1
================================================================================
================================================================================
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF FEBRUARY 7, 2001
BY AND BETWEEN
CONNECTICUT BANCSHARES, INC.
AND
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF EAST HARTFORD
================================================================================
2
TABLE OF CONTENTS
PAGE NO.
Introductory Statement........................................................1
ARTICLE I
THE MERGER..............................................................1
----------
Section 1.1. Structure of the Merger....................................2
-----------------------
Section 1.2. Effect on Shares of First Federal Common Stock.............2
----------------------------------------------
Section 1.3. Payment Procedures.........................................2
------------------
Section 1.4. Stock Options..............................................4
-------------
Section 1.5. Effect on Shares of Acquisition Sub Stock..................4
-----------------------------------------
Section 1.6. Charter and Bylaws of the Surviving Corporation............4
-----------------------------------------------
Section 1.7. Directors and Officers of the Surviving Corporation........4
---------------------------------------------------
Section 1.8. Alternative Structure......................................4
---------------------
Section 1.9. Bank Merger................................................5
-----------
ARTICLE II
REPRESENTATIONS AND WARRANTIES..........................................5
------------------------------
Section 2.1. Representations and Warranties of First Federal............5
-----------------------------------------------
Section 2.2. Representations and Warranties of Connecticut Bancshares..22
--------------------------------------------------------
ARTICLE III
CONDUCT PENDING THE MERGER.............................................26
--------------------------
Section 3.1. Conduct of First Federal's Business Prior to the Effective
----------------------------------------------------------
Time......................................................26
----
Section 3.2. Forbearance by First Federal..............................26
----------------------------
Section 3.3. Conduct of Connecticut Bancshares's Business
--------------------------------------------
Prior to the Effective Time...............................29
---------------------------
ARTICLE IV
COVENANTS..............................................................30
---------
Section 4.1. Acquisition Proposals.....................................30
---------------------
Section 4.2. [RESERVED]................................................31
----------
Section 4.3. Access and Information....................................31
----------------------
Section 4.4. Applications; Consents....................................33
----------------------
Section 4.5. Anti-takeover Provisions..................................33
------------------------
Section 4.6. Additional Agreements.....................................33
---------------------
Section 4.7. Publicity.................................................33
---------
Section 4.8. Stockholder Meeting.......................................34
-------------------
Section 4.9. Proxy Statement...........................................34
---------------
Section 4.10.Notification of Certain Matters...........................35
-------------------------------
Section 4.11.Employees, Directors and Officers.........................35
---------------------------------
Section 4.12.Indemnification...........................................39
---------------
Section 4.13.First Federal Main Office.................................40
-------------------------
Section 4.14.Charitable Activities.....................................40
---------------------
ii
3
ARTICLE V
CONDITIONS TO CONSUMMATION.............................................41
--------------------------
Section 5.1. Conditions to Each Party's Obligations....................41
--------------------------------------
Section 5.2. Conditions to the Obligations of Connecticut Bancshares...41
-------------------------------------------------------
Section 5.3. Conditions to the Obligations of First Federal............42
----------------------------------------------
ARTICLE VI
TERMINATION............................................................43
-----------
Section 6.1. Termination...............................................43
-----------
Section 6.2. Termination Fee...........................................44
---------------
Section 6.3. Effect of Termination.....................................45
---------------------
ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME.............................45
------------------------------------------
Section 7.1. Effective Date and Effective Time.........................45
---------------------------------
Section 7.2. Deliveries at the Closing.................................45
-------------------------
ARTICLE VIII
CERTAIN OTHER MATTERS..................................................45
---------------------
Section 8.1. Certain Definitions; Interpretation.......................45
-----------------------------------
Section 8.2. Survival..................................................47
--------
Section 8.3. Waiver; Amendment.........................................47
-----------------
Section 8.4. Counterparts..............................................47
------------
Section 8.5. Governing Law.............................................47
-------------
Section 8.6. Expenses..................................................47
--------
Section 8.7. Notices...................................................47
-------
Section 8.8. Entire Agreement; etc.....................................48
---------------------
Section 8.9. Successors and Assigns; Assignment........................49
----------------------------------
Section 8.10.Specific Performance......................................49
--------------------
Exhibit A - Form of Voting Agreement
Exhibit B - Plan of Merger
Exhibit C - Plan of Bank Merger
iii
4
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
This is an AGREEMENT AND PLAN OF REORGANIZATION, dated as of the 7th
day of February, 2001 ("AGREEMENT"), by and between Connecticut Bancshares,
Inc., a Delaware corporation ("CONNECTICUT BANCSHARES"), and First Federal
Savings and Loan Association of East Hartford, a federally charted savings
association ("FIRST FEDERAL").
INTRODUCTORY STATEMENT
The Board of Directors of each of Connecticut Bancshares and First
Federal (i) has determined that this Agreement and the business combination and
related transactions contemplated hereby are advisable and in the best interests
of Connecticut Bancshares and First Federal, respectively, and in the best
interests of their respective stockholders and (ii) has approved, at meetings of
each of such Boards of Directors, this Agreement.
Connecticut Bancshares and First Federal desire to make certain
representations, warranties and agreements in connection with the business
combination and related transactions provided for herein and to prescribe
various conditions to such transactions.
As a condition and inducement to Connecticut Bancshares' willingness
to enter into this Agreement, certain shareholders of First Federal, including
members of the Board of Directors of First Federal, have entered into an
agreement in the form attached hereto as Exhibit A pursuant to which he or she
will vote his or her shares of First Federal Common Stock (as defined in SECTION
1.2) in favor of this Agreement and the transactions contemplated hereby.
In consideration of their mutual promises and obligations hereunder,
the parties hereto adopt and make this Agreement and prescribe the terms and
conditions hereof and the manner and basis of carrying it into effect, which
shall be as follows:
ARTICLE I
THE MERGER
----------
Section 1.1.Structure of the Merger. Connecticut Bancshares shall
-----------------------
cause an interim federal savings association ("ACQUISITION SUB") to be organized
as a wholly owned subsidiary of The Savings Bank of Manchester ("SAVINGS BANK OF
MANCHESTER"), a Connecticut-chartered savings bank. On the Effective Date (as
defined in SECTION 7.1), Acquisition Sub will merge with and into First Federal
("MERGER"), pursuant to the provisions of, and with the effect provided in, the
rules and regulations of the Office of Thrift Supervision ("OTS") and pursuant
to the terms and conditions of a plan of merger ("PLAN OF MERGER") to be entered
into between Acquisition Sub and First Federal in the form attached hereto as
Exhibit B. Upon consummation of the Merger, the separate corporate existence of
Acquisition Sub shall cease. First Federal shall be the surviving institution
(hereinafter sometimes referred to in such capacity as the "SURVIVING
CORPORATION") in the Merger and shall continue to be governed by
1
5
the laws of the United States and its separate corporate existence, with all of
its rights, privileges, immunities, powers and franchises, shall continue
unaffected by the Merger. From and after the Effective Time (as defined in
SECTION 7.1), First Federal shall possess all of the properties and rights and
be subject to all of the liabilities and obligations of Acquisition Sub.
Section 1.2.Effect on Shares of First Federal Common Stock. By
----------------------------------------------
virtue of the Merger, automatically and without any action on the part of the
holder thereof, each share of common stock, par value $.01 per share, of First
Federal ("FIRST FEDERAL COMMON STOCK") that is issued and outstanding at the
Effective Time shall cease to be outstanding and shall be converted into and
become the right to receive $37.50 in cash, without interest (the "MERGER
CONSIDERATION"). Notwithstanding the foregoing, shares of First Federal Common
Stock held directly or indirectly by Connecticut Bancshares (other than shares
held in a fiduciary capacity or in satisfaction of a debt previously contracted)
shall be canceled and retired and shall cease to exist, and no exchange or
payment shall be made with respect thereto. In accordance with 12 C.F.R. 552.14
shares of First Federal Common Stock shall not be entitled to dissenter and
appraisal rights.
Section 1.3.Payment Procedures.
------------------
(a) Appropriate transmittal materials ("LETTER OF TRANSMITTAL")
shall be mailed as soon as reasonably practicable after the Effective Time to
each holder of record of First Federal Common Stock as of the Effective Time.
Except as provided in SECTION 1.3(H), a Letter of Transmittal shall be deemed
properly completed only if accompanied by certificates representing all shares
of First Federal Common Stock to be converted thereby.
(b) At and after the Effective Time, each certificate ("FIRST
FEDERAL CERTIFICATE") previously representing shares of First Federal Common
Stock (except as specifically set forth in SECTION 1.2) shall represent only the
right to receive the Merger Consideration multiplied by the number of shares of
First Federal Common Stock previously represented by the First Federal
Certificate.
(c) Prior to the Effective Time, Connecticut Bancshares shall
deposit, or shall cause to be deposited, in a segregated account with a bank or
trust company selected by Connecticut Bancshares and reasonably acceptable to
First Federal, which shall act as paying agent ("PAYING AGENT") for the benefit
of the holders of shares of First Federal Common Stock, for payment in
accordance with this SECTION 1.3, an amount of cash sufficient to pay the
aggregate Merger Consideration to be paid pursuant to SECTION 1.2.
(d) The Letter of Transmittal shall (i) specify that delivery shall
be effected, and risk of loss and title to the First Federal Certificates shall
pass, only upon delivery of the First Federal Certificates to the Paying Agent,
(ii) be in a form and contain any other provisions as Connecticut Bancshares may
reasonably determine and (iii) include instructions for use in effecting the
surrender of the First Federal Certificates in exchange for the Merger
Consideration.
2
6
Upon the proper surrender of the First Federal Certificates to the Paying Agent,
together with a properly completed and duly executed Letter of Transmittal, the
holder of such First Federal Certificates shall be entitled to receive in
exchange therefor a check in the amount equal to the cash that such holder has
the right to receive pursuant to SECTION 1.2. First Federal Certificates so
surrendered shall forthwith be canceled. As soon as practicable following
receipt of the properly completed Letter of Transmittal and any necessary
accompanying documentation, the Paying Agent shall issue a check as provided
herein. If there is a transfer of ownership of any shares of First Federal
Common Stock not registered in the transfer records of First Federal, the Merger
Consideration shall be issued to the transferee thereof if the First Federal
Certificates representing such First Federal Common Stock are presented to the
Paying Agent, accompanied by all documents required, in the reasonable judgment
of Connecticut Bancshares and the Paying Agent, (x) to evidence and effect such
transfer and (y) to evidence that any applicable stock transfer taxes have been
paid.
(e) From and after the Effective Time there shall be no transfers on
the stock transfer records of First Federal of any shares of First Federal
Common Stock. If, after the Effective Time, First Federal Certificates are
presented to Connecticut Bancshares, they shall be canceled and exchanged for
the Merger Consideration deliverable in respect thereof pursuant to this
Agreement in accordance with the procedures set forth in this SECTION 1.3.
(f) Any portion of the aggregate amount of cash to be paid pursuant
to SECTION 1.2 that remains unclaimed by the stockholders of First Federal for
six months after the Effective Time shall be repaid by the Paying Agent to
Connecticut Bancshares upon the written request of Connecticut Bancshares. After
such request is made, any stockholders of First Federal who have not theretofore
complied with this SECTION 1.3 shall look only to Connecticut Bancshares for the
Merger Consideration deliverable in respect of each share of First Federal
Common Stock such stockholder holds, as determined pursuant to SECTION 1.2 of
this Agreement, without any interest thereon. If outstanding First Federal
Certificates are not surrendered prior to the date on which such payments would
otherwise escheat to or become the property of any governmental unit or agency,
the unclaimed items shall, to the extent permitted by any abandoned property,
escheat or other applicable laws, become the property of Connecticut Bancshares
(and, to the extent not in its possession, shall be paid over to it), free and
clear of all claims or interest of any person previously entitled to such
claims. Notwithstanding the foregoing, neither the Paying Agent nor any party to
this Agreement (or any affiliate thereof) shall be liable to any former holder
of First Federal Common Stock for any amount delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(g) Connecticut Bancshares and the Paying Agent shall be entitled to
rely upon First Federal's stock transfer books to establish the identity of
those persons entitled to receive the Merger Consideration, which books shall be
conclusive with respect thereto. In the event of a dispute with respect to
ownership of stock represented by any First Federal Certificate (including by
means of an interpleader action), Connecticut Bancshares and the Paying Agent
3
7
shall be entitled to deposit any Merger Consideration represented thereby in
escrow with an independent third party and thereafter be relieved with respect
to any claims thereto.
(h) If any First Federal Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such First Federal Certificate to be lost, stolen or destroyed and, if required
by the Paying Agent, the posting by such person of a bond in such amount as the
Paying Agent may direct as indemnity against any claim that may be made against
it with respect to such First Federal Certificate, the Paying Agent will issue
in exchange for such lost, stolen or destroyed First Federal Certificate the
Merger Consideration deliverable in respect thereof pursuant to SECTION 1.2.
Section 1.4.Stock Options. At the Effective Time, each option to
-------------
acquire shares of First Federal Common Stock (a "FIRST FEDERAL OPTION") granted
pursuant to First Federal's Amended and Restated 1990 Incentive Stock Option
Plan, 1992 Stock Option Plan for Outside Directors, and 1998 Stock Option Plan
(the "FIRST FEDERAL OPTION PLANS") that is then outstanding and unexercised
shall be canceled, and in lieu thereof Connecticut Bancshares shall pay, or
cause to be paid, to the holders of such options an amount in cash equal to the
product of (i) the number of shares of First Federal Common Stock subject to
such option at the Effective Time and (ii) an amount by which the Merger
Consideration exceeds the exercise price per share of such option, net of any
cash which must be withheld under federal and state income and employment tax
requirements. In the event that the exercise price of a First Federal Option is
greater than the Merger Consideration, then at the Effective Time such First
Federal Option shall be canceled without any payment made in exchange therefor.
At the Effective Time the First Federal Option Plans shall be deemed terminated.
Section 1.5.Effect on Shares of Acquisition Sub Stock. Each share of
-----------------------------------------
common stock of Acquisition Sub that is issued and outstanding immediately prior
to the Effective Time shall be converted into and exchanged for one share of the
Surviving Corporation.
Section 1.6.Charter and Bylaws of the Surviving Corporation. The
-----------------------------------------------
federal stock charter and bylaws of First Federal in effect immediately prior to
the Effective Time shall be the federal stock charter and bylaws of the
Surviving Corporation from and after the Effective Time until amended as
provided by law.
Section 1.7.Directors and Officers of the Surviving Corporation.
---------------------------------------------------
From and after the Effective Time, the directors and officers of First Federal
shall consist of the directors and officers of Acquisition Sub serving
immediately prior to the Effective Time, each to hold office in accordance with
the federal stock charter and bylaws of the Surviving Corporation until their
respective successors are duly elected or appointed and qualified.
