-----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, WjVXs2Q/ZvWk9xJhHIkWlR6Tww6Q4Eo6bvwfHXM0Q7qR4XFER4hAQm3q1YUD2wcw HTIUV07K2+++ti7cVQmvXg== 0000950135-98-002566.txt : 19980424 0000950135-98-002566.hdr.sgml : 19980424 ACCESSION NUMBER: 0000950135-98-002566 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980410 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980422 SROS: NASD FILER: 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: 8-K SEC ACT: SEC FILE NUMBER: 000-16947 FILM NUMBER: 98598734 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 8-K 1 PEOPLES HERITAGE FINANCIAL GROUP 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 April 10, 1998 - -------------------------------------------------------------------------------- (Date of earliest event reported) Peoples Heritage Financial Group, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Maine 0-16947 01-0437984 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) P.O. Box 9540, One Portland Square, Portland, Maine 04112-9540 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (207) 761-8500 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS As of the end of the day on April 10, 1998, following receipt of all required regulatory and stockholder approvals, Peoples Heritage Financial Group, Inc. ("PHFG") completed the acquisition of CFX Corporation ("CFX") pursuant to the Agreement and Plan of Merger, dated as of October 27, 1997, between PHFG and CFX (the "Agreement"). The acquisition was effected by means of the merger of CFX with and into PHFG (the "Merger"). Upon consummation of the Merger, each share of common stock, $.66 2/3 par value per share, of CFX (the "CFX Common Stock") outstanding immediately prior thereto was converted into the right to receive 0.667 of a share of common stock, par value $.01 per share, of PHFG, including each attached right issued pursuant to the Rights Agreement, dated September 12, 1989, between PHFG and the Rights Agent named therein (together, the "PHFG Common Stock"), with cash in lieu of fractional share interests. PHFG's Registration Statement on Form S-4 (No. 333-43551), which was declared effective by the Securities and Exchange Commission (the "Commission") on December 31, 1997, contains detailed information regarding the Merger and related matters. In addition, the information set forth under Item 5 of this Current Report on Form 8-K is incorporated herein by reference. ITEM 5. OTHER EVENTS Other matters related to PHFG's acquisition of CFX are noted below. Board of Directors. Effective following the annual meeting of stockholders of PHFG on April 28, 1998, the following persons, who were immediately prior to consummation of the Merger serving as members of the Board of Directors of CFX, will become members of the Board of Directors of PHFG: Peter J. Baxter, who will become Vice Chairman of the Board of Directors of PHFG, P. Kevin Condron, Douglas S. Hatfield, Jr., Philip A. Mason and Seth A. Resnicoff, M.D. Executive Officers. Upon consummation of the Merger, Peter J. Baxter became Executive Vice President and Chief Operating Officer of PHFG and Christopher W. Bramley became Executive Vice President and Chief Operating Officer of Family Bank, FSB ("Family Bank"), PHFG's Massachusetts-based banking subsidiary. Messrs. Baxter and Bramley previously served as President and Chief Executive Officer and Executive Vice President of CFX, respectively. In connection with the foregoing, PHFG and each of Messrs. Baxter and Bramley entered into a Severance Agreement in the form included as Exhibit 10.1 hereto. Mr. Bramley will be elected President of Family Bank on April 23, 1998. Subsidiary Mergers. Subsequent to consummation of the Merger, the three banking subsidiaries of CFX were merged with and into banking subsidiaries of PHFG. Specifically, (i) CFX Bank was merged with and into Bank of New Hampshire ("BNH"), PHFG's New Hampshire-based banking subsidiary, (ii) Safety Fund National Bank was merged with and 2 3 into Family Bank and (iii) Orange Savings Bank was merged with and into Family Bank (collectively, the "Bank Mergers"). Certain Dispositions. In order to satisfy certain commitments made by PHFG to the U.S. Department of Justice and the Board of Governors of the Federal Reserve System in connection with the Merger, CFX Bank and First Essex Bank, FSB (the "Purchaser") entered into a Purchase and Assumption Agreement, dated as of March 28, 1998 (the "Branch Agreement"), pursuant to which BNH, as successor to CFX Bank upon consummation of the merger of CFX Bank with and into BNH, will sell to the Purchaser five branch offices formerly maintained by CFX Bank and located in Concord (two), Hillsborough (one) and Manchester (two), New Hampshire (the "Branch Offices") and the related assets and liabilities (the "Branch Sale"). Purchaser will assume the deposits at the Branch Offices, which amounted to approximately $159 million at February 28, 1998, as well as purchase approximately $67 million of loans and approximately $2 million of real and personal property related to the Branch Offices. The Purchaser has agreed to pay a 10% premium on the average deposits acquired over a specified time period prior to closing of the Branch Sale. The Branch Sale is subject to the receipt of all required regulatory approvals and is expected to close in mid-1998. A copy of the press release announcing the execution of the Branch Agreement is filed as Exhibit 99.1 hereto. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) The following consolidated financial statements of CFX are incorporated herein by reference to the Annual Report on Form 10-K for the year ended December 31, 1997 filed by CFX with the Commission on March 30, 1998: Consolidated Balance Sheets at December 31, 1997 and 1996 Consolidated Statements of Income for the Years Ended December 31, 1997, 1996 and 1995 Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1997, 1996 and 1995 Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995 Notes to Consolidated Financial Statements Reports of Wolf & Company, P.C., KMPG Peat Marwick LLP and Shatswell, MacLeod & Company, P.C. (b) The following pro forma financial statements of PHFG are included pursuant to Item 7(b) of Form 8-K. 3 4 PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION The following unaudited pro forma combined condensed consolidated balance sheet combines the consolidated historical balance sheets of PHFG and CFX, assuming the Merger was consummated as of December 31, 1997 on a pooling of interests accounting basis, and the following unaudited pro forma combined condensed consolidated statements of operations present the combined consolidated statements of operations of PHFG and CFX assuming the Merger was consummated as of the beginning of the indicated periods. Certain insignificant reclassifications have been reflected in the pro forma information to conform statement presentations. The effect of an expected reorganization and restructuring charge