massachusetts Board may deem necessary or advisable. In addition, Massachusetts law provides that the Massachusetts Board cannot approve the Merger until it has received notice from the MHPF that arrangements satisfactory to the MHPF have been made for the proposed acquiror to make 0.9 percent of its assets located in Massachusetts available for call by the MHPF for a period of ten years for purposes of funding various affordable housing programs. Massachusetts law provides that such funds shall bear interest at rates approved by the Massachusetts Commissioner of Banks ("Massachusetts Commissioner"), which shall be based upon the cost (not to include lost opportunity costs) incurred in making funds available to the MHPF. Pursuant to this requirement, Family Bank and the Company, as lender and guarantor, respectively, will enter into a loan agreement with the MHPF pursuant to which Family Bank will agree to make funds available for call by MHPF's Board. 23 27 Under Massachusetts law, the Company also would be required to maintain, for a period of two years following the consummation of the Merger, the asset base of Family Bank at a level equal to or greater than the total assets of such bank on the date of consummation, provided, however, that the Massachusetts Commissioner may waive such asset retention requirement if, in his judgment, economic conditions warrant such waiver. The Company has requested confirmation from the Massachusetts Commissioner that this requirement does not apply to the assets of Family Bank located in New Hampshire. Applications have been filed with applicable regulatory authorities for approval of the Merger. Although neither the Company nor Family is aware of any basis for disapproving the Merger, there can be no assurance that all requisite approvals will be obtained, that such approvals will be received on a timely basis or that such approvals will not impose conditions or requirements which, individually or in the aggregate, would so materially reduce the economic or business benefits of the transactions contemplated by the Agreement to the Company that had such condition or requirement been known the Company, in its reasonable judgment, would not have entered into the Agreement. If any such condition or requirement is imposed, the Agreement permits the Board of Directors of the Company to terminate the Agreement. BUSINESS PENDING THE MERGER Pursuant to the Agreement, Family agreed that, except as contemplated by the Agreement or with the prior written consent of the Company, during the period from the date of the Agreement and continuing until the Effective Time it and Family Bank shall carry on their respective businesses in the ordinary course consistent with past practice. Pursuant to the Agreement, Family also agreed to use all reasonable efforts to (i) preserve its business organization and that of Family Bank intact, (ii) keep available to itself and the Company the present services of the employees of Family and Family Bank and (iii) preserve for itself and the Company the goodwill of the customers of Family and Family Bank and others with whom business relationships exist. In addition, under the terms of the Agreement, Family agreed not to take certain actions, nor permit its subsidiaries to take certain actions, without the prior written consent of the Company, which generally relate to various aspects of Family's business and operations, qualification of the Merger as a reorganization within the meaning of Section 368 of the Code and compliance with the representations and warranties of Family contained in the Agreement. Pursuant to the Agreement, Family also agreed to not, and to cause its subsidiaries not to, solicit or encourage inquiries or proposals with respect to, furnish any information relating to, or participate in any negotiations or discussions concerning, any acquisition, lease or purchase of all or a substantial portion of the assets of, or any equity interest in, Family or any of its subsidiaries, other than as contemplated by the Agreement, provided, however, that the Board of Directors of Family may furnish such information or participate in such negotiations or discussions if such Board of Directors, after having consulted with and considered the advice of outside counsel, has determined that the failure to do the same would cause the members of such Board of Directors to breach their fiduciary duties under applicable law. Pursuant to the Agreement, the Company agreed that during the period from the date of the Agreement to the Effective Time it shall continue to conduct its business in a manner designed in its reasonable judgment to enhance the long-term value of the Common Stock and the business prospects of the Company. In addition, under the terms of the Agreement, the Company agreed not to take certain actions, nor permit its significant subsidiaries to take certain actions, without the prior written consent of Family, which generally relate to actions which could impede or delay consummation of the Merger, qualification of the Merger as a reorganization within the meaning of Section 368 of the Code and compliance with the representations and warranties of the Company contained in the Agreement. EFFECTIVE TIME OF THE MERGER; TERMINATION AND AMENDMENT The effective time of the Merger shall be the date and time of the filing of articles of merger with the Secretary of State of Maine pursuant to the Maine Business Corporation Act and the Secretary of State of the Commonwealth of Massachusetts pursuant to the Massachusetts Business Corporation Law, unless a different date and time is specified as the effective time in such articles of merger (the "Effective Time"). The 24 28 Effective Time shall be as set forth in such articles of merger, which will be filed only after the receipt of all requisite regulatory approvals of the Merger, approval of the Agreement by the requisite votes of the shareholders of the Company and Family and the satisfaction or waiver of all other conditions to the Merger set forth in the Agreement. A closing (the "Closing") shall take place immediately prior to the Effective Time on the fifth business day, or under certain circumstances on the first day which is at least two business days, following the satisfaction or waiver (to the extent permitted) of all the conditions to consummation of the Merger specified in the Agreement (other than the delivery of certificates, opinions and other instruments and documents to be delivered at the Closing), or on such other date as the parties may mutually agree upon. The Agreement may be terminated as follows: (i) at any time on or prior to the Effective Time by the mutual consent in writing of the parties; (ii) at any time on or prior to the Effective Time by either party in the event of a material breach by the other party of any material covenant or agreement or representation and warranty, in any case which would have a material adverse effect, as defined, and which has not been cured within the time period specified in the Agreement; (iii) at any time by any party in writing if any application for any required federal or state regulatory approval has been denied or is approved with any condition or requirement which would prevent satisfaction of this condition to the Company's obligation to consummate the Merger, and the time period for appeals and requests for reconsideration has run; (iv) at any time by any party in writing if the shareholders of the Company or Family fail to approve the Agreement at a meeting duly called for the purpose, unless the failure of such occurrence is due to the failure of the party seeking to terminate to perform or observe in any material respect its agreements set forth in the Agreement; (v) by any party in writing in the event that the Merger is not consummated by May 30, 1997, provided that this right to terminate shall not be available to any party whose failure to perform an obligation under the Agreement resulted in the failure of the Merger to be consummated by such date; and (vi) by Family at any time during the five-day period following the Pricing Period (as defined below) if the average of the daily closing prices of a share of Common Stock, as reported on the Nasdaq Stock Market's National Market, during the Pricing Period (the "Average Closing Price") is less than $15.00, subject, however, to the following three sentences. If Family elects to exercise its termination right pursuant to clause (vi) above, it shall give written notice to the Company (which may be withdrawn by it at any time during the aforementioned five-day period). During the five-day period commencing with its receipt of such notice, the Company shall have the option to increase the consideration to be received by the holders of Family Common Stock under the Agreement by adjusting the Exchange Ratio to equal a number (calculated to the nearest one-thousandth) obtained by dividing (x) $18.90 by (y) the Average Closing Price. If the Company so elects within such five-day period, it shall give prompt written notice to Family of such election and the revised Exchange Ratio, whereupon no termination shall have occurred pursuant to clause (vi) above and the Agreement shall remain in effect in accordance with its terms (except as the Exchange Ratio shall have been so modified). Under the Agreement, the term "Pricing Period" means the period of ten consecutive trading days following the Determination Date and the term "Determination Date" means the earlier of (x) the date on which the last regulatory approval required to consummate the Merger is obtained and (y) December 1, 1996. In the event of termination, the Agreement shall become null and void, except that certain provisions thereof relating to expenses and confidentiality shall survive any such termination and any such termination shall not relieve any breaching party from liability for any willful breach of any covenant, undertaking, representation or warranty giving rise to such termination. To the extent permitted under applicable law, the Agreement may be amended or supplemented at any time by written agreement of the parties whether before or after the approval of the shareholders of the Company or Family, provided that after any such approval the Agreement may not be amended or supplemented in a manner which modifies either the amount or form of the consideration to be received by Family's shareholders or otherwise materially adversely affects the shareholders of Family or the shareholders of the Company without further approval by those shareholders who are so affected. 25 29 INTERESTS OF CERTAIN PERSONS IN THE MERGER Pursuant to the Agreement, the Company agreed (i) to take such action as is necessary to cause one existing non-employee director of Family designated by Family and acceptable to the Company to be elected as a director of the Company as of the Effective Time and to nominate such person for re-election as a director of the Company upon expiration of his initial term as a director of the Company; (ii) to honor various contractual obligations of Family as of the date of the Agreement, including (x) the employment agreements among Family, Family Bank, FSB ("Family Bank"), a wholly-owned subsidiary of Family, and each of David D. Hindle, President and Chief Executive Officer, George E. Fahey, Executive Vice President and Chief Financial Officer, Ronald G. Trombley, Senior Vice President, David J. LaFlamme, Senior Vice President, and Bruce Fenn, III, Senior Vice President, (y) the supplemental executive retirement plan between the Company and each of the above-named executive officers of Family and (z) the split-dollar insurance agreements between Family Bank and each of Messrs. Hindle, Fahey, LaFlamme and Trombley; and (iii) to continue rights to indemnification and liability insurance for directors and officers of Family and Family Bank for specified periods. Assuming the Merger were to be consummated as of December 31, 1996, the aggregate amount of the lump sum severance payments due to Messrs. Hindle, Fahey, Trombley, LaFlamme and Fenn pursuant to his respective employment agreement would be approximately $550,000, $343,000, $348,000, $306,000 and $278,000, respectively. Other than as set forth above, no director or executive officer of the Company or Family has any direct or indirect material interest in the Merger, except in the case of a director or executive officer of Family insofar as ownership of Family Common Stock and options to acquire Family Common Stock might be deemed such an interest. CERTAIN EMPLOYEE MATTERS The Agreement provides that as soon as administratively practicable after the Effective Time, the Company shall take all reasonable action so that employees of Family and its subsidiaries shall be entitled to participate in the Company's employee benefit plans of general applicability, and until such time Family's employee benefit plans shall remain in effect, provided that no employee of Family or a Family subsidiary who becomes an employee of the Company and subject to the Company's medical insurance plans shall be excluded coverage thereunder on the basis of a preexisting condition that was not also excluded under Family's medical insurance plans, except to the extent such preexisting condition was excluded from coverage under Family's medical insurance plans, in which case the Agreement does not require coverage for such preexisting condition. For purposes of determining eligibility to participate in and the vesting of benefits under the Company's employee benefit plans, the Company shall recognize years of service with Family and a Family subsidiary as such service is recognized by Family and a Family subsidiary. All employees of Family or a Family subsidiary as of the Effective Time shall become employees of the Company or a Company subsidiary as of the Effective Time, provided that the Company or a Company subsidiary shall have no obligation to continue the employment of any such person and nothing contained in the Agreement shall give any employee of Family or a Family subsidiary a right to continuing employment with the Company or a Company subsidiary after the Effective Time. To the extent that the employment of any employee of Family or a Family subsidiary (other than any employee who is party to an employment agreement) is involuntarily terminated following the Effective Time, such employee will be entitled to receive severance payments in accordance with, and to the extent provided in, the Company's severance plan regarding the Merger. For purposes of determining benefits under such severance plan, the Company shall recognize years of service with Family or a Family subsidiary prior to the Effective Time. ACCOUNTING TREATMENT OF THE MERGER It is expected that the Merger will be accounted for as a purchase under generally accepted accounting principles. Under the purchase method of accounting, the acquired assets and liabilities as of the effective date of the acquisition are recorded at their respective fair market values and added to those of the Company. Financial statements of the Company issued after consummation of the transaction reflect such values. Financial statements of the Company issued before consummation of a transaction recorded under the purchase method are not restated retroactively to reflect the historical financial position or results of operations 26 30 of the acquired assets and liabilities. The unaudited pro forma financial information contained in this Offer to Purchase has been prepared using the purchase method to account for the Merger. See "Pro Forma Combined Consolidated Financial Information." EXPENSES OF THE MERGER The Agreement provides that each party thereto shall each bear and pay all costs and expenses incurred by it in connection with the transactions contemplated by the Agreement, including fees and expenses of its own financial consultants, accountants and counsel, except that expenses of printing the Registration Statement and the registration fee to be paid to the Commission in connection therewith shall be shared equally between the Company and Family. STOCK OPTION AGREEMENTS As an inducement and a condition to the Company's entering into the Agreement, the Company and Family also entered into a Stock Option Agreement, dated as of May 30, 1996 (the "Family Stock Option Agreement"), pursuant to which Family, as issuer, granted the Company, as grantee, the option, upon the occurrence of certain events (none of which has occurred as of the date hereof to the best of the knowledge of the Company and Family), to purchase up to 832,000 shares of Family Common Stock, representing 19.9% of the outstanding shares of Family Common Stock, at a price of $20.50 per share, subject to adjustment in certain circumstances and termination within certain periods. As an inducement and a condition to Family's entering into the Agreement, the Company and Family also entered into a Stock Option Agreement, dated as of May 30, 1996 (the "Company Stock Option Agreement"), pursuant to which the Company, as issuer, granted Family, as grantee, an option, upon the occurrence of certain events (none of which has occurred as of the date hereof to the best of the knowledge of the Company and Family), to purchase up to 1,500,000 shares of Common Stock, representing approximately 6.0% of the outstanding shares of Common Stock, at a price of $19.75 per share, subject to adjustment in certain circumstances and termination within certain periods. With the exception of the number and percentage of shares of common stock of the issuer subject to an option and the per share price at which an option may be exercised, the terms of the Family Stock Option Agreement and the Company Stock Option Agreement are substantially identical. The Stock Option Agreements are intended to increase the likelihood that the Merger will be consummated in accordance with the terms of the Agreement and may have the effect of discouraging competing offers to the Merger. Copies of the Family Stock Option Agreement and the Company Stock Option Agreement have been incorporated by reference in the Schedule 13E-4 of which this Offer to Purchase is a part, and reference is made thereto for the complete terms thereof. These agreements may be inspected or obtained in the manner set forth under "Available Information." CERTAIN REGULATORY CONSIDERATIONS Subject to application to and approval of the OTS (see "The Merger -- Regulatory Approvals"), as a result of the Merger the Company will become a savings and loan holding company under the HOLA subject to certain regulation and supervision by the OTS (which will continue to be the primary federal banking regulator of Family Bank). Such regulation and supervision of the Company will be in addition to that of the FRB as a result of the Company's status as a bank holding company under the BHCA. Set forth below is a brief description of the regulation of savings and loan holding companies which also are bank holding companies and which will be applicable to the Company upon consummation of the Merger. REGISTRATION AND REPORTING REQUIREMENTS. Savings and loan holding companies are required to register as such with the OTS within 90 days after becoming a savings and loan holding company. Each savings and loan holding company, including subsidiary savings and loan holding companies, is required to file an annual report with the OTS and quarterly current reports detailing changes from the annual filing. Currently, no fees are required in connection with the filing of these reports. 27 31 ACTIVITIES LIMITATIONS. In general, a savings and loan holding company which holds only one savings institution subsidiary which meets a so-called "qualified thrift lender test" set forth in the HOLA and regulations of the OTS thereunder is not subject to activities limitations, whereas a savings and loan holding company which holds more than one savings institution subsidiary, or only one savings institution subsidiary which does not meet the "qualified thrift lender" test, is subject to activities limitations which are comparable to, but not identical with, the activities limitations which are applicable to all bank holding companies under the BHCA. Pursuant to OTS regulations, the activities limitations which are applicable to a savings and loan holding company are not applicable to a company which is treated as a bank holding company under the BHCA or any of its subsidiaries. RESTRICTIONS ON ACQUISITIONS. Except under limited circumstances, savings and loan holding companies are prohibited from acquiring, without prior approval of the Director of the OTS, (i) control of any other savings institution or savings and loan holding company or substantially all the assets thereof or (ii) more than 5% of the voting shares of a savings institution or holding company thereof which is not a subsidiary. Except with the prior approval of the Director of the OTS, no director or officer of a savings and loan holding company or person owning or controlling by proxy or otherwise more than 25% of such company's stock, may acquire control of any savings institution, other than a subsidiary savings institution, or of any other savings and loan holding company. The Director of the OTS may approve acquisitions resulting in the formation of a multiple savings and loan holding company which controls savings institutions in more than one state only if (i) the multiple savings and loan holding company involved controls a savings institution which operated a home or branch office located in the state of the institution to be acquired as of March 5, 1987, (ii) the acquiror is authorized to acquire control of the savings institution pursuant to the emergency acquisition provisions of the Federal Deposit Insurance Act or (iii) the statutes of the state in which the institution to be acquired is located specifically permit institutions to be acquired by state-chartered savings institutions located in the state where the acquiring entity is located (or by a holding company that controls such state-chartered savings institutions). TRANSACTIONS WITH AFFILIATES. Transactions between a savings institution and its affiliates (including its parent holding company) are subject to substantially the same restrictions as are applicable to transactions between a bank and its affiliates. In this regard, a savings institution subsidiary is subject to the restrictions set forth in Sections 23A and 23B of the Federal Reserve Act and the additional restrictions set forth in Section 11(a) of the HOLA, as implemented in regulations of the OTS thereunder. EXAMINATIONS. Each savings and loan holding company and each subsidiary thereof is subject to such examinations as the OTS may prescribe. The cost of each examination (other than examinations of savings institutions) shall be assessed against and paid by such holding company. The OTS shall, to the extent feasible, use for these purposes reports filed with or examinations made by other federal agencies or the appropriate state supervisory authority. The above discussion of the regulation of savings and loan holding companies is not intended to be a complete description of such regulation and is qualified in its entirety by reference to applicable statutes, regulations and other regulatory pronouncements. 28 32 THE COMPANY GENERAL The Company is a Maine-chartered, multi-bank holding company registered under the BHCA. As used in this Offer to Purchase, the term "the Company" refers to such corporation and its subsidiaries, unless the context otherwise requires. The Company conducts business from its headquarters in Portland, Maine and 107 offices located throughout the States of Maine and New Hampshire. At June 30, 1996, the Company had consolidated assets of $4.4 billion, consolidated deposits of $3.4 billion and consolidated shareholders' equity of $366.3 million. Based on total assets at June 30, 1996, the Company is the largest independent bank holding company headquartered in the State of Maine and the fifth largest independent bank holding company headquartered in New England. The Company offers a broad range of commercial and consumer banking services and products and trust and investment advisory services through two wholly-owned banking subsidiaries: Peoples Heritage Bank ("PHB") and BNH. PHB is a Maine-chartered savings bank which operates 62 offices throughout Maine and, through subsidiaries, engages in mortgage banking, financial planning and equipment leasing activities. At June 30, 1996, PHB had consolidated assets of $2.6 billion, consolidated deposits of $1.9 billion and consolidated shareholder's equity of $196.7 million. BNH is a New Hampshire-chartered commercial bank which operates 45 offices throughout New Hampshire. At June 30, 1996, BNH had consolidated assets of $1.8 billion, consolidated deposits of $1.5 billion and consolidated shareholder's equity of $140.9 million. Each of PHB and BNH is a member of the BIF administered by the FDIC. The principal executive offices of the Company are located at One Portland Square, Portland, Maine 04112-9540, and its telephone number is (207) 761-8500. RECENT ACQUISITIONS OF THE COMPANY On April 2, 1996, the Company acquired all of the outstanding shares of capital stock of BNHC, a New Hampshire-based bank holding company for BNH, by exchanging two shares of Common Stock for each outstanding share of BNHC Common Stock. The acquisition of BNHC was accounted for as a pooling of interests for accounting and financial reporting purposes and, as a result, all financial information relating to the Company contained herein reflects the combined financial position and results of operations of the Company and BNHC as if the acquisition of BNHC had taken place prior to the periods covered by such financial information. For additional information in this regard, reference is made to the supplemental consolidated financial statements and related financial information of the Company contained in the Report on Form 8-K filed by the Company on July 2, 1996. See "Available Information." These financial statements do not extend through the date of consummation of the acquisition of BNHC; however, they will become the historical consolidated financial statements of the Company after financial statements covering the date of consummation of the business combination are issued. Subsequent to the acquisition of BNHC, the Company merged its other New Hampshire-based banking subsidiary -- The First National Bank of Portsmouth ("FNBP") -- into BNH under the pooling-of-interests method of accounting effective after the close of business on June 28, 1996. On February 16, 1996, the Company purchased five branch offices of Fleet Bank NH which are located in central and southern New Hampshire and which were divested by Fleet Bank NH in connection with the merger of Fleet Financial Group, Inc. and Shawmut National Corporation. The purchase resulted in the Company's acquisition of approximately $218.3 million of loans, including $178.6 million of single-family residential mortgage loans, and its assumption of $160.9 million of deposits. 29 33 FAMILY Family is a Massachusetts-chartered savings and loan holding company registered under the HOLA. As used in this Offer to Purchase, the term "Family" refers to such corporation and its subsidiaries, unless the context otherwise requires. Family offers a broad range of commercial and retail financial services, including transaction accounts, savings deposits, residential and commercial mortgages and other commercial and consumer loans, through Family Bank, a wholly-owned subsidiary of Family. At June 30, 1996, Family had consolidated assets of $926.6 million, consolidated deposits of $761.6 million and consolidated shareholders' equity of $70.0 million. Family Bank operates 17 banking offices in the Merrimack Valley area of Greater Haverhill and Greater Lowell, Massachusetts and six offices in southern New Hampshire. Family Bank became a federally-chartered savings bank regulated by the OTS in 1995 when Family combined its two formerly state-chartered savings banks to allow its customers to bank at its offices in either Massachusetts or New Hampshire. Family Bank is a member of the BIF administered by the FDIC. The principal executive offices of Family are located at 153 Merrimack Street, Haverhill, Massachusetts, and its telephone number is (508) 374-1911. 30 34 SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) The following selected supplemental consolidated financial data for the two years ended December 31, 1995 is derived from the audited supplemental consolidated financial statements of the Company which give retroactive effect to the Company's acquisition of BNHC in April 1996, which financial statements are contained in the Report on Form 8-K filed by the Company on July 2, 1996; and the following selected consolidated financial data for the six months ended June 30, 1996 and 1995 is derived from unaudited consolidated financial statements which give retroactive effect to the same, which financial statements are included in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996. The unaudited consolidated financial statements include all adjustments, consisting of normal recurring accruals, which the Company considers necessary for a fair presentation of the financial position and the results of operations for these periods. Operating results for the six months ended June 30, 1996 are not necessarily indicative of the results that may be expected for any other interim period or the entire year ending December 31, 1996. The selected consolidated financial information set forth below is qualified by reference to the above-referenced Form 8-K and Form 10-Q (which may be inspected or obtained in the manner set forth under "Available Information") and the financial statements and related notes contained therein.