Section 1.8.Alternative Structure. Notwithstanding anything to the
---------------------
contrary contained in this Agreement, prior to the Effective Time, Connecticut
Bancshares may specify that the structure of the transactions contemplated by
this Agreement be revised and the parties
4
8
shall enter into such alternative transactions as Connecticut Bancshares may
determine to effect the purposes of this Agreement; PROVIDED, HOWEVER, that such
revised structure shall not (i) alter or change the amount or kind or timing of
the payment of the Merger Consideration, (ii) require, in the reasonable opinion
of counsel to First Federal and counsel to Connecticut Bancshares, First Federal
to resolicit its stockholders in connection with the Stockholder Meeting (as
defined in SECTION 4.8) or (iii) materially impede or delay the receipt of any
regulatory approval referred to in, or the consummation of the transactions
contemplated by, this Agreement. This Agreement and any related documents shall
be appropriately amended in order to reflect any such revised structure.
Section 1.9. Bank Merger. Concurrently with or as soon as
-----------
practicable after the execution and delivery of this Agreement, Savings Bank of
Manchester and First Federal shall enter into a Plan of Bank Merger in the form
attached hereto as Exhibit C, providing for the merger of First Federal with and
into Savings Bank of Manchester with the Savings Bank of Manchester as the
surviving entity (the "BANK MERGER"). The parties hereto intend that the Bank
Merger shall become effective on the Effective Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 2.1. Representations and Warranties of First Federal. Prior
-----------------------------------------------
to the execution of this Agreement, First Federal has delivered to Connecticut
Bancshares a letter entitled "Disclosure Letter" in which First Federal has
taken exception to certain of the representations and warranties set forth in
this Article II. Any information disclosed therein shall be deemed to be
disclosed only for purposes of the Section of this Agreement specifically
referenced with respect to such information. The inclusion of a given item in
First Federal's Disclosure Letter shall not be deemed a conclusion or admission
that such item is material or has a Material Adverse Effect (as defined in
SECTION 8.1). First Federal represents and warrants to Connecticut Bancshares
that, except as disclosed in First Federal's Disclosure Letter:
(a) Organization.
------------
(i) First Federal is a savings association duly organized and
validly existing under the laws of the United States of America. The deposits of
First Federal are insured by the Savings Association Insurance Fund of the
Federal Deposit Insurance Corporation ("FDIC") to the extent provided in the
Federal Deposit Insurance Act, as amended ("FDIA"). First Federal is a member of
the Federal Home Loan Bank of Boston.
(ii) First Federal has all requisite corporate power and
authority to own, lease and operate its properties and to conduct the business
currently being conducted by it. First Federal is duly qualified or licensed as
a foreign corporation to transact business and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it
5
9
or the nature of the business conducted by it makes such qualification or
licensing necessary, each of which jurisdictions is listed in First Federal's
Disclosure Letter.
(b) Subsidiaries.
------------
(i) First Federal's Disclosure Letter sets forth (A) the name,
percentage ownership and number of shares of stock owned or controlled by First
Federal of each corporation, partnership, joint venture or other entity in which
First Federal has, directly or indirectly, an equity interest representing 5% or
more of any class of the capital stock thereof or other equity interests therein
(individually, a "SUBSIDIARY" and collectively, "SUBSIDIARIES"); (B) the
jurisdiction of incorporation, capitalization and ownership of each Subsidiary;
(C) the names of the officers and directors of each Subsidiary; and (D) the
jurisdictions in which each Subsidiary is qualified or licensed to do business
as a foreign corporation. The outstanding shares of capital stock of each
Subsidiary have been validly authorized and are validly issued, fully paid and
nonassessable. First Federal owns of record and beneficially all the capital
stock of each of its Subsidiaries free and clear of any claims, liens,
encumbrances or restrictions and there are no agreements or understandings with
respect to the voting or disposition of any such shares. All such Subsidiaries
and ownership interests are in compliance with all applicable laws, rules and
regulations relating to investments in equity ownership interests by federally
chartered savings associations.
(ii) Each of First Federal's Subsidiaries is a corporation
duly organized and validly existing under the laws of its jurisdiction of
incorporation, has all requisite corporate power and authority to own, lease and
operate its properties and to conduct the business currently being conducted by
it and is duly qualified or licensed as a foreign corporation to transact
business and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it or the nature of the business conducted by
it makes such qualification or licensing necessary.
(iii) None of First Federal's Subsidiaries holds shares of its
capital stock in its treasury, and there are not outstanding (A) any options,
warrants or other rights with respect to the capital stock of any Subsidiary,
(B) any securities convertible into or exchangeable for shares of such capital
stock or any other debt or equity security of any Subsidiary or (C) any other
commitments of any kind for the issuance of additional shares of capital stock
or other debt or equity security of any Subsidiary or options, warrants or other
rights with respect to such securities.
(iv) No Subsidiary of First Federal is an "insured depository
institution" as defined in the FDIA and the applicable regulations thereunder.
6
10
(c) Capital Structure.
-----------------
(i) The authorized capital stock of First Federal consists of
15,000,000 shares of First Federal Common Stock, and 5,000,000 shares of
preferred stock, par value $.01 per share ("FIRST FEDERAL PREFERRED STOCK").
(ii) As of the date of this Agreement:
(A) 2,830,784 shares of First Federal Common Stock are
issued and outstanding, all of which are validly
issued, fully paid and nonassessable;
(B) 341,231 shares of First Federal Common Stock are
reserved for issuance pursuant to outstanding
First Federal Options under the First Federal
Option Plans;
(C) 447,993 shares of First Federal Common Stock are
reserved for future issuance pursuant to First
Federal's Dividend Reinvestment and Stock Purchase
Plan; and
(D) no shares of First Federal Preferred Stock are
outstanding or reserved for issuance.
(iii) Set forth in First Federal's Disclosure Letter is a
complete and accurate list of all outstanding First Federal Options that have
been granted by First Federal, including the names of the optionees, dates of
grant, exercise prices, dates of vesting, dates of termination and shares
subject to each grant. Following the Effective Time, no holder of First Federal
Options will have any right to receive shares of common stock of Connecticut
Bancshares upon the exercise of First Federal Options.
(iv) No bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which stockholders of First Federal may vote
are issued or outstanding.
(v) Except as set forth in this SECTION 2.1(C), (A) no shares
of capital stock or other voting securities of First Federal are issued,
reserved for issuance or outstanding and (B) neither First Federal nor any of
its Subsidiaries has or is bound by any outstanding subscriptions, options,
warrants, calls, rights, convertible securities, commitments or agreements of
any character obligating First Federal or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, any additional shares
of capital stock of First Federal or obligating First Federal or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, convertible security, commitment or agreement. There are no outstanding
contractual obligations of First Federal or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of First
Federal or any of its Subsidiaries.
7
11
(d) Authority. First Federal has all requisite corporate power and
---------
authority to enter into this Agreement and the Plan of Merger, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated by this Agreement and the Plan of Merger. The execution and
delivery of this Agreement and the Plan of Merger and the consummation of the
transactions contemplated by this Agreement and the Plan of Merger have been
duly authorized by all necessary corporate actions on the part of the Board of
Directors of First Federal, and no other corporate proceedings on the part of
First Federal are necessary to authorize this Agreement or to consummate the
transactions contemplated by this Agreement other than the approval and adoption
of this Agreement and the Plan of Merger by the affirmative vote of the holders
of at least two-thirds of the outstanding shares of First Federal Common Stock
at First Federal's Stockholder Meeting (as defined in SECTION 4.8). This
Agreement has been duly and validly executed and delivered by First Federal and
constitutes a valid and binding obligation of First Federal, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity, whether applied in a court of law or a court of equity.
The Plan of Merger, upon execution and delivery by First Federal, will be duly
and validly executed and delivered by First Federal and will constitute a valid
and binding obligation of First Federal, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and to general principles of equity,
whether applied in a court of law or a court of equity.
(e) Fairness Opinion. First Federal has received the written opinion
----------------
of Sandler O'Neill & Partners, L.P. ("Sandler O'Neill"), to the effect that, as
of the date hereof, the Merger Consideration to be received by First Federal's
stockholders is fair, from a financial point of view, to such stockholders.
(f) No Violations; Consents.
-----------------------
(i) The execution, delivery and performance of this Agreement
and the Plan of Merger by First Federal do not, and the consummation of the
transactions contemplated by this Agreement will not, (A) assuming the consents
and approvals referred to in SECTION 2.1(F)(II) are obtained, violate any law,
rule or regulation or any judgment, decree, order, governmental permit or
license to which First Federal or any of its Subsidiaries (or any of their
respective properties) is subject, (B) violate the federal stock charter or
bylaws of First Federal or the similar organizational documents of any of its
Subsidiaries or (C) constitute a breach or violation of, or a default under (or
an event which, with due notice or lapse of time or both, would constitute a
default under), or result in the termination of, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the properties or assets of First
Federal or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, indenture, deed of trust, loan agreement or other
agreement, instrument or obligation to which First Federal or any of its
Subsidiaries is a party, or to which any of their respective properties or
assets may be subject.
8
12
(ii) Except for (A) the approval or non-objection of the OTS
under the Home Owners' Loan Act, (B) the approval of the FDIC under the FDIA,
and (C) the filing of the Proxy Statement (as defined in SECTION 4.9) with the
OTS and its approval by the OTS, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (each a "GOVERNMENTAL ENTITY") or with
any third party are necessary in connection with the execution and delivery by
First Federal of this Agreement or the Plan of Merger or the consummation by
First Federal of the Merger and the other transactions contemplated by this
Agreement and the Plan of Merger. First Federal knows of no reason pertaining to
First Federal why any of the approvals referred to in this SECTION 2.1(F) should
not be obtained without the imposition of any material condition or restriction
described in SECTION 5.1(B).
(g) Reports and Financial Statements.
--------------------------------
(i) First Federal and each of its Subsidiaries have each
timely filed all reports, forms, registrations and statements, together with any
amendments required to be made with respect thereto, that they were required to
file since December 31, 1997 with (A) the FDIC, (B) the OTS, (C) the National
Association of Securities Dealers, Inc., and (D) any other applicable
self-regulatory organization (collectively, "FIRST FEDERAL'S REPORTS") and have
paid all fees and assessments due and payable in connection therewith. As of
their respective dates, none of First Federal's Reports contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. All of First Federal's
Reports filed with the OTS pursuant to 12 C.F.R. Part 563d complied in all
material respects with the applicable requirements of OTS regulations and the
Securities Exchange Act of 1934, as amended ("EXCHANGE ACT") and the rules and
regulations of the SEC promulgated thereunder, to the extent such requirements
are incorporated into OTS regulations.
(ii) Each of the financial statements of First Federal
included in First Federal's Reports filed with the OTS complied as to form, as
of their respective dates of filing with the OTS, in all material respects with
applicable accounting requirements and with the published rules and regulations
of the OTS with respect thereto. The financial statements included in First
Federal's Reports were prepared from the books and records of First Federal and
its Subsidiaries, fairly present the consolidated financial position of First
Federal and its Subsidiaries in each case at and as of the dates indicated and
the consolidated results of operations, retained earnings and cash flows of
First Federal and its Subsidiaries for the periods indicated, and were prepared
in accordance with generally accepted accounting principles ("GAAP")
consistently applied throughout the periods covered thereby; PROVIDED, HOWEVER,
that the unaudited financial statements for interim periods are subject to
normal year-end adjustments (which will not be material individually or in the
aggregate) and lack a statement of cash flows and footnotes.
9
13
(h) Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
First Federal's Reports filed with the OTS prior to the date of this Agreement,
since September 30, 2000, (i) First Federal and its Subsidiaries have not
incurred any liability, except in the ordinary course of their business
consistent with past practice, (ii) First Federal and its Subsidiaries have
conducted their respective businesses only in the ordinary and usual course of
such businesses consistent with their past practices, (iii) there has not been
any event or occurrence that has had or is reasonably likely to have a Material
Adverse Effect on First Federal, and (iv) there has been no change in any
accounting principles, practices or methods of First Federal or any of its
Subsidiaries other than as required by GAAP.
(i) Absence of Claims. No litigation, controversy, claim, action,
-----------------
suit or other legal, administrative or arbitration proceeding before any court,
governmental agency or arbitrator is pending against First Federal or any of its
Subsidiaries and no such litigation, controversy, claim, action, suit or
proceeding has been threatened. To the knowledge of First Federal, there are no
investigations, reviews or inquiries by any court or governmental agency pending
or threatened against First Federal or any of its Subsidiaries. There are no
judgments, decrees, injunctions, orders or rules of any Governmental Entity or
arbitrator outstanding against First Federal or any of its Subsidiaries. No
action, suit or proceeding is pending that presents a claim to restrain or
prohibit the transactions contemplated herein and no such action, suit or
proceeding has been threatened.
(j) Absence of Regulatory Actions. Since December 31, 1996, neither
-----------------------------
First Federal nor any of its Subsidiaries has been a party to any cease and
desist order, written agreement or memorandum of understanding with, or any
commitment letter or similar undertaking to, or has been subject to any action,
proceeding, order or directive by, or has been a recipient of any extraordinary
supervisory letter from any federal or state governmental authority charged with
the supervision or regulation of depository institutions or depository
institution holding companies or engaged in the insurance of bank deposits
("GOVERNMENT REGULATORS"), or has adopted any board resolutions at the request
of any Government Regulator, or has been advised by any Government Regulator
that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such action, proceeding, order,
directive, written agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter, board resolutions or similar undertaking.
(k) Taxes. All federal, state, local and foreign tax returns
-----
required to be filed by or on behalf of First Federal or any of its Subsidiaries
have been timely filed or requests for extensions have been timely filed and any
such extension shall have been granted and not have expired, and all such filed
returns are complete and accurate in all material respects. All taxes shown on
such returns, all taxes required to be shown on returns for which extensions
have been granted and all other taxes required to be paid by First Federal or
any of its Subsidiaries have been paid in full or adequate provision has been
made for any such taxes on First Federal's balance sheet (in accordance with
GAAP). For purposes of this SECTION 2.1(K), the term "TAXES" shall include all
income, franchise, gross receipts, real and personal property, real property
10
14
transfer and gains, wage and employment taxes. There is no pending audit
examination, deficiency assessment, tax investigation or refund litigation with
respect to any taxes of First Federal or any of its Subsidiaries, and no claim
has been made by any authority in a jurisdiction where First Federal or any of
its Subsidiaries do not file tax returns that First Federal or any such
Subsidiary is subject to taxation in that jurisdiction. All taxes, interest,
additions and penalties due with respect to completed and settled examinations
or concluded litigation relating to First Federal or any of its Subsidiaries
have been paid in full or adequate provision has been made for any such taxes on
First Federal's balance sheet (in accordance with GAAP). First Federal and its
Subsidiaries have not executed an extension or waiver of any statute of
limitations on the assessment or collection of any material tax due that is
currently in effect. First Federal and each of its Subsidiaries has withheld and
paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party, and First Federal and each of its Subsidiaries
has timely complied with all applicable information reporting requirements under
Part III, Subchapter A of Chapter 61 of the Internal Revenue Code ("IRC") and
similar applicable state and local information reporting requirements. Neither
First Federal nor any of its Subsidiaries (i) has made an election under Section
341(f) of the IRC, or (ii) has issued or assumed any obligation under Section
279 of the IRC, any high yield discount obligation as described in Section
163(i) of the IRC or any registration-required obligation within the meaning of
Section 163(f)(2) of the IRC that is not in registered form.