in connection with the Merger and the Bank Mergers has been reflected in the pro forma combined condensed consolidated balance sheet; however, because the reorganization and restructuring charge is nonrecurring, it has not been reflected in the pro forma combined condensed consolidated statements of operations. The pro forma financial data does not reflect cost savings, operating synergies and revenue enhancements which are expected to be realized subsequent to consummation of the Merger and the Bank Mergers or, except as indicated, the effects of the Branch Sale. The pro forma information presented is not necessarily indicative of the results of operations or the combined financial position that would have resulted had the Merger been consummated at December 31, 1997 or at the beginning of the periods indicated, nor is it necessarily indicative of the results of operations in future periods or the future financial position of the combined entities. The pro forma information should be read in conjunction with the historical consolidated financial statements of PHFG and CFX, including the related notes. Reference is made in this regard to the Annual Reports on Form 10-K filed by PHFG and CFX for the year ended December 31, 1997, respectively. 4 5 PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET PHFG AND CFX DECEMBER 31, 1997 (Unaudited) (In Thousands, Except Share Data)
Pro Forma PHFG CFX Adjustments Combined ---------- ---------- ----------- ---------- ASSETS Cash and due from banks $ 339,270 $ 87,671 -- $ 426,941 Federal funds sold 6,091 7,000 -- 13,091 Securities available for sale, at market value 1,268,055 534,550 -- 1,802,605 Securities held to maturity -- 28,184 -- 28,184 Loans held for sale 360,631 37,737 -- 398,368 Loans and leases 4,489,365 2,034,856 -- 6,524,221 Less: Allowance for loan and lease losses 68,085 21,898 -- 89,983 ---------- ---------- -------- ---------- Net loans and leases 4,421,280 2,012,958 -- 6,434,238 ---------- ---------- -------- ---------- Premises and equipment 75,968 38,761 -- 114,729 Goodwill and other intangibles 118,019 8,698 -- 126,717 Mortgage servicing rights 50,808 8,894 -- 59,702 Other assets 155,215 109,314 -- 264,529 ---------- ---------- -------- ---------- Total assets $6,795,337 $2,873,767 -- $9,669,104 ========== ========== ======== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Interest-bearing $4,057,789 $1,714,488 -- $5,772,277 Non-interest bearing 744,851 227,508 -- 972,359 ---------- ---------- -------- ---------- 4,802,640 1,941,996 -- 6,744,636 Borrowings from the Federal Home Loan Bank of Boston 940,991 453,755 -- 1,394,746 Federal funds purchased and securities sold under repurchase agreements 370,219 198,610 -- 568,829 Other borrowings 18,762 -- -- 18,762 Other liabilities 87,659 33,689 15,698(1) 137,046 ---------- ---------- -------- ---------- Total liabilities 6,220,271 2,628,050 15,698(1) 8,864,019 ---------- ---------- -------- ---------- Corporation-obligated, mandatorily redeemable securities of subsidiary trust 100,000 -- -- 100,000 ---------- ---------- -------- ---------- Shareholders' equity: Preferred Stock -- -- -- -- Common Stock: PHFG 286 -- 164(2) 450 CFX -- 16,078 (16,078)(2) -- Paid-in capital 271,790 149,106 15,127(2) 436,023 Retained earnings 224,784 79,080 (15,698)(1) 288,166 Net unrealized gain on securities available for sale 3,565 2,240 -- 5,805 Treasury stock at cost (25,359) (787) 787 (25,359) ---------- ---------- -------- ---------- Total shareholders' equity 475,066 245,717 (15,698)(1) 705,085 ---------- ---------- -------- ---------- Total liabilities and shareholders' equity $6,795,337 $2,873,767 $ -- $9,669,104 ========== ========== ======== ==========
5 6 Notes to Pro Forma Combined Condensed Consolidated Balance Sheet (1) Reflects an estimated $25.2 million of after-tax one-time reorganization and restructuring costs related to the Merger and the Bank Mergers, net of an estimated $9.5 million after-tax gain from the Branch Sale. The one-time reorganization and restructuring costs consist of costs relating to termination of employment contracts and severance obligations ($7.5 million), professional fees ($6.3 million), write-downs of fixed assets ($5.1 million), data processing/integration costs ($3.4 million) and other costs ($2.9 million). The actual amount of the one-time reorganization and restructuring costs related to the Merger and the Bank Mergers is still being evaluated and could be more or less than the amount indicated, as could the estimated gain from the Branch Sale. (2) Reflects the par value of the PHFG Common Stock issued in exchange for CFX Common Stock in connection with the Merger, with related adjustment to paid-in capital. The PHFG Common Stock issued in connection with the Merger was calculated by multiplying the number of outstanding shares of CFX Common Stock immediately prior to consummation thereof by the Exchange Ratio. This calculation resulted in approximately 16,393,709 shares of PHFG Common Stock issuable in connection with the Merger, which does not reflect cash to be paid in lieu of fractional share interests. In addition, PHFG assumed options to acquire approximately 380,672 shares of PHFG Common Stock (as adjusted by the Exchange Ratio) upon consummation of the Merger. 6 7 PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS PHFG AND CFX YEAR ENDED DECEMBER 31, 1997 (Unaudited) (In Thousands, Except Per Share Data)
Pro Forma PHFG CFX Combined(1) -------- -------- ----------- Interest and dividend income: Interest and fees on loans and leases $366,029 $155,480 $521,509 Interest and dividends on securities 76,183 44,059 120,242 -------- -------- -------- Total interest and dividend income 442,212 199,539 641,751 -------- -------- -------- Interest expense: Interest on deposits 148,803 71,009 219,812 Interest on borrowed funds 47,220 30,243 77,463 -------- -------- -------- Total interest expense 196,023 101,252 297,275 -------- -------- -------- Net interest income 246,189 98,287 344,476 Provision for loan losses -- 4,548 4,548 -------- -------- -------- Net interest income after provision for loan losses 246,189 93,739 339,928 -------- -------- -------- Noninterest income: Customer services 23,191 5,113 28,304 Mortgage banking services 18,771 6,996 25,767 Trust and investment advisory services 8,809 3,015 11,824 Insurance commissions 1,899 -- 1,899 Net securities gains (losses) 150 2,547 2,697 Other noninterest income 4,118 7,871 11,989 -------- -------- -------- 56,938 25,542 82,480 -------- -------- -------- Noninterest expenses: Salaries and employee benefits 92,703 38,730 131,433 Occupancy and equipment 26,180 12,127 38,307 Distributions on securities of subsidiary trust 8,351 -- 8,351 Amortization of goodwill and deposit premiums 8,120 623 8,743 Advertising and marketing 6,624 2,322 8,946 Merger expenses 354 11,031 11,385 Charges related to CFX Funding(2) -- 7,206 7,206 Other noninterest expenses 45,674 20,511 66,185 -------- -------- -------- 188,006 92,550 280,556 -------- -------- -------- Income before income tax expense 115,121 26,731 141,852 Income tax expense 41,720 7,797 49,517 -------- -------- -------- Net income $ 73,401 $ 18,934 $ 92,335 ======== ======== ======== Earnings per share: Basic $2.64 $0.79 $2.11 Diluted 2.59 0.78 2.07 Weighted average shares outstanding: Basic 27,806 23,866 43,725 Diluted 28,363 24,329 44,590