DECEMBER 31, JUNE 30, -------------------------- 1996 1995 1994 ----------- ----------- ----------- BALANCE SHEET DATA: Total assets........................................... $ 4,371,709 $ 4,058,126 $ 3,737,906 Debt and equity securities, net........................ 757,453 766,648 719,194 Total loans, net(1).................................... 3,051,435 2,717,608 2,575,902 Goodwill and other intangibles......................... 38,849 22,792 20,713 Deposits............................................... 3,383,083 3,197,138 2,885,845 Borrowings............................................. 571,324 456,932 505,347 Shareholders' equity................................... 366,260 354,925 304,439 Nonperforming assets(2)................................ 49,776 56,752 78,339 Allowance for loan and lease losses.................... 63,654 60,975 63,675 Book value per share................................... 14.55 14.16 12.26 Tangible book value per share.......................... 13.01 13.25 11.42
SIX MONTHS ENDED YEAR ENDED DECEMBER JUNE 30, 31, --------------------- --------------------- 1996 1995 1995 1994 -------- -------- -------- -------- OPERATIONS DATA: Interest and dividend income.................... $164,839 $146,270 $305,849 $256,597 Interest expense................................ 72,869 63,696 134,895 108,002 -------- -------- -------- -------- Net interest income............................. 91,970 82,574 170,954 148,595 Provision for loan losses....................... 900 2,070 4,230 3,374 -------- -------- -------- -------- Net interest income after provision for loan losses........................................ 91,070 80,504 166,724 145,221 -------- -------- -------- -------- Net securities gains (losses)................... 504 (149) 116 (254) Other noninterest income........................ 18,161 14,809 31,301 27,880 Noninterest expense............................. 74,168 63,149 130,280 125,137 -------- -------- -------- -------- Income before income tax expense................ 35,567 32,015 67,861 47,710 Income tax expense.............................. 12,818 10,744 23,375 13,662 -------- -------- -------- -------- Net income...................................... $ 22,749 $ 21,271 $ 44,486 $ 34,048 ======== ======== ======== ======== Net income per share............................ $0.90 $0.87 $1.80 $1.37
31 35
AT OR FOR THE AT OR FOR THE SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, ---------------- --------------- 1996 1995 1995 1994 ----- ----- ----- ----- OTHER DATA(3): Return on average assets................................... 1.07% 1.14% 1.16% 0.94% Return on average equity(4)................................ 12.61 13.48 13.53 11.42 Average equity to average assets(4)........................ 8.52 8.49 8.55 8.21 Regulatory capital ratios at end of period Tier I leverage.......................................... 7.66 8.01 8.33 7.80 Total risk-based......................................... 13.08 13.67 14.15 13.76 Nonperforming assets as a percent of total assets at end of period(2)................................................ 1.14 1.81 1.40 2.10 - --------------- (1) Does not include loans held for sale. (2) Nonperforming assets consist of nonperforming loans, other real estate owned and repossessions, net of related reserves where appropriate. Nonperforming loans consist of non-accrual loans, accruing loans 90 days or more overdue and troubled debt restructurings. (3) With the exception of end of period ratios, all ratios are based on average daily balances during the indicated periods and are annualized where appropriate. (4) Average equity excludes the effect of unrealized gains or losses on securities available for sale.
32 36 PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION The following unaudited pro forma combined condensed consolidated balance sheets present the combined balance sheets of the Company and Family, assuming that each of the Offer and the Merger was consummated as of the dates indicated, and the following unaudited pro forma combined condensed consolidated statements of operations present the combined consolidated statements of operations of the Company and Family, assuming that each of the Offer and the Merger was consummated as of the beginning of the indicated periods. Certain insignificant reclassifications have been made in the case of the pro forma information relating to Family to conform to the pro forma information relating to the Company. Pro forma information relating to the Offer assumes that (i) 2,500,000 shares of Common Stock are purchased pursuant to the Offer at a Purchase Price of $22.50 per Share, which is the mid-point between the maximum and minimum Purchase Price at which Shares may be acquired pursuant to the Offer, and (ii) expenses related to the Offer amount to approximately $335,000. The Company does not believe that the pro forma information relating to the Offer would be materially different than presented if the actual Purchase Price is such maximum or minimum Purchase Price. The Merger will be accounted for under the purchase method of accounting. For a description of the purchase method of accounting, see "The Merger -- Accounting Treatment of the Merger." The effect of reorganization and restructuring charges in connection with the Merger has been reflected in the pro forma combined condensed consolidated balance sheets; however, because the charges are nonrecurring, they have not been reflected in the pro forma combined condensed consolidated statements of operations. The pro forma financial data does not give effect to anticipated cost savings in connection with the Merger. The pro forma financial information should be read in conjunction with the selected consolidated financial data of the Company included elsewhere herein. The pro forma information presented is not necessarily indicative of the financial position of the Company that would have resulted had the Offer and the Merger been consummated at the dates indicated or the results of operations of the Company that would have resulted had the Offer and the Merger been consummated at the beginning of the indicated periods, nor is the pro forma information necessarily indicative of the future financial position or results of operations of the Company. 33 37 THE COMPANY AND FAMILY PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET JUNE 30, 1996 (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA)
THE COMPANY AND FAMILY THE COMPANY COMBINED THE THE AND PRO FORMA AND THE COMPANY OFFER THE OFFER FAMILY ADJUSTMENTS OFFER ---------- -------- ----------- -------- ----------- ----------- ASSETS Cash and due from banks.................... $ 234,481 $ -- $ 234,481 $ 38,866 $ -- $ 273,347 Federal funds sold......................... 32,500 -- 32,500 -- -- 32,500 Securities available for sale at market value.................................... 757,453 (56,585) 700,868 394,571 -- 1,095,439 Loans held for sale........................ 65,957 -- 65,957 10,863 -- 76,820 Loans and leases (net of deferred fees).... 3,115,089 -- 3,115,089 453,435 2,780(1) 3,571,304 Less: Allowance for loan and lease losses................................... (63,654) -- (63,654) (6,760) -- (70,414) ---------- -------- ---------- -------- -------- ---------- Net loans and leases.............. 3,051,435 -- 3,051,435 446,675 2,780 3,500,890 ---------- -------- ---------- -------- -------- ---------- Premises and equipment..................... 57,357 -- 57,357 12,298 99(2) 69,754 Goodwill and other intangibles............. 38,849 -- 38,849 5,658 36,424(3) 80,931 Mortgage servicing rights.................. 26,326 -- 26,326 83 4,217(4) 30,626 Other real estate and repossessed assets owned.................................... 11,349 -- 11,349 3,659 -- 15,008 Deferred income taxes...................... 32,194 -- 32,194 4,051 2,740(5) 38,985 Interest and dividends receivable.......... 29,635 -- 29,635 5,974 -- 35,609 Other assets............................... 34,173 -- 34,173 3,916 -- 38,089 ---------- -------- ---------- -------- -------- ---------- Total assets...................... $4,371,709 $(56,585) $4,315,124 $926,614 $ 46,260 $5,287,998 ========== ======== ========== ======== ======== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Regular savings........................ $ 598,386 $ -- $ 598,386 $178,499 $ -- $ 776,885 Money market access accounts........... 508,919 -- 508,919 61,632 -- 570,551 Certificates of deposit................ 1,443,205 -- 1,443,205 342,380 (1,913)(6) 1,783,672 NOW accounts........................... 366,664 -- 366,664 91,439 -- 458,103 Demand deposits........................ 465,909 -- 465,909 87,601 -- 553,510 ---------- -------- ---------- -------- -------- ---------- 3,383,083 -- 3,383,083 761,551 (1,913) 4,142,721 ---------- -------- ---------- -------- -------- ---------- Securities sold under repurchase agreements............................... 149,417 -- 149,417 3,799 -- 153,216 Borrowings from the Federal Home Loan Bank of Boston................................ 401,442 -- 401,442 69,932 2,079(7) 473,453 Other borrowings........................... 20,465 -- 20,465 -- -- 20,465 Deferred income taxes...................... 10,934 -- 10,934 230 3,783(8) 14,947 Other liabilities.......................... 40,108 -- 40,108 21,150 4,960(9) 66,218 ---------- -------- ---------- -------- -------- ---------- Total liabilities................. 4,005,449 -- 4,005,449 856,662 8,909 4,871,020 ---------- -------- ---------- -------- -------- ---------- Shareholders' equity: Preferred Stock.......................... -- -- -- -- -- -- Common Stock: The Company............................ 256 -- 256 -- 54(10) 310 Family................................. -- -- -- 562 (562)(10) -- Paid in capital............................ 224,268 -- 224,268 30,009 77,240(10) 331,517 Retained earnings.......................... 149,175 -- 149,175 50,043 (50,043)(10) 149,175 Net unrealized gain (loss) on securities available for sale, net of taxes......... (1,159) -- (1,159 ) (1,574) 1,574(10) (1,159 ) Treasury stock at cost..................... (6,280) (56,585) (62,865 ) (9,055) 9,055(10) (62,865 ) Unearned compensation -- ESOP.............. -- -- -- (33) 33(10) -- ---------- -------- ---------- -------- -------- ---------- Total shareholders' equity........ 366,260 (56,585) 309,675 69,952 37,351 416,978 ---------- -------- ---------- -------- -------- ---------- Total liabilities and shareholders' equity............ $4,371,709 $(56,585) $4,315,124 $926,614 $ 46,260 $5,287,998 ========== ======== ========== ======== ======== ========== Book value per share....................... $ 14.55 $ 13.66 $ 14.83 ========== ========== ========== Tangible book value per share.............. $ 13.01 $ 11.94 $ 11.96 ========== ========== ==========
34 38 THE COMPANY AND FAMILY PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET DECEMBER 31, 1995 (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA)
THE COMPANY AND THE FAMILY COMPANY COMBINED THE THE AND PRO FORMA AND THE COMPANY OFFER THE OFFER FAMILY ADJUSTMENTS OFFER ---------- -------- ---------- -------- ----------- ----------- ASSETS Cash and due from banks................. $ 190,436 $ -- $ 190,436 $ 28,449 $ -- $ 218,885 Federal funds sold...................... 100,255 -- 100,255 9,505 -- 109,760 Securities available for sale at market value................................. 766,648 (56,585) 710,063 357,757 -- 1,067,820 Loans held for sale..................... 70,979 -- 70,979 8,056 -- 79,035 Loans and leases (net of deferred fees)................................. 2,778,583 -- 2,778,583 457,626 2,780(1) 3,238,989 Less: Allowance for loan and lease losses................................ (60,975) -- (60,975) (6,427) -- (67,402 ) ---------- -------- ---------- -------- -------- ---------- Net loans and leases........... 2,717,608 -- 2,717,608 451,199 2,780 3,171,587 ---------- -------- ---------- -------- -------- ---------- Premises and equipment.................. 56,021 -- 56,021 12,417 99(2) 68,537 Goodwill and other intangibles.......... 22,792 -- 22,792 6,073 36,424(3) 65,289 Mortgage servicing rights............... 20,309 -- 20,309 83 4,217(4) 24,609 Other real estate and repossessed assets owned................................. 14,232 -- 14,232 3,430 -- 17,662 Deferred income taxes................... 32,972 -- 32,972 2,361 2,740(5) 38,073 Interest and dividends receivable....... 30,726 -- 30,726 5,647 -- 36,373 Other assets............................ 35,148 -- 35,148 7,190 -- 42,338 ---------- -------- ---------- -------- -------- ---------- Total assets................... $4,058,126 $(56,585) $4,001,541 $892,167 $ 46,260 $4,939,968 ========== ======== ========== ======== ======== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Regular savings....................... $ 557,896 $ -- $ 557,896 $172,784 $ -- $ 730,680 Money market access accounts.......... 490,575 -- 490,575 63,772 -- 554,347 Certificates of deposit............... 1,363,095 -- 1,363,095 335,051 (1,913)(6) 1,696,233 NOW accounts.......................... 351,481 -- 351,481 82,529 -- 434,010 Demand deposits....................... 434,091 -- 434,091 79,881 -- 513,972 ---------- -------- ---------- -------- -------- ---------- 3,197,138 -- 3,197,138 734,017 (1,913) 3,929,242 ---------- -------- ---------- -------- -------- ---------- Federal funds purchased................. 1,500 -- 1,500 -- -- 1,500 Securities sold under repurchase agreements............................ 180,957 -- 180,957 3,338 -- 184,295 Borrowings from the Federal Home Loan Bank of Boston........................ 252,446 -- 252,446 72,195 2,079(7) 326,720 Other borrowings........................ 22,029 -- 22,029 -- -- 22,029 Deferred income taxes................... 12,577 -- 12,577 1,598 3,783(8) 17,958 Other liabilities....................... 36,554 -- 36,554 12,323 4,960(9) 53,837 ---------- -------- ---------- -------- -------- ---------- Total liabilities.............. 3,703,201 -- 3,703,201 823,471 8,909 4,535,581 ---------- -------- ---------- -------- -------- ---------- Shareholders' equity: Preferred Stock....................... -- -- -- -- -- -- Common Stock: The Company......................... 256 -- 256 -- 54(10) 310 Family.............................. -- -- 562 (562)(10) -- Paid in capital......................... 224,268 -- 224,268 30,018 75,975(10) 330,261 Retained earnings....................... 134,443 -- 134,443 47,153 (47,153)(10) 134,443 Net unrealized gain (loss) on securities available for sale, net of taxes...... 3,763 -- 3,763 954 (954)(10) 3,763 Treasury stock at cost.................. (7,805) (56,585) (64,390) (9,917) 9,917(10) (64,390 ) Unearned compensation -- ESOP........... -- -- -- (74) 74(10) -- ---------- -------- ---------- -------- -------- ---------- Total shareholders' equity..... 354,925 (56,585) 298,340 68,696 37,351 404,387 ---------- -------- ---------- -------- -------- ---------- Total liabilities and shareholders' equity......... $4,058,126 $(56,585) $4,001,541 $892,167 $ 46,260 $4,939,968 ========== ======== ========== ======== ======== ========== Book value per share.................... $14.16 $13.22 $14.53 ----- ----- ------ ----- ----- ------ Tangible book value per share........... $13.25 $12.21 $12.18 ----- ----- ------ ----- ----- ------
35 39 THE COMPANY AND FAMILY PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA)
THE COMPANY THE AND COMPANY FAMILY AND COMBINED THE THE THE PRO FORMA AND THE COMPANY OFFER OFFER FAMILY ADJUSTMENTS OFFER -------- ------- -------- ------- ----------- ----------- Interest and dividend income: Interest and fees on loans and leases... $139,222 $ -- $139,222 $19,805 $ (278)(11) $ 158,749 Interest on mortgage-backed investments........................... 7,507 -- 7,507 9,092 -- 16,599 Interest on other investments........... 17,198 (1,768) 15,430 2,445 -- 17,875 Dividends on equity securities.......... 912 -- 912 264 -- 1,176 -------- ------- -------- ------- ------- -------- Total interest and dividend income.... 164,839 (1,768) 163,071 31,606 (278) 194,399 -------- ------- -------- ------- ------- -------- Interest expense: Interest on deposits.................... 59,356 -- 59,356 12,911 478(12) 72,745 Interest on borrowed funds.............. 13,513 -- 13,513 2,039 (520)(13) 15,032 -------- ------- -------- ------- ------- -------- Total interest expense................ 72,869 -- 72,869 14,950 (42) 87,777 -------- ------- -------- ------- ------- -------- Net interest income................... 91,970 (1,768) 90,202 16,656 (236) 106,622 Provision for loan losses................. 900 -- 900 500 -- 1,400 -------- ------- -------- ------- ------- -------- Net interest income after provision for loan losses..................... 91,070 (1,768) 89,302 16,156 (236) 105,222 -------- ------- -------- ------- ------- -------- Noninterest income: Mortgage banking services............... 6,535 -- 6,535 408 (301)(14) 6,642 Customer services....................... 6,916 -- 6,916 2,180 -- 9,096 Trust and investment advisory services.............................. 3,524 -- 3,524 102 -- 3,626 Loan related services................... 906 -- 906 55 -- 961 Net securities gains.................... 504 -- 504 144 -- 424 Other noninterest income................ 280 -- 280 223 -- 727 -------- ------- -------- ------- ------- -------- 18,665 -- 18,665 3,112 (301) 21,476 -------- ------- -------- ------- ------- -------- Noninterest expenses: Salaries and employee benefits.......... 35,631 -- 35,631 5,895 -- 41,526 Occupancy............................... 6,399 -- 6,399 970 2(15) 7,371 Data processing......................... 5,769 -- 5,769 511 -- 6,280 Equipment............................... 3,991 -- 3,991 988 -- 4,979 Advertising and marketing............... 1,999 -- 1,999 700 -- 2,699 Deposit and other assessments........... 669 -- 669 212 -- 881 Collection and carrying costs of nonperforming assets.................. 882 -- 882 145 -- 1,027 Merger expenses......................... 5,105 -- 5,105 533 -- 5,638 Other noninterest expenses.............. 13,723 -- 13,723 3,074 1,214(16) 18,011 -------- ------- -------- ------- ------- -------- 74,168 -- 74,168 13,028 1,216 88,412 -------- ------- -------- ------- ------- -------- Income before income tax.................. 35,567 (1,768) 33,799 6,240 (1,753) 38,286 Applicable income tax..................... 12,818 (601) 12,217 2,450 (226)(17) 14,441 -------- ------- -------- ------- ------- -------- Net income............................ $ 22,749 $(1,167) $ 21,582 $ 3,790 $(1,527) $ 23,845 ======== ======= ======== ======= ======= ======== Net income per share...................... $0.90 $0.95 $0.85 Average shares outstanding................25,149,123 22,649,123 28,074,208
36 40 THE COMPANY AND FAMILY PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995 (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA)
THE THE COMPANY COMPANY AND FAMILY AND COMBINED THE THE THE PRO FORMA AND THE COMPANY OFFER OFFER FAMILY ADJUSTMENTS OFFER -------- ------- -------- ------- ----------- ----------- Interest and dividend income: Interest and fees on loans and leases... $253,787 $ -- $253,787 $40,207 $ (556)(11) $ 293,438 Interest on mortgage-backed investments........................... 12,627 -- 12,627 12,285 -- 24,912 Interest on other investments........... 37,521 (3,537) 33,984 6,667 -- 40,651 Dividends on equity securities.......... 1,914 -- 1,914 825 -- 2,739 -------- ------- -------- ------- ------- -------- Total interest and dividend income.... 305,849 (3,537) 302,312 59,984 (556) 361,740 -------- ------- -------- ------- ------- -------- Interest expense: Interest on deposits.................... 108,209 -- 108,209 24,860 957(12) 134,026 Interest on borrowed funds.............. 26,686 -- 26,686 2,872 (1,039)(13) 28,519 -------- ------- -------- ------- ------- -------- Total interest expense................ 134,895 -- 134,895 27,732 (82) 162,545 -------- ------- -------- ------- ------- -------- Net interest income................... 170,954 (3,537) 167,417 32,252 (474) 199,195 Provision for loan losses................. 4,230 -- 4,230 1,150 -- 5,380 -------- ------- -------- ------- ------- -------- Net interest income after provision for loan losses..................... 166,724 (3,537) 163,187 31,102 (474) 193,815 -------- ------- -------- ------- ------- -------- Noninterest income: Mortgage banking services............... 10,849 -- 10,849 1,025 (602)(14) 11,272 Customer services....................... 11,908 -- 11,908 3,465 -- 15,373 Trust and investment advisory services.............................. 5,850 -- 5,850 200 -- 6,050 Loan related services................... 1,907 -- 1,907 199 -- 2,106 Net securities gains.................... 116 -- 116 979 -- 1,095 Other noninterest income................ 787 -- 787 313 -- 1,100 -------- ------- -------- ------- ------- -------- 31,417 -- 31,417 6,181 (602) 36,996 -------- ------- -------- ------- ------- -------- Noninterest expenses: Salaries and employee benefits.......... 67,472 -- 67,472 10,775 -- 78,247 Occupancy............................... 10,574 -- 10,574 1,951 3(15) 12,528 Data processing......................... 8,924 -- 8,924 1,052 -- 9,976 Equipment............................... 6,844 -- 6,844 1,909 -- 8,753 Advertising and marketing............... 4,642 -- 4,642 749 -- 5,391 Deposit and other assessments........... 4,497 -- 4,497 845 -- 5,342 Collection and carrying costs of nonperforming assets.................. 2,595 -- 2,595 397 -- 2,992 Merger expenses......................... 4,958 -- 4,958 -- -- 4,958 Other noninterest expenses.............. 19,774 -- 19,774 6,024 2,428(16) 28,226 -------- ------- -------- ------- ------- -------- 130,280 -- 130,280 23,702 2,431 156,413 -------- ------- -------- ------- ------- -------- Income before income tax.................. 67,861 (3,537) 64,324 13,581 (3,507) 74,398 Applicable income tax..................... 23,375 (1,203) 22,172 5,582 (453)(17) 27,301 -------- ------- -------- ------- ------- -------- Net income............................ $ 44,486 $(2,334) $ 42,152 $ 7,999 $(3,054) $ 47,097 ======== ======= ======== ======= ======= ======== Net income per share...................... $1.80 $1.90 $1.71 Average shares outstanding................24,696,393 22,196,393 27,614,059