(l) Agreements.
----------
(i) Except for this Agreement, First Federal and its
Subsidiaries are not bound by any material contract (as defined in Item
601(b)(10) of Regulation S-K promulgated by the SEC), to be performed after the
date hereof that has not been filed with or incorporated by reference in First
Federal's Reports.
(ii) First Federal's Disclosure Letter lists any contract,
arrangement, commitment or understanding (whether written or oral) to which
First Federal or any of its Subsidiaries is a party or is bound:
(A) with any executive officer or other key employee
of First Federal or any of its Subsidiaries the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence
of a transaction involving First Federal or any of its Subsidiaries of the
nature contemplated by this Agreement;
(B) with respect to the employment of any directors,
officers employees or consultants;
(C) (including any stock option plan, phantom stock
or stock appreciation rights plan, restricted stock plan or stock purchase plan)
any of the benefits of which will be increased, or the vesting or payment of the
benefits of which will be accelerated, by the
11
15
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement;
(D) containing covenants that limit the ability of
First Federal or any of its Subsidiaries to compete in any line of business or
with any person, or that involve any restriction on the geographic area in
which, or method by which, First Federal (including any successor thereof) or
any of its Subsidiaries may carry on its business (other than as may be
required by law or any regulatory agency);
(E) pursuant to which First Federal or any of its
Subsidiaries may become obligated to invest in or contribute capital to any
entity;
(F) not fully disclosed in the First Federal's Reports
that relates to borrowings of money (or guarantees thereof) by First Federal or
any of its Subsidiaries, other than in the ordinary course of business; or
(G) which is a lease or license with respect to any
property, real or personal, whether as landlord, tenant, licensor or licensee,
involving a liability or obligation as obligor in excess of $25,000 on an annual
basis.
To the knowledge of First Federal, each of the agreements and other
documents referenced in First Federal's Disclosure Letter is a valid, binding
and enforceable obligation of the parties sought to be bound thereby, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
and remedies generally and to general principles of equity, whether applied in a
court of law or a court of equity. First Federal has previously delivered to
Connecticut Bancshares true and complete copies of each agreement and other
documents referenced in First Federal's Disclosure Letter.
(iii) Neither First Federal nor any of its Subsidiaries is in
default under (and no event has occurred which, with due notice or lapse of time
or both, would constitute a default under) or is in violation of any provision
of any note, bond, indenture, mortgage, deed of trust, loan agreement, lease or
other agreement to which it is a party or by which it is bound or to which any
of its respective properties or assets is subject and, to the knowledge of First
Federal, no other party to any such agreement (excluding any loan or extension
of credit made by First Federal or any of its Subsidiaries) is in default in any
respect thereunder.
(iv) First Federal and each of its Subsidiaries owns or
possesses valid and binding licenses and other rights to use without payment all
patents, copyrights, trade secrets, trade names, service marks and trademarks
used in its businesses, and neither First Federal nor any of its Subsidiaries
has received any notice of conflict with respect thereto that asserts the right
of others. Each of First Federal and its Subsidiaries has performed all the
12
16
obligations required to be performed by it and are not in default under any
contact, agreement, arrangement or commitment relating to any of the foregoing.
(m) Labor Matters. First Federal and its Subsidiaries are in
-------------
material compliance with all applicable laws respecting employment, retention of
independent contractors and employment practices, terms and conditions of
employment and wages and hours, and are not engaged in any unfair labor
practice. Neither First Federal nor any of its Subsidiaries is or has ever been
a party to, or is or has ever been bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization with respect to its employees, nor is First Federal or any of
its Subsidiaries the subject of any proceeding asserting that it has committed
an unfair labor practice or seeking to compel it or any such Subsidiary to
bargain with any labor organization as to wages and conditions of employment nor
has any such proceeding been threatened, nor is there any strike, other labor
dispute or organizational effort involving First Federal or any of its
Subsidiaries pending or threatened.
(n) Employee Benefit Plans.
----------------------
(i) First Federal's Disclosure Letter contains a complete and
accurate list of all pension, retirement, stock option, stock purchase, stock
ownership, savings, stock appreciation right, profit sharing, deferred
compensation, consulting, bonus, group insurance, severance and other benefit
plans, contracts, agreements and arrangements, including, but not limited to,
"employee benefit plans," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), incentive and welfare
policies, contracts, plans and arrangements and all trust agreements related
thereto with respect to any present or former directors, officers or other
employees of First Federal or any of its Subsidiaries (hereinafter referred to
collectively as the "FIRST FEDERAL EMPLOYEE PLANS"). There has been no
announcement or commitment by First Federal or any of its Subsidiaries to create
an additional First Federal Employee Plan, or to amend any First Federal
Employee Plan, except for amendments contemplated by this Agreement or required
by applicable law which do not materially increase the cost of such First
Federal Employee Plan. With respect to each First Federal Employee Plan, First
Federal has made available to Connecticut Bancshares a true and correct copy of
(A) the annual report on the applicable form of the Form 5500 series filed with
the Internal Revenue Service ("IRS") for the most recent three plan years, if
required to be filed, (B) such First Federal Employee Plan, including amendments
thereto, (C) each trust agreement, insurance contract or other funding
arrangement relating to such First Federal Employee Plan, including amendments
thereto, (D) the most recent summary plan description and summary of material
modifications thereto for such First Federal Employee Plan, if the First Federal
Employee Plan is subject to Title I of ERISA, (E) the most recent actuarial
report or valuation if such First Federal Employee Plan is a First Federal
Pension Plan (as defined below) and any subsequent changes to the actuarial
assumptions contained therein and (F) the most recent determination letter
issued by the IRS if such First Federal Employee Plan is a First Federal
Qualified Plan (as defined below).
13
17
(ii) There is no pending or threatened litigation,
administrative action or proceeding relating to any First Federal Employee Plan.
All of the First Federal Employee Plans comply in all material respects with all
applicable requirements of ERISA, the IRC and other applicable laws. There has
occurred no "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the IRC) with respect to the First Federal Employee Plans which
is likely to result in the imposition of any penalties or taxes upon First
Federal or any of its Subsidiaries under Section 502(i) of ERISA or Section 4975
of the IRC.
(iii) No liability to the Pension Benefit Guaranty Corporation
has been or is expected by First Federal or any of its Subsidiaries to be
incurred with respect to any First Federal Employee Plan which is subject to
Title IV of ERISA ("FIRST FEDERAL PENSION PLAN"), or with respect to any
"single-employer plan" (as defined in Section 4001(a) of ERISA) currently or
formerly maintained by First Federal or any entity which is considered one
employer with First Federal under Section 4001(b)(1) of ERISA or Section 414 of
the IRC (an "ERISA AFFILIATE"). No First Federal Pension Plan had an
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, as of the last day of the end of the most recent plan year ending
prior to the date hereof; the fair market value of the assets of each First
Federal Pension Plan exceeds the present value of the "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA) under such First Federal Pension Plan
as of the end of the most recent plan year with respect to the respective First
Federal Pension Plan ending prior to the date hereof, calculated on the basis of
the actuarial assumptions used in the most recent actuarial valuation for such
First Federal Pension Plan as of the date hereof; and no notice of a "reportable
event" (as defined in Section 4043 of ERISA) for which the 30-day reporting
requirement has not been waived has been required to be filed for any First
Federal Pension Plan within the 12-month period ending on the date hereof.
Neither First Federal nor any of its Subsidiaries has provided, or is required
to provide, security to any First Federal Pension Plan or to any single-employer
plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the IRC. Neither
First Federal, its Subsidiaries, nor any ERISA Affiliate has contributed to any
"multiemployer plan," as defined in Section 3(37) of ERISA, on or after
September 26, 1980.
(iv) Each First Federal Employee Plan that is an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) and which is
intended to be qualified under Section 401(a) of the IRC (a "FIRST FEDERAL
QUALIFIED PLAN") has received a favorable determination letter from the IRS, and
First Federal and its Subsidiaries are not aware of any circumstances likely to
result in revocation of any such favorable determination letter. Each First
Federal Qualified Plan that is an "employee stock ownership plan" (as defined in
Section 4975(e)(7) of the IRC) has satisfied all of the applicable requirements
of Sections 409 and 4975(e)(7) of the IRC and the regulations thereunder in all
respects and any assets of any such First Federal Qualified Plan that are not
allocated to participants' individual accounts are pledged as security for, and
may be applied to satisfy, any securities acquisition indebtedness.
(v) First Federal and its Subsidiaries do not have any
obligations for post-retirement or post-employment benefits under any First
Federal Employee Plan that cannot
14
18
be amended or terminated upon 60 days' notice or less without incurring any
liability thereunder, except for coverage required by Part 6 of Title I of ERISA
or Section 4980B of the IRC, or similar state laws, the cost of which is borne
by the insured individuals. Except as otherwise provided in SECTION 4.11, with
respect to First Federal or any of its Subsidiaries, for the First Federal
Employee Plans listed in First Federal's Disclosure Letter, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not (i) to the knowledge of First Federal, result in any payment or
series of payments by First Federal or any of its Subsidiaries to any person
which is an "excess parachute payment" (as defined in Section 280G of the IRC),
(ii) increase or secure (by way of a trust or other vehicle) any benefits
payable under any First Federal Employee Plan, or (iii) accelerate the time of
payment or vesting of any such benefit.
(o) Title to Assets. First Federal's Disclosure Letter contains a
---------------
complete and accurate list of all real property owned or leased by First Federal
or any of its Subsidiaries, including all properties of First Federal or any of
its Subsidiaries classified as "Real Estate Owned" or words of similar import
(the "REAL PROPERTY"). First Federal and each of its Subsidiaries has good and
marketable title to its properties and assets (including any intellectual
property asset such as any trademark, service mark, trade name or copyright) and
property acquired in a judicial foreclosure proceeding or by way of a deed in
lieu of foreclosure or similar transfer whether real or personal, tangible or
intangible, in each case free and clear of any liens, security interests,
encumbrances, mortgages, pledges, restrictions, charges or rights or interests
of others, except pledges to secure deposits and other liens incurred in the
ordinary course of business. Each lease pursuant to which First Federal or any
of its Subsidiaries is lessee or lessor is valid and in full force and effect
and neither First Federal nor any of its Subsidiaries, nor, to the knowledge of
First Federal, any other party to any such lease is in default or in violation
of any provisions of any such lease. All material tangible properties of First
Federal and each of its Subsidiaries are in a good state of maintenance and
repair, conform in all material respects with all applicable ordinances,
regulations and zoning laws and are considered by First Federal to be adequate
for the current business of First Federal and its Subsidiaries. To the knowledge
of First Federal, none of the buildings, structures or other improvements
located on the Real Property encroaches upon or over any adjoining parcel or
real estate or any easement or right-of-way.
(p) Compliance with Laws. First Federal and each of its Subsidiaries
--------------------
has all permits, licenses, certificates of authority, orders and approvals of,
and has made all filings, applications and registrations with, all Governmental
Entities that are required in order to permit it to carry on its business as it
is presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and no suspension or
cancellation of any of them is threatened. Neither First Federal nor any of its
Subsidiaries are in violation of, is, to the knowledge of First Federal, under
investigation with respect to any violation of, or has been given notice or been
charged with any violation of, any law, ordinance, regulation, order, writ,
rule, decree or condition to approval of any Governmental Entity which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on First Federal.
15
19
(q) Fees. Other than financial advisory services performed for First
----
Federal by Sandler O'Neill pursuant to an agreement dated July 13, 1995, a true
and complete copy of which has been previously delivered to Connecticut
Bancshares, neither First Federal nor any of its Subsidiaries, nor any of their
respective officers, directors, employees or agents, has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted directly
or indirectly for First Federal or any of its Subsidiaries in connection with
this Agreement or the transactions contemplated hereby.
(r) Environmental Matters.
---------------------
(i) Each of First Federal and its Subsidiaries, the
Participation Facilities (as defined below), and, to the knowledge of First
Federal, the Loan Properties (as defined below) are, and have been, in
substantial compliance with all Environmental Laws (as defined below), and
neither First Federal nor any of its Subsidiaries is liable under any
Environmental Laws;
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or
threatened, before any court, governmental agency or board or other forum
against First Federal or any of its Subsidiaries or any Participation Facility
(1) for alleged noncompliance (including by any predecessor) with, or liability
under, any Environmental Law or (2) relating to the presence of or release into
the environment of any Hazardous Material (as defined below), whether or not
occurring at or on a site owned, leased or operated by First Federal or any of
its Subsidiaries or any Participation Facility;
(iii) To the knowledge of First Federal, there is no suit,
claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending or threatened before any court, governmental
agency or board or other forum relating to or against any Loan Property (or
First Federal or any of its Subsidiaries in respect of such Loan Property) (1)
relating to alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (2) relating to the presence of or
release into the environment of any Hazardous Material, whether or not occurring
at or on a Loan Property;
(iv) To the knowledge of First Federal, the properties
(including, without limitation, soil, groundwater or surface water on or under
the properties, and buildings thereon) currently owned or operated by First
Federal or any of its Subsidiaries are not contaminated with and do not
otherwise contain any Hazardous Material other than as permitted under
applicable Environmental Law;
(v) Neither First Federal nor any of its Subsidiaries has
received any notice, demand letter, executive or administrative order, directive
or request for information from
16
20
any Governmental Entity or any third party indicating that it may be in
violation of, or liable under, any Environmental Law;
(vi) To the knowledge of First Federal, there are no
underground storage tanks on, in or under any properties owned or operated by
First Federal or any of its Subsidiaries or any Participation Facility and no
underground storage tanks have been closed or removed from any properties owned
or operated by First Federal or any of its Subsidiaries or any Participation
Facility; and
(vii) To the knowledge of First Federal, during the period of
(1) First Federal's or any of its Subsidiaries' ownership or operation of any of
their respective current properties or (2) First Federal's or any of its
Subsidiaries' participation in the management of any Participation Facility,
there has been no contamination by or release of Hazardous Materials in, on,
under or affecting such properties. To the knowledge of First Federal, without
any investigation or inquiry, prior to the period of (1) First Federal's or any
of its Subsidiaries' ownership or operation of any of their respective current
properties or (2) First Federal's or any of its Subsidiaries' participation in
the management of any Participation Facility, there was no contamination by or
release of Hazardous Material in, on, under or affecting such properties.