7 8 PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS PHFG AND CFX YEAR ENDED DECEMBER 31, 1996 (Unaudited) (In Thousands, Except Per Share Data)
Pro Forma HFG FX Combined(1) ------- ------- ----------- Interest and dividend income: Interest and fees on loans and leases 288,999 128,533 $417,532 Interest and dividends on securities 52,173 39,772 91,945 ------- ------- -------- Total interest and dividend income 341,172 168,305 509,477 ------- ------- -------- Interest expense: Interest on deposits 120,443 63,634 184,077 Interest on borrowed funds 30,156 15,949 46,105 ------- ------ -------- Total interest expense 150,599 79,583 230,182 ------- ------ -------- Net interest income 190,573 88,722 279,295 Provision for loan losses 900 4,285 5,185 ------- ------ -------- Net interest income after provision for loan losses 189,673 84,437 274,110 ------- ------ -------- Noninterest income: Customer services 15,353 4,952 20,305 Mortgage banking services 12,940 4,716 17,656 Trust and investment advisory services 7,233 2,351 9,584 Net securities gains (losses) 507 2,780 3,287 Other noninterest income 2,415 7,463 9,878 ------- ------- -------- 38,448 22,262 60,710 ------- ------- ------- Noninterest expenses: Salaries and employee benefits 73,303 34,076 107,379 Occupancy and equipment 20,799 10,306 31,105 Amortization of goodwill and deposit premiums 4,874 653 5,527 Advertising and marketing 4,327 2,366 6,693 Merger expenses 5,105 4,522 9,627 Other noninterest expenses 39,665 19,347 59,012 ------- ------- -------- 148,073 71,270 219,343 ------- ------- -------- Income before income tax expense 80,048 35,429 115,477 Income tax expense 27,568 11,876 39,444 ------- ------- -------- Net income $52,480 $23,553 $ 76,033 ======= ======= ======== Earnings per share: Basic $2.10 $1.01 $1.87 Diluted 2.06 0.99 1.84 Weighted average shares outstanding: Basic 25,035 23,383 40,632 Diluted 25,426 23,897 41,365
8 9 PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS PHFG AND CFX YEAR ENDED DECEMBER 31, 1995 (Unaudited) (In Thousands, Except Per Share Data)
Pro Forma PHFG CFX Combined(1) -------- -------- ----------- Interest and dividend income: Interest and fees on loans and leases $253,787 $109,601 $363,388 Interest and dividends on securities 52,062 39,207 91,269 -------- -------- -------- Total interest and dividend income 305,849 148,808 454,657 ------- -------- -------- Interest expense: Interest on deposits 108,209 57,674 165,883 Interest on borrowed funds 26,686 10,191 36,877 -------- -------- ------- Total interest expense 134,895 67,865 202,760 ------- -------- -------- Net interest income 170,954 80,943 251,897 Provision for loan losses 4,230 3,814 8,044 -------- -------- -------- Net interest income after provision for loan losses 166,724 77,129 243,853 ------- -------- -------- Noninterest income: Customer services 11,908 4,474 16,382 Mortgage banking services 10,849 3,397 14,246 Trust and investment advisory services 5,850 2,246 8,096 Net securities gains (losses) 116 2,383 2,499 Other noninterest income 2,694 5,238 7,932 ------- -------- ------- 31,417 17,738 49,155 ------ -------- ------- Noninterest expenses: Salaries and employee benefits 67,472 31,941 99,413 Occupancy and equipment 17,418 9,118 26,536 Amortization of goodwill and deposit premiums 2,211 714 2,925 Advertising and marketing 4,642 1,972 6,614 Merger expenses 4,958 -- 4,958 Other noninterest expenses 33,579 19,506 53,085 ------- -------- -------- 130,280 63,251 193,531 ------- -------- -------- Income before income tax expense 67,861 31,616 99,477 Income tax expense 23,375 10,062 33,437 ------- -------- -------- Net income 44,486 21,554 66,040 Preferred stock dividends -- 89 89 ------- -------- -------- Net income available to common stock $44,486 $ 21,465 $ 65,951 ======= ======== ======== Earnings per share: Basic $ 1.80 $ 0.93 $ 1.64 Diluted 1.78 0.89 1.61 Weighted average shares outstanding: Basic 24,696 23,180 40,157 Diluted 24,999 24,069 41,053
9 10 Note to Pro Forma Combined Condensed Consolidated Statements of Operations (1) PHFG expects to achieve cost savings, operating synergies and revenue enhancements following consummation of the Merger and the Bank Mergers. The cost savings, operating synergies and revenue enhancements are expected to be achieved in various amounts at various times during the periods subsequent to the consummation of such transactions, and not ratably over or at the beginning or end of such periods. No adjustment has been reflected in the pro forma combined statements of operations for the anticipated cost savings, operating synergies and revenue enhancements. For the reasons noted above, it should not be assumed that the dilution in PHFG's earnings per share reflected in the pro forma combined condensed consolidated statements of operations will represent actual dilution with respect to the Merger. (2) Relates to the discontinuance of the securitization business of CFX Funding, a 51% owned subsidiary of CFX. (c) The following exhibits are included with this Report: Exhibit 2.1 Agreement and Plan of Merger, dated as of October 27, 1997, between PHFG and CFX(1) Exhibit 10.1 Form of Severance Agreement between PHFG and each of Peter J. Baxter and Christopher W. Bramley Exhibit 23.1 Consent of Wolf & Company, P.C. Exhibit 23.2 Consent of Shatswell, MacLeod & Company, P.C. Exhibit 23.3 Consents of KPMG Peat Marwick LLP Exhibit 99.1 Press Release, dated March 30, 1998 - ---------- (1) Incorporated by reference to the Current Report on Form 8-K filed by PHFG on November 3, 1997. 10 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PEOPLES HERITAGE FINANCIAL GROUP, INC. By: /s/ Peter J. Verrill -------------------------------- Name: Peter J. Verrill Title: Executive Vice President, Chief Financial Officer and Treasurer Date: April 22, 1998 11 EX-10.1 2 SEVERANCE AGREEMENT 1 EXHIBIT 10.1 SEVERANCE AGREEMENT This AGREEMENT, made and entered into as of the 10th day of April 1998, between PEOPLES HERITAGE FINANCIAL GROUP, INC. (the "Company") and ____________________ (the "Executive"); W I T N E S S E T H: WHEREAS, the Executive is employed by the Company in a key executive capacity and possesses intimate knowledge of the business and affairs of the Company; and WHEREAS, the Company desires to ensure, insofar as possible, that it will continue to have the benefit of the Executive's services and to protect its confidential information and goodwill; and WHEREAS, the Company recognizes that circumstances may arise in which a change in the control of the Company occurs, thereby causing uncertainty of employment without regard