37 41 NOTES TO PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) Reflects adjustment of Family's loan portfolio to estimated fair value. (2) Reflects adjustment of Family's premises and equipment to estimated fair value. (3) Reflects the excess of the purchase price of Family over the fair value of the net assets acquired (goodwill) after reflecting the adjustments described in Notes 1-2 and 4-9. (4) Reflects the estimated fair value of Family's mortgage servicing portfolio. (5) Reflects adjustment related to the exercise of the Family Options referred to in Note 10 and the tax effect of certain related purchase accounting adjustments. (6) Reflects adjustment of Family's certificates of deposit to fair value. (7) Reflects adjustment of Family's FHLB advances to fair value. (8) Reflects tax effect of certain purchase accounting adjustments. (9) Reflects $4.96 million of estimated one-time reorganization and restructuring costs related to the Merger. Such costs include estimated investment banking and other professional fees, severance costs associated with expected consolidations following the Merger, stock issuance costs and miscellaneous other costs. The effect of the one-time charges has been reflected in the pro forma consolidated balance sheet data but not in the pro forma operations data because it is nonrecurring. (10) Reflects elimination of certain Family shareholder equity accounts and adjustment of paid-in capital and common stock to reflect the market value of the Common Stock to be issued in the Merger. The purchase price is based on exchanging 1.26 shares of Common Stock for (i) each outstanding share of Family Common Stock as of June 30, 1996 and (ii) the incremental number of shares of Family Common Stock (x) issued upon exercise of outstanding Family Options between June 30, 1996 and August 31, 1996, (y) issuable upon exercise of outstanding Family Options which are scheduled to expire in accordance with their terms on or prior to December 31, 1996 and (z) issuable upon exercise of vested Family Options held by employees of Family who will be leaving Family prior to December 31, 1996 (collectively, the "Current Family Options"), in each case at the per share closing price of the Common Stock ($19.75) on May 30, 1996, the last business day preceding public announcement of the Agreement. Shares issuable upon the exercise of Family Options which are not included in the foregoing are not included in the number of outstanding shares of Family Common Stock on the assumption that all such options will become equivalent options to purchase Common Stock. The estimated total market value of Common Stock to be issued in connection with the Merger is calculated as follows: Number of shares of Family Common Stock outstanding on June 30, 1996........ 4,215,211 Incremental shares of Family Common Stock issued or issuable upon exercise of the Current Family Options............................................. 96,735 ---------- Total assumed number of outstanding shares of Family Common Stock........... 4,311,946 Exchange Ratio.............................................................. 1.26 ---------- Total number of shares of Common Stock to be issued in the Merger........... 5,433,052 Market price per share of Common Stock on May 30, 1996...................... $ 19.75 ---------- Total market value of the Common Stock to be issued in the Merger (in thousands)................................................................ $ 107,303 ==========
(11) Reflects accretion of the premium on loans and leases over a five-year period. (12) Reflects amortization of the premium on deposits over a two-year period. (13) Reflects accretion of the discount on borrowings over a two-year period. (14) Reflects amortization of mortgage servicing rights resulting from the acquisition of Family over a seven-year period. 38 42 (15) Reflects amortization of adjustment to fair value of premises and equipment over a 31.5 year period. (16) Reflects amortization of goodwill (amortized over a 15-year period). (17) Reflects the tax effect of the adjustments described in Notes 11-15. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Exchange Act and the rules and regulations thereunder and, in accordance therewith, files reports, proxy statements and other information with the Commission. Reports, proxy statements and other information filed by the Company can be inspected and copied at Room 1024 of the Commissioner's office at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's Regional Office in New York (7 World Trade Center, Suite 1300, New York, New York 10048), and copies of such material can be obtained from the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Common Stock is quoted on the Nasdaq Stock Market's National Market. Consequently, reports, proxy statements and other information relating to the Company also may be inspected at the office of the National Association of Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006. The Company has filed an Issuer Tender Offer on Schedule 13E-4, which includes this Offer to Purchase, with the SEC. Statements contained in this Offer to Purchase as to the contents of any contract or other document filed as an exhibit to the Company's Issuer Tender Offer on Schedule 13E-4 are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed therewith as an exhibit. MISCELLANEOUS The Offer is not being made to, nor will the Company accept tenders from or on behalf of, holders of Shares residing in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. The Company is not aware of any jurisdiction where the making of the Offer or the tender of Shares would not be in compliance with applicable law. If the Company becomes aware of any jurisdiction where the making of the Offer or the tender of Shares is not in compliance with any applicable law, the Company will make a good faith effort to comply with such law. If after such good faith effort the Company cannot comply with such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares residing in such jurisdiction. In any jurisdiction in which the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Company by the Dealer Manager or one or more registered brokers or dealers licensed under the laws of such jurisdiction. All information contained in this Offer to Purchase relating to the Company has been supplied by the Company, and all information contained in this Offer to Purchase relating to Family has been supplied by Family. PEOPLES HERITAGE FINANCIAL GROUP, INC. September 10, 1996 39 43 SCHEDULE A TRANSACTIONS EFFECTED BY DIRECTORS AND OFFICERS Set forth below are the purchases of Shares effected by, or for the benefit of, each director and executive officer of the Company since July 16, 1996, all of which were pursuant to the indicated stock benefit plans of the Company:
DATE OF NUMBER OF NAME PURCHASE SHARES PRICE MANNER OF PURCHASE - ---- -------- --------- ------ ----------------------------- Gray, Everett........................ 8/9/96 20 $21.00 Dividend Reinvestment Plan Greene, Andrew....................... 8/9/96 20 21.00 Dividend Reinvestment Plan Levenson, Dana....................... 8/9/96 2 21.00 Dividend Reinvestment Plan Ryan, William........................ 7/19/96 488 17.32 Employee Stock Purchase Plan 7/22/96 .1518 19.50 Thrift Incentive Plan 8/9/96 70 21.00 Dividend Reinvestment Plan Beyer, Henry......................... 7/22/96 36.64 19.50 Thrift Incentive Plan 8/7/96 62.62 20.20 Thrift Incentive Plan 8/9/96 .80 20.88 Thrift Incentive Plan 8/21/96 17.63 20.97 Thrift Incentive Plan Fridlington, John.................... 7/22/96 .313 19.50 Thrift Incentive Plan Mitchell, Carol...................... 7/19/96 318 17.32 Employee Stock Purchase Plan 7/22/96 12.06 19.50 Thrift Incentive Plan 8/7/96 9.95 20.20 Thrift Incentive Plan 8/9/96 .13 20.88 Thrift Incentive Plan 8/21/96 8.81 20.97 Thrift Incentive Plan Verrill, Peter....................... 7/19/96 789 17.32 Employee Stock Purchase Plan 7/22/96 .2880 19.50 Thrift Incentive Plan 8/9/96 39 21.00 Dividend Reinvestment Plan
In addition to the foregoing transactions, effective September 3, 1996, Davis Thurber transferred 90,000 Shares to his wife and 25,000 Shares to a limited partnership for family members, of which he and his wife are the sole general partners. In each case these transfers were without consideration. 44 Facsimile copies of the Letter of Transmittal, properly completed and duly executed, will be accepted from Eligible Institutions. The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each tendering shareholder or his or her broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below: THE DEPOSITARY: AMERICAN STOCK TRANSFER AND TRUST COMPANY By Mail: By Facsimile Transmission: 40 Wall Street (for Eligible Institutions Only) New York, New York 10005 (718) 234-5001 (Attention: Corporate Trust Department) Confirm by Telephone: (718) 921-8200
By Hand/Overnight Delivery: 40 Wall Street 46th Floor New York, New York 10005 (Attention: Corporate Trust Department) Any questions or requests for assistance or for additional copies of the Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the Information Agent at the telephone number and address set forth below. A tendering shareholder also may contact his broker, dealer, commercial bank or trust company for assistance concerning the Offer. In order to confirm the delivery of Shares, a tendering shareholder should contact the Depositary. THE INFORMATION AGENT FOR THE OFFER IS: MORROW & CO., INC. 909 Third Avenue 20th Floor New York, New York 10022 (212) 754-8000 Call Toll Free: 1-800-566-9061 Banks and brokerage firms please call 1-800-662-5200 THE DEALER MANAGER FOR THE OFFER IS: KEEFE, BRUYETTE & WOODS, INC. Two World Trade Center New York, New York 10048 (212) 323-8450 EX-9.A2 3 LETTER OF TRANSMITTAL 1 EXHIBIT 9(a)(2) LETTER OF TRANSMITTAL TO ACCOMPANY SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF PEOPLES HERITAGE FINANCIAL GROUP, INC. TENDERED PURSUANT TO THE OFFER TO PURCHASE DATED SEPTEMBER 10, 1996 - ------------------------------------------------------------------------------- THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996, UNLESS THE OFFER IS EXTENDED. - ------------------------------------------------------------------------------- TO: AMERICAN STOCK TRANSFER AND TRUST COMPANY, DEPOSITARY By Mail: By Facsimile Transmission: 40 Wall Street (for Eligible Institutions Only) New York, New York 10005 (718) 234-5001 (Attention: Corporate Trust Department) Confirm by Telephone: (718) 921-8200
By Hand/Overnight Delivery: 40 Wall Street 46th Floor New York, New York 10005 (Attention: Corporate Trust Department) - -------------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED (SEE INSTRUCTIONS 3 AND 4)
- ------------------------------------------------------------------------------------------------------------------------ NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) (PLEASE FILL IN EXACTLY AS CERTIFICATE(S) TENDERED NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH SIGNED LIST IF NECESSARY) ------------------------------------------------------------------------------------------------------------------------ NUMBER OF SHARES NUMBER CERTIFICATE REPRESENTED BY OF SHARES NUMBER(S)* CERTIFICATE(S)* TENDERED** --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- Total Shares Tendered ------------------------------------------------------------------------------------------------------------------------ * Need not be completed if Shares are delivered by book-entry transfer. ** If you desire to tender fewer than all Shares evidenced by any certificates listed above, please indicate in this column the number of Shares you wish to tender. Otherwise, all Shares evidenced by such certificates will be deemed to have been tendered. See Instruction 4. - --------------------------------------------------------------------------------
2 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE SHOWN ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THIS LETTER OF TRANSMITTAL IS TO BE USED ONLY (A) IF CERTIFICATES FOR SHARES (AS DEFINED BELOW) ARE TO BE FORWARDED WITH IT, OR (B) IF A TENDER OF SHARES IS TO BE MADE BY BOOK-ENTRY TRANSFER TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE DEPOSITORY TRUST COMPANY ("DTC") OR THE PHILADELPHIA DEPOSITORY TRUST COMPANY ("PDTC") (TOGETHER, THE "BOOK-ENTRY TRANSFER FACILITIES") AS DESCRIBED UNDER "THE OFFER -- PROCEDURE FOR TENDERING SHARES" IN THE OFFER TO PURCHASE. ABSENT CIRCUMSTANCES CAUSING THE RIGHTS (AS DEFINED BELOW) TO BECOME EXERCISABLE OR SEPARATELY TRADEABLE PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE), A TENDER OF SHARES ALSO WILL CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS. UNLESS THE CONTEXT REQUIRES OTHERWISE, ALL REFERENCES HEREIN TO SHARES INCLUDE THE ASSOCIATED RIGHTS. SHAREHOLDERS WHOSE CERTIFICATES ARE NOT IMMEDIATELY AVAILABLE OR WHO CANNOT DELIVER THEIR CERTIFICATES FOR SHARES AND ALL OTHER DOCUMENTS THIS LETTER OF TRANSMITTAL REQUIRES TO THE DEPOSITORY AT OR BEFORE THE EXPIRATION DATE (OR WHO ARE UNABLE TO COMPLY WITH THE PROCEDURE FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS) MUST TENDER THEIR SHARES ACCORDING TO THE GUARANTEED DELIVERY PROCEDURE SET FORTH UNDER "THE OFFER -- PROCEDURE FOR TENDERING SHARES" IN THE OFFER TO PURCHASE. SEE INSTRUCTION 2. DELIVERY OF DOCUMENTS TO ONE OF THE BOOK-ENTRY TRANSFER FACILITIES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING: Names of Tendering Institution: -------------------------------------------- Check Box of Applicable Book-Entry Transfer Facility: / / DTC / / PDTC Account Number: ------------------------------------------------------------- Transaction Code Number: ---------------------------------------------------- / / CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Owner(s): --------------------------------------------- Date of Execution of Notice of Guaranteed Delivery: ------------------------- Name of Institution Which Guaranteed Delivery: ------------------------------ Check Box of Applicable Book-Entry Transfer Facility and Give Account Number and Transaction Code if Delivered by Book-Entry Transfer: / / DTC / / PDTC Account Number: ------------------------------------------------------------- Transaction Code Number: ---------------------------------------------------- 3 TO AMERICAN STOCK TRANSFER AND TRUST COMPANY: The undersigned hereby tenders to Peoples Heritage Financial Group, Inc., a Maine corporation (the "Company"), the above-described shares of the Company's common stock, par value $.01 per share (including the associated Preferred Stock Purchase Rights (the "Rights"), the "Shares"), at the price per Share indicated in this Letter of Transmittal, net to the seller in cash, upon the terms and subject to the conditions set forth in the Company's Offer to Purchase dated September 10, 1996, receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together constitute the "Offer"). Absent circumstances causing the Rights to become exercisable or separately tradable prior to the Expiration Date, a tender of Shares also will constitute a tender of the associated Rights. Unless the context requires otherwise, all references herein to Shares include the associated Rights. Subject to and effective on acceptance for payment of the Shares tendered hereby in accordance with the terms of the Offer (including, if the Offer is extended or amended, the terms or conditions of any such extension or amendment), the undersigned hereby sells, assigns, and transfers to or upon the order of the Company all right, title and interest in and to all Shares tendered hereby or orders the registration of such Shares tendered by book-entry transfer that are purchased pursuant to the Offer to or upon the order of the Company and hereby irrevocably constitutes and appoints the Depositary as attorney-in-fact of the undersigned with respect to such Shares, with full power of substitution (such power of attorney being an irrevocable power coupled with interest), to: (a) deliver certificates for such Shares, or transfer ownership of such Shares on the account books maintained by a Book-Entry Transfer Facility, together in either such case with all accompanying evidences of transfer and authenticity, to or upon the order of the Company, upon receipt by the Depositary, as the undersigned's agent, of the Purchase Price (as defined below) with respect to such Shares; (b) present certificates for such Shares for cancellation and transfer on the Company's books; and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares, all in accordance with the terms of the Offer. The undersigned hereby represents and warrants to the Company that: (a) the undersigned understands that tenders of Shares pursuant to any one of the procedures described under "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase and in the Instructions hereto will constitute the undersigned's acceptance of the terms and conditions of the Offer, including the undersigned's representation and warranty that (i) the undersigned has a net long position in Shares or equivalent securities at least equal to the Shares tendered within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended, and (ii) such tender of Shares complies with Rule 14e-4; (b) when and to the extent the Company accepts the Shares for purchase, the Company will acquire good, marketable and unencumbered title to them, free and clear of all security interests, liens, charges, encumbrances, conditional sales agreements or other obligations relating to their sale or transfer, and not subject to any adverse claim; (c) on request, the undersigned will execute and deliver any additional documents the Depositary or the Company deems necessary or desirable to complete the assignment, transfer and purchase of the Shares tendered hereby; and (d) the undersigned has read and agrees to all of the terms of the Offer. The names and addresses of the registered owners should be printed, if they are not already printed above, exactly as they appear on the certificates representing Shares tendered hereby. The certificate numbers, the number of Shares represented by such certificates, the number of Shares that the undersigned wishes to tender and the purchase price at which such Shares are being tendered should be indicated in the appropriate boxes. The undersigned understands that the Company will determine a single per Share price (not greater than $24.00 nor less than $21.00 per Share) (the "Purchase Price") that it will pay for Shares validly tendered pursuant to the Offer taking into account the number of Shares so tendered and the prices specified by tendering shareholders. The undersigned understands that the Company will select the Purchase Price that will allow it to buy 4 2,500,000 Shares (or such lesser number of Shares as are validly tendered at prices not greater than $24.00 nor less than $21.00 per Share) pursuant to the Offer. The undersigned understands that all Shares validly tendered at prices at or below the Purchase Price will be purchased at the Purchase Price, net to the seller in cash, upon the terms and subject to the conditions of the Offer, including its proration provisions, and that the Company will return all other Shares, including Shares tendered and not withdrawn at prices greater than the Purchase Price and Shares not purchased because of proration. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, the Company may terminate or amend the Offer or may not be required to purchase any of the Shares tendered hereby or may accept for payment fewer than all of the Shares tendered hereby. The undersigned understands that certificate(s) for any Shares not tendered or not purchased will be returned to the undersigned at the address indicated above, unless otherwise indicated under the "Special Payment Instructions" or "Special Delivery Instructions" below. The undersigned recognizes that the Company has no obligation, pursuant to the "Special Payments Instructions," to transfer any certificate for Shares from the name of their registered owner, or to order the registration or transfer of such Shares tendered by book-entry transfer, if the Company purchases none of the Shares represented by such certificate or tendered by such book-entry transfer. The undersigned understands that acceptance of Shares by the Company for payment will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Offer. The check for the Purchase Price for such of the tendered Shares as are purchased will be issued to the order of the undersigned and mailed to the address indicated above unless otherwise indicated under the "Special Payment Instructions" or the "Special Delivery Instructions" below. All authority conferred or agreed to be conferred in this Letter of Transmittal shall survive the death or incapacity of the undersigned, and any obligations of the undersigned under this Letter of Transmittal shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. 5 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY ------------------------------------------ PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED. ------------------------------------------ If Shares are being tendered at more than one price, use a separate Letter of Transmittal for each price specified. (See Instruction 5) ------------------------------------------ Check only one box. If more than one box is checked, or if no box is checked (except as provided in the Odd Lots Instructions below), there is no valid tender of Shares. ------------------------------------------ Shares tendered at price determined pursuant to the Offer / / The undersigned wants to maximize the chance of having Peoples Heritage Financial Group, Inc. purchase all the Shares the undersigned is tendering (subject to the possibility of proration). Accordingly, by checking this one box INSTEAD OF ONE OF THE PRICE BOXES BELOW, the undersigned hereby tenders Shares and is willing to accept the Purchase Price determined pursuant to the Offer. This action will result in receiving a price per Share of as low as $21.00 or as high as $24.00. or ------------------ ------------------ Shares tendered at price determined by shareholder By checking one of the boxes below INSTEAD OF THE BOX ABOVE, the undersigned hereby tenders Shares at the price checked. This action could result in none of the Shares being purchased if the Purchase Price for the Shares is less than the price checked. Price (in dollars) per Share at which Shares are being tendered: / / $21.00 / / $22.25 / / $23.25 / / 21.25 / / 22.50 / / 23.50 / / 21.50 / / 22.75 / / 23.75 / / 21.75 / / 23.00 / / 24.00 / / 22.00