The following definitions apply for purposes of this SECTION 2.1(R):
"LOAN PROPERTY" means any property in which the applicable
party (or a Subsidiary of it) holds a security interest and, where required by
the context, includes the owner or operator of such property, but only with
respect to such property.
"PARTICIPATION FACILITY" means any facility in which the
applicable party (or a Subsidiary of it) participates in the management
(including all property held as trustee or in any other fiduciary capacity) and,
where required by the context, includes the owner or operator of such property,
but only with respect to such property.
"ENVIRONMENTAL LAW" means (i) any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, legal doctrine, order, directive, executive or administrative
order, judgment, decree, injunction, legal requirement or agreement with any
governmental entity relating to (A) the protection, preservation or restoration
of the environment (which includes, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, structures, soil, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety as it relates to Hazardous Materials, or (B) the
exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of, Hazardous Materials, in each case as amended and as now in effect. The term
Environmental Law includes all federal, state and local laws, rules, regulations
or requirements relating to the protection of the environment or health and
safety, including, without limitation, (i) the Federal Comprehensive
Environmental Response, Compensation and Liability Act of
17
21
1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal
Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal
Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976
(including, but not limited to, the Hazardous and Solid Waste Amendments thereto
and Subtitle I relating to underground storage tanks), the Federal Solid Waste
Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of
1970 as it relates to Hazardous Materials, the Federal Hazardous Substances
Transportation Act, the Emergency Planning and Community Right-To-Know Act, the
Safe Drinking Water Act, the Endangered Species Act, the National Environmental
Policy Act, the Rivers and Harbors Appropriation Act or any so-called
"Superfund" or "Superlien" law, each as amended and as now or hereafter in
effect, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Material.
"HAZARDOUS MATERIAL" means any substance (whether solid,
liquid or gas) which is or could be detrimental to human health or safety or to
the environment, currently or hereafter listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, under any Environmental Law, whether by type or by quantity,
including any substance containing any such substance as a component. Hazardous
Material includes, without limitation, any toxic waste, pollutant, contaminant,
hazardous substance, toxic substance, hazardous waste, special waste, industrial
substance, oil or petroleum, or any derivative or by-product thereof, radon,
radioactive material, asbestos, asbestos-containing material, urea formaldehyde
foam insulation, lead and polychlorinated biphenyl.
(s) Loan Portfolio; Allowance; Asset Quality.
----------------------------------------
(i) With respect to each loan, lease, advance, credit
enhancement, guarantee, other extension of credit, commitment and
interest-bearing asset of First Federal and its Subsidiaries (collectively,
"LOANS") owned by First Federal or its Subsidiaries in whole or in part:
(A) to the knowledge of First Federal, the note and
the related security documents are each legal, valid and binding obligations of
the maker or obligor thereof, enforceable against such maker or obligor in
accordance with their terms;
(B) neither First Federal nor any of its Subsidiaries,
nor any prior holder of a Loan, has modified the note or any of the related
security documents in any material respect or satisfied, canceled or
subordinated the note or any of the related security documents except as
otherwise disclosed by documents in the applicable loan file;
(C) First Federal or a Subsidiary of First Federal is
the sole holder of legal and beneficial title to each Loan (or First Federal's
or its Subsidiary's applicable
18
23
participation interest, as applicable), except as otherwise referenced on the
books and records of First Federal or a Subsidiary of First Federal;
(D) the note and the related security documents,
copies of which are included in the Loan files, are true and correct copies of
the documents they purport to be and have not been suspended, amended, modified,
canceled or otherwise changed except as otherwise disclosed by documents in the
applicable Loan file;
(E) to the knowledge of First Federal, there is no
pending or threatened condemnation proceeding or similar proceeding affecting
the property that serves as security for a Loan, except as otherwise referenced
on the books and records of First Federal;
(F) to the knowledge of First Federal, there is no
litigation or proceeding pending or threatened relating to the property that
serves as security for a Loan that would have a Material Adverse Effect upon
the related Loan; and
(G) with respect to a Loan held in the form of a
participation, the participation documentation is legal, valid, binding and
enforceable in accordance with its terms.
(ii) The allowance for possible loan losses reflected in First
Federal's audited balance sheet at December 31, 1999 was, and the allowance for
possible losses shown on the balance sheets in First Federal's Reports for
periods ending after December 31, 1999, in the opinion of management, was or
will be adequate, as of the dates thereof, under GAAP.
(iii) To the knowledge of First Federal, neither First Federal
nor any of its Subsidiaries is a party to any Loan that is in violation of any
law, regulation or rule of any Governmental Entity.
(t) Deposits. None of the deposits of First Federal or any of
--------
its Subsidiaries is a "brokered" deposit.
(u) Anti-takeover Provisions Inapplicable. First Federal and its
-------------------------------------
Subsidiaries have taken all actions required to exempt Connecticut Bancshares,
Acquisition Sub, the Agreement, the Merger and the Plan of Merger from any
provisions of an antitakeover nature contained in their organizational
documents, and the provisions of any federal or state "anti- takeover," "fair
price," "moratorium," "control share acquisition" or similar laws or
regulations.
(v) Material Interests of Certain Persons. No officer or director of
-------------------------------------
First Federal, or any "associate" (as such term is defined in Rule 12b-2 under
the Exchange Act) of any such officer or director, has any material interest in
any material contract or property (real or personal), tangible or intangible,
used in or pertaining to the business of First Federal or any of its
Subsidiaries.
19
24
(w) Insurance. In the opinion of management, First Federal and its
---------
Subsidiaries are presently insured for amounts deemed reasonable by management
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. All of the
insurance policies and bonds maintained by First Federal and its Subsidiaries
are in full force and effect, First Federal and its Subsidiaries are not in
default thereunder and all material claims thereunder have been filed in due and
timely fashion.
(x) Investment Securities; Derivatives.
----------------------------------
(i) Except for Federal Home Loan Bank stock, pledges to secure
Federal Home Loan Bank borrowings and restrictions that exist for securities
classified as "held to maturity," none of the investment securities held by
First Federal or any of its Subsidiaries is subject to any restriction
(contractual or statutory) that would materially impair the ability of the
entity holding such investment freely to dispose of such investment at any time.
(ii) First Federal's Disclosure Letter contains a complete and
accurate list of all exchange-traded or over-the-counter equity, interest rate,
foreign exchange or other swap, forward, future, option, cap, floor or collar or
any other contract that is a derivative contract (including various combinations
thereof) that First Federal and any of its Subsidiaries is a party or has agreed
to enter into and all securities owned by First Federal and any of its
Subsidiaries that (A) are referred to generically as "structured notes," "high
risk mortgage derivatives," "capped floating rate notes" or "capped floating
rate mortgage derivatives" or (B) are likely to have changes in value as a
result of interest or exchange rate changes that significantly exceed normal
changes in value attributable to interest or exchange rate changes.
(y) Indemnification. Except as provided in the federal stock charter
---------------
or bylaws of First Federal and the similar governing documents of its
Subsidiaries, neither First Federal nor any Subsidiary is a party to any
agreement that provides for the indemnification of any of its present or former
directors, officers, or employees or other persons who serve or served as a
director, officer or employee of another corporation, partnership or other
enterprise at the request of First Federal and, to the knowledge of First
Federal, there are no claims for which any such person would be entitled to
indemnification under the federal stock charter or bylaws of First Federal or
the similar governing documents of any of its Subsidiaries, under any applicable
law or regulation or under any indemnification agreement.
(z) Books and Records. The books and records of First Federal and
-----------------
its Subsidiaries on a consolidated basis have been, and are being, maintained in
accordance with applicable legal and accounting requirements and reflect in all
material respects the substance of events and transactions that should be
included therein.
(aa) Corporate Documents. First Federal has previously furnished
-------------------
or made available to Connecticut Bancshares a complete and correct copy of the
federal stock charter and
20
25
bylaws of First Federal and the similar governing documents of each of First
Federal's Subsidiaries, as in effect as of the date of this Agreement. Neither
First Federal nor any of First Federal's Subsidiaries is in violation of its
federal stock charter, bylaws or similar governing documents. The minute books
of First Federal and each of First Federal's Subsidiaries constitute a complete
and correct record of all actions taken by their respective boards of directors
(and each committee thereof) and their stockholders.
(bb) Proxy Statement. The information regarding First Federal and
---------------
its Subsidiaries to be included in the Proxy Statement (as defined in SECTION
4.9) will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. When the Proxy Statement is mailed, and at the time of the
Stockholder Meeting (as defined in SECTION 4.8), the Proxy Statement shall
comply with the applicable provisions of the OTS regulations.
(cc) Community Reinvestment Act Compliance. First Federal is in
-------------------------------------
material compliance with the applicable provisions of the Community Reinvestment
Act ("CRA") and the regulations promulgated thereunder, and First Federal
currently has a CRA rating of satisfactory or better. To the knowledge of First
Federal, there is no fact or circumstance or set of facts or circumstances that
would cause First Federal to fail to comply with such provisions or cause the
CRA rating of First Federal to fall below satisfactory.
(dd) Undisclosed Liabilities. First Federal and its Subsidiaries
-----------------------
have not incurred any debt, liability or obligation of any nature whatsoever
(whether accrued, contingent, absolute or otherwise and whether due or to become
due) except for (i) liabilities reflected on or reserved against in the
consolidated financial statements of First Federal as of December 31, 1999, (ii)
liabilities incurred since December 31, 1999 in the ordinary course of business
consistent with past practice that, either alone or when combined with all
similar liabilities, have not had, and would not reasonably be expected to have,
a Material Adverse Effect on First Federal and (iii) liabilities incurred for
legal, accounting, financial advising fees and out-of- pocket expenses in
connection with a proposed sale or merger of First Federal.
(ee) Year 2000 Matters. First Federal and its Subsidiaries have not
-----------------
experienced any data processing or other computer malfunctions related to
processing date information on and after January 1, 2000 and none of the third
party service providers or customers of First Federal or its Subsidiaries have
reported year 2000 data processing problems to First Federal that, individually
or in the aggregate, would have a Material Adverse Effect on First Federal.
(ff) No Right to Dissent. Nothing in the federal stock charter or
-------------------
bylaws of First Federal provides or would provide to any holder of First Federal
Common Stock, upon executing the Agreement or the Plan of Merger or the
consummation of the transactions contemplated hereby and thereby, rights of
dissent and appraisal of any kind.
21
26
Section 2.2.Representations and Warranties of Connecticut
---------------------------------------------
Bancshares. Prior to the execution of this Agreement, Connecticut Bancshares has
- ----------
delivered to First Federal a letter entitled "Disclosure Letter" in which
Connecticut Bancshares has taken exception to certain of the representations and
warranties set forth in this Article II. Any information disclosed therein shall
be deemed to be disclosed only for purposes of the Section of this Agreement
specifically referenced with respect to such information. The inclusion of a
given item in Connecticut Bancshares' Disclosure Letter shall not be deemed a
conclusion or admission that such item is material or has a Material Adverse
Effect (as defined in SECTION 8.1). Connecticut Bancshares represents and
warrants to First Federal that:
(a) Organization.
------------
(i) Connecticut Bancshares is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
(ii) Savings Bank of Manchester is a savings bank duly
organized and validly existing under the laws of the State of Connecticut. The
deposits of Savings Bank of Manchester are insured by the Bank Insurance Fund of
the FDIC to the extent provided in the FDIA. Savings Bank of Manchester is a
member of the Federal Home Loan Bank of Boston.
(iii) Connecticut Bancshares has all requisite corporate power
and authority to own, lease and operate its properties and to conduct the
business now being conducted by it. Connecticut Bancshares is duly qualified or
licensed as a foreign corporation to transact business and is in good standing
in each jurisdiction in which the character of the properties owned or leased by
it or the nature of the business conducted by it makes such qualification or
licensing necessary.
(iv) At the Effective Time, Acquisition Sub will be an interim
savings association, duly organized, validly existing and in good standing under
the laws of the United States of America, all of the outstanding capital stock
of which will be owned directly or indirectly by Connecticut Bancshares free and
clear of any lien, charge or other encumbrance. From and after its
incorporation, Acquisition Sub will not engage in any activities other than in
connection with or as contemplated by this Agreement.
(b) Authority.
---------
(i) Connecticut Bancshares has all requisite corporate power
and authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated by this Agreement. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate actions of the Board of Directors of Connecticut Bancshares and no
other corporate proceedings on the part of Connecticut Bancshares (including,
without limitation, any vote or approval of the stockholders of Connecticut
Bancshares) are
22
27
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by Connecticut Bancshares and constitutes a valid and
binding obligation of Connecticut Bancshares, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and to general principles of equity,
whether applied in a court of law or a court of equity.
(ii) Acquisition Sub will have all requisite corporate power
and authority to enter into the Plan of Merger and to consummate the
transactions contemplated thereby. The execution and delivery of the Plan of
Merger and the consummation of the transactions contemplated thereby will be
authorized by the Board of Directors of Acquisition Sub. The Plan of Merger,
upon execution and delivery by Acquisition Sub, will be duly and validly
executed and delivered by Acquisition Sub and will constitute a valid and
binding obligation of Acquisition Sub, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and to general principles of equity,
whether applied in a court of law or a court of equity.
(iii) Savings Bank of Manchester will have all requisite
corporate power and authority to enter into the Plan of Bank Merger and to
consummate the transactions contemplated thereby. The execution and delivery of
the Plan of Bank Merger and the consummation of the Bank Merger and the
transactions contemplated thereby will be authorized by all necessary corporate
actions on the part of Savings Bank of Manchester including authorization by the
Board of Directors of Savings Bank of Manchester. The Plan of Bank Merger, upon
execution and delivery by Savings Bank of Manchester, will be duly and validly
executed and delivered by Savings Bank of Manchester and will constitute a valid
and binding obligation of Savings Bank of Manchester, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally and to general principles of
equity, whether applied in a court of law or a court of equity.
(c) No Violations; Consents.