to the Executive's competence or past contributions; and WHEREAS, the Company and the Executive wish to provide reasonable security to the Executive against changes in the Executive's relationship with the Company in the event of such change in control; NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 1. DEFINITIONS (a) ACCRUED BENEFIT MEANS: (i) All salary earned or accrued through the date the Executive's employment is terminated; (ii) reimbursement for any and all monies advanced in connection with the Executive's employment for reasonable and necessary expenses incurred by the Executive through the date the Executive's employment is terminated; (iii) any and all other compensation previously earned and deferred at the election of the Executive or pursuant to any deferred 2 compensation plans then in effect together with any interest or desired earnings thereon; (iv) annual bonus, if any, accrued for a Year prior to the Year in which employment terminates, but not yet paid to the Executive, under any bonus or incentive compensation plan or plans in which the Executive is a participant; (v) a pro rata portion of the maximum bonus payable to the Executive for the Year in which employment terminates under any bonus or incentive compensation plan or plans in which the Executive is a participant, determined as if the Executive had remained in employment for the full Year and prorated based upon weeks, including partial weeks, of employment during that Year; (vi) all other payments and benefits to which the Executive may be entitled under the terms of any applicable compensation arrangement or benefit plan or program of the Company. (b) ACT means the Securities Exchange Act of 1934, as amended. (c) AFFILIATE of any specified persons means any other person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under direct or indirect common control with such specified person. For the purposes of this definition, "control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. (d) ANNUAL COMPENSATION. Annual compensation shall mean the sum of: (i) the Executive's annual salary at the rate in effect on the date of a termination of employment as described in Section 3 or in Section 7(d) (or, in the event of a termination for Good Reason under Section 1(k)(i)(A) below, the annual salary as in effect immediately before the actions giving rise to Good Reason); plus (ii) the greatest of the bonuses either paid or accrued in either the Year of the Change in Control or the immediately preceding Year. 2 3 (e) BASE AMOUNT means an amount equal to the Executive's Annualized Includable Compensation for the Base Period as defined in Section 280G(d)(1) and (2) of the Code (as hereinafter defined). (f) CAUSE means (i) the executive's conviction of, or plea of NOLO CONTENDERE to, a felony; or (ii) willful and intentional misconduct, willful neglect, or gross negligence, in the performance of the Executive's duties, which has caused a demonstrable and serious injury to the Company, monetary or otherwise. The Executive shall be given written notice that the Company intends to terminate his employment for Cause. Such written notice shall specify the particular acts, or failures to act, on the basis of which the decision to so terminate employment was made. In the case of a termination for Cause as described in Clause (ii), above, the Executive shall be given the opportunity within 30 days of the receipt of such notice to meet with the Board to defend such acts, or failures to act, prior to termination. The Company may suspend the Executive's title and authority pending such meeting, and such suspension shall not constitute "Good Reason," as defined in subsection (k) below. (g) CHANGE IN CONTROL OF THE COMPANY shall mean a Change in Control of a nature that would be required to be reported in response to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the Act or any successor thereto, provided that without limiting the foregoing, a Change in Control of the Company also shall be deemed to have occurred if: (i) any "person" (as defined under Section 3(a)(9) of the Act) or "group" of persons (as provided under Rule 13d-3 of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 or otherwise under the Act), directly or indirectly (including as provided in Rule 13d-3(d)(1) of the Act), of capital stock of the Company the holders of which are entitled to vote for the election of directors ("voting stock") representing that percentage of the Company's then outstanding voting stock (giving effect to the deemed ownership of securities by such person or group, as provided in Rule 13d-3(d)(1) of the Act, but not giving effect to any such deemed ownership of securities by another person or group) equal to or greater than thirty-five percent (35%) of all such voting stock; (ii) individuals who constitute the Board on the date hereof (the "Incumbent Board") cease for any reason to constitute at least a majority thereof. Any person becoming a director subsequent 3 4 to such date whose election, or nomination for election, is, at any time, approved by a vote of at least a majority of the directors comprising the Incumbent Board shall be considered as though he were a member of the Incumbent Board; (iii) The Company combines with another person or entity, whether through a merger, asset sale, reorganization or otherwise, and (A) any person or group of persons holds at any time after such combination, voting stock equal to or greater than thirty-five percent (35%) determined by reference to the voting securities of the surviving entity, or (B) the Company's directors, as of the date immediately before such combination, constitute less than a majority of the Board of Directors of the combined entity. (h) CODE means the Internal Revenue Code of 1986, including any amendments thereto. (i) EFFECTIVE DATE means the date this Agreement is executed by the parties. (j) EMPLOYMENT PERIOD means a period commencing on the date of a Change in Control of the Company and ending on the earlier of (i) the last day of the twenty-four months following the month in which the Change in Control occurs, or (ii) the Executive's Normal Retirement Date. (k) GOOD REASON means: (i) any breach of this Agreement by the Company, including without limitation (A) any reduction during the employment period in the amount of the Executive's base salary or aggregate benefits as in effect from time to time, (B) failure to provide the Executive with the same fringe benefits that were provided to the Executive immediately prior to a Change in Control of the Company, or with a package of fringe benefits (including paid vacations) that, though one or more of such benefits may vary from those in effect immediately prior to such a Change in Control, is substantially comparable in all material respects to such fringe benefits taken as a whole, or (C) any other breach by the Company of its obligations contained in Section 6 below; (ii) without the Executive's express written