6 ODD LOTS (SEE INSTRUCTION 8) To be completed ONLY if Shares are being tendered by or on behalf of a person owning beneficially, as of the close of business on September 9, 1996 and who continues to own beneficially as of the Expiration Date (as defined below). The undersigned either (check one box): / / was the beneficial owner, as of the close of business on September 9, 1996, of an aggregate of fewer than 100 Shares, all of which are being tendered, or / / is a broker, dealer, commercial bank, trust company or other nominee which (a) is tendering, for the beneficial owners thereof, Shares with respect to which it is the record owner, and (b) believes, based on representations made to it by such beneficial owners, that each such person was the beneficial owner, as of the close of business on September 9, 1996 of an aggregate of fewer than 100 Shares and is tendering all such Shares. 7 PEOPLES HERITAGE FINANCIAL GROUP, INC. DIVIDEND REINVESTMENT PLAN (SEE INSTRUCTION 14) This section is to be completed ONLY if Shares held in the Company's Dividend Reinvestment Plan are to be tendered. / / By checking this box, the undersigned represents that the undersigned is a participant in the Peoples Heritage Financial Group, Inc. Dividend Reinvestment Plan and hereby tenders the following number of Shares held in the Dividend Reinvestment Plan account of the undersigned at American Stock Transfer and Trust Company: ________ Shares* * The undersigned understands and agrees that all Shares held in the Dividend Reinvestment Plan account of the undersigned at American Stock Transfer and Trust Company will be tendered if the above box is checked and the space above is left blank. - ------------------------------------------------------------ SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 4, 6, 7 AND 9) To be completed ONLY if certificate(s) for the Shares not tendered or not purchased and/or any check for the Purchase Price of Shares purchased are to be issued in the name of and sent to someone other than the undersigned. Issue: / / check / / certificate(s) to: Name ------------------------------------------------------------ (PLEASE PRINT) Address ------------------------------------------------------------ ------------------------------------------------------------ (INCLUDE ZIP CODE) ------------------------------------------------------------ (TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER) ------------------------------------------------------------ ------------------------------------------------------------ SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 4, 6, 7 AND 9) To be completed ONLY if certificate(s) for Shares not tendered or not purchased and/or any check for the Purchase Price of Shares purchased, issued in the name of the undersigned, are to be sent to someone other than the undersigned, or the undersigned at an address other than that shown above. Mail: / / check / / certificate(s) to: Name ------------------------------------------------------------ (PLEASE PRINT) Address ------------------------------------------------------------ ------------------------------------------------------------ (INCLUDE ZIP CODE) ------------------------------------------------------------ 8 SHAREHOLDER(S) SIGN HERE (SEE INSTRUCTIONS 1 AND 6) (PLEASE COMPLETE SUBSTITUTE FORM W-9 CONTAINED HEREIN) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SIGNATURE(S) OF OWNER(S) Must be signed by registered owner(s) exactly as name(s) appear(s) on certificate(s) or on a security position listing or by person(s) authorized to become registered owner(s) by certificate(s) and documents transmitted with this Letter of Transmittal. If signature is by attorney-in-fact, executor, administrator, trustee, guardian, officer of a corporation or another acting in a fiduciary or representative capacity, please set forth the full title. See Instruction 6. PLEASE PRINT OR TYPE. Dated: , 1996 --------------------------- Name(s) ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- (PLEASE PRINT) Capacity (full Title) ----------------------------------------------------------- Area Code and Telephone Number ---------------------------------------------------------------- Tax Identification or Social Security Number(s) ------------------------------------------------------- MEDALLION GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 6) Authorized Signature ------------------------------------------------------------ Name -------------------------------------------------------------------------- (PLEASE PRINT) Title -------------------------------------------------------------------------- Name of Firm -------------------------------------------------------------------- Address ------------------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone Number ---------------------------------------------------------------- Dated: , 1996 --------------------------- 9 INSTRUCTIONS FORMING PART OF THE TERMS OF THE OFFER (1) Guarantee of Signatures. No signature guarantee is required if either: (a) this Letter of Transmittal is signed by the registered owner of the Shares exactly as the name of the registered holder appears on the certificate (which term, for purposes of this document, shall include any participant in a Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) tendered with this Letter of Transmittal and payment and delivery are to be made directly to such owner unless such owner has completed either the box entitled "Special Payment Instructions" or "Special Delivery Instructions" above; or (b) such Shares are tendered for the account of a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc. or a commercial bank, trust company, savings association or credit union having an office, branch or agency in the United States (each such entity an "Eligible Institution"). In all other cases, an Eligible Institution must Medallion guarantee all signatures on this Letter of Transmittal. See Instruction 6. (2) Delivery of Letter of Transmittal and Certificates: Guaranteed Delivery Procedures. This Letter of Transmittal is to be used only if certificates are delivered with it to the Depositary (or such certificates will be delivered pursuant to a Notice of Guaranteed Delivery previously sent to the Depositary) or if tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth under "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase. Certificates for all physically tendered Shares or confirmation of a book-entry transfer into the depositary's account at a Book-Entry Transfer Facility of Shares tendered electronically, together in each case with a properly completed and duly executed Letter of Transmittal or facsimile of it, and any other documents required by this Letter of Transmittal, should be mailed or delivered to the Depositary at the appropriate address set forth herein and must be delivered to the Depositary on or before the Expiration Date (as defined in the Offer to Purchase). Shareholders whose certificates are not immediately available or who cannot deliver Shares and all other required documents to the Depositary on or before the Expiration Date, or whose Shares cannot be delivered on a timely basis pursuant to the procedures for book-entry transfer, may tender their Shares by or through an Eligible Institution by properly completing (including the price at which the Shares are being tendered) and duly executing and delivering a Notice of Guaranteed Delivery (or facsimile of it) and by otherwise complying with the guaranteed delivery procedure set forth under "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase. Pursuant to such procedure, the certificates for all physically tendered Shares, or book-entry confirmation, as the case may be, as well as a properly completed and duly executed Letter of Transmittal, must be received by the Depositary within five over-the-counter trading days after receipt by the Depositary of such Notice of Guaranteed Delivery, all as provided under "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, telex, facsimile transmission or mail to the Depositary and must include a signature guarantee by an Eligible Institution in the form set forth in such Notice. For Shares to be validly tendered pursuant to the guaranteed delivery procedure, the Depositary must receive the Notice of Guaranteed Delivery on or before the Expiration Date. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. The Company will not accept any alternative, conditional or contingent tenders, nor will it purchase any fractional Shares. All tendering shareholders, by execution of this Letter of Transmittal (or a facsimile of it), waive any right to receive any notice of the acceptance of their tender. 10 (3) Inadequate Space. If the space provided in the box captioned "Description of Shares Tendered" is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate signed schedule and attached to this Letter of Transmittal. (4) Partial Tenders and Unpurchased Shares. (Not applicable to shareholders who tender by book-entry transfer.) If fewer than all of the Shares evidenced by any certificate are to be tendered, fill in the number of Shares which are to be tendered in the column entitled "Number of Shares Tendered." In such case, if any tendered Shares are purchased, a new certificate for the remainder of the Shares evidenced by the old certificate(s) will be issued and sent to the registered holders, unless otherwise specified in either the "Special Payment Instructions" or "Special Delivery Instructions" boxes on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by the certificate(s) listed and delivered to the Depositary are deemed to have been tendered unless otherwise indicated. (5) Indication of Price at which Shares are being Tendered. For Shares to be properly tendered, the shareholder must check the box indicating the price per Share at which he is tendering Shares under "Price (In Dollars) Per Share at Which Shares Are Being Tendered" on this Letter of Transmittal, provided, however, that a shareholder may check the box above in the section entitled "PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED" indicating that he or she is tendering all Shares at the Purchase Price. ONLY ONE BOX MAY BE CHECKED. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED, THERE IS NO VALID TENDER OF SHARES. A shareholder wishing to tender portions of his or her Share holdings at different prices must complete a separate Letter of Transmittal for each price at which he or she wishes to tender each such portion of his or her Shares. The same Shares cannot be tendered (unless previously properly withdrawn as provided in the Offer to Purchase) at more than one price. (6) Signatures on Letter of Transmittal, Stock Powers and Endorsements. (a) If this Letter of Transmittal is signed by the registered owner(s) of the Shares tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the certificate without any change whatsoever. (b) If the Shares are registered in the names of two or more joint owners, each such owner must sign this Letter of Transmittal. (c) If any tendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal (or facsimiles thereof) as there are different registrations of certificates. (d) When this Letter of Transmittal is signed by the registered owner(s) of the Shares listed and transmitted hereby, no endorsements of certificate(s) representing such Shares or separate stock powers are required unless payment is to be made, or the certificates for Shares not tendered or not purchased are to be issued, to a person other than the registered owner(s). Signatures on such certificates or stock powers must be Medallion guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered owner of the certificates listed, however, the certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered owner(s) appear(s) on the certificate, and the signatures on such certificate or stock powers must be Medallion guaranteed by an Eligible Institution. See Instruction 1. (e) If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and must submit proper evidence satisfactory to the Company of their authority so to act. (7) Stock Transfer Taxes. Except as provided in this Instruction 7, no stock transfer tax stamps or funds to cover such stamps need accompany this Letter of Transmittal. The Company will pay or cause to be paid any stock transfer taxes payable on the transfer to it of Shares purchased pursuant to the Offer. If, however, (a) payment of the Purchase Price is to be made to any person(s) other than the registered owner(s); 11 (b) Shares not tendered or not accepted for purchase are to be registered in the name of any person(s) other than the registered owner(s) or (c) tendered certificates are registered in the name(s) of any person(s) other than the person(s) signing this Letter of Transmittal, then the Depository will deduct from the Purchase Price the amount of any stock transfer taxes (whether imposed on the registered owner, such other person or otherwise) payable on account of the transfer to such person unless satisfactory evidence of the payment of such taxes or an exemption from them is submitted. (8) Odd Lots. As described under "The Offer -- Number of Shares; Proration" in the Offer to Purchase, if the Company is to purchase less than all Shares tendered before the Expiration Date, the Shares purchased first will consist of all Shares tendered by any shareholder who owned beneficially, as of the close of business on September 9, 1996 and continues to own beneficially as of the Expiration Date, an aggregate of fewer than 100 Shares and who tenders all of his or her Shares at or below the Purchase Price (including by not designating a purchase price). The preference will not be available unless the box captioned "Odd Lots" is completed. (9) Special Payment and Delivery Instructions. If certificates for Shares not tendered or not purchased and/or checks are to be issued in the name of a person other than the person signing the Letter of Transmittal or if such certificates and/or checks are to be sent to someone other than the person signing the Letter of Transmittal or to the signer at a different address, the boxes captioned "Special Payment Instructions" and/or "Special Delivery Instructions" on this Letter of Transmittal should be completed as applicable and signatures must be Medallion guaranteed as described in Instruction 1. (10) Irregularities. The Company will determine, in its discretion, all questions as to the number of Shares to be accepted, the price to be paid therefor and the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares and its determination shall be final and binding on all parties. The Company reserves the absolute right to reject any or all tenders of Shares determined by it not to be in proper form or the acceptance of or payment for which may be unlawful. The Company also reserves the absolute right to waive any of the conditions of the Offer or any defect or irregularity in the tender of any particular Shares and the Company's interpretation of the terms of the Offer (including these instructions) will be final and binding on all parties. No tender of Shares will be deemed to be validly made until all defects or irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the Company shall determine. None of the Company, the Dealer Manager, the Depositary, the Information Agent nor any other person is or will be obligated to give notice of defects or irregularities in tenders, nor shall any of them incur any liability for failure to give any such notice. (11) Questions and Requests for Assistance and Additional Copies. Questions and request for assistance may be directed to, or additional copies of the Offer to Purchase, the Notice of Guaranteed Delivery and this Letter of Transmittal may be obtained from, the Information Agent at the address and telephone number set forth at the end of this Letter of Transmittal or from your broker, dealer, commercial bank or trust company. (12) Substitute Form W-9. Each tendering shareholder (see "Important Tax Information" below) is required to provide the Depositary with a correct taxpayer identification number ("TIN") on Substitute Form W-9 (the "Form W-9") which is provided under "Important Tax Information" below, and, if applicable, to indicate that the shareholder is not subject to backup withholding by checking the box in Part 2 of the form. Failure to provide the information on the form or to check the box in Part 2 of the form may subject the tendering shareholder to 31% federal income tax withholding on the payments made to the shareholder or other payee with respect to Shares purchased pursuant to the Offer. The box in Part 3 of the form may be checked if the tendering shareholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked and the Depositary is not provided with a TIN within sixty (60) days, the Depositary will withhold 31% on all such payments thereafter until a TIN is provided to the Depositary. (13) Withholding on Foreign Shareholders. The Depository will withhold federal income taxes equal to 30% of the gross payments payable to a foreign shareholder unless the Depository determines that a reduced rate of withholding or an exemption from withholding is applicable. For this purpose, a foreign shareholder is any shareholder that is not (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity 12 created or organized in or under the laws of the United States or any political subdivision thereof, or (iii) any estate or trust the income of which is subject to United States federal income taxation regardless of the source of such income. The Depository will determine a shareholder's status as a foreign shareholder and eligibility for a reduced rate of, or an exemption from, withholding by reference to the shareholder's address and to any outstanding certificates or statements concering eligibility for a reduced rate of, or exemption from, withholding unless facts and circumstances indicate that reliance is not warranted. A foreign shareholder who has not previously submitted the appropriate certificates or statements with respect to a reduced rate of, or exemption from, withholding for which such shareholder may be eligible should consider doing so in order to avoid overwithholding. A foreign shareholder may be eligible to obtain a refund of tax withheld if such shareholder meets one of the three tests for capital gain or loss treatment described under "The Offer -- Certain Federal Income Tax Consequences" in the Offer to Purchase or is otherwise able to establish that no tax or a reduced amount of tax was due. (14) Dividend Reinvestment Plan. Shareholders who participate in the Company's Dividend Reinvestment Plan who want to tender Shares held under that plan pursuant to the Offer should mark the box under "PEOPLES HERITAGE FINANCIAL GROUP, INC. DIVIDEND REINVESTMENT PLAN" and indicate the number of Shares that are to be tendered. If such box is marked but the number of Shares to be tendered is not indicated, all Shares held for the shareholder's account in the Company's Dividend Reinvestment Plan at American Stock Transfer and Trust Company will be tendered. All Shares held for the shareholders' account in the Company's Dividend Reinvestment Plan at American Stock Transfer and Trust Company will be tendered pursuant to the same price listed under "PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED." IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE OF IT (TOGETHER WITH CERTIFICATES FOR SHARES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY ON OR BEFORE THE EXPIRATION DATE. IMPORTANT TAX INFORMATION Under federal income tax law, a shareholder whose tendered Shares are accepted for payment is required to provide the Depositary with such shareholder's correct TIN on Form W-9 below. If the Depositary is not provided with the correct TIN, the Internal Revenue Service may subject the shareholder or other payee to a $50.00 penalty. In addition, payments that are made to such shareholder or other payee with respect to Shares purchased pursuant to the Offer may be subject to backup withholding. Certain shareholders (including, among others, all corporations and certain foreign individuals) are considered "exempt recipients" and are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, the shareholder must submit a Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. A Form W-8 can be obtained from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. If backup withholding applies, the Depositary is required to withhold 31% of any such payments made to the shareholder or other payee. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. PURPOSE OF FORM W-9 To prevent backup withholding on payment made to a shareholder or other payee with respect to Shares purchased pursuant to the Offer, the shareholder is required to notify the Depositary of the shareholder's correct TIN by completing the form below, certifying that the TIN provided on Form W-9 is correct (or that such shareholder is awaiting a TIN) and that: (a) the shareholder has not been notified by the Internal Revenue Service that the shareholder is subject to backup withholding as a result of failure to report all interest or dividends; or 13 (b) the Internal Revenue Service has notified the shareholder that the shareholder is no longer subject to backup withholding. The shareholder is required to give the Depositary the TIN (e.g., social security number or employer identification number) of the record owner of the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Form W-9" for additional guidance on which number to report. - ---------------------------------------------------------------------------------------------------- PAYOR'S NAME: AMERICAN STOCK TRANSFER AND TRUST COMPANY - ---------------------------------------------------------------------------------------------------- SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND ------------------------------ DEPARTMENT OF THE TREASURY DATING BELOW Social Security Number INTERNAL REVENUE SERVICE or ------------------------------ Employer Identification Number ------------------------------------------------------------------------ PART 2 -- Check the box if you are NOT subject to backup withholding under the Internal Revenue Code because (a) I am (we are) exempt from backup withholding, or (b) I (we) have not been notified that I am (we are) subject to backup withholding as a result of failure to report all interest or dividends or (c) the Internal Revenue Service has PAYER'S REQUEST FOR notified me (us) that I am (we are) no longer subject to backup TAXPAYER IDENTIFICATION withholding. NUMBER ("TIN") / / Correct / / Not Correct ------------------------------------------------------------------------ CERTIFICATION -- Under penalties of PART 3 -- perjury, I certify that the information Awaiting TIN / / provided on this form is true, correct, and complete. - ---------------------------------------------------------------------------------------------------- Signature Date ------------------------------------------------------ ----------------------- - ----------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF FORM W-9. 14 - ------------------------------------------------------------------------------- CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within sixty (60) days, 31% of all reportable payments made to me thereafter will be withheld, until I provide a number. , 1996 - ------------------------------------------- --------------------- Signature Date - ------------------------------------------------------------------------------- The Information Agent: MORROW & CO., INC. 909 Third Avenue 20th Floor New York, New York 10022 (212) 754-8000 Call Toll Free: 1-800-566-9061 Banks and brokerage firms please call 1-800-662-5200 The Dealer Manager for the Offer is: KEEFE, BRUYETTE & WOODS, INC. Two World Trade Center New York, New York 10048 (212) 323-8450 (Call Collect) EX-9.A3 4 NOTICE OF GUARANTEE DELIVERY 1 EXHIBIT 9(a)(3) NOT VALID UNLESS SIGNED BY AN ELIGIBLE INSTITUTION. PEOPLES HERITAGE FINANCIAL GROUP, INC. NOTICE OF GUARANTEED DELIVERY OF SHARES OF COMMON STOCK OFFER TO PURCHASE FOR CASH UP TO 2,500,000 SHARES OF ITS COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) AT A PURCHASE PRICE NOT GREATER THAN $24.00 NOR LESS THAN $21.00 PER SHARE This form or a facsimile copy of it must be used to accept the Offer (as defined below) if: (a) certificates for common stock, par value $.01 per share (the "Shares"), including the associated Rights (as defined herein), of Peoples Heritage Financial Group, Inc., a Maine corporation, are not immediately available; or (b) the procedure for book-entry transfer cannot be completed on a timely basis; or (c) time will not permit the Letter of Transmittal or other required documents to reach the Depositary before the Expiration Date (as defined in Section 1 of the Offer to Purchase, as defined below). This form or a facsimile of it, signed and properly completed, may be delivered by hand, mail, telegram or facsimile transmission to the Depositary by the Expiration Date. See "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase. DEPOSITARY: AMERICAN STOCK TRANSFER AND TRUST COMPANY By Mail: By Facsimile Transmission: 40 Wall Street (for Eligible Institutions Only) New York, New York 10005 (718) 234-5001 (Attention: Corporate Trust Department) Confirm by Telephone: (718) 921-8200
By Hand/Overnight Delivery: 40 Wall Street 46th Floor New York, New York 10005 (Attention: Corporate Trust Department) DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE SHOWN ABOVE OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THOSE LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. 2 Ladies and Gentlemen: The undersigned hereby tenders to Peoples Heritage Financial Group, Inc., at the price per Share indicated below, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated September 10, 1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which together with the Offer to Purchase constitute the "Offer"), receipt of which is hereby acknowledged, Shares of common stock, par value $.01 per share (including the associated Preferred Stock Purchase Rights (the "Rights"), the "Shares"), pursuant to the guaranteed delivery procedure set forth under "The Offer -- Procedures for Tendering Shares" in the Offer to Purchase. Unless the Rights become exercisable or separately tradeable prior to the Expiration Date, a tender of Shares also will constitute a tender of the associated Rights. Unless the context requires otherwise, all references herein to Shares include the associated Rights. ------------------------------------------ PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED. ------------------------------------------ If Shares are being tendered at more than one price, use a separate Notice of Guaranteed Delivery for each price specified. ------------------------------------------ Check only one box. If more than one box is checked, or if no box is checked (except as provided in the Odd Lot Instructions below), there is no valid tender of Shares. ------------------------------------------ Shares tendered at price determined pursuant to the Offer / / The undersigned wants to maximize the chance of having Peoples Heritage Financial Group, Inc. purchase all the Shares the undersigned is tendering (subject to the possibility of proration). Accordingly, by checking this one box INSTEAD OF ONE OF THE PRICE BOXES BELOW, the undersigned hereby tenders Shares and is willing to accept the Purchase Price determined pursuant to the Offer. This action will result in receiving a price per share of as low as $21.00 or as high as $24.00. or ------------------ ------------------ Shares tendered at price determined by shareholder By checking one of the boxes below INSTEAD OF THE BOX ABOVE, the undersigned hereby tenders Shares at the price checked. This action could result in none of the Shares being purchased if the Purchase Price for the Shares is less than the price checked. Price (in dollars) per Share at which Shares are being tendered: / / $21.00 / / $22.25 / / $23.25 / / 21.25 / / 22.50 / / 23.50 / / 21.50 / / 22.75 / / 23.75 / / 21.75 / / 23.00 / / 24.00 / / 22.00
3 ODD LOTS To be completed ONLY if Shares are being tendered by or on behalf of a person owning beneficially, as of the close of business on September 9, 1996 and who continue to own beneficially as of the Expiration Date, an aggregate of fewer than 100 Shares. The undersigned either (check one): / / was the beneficial owner, as of the close of business on September 9, 1996 of an aggregate of fewer than 100 Shares, all of which are being tendered, or / / is a broker, dealer, commercial bank, trust company or other nominee which (a) is tendering, for the beneficial owners thereof, Shares with respect to which it is the record owner, and (b) believes, based upon representations made to it by such beneficial owners, that each such person was the beneficial owner, as of the close of business on September 9, 1996, of an aggregate of fewer than 100 Shares and is tendering all of such Shares. - -------------------------------------------------------------------------------- Certificate Nos. (if available): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- If Shares will be tendered by book-entry transfer, check one box: / / The Depository Trust Company / / Philadelphia Depository Trust Company Account Number: - -------------------------------------------------------------------------------- Name(s): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PLEASE TYPE OR PRINT Address(es): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Area Code and Telephone Number: ------------------------------------------------- Sign Here: ---------------------------------------------------------------------- Dated: , 1996 --------------- - -------------------------------------------------------------------------------- 4 - -------------------------------------------------------------------------------- GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., or a commercial bank, trust company, savings association or credit union having an office or correspondent in the United States (each, an "Eligible Institution"), hereby (i) represents that the undersigned has a net long position in Shares or equivalent securities within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended, at least equal to the Shares tendered, (ii) represents that such tender of Shares complies with Rule 14e-4 and (iii) guarantees that either the certificates representing the Shares tendered hereby in proper form for transfer, or timely confirmation of the book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company (pursuant to the procedures set forth under "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantee and any other documents required by the Letter of Transmittal, will be received by the Depositary at one of its addresses set forth above within five New York Stock Exchange, Inc. trading days after the date of execution hereof. Name of Firm: ----------------------------- ----------------------------- AUTHORIZED SIGNATURE Address: Name: ---------------------------------- ------------------------ Title: ----------------------- Zip Code --------------------------------- Area Code and Dated: , 1996 Telephone Number: ---------------- ------------------------- DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. - -------------------------------------------------------------------------------- EX-9.A4 5 LETTER FROM THE COMPANY TO BROKERS, DEALERS .... 1 EXHIBIT 9(a)(4) Keefe, Bruyette & Woods, Inc. Two World Trade Center 85th Floor New York, New York 10048 PEOPLES HERITAGE FINANCIAL GROUP, INC. OFFER TO PURCHASE FOR CASH UP TO 2,500,000 SHARES OF ITS COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) AT A PURCHASE PRICE NOT GREATER THAN $24.00 NOR LESS THAN $21.00 PER SHARE September 10, 1996 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: Peoples Heritage Financial Group, Inc. (the "Company"), a Maine corporation, has appointed us to act as Dealer Manager in connection with its offer to purchase for cash up to 2,500,000 shares of its common stock, par value $.01 per share (including the associated Preferred Stock Purchase Rights (the "Rights"), the "Shares"), at prices, not greater than $24.00 nor less than $21.00 per Share, upon the terms and subject to the conditions set forth in its Offer to Purchase dated September 10, 1996 and in the related Letter of Transmittal (which together constitute the "Offer"). We enclose the materials listed below relating to the Offer. Unless the Rights become exercisable or separately tradeable prior to the Expiration Date (as defined in the section titled "The Offer -- Number of Shares; Proration" in the Offer to Purchase), a tender of Shares also will constitute a tender of the associated Rights. Unless the context requires otherwise, all references herein to Shares include the associated Rights. The Company will determine a single per Share price (not greater than $24.00 nor less than $21.00 per Share) (the "Purchase Price"), that it will pay for Shares validly tendered pursuant to the Offer taking into account the number of Shares so tendered and the prices specified by tendering shareholders. The Company will select the Purchase Price which will allow it to buy 2,500,000 Shares (or such lesser number of Shares as are validly tendered at prices not greater than $24.00 nor less than $21.00 per Share) pursuant to the Offer. All Shares validly tendered at prices at or below the Purchase Price will be purchased at the Purchase Price, net to the seller in cash, upon the terms and subject to the conditions of the Offer, including the proration terms thereof. See "The Offer -- Number of Shares; Proration" in the Offer to Purchase. If, prior to the Expiration Date, more than 2,500,000 Shares (or such greater number of Shares as the Company may elect to purchase) are validly tendered, the Company will, upon the terms and subject to the conditions of the Offer, accept Shares for purchase first from Odd Lot Owners (as defined under "The Offer -- Tenders by Owners of Fewer Than 100 Shares" in the Offer to Purchase) who validly tender their Shares at or below the Purchase Price and then on a pro rata basis from all other shareholders whose Shares are validly tendered at or below the Purchase Price. The Offer is not conditioned on any minimum number of Shares being tendered. The Offer is, however, subject to certain other conditions set forth in the Offer. See "The Offer -- Certain Conditions of the Offer" in the Offer to Purchase. For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, we are enclosing the following documents: 1. Offer to Purchase dated September 10, 1996; 2. Letter to Clients which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 2 3. Letter, dated September 10, 1996, from William J. Ryan, Chairman, President and Chief Executive Officer of the Company, to the shareholders of the Company; 4. Letter of Transmittal for your use and for the information of your clients (together with Substitute Form W-9 and guidelines); and 5. Notice of Guaranteed Delivery to be used to accept the Offer if Share certificates and all other required documents cannot be delivered to the Depositary by the Expiration Date or if the procedure for book-entry transfer cannot be completed on a timely basis. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996, UNLESS THE OFFER IS EXTENDED. No fees or commissions will be payable to brokers, dealers or any other persons for soliciting tenders of Shares pursuant to the Offer. The Company will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to the beneficial owners of Shares held by you as a nominee or in a fiduciary capacity. The Company will pay or cause to be paid any stock transfer taxes applicable to its purchase of Shares, except as otherwise provided in Instruction 7 of the Letter of Transmittal. In order to take advantage of the Offer, a duly executed and properly completed Letter of Transmittal and any other required documents should be sent to the Depositary with either certificate(s) representing the tendered Shares or confirmation of their book-entry transfer, all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. As described under "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase, tenders may be made without the concurrent deposit of stock certificates or concurrent compliance with the procedure for book-entry transfer, if such tenders are made by or through a broker or dealer which is a member firm of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or a commercial bank, trust company, savings association or credit union having an office, branch or agency in the United States. Certificates for Shares so tendered (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the "Book-Entry Transfer Facilities" described under "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase), together with a properly completed and duly executed Letter of Transmittal and any other documents required by the Letter of Transmittal, must be received by the Depositary within five over-the- counter trading days after timely receipt by the Depositary of a properly completed and duly executed Notice of Guaranteed Delivery. Any inquiries you may have with respect to the Offer should be addressed to the Dealer Manager or to the Information Agent at their respective addresses and telephone numbers set forth on the back cover page of the Offer to Purchase. Additional copies of the enclosed materials may be obtained from the Information Agent, Morrow & Co., Inc., telephone: (212) 754-8000 or toll free 1-800-662-5200. Very truly yours, KEEFE, BRUYETTE & WOODS, INC. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. EX-9.A5 6 LETTER TO BROKERS' CLIENTS 1 EXHIBIT 9(a)(5) PEOPLES HERITAGE FINANCIAL GROUP, INC. OFFER TO PURCHASE FOR CASH UP TO 2,500,000 SHARES OF ITS COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) AT A PURCHASE PRICE NOT GREATER THAN $24.00 NOR LESS THAN $21.00 PER SHARE September 10, 1996 To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated September 10, 1996, and the related Letter of Transmittal (which together constitute the "Offer"), in connection with the offer by Peoples Heritage Financial Group, Inc. (the "Company"), a Maine corporation, to purchase for cash up to 2,500,000 shares of its common stock, par value $.01 per share (including the associated Preferred Stock Purchase Rights (the "Rights"), the "Shares"), at prices not greater than $24.00 nor less than $21.00 per Share, upon the terms and subject to the conditions of the Offer. Unless the Rights become exercisable or separately tradeable prior to the Expiration Date (as defined under "The Offer -- Number of Shares; Proration" in the Offer to Purchase), a tender of Shares will also constitute a tender of the associated Rights. Unless the context requires otherwise, all references herein to Shares include the associated Rights. The Company will determine a single per Share price (not greater than $24.00 nor less than $21.00 per Share) (the "Purchase Price") that it will pay for Shares validly tendered pursuant to the Offer taking into account the number of Shares so tendered and the prices specified by tendering shareholders. The Company will select the Purchase Price which will allow it to buy 2,500,000 Shares (or such lesser number of Shares as are validly tendered at prices not greater than $24.00 nor less than $21.00 per Share) pursuant to the Offer. All Shares validly tendered prior to the Expiration Date at prices at or below the Purchase Price will be purchased at the Purchase Price, net to the seller in cash, upon the terms and subject to the conditions of the Offer, including the proration terms thereof. The Company will return all other Shares, including Shares tendered at prices greater than the Purchase Price and Shares not purchased because of proration. See "The Offer -- Number of Shares; Proration" in the Offer to Purchase. If, prior to the Expiration Date, more than 2,500,000 Shares (or such greater number of Shares as the Company may elect to purchase) are validly tendered, the Company will, upon the terms and subject to the conditions of the Offer, accept Shares for purchase first from Odd Lot Owners (as defined under "The Offer -- Tenders by Owners of Fewer Than 100 Shares" in the Offer to Purchase) who validly tender their Shares at or below the Purchase Price and then on a pro rata basis from all other shareholders whose Shares are validly tendered at or below the Purchase Price. WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. AS SUCH, WE ARE THE ONLY ONE WHO CAN TENDER YOUR SHARES, AND THEN ONLY PURSUANT TO YOUR INSTRUCTIONS. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION ONLY; YOU CANNOT USE IT TO TENDER SHARES WE HOLD FOR YOUR ACCOUNT. Please instruct us as to whether you wish us to tender any or all of the Shares we hold for your account on the terms and subject to the conditions of the Offer. We call your attention to the following: 1. You may tender Shares at prices (in multiples of $.25), not greater than $24.00 nor less than $21.00 per Share, as indicated in the attached Instruction Form, net to you in cash. 2. The Offer is not conditioned on any minimum number of Shares being tendered. The Offer is, however, subject to certain other conditions set forth in the Offer. 2 3. The Offer, proration period and withdrawal rights will expire at 5:00 p.m., New York City time, on Monday, October 7, 1996, unless the Company extends the Offer. 4. The Offer is for up to 2,500,000 Shares, constituting approximately 9.9% of the Shares outstanding as of September 10, 1996. 5. Tendering shareholders will not be obligated to pay any brokerage commissions, solicitation fees or, subject to instruction 7 of the Letter of Transmittal, stock transfer taxes on the Company's purchase of Shares pursuant to the Offer. 6. If you owned beneficially as of the close of business on September 9, 1996 and continued to own beneficially as of the Expiration Date, an aggregate of fewer than 100 Shares and you instruct us to tender on your behalf all such Shares at or below the Purchase Price before the expiration of the Offer and check the box captioned "Odd Lots" in the attached Instruction Form, the Company, upon the terms and subject to the conditions of the Offer, will accept all such Shares for purchase before proration, if any, of the purchase of other Shares tendered at or below the Purchase Price. 7. If you wish to tender portions of your Shares at different prices you must complete a separate Instruction Form for each price at which you wish to tender each such portion of your Shares. We must submit separate Letters of Transmittal on your behalf for each price you will accept. If you wish to have us tender any or all of your shares, please so instruct us by completing, executing, detaching and returning to us the attached Instruction Form. An envelope to return your Instruction Form to us is enclosed. If you authorize us to tender your Shares, we will tender all such Shares unless you specify otherwise on the attached Instruction Form. YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE OFFER. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996, UNLESS THE COMPANY EXTENDS THE OFFER. As described under "The Offer -- Number of Shares; Proration" in the Offer to Purchase, if before the Expiration Date more than 2,500,000 Shares (or such greater number of Shares as the Company elects to purchase) are validly tendered at or below the Purchase Price, the Company will accept Shares for purchase at the Purchase Price in the following order of priority: (a) first, all Shares validly tendered at or below the Purchase Price prior to the Expiration Date by any Odd Lot Owner who: (1) tenders all Shares beneficially owned by such Odd Lot Owner at or below the Purchase Price (partial tenders will not qualify for this preference); and (2) completes the section captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery; and (b) then, after purchase of all of the foregoing Shares, all other Shares validly tendered at or below the Purchase Price before the Expiration Date on a pro rata basis, if necessary (with adjustments to avoid purchases of fractional Shares). The Offer is not being made to, nor will the Company accept tenders from, holders of Shares in any jurisdiction in which the Offer or its acceptance would not comply with the securities or Blue Sky laws of such jurisdiction. The Company is not aware of any jurisdiction in which the making of the Offer or the tender of Shares would not be in compliance with the laws of such jurisdictions. However, the Company reserves the right to exclude holders in any jurisdiction in which it is asserted that the Offer cannot lawfully be made. So long as the Company makes a good faith effort to comply with any state law deemed applicable to the Offer, if it cannot do so, the Company believes that the exclusion of holders residing in such jurisdiction is permitted under Rule 13e-4(f)(9) promulgated under the Exchange Act. In any jurisdiction the securities or Blue Sky laws of which require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on the Company's behalf by Keefe, Bruyette & Woods, Inc., as Dealer Manager, or one or more registered brokers or dealers licensed under the laws of such jurisdiction. 3 INSTRUCTION FORM WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH UP TO 2,500,000 SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF PEOPLES HERITAGE FINANCIAL GROUP, INC. AT A PURCHASE PRICE NOT GREATER THAN $24.00 NOR LESS THAN $21.00 PER SHARE The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase dated September 10, 1996 and the related Letter of Transmittal (which together constitute the "Offer"), in connection with the offer by Peoples Heritage Financial Group, Inc. (the "Company"), a Maine corporation, to purchase for cash up to 2,500,000 shares of its common stock, par value $.01 per share (including the associated Preferred Stock Purchase Rights (the "Rights"), the "Shares"), at prices not greater than $24.00 nor less than $21.00 per Share, upon the terms and subject to the conditions of the Offer. Unless the Rights become exercisable or separately tradeable prior to the Expiration Date (as defined under "The Offer -- Number of Shares; Proration" in the Offer to Purchase), a tender of Shares also will constitute a tender of the associated Rights. Unless the context requires otherwise, all references herein to Shares include the associated Rights. The Company will determine a single per Share price (not greater than $24.00 nor less than $21.00 per Share) (the "Purchase Price") that it will pay for Shares validly tendered pursuant to the Offer taking into account the number of Shares so tendered and the prices specified by tendering shareholders. The Company will select the Purchase Price which will allow it to buy 2,500,000 Shares (or such lesser number of Shares as are validly tendered at prices not greater than $24.00 nor less than $21.00 per Share) pursuant to the Offer. All Shares validly tendered at prices at or below the Purchase Price will be purchased at the Purchase Price, net to the seller in cash, upon the terms and subject to the conditions of the Offer, including the proration terms thereof. The Company will return all other Shares, including Shares tendered at prices greater than the Purchase Price and Shares not purchased because of proration. See "The Offer -- Number of Shares; Proration" in the Offer to Purchase. The undersigned hereby instruct(s) you to tender to the Company the number of Shares indicated below or, if no number is indicated, all Shares you hold for the account of the undersigned, at the price per Share indicated below, pursuant to the terms and subject to the conditions of the Offer. 4 Aggregate number of Shares to be tendered by you for us: Shares* ------------------------------------------ PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED. ------------------------------------------ If Shares are being tendered at more than one price, use a separate Instruction Form. ------------------------------------------ Check only one box. If more than one box is checked, or if no box is checked (except as provided in the Odd Lot Instructions) there is no valid instruction to tender Shares. ------------------------------------------ Shares tendered at price determined pursuant to the Offer / / The undersigned wants to maximize the chance of having Peoples Heritage Financial Group, Inc. purchase all the Shares the undersigned is tendering (subject to the possibility of proration). Accordingly, by checking this one box INSTEAD OF ONE OF THE PRICE BOXES BELOW, the undersigned hereby tenders Shares and is willing to accept the Purchase Price determined pursuant to the Offer. This action will result in receiving a price per share as low as $21.00 or as high as $24.00. or ------------------ ------------------ Shares tendered at price determined by shareholder By checking one of the boxes below INSTEAD OF THE BOX ABOVE, the undersigned hereby tenders Shares at the price checked. This action could result in none of the Shares being purchased if the Purchase Price for the Shares is less than the price checked. Price (in dollars) per Share at which Shares are being tendered: / / $21.00 / / $22.25 / / $23.25 / / 21.25 / / 22.50 / / 23.50 / / 21.50 / / 22.75 / / 23.75 / / 21.75 / / 23.00 / / 24.00 / / 22.00
ODD LOTS / / By checking this box, the undersigned represents that the undersigned owned beneficially, as of the close of business on September 9, 1996, and will continue to own beneficially as of the Expiration Date, an aggregate of fewer than 100 Shares and is instructing the holder to tender all such Shares. - -------------------------------------------------------------------------------- SIGNATURE BOX Signature(s) - -------------------------------------------------------------------------------- Dated - -------------------------------------------------------------------------------- Name(s) and Address(es) (Please Print) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Area Code and Telephone Number - --------------------------------------------------------------------------- Taxpayer Identification or Social Security Number - ----------------------------------------------------------- - -------------------------------------------------------------------------------- - --------------- * Unless otherwise indicated, all of the Shares, including the associated Rights, held for the account of the undersigned will be tendered. EX-9.A6 7 TAX GUIDELINES 1 EXHIBIT 9(a)(6) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE. Purpose of Form. -- A person who is required to file an information return with the IRS must obtain your correct TIN to report income paid to you, real estate transactions, mortgage interest you paid, the acquisition or abandonment of secured property, or contributions you made to an IRA. Use Form W-9 to furnish your correct TIN to the requester (the person asking you to furnish your TIN) and, when applicable, (1) to certify that the TIN you are furnishing is correct (or that you are waiting for a number to be issued), (2) to certify that you are not subject to backup withholding, and (3) to claim exemption from backup withholding if you are an exempt payee. Furnishing your correct TIN and making the appropriate certifications will prevent payments from being subject to backup withholding. Note: If a requester gives you a form other than a W-9 to request your TIN, you must use the requester's form. How To Obtain a TIN. -- If you do not have a TIN, apply for one immediately. To apply, get Form SS-5, Application for a Social Security Card (for individuals), from your local office of the Social Security Administration, or Form SS-4, Application for Employer Identification Number (for businesses and all other entities), from your local IRS office. To complete Form W-9 if you do not have a TIN, write "Applied for" in the space for the TIN in Part I (or check box 2 of Substitute Form W-9), sign and date the form, and give it to the requester. Generally, you must obtain a TIN and furnish it to the requester by the time of payment. If the requester does not receive your TIN by the time of payment, backup withholding, if applicable, will begin and continue until you furnish your TIN to the requester. Note: Writing "Applied for" (or checking box 2 of the Substitute Form W-9) on the form means that you have already applied for a TIN or that you intend to apply for one in the near future. As soon as you receive your TIN, complete another Form W-9, include your TIN, sign and date the form, and give it to the requester. What Is Backup Withholding? -- Persons making certain payments to you after 1992 are required to withhold and pay to the IRS 31% of such payments under certain conditions. This is called "backup withholding." Payments that could be subject to backup withholding include interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee compensation, and certain payments from fishing boat operators, but do not include real estate transactions. If you give the requester your correct TIN, make the appropriate certifications, and report all your taxable interest and dividends on your tax return, your payments will not be subject to backup withholding. Payments you receive will be subject to backup withholding if: 1. You do not furnish your TIN to the requester, or 2. The IRS notifies the requester that you furnished an incorrect TIN, or 3. You are notified by the IRS that you are subject to backup withholding because you failed to report all your interest and dividends on your tax return (for reportable interest and dividends only), or 4. You do not certify to the requester that you are not subject to backup withholding under 3 above (for reportable interest and dividend accounts opened after 1983 only), or 5. You do not certify your TIN. This applies only to reportable interest, dividend, broker, or barter exchange accounts opened after 1983, or broker accounts considered inactive in 1983. Except as explained in 5 above, other reportable payments are subject to backup withholding only if 1 or 2 above applies. Certain payees and payments are exempt from backup withholding and information reporting. 2 See "Payees and Payments Exempt From Backup Withholding" below, and "Exempt Payees and Payments" under "Signing the Certification" below, if you are an exempt payee. Payees and Payments Exempt From Backup Withholding. -- The following is a list of payees exempt from backup withholding and for which no information reporting is required. For interest and dividends, all listed payees are exempt except item (9). For broker transactions, payees listed in (1) through (13) and a person registered under the Investment Advisers Act of 1940 who regularly acts as a broker are exempt. Payments subject to reporting under sections 6041 and 6041A are generally exempt from backup withholding only if made to payees described in items (1) through (7), except a corporation that provides medical and health care services or bills and collects payments for such services is not exempt from backup withholding or information reporting. Only payees described in items (2) through (6) are exempt from backup withholding for barter exchange transactions, patronage dividends, and payments by certain fishing boat operators. (1) A corporation. (2) An organization exempt from tax under section 501(a), or an IRA, or a custodial account under section 403(b)(7). (3) The United States or any of its agencies or instrumentalities. (4) A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities. (5) A foreign government or any of its political subdivisions, agencies, or instrumentalities. (6) An international organization or any of its agencies or instrumentalities. (7) A foreign central bank of issue. (8) A dealer in securities or commodities required to register in the United States or a possession of the United States. (9) A futures commission merchant registered with the Commodity Futures Trading Commission. (10) A real estate investment trust. (11) An entity registered at all times during the tax year under the Investment Company Act of 1940. (12) A common trust fund operated by a bank under section 584(a). (13) A financial institution. (14) A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. (15) A trust exempt from tax under section 664 or described in section 4947. Payments of dividend and patronage dividends generally not subject to backup withholding include the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in a trade or business in the United States and that have at least one nonresident partner. - Payments of patronage dividends not paid in money. - Payments made by certain foreign organizations. Payments of interest generally not subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct TIN to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - Payments described in section 6049(b)(5) to nonresident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Mortgage interest paid by you. Payments that are not subject to information reporting are also not subject to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045, 6049, 6050A, and 6050N, and their regulations. PENALTIES Failure To Furnish TIN. -- If you fail to furnish your correct TIN to a requester, you will be subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. 3 Civil Penalty for False Information With Respect to Withholding. -- If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. Criminal Penalty for Falsifying Information. -- Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. Misuse of TINS. -- If the requester discloses or uses TINs in violation of Federal law, the requester may be subject to civil and criminal penalties. SPECIFIC INSTRUCTIONS Name. -- If you are an individual, you must generally provide the name shown on your Social Security card. However, if you have changed your last name, for instance, due to marriage, without informing the Social Security Administration of the name change, please enter your first name, the last name shown on your Social Security card, and your new last name. If you are a sole proprietor, you must furnish your individual name and either your SSN or EIN. You may also enter your business name or "doing business as" name on the business name line. Enter your name(s) as shown on your Social Security card and/or as it was used to apply for your EIN on Form SS-4. SIGNING THE CERTIFICATION 1. Interest, Dividend, Broker and Barter Exchange Accounts Opened Before 1984 and Broker Accounts Considered Active During 1983. You are required to furnish your correct TIN, but you are not required to sign the certification. 2. Interest, Dividend, Broker, and Barter Exchange Accounts Opened After 1983 and Broker Accounts Considered Inactive During 1983. You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out item 2 in the certification before signing the form. 3. Real Estate Transactions. You must sign the certification. You may cross out item 2 of the certification. 4. Other Payments. You are required to furnish your correct TIN, but you are not required to sign the certification unless you have been notified of an incorrect TIN. Other payments include payments made in the course of the requester's trade or business for rents, royalties, goods (other than bills for merchandise), medical and health care services, payments to a nonemployee for services (including attorney and accounting fees), and payments to certain fishing boat crew members. 5. Mortgage Interest Paid by You, Acquisition or Abandonment of Secured Property, IRA Contributions. You are required to furnish your correct TIN, but you are not required to sign the certification. 6. Exempt Payees and Payments. If you are exempt from backup withholding, you should complete this form to avoid possible erroneous backup withholding. Enter your correct TIN in Part I, write "EXEMPT" in the block in Part II, and sign and date the form. If you are a nonresident alien or foreign entity not subject to backup withholding, give the requester a complete Form W-8, Certificate of Foreign Status. 7. TIN "Applied for." Follow the instructions under "How to Obtain a TIN" on page 1, and sign and date this form. Signature. -- For a joint account, only the person whose TIN is shown in Part I should sign. Privacy Act Notice. -- Section 6109 requires you to furnish your correct TIN to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or abandonment of secured property, or contributions you made to an IRA. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a TIN to a payer. Certain penalties may also apply. 4 WHAT NAME AND NUMBER TO GIVE THE REQUESTER
For this type of account: Give name and SSN of: 1. Individual........................................................... The individual 2. Two or more individuals (joint account).............................. The actual owner of the account or, if combined funds, the first individual on the account(1) 3. Custodian account of a minor (Uniform Gift to Minors Act)............ The minor(2) 4. a. The usual revocable savings trust (grantor is also trustee)....... The grantor-trustee(1) b. So-called trust account that is not a legal or valid trust under The actual owner(1) state law......................................................... 5. Sole proprietorship.................................................. The owner(3) For this type of account: Give name and EIN of: 6. Sole proprietorship.................................................. The owner(3) 7. A valid trust, estate, or pension trust.............................. Legal entity(4) 8. Corporate............................................................ The corporation 9. Association, club, religious, charitable, educational, or other tax-exempt organization.............................................. The organization 10. Partnership.......................................................... The partnership 11. A broker or registered nominee....................................... The broker or nominee 12. Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district or prison) that receives agriculture program payments................... The public entity - --------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's SSN. (3) Show your individual name. You may also enter your business name. You may use your SSN or EIN. (4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.)
Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. EX-9.A7 8 LETTER TO SHAREHOLDERS 1 ['PEOPLES HERITAGE LOGO'] September 10, 1996 To Our Shareholders: We are pleased to inform you that Peoples Heritage Financial Group, Inc. is offering to purchase up to 2,500,000 shares (representing approximately 9.9% of the currently outstanding shares) of its common stock (including associated Preferred Stock Purchase Rights) from its shareholders through a tender offer at prices not greater than $24.00 nor less than $21.00 per share (the "Offer"). The Company is conducting the Offer through a procedure commonly known as a "Dutch Auction." This procedure allows you to select the price within the above price range at which you are willing to sell some or all of your shares to the Company. Based upon the number of shares tendered and the prices specified by the tendering shareholders, the Company will determine the single per share price within the above range that will allow it to purchase up to 2,500,000 shares (or such lesser number of shares that are validly tendered). All of the shares that are validly tendered at prices at or below that purchase price will, subject to possible proration, be purchased at that purchase price, net in cash to the selling shareholder. All other shares which have been tendered and not purchased will be returned to the shareholder. The Offer is being made in connection with the Company's proposed acquisition of Family Bancorp and is not conditioned on any minimum number of shares being tendered. The Offer is explained in detail in the enclosed Offer to Purchase and Letter of Transmittal. If you wish to tender your shares, detailed instructions are included in the enclosed materials. We encourage you to read these materials carefully before making any decision with respect to the Offer. Please note that the Offer is scheduled to expire at 5:00 p.m. on Monday, October 7, 1996, unless extended by the Company. Neither the Company nor its Board of Directors makes any recommendation to any shareholder as to whether to tender or refrain from tendering shares. If you have any questions regarding the enclosed materials, please do not hesitate to call Morrow & Co., Inc., which the Company has retained as Information Agent in connection with the Offer. Morrow's toll-free number is 1-800-566-9061. Sincerely, LOGO William J. Ryan Chairman of the Board, President and Chief Executive Officer EX-9.A8 9 LETTER TO PARTICIPANTS 1 ['PEOPLES HERITAGE LOGO'] IMMEDIATE ATTENTION REQUIRED September 10, 1996 Re: Direction Concerning Tender of Shares To: Participants in the Thrift Incentive Plan of Peoples Heritage Financial Group, Inc. Enclosed are materials that require your immediate attention. They describe matters directly affecting your interest in the Thrift Incentive Plan ("TIP) maintained by Peoples Heritage Financial Group, Inc. (the "Company"). Read all the materials carefully. You will need to complete the enclosed Direction Form and return it in the postage paid envelope provided. THE DEADLINE FOR RECEIPT OF YOUR COMPLETED DIRECTION FORM IS 5:00 P.M., NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996 (UNLESS EXTENDED). YOU SHOULD COMPLETE THE FORM AND RETURN IT EVEN IF YOU DECIDE NOT TO PARTICIPATE IN THE TRANSACTION DESCRIBED IN THE MATERIALS. The remainder of this letter summarizes the transaction and your rights and options under the TIP, but you also should review the more detailed explanation provided in the other materials. BACKGROUND The Company has made a tender offer to purchase up to 2,500,000 shares of its Common Stock (the "Offer"). The objectives of the purchase, and financial and other information relating to the offer, are described in detail in the enclosed Offer to Purchase, which is being provided to all shareholders of the Company. As a participant who has shares of common stock of the Company allocated to your account under the TIP, you are affected, because the Company's Offer to Purchase extends to the approximately 251,442 shares of the Company's Common Stock currently held by the TIP. Only Peoples Heritage Bank's Trust and Investment Group (the "Trustee"), as Trustee of the TIP, actually can tender these shares for sale. However, as a TIP participant, you have the right to direct the Trustee whether or not to tender your shares of Company Common Stock allocated to your TIP account as of September 9, 1996. If you elect to have the Trustee tender these shares, you also are entitled to specify the price or prices at which they should be tendered. To ensure the confidentiality of your decision, American Stock Transfer and Trust Company, the Depositary for the Offer, will tabulate the directions of all participants in the TIP. Your Direction Forms are to be returned to the Depositary. You should note that the Trustee will determine whether the implementation of any participant directions or adherence to any TIP provisions would be a violation of the Employee Retirement Income Security Act of 1974 ("ERISA"). Although it is not anticipated that any direction will violate ERISA, such that the direction would have to be reversed or ignored, the Department of Labor requires that the Trustee, as the fiduciary for participants, retain this discretion. The Trustee has retained an independent legal advisor to advise it in exercising this discretion. HOW THE OFFER TO PURCHASE WORKS The details of the Offer to Purchase are described in the enclosed materials, which you should review carefully. However, in broad outline, the transaction will work as follows with respect to TIP participants. -- The Company has offered to purchase up to 2,500,000 of its shares of Common Stock at a price between $21.00 and $24.00 per share. 2 -- If you want any of the shares that are allocated to your TIP account sold, you need to direct that they be offered (or "tendered") for sale. -- You may specify the price at which you want the shares tendered, which must be between the two limits above. Alternatively, you may direct that your shares be tendered at whatever price is finally determined to be the "Purchase Price," as explained below. -- After the deadline for the tender of shares by all shareholders, American Stock Transfer and Trust Company, the Depositary for the Offer, will tabulate all directions, and the Company will determine the lowest price, between the two limits, at which it can purchase up to 2,500,000 shares. This is referred to as the Purchase Price. -- Unless the Offer is voided or discontinued in accordance with its terms, the Company then will buy all the shares that were tendered at the Purchase Price or below. However, all sellers will receive the same Purchase Price, even if they tendered below the Purchase Price. -- If you have specified a price in excess of the Purchase Price as finally determined, those shares will not be purchased, and they will remain allocated to your TIP account. If you do not want to sell, an option is provided for you to direct that shares allocated to your TIP account be held. Similarly, if you are sure that you want to sell and are willing to take any price not below the lower limit of $21.00, then, as mentioned above, there is a separate option provided for you under which all of your allocated shares will be tendered at the Purchase Price. The Trustee may override any direction that it determines is in violation of ERISA, as previously described. In particular, the Company will be prohibited from purchasing shares from the TIP if the Purchase Price, as finally determined, is less than the prevailing market price of the shares on the date the shares are accepted for purchase. Finally, the Company will prorate the number of shares purchased from shareholders if there is an excess of shares over the exact number desired at the Purchase Price as ultimately determined. PROCEDURE FOR DIRECTING TRUSTEE A Direction Form for giving your instructions to the Trustee is enclosed for each participant in the TIP who has invested in Common Stock. You must complete this form and return it in the included envelope in time to be received no later than 5:00 p.m., New York City Time, on Monday, October 7, 1996 (unless the Offer to Purchase is extended or amended). If your form is not received by this deadline, or if it is not fully and properly completed, the shares in your TIP account will not be tendered. (A separate letter and Direction Form for shares held in your account in the Company's Profit Sharing Employee Stock Ownership Plan are being sent to you under separate cover and also will require your immediate attention.) To properly complete your Direction Form, you must do the following: (1) On the face of the form, check Box 1, 2, or 3. CHECK ONLY ONE BOX. Make your decision which box to check as follows: -- CHECK BOX 1 if you do not want the shares allocated to your account tendered for sale at any price and simply want the Trustee to continue holding shares allocated to your account. -- CHECK BOX 2 if you definitely want the Trustee to tender for sale all of the shares allocated to your account and are willing to accept any price (not below $21.00 per share). -- CHECK BOX 3 in all other cases and complete lines A to D of the table immediately below Box 3. (You should not complete the table if you checked Box 1 or 2.) Use lines A and B to specify the number of shares that you want to tender at each price indicated. Typically, you would elect to have all of your shares tendered at a single price. However, the form gives you the option of splitting your shares among several prices. You must state the number of shares to be sold at each indicated price by filling in the number of shares in the box immediately below the price. 3 After you have specified your tender price or prices, you should total the number of shares in each row A and B and insert the total of each line in the box provided at the end of that line. Specify the number of shares, if any, that you do not want tendered, but wish the Trustee to hold, in the single box on line C. Finally, total the shares in the end boxes of rows A to C and insert the total in the box on line D. The total in this box must equal the number of shares allocated to your Account as shown on the address label on the Direction Form. (2) Date and sign the Direction Form in the spaces provided. (3) Return the Direction Form in the included envelope to American Stock Transfer and Trust Company no later than 5:00 p.m., New York City Time, on Monday, October 7, 1996 (unless this deadline is extended). Be sure to return the form even if you decide not to have the Trustee tender any shares. Your direction will be deemed irrevocable unless withdrawn by 5:00 p.m., New York City Time, on Monday, October 7, 1996 (unless the Offer to Purchase is extended or amended). To be effective, a notice of withdrawal of your direction must be in writing and must be received by American Stock Transfer and Trust Company at the following address: American Stock Transfer and Trust Company, Depositary 40 Wall Street 46th Floor New York, New York 10005 (Attention: Corporate Trust Department) Your notice must include your name, address, Social Security number, and the number of shares allocated to your TIP account that you are withdrawing. Upon receipt of your notice, your previous direction will be deemed cancelled. You may direct the retendering of any shares in your accounts by repeating the previous instructions for directing the tendering set forth in this letter. INVESTMENT OF TENDER PROCEEDS For any TIP shares that are tendered and purchased by the Company, the Company will pay cash to the TIP and the Trustee generally will reinvest such proceeds in accordance with your current election of future contributions made to Federated Retirement Plan Services ("Federated"). If you wish to change your election of future contributions or confirm what your election is, you may call the voice response unit of Federated at 1-800-554-6513 and select Option Three. You need not do anything if you want the proceeds invested in accordance with your current election of future contributions. Participants in the TIP who are executive officers of the Company subject to the reporting and short-swing trading requirements of Section 16 of the Securities Exchange Act of 1934 will need to change a current election under the TIP to invest in shares of Common Stock in order to avoid potential short-swing liability under Section 16. INDIVIDUAL PARTICIPANTS IN THE TIP WILL NOT RECEIVE ANY PORTION OF THE TENDER PROCEEDS. ALL SUCH PROCEEDS AND THE ASSETS WILL REMAIN IN THE PLAN AND MAY BE WITHDRAWN ONLY IN ACCORDANCE WITH THE TERMS OF THE PLAN. NO GAIN OR LOSS WILL BE RECOGNIZED BY PARTICIPANTS IN THE TIP FOR FEDERAL INCOME TAX PURPOSES IN CONNECTION WITH THE TENDER OR SALE OF SHARES HELD IN THE PLAN. NO RECOMMENDATION THE COMPANY'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MAKING OF THE OFFER TO PURCHASE. HOWEVER, NEITHER THE COMPANY, ITS BOARD OF DIRECTORS, PEOPLES HERITAGE BANK'S TRUST AND INVESTMENT GROUP, AS TRUSTEE, AMERICAN STOCK TRANSFER AND TRUST COMPANY, AS DEPOSITARY OR ANY OTHER PARTY MAKES ANY RECOMMENDATIONS TO PARTICIPANTS AS TO WHETHER TO TENDER SHARES, THE PRICE AT WHICH TO TENDER, OR WHETHER TO REFRAIN FROM TENDERING SHARES. EACH PARTICIPANT MUST MAKE HIS OR HER OWN DECISION ON THESE MATTERS. 4 CONFIDENTIALITY AMERICAN STOCK TRANSFER AND TRUST COMPANY HAS BEEN RETAINED TO HELP ENSURE THE CONFIDENTIALITY OF YOUR DECISION AS A TIP PARTICIPANT. YOUR DECISION WILL NOT BE DISCLOSED TO ANY DIRECTORS, OFFICERS, OR EMPLOYEES OF PEOPLES HERITAGE FINANCIAL GROUP, INC. OR PEOPLES HERITAGE BANK, EXCEPT FOR THE PURPOSE OF ALLOCATING PROCEEDS TO YOUR ACCOUNT IN THE EVENT THAT ALL OR A PORTION OF YOUR SHARES ARE SOLD. FURTHER INFORMATION Although Morrow & Co., Inc. (the "Information Agent") has no recommendation and cannot advise you what to do, its representatives are prepared to answer any question that you may have on the procedures involved in the Offer and your direction. The Information Agent also can help you complete your Direction Form. For this purpose, you may contact the Information Agent at the following number between 9:00 a.m. and 5:00 p.m., New York City Time, Monday through Friday: Morrow & Co., Inc. 909 Third Avenue 20th Floor New York, New York 10022 (212) 754-8000 Call Toll Free: 1-800-566-9061 Your ability to instruct the Trustee concerning whether or not to tender shares allocated to your Account is an important part of your rights as a TIP participant. Please consider this letter and the enclosed materials carefully and then return your Direction Form for each plan promptly. Sincerely, /s/ William J. Ryan William J. Ryan Chairman, President and Chief Executive Officer 5 PEOPLES HERITAGE FINANCIAL GROUP, INC. THRIFT INCENTIVE PLAN DIRECTION FORM BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY THE ACCOMPANYING OFFER TO PURCHASE See the Address Label on Reverse Side of This Form for the Number of Shares Allocated to Your Thrift Incentive Plan Account In accordance with the Peoples Heritage Financial Group, Inc. (the "Company") Offer to Purchase dated September 10, 1996, a copy of which I have received and read, and pursuant to the pass-through provisions of the Company's Thrift Incentive Plan (the "Plan"), I hereby direct the Plan's Trustee, Peoples Heritage Bank's Trust and Investment Group, as follows (check only one box): / / 1. To refrain from tendering and to hold all shares allocated to my account. / / 2. To tender all shares allocated to my account at the Purchase Price determined by the Company. / / 3. To tender shares allocated to my account at the price or prices indicated below, except for any shares to be held as indicated on line C below: - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ PRICE $21.00 $21.25 $21.50 $21.75 $22.00 $22.25 $22.50 $22.75 $23.00 - ------------------------------------------------------------------------------------------------------------------------ A NUMBER OF SHARES - ------------------------------------------------------------------------------------------------------------------------ PRICE $23.25 $23.50 $23.75 $24.00 - ------------------------------------------------------------------------------------------------------------------------ B NUMBER OF SHARES - ------------------------------------------------------------------------------------------------------------------------ C SHARES TO BE HELD - ------------------------------------------------------------------------------------------------------------------------ D TOTAL SHARES - ------------------------------------------------------------------------------------------------------------------------
- ---------------------------------- ROW A TOTAL - ---------------------------------- - ---------------------------------- ROW B TOTAL - ---------------------------------- - ---------------------------------- - ---------------------------------- - ----------------------------------
Total the number of shares in each of rows A and B and insert that total in the box at the end of each row. Show shares to be held in the box at the end of row C. Total the numbers in the end boxes of rows A to C and insert that total number in the end box of row D. The total in the box of row D must equal the number of shares allocated to your Account as shown on the address label on the reverse side of this form. 6 - -------------------------------------------------------------------------------- INSTRUCTIONS Carefully complete the face portion of this Direction Form. Then insert today's date and sign your name in the spaces provided below. Enclose the form in the included postage prepaid envelope and mail it promptly. Your Direction Form must be received no later than 5:00 p.m., New York City Time, on Monday, October 7, 1996. Direction Forms that are not fully or properly completed, dated, and signed, or that are received after the deadline, will be ignored, and the shares allocated to your account will not be tendered. Note that the Trustee also has the right to ignore any direction that it determines cannot be implemented without violation of applicable law. Neither the Company, its Board of Directors, Peoples Heritage Bank's Trust and Investment Group, as Trustee, nor any other party makes any recommendation to participants as to whether to tender shares, the price at which to tender, or to refrain from tendering shares. Each participant must make his or her own decision on these matters. Date: , 1996 -------------------------------------------- Your Signature (Please sign as your name appears below) As of September 9, 1996, there were allocated to your account the number of shares of Peoples Heritage Financial Group, Inc. common stock shown to the right of your address on the label below. ------------------------------------ ------------------------------------ ------------------------------------ ------------------------------------ - -------------------------------------------------------------------------------- 7 ['PEOPLES HERITAGE LOGO'] IMMEDIATE ATTENTION REQUIRED September 10, 1996 Re: Direction Concerning Tender of Shares To: Participants in the Profit Sharing Employee Stock Ownership Plan of Peoples Heritage Financial Group, Inc. Enclosed are materials that require your immediate attention. They describe matters directly affecting your interest in the Profit Sharing Employee Stock Ownership Plan ("ESOP") maintained by Peoples Heritage Financial Group, Inc. (the "Company"). Read all the materials carefully. You will need to complete the enclosed Direction Form and return it in the postage paid envelope provided. THE DEADLINE FOR RECEIPT OF YOUR COMPLETED DIRECTION FORM IS 5:00 P.M., NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996 (UNLESS EXTENDED). YOU SHOULD COMPLETE THE FORM AND RETURN IT EVEN IF YOU DECIDE NOT TO PARTICIPATE IN THE TRANSACTION DESCRIBED IN THE MATERIALS. The remainder of this letter summarizes the transaction and your rights and options under the ESOP, but you also should review the more detailed explanation provided in the other materials. BACKGROUND The Company has made a tender offer to purchase up to 2,500,000 shares of its Common Stock (the "Offer"). The objectives of the purchase, and financial and other information relating to the offer, are described in detail in the enclosed Offer to Purchase, which is being provided to all shareholders of the Company. As a participant who has shares of common stock of the Company allocated to your account under the ESOP, you are affected, because the Company's Offer to Purchase extends to the approximately 341,456 shares of the Company's Common Stock held by the ESOP. Only Peoples Heritage Bank's Trust and Investment Group (the "Trustee") , as Trustee of the ESOP, actually can tender these shares for sale. However, as an ESOP participant, you have the right to direct the Trustee whether or not to tender your shares of Company Common Stock allocated to your ESOP account as of September 9, 1996. If you elect to have the Trustee tender these shares, you also are entitled to specify the price or prices at which they should be tendered. To ensure the confidentiality of your decision, American Stock Transfer and Trust Company, the Depositary for the Offer, will tabulate the directions of all participants in the ESOP. Your Direction Forms are to be returned to the Depositary. You should note that the Trustee will determine whether the implementation of any participant directions or adherence to any ESOP provisions would be a violation of the Employee Retirement Income Security Act of 1974 ("ERISA"). Although it is not anticipated that any direction will violate ERISA, such that the direction would have to be reversed or ignored, the Department of Labor requires that the Trustee, as the fiduciary for participants, retain this discretion. The Trustee has retained an independent legal advisor to advise it in exercising this discretion. HOW THE OFFER TO PURCHASE WORKS The details of the Offer to Purchase are described in the enclosed materials, which you should review carefully. However, in broad outline, the transaction will work as follows with respect to ESOP participants. -- The Company has offered to purchase up to 2,500,000 of its shares of Common Stock at a price between $21.00 and $24.00 per share. 