-----------------------
(i) The execution, delivery and performance of this Agreement
by Connecticut Bancshares do not, and the consummation of the transactions
contemplated hereby will not, constitute (A) assuming the consents and approvals
referred to in SECTION 2.2(B)(II) are obtained, a violation of any law, rule or
regulation or any judgment, decree, order, governmental permit or license to
which Connecticut Bancshares or any of its Subsidiaries (or any of their
properties) is subject; (B) a violation of the certificate of incorporation or
bylaws of Connecticut Bancshares of any of its Subsidiaries; or (C) a breach or
violation of, or a default under (or an event which, with due notice or lapse of
time or both, would constitute a default under), or result in the termination
of, accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of the
properties or assets of Connecticut Bancshares under, any of the terms,
conditions or provisions of any note, bond,
23
28
indenture, deed of trust, loan agreement or other agreement, instrument or
obligation to which Connecticut Bancshares is a party, or to which any of its
properties or assets may be subject.
(ii) Except for (A) the approval of the OTS under the Home
Owners' Loan Act, (B) the approval of the Commissioner of Banking of the State
of Connecticut, and (C) the approval of the FDIC under the FDIA, no consents or
approvals of or filings or registrations with any Governmental Entity or with
any third party are necessary in connection with the execution and delivery by
Connecticut Bancshares of this Agreement or the consummation by Connecticut
Bancshares, Savings Bank of Manchester and Acquisition Sub of the Merger and the
other transactions contemplated by this Agreement. Connecticut Bancshares knows
of no reason pertaining to Connecticut Bancshares or Savings Bank of Manchester
why any of the approvals referred to in this SECTION 2.2(C) should not be
obtained without the imposition of any material condition or restriction
described in SECTION 5.1(B).
(d) Reports and Financial Statements.
--------------------------------
(i) Connecticut Bancshares has timely filed all material
reports, together with any amendments required to be made with respect thereto,
that it was required to file with the SEC (collectively, "CONNECTICUT
BANCSHARES'S REPORTS"). As of their respective dates, none of Connecticut
Bancshares's Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. All of Connecticut Bancshares's Reports complied in
all material respects with the applicable requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder.
(ii) Each of the financial statements of Connecticut
Bancshares included in Connecticut Bancshares's Reports filed with the SEC
complied as to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto. The financial statements
included in Connecticut Bancshares's Reports were prepared from the books and
records of Connecticut Bancshares and its subsidiaries, fairly present the
consolidated financial position of Connecticut Bancshares and its subsidiaries
in each case at and as of the dates indicated and the consolidated results of
operations, retained earnings and cash flows of Connecticut Bancshares and its
subsidiaries for the periods indicated, and, except as otherwise set forth in
the notes thereto, were prepared in accordance with GAAP consistently applied
throughout the periods covered thereby; PROVIDED, HOWEVER, that the unaudited
financial statements for interim periods are subject to normal year-end
adjustments (which will not be material individually or in the aggregate) and
lack a statement of cash flows and footnotes.
(iii) Savings Bank of Manchester has timely filed all material
reports, together with any amendments required to be made with respect thereto,
that it was required to file with any Governmental Entity (collectively, "SMB'S
REPORTS"). As of their respective dates,
24
29
none of SBM's Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. All of SBM's Reports complied in all material
respects with the applicable requirements of the pertinent Governmental
Entities.
(e) Absence of Claims. No litigation, proceeding, controversy,
-----------------
claim, action or suit or other legal, administrative or arbitration proceeding
before any court, governmental agency or arbitrator is pending or has been
threatened against Connecticut Bancshares that would reasonably be expected to
prevent or adversely affect, or which seeks to prohibit the consummation of, the
transactions contemplated by this Agreement.
(f) Proxy Statement. The information regarding Connecticut
---------------
Bancshares to be supplied by Connecticut Bancshares for inclusion in the Proxy
Statement will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
(g) Financing. Connecticut Bancshares or Savings Bank of Manchester
---------
will have available to it, at the Effective Time, immediately available funds
necessary to pay the aggregate Merger Consideration and will use such funds for
the such purpose subject to the conditions of this Agreement.
(h) Employee Benefit Plans. Connecticut Bancshares' Disclosure
----------------------
Letter contains a complete and accurate list of all pension, retirement, stock
option, stock purchase, stock ownership, savings, stock appreciation right,
profit sharing, deferred compensation, consulting, bonus, group insurance,
severance and other benefit plans, contracts, agreements and arrangements,
including, but not limited to, "employee benefit plans," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), incentive and welfare policies, contracts, plans and arrangements and
all trust agreements related thereto with respect to any present or former
directors, officers or other employees of Connecticut Bancshares or any of its
Subsidiaries (hereinafter referred to collectively as the "CONNECTICUT
BANCSHARES EMPLOYEE PLANS"). With respect to each Connecticut Bancshares
Employee Plan, Connecticut Bancshares has made available to First Federal a true
and correct copy of (A) the annual report on the applicable form of the Form
5500 series filed with the Internal Revenue Service ("IRS") for the most recent
three plan years, if required to be filed, (B) such Connecticut Bancshares
Employee Plan, including amendments thereto, (C) each trust agreement, insurance
contract or other funding arrangement relating to such Connecticut Bancshares
Employee Plan, including amendments thereto, (D) the most recent summary plan
description and summary of material modifications thereto for such Connecticut
Bancshares Employee Plan, if the Connecticut Bancshares Employee Plan is subject
to Title I of ERISA, (E) the most recent actuarial report or valuation is such
Connecticut Bancshares Employee Plan is subject to title IV of ERISA and any
subsequent changes to the actuarial assumptions contained therein and (F) the
most recent
25
30
determination letter issued by the IRS if such Connecticut Bancshares Employee
Plan is a Connecticut Bancshares Qualified Plan.
ARTICLE III
CONDUCT PENDING THE MERGER
--------------------------
Section 3.1.Conduct of First Federal's Business Prior to the
------------------------------------------------
Effective Time. Except as expressly provided in this Agreement, during the
- --------------
period from the date of this Agreement to the Effective Time, First Federal
shall, and shall cause its Subsidiaries to, use its best efforts to (i) conduct
its business in the regular, ordinary and usual course consistent with past
practice, (ii) maintain and preserve intact its business organization,
properties, leases, employees and advantageous business relationships and retain
the services of its officers and key employees, (iii) take no action that would
adversely affect or delay the ability of First Federal or Connecticut Bancshares
to perform their respective covenants and agreements on a timely basis under
this Agreement, (iv) take no action that would adversely affect or delay the
ability of First Federal, Connecticut Bancshares or Savings Bank of Manchester
to obtain any necessary approvals, consents or waivers of any Governmental
Entity required for the transactions contemplated hereby or that would
reasonably be expected to result in any such approvals, consents or waivers
containing any material condition or restriction, and (v) take no action that
results in or is reasonably likely to have a Material Adverse Effect on First
Federal or its Subsidiaries.
Section 3.2.Forbearance by First Federal. Without limiting the
----------------------------
covenants set forth in SECTION 3.1 hereof, except as otherwise provided in this
Agreement and except to the extent required by law or regulation or any
Governmental Entity, during the period from the date of this Agreement to the
Effective Time, First Federal shall not, and shall not permit any of its
Subsidiaries to, without the prior consent of Connecticut Bancshares:
(a) incur any new borrowings with final maturities exceeding six (6)
months or refinance existing borrowings, other than its existing overnight line
of credit with the Federal Home Loan Bank of Boston, or pledge any of its assets
to secure any borrowings other than as required pursuant to the terms of its
borrowings in effect as of the date of this Agreement (deposits, including
certificates of deposit, will not be deemed to be borrowings within the meaning
of this SECTION 3.2(A));
(b) other than in the ordinary course of business, assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity;
(c) (i) adjust, split, combine or reclassify any capital stock;
26
31
(ii) make, declare or pay any dividend, or make any other
distribution on its capital stock, except for regular
quarterly cash dividends at a rate not in excess of
$0.22 per share of First Federal Common Stock;
(iii) except with respect to the First Federal Employee Stock
Option Plan and the First Federal ESOP (as defined in
SECTION 4.11(D)), directly or indirectly redeem,
purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible
(whether currently convertible or convertible only after
the passage of time or the occurrence of certain events)
into or exchangeable for any shares of its capital
stock;
(iv) grant any stock options or stock appreciation rights or
grant any individual, corporation or other entity any
right to acquire any shares of its capital stock; or
(v) issue any additional shares of capital stock or any
securities or obligations convertible or excisable for
any shares of its capital stock except pursuant to (A)
the exercise of First Federal Options outstanding as of
the date hereof or (B) the Dividend Reinvestment and
Stock Purchase Plan;
(d) sell, transfer, mortgage, encumber or otherwise dispose of any
of its material properties or assets (except investment securities) to any
individual, corporation or other entity other than a Subsidiary, or cancel,
release or assign any indebtedness to any such person or any claims held by any
such person, except in the ordinary course of business or pursuant to contracts
or agreements in force at the date of this Agreement;
(e) except pursuant to contracts or agreements in force at the date
hereof or as permitted by this Agreement, make any equity investment, either by
purchase of stock or securities, contributions to capital, property transfers,
or purchase of any property or assets of any other individual, corporation or
other entity;
(f) enter into, renew, amend or terminate any contract or agreement,
or make any change in any of its leases or contracts, other than with respect to
those involving aggregate payments of less than, or the provision of goods or
services with a market value of less than, $50,000 per annum and/or with a term
of less than twelve (12) months or that is cancellable on 90 days' notice
without material penalty, and other than contracts or agreements covered by
SECTION 2.1(L);
(g) make, renegotiate, renew, increase, extend, modify or purchase
any loan, lease (credit equivalent), advance, credit enhancement or other
extension of credit, or make any
27
32
commitment in respect of any of the foregoing, except (i) loans or advances as
to which First Federal has a binding obligation to make such loan or advances as
of the date hereof, (ii) certain loans or advances as to which First Federal has
received a written application and which are disclosed in First Federal's
Disclosure Letter, (iii) conforming residential mortgage loans up to and
including $400,000, (iv) commercial real estate loans up to and including
$750,000, or (v) non-real estate commercial loans up to and including $100,000;
(h) except for loans or extensions of credit made on terms generally
available to the public, make or increase any loan or other extension of credit,
or commit to make or increase any such loan or extension of credit, to any
director or officer of First Federal or any of its Subsidiaries, or any entity
controlled, directly or indirectly, by any of the foregoing, other than renewals
of existing loans or commitments to loan;
(i) (i) increase in any manner the compensation or fringe
benefits of any of its employees or directors other than
in the ordinary course of business consistent with past
practice and pursuant to policies currently in effect or
pay any bonus, pension, retirement allowance or
contribution not required by any existing plan or
agreement to any such employees or directors;
(ii) become a party to, amend or commit itself to any
pension, retirement, profit-sharing or welfare benefit
plan or agreement or employment agreement with or for
the benefit of any employee or director;
(iii) voluntarily accelerate the vesting of, or the lapsing of
restrictions with respect to, any stock options or other
stock-based compensation; or
(iv) elect to any senior executive office any person who is
not a member of the senior executive officer team of
First Federal as of the date of this Agreement or elect
to the Board of Directors of First Federal any person
who is not a member of the Board of Directors of First
Federal as of the date of this Agreement, or hire any
employee with annual compensation in excess of $75,000;
(j) settle any claim, action or proceeding involving money damages
in excess of $50,000 or impose any material restriction on the operations of
First Federal or any of its Subsidiaries;
(k) amend its charter or its bylaws other than to extend the date on
which the annual meeting of First Federal Stockholders may be held;
28
33
(l) make any capital expenditures other than pursuant to binding
commitments existing on the date hereof and other than expenditures necessary to
maintain existing assets in good repair or to make payment of necessary taxes;
(m) establish or commit to the establishment of any new branch or
other office facilities or file any application to relocate or terminate the
operation of any banking office;
(n) take any action that is intended or expected to result in any of
its representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in Article V not being satisfied
or in a violation of any provision of this Agreement;
(o) engage in any transaction that is not in the usual and
ordinary course of business and consistent with past practices;
(p) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or regulatory
guidelines; or
(q) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
prohibited by this SECTION 3.2.
Any request by First Federal or response thereto by Connecticut Bancshares
shall be made in accordance with the notice provisions of SECTION 8.7 and shall
note that it is a request pursuant to this SECTION 3.2.
Section 3.3. Conduct of Connecticut Bancshares's Business Prior to
-----------------------------------------------------
the Effective Time. Except as expressly provided in this Agreement, during the
- ------------------
period from the date of this Agreement to the Effective Time, Connecticut
Bancshares shall use its best efforts to (i) take no action that would
materially adversely affect or delay the ability of First Federal or Connecticut
Bancshares to perform their respective covenants and agreements on a timely
basis under this Agreement, (ii) take no action that would adversely affect or
delay the ability of First Federal, Connecticut Bancshares or Savings Bank of
Manchester to obtain any necessary approvals, consents or waivers of any
Governmental Entity required for the transactions contemplated hereby or which
would reasonably be expected to result in any such approvals, consents or
waivers containing any material condition or restriction, or (iii) take any
action that is intended to or reasonably expected to result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect prior to the Effective Time, or in any of the
conditions to the Merger set forth in Article V not being satisfied or in
material violation of any provision of this Agreement.
29
34
ARTICLE IV
COVENANTS
---------
Section 4.1. Acquisition Proposals.
---------------------
(a) First Federal shall not, and shall cause its Subsidiaries and
its Subsidiaries' officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any investment banker, attorney or
accountant retained by First Federal or any of its Subsidiaries) not to,
directly or indirectly, initiate, solicit or knowingly encourage (including by
way of furnishing non-public information or assistance), or facilitate
knowingly, any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as defined in
SECTION 8.1). First Federal shall notify Connecticut Bancshares orally and in
writing of any Acquisition Proposal (including, without limitation, the terms
and conditions of any such Acquisition Proposal and the identity of the person
making such Acquisition Proposal) as promptly as practicable (but, in any event,
no later than 24 hours) after the receipt thereof and shall keep Connecticut
Bancshares informed of the status and details of any such Acquisition Proposal.
Notwithstanding the first sentence of this SECTION 4.1(A), First Federal may
furnish information to, or enter into discussions or negotiations with, any
person or entity that makes an unsolicited written, bona fide proposal to
acquire First Federal pursuant to a merger, consolidation, share exchange,
business combination, tender or exchange offer or other similar transaction, if,
and only to the extent that, (i) the Board of Directors of First Federal
determines that such proposal may constitute a Superior Proposal (as defined
below) and (ii) the Board of Directors of First Federal, after consultation with
and based upon the written advice of independent legal counsel, determines in
good faith that such action is necessary for the Board of Directors of First
Federal to comply with its fiduciary duties to stockholders under applicable
law. Prior to furnishing such information to, or entering into discussions or
negotiations with, such person or entity, First Federal shall provide prompt
notice to Connecticut Bancshares to the effect that it is furnishing information
to, or entering into discussions or negotiations with, such person or entity and
shall receive from such person or entity an executed confidentiality agreement
in reasonably customary form.