consent, the assignment to the Executive of any duties which are materially inconsistent with the Executive's positions, duties, responsibilities and status immediately prior to the Change in Control of the Company, a 4 5 material change in the Executive's reporting responsibilities, titles or offices as an employee and as in effect immediately prior to the Change in Control, or a significant reduction, in the Executive's title, duties or responsibilities, or in the level of his support services; (iii) the relocation of the Executive's principal place of employment, without the Executive's written consent, to a location outside the same metropolitan area in which the Executive was employed at the time of such Change in Control, or the imposition of any requirement that the Executive spend more than ninety business days per year at a location other than such principal place of employment; (iv) any purported termination of the Executive's employment for Cause, Disability or Retirement which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (m) below. Upon the occurrence of any of the events described in (i), (ii), (iii) or (iv) above, the Executive shall give the Company written notice that such event constitutes Good Reason, and the Company shall thereafter have thirty (30) days in which to cure. If the Company has not cured in that time, the event shall constitute Good Reason. (l) NORMAL RETIREMENT DATE means Normal Retirement Date as defined in the Peoples Heritage Financial Group, Inc. Retirement Plan. (m) NOTICE OF TERMINATION. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision relied upon in this Agreement and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated. (n) PERSON or GROUP means a "person" or "group," as defined in Section 1(g)(i) hereof. (o) YEAR means a calendar year unless otherwise specifically provided. 2. TERM OF AGREEMENT. This Agreement shall begin on the date first set forth above and shall continue until January 1, 2001, provided that, on such January 1, and each succeeding January 1, the term shall be renewed for an additional period of one year unless either party has given written notice that the term is not so renewed, which notice must be delivered to the other party at least one year prior to the date of any such renewal, and 5 6 further provided that if a Change in Control of the Company occurs during such term, the term shall in all events continue through the last day of the Employment Period. This Agreement is also subject to earlier termination as provided in Section 3 below. All rights and obligations hereunder shall survive to the extent necessary to the intended enforcement thereof. 3. TERMINATION OF EMPLOYMENT PRIOR TO A CHANGE IN CONTROL. (a) The Company and the Executive shall each retain the right to terminate the employment of the Executive at any time prior to a Change in Control of the Company. In the event the Executive's employment is terminated prior to a Change in Control of the Company, this Agreement shall, except as provided in Subsection (b) and Section 20 below, be terminated and of no further force and effect, and any and all rights and obligations of the parties hereunder shall cease. (b) If the Executive's employment is terminated by the Company prior to the occurrence of a Change in Control of the Company, and if it can be shown that the Executive's termination (i) was at the direction or request of a third party that had taken steps reasonably calculated to effect the Change in Control of the Company thereafter, or (ii) otherwise occurred in connection with, or in anticipation of, the Change in Control of the Company, the Executive shall have the rights described in Section 7(d) below, as if a Change in Control of the Company had occurred on the date immediately preceding such termination. 4. EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. If a Change in Control of the Company occurs when the Executive is employed by the Company, the Company will continue thereafter to employ the Executive, and the Executive will remain in the employ of the Company, during the Employment Period, in accordance with the terms and provisions of this Agreement. 5. DUTIES. During the Employment Period, the Executive shall serve in such capacities and positions as may be assigned by the Company consistent with the Executive's capacities and positions on the Effective Date and shall devote the Executive's best efforts and all of the Executive's business time, attention and skill to the business and affairs of the Company, as such business and affairs now exist and as they may hereafter be conducted. 6. COMPENSATION. During the Employment Period, the Executive shall be compensated by the Company as follows: (a) the Executive shall receive, at such intervals and in accordance with such standard policies as in effect on the date of the Change in Control of the Company, an annual salary not less than the Executive's annual salary as in effect on the date of the Change in Control of the Company, subject to adjustment as hereinafter provided; 6 7 (b) the Executive shall be included in all plans providing incentive compensation to executives, including but not limited to bonus, deferred compensation, annual or other incentive compensation, supplemental pension, stock ownership, stock option, stock appreciation, stock bonus and similar or comparable plans as any such plans are extended by the Company from time to time to senior corporate officers, key employees and other employees of comparable status; (c) the Executive shall be reimbursed, at such intervals and in accordance with such standard policies as may be in effect on the date of the Change in Control of the Company, for any and all monies advanced in connection with the Executive's employment for reasonable and necessary expenses incurred by the Executive on behalf of the Company, including travel expenses; (d) the Executive shall be included, to the extent eligible thereunder, in any and all plans providing but not limited to, group life insurance, hospitalization, disability, medical, dental, pension, profit sharing and stock bonus plans, and shall be provided any and all other benefits and perquisites made available to other employees of comparable status and position at the expense of the Company on a comparable basis; (e) the Executive shall receive annually not less than the amount of paid vacation and not fewer than the number of paid holidays received annually immediately prior to the Change in Control of the Company or available annually to other employees of comparable status and position with the Company; and (f) During the Employment Period the Board of Directors of the Company, or an appropriate committee thereof, will consider and appraise, at least annually, the contributions of the Executive to the Company's operating efficiency, growth, production and profits and, in accordance with past practice, due consideration shall be given to the upward adjustment of the Executive's compensation rate, at least annually, commensurate with increases generally given to other senior corporate officers and key employees and as the scope of the Executive's duties expands. 