8 -- If you want any of the shares that are allocated to your ESOP account sold, you need to direct that they be offered (or "tendered") for sale. -- You may specify the price at which you want the shares tendered, which must be between the two limits above. Alternatively, you may direct that your shares be tendered at whatever price is finally determined to be the "Purchase Price," as explained below. -- After the deadline for the tender of shares by all shareholders, American Stock Transfer and Trust Company, the Depositary for the Offer, will tabulate all directions, and the Company will determine the lowest price, between the two limits, at which it can purchase up to 2,500,000 shares. This is referred to as the Purchase Price. -- Unless the Offer is voided or discontinued in accordance with its terms, the Company then will buy all the shares that were tendered at the Purchase Price or below. However, all sellers will receive the same Purchase Price, even if they tendered below the Purchase Price. -- If you have specified a price in excess of the Purchase Price as finally determined, those shares will not be purchased, and they will remain allocated to your ESOP account. If you do not want to sell, an option is provided for you to direct that shares allocated to your ESOP account be held. Similarly, if you are sure that you want to sell and are willing to take any price not below the lower limit of $21.00, then, as mentioned above, there is a separate option provided for you under which all of your allocated shares will be tendered at the Purchase Price. The Trustee may override any direction that it determines is in violation of ERISA, as previously described. In particular, the Company will be prohibited from purchasing shares from the ESOP if the Purchase Price, as finally determined, is less than the prevailing market price of the shares on the date the shares are accepted for purchase. Finally, the Company will prorate the number of shares purchased from shareholders if there is an excess of shares over the exact number desired at the Purchase Price as ultimately determined. PROCEDURE FOR DIRECTING TRUSTEE A Direction Form for giving your instructions to the Trustee is enclosed for each participant in the ESOP. You must complete this form and return it in the included envelope in time to be received no later than 5:00 p.m., New York City Time, on Monday, October 7, 1996 (unless the Offer to Purchase is extended or amended). If your form is not received by this deadline, or if it is not fully and properly completed, the shares in your ESOP account will not be tendered. (A separate letter and Direction Form for any shares of Company Common Stock held in your account in the Company's Thrift Incentive Plan are being sent to you under separate cover and also will require your immediate attention). To properly complete your Direction Form, you must do the following: (1) On the face of the form, check Box 1, 2, or 3. CHECK ONLY ONE BOX. Make your decision which box to check as follows: -- CHECK BOX 1 if you do not want the shares allocated to your account tendered for sale at any price and simply want the Trustee to continue holding shares allocated to your account. -- CHECK BOX 2 if you definitely want the Trustee to tender for sale all of the shares allocated to your account and are willing to accept any price (not below $21.00 per share). -- CHECK BOX 3 in all other cases and complete lines A to D of the table immediately below Box 3. (You should not complete the table if you checked Box 1 or 2.) Use lines A and B to specify the number of shares that you want to tender at each price indicated. Typically, you would elect to have all of your shares tendered at a single price. However, the form gives you the option of splitting your shares among several prices. You must state the number of shares to be sold at each indicated price by filling in the number of shares in the box immediately below the price. 9 After you have specified your tender price or prices, you should total the number of shares in each row A and B and insert the total of each line in the box provided at the end of that line. Specify the number of shares, if any, that you do not want tendered, but wish the Trustee to hold, in the single box on line C. Finally, total the shares in the end boxes of rows A to C and insert the total in the box on line D. The total in this box must equal the number of shares allocated to your Account as shown on the address label on the Direction Form. (2) Date and sign the Direction Form in the spaces provided. (3) Return the Direction Form in the included envelope to American Stock Transfer and Trust Company no later than 5:00 p.m., New York City Time, on Monday, October 7, 1996 (unless this deadline is extended). Be sure to return the form even if you decide not to have the Trustee tender any shares. Your direction will be deemed irrevocable unless withdrawn by 5:00 p.m., New York City Time, on Monday, October 7, 1996 (unless the Offer to Purchase is extended or amended). To be effective, a notice of withdrawal of your direction must be in writing and must be received by American Stock Transfer and Trust Company at the following address: American Stock Transfer and Trust Company, Depositary 40 Wall Street 46th Floor New York, New York 10005 (Attention: Corporate Trust Department) Your notice must include your name, address, Social Security number, and the number of shares allocated to your ESOP account that you are withdrawing. Upon receipt of your notice, your previous direction will be deemed cancelled. You may direct the retendering of any shares in your accounts by repeating the previous instructions for directing the tendering set forth in this letter. INVESTMENT OF TENDER PROCEEDS For any ESOP shares that are tendered and purchased by the Company, the Company will pay cash to the ESOP. The Trustee will then decide whether to reinvest in shares of the Company's common stock or in alternative investments, being guided by the ESOP's terms and the trust agreement, and subject to the limitations of ERISA. The ESOP is designed to be invested primarily in Common Stock of the Company and proceeds eventually will be used to purchase shares of such stock at a price which may be higher or lower than the Purchase Price, as finally determined. This could result in a reduction or an increase in the value of your ESOP account. INDIVIDUAL PARTICIPANTS IN THE ESOP WILL NOT RECEIVE ANY PORTION OF THE TENDER PROCEEDS. ALL SUCH PROCEEDS AND THE ASSETS WILL REMAIN IN THE PLAN AND MAY BE WITHDRAWN ONLY IN ACCORDANCE WITH THE TERMS OF THE PLAN. NO GAIN OR LOSS WILL BE RECOGNIZED BY PARTICIPANTS IN THE ESOP FOR FEDERAL INCOME TAX PURPOSES IN CONNECTION WITH THE TENDER OR SALE OF SHARES HELD IN THE PLAN. NO RECOMMENDATION THE COMPANY'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MAKING OF THE OFFER TO PURCHASE. HOWEVER, NEITHER THE COMPANY, ITS BOARD OF DIRECTORS, PEOPLES HERITAGE BANK'S TRUST AND INVESTMENT GROUP, AS TRUSTEE, AMERICAN STOCK TRANSFER AND TRUST COMPANY, AS DEPOSITARY OR ANY OTHER PARTY MAKES ANY RECOMMENDATIONS TO PARTICIPANTS AS TO WHETHER TO TENDER SHARES, THE PRICE AT WHICH TO TENDER, OR WHETHER TO REFRAIN FROM TENDERING SHARES. EACH PARTICIPANT MUST MAKE HIS OR HER OWN DECISION ON THESE MATTERS. CONFIDENTIALITY AMERICAN STOCK TRANSFER AND TRUST COMPANY HAS BEEN RETAINED TO HELP ENSURE THE CONFIDENTIALITY OF YOUR DECISION AS AN ESOP PARTICIPANT. YOUR 10 DECISION WILL NOT BE DISCLOSED TO ANY DIRECTORS, OFFICERS, OR EMPLOYEES OF PEOPLES HERITAGE FINANCIAL GROUP, INC. OR PEOPLES HERITAGE BANK, EXCEPT FOR THE PURPOSE OF ALLOCATING PROCEEDS TO YOUR ACCOUNT IN THE EVENT THAT ALL OR A PORTION OF YOUR SHARES ARE SOLD. FURTHER INFORMATION Although Morrow & Co., Inc. (the "Information Agent") has no recommendation and cannot advise you what to do, its representatives are prepared to answer any question that you may have on the procedures involved in the Offer and your direction. The Information Agent also can help you complete your Direction Form. For this purpose, you may contact the Information Agent at the following number between 9:00 a.m. and 5:00 p.m., New York City Time, Monday through Friday: Morrow & Co., Inc. 909 Third Avenue 20th Floor New York, New York 10022 (212) 754-8000 Call Toll Free: 1-800-566-9061 Your ability to instruct the Trustee concerning whether or not to tender shares allocated to your Account is an important part of your rights as a TIP and/or ESOP participant. Please consider this letter and the enclosed materials carefully and then return your Direction Form for each plan promptly. Sincerely, /s/ William J. Ryan William J. Ryan Chairman, President and Chief Executive Officer 11 PEOPLES HERITAGE FINANCIAL GROUP, INC. PROFIT SHARING EMPLOYEE STOCK OWNERSHIP PLAN DIRECTION FORM BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY THE ACCOMPANYING OFFER TO PURCHASE See the Address Label on Reverse Side of This Form for the Number of Shares Allocated to Your Employee Stock Ownership Plan Account In accordance with the Peoples Heritage Financial Group, Inc. (the "Company") Offer to Purchase dated September 10, 1996, a copy of which I have received and read, and pursuant to the pass-through provisions of the Company's Profit Sharing Employee Stock Ownership Plan (the "Plan"), I hereby direct the Plan's Trustee, Peoples Heritage Bank's Trust and Investment Group, as follows (check only one box): / / 1. To refrain from tendering and to hold all shares allocated to my account. / / 2. To tender all shares allocated to my account at the Purchase Price determined by the Company. / / 3. To tender shares allocated to my account at the price or prices indicated below, except for any shares to be held as indicated on line C below: - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ PRICE $21.00 $21.25 $21.50 $21.75 $22.00 $22.25 $22.50 $22.75 $23.00 - ------------------------------------------------------------------------------------------------------------------------ A NUMBER OF SHARES - ------------------------------------------------------------------------------------------------------------------------ PRICE $23.25 $23.50 $23.75 $24.00 - ------------------------------------------------------------------------------------------------------------------------ B NUMBER OF SHARES - ------------------------------------------------------------------------------------------------------------------------ C SHARES TO BE HELD - ------------------------------------------------------------------------------------------------------------------------ D TOTAL SHARES - ------------------------------------------------------------------------------------------------------------------------
- ---------------------------------- ROW A TOTAL - ---------------------------------- A - ---------------------------------- ROW B TOTAL - ---------------------------------- B - ---------------------------------- C - ---------------------------------- D - ----------------------------------
Total the number of shares in each of rows A and B and insert that total in the box at the end of each row. Show shares to be held in the box at the end of row C. Total the numbers in the end boxes of rows A to C and insert that total number in the end box of row D. The total in the box of row D must equal the number of shares allocated to your account as shown on the address label on the reverse side of this form. 12 - -------------------------------------------------------------------------------- INSTRUCTIONS Carefully complete the face portion of this Direction Form. Then insert today's date and sign your name in the spaces provided below. Enclose the form in the included postage prepaid envelope and mail it promptly. Your Direction Form must be received no later than 5:00 p.m., New York City Time, on Monday, October 7, 1996. Direction Forms that are not fully or properly completed, dated, and signed, or that are received after the deadline, will be ignored, and the shares allocated to your account will not be tendered. Note that the Trustee also has the right to ignore any direction that it determines cannot be implemented without violation of applicable law. Neither the Company, its Board of Directors, Peoples Heritage Bank's Trust and Investment Group, as Trustee, nor any other party makes any recommendation to participants as to whether to tender shares, the price at which to tender, or to refrain from tendering shares. Each participant must make his or her own decision on these matters. Date: , 1996 ------------------- ------------------------------------------- Your Signature (Please sign as your name appears below) As of September 9, 1996, there were allocated to your account the number of shares of Peoples Heritage Financial Group, Inc. common stock shown to the right of your address on the label below. - --------------------------------- - --------------------------------- - --------------------------------- - --------------------------------- - -------------------------------------------------------------------------------- EX-9.A9 10 PRESS RELEASE DATED 09-10-96 1 EXHIBIT 9(a)(9) PEOPLES HERITAGE ANNOUNCES TENDER OFFER Portland, Maine; September 10, 1996. Peoples Heritage Financial Group, Inc. (NASDAQ:PHBK) announced today that it has commenced a tender offer to purchase up to 2.5 million shares, representing approximately 9.9 percent of the Company's outstanding Common Stock, from shareholders of the Company. The offer is being made upon the terms set forth in an Offer to Purchase and in a related Letter of Transmittal which are being mailed to stockholders. The offer is in the form of a "Dutch Auction" and allows shareholders to specify prices at which they are willing to tender their shares to the Company at a price no greater than $24.00 per share and no less than $21.00 per share. After completion of the offer period, the Company will set the per-share price at a level that allows it to purchase up to the maximum number of shares being sought. The Company-set price will be paid for all purchased shares, even those tendered at a lower price. If more than the maximum number of shares sought is tendered at or below the Company-set price, shares will be prorated. The tender offer is not conditioned on a minimum number of shares being tendered but is subject to a number of other conditions. The tender offer is being conducted by Peoples Heritage in connection with its proposed acquisition of Family Bancorp (NASDAQ:FMLY), which is anticipated to be completed by year end following the receipt of all required regulatory approvals. Based on outstanding shares of Family common stock and options to purchase such stock, a maximum of 5,572,001 shares of Common Stock will be issuable by the Company upon completion of the acquisition of Family Bancorp. The shares of Common Stock to be issued to shareholders of Family pursuant to the acquisition are not eligible to be tendered in the offer, and neither the offer nor the Merger is conditioned upon consummation of the other. The Company and its Board of Directors are not making any recommendation to shareholders as to whether or not to tender their shares for purchase and have not authorized any person to make such a recommendation. Keefe, Bruyette & Woods, Inc. is the dealer-manager for the offer, American Stock Transfer and Trust Company is the depositary and Morrow & Co., Inc. is the information agent. Peoples Heritage Financial Group is a $4.4 billion banking and financial services holding company headquartered in Portland, Maine. The Company's Maine banking subsidiary, Peoples Heritage Bank, operates 62 banking offices throughout the state. Its New Hampshire banking subsidiary, Bank of New Hampshire, operates 45 banking offices throughout the state. Family Bancorp is the holding company for Family Bank which operates 17 banking offices in northeastern Massachusetts and six banking offices in southern New Hampshire. EX-9.A10 11 SUMMARY OF ADVERTISMENT DATED 09-11-96 1 EXHIBIT 9(a)(10) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase, dated September 10, 1996, and the related Letter of Transmittal. Capitalized terms not defined in this notice are defined in the Offer to Purchase. The Offer is not being made to, nor will the Company accept tenders from, holders of Shares in any jurisdictions in which the Offer or its acceptance would violate that jurisdiction's laws. The Company is not aware of any jurisdiction in which the making of the Offer or the tender of Shares would not be in compliance with the laws of such jurisdiction. In those jurisdictions whose laws require that the Offer be made by a licensed broker or dealer, the Offer shall be deemed to be made on the Company's behalf by Keefe, Bruyette & Woods, Inc. or one or more registered brokers or dealers licensed under the laws of such jurisdictions. NOTICE OF OFFER BY PEOPLES HERITAGE FINANCIAL GROUP, INC. TO PURCHASE FOR CASH UP TO 2,500,000 SHARES OF ITS COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) AT A PURCHASE PRICE NOT GREATER THAN $24.00 NOR LESS THAN $21.00 PER SHARE Peoples Heritage Financial Group, Inc., a Maine corporation (the "Company"), invites shareholders to tender shares of its common stock, par value $0.01 per share (including the associated Preferred Stock Purchase Rights (the "Rights"), the "Shares" or the "Common Stock"), to the Company at prices, net to the seller in cash, not greater than $24.00 nor less than $21.00 per Share, specified by such shareholders, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated September 10, 1996 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer"). Absent circumstances causing the Rights to become exercisable or separately tradeable prior to the Expiration Date, the tender of Shares also will constitute a tender of the associated Rights. Unless the context requires otherwise, all references herein to Shares include the associated Rights. The information contained in the Offer to Purchase and the Letter of Transmittal is incorporated by reference herein in its entirety. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED OR THE MERGER REFERRED TO BELOW, BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS SET FORTH IN THE OFFER. 2 THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MONDAY, OCTOBER 7, 1996, UNLESS THE OFFER IS EXTENDED. The Company will, upon the terms and subject to the conditions of the Offer, determine a single per Share price (not greater than $24.00 nor less than $21.00 per Share) (the "Purchase Price") that it will pay for Shares validly tendered pursuant to the Offer taking in to account the number of Shares so tendered and the prices specified by tendering shareholders. The Company will select the Purchase Price which will allow it to buy 2,500,000 Shares (or such lesser number as are validly tendered at prices not greater than $24.00 nor less than $21.00 per Share) pursuant to the Offer. All Shares validly tendered at prices at or below the Purchase Price will be purchased at the Purchase Price, net to the seller in cash, upon the terms and subject to the conditions of the Offer, including the proration terms described below. For purposes of the Offer, the Company will be deemed to have accepted for payment (and thereby purchased), subject to proration, Shares which are validly tendered at or below the Purchase Price when, as and if it gives oral or written notice to the Depositary of its acceptance of such Shares for payment pursuant to the Offer. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (or a timely confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities (as defined in the Offer to Purchase)), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by the Letter of Transmittal. Upon the terms and subject to the conditions of the Offer, in the event that prior to the Expiration Date more than 2,500,000 Shares (or such greater number of Shares as the Company may elect to purchase pursuant to the Offer) are validly tendered at or below the Purchase Price, the Company will accept Shares for purchase in the following order of priority: (a) first, all Shares validly tendered by any Odd Lot Owner (as defined in the Offer) who tenders all such Shares beneficially owned by such Odd Lot Owner at or below the Purchase Price (partial tenders will not qualify for this preference) and who completes the box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery, and (b) then, after purchase of all of the foregoing Shares, all other Shares validly tendered at or below the Purchase Price before the Expiration Date on a pro rata basis, if necessary (with adjustments to avoid purchases of fractional Shares). The Offer may provide shareholders who are considering a sale of all or a portion of their Shares the opportunity to determine the price or prices (not greater than $24.00 nor less than $21.00 per Share) at which they are willing to sell their Shares and, if any such Shares are purchased pursuant to the Offer, to sell those Shares for cash without the usual transaction costs associated with open-market sales. The Offer is being conducted by the Company in connection with its proposed acquisition of Family Bancorp ("Family"), a Massachusetts corporation, pursuant to an 2 3 Agreement and Plan of Merger, dated as of May 30, 1996, by and among the Company, Peoples Heritage Merger Corp. ("Merger Corp."), a newly-formed, wholly-owned subsidiary of the Company, and Family (the "Agreement"). The Agreement provides, among other things, for (i) the merger of Family with and into Merger Corp. (the "Merger") and (ii) the conversion of each share of common stock, par value $0.10 per share, of Family (the "Family Common Stock") outstanding immediately prior to the Merger (other than any dissenting shares under Massachusetts law and certain shares held by the Company) into the right to receive 1.26 shares of Common Stock (the "Exchange Ratio"), subject to possible adjustment under certain circumstances, plus cash in lieu of any fractional share interest. Based on 4,259,336 shares of Family Common Stock outstanding as of August 31, 1996 and outstanding options to purchase 162,887 of such shares as of the same date, a maximum of 5,572,001 shares of Common Stock will be issuable upon consummation of the Merger. The shares of Common Stock to be issued to shareholders of Family pursuant to the Agreement are not eligible to be tendered in the Offer. The Offer is being conducted in advance of consummation of the Merger, and neither the Offer nor the Merger is conditioned upon consummation of the other. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED. The Company reserves the right, at any time or from time to time, in its sole discretion, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary and making a public announcement thereof. Subject to certain conditions, the Company also expressly reserves the right to terminate the Offer and not accept for payment any Shares not theretofore accepted for payment. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by the Company, also may be withdrawn after 12:00 midnight, New York City time, on Tuesday, November 5, 1996. For a withdrawal to be effective, the Depositary must timely receive a written, telegraphic or facsimile transmission notice of withdrawal. Such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder (if different from that of the person who tendered such Shares). If the certificates have been delivered or otherwise identified to the Depositary, then, prior to the release of such certificates, the tendering shareholder must 3 4 also submit the serial numbers of the particular certificates evidencing the Shares to be withdrawn and the signature on the notice of withdrawal must be Medallion guaranteed by an Eligible Institution (except in the case of Shares tendered by an Eligible Institution). If Shares have been tendered pursuant to the procedure for book-entry transfer set forth in the Offer to Purchase, the notice of withdrawal must specify the name and number of the account at the applicable Book-Entry Transfer Facility to be credited with the withdrawn Shares and otherwise comply with the procedures of such facility. THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION, WHICH SHOULD BE READ BEFORE SHAREHOLDERS DECIDE WHETHER TO ACCEPT OR REJECT THE OFFER AND IF ACCEPTED, AT WHAT PRICES TO TENDER THEIR SHARES. These materials are being mailed to record holders of Shares and are being furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the Company's shareholder list (or, if applicable, who are listed as participants in a clearing agency's security position listing) for transmittal to beneficial holders of Shares. THE INFORMATION REQUIRED TO BE DISCLOSED BY RULE 13E-4(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, IS CONTAINED IN THE OFFER TO PURCHASE AND IS INCORPORATED IN THIS NOTICE BY REFERENCE. Please contact the Information Agent for copies of the Offer to Purchase, the related Letter of Transmittal and other tender offer materials. It will furnish copies promptly at the Company's expense. The Information Agent for the Offer is: MORROW & CO., INC. 909 Third Avenue 20th Floor New York, New York 10022 (212) 754-8000 Call Toll Free: 1-800-566-9061 Banks and brokerage firms please call 1-800-662-5200 The Dealer Manager for the Offer Is: KEEFE, BRUYETTE & WOODS, INC. Two World Trade Center New York, New York 10048 (212) 323-8450 September 11, 1996 4 -----END PRIVACY-ENHANCED MESSAGE-----