(b) For purposes of this Agreement, "SUPERIOR PROPOSAL" shall mean
a proposal or offer to acquire or purchase all or a substantial portion of the
assets of or a substantial equity interest in, or to effect any
recapitalization, liquidation or dissolution involving, or a business
combination or other similar transaction with, First Federal or any First
Federal Subsidiary (including a tender offer or exchange offer to purchase First
Federal Common Stock) other than as contemplated by this Agreement: (i) that did
not arise from or involve a breach or violation by First Federal of SECTION
4.1(A) or any other provision of this Agreement; (ii) that the First Federal
Board of Directors determines in its good faith judgment, based on, among other
things, advice from an independent investment advisor, to be superior to the
Merger from a financial point-of-view to First Federal's stockholders; and (iii)
the financing for the implementation of which, to the extent required, is then
committed or, in the good faith reasonable judgment of the First Federal Board
of Directors, based on, among other things,
30
35
advice of an independent investment advisor, is capable of being obtained by the
party making the proposal or offer.
Section 4.2.[RESERVED]
Section 4.3.Access and Information.
----------------------
(a) Upon reasonable notice, First Federal shall (and shall cause its
Subsidiaries to) afford Connecticut Bancshares and its representatives
(including, without limitation, directors, officers and employees of Connecticut
Bancshares and its affiliates and counsel, accountants and other professionals
retained by Connecticut Bancshares) such reasonable access during normal
business hours throughout the period prior to the Effective Time to the books,
records (including, without limitation, tax returns and work papers of
independent auditors), contracts, properties, personnel and to such other
information relating to First Federal and its Subsidiaries as Connecticut
Bancshares may reasonably request; PROVIDED, HOWEVER, that no investigation
pursuant to this SECTION 4.3 shall affect or be deemed to modify any
representation or warranty made by First Federal in this Agreement. As to
information which First Federal or any of its Subsidiaries is not permitted by
law to disclose, First Federal will, upon request of Connecticut Bancshares, use
all reasonable efforts to obtain any consent, approval or waiver that may be
required for such disclosure.
(b) First Federal shall provide Connecticut Bancshares with true,
correct and complete copies of all financial and other information relating to
the business or operations of First Federal that is provided to directors of
First Federal in connection with meetings of its Board of Directors or
committees thereof.
(c) As soon as reasonably available, but in no event more than 45
days after the end of each fiscal quarter (and 90 days in the case of the fourth
fiscal quarter), First Federal shall deliver to Connecticut Bancshares its
Quarterly and Annual Reports, as filed with the OTS. First Federal shall deliver
to Connecticut Bancshares any Current Reports on Form 8-K promptly after filing
such reports with the OTS and shall provide Connecticut Bancshares with a copy
of any press release promptly after such release is made available to the
public.
(d) Connecticut Bancshares will not, and will use its best efforts
to cause its representatives not to, use any information obtained pursuant to
this SECTION 4.3 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. Subject to the requirements of
applicable law, Connecticut Bancshares will keep confidential, and will use its
best efforts to cause its representatives to keep confidential, all information
and documents obtained pursuant to this SECTION 4.3 unless such information (i)
was already known to Connecticut Bancshares or an affiliate of Connecticut
Bancshares, other than pursuant to a confidentiality agreement or other
confidential relationship, (ii) becomes available to Connecticut Bancshares or
an affiliate of Connecticut Bancshares from other sources not known by such
party to be bound by a confidentiality agreement or other obligation of secrecy,
(iii) is
31
36
disclosed with the prior written approval of First Federal or (iv) is or becomes
readily ascertainable from published information or trade sources.
(e) During the period of time beginning on the day the Proxy
Statement (as defined in SECTION 4.9) is first mailed and continuing to the
Effective Time, including weekends and holidays, First Federal shall provide
Connecticut Bancshares and its authorized agents and representatives full access
to First Federal's offices after normal business hours for the purpose of
installing necessary wiring and equipment to be utilized by Savings Bank of
Manchester after the Effective Time; PROVIDED, that:
(i) reasonable advance notice of each entry shall be given
to First Federal and First Federal approves of each
entry, which approval shall not be unreasonably
withheld;
(ii) First Federal shall have the right to have its employees
or contractors present to inspect the work being done;
(iii) to the extent practicable, such work shall be done in a
matter that will not interfere with First Federal's
business conducted at any affected branch offices;
(iv) all such work shall be done in compliance with all
applicable laws and government regulations, and Savings
Bank of Manchester shall be responsible for the
procurement, at Savings Bank of Manchester's expense, of
all required governmental or administrative permits and
approvals;
(v) Savings Bank of Manchester shall maintain appropriate
insurance (naming First Federal as insured payee)
satisfactory to Savings Bank of Manchester in connection
with any work done by Savings Bank of Manchester's
agents and representatives pursuant to this SECTION 4.3;
(vi) Savings Bank of Manchester shall reimburse First Federal
for any out-of-pocket costs or expenses reasonably
incurred by First Federal in connection with this
undertaking (including such expenses associated with
subsection (ii) of this Section 4.3(e)); and
(vii) in the event this Agreement is terminated in accordance
with Article VI hereof, Savings Bank of Manchester,
within a reasonable time period and at its sole cost and
expense, will restore such offices to their condition
prior to the commencement of any such installation.
32
37
Section 4.4. Applications; Consents.
----------------------
(a) As soon as practicable after the date hereof, Connecticut
Bancshares shall use its reasonable best efforts to prepare and file all
necessary applications, notices and filings to obtain as promptly as practicable
all permits, consents, approvals and authorizations of all Governmental Entities
that are necessary or advisable to consummate the transactions contemplated by
this Agreement. First Federal shall, upon request, furnish Connecticut
Bancshares with all information concerning First Federal, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with any application, notice or filing made
by or on behalf of Connecticut Bancshares to any Governmental Entity in
connection with the transactions contemplated by this Agreement and the Plan of
Merger.
(b) As soon as practicable after the date hereof, each of the
parties hereto shall, and they shall cause their respective Subsidiaries to, use
its best efforts to obtain any consent, authorization or approval of any third
party that is required to be obtained in connection with the Merger and the Bank
Merger.
Section 4.5.Anti-takeover Provisions. First Federal and its
------------------------
Subsidiaries shall take all steps required by any relevant federal or state law
or regulation or under any relevant agreement or other document to exempt or
continue to exempt Connecticut Bancshares, Savings Bank of Manchester,
Acquisition Sub, the Agreement, the Plan of Merger and the Merger from any
provisions of an antitakeover nature contained in First Federal's federal stock
charter and bylaws, or in the similar governing documents of any of First
Federal's subsidiaries, and the provisions of any federal or state antitakeover
laws.
Section 4.6.Additional Agreements. Subject to the terms and
---------------------
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, and cause their respective Subsidiaries to take,
promptly all actions and to do promptly, or cause to be done promptly, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including the Merger (and if the Plan of Bank Merger is executed, the Bank
Merger), as expeditiously as possible, including using efforts to obtain all
necessary actions or non-actions, extensions, waivers, consents and approvals
from all applicable Governmental Entities, effecting all necessary
registrations, applications and filings (including, without limitation, filings
under any applicable state securities laws) and obtaining any required
contractual consents and regulatory approvals.
Section 4.7.Publicity. The initial press release announcing this
---------
Agreement shall be a joint press release. Thereafter First Federal and
Connecticut Bancshares shall consult with each other in issuing any press
releases or otherwise making public statements with respect to the Merger and
any other transaction contemplated hereby and in making any filings with any
governmental entity or with any national securities exchange with respect
thereto.
33
38
Section 4.8.Stockholder Meeting. First Federal shall take all action
-------------------
necessary, in accordance with applicable law and its federal stock charter and
bylaws, to convene a meeting of its stockholders ("STOCKHOLDER MEETING") as
promptly as practicable for the purpose of considering and voting on approval
and adoption of this Agreement, the Plan of Merger and the other transactions
provided for in this Agreement. First Federal shall engage, at its own expense,
a proxy soliciting firm in connection with the Stockholder Meeting. By approving
this Agreement and the Plan of Merger and authorizing their execution, the First
Federal Board of Directors agrees that it shall, at the time the Proxy Statement
is mailed to the stockholders of First Federal, recommend that First Federal's
stockholders vote for such approval; PROVIDED, HOWEVER, that the First Federal
Board of Directors may withdraw, modify, condition or refuse to make such
recommendation only if the Board of Directors shall determine in good faith,
based on the written advice of outside legal counsel, that such recommendation
should not be made in light of its fiduciary duty to First Federal's
stockholders following (i) a Superior Offer, or (ii) the withdrawal, or material
modification that results in a revocation, of the opinion referenced in SECTION
2.1(E) by Sandler O'Neill or (iii) the delivery to the First Federal Board of
Directors of written advice from Sandler O'Neill that the Merger Consideration
is either not fair or is inadequate to the stockholders of First Federal from a
financial point of view.
Section 4.9.Proxy Statement.
---------------
(a) For the purposes of holding the Stockholder Meeting, First
Federal shall prepare and file with the OTS as soon as reasonably practicable
after the date hereof, a proxy statement satisfying all applicable requirements
of the Exchange Act and the rules and regulations thereunder (such proxy
statement, in the form mailed by First Federal to the holders of First Federal
Common Stock, the "PROXY STATEMENT"). Connecticut Bancshares shall, upon
request, furnish First Federal with all information concerning Connecticut
Bancshares as First Federal may reasonably require in connection with the
preparation of the Proxy Statement. First Federal shall give Connecticut
Bancshares and its counsel the opportunity to review and comment on the Proxy
Statement prior to its being filed with the OTS. First Federal shall notify
Connecticut Bancshares promptly of the receipt of any comments of the OTS with
respect to the Proxy Statement and of any requests by the OTS for any amendment
or supplement thereto or for additional information and shall provide promptly
to Connecticut Bancshares copies of all correspondence between First Federal or
any representative of First Federal and the OTS. First Federal shall give
Connecticut Bancshares and its counsel the opportunity to review and comment on
all amendments and supplements to the Proxy Statement and all responses to
requests for additional information and replies to comments prior to their being
filed with, or sent to, the OTS. First Federal agrees to use all reasonable
efforts to respond promptly to all such comments of and requests by the OTS, to
have the Proxy Statement cleared by the staff of the OTS as promptly as
practicable and to cause the Proxy Statement and all required amendments and
supplements thereto to be mailed to the holders of First Federal Common Stock
entitled to vote at the Stockholder Meeting at the earliest practicable time.
34
39
(b) First Federal shall promptly notify Connecticut Bancshares if at
any time it becomes aware that the Proxy Statement contains any untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. In such event, First
Federal shall prepare, with the cooperation of Connecticut Bancshares, a
supplement or amendment to such Proxy Statement which corrects such misstatement
or omission and First Federal shall mail such supplement or amended Proxy
Statement to First Federal's stockholders.
Section 4.10. Notification of Certain Matters. First Federal shall
-------------------------------
give prompt notice to Connecticut Bancshares of: (i) any event or notice of, or
other communication relating to, a default or event that, with notice or lapse
of time or both, would become a default, received by First Federal or any of its
Subsidiaries subsequent to the date of this Agreement and prior to the Effective
Time, under any contract material to the financial condition, properties,
businesses or results of operations of First Federal and its Subsidiaries taken
as a whole to which First Federal or any Subsidiary is a party or is subject;
and (ii) any event, condition, change or occurrence which individually or in the
aggregate has, or which, so far as reasonably can be foreseen at the time of its
occurrence, is reasonably likely to result in a Material Adverse Effect with
respect to First Federal or which would have been required to be disclosed by
First Federal on a schedule to this Agreement had such event, condition, change
or occurrence been known at the time such party delivered its disclosure
schedules; PROVIDED, HOWEVER, that no notice provided pursuant to this SECTION
4.10 shall affect or be deemed to modify any representation or warranty made
herein. Each of First Federal and Connecticut Bancshares shall give prompt
notice to the other party of any (i) notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with any of the transactions contemplated by this Agreement and
(ii) the occurrence or non-occurrence of any fact or event which would be
reasonably likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at any time from
the date hereof to the Effective Time or to cause any covenant, condition or
agreement under this Agreement not to be complied with or satisfied in all
material respects.
Section 4.11. Employees, Directors and Officers.
---------------------------------
(a) All persons who are employees of First Federal immediately prior
to the Effective Time and whose employment is not specifically terminated at or
prior to the Effective Time (a "CONTINUING EMPLOYEE") shall, at the effective
time of the Bank Merger, become employees of Savings Bank of Manchester;
PROVIDED, HOWEVER, that in no event shall any of First Federal's employees be
officers of Savings Bank of Manchester, or have or exercise any power or duty
conferred upon such an officer, unless and until duly elected or appointed to
such position in accordance with the bylaws of Savings Bank of Manchester. All
of the Continuing Employees (other than any Continuing Employee who has an
employment agreement with First Federal as disclosed in the First Federal
Disclosure Letter) shall be employed at the will of Savings Bank of
35
40
Manchester and no contractual right to employment shall inure to such employees
because of this Agreement.
(b) As of the Effective Time, each Continuing Employee shall be
eligible to participate in the Savings Bank of Manchester Bank 401(k) Plan,
Employee Stock Ownership Plan and Pension Plan with full credit for prior
service with First Federal for purposes of eligibility, vesting and satisfaction
of any service requirements for early, normal or disability retirement, but not
for purposes of benefit accrual under the Savings Bank of Manchester Pension
Plan. As soon as administratively practicable after the Effective Time,
Connecticut Bancshares shall make available employer-provided health and other
employee welfare benefit plans, fringe benefits and coverage under its personnel
policies to each Continuing Employee on the same basis as it provides such
coverage to Connecticut Bancshares employees with full credit for prior service
with First Federal except that any pre-existing condition, eligibility waiting
period or other limitations or exclusions otherwise applicable under such plans
to new employees shall not apply to a Continuing Employee or their covered
dependents. Following the Effective Time and until such time as the Continuing
Employees participate in the employee welfare and fringe benefit plans and
personnel policies provided to similarly situated employees of Savings Bank of
Manchester, the benefits to be provided to the Continuing Employees shall be the
First Federal employee welfare and fringe benefit plans and personnel policies
that were provided by First Federal to such Continuing Employees immediately
before the Effective Time. Notwithstanding anything in this SECTION 4.11(B) to
the contrary, no Continuing Employee shall be eligible to receive any benefit
from Connecticut Bancshares or Savings Bank of Manchester that would result in a
duplication of benefits provided under a First Federal plan or program. As of
the Effective Time, each Continuing Employee shall be credited with vacation
leave in an amount not less than the amount of unused First Federal vacation
leave available to such Continuing Employee on the date immediately preceding
the Effective Time. Such credited leave shall be available for use only through
and including December 31, 2001 and shall reduce hour-for-hour the vacation
leave otherwise creditable to such Continuing Employee under the Savings Bank of
Manchester vacation leave policy during such period.