7. TERMINATION OF EMPLOYMENT. Any termination by the Company or the Executive of the Executive's employment during the Employment Period shall be communicated by written Notice of Termination to the Executive if such notice is delivered by the Company and to the Company if such notice is delivered by the Executive. The Notice of Termination shall comply with the requirements of Section 17 below. (a) TERMINATION FOR DISABILITY. If during the Employment Period, the Executive's employment is terminated on account of the Executive's disability, as determined under the Company's long-term disability plan (as in effect on the date of a Change in Control of the Company), the Executive shall receive any Accrued 7 8 Benefits, and shall remain eligible for all benefits as provided pursuant to the terms of any long-term disability programs of the Company in effect at the time of such termination. (b) TERMINATION ON THE EXECUTIVE'S DEATH. If, during the Employment Period, the Executive's employment is terminated on account of the Executive's death, the Executive's estate or his designated beneficiary (or beneficiaries), as applicable, shall receive all the Executive's Accrued Benefits. (c) VOLUNTARY TERMINATION OR TERMINATION FOR CAUSE. If, during the Employment Period, (i) the Executive shall terminate employment with the Company other than for Good Reason, or (ii) the Executive's employment is terminated for Cause, the Executive shall receive from the Company his Accrued Benefits. (d) TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY THE EXECUTIVE FOR GOOD REASON. If, during the Employment Period, the Executive's employment with the Company is terminated by the Company other than for Cause, or by the Executive for Good Reason, then: (i) the Executive shall be entitled to receive from the Company his Accrued Benefit, except that, for this purpose, Accrued Benefit shall not include any entitlement to severance under any Company severance policy generally applicable to the Company's salaried employees; (ii) the Executive shall receive from the Company, no less than ten days following termination of his employment, a lump sum payment (the "Termination Payment") equal to three times the Executive's Annual Compensation; (iii) all rights under any equity or long-term incentive plan shall be fully vested; (iv) rights, if any, to supplemental pension shall be fully vested; and (v) the Executive shall continue to be covered at the expense of the Company by the same or equivalent hospital, medical, dental, accident, disability and life insurance coverage as in effect for the Executive immediately prior to termination of his employment, until the earlier of (A) thirty-six months following termination of employment, or (B) the date the Executive has commenced new employment and has thereby become eligible for comparable benefits. 8 9 8. CERTAIN SUPPLEMENTAL PAYMENTS BY THE COMPANY. (a) In the event the Executive's employment is terminated pursuant to Section 7(d) above, and if in connection therewith it is determined that (A) part or all of the compensation and benefits to be paid to the Executive constitute "parachute payments" under Section 280G of the Code, and (B) the payment thereof will cause the Executive to incur excise tax under Section 4999 of the Code, the Company, on or before the date for payment of such excise tax, shall pay the Executive, in lump sum, an amount (the "Gross-Up Amount") such that, after payment of all federal, state and local income tax and any additional excise tax under Section 4999 of the Code in respect of the Gross-Up Amount payment, the Executive will be fully reimbursed for the amount of such excise tax. (b) The determination of the Parachute Amount, the Base Amount and the Gross-Up Amount, as well as any other calculations necessary to implement this Section 8 shall be made by a nationally recognized accounting or benefits consulting firm selected by the Executive and reasonably satisfactory to the Company and which has not performed services, other than minor indirect or incidental services, for either the Company or the Executive for three years prior to the date the Consultant is retained for this purpose. The Consultant's fee shall be paid by the Company. (c) As promptly as practicable following such determination and the elections hereunder, the Company shall pay to or distribute to or for the benefit of the Executive such amounts as are then due to the Executive under this Agreement and shall promptly pay to or distribute for the benefit of the Executive in the future such amounts as become due to the Executive under this Agreement. (d) As a result of the uncertainty in the application of Section 280G of the Code at the time of an initial determination hereunder, it is possible that payments will not have been made by the Company which should have been made under clause (a) of this Section 8 ("Underpayment"). In the event that there is a final determination by the Internal Revenue Service, or a final determination by a court of competent jurisdiction, that an Underpayment has been made and the Executive thereafter is required to make any payment of an excise tax, income tax, any interest or penalty, the accounting or benefits consulting firm selected under clause (b) above shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive. 9. FURTHER OBLIGATIONS OF THE EXECUTIVE. During and following the Executive's employment by the Company, the Executive shall hold in confidence and not directly or indirectly disclose or use or copy or make lists of any confidential information or proprietary data of the Company, except to the extent authorized in writing by the Board of Directors of the Company or required by any court or administrative agency, other than to an 9 10 employee of the Company or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of duties as an executive of the Company. Confidential information shall not include any information known generally to the public or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that of the Company. All records, files, documents and materials or copies thereof, relating to the Company's business which the Executive shall prepare, or use, or come into contact with, shall be and remain the sole property of the Company and shall be promptly returned to the Company upon termination of employment with the Company. 10. EXPENSES AND INTEREST. If, after a Change in Control of the Company, a good faith dispute arises with respect to the enforcement of the Executive's rights under this Agreement, or if any legal or arbitration proceeding shall be brought in good faith to enforce or interpret any provision contained herein, or to recover damages for breach hereof, the Executive shall recover from the Company any reasonable attorney's fees and necessary costs and disbursements incurred as a result of such dispute, and prejudgment interest on any money judgment or arbitration award obtained by the Executive calculated at the rate of interest announced by Peoples Heritage Bank, or the successor thereto, from time to time as its prime rate from the date that payments to him should have been made under this Agreement. 11. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation during and after the Employment Period to pay the Executive the compensation and to make the arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any setoff, counterclaim, recoupment, defense or other right which the Company may have against him or anyone else. All amounts payable by the Company hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Company shall be final and the Company will not seek to recover all or any part of such payment from the Executive or from whomsoever may be entitled thereto, for any reason whatever except as provided in Section 8(d) above. 12. SUCCESSORS. (a) (i) If the Company sells, assigns, or transfers all or substantially all of its business and assets to any Person, excluding Affiliates of the Company, or if the Company merges into or consolidates or otherwise combines with any Person which is a continuing or successor entity, then the Company shall assign all of its rights, title and interest in this Agreement as of the date of such event to the Person which is either the acquiring or successor Company, and such Person shall assume in writing and perform from and after the date of such written assignment all of the terms, conditions and provisions imposed by this Agreement upon the Company. Failure of the Company to obtain such 10 11 written assignment shall be a breach of this Agreement. In case of such assignment by the Company and of written assumption and agreement by such Person, all further rights as well as all other obligations of the Company under this Agreement thenceforth shall cease and terminate and thereafter the expression "the Company" wherever used herein shall be deemed to mean such Person or Persons. (ii) This Agreement and all rights of the Executive shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, estates, executors, administrators, heirs and beneficiaries. All amounts payable to the Executive hereunder shall be paid, in the event of the Executive's death, to the Executive's estate, heirs and representatives. This Agreement shall inure to the benefit of, be binding upon and be enforceable by, any successor, surviving or resulting Company or other entity to which all or substantially all of the Company's business and assets shall be transferred. This Agreement shall not be terminated by the voluntary or involuntary dissolution of the Company. 13. ENFORCEMENT. The provisions of this Agreement shall be regarded as divisible, and if any such provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby. 14. AMENDMENT. This Agreement may not be amended or modified at any time except by a written instrument executed by the Company and the Executive if such amendment or modification occurs before any Change in Control, or by the Executive and the Company after any Change in Control. 15. WITHHOLDING. The Company shall be entitled to withhold from amounts to be paid to the Executive hereunder any federal, state or local withholding or other taxes, or charge which it is from time to time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such withholding shall arise. 16. GOVERNING LAW: ARBITRATION. This Agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Maine. Any dispute arising out of this Agreement shall be determined by arbitration in the State of Maine under the rules of the American Arbitration Association then in effect and judgment upon any award pursuant to such arbitration may be enforced in any court having jurisdiction thereof. 11 12 17. NOTICE. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received and, if mailed, shall be mailed by United States registered or certified mail, return receipt requested, addressee only postage prepaid, to the Company at: Peoples Heritage Financial Group, Inc. P.O. Box 9540 One Portland Square Portland, ME 04112 Attn: Clerk or if to the Executive, at the address set forth below the Executive's signature line of this Agreement, or to such other address as the party to be notified shall have given to the other. 18. NO WAIVER. No waiver by any party at any time of any breach by another party of, or compliance with, any condition or provision of this Agreement to be performed by another party shall be deemed a waiver of similar or dissimilar provisions or conditions at any time. 19. HEADINGS. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement. 20. RIGHTS UNDER EXISTING EMPLOYMENT AGREEMENT. The Company acknowledges that it has assumed all the obligations of CFX Corporation ("CFX"), as predecessor in interest to the Company by merger, under the Employment Agreement, dated August ___, 1997,(1) by and between CFX and the Executive (the "Employment Agreement"). Notwithstanding any provision of this Agreement or the Employment Agreement to the contrary, in the event the Executive's employment with the Company is terminated for any reason within one year of the date of this Agreement, the Executive's employment with the Company shall be deemed to have been terminated upon the occurrence of or within one year after a "Triggering Event," as that term is defined in the Employment Agreement and the Executive shall (i) be entitled to receive the payments and benefits set forth in Section 7 of the Employment Agreement and not this Agreement, it being agreed that in no event shall the Executive be entitled to receive benefits under both this Agreement and the Employment Agreement, and (ii) comply with the requirements of Sections 10 and 11 of the Employment Agreement. After such one-year period, and provided that the Executive has not become entitled to receive benefits under the Employment Agreement, the Employment Agreement shall terminate and be of no further force and effect without any action on the part of the Company, as successor to CFX, and the Executive, and the Executive thereafter shall be entitled to receive such severance benefits as he may be entitled to receive in accordance with the terms of this Agreement. In the event the Company enters into an - ----------------- (1) August 12 and 14 in the case of Peter J. Baxter and Christopher W. Bramley, respectively. 12 13 employment or severance agreement with any other executive officer at the same job range level at the Company on terms more favorable than those set forth in this Agreement (other than in connection with an acquisition by the Company), the Executive shall be entitled to enter into a contract on such more favorable terms. The parties agree that this Agreement shall constitute a written modification to the Employment Agreement which satisfies the requirements of Section 19 thereof. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first written above. PEOPLES HERITAGE FINANCIAL GROUP, INC. By: ______________________________________________ Name: William J. Ryan Title: Chairman, President and Chief Executive Officer __________________________________________________ Executive: Address: 13 EX-23.1 3 CONSENT OF WOLF & COMPANY 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in this Current Report on Form 8-K, the Registration Statements on Form S-8 (Nos. 33-22205, 33-22206, 33-80310, 333-17467 and 333-46367) and the Registration Statement on Form S-3 (No. 333-34931) of Peoples Heritage Financial Group, Inc. of our report, dated January 30, 1998, except for Note W as to which the date is February 9, 1998, on the consolidated balance sheets of CFX Corporation and subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1997, which report appears in the December 31, 1997 Annual Report on Form 10-K of CFX Corporation. /s/ Wolf & Company, P.C. Boston, Massachusetts April 9, 1998 EX-23.2 4 CONSENT OF SHATSWELL, MACLEOD & COMPANY, P.C. 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in this Current Report on Form 8-K, the Registration Statements on Form S-8 (Nos. 33-22205, 33-22206, 33-80310, 333-17467 and 333-46367) and the Registration Statement on Form S-3 (No. 333-34931) of Peoples Heritage Financial Group, Inc. of our report, dated January 13, 1997, except for Note 20 as to which the date is February 13, 1997, relating to Portsmouth Bank Shares, Inc. and Subsidiary, which report appears in the December 31, 1997 Annual Report on Form 10- K of CFX Corporation. /s/ Shatswell, MacLeod & Company, P.C. West Peabody, Massachusetts April 9, 1998 EX-23.3 5 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 23.3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in this Current Report on Form 8-K, the Registration Statements on Form S-8 (Nos. 33-22205, 33-22206, 33-80310, 333-17467 and 333-46367) and the Registration Statement on Form S-3 (No. 333-34931) of Peoples Heritage Financial Group, Inc. of our report, dated January 22, 1996, relating to the consolidated statement of operations of The Safety Fund Corporation for the year ended December 31, 1995, which report appears in the December 31, 1995 Annual Report on Form 10-KSB of The Safety Fund Corporation and in the December 31, 1997 Annual Report on Form 10-K of CFX Corporation. /s/ KPMG Peat Marwick LLP Boston, Massachusetts April 8, 1998 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in this Current Report on Form 8-K, the Registration Statements on Form S-8 (Nos. 33-22205, 33-22206, 33-80310, 333-17467 and 333-46367) and the Registration Statement on Form S-3 (No. 333-34931) of Peoples Heritage Financial Group, Inc. of our report, dated January 22, 1997, relating to the consolidated balance sheet of Community Bankshares, Inc. and subsidiaries as of December 31, 1996, and the related consolidated statements of income, changes in stockholders' equity and cash flows for the year ended December 31, 1996, the six months ended December 31, 1995 and the year ended June 30, 1995, which report appears in the December 31, 1996 Annual Report on Form 10-K of Community Bankshares, Inc and in the December 31, 1997 Annual Report on Form 10-K of CFX Corporation. /s/ KPMG Peat Marwick LLP Boston, Massachusetts April 8, 1998 EX-99.1 6 PRESS RELEASE 1 EXHIBIT 99.1 PEOPLES HERITAGE RECEIVES REGULATORY APPROVALS TO ACQUIRE CFX CORPORATION $10 BILLION BANKING AND FINANCIAL SERVICES COMPANY CREATED BANK OF NEW HAMPSHIRE TO BE STATE'S LARGEST BANK Portland, Maine, March 30, 1998 -- Peoples Heritage Financial Group, Inc. (NASDAQ: PHBK), a $6.8 billion multi-bank and financial services holding company headquartered in Portland, Maine, announced today that is has received all regulatory approvals which are necessary to complete its acquisition of Keene, New Hampshire-based CFX Corporation (AMEX:CFX) with assets of $2.8 billion. The legal completion of the merger is scheduled for April 10, 1998, with operational consolidations scheduled for late spring and mid-summer. "This is a strong strategic move to make us New England's leading and largest community banking company," said William J. Ryan, Chairman, President and Chief Executive Officer of Peoples Heritage Financial Group. Under the terms of the agreement between the parties, each share of common stock of CFX outstanding just prior to the completion of the acquisition (other than dissenting shares) will be converted into the right to receive 0.667 of a share of common stock of Peoples Heritage. Approximately 16.3 million shares of Peoples Heritage common stock will be issued in the transaction, which will be a tax free reorganization and will be accounted for as a pooling-of-interests. In addition to the exchange of outstanding shares shortly after the effective legal date of the acquisition, outstanding options to acquire common stock of CFX will be converted, based on the share exchange ratio, to options to acquire approximately 450,000 shares of common stock of Peoples Heritage. CFX operates banks in New Hampshire and Massachusetts that will be merged into the Peoples Heritage owned banks in the two states. Peoples Heritage's New Hampshire banking subsidiary, Bank of New Hampshire (BNH), will gain the leading deposit market share in the state. Peoples Heritage's Massachusetts banking subsidiary, Family Bank, will extend its market share into central Massachusetts and hold the state's tenth largest market share. The Company's Maine banking affiliate, Peoples Heritage Bank, which already holds Maine's largest deposit market position, will not be directly affected by the acquisition of CFX, which has no presence in the state. In order to satisfy commitments made by PHFG to regulatory authorities in conjunction with the approval of the acquisition of CFX, CFX Bank has entered into an agreement to divest five branches in New Hampshire -- two each in Concord and Manchester and one in Hillsborough -- with total deposits of approximately $160 million. The branches will be sold to First Essex Bank, FSB, headquartered in Andover, Massachusetts. First Essex Bancorp, Inc., the parent holding company of First Essex Bank, 2 has $1.1 billion in assets and operates banking offices in northern Massachusetts and southern New Hampshire. CFX operates 56 banking offices through CFX Bank and the recently acquired Portsmouth Savings Bank, Concord Savings Bank and Centerpoint Bank in New Hampshire, and Orange Savings Bank and Safety Fund National Bank in Massachusetts. All CFX branches in New Hampshire, except for those being divested, will become BNH offices and the 13 Orange and Safety Fund branches in Massachusetts will become Family Bank branches. Following completion of the mergers, BNH will have 84 branches and approximately $4.5 billion in assets, and Family Bank will have 35 branches, including four in southern New Hampshire, and approximately $1.5 billion in assets. (end) 2 -----END PRIVACY-ENHANCED MESSAGE-----