(c) Connecticut Bancshares agrees to honor in accordance with their
terms all plans, contracts, arrangements, commitments or understandings
disclosed in First Federal's Disclosure Letter, including with respect to
benefits which vest or are otherwise accrued or payable as a result of the
consummation of the transactions contemplated by this Agreement and, including,
without limitation, the First Federal Directors' Retirement Plan, the executive
employment agreements and certain agreements with retired directors described in
the First Federal Disclosure Letter. Set forth in First Federal's Disclosure
Letter in reasonable detail are estimates of the payments and benefits due under
the employment agreements and director retirement programs described in First
Federal's Disclosure Letter. It is intended by Connecticut Bancshares and First
Federal that the procedures and methodologies used in preparing such estimates
shall be followed in determining the actual payments or benefits due under such
agreements.
36
41
(d) Before the Effective Time, First Federal may contribute to the
First Federal Savings Employee Stock Ownership Plan (the "FIRST FEDERAL ESOP")
for the 2001 plan year funds sufficient to purchase no more than 10,000 shares
of First Federal Common Stock and may amend the First Federal ESOP to provide
that such shares shall be allocated on or before the Effective Time to each
eligible participant in the First Federal ESOP, regardless of the number of
hours of service completed during the 2001 plan year, in proportion to such
participant's compensation. As of the Effective Time, all shares held by the
First Federal ESOP shall be converted in to the right to receive the Merger
Consideration. The First Federal ESOP shall be terminated as of, or prior to,
the Effective Time and, subject to receipt of a favorable determination letter
from the IRS, distributions shall be made to Continuing Employees as provided in
the plan who shall be eligible to roll over such distributions to the Savings
Bank of Manchester 401(k) Plan. Participants in the First Federal ESOP who are
not Continuing Employees shall be eligible to receive distributions as soon as
administratively practicable after their termination of employment.
(e) Before the Effective Time, First Federal may amend the First
Federal Saving Tax Deferred Retirement and Savings Plan (the "FIRST FEDERAL
401(K) PLAN") and the First Federal Retirement Income Plan to provide that
participants in such plans whose employment is terminated in connection with the
transactions contemplated by this Agreement shall be fully vested in their
benefits under such plans. As soon as administratively practicable following the
Effective Time, Connecticut Bancshares shall cause the First Federal 401(k) Plan
to be merged into the Savings Bank of Manchester 401(k) Plan the promissory
notes with respect to participant loans outstanding from accounts transferred in
connection with such merger shall be transferred to the Savings Bank of
Manchester 401(k) Plan and shall not become due and payable by reason of the
merger. First Federal shall take such action as may be necessary under the plan
and applicable law to freeze benefit accruals under the First Federal Retirement
Income Plan as of a date not later than the Effective Time. As soon as
administratively practicable after the Effective Time Connecticut Bancshares
shall cause the First Federal Retirement Income Plan to be merged into the
Savings Bank of Manchester Pension Plan. As of the effective date of the plan
merger, each Continuing Employee who is a participant in the Savings Bank of
Manchester Pension Plan shall (i) be credited with their frozen benefit under
the First Federal Plan, (ii) for all purposes under the Savings Bank of
Manchester Pension Plan, receive credit from the Effective Time for services
provided after the Effective Time as a Continuing Employee and (iii) be credited
with service as a First Federal employee for purposes of determining eligibility
under the early retirement, normal retirement and disability provisions of the
Savings Bank of Manchester Pension Plan but not for purposes of determining
years of benefit accrual service under the benefit formula in effect after the
Effective Time.
(f) First Federal shall use its reasonable efforts to obtain from
each holder of a First Federal Option and to deliver to Connecticut Bancshares
at or before the Closing (as defined in SECTION 7.1) an agreement to the
cancellation of such holder's First Federal Options in exchange for a cash
payment as described in SECTION 1.4.
37
42
(g) Connecticut Bancshares shall appoint, and cause Savings Bank of
Manchester to appoint, to their respective Boards of Directors as of the
Effective Time a total of three members of the current Board of Directors of
First Federal; PROVIDED, HOWEVER, that no more than two of the three individuals
shall be appointed to either the Board of Directors of Connecticut Bancshares or
the Board of Directors of Savings Bank of Manchester. The three individuals
selected for appointment shall be mutually agreeable to the parties hereto, but
the choice of the Board of Directors on which such individuals shall serve shall
be solely that of Connecticut Bancshares and Savings Bank of Manchester, as
applicable.
(h) Connecticut Bancshares shall cause Savings Bank of Manchester to
establish a Community Advisory Board as of the Effective Time. The Community
Advisory Board shall serve for a term of two years after the Effective Time. The
Community Advisory Board shall consist of the current members of the Board of
Directors of First Federal except for those individuals selected to serve of the
Boards of Directors of Connecticut Bancshares and Savings Bank of Manchester as
set forth in SECTION 4.11(G). Each member of the Community Advisory Board shall
receive a quarterly cash retainer of $5,000.
(i) On or before the Effective Time, First Federal may pay the
annual bonuses for 2000, normally paid to employees in 2001. In addition, on or
before the Effective Time, First Federal may pay bonuses for 2001 in an amount
not to exceed the 2000 bonuses and pro-rated through the Effective Time.
(j) Connecticut Bancshares shall cause the medical and dependent
care flexible spending accounts maintained by First Federal on behalf of any
Continuing Employee to continue in effect until December 31, 2001, either by
continuation of the First Federal plans under which such accounts were
maintained before the Effective Time or by merger of such flexible spending
accounts into comparable plans maintained by Connecticut Bancshares or Savings
Bank of Manchester, and in no event shall any Continuing Employee forfeit the
balance of any such flexible spending account unless such Continuing Employee
shall have failed to submit a claim for reimbursement from such flexible
spending account on or before March 31, 2002.
(k) Connecticut Bancshares shall provide (i) reasonable outplacement
assistance, as determined by Connecticut Bancshares in its sole discretion, to
each First Federal employee who is terminated at the Effective Time or to a
Continuing Employee who is terminated within 12 months of the Effective Time
(other than for cause) and (ii) a monthly payment to each First Federal employee
who is terminated at the Effective Time or a Continuing Employee who is
terminated within 12 months of the Effective Time (other than for cause) equal
to sixty-five percent (65%) of the aggregate monthly premiums for such
employees's health (medical and dental) insurance coverage if the employee
elects COBRA health care continuation coverage but only to the extent that the
employee (or his or her dependents) remains eligible for such coverage and for a
period not in excess of six months.
38
43
Section 4.12.Indemnification.
---------------
(a) From and after the Effective Time (without limitation as to
time), Connecticut Bancshares (and any successor) shall indemnify and hold
harmless each present and former director and officer of First Federal and its
Subsidiaries and each officer or employee of First Federal and its Subsidiaries
that is serving or has served as a director or trustee of another entity
expressly at First Federal's request or direction (each, an "INDEMNIFIED
PARTY"), against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, amounts paid in settlement, losses, claims, damages or
liabilities (collectively, "COSTS") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time (including the transactions contemplated by this
Agreement), whether asserted or claimed prior to, at or after the Effective
Time, and to advance any such Costs to each Indemnified Party as they are from
time to time incurred, in each case to the fullest extent such Indemnified Party
would have been permitted to be indemnified as a director, officer or employee
of First Federal and its Subsidiaries and under the DGCL (as in effect on the
Effective Date).
(b) Any Indemnified Party wishing to claim indemnification under
SECTION 4.12(A), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Connecticut Bancshares thereof, but the
failure to so notify shall not relieve Connecticut Bancshares of any liability
it may have hereunder to such Indemnified Party if such failure does not
materially and substantially prejudice Connecticut Bancshares. In the event of
any such claim, action, suit, proceeding or investigation: (i) Connecticut
Bancshares shall have the right to assume the defense thereof with counsel
reasonably acceptable to the Indemnified Party and Connecticut Bancshares shall
not be liable to such Indemnified Party for any legal expenses of other counsel
subsequently incurred by such Indemnified Party in connection with the defense
thereof, except that if Connecticut Bancshares does not elect to assume such
defense within a reasonable time or counsel for the Indemnified Party at any
time advises that there are issues which raise conflicts of interest between
Connecticut Bancshares and the Indemnified Party (and counsel for Connecticut
Bancshares does not disagree), the Indemnified Party may retain counsel
satisfactory to such Indemnified Party, and Connecticut Bancshares shall remain
responsible for the reasonable fees and expenses of such counsel as set forth
above, to be paid promptly as statements therefor are received; PROVIDED,
HOWEVER, that Connecticut Bancshares shall be obligated pursuant to this
paragraph (b) to pay for only one firm of counsel for all Indemnified Parties in
any one jurisdiction with respect to any given claim, action, suit, proceeding
or investigation unless the use of one counsel for such Indemnified Parties
would present such counsel with a conflict of interest; (ii) the Indemnified
Party will reasonably cooperate in the defense of any such matter; and (iii)
Connecticut Bancshares shall not be liable for any settlement effected by an
Indemnified Party without its prior written consent, which consent may not be
withheld unless such settlement is unreasonable in light of such claims,
actions, suits, proceedings or investigations against, or defenses available to,
such Indemnified Party.
39
44
(c) Connecticut Bancshares shall pay all reasonable costs, including
attorneys' fees, that may be incurred by any Indemnified Party in successfully
enforcing the indemnity and other obligations provided for in this SECTION 4.12
to the fullest extent permitted by law. The rights of each Indemnified Party
hereunder shall be in addition to any other rights such Indemnified Party may
have under applicable law.
(d) Connecticut Bancshares shall maintain First Federal's existing
directors and officers' insurance policy (or provide a policy providing
comparable coverage and amounts on terms no less favorable to the persons
currently covered by First Federal's existing policy, including Connecticut
Bancshares's existing policy if its meets the foregoing standard) covering
persons who are currently covered by such insurance for a period of three years
after the Effective Date; PROVIDED, HOWEVER, that Connecticut Bancshares shall
not be required to expend annually for such insurance amounts in excess of 150%
of the per annum premiums paid by First Federal for the policy year that
includes the date of this Agreement, and PROVIDED FURTHER, that if the annual
premiums for such insurance exceed such 150% amount, then Connecticut Bancshares
shall be obligated to obtain the most advantageous coverage of directors' and
officers' insurance obtainable for a cost not exceeding such 150% amount, and
provided that the officers and directors of First Federal may be required to
make applications and provide customary representations and warranties to
Connecticut Bancshares's insurance carrier for the purpose of obtaining such
insurance.
(e) In the event Connecticut Bancshares or any of its successors or
assigns (i) consolidates with or merges into any other person or entity and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any person or entity, then, and in each such case,
to the extent necessary, proper provision shall be made so that the successors
and assigns of Connecticut Bancshares assume the obligations set forth in this
SECTION 4.12.
(f) The provisions of this SECTION 4.12 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
representatives.
Section 4.13. First Federal Main Office. Connecticut Bancshares shall
-------------------------
occupy, or cause a third party to occupy, the First Federal main office building
located at 1137 Main Street, East Hartford, Connecticut for a period of
twenty-four (24) months after the Effective Date.
Section 4.14. Charitable Activities. Connecticut Bancshares shall
---------------------
maintain a level of commitment to charitable giving and activities in the
communities served by First Federal substantially consistent with that of First
Federal.
40
45
ARTICLE V
CONDITIONS TO CONSUMMATION
Section 5.1.Conditions to Each Party's Obligations. The respective
--------------------------------------
obligations of each party to effect the Merger and any other transactions
contemplated by this Agreement shall be subject to the satisfaction of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been approved
--------------------
by the requisite vote of First Federal's stockholders in accordance with
applicable laws and regulations.
(b) Regulatory Approvals. All approvals, consents or waivers of
--------------------
any Governmental Entity required to permit consummation of the transactions
contemplated by this Agreement shall have been obtained and shall remain in full
force and effect, and all statutory waiting periods shall have expired;
PROVIDED, HOWEVER, that none of such approvals, consents or waivers shall
contain any condition or requirement that would so materially and adversely
impact the economic or business benefits to Connecticut Bancshares of the
transactions contemplated hereby that, had such condition or requirement been
known, Connecticut Bancshares would not, in its reasonable judgment, have
entered into this Agreement.
(c) No Injunctions or Restraints; Illegality. No party hereto shall
----------------------------------------
be subject to any order, decree or injunction of a court or agency of competent
jurisdiction that enjoins or prohibits the consummation of the Merger and no
Governmental Entity shall have instituted any proceeding for the purpose of
enjoining or prohibiting the consummation of the Merger or any transactions
contemplated by this Agreement. No statute, rule or regulation shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger.
Section 5.2.Conditions to the Obligations of Connecticut Bancshares.
-------------------------------------------------------
The obligations of Connecticut Bancshares to effect the Merger and any other
transactions contemplated by this Agreement shall be further subject to the
satisfaction of the following additional conditions:
(a) Performance of Obligations. Each of the obligations of First
--------------------------
Federal required to be performed by it at or prior to the Closing pursuant to
the terms of this Agreement shall have been duly performed and complied with in
all material respects.
(b) Representations and Warranties. Each of the representations and
------------------------------
warranties of First Federal set forth in SECTIONS 2.1(A) (except as relates to
qualification), (B) (except as relates to qualification), (C), (D), (F)(I)(A),
(F)(I)(B) and (U) of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time as though
made at and as of the Effective Time (except as to any representation or
warranty which specifically relates to an earlier date), and there shall not
exist inaccuracies in the representations and warranties of First Federal set
forth in this Agreement (including the
41
46
representations set forth in the sections specified above) such that the
aggregate effect of such inaccuracies, without giving effect to any
qualification as to materiality set forth in such representations and
warranties, has, or is reasonably likely to have, a Material Adverse Effect on
First Federal.
(c) Third Party Consents. First Federal shall have obtained the
--------------------
consent or approval of each person (other than the governmental approvals or
consents referred to in SECTION 5.1(B)) whose consent or approval shall be
required in order to permit the succession by Connecticut Bancshares to any
obligation, right or interest of First Federal under any loan or credit
agreement, note, mortgage, indenture, lease, license or other agreement or
instrument to which First Federal or its Subsidiaries is a party or is otherwise
bound, except those for which failure to obtain such consents and approvals
would not, individually or in the aggregate, have a Material Adverse Effect on
Connecticut Bancshares or upon the consummation of the transactions contemplated
hereby.
(d) Certificates. Connecticut Bancshares shall have received (i) a
------------
certificate signed by the chief executive officer and the chief financial or
principal accounting officer of First Federal to the effect that the conditions
set forth in SECTIONS 5.1(A), 5.2(A) and 5.2(B) have been satisfied, (ii)
certificates (such certificates to be dated as of a day as close as practicable
to the Closing Date) from appropriate authorities as to the corporate existence
of First Federal and its Subsidiaries and (iii) such other documents and
certificates to evidence fulfillment of the conditions set forth in SECTIONS 5.1
and 5.2 as Connecticut Bancshares may reasonably require.
Section 5.3.Conditions to the Obligations of First Federal. The
----------------------------------------------
obligations of First Federal to effect the Merger and any other transactions
contemplated by this Agreement shall be further subject to the satisfaction of
the following additional conditions:
(a) Performance of Obligations. Each of the obligations of
--------------------------
Connecticut Bancshares required to be performed by it at or prior to the Closing
pursuant to the terms of this Agreement shall have been duly performed and
complied with in all material respects.
(b) Representations and Warranties. Each of the representations and
------------------------------
warranties of Connecticut Bancshares set forth in SECTIONS 2.2(A) (except as
relates to qualification), (B), (C)(I)(A) and (C)(I)(B) of this Agreement shall
be true and correct in all material respects as of the date of this Agreement
and as of the Effective Time as though made at and as of the Effective Time
(except as to any representation or warranty which specifically relates to an
earlier date), and there shall not exist inaccuracies in the representations and
warranties of Connecticut Bancshares set forth in this Agreement (including the
representations set forth in the sections specified above) such that the
aggregate effect of such inaccuracies, without giving effect to any
qualification as to materiality set forth in such representations and
warranties, has, or is reasonably likely to have, a Material Adverse Effect on
Connecticut Bancshares.
42
47
(c) Deposit of Merger Consideration. Connecticut Bancshares or
-------------------------------
Savings Bank of Manchester shall have deposited with the Paying Agent sufficient
cash to pay the aggregate Merger Consideration and First Federal shall have
received a certificate from the Paying Agent to such effect.
(d) Certificates. First Federal shall have received (i) a
------------
certificate signed by the chief executive officer and the chief financial or
principal accounting officer of Connecticut Bancshares to the effect that the
conditions set forth in SECTIONS 5.3(A) and 5.3(B) have been satisfied, (ii)
certificates (such certificates to be dated as of a day as close as practicable
to the Closing Date) from appropriate authorities as to the corporate existence
of Connecticut Bancshares and Savings Bank of Manchester and (iii) such other
documents and certificates to evidence fulfillment of the conditions set forth
in SECTIONS 5.1 and 5.3 as First Federal may reasonably require.
ARTICLE VI
TERMINATION
-----------
Section 6.1.Termination. This Agreement may be terminated, and the
-----------
Merger abandoned, at or prior to the Effective Date, either before or after any
requisite stockholder approval:
(a) by the mutual consent of Connecticut Bancshares and First
Federal in a written instrument, if the Board of Directors of each so determines
by vote of a majority of the members of its entire Board; or
(b) by either Connecticut Bancshares or First Federal, in the event
of the failure of the stockholders of First Federal to approve the Agreement at
the Stockholder Meeting; PROVIDED, HOWEVER, that First Federal shall only be
entitled to terminate the Agreement pursuant to this clause if it has complied
in all material respects with its obligations under SECTION 4.8 and SECTION 4.9;
or
(c) by either Connecticut Bancshares or First Federal, if either (i)
any approval, consent or waiver of a governmental agency required to permit
consummation of the transactions contemplated hereby shall have been denied or
(ii) any governmental authority of competent jurisdiction shall have issued a
final, unappealable order enjoining or otherwise prohibiting consummation of the
transactions contemplated by this Agreement; or
(d) by either Connecticut Bancshares or First Federal, in the event
that the Merger is not consummated by October 31, 2001, unless the failure to so
consummate by such time is due to the breach of any representation, warranty or
covenant contained in this Agreement by the party seeking to terminate; or
43
48
(e) by either Connecticut Bancshares or First Federal (provided that
the party seeking termination is not then in material breach of any
representation, warranty, covenant or other agreement contained herein), in the
event of (i) a failure to perform or comply by the other party with any covenant
or agreement of such other party contained in this Agreement, which failure or
non-compliance is material in the context of the transactions contemplated by
this Agreement, or (ii) any inaccuracies or omissions in the representations and
warranties of the other party contained in this Agreement, which inaccuracies or
omissions would provide the non- breaching party the ability to refuse to
consummate the Merger under the applicable standard set forth in SECTION 5.2(B)
in the case of Connecticut Bancshares and SECTION 5.3(B) in the case of First
Federal; in either case which has not been or cannot be cured within 30 calendar
days after written notice thereof is given by the party seeking to terminate to
such other party;
(f) by Connecticut Bancshares, if the Board of Directors of First
Federal does not publicly recommend in the Proxy Statement that stockholders
approve and adopt this Agreement and the Merger or if, after recommending in the
Proxy Statement that stockholders approve and adopt this Agreement and the
Merger, the Board of Directors of First Federal shall have withdrawn, qualified
or revised such recommendation in any respect materially adverse to Connecticut
Bancshares; or
(g) by First Federal, if the Board of First Federal shall have
approved a Superior Proposal.
Section 6.2. Termination Fee. In recognition of the efforts,
---------------
expenses and other opportunities foregone by Connecticut Bancshares while
structuring the Merger, the parties hereto agree that First Federal shall pay to
Connecticut Bancshares a termination fee of Four Million Five Hundred Thousand
Dollars ($4,500,000) plus Connecticut Bancshares' documented, reasonable
out-of-pocket expenses (including fees and expenses of legal, financial and
accounting advisors) in cash and on demand if:
(A) (i) Connecticut Bancshares or First Federal terminates this
Agreement pursuant to SECTION 6.1(B), or pursuant to
SECTION 6.1(D) without the Stockholder Meeting having
occurred,
(ii) At any time after the date of this Agreement and before
such termination an Acquisition Proposal (as defined in
SECTION 8.1) with respect to First Federal shall have
been publicly announced or otherwise communicated to the
senior management, Board of Directors or stockholders of
First Federal, and
(iii) Within 12 months of such termination First Federal
enters into any definitive agreement with respect to, or
consummates, any Acquisition Transaction (as defined in
SECTION 8.1); or
44
49
(B) Connecticut Bancshares terminates this Agreement pursuant to
SECTION 6.1(F); or
(C) First Federal terminates this Agreement pursuant to SECTION
6.1(G).
Section 6.3.Effect of Termination. In the event of termination of
---------------------
this Agreement by either Connecticut Bancshares or First Federal prior to the
consummation of the Merger as provided in SECTION 6.1, this Agreement shall
forthwith become void and have no effect except (i) the obligations of the
parties under SECTIONS 4.3(D), 6.2 and 8.6 shall survive any termination of this
Agreement and (ii) that notwithstanding anything to the contrary contained in
this Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this Agreement.
ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME
-----------------------------------------
Section 7.1.Effective Date and Effective Time. The closing of the
---------------------------------
transactions contemplated hereby (the "CLOSING") shall take place at the offices
of Muldoon Murphy & Faucette LLP, 5101 Wisconsin Avenue, N.W., Washington, DC
20016, unless another place is agreed to by Connecticut Bancshares and First
Federal, on a date designated by Connecticut Bancshares (the "CLOSING DATE")
that is no later than 14 days following the date on which the expiration of the
last applicable waiting period in connection with notices to and approvals of
governmental authorities shall occur and all conditions to the consummation of
this Agreement are satisfied or waived (excluding conditions that, by their
nature, cannot be satisfied until the Closing Date), or on such other date as
may be agreed to by the parties. Prior to the Closing Date, Acquisition Sub and
First Federal shall execute articles of combination or similar document in
accordance with all appropriate legal requirements, which shall be filed as
required by law on the Closing Date, and the Merger provided for therein shall
become effective upon such filing or on such date as may be specified in such
articles of combination or similar document. The date of such filing or such
later effective date as specified in the articles of combination is herein
referred to as the "EFFECTIVE DATE." The "EFFECTIVE TIME" of the Merger shall be
as set forth in the articles of combination.
Section 7.2.Deliveries at the Closing. Subject to the provisions of
-------------------------
Articles V and VI, on the Closing Date there shall be delivered to Connecticut
Bancshares and First Federal the documents and instruments required to be
delivered under Article V.
ARTICLE VIII
CERTAIN OTHER MATTERS
Section 8.1.Certain Definitions; Interpretation. As used in this
-----------------------------------
Agreement, the following terms shall have the meanings indicated:
45
50
"ACQUISITION PROPOSAL" shall mean any of the following (other than
the transactions contemplated hereunder) involving First Federal or any of
its Subsidiaries: (i) any merger, consolidation, share exchange, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 25% or more of the
assets of First Federal in a single transaction or series of transactions;
(iii) any tender offer or exchange offer for 25% or more of the
outstanding shares of capital stock of First Federal or the filing of a
registration statement under the Securities Act of 1933 in connection
therewith; or (iv) any public announcement of a BONA FIDE proposal, plan
or intention to do any of the foregoing or any agreement to engage in any
of the foregoing.
"ACQUISITION TRANSACTION" shall mean any of the following (other
than the transactions contemplated hereunder) involving First Federal or
any of its Subsidiaries: (i) any merger, consolidation, share exchange,
business combination, or other similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 25% or more
of the assets of First Federal in a single transaction or series of
transactions; or (iii) any tender offer or exchange offer for 25% or more
of the outstanding shares of capital stock of First Federal or the filing
of a registration statement under the Securities Act of 1933 in connection
therewith.
"MATERIAL" means material to Connecticut Bancshares or First Federal
(as the case may be) and its respective Subsidiaries, taken as a whole.
"MATERIAL ADVERSE EFFECT" means an effect which is material and
adverse to the business, financial condition or results of operations of
First Federal and its Subsidiaries taken as a whole or Connecticut
Bancshares and its Subsidiaries taken as a whole, as the case may be;
PROVIDED, HOWEVER, that any such effect resulting from any (i) changes in
laws, rules or regulations or GAAP or regulatory accounting requirements
or interpretations thereof that apply to First Federal or Connecticut
Bancshares and Savings Bank of Manchester, as the case may be, or to
similarly situated financial and/or depository institutions or (ii)
changes in economic conditions affecting financial institutions generally,
including but not limited to, changes in the general level of market
interest rates shall not be considered in determining if a Material
Adverse Effect has occurred.
"KNOWLEDGE" shall mean, with respect to a party hereto, actual
knowledge of any of the members of the Board of Directors of that party or
any officer of that party with the title ranking not less than vice
president.
"PERSON" includes an individual, corporation, limited liability
company, partnership, association, trust or unincorporated organization.
46
51
When a reference is made in this Agreement to Sections or Exhibits,
such reference shall be to a Section of, or Exhibit to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for ease of reference only and shall not affect the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation." Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular. Any reference to gender
in this Agreement shall be deemed to include any other gender.
Section 8.2.Survival. Only those agreements and covenants of the
--------
parties that are by their terms applicable in whole or in part after the
Effective Time, including SECTIONS 4.11 and 4.12 of this Agreement, shall
survive the Effective Time. All other representations, warranties, agreements
and covenants shall be deemed to be conditions of the Agreement and shall not
survive the Effective Time.
Section 8.3.Waiver; Amendment. Prior to the Effective Time, any
-----------------
provision of this Agreement may be (i) waived in writing by the party benefitted
by the provision or (ii) amended or modified at any time (including the
structure of the transaction) by an agreement in writing between the parties
hereto except that, after the vote by the stockholders of First Federal, no
amendment or modification may be made that would reduce the amount or alter or
change the kind of consideration to be received by holders of First Federal
Common Stock.
Section 8.4.Counterparts. This Agreement may be executed in
------------
counterparts each of which shall be deemed to constitute an original, but all of
which together shall constitute one and the same instrument.
Section 8.5.Governing Law. This Agreement shall be governed by, and
-------------
interpreted in accordance with, the laws of the State of Connecticut, without
regard to conflicts of laws principles.
Section 8.6.Expenses. Each party hereto will bear all expenses
--------
incurred by it in connection with this Agreement and the transactions
contemplated hereby.
Section 8.7.Notices. All notices, requests, acknowledgments and
-------
other communications hereunder to a party shall be in writing and shall be
deemed to have been duly given when delivered by hand, overnight courier or
facsimile transmission (confirmed in writing) to such party at its address or
facsimile number set forth below or such other address or facsimile transmission
as such party may specify by notice (in accordance with this provision) to the
other party hereto.
47
52
If to First Federal, to:
First Federal Savings and Loan Association of East Hartford
1137 Main Street
East Hartford, CT 06108
Facsimile: (860) 289-8548
Attention: James D. Shelton
Chairman, President and Chief Executive Officer
With copies to:
Paul F. McAlenney, Esquire
Day, Berry & Howard LLP
CityPlace I
Hartford, Connecticut 06103
Telephone: (860) 275-0100
Facsimile: (860) 275-0343
If to Connecticut Bancshares, to:
Connecticut Bancshares, Inc.
923 Main Street
Manchester, CT 06040
Facsimile: (860) 533-3346
Attention: Richard P. Meduski
President and Chief Executive Officer
With copies to:
Douglas P. Faucette, Esq.
Muldoon Murphy & Faucette LLP
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Facsimile: (202) 966-9409
Section 8.8.Entire Agreement; etc. This Agreement, together with the
---------------------
Plan of Merger, the Exhibits and Disclosure Letter, represents the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and supersedes any and all other oral or written agreements
heretofore made. All terms and provisions of this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Except for SECTION 4.12, which confers rights on the
parties described therein, nothing in this Agreement is intended to confer upon
any other person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
48
53
Section 8.9.Successors and Assigns; Assignment. This Agreement shall
----------------------------------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; PROVIDED, HOWEVER, that this Agreement may
not be assigned by either party hereto without the written consent of the other
party.
Section 8.10. Specific Performance. First Federal acknowledges that
--------------------
the First Federal Common Stock and the First Federal business and assets are
unique, and that if First Federal fails to consummate the transactions
contemplated by this Agreement such failure will cause irreparable harm to
Connecticut Bancshares for which there will be no adequate remedy at law,
Connecticut Bancshares shall be entitled, in addition to its other remedies at
law, to specific performance of this Agreement if First Federal shall, without
cause, refuse to consummate the transactions contemplated by this Agreement.
[Signature page follows]
49
54
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first above
written.
CONNECTICUT BANCSHARES, INC.
By: /s/Richard P. Meduski
-----------------------------------------------
Richard P. Meduski
President and Chief Executive Officer
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF EAST HARTFORD
By: /s/James D. Shelton
-----------------------------------------------
James D. Shelton
Chairman, President and Chief Executive Officer
50