Exhibit 10.5
AGREEMENT
THIS AGREEMENT is dated as of the first day of May, 1997 and
made and entered into by NORWALK SAVINGS SOCIETY, a Connecticut
chartered stock savings bank (the "Bank") having an office located
at 48 Wall Street, Norwalk, Connecticut and WESTPORT ASSET
MANAGEMENT, INC., a Connecticut corporation having an office
located at 253 Riverside Avenue, Westport, Connecticut
("Westport").
WHEREAS, the Bank's Articles of Incorporation (the "Articles")
authorize 7,000,000 shares of common stock, par value 0.01, of
which approximately 2,442,129 are issued and outstanding (the "Bank
Common Stock", which shall include for purposes of this Agreement,
any larger or smaller amount of shares of Bank Common Stock which
may hereafter be issued and outstanding);
WHEREAS, Westport has filed a Form F11-A under the Securities
Exchange Act of 1934 indicating that 439,600 shares (the "Westport
Shares") or approximately 18.0% of all outstanding shares of Bank
Common Stock are held in certain discretionary managed accounts of
Westport ("Managed Accounts") and Westport has disclaimed
beneficial ownership of such shares beneficially owned by such
persons and has disclaimed the existence of a group;
WHEREAS, (i) certain provisions in the Articles prohibit any
person from acquiring or offering to acquire 5% or more of the
outstanding shares of Bank Common Stock until June 15, 1997 without
prior approval of the Bank's Board of Directors and, in addition,
prohibit any person from acquiring 10% or more of the outstanding
shares of Bank Common Stock at any time without prior approval by
a 2/3 vote of the Bank's shareholders and the Banking Commissioner
of the State of Connecticut (the "Commissioner"), the Federal
Deposit Insurance Corporation (the "FDIC"), and/or the Federal
Reserve Board (the "FRB"), as appropriate;
WHEREAS, Westport does not acknowledge that the ownership of
Westport Shares as reported in the Form F11-A violates certain
provisions of the Articles but is willing to enter into this
Agreement to avoid any actions that the Bank may choose to pursue
arising out of the approximately 18.0% ownership as reported;
WHEREAS, the Bank does not acknowledge that Westport's
ownership of the Westport Shares does not violate certain
provisions of the Articles, but is willing to enter into this
Agreement to avoid the time and expense of enforcing its provisions
while at the same time achieving a result which is considered to be
consistent with the corporate goals of the Bank;
WHEREAS, Westport has represented to the Bank and their
attorneys that Westport does not hold the shares of the Bank Common
Stock with the purpose of changing or influencing management
policies of the Bank; and
WHEREAS, Westport and the Bank have proposed entering into an
agreement whereby Westport will divest of certain of the Westport
Shares on the terms and conditions as described herein.
NOW, THEREFORE, in consideration of the mutual promises,
representations and warranties contained herein, the Bank and
Westport hereby agree as follows:
1. Termination Date.
This Agreement shall terminate (a) one year from the execution
date of this Agreement or (b) at such time that Westport shall be
the Beneficial Owner (as hereinafter defined) of no more than the
Maximum Stock Ownership Limit (as hereinafter defined), whichever
shall occur first (the "Termination Date").
2. Westport Divestiture.
(a) On or before the Termination Date, Westport agrees that
it shall be the Beneficial Owner (as hereinafter defined) of less
than 10% of the Bank Common Stock (the "Maximum Ownership Limit").
Westport shall divest and relinquish ownership of a sufficient
number of Westport Shares in order to comply with the Maximum Stock
Ownership Limit in any manner which it deems advisable including,
but not limited to, selling, donating, pledging, exchanging or
forfeiting the Westport Shares. The term "Beneficial Owner" shall
have the same meaning as set forth in Rule 13d-3 to the Securities
and Exchange Act of 1934, as amended, and shall include any person
who, directly or indirectly, through any contract arrangement,
understanding, relationship, or otherwise has or shares (i) voting
power which includes the power to vote, or to direct the voting of
such securities or (ii) investment power, which includes the power
to dispose of, or to direct the disposition of such securities.
(b) Until the Termination Date, Westport agrees to furnish to
the Bank, on or before the third business day of the month, a
written summary showing Westport's then-current holdings of Bank
Common Stock and a summary of each transaction in the Westport
Shares entered into by Westport during the previous calendar month,
provided however, that Westport shall not furnish such report to
the Bank if Westport did not complete a transaction in the Westport
Shares in the previous calendar month.
(c) Until the Termination Date, the Bank agrees not to seek
to exercise its Liquidation Right (as hereinafter defined) to
require the liquidation of any of the Westport Shares, provided,
that Westport shall be in compliance with this Agreement and,
provided further, that Westport shall not have breached or
otherwise violated this Agreement, which breach or violation shall
remain uncured for a period of 15 days or more.
(d) In the event that Westport fails to comply with the
Maximum Stock Ownership Limit by the Termination Date, Westport
agrees that the Bank may, in its sole discretion, require Westport
to liquidate the Excess Shares (as defined below) in accordance
with certain provisions in the Articles as in effect on the date of
this Agreement (the "Liquidation Right"). The Bank's failure to
exercise its Liquidation Right on or after the Termination Date
shall not constitute a waiver by the Bank of its right to exercise
such Liquidation Right at any future time.
(e) In the event that Westport fails to comply with the
Maximum Stock Ownership Limit by the Termination Date, the Bank
reserves the right to take any other action at law or in equity
that may be available to it.
3. Dividends.
During the term of this Agreement, the owners of the Westport
Shares shall be entitled to collect and receive all dividends that
may be paid or accrue upon their shares of Bank Common Stock.
4. No Additional Acquisition.
Until the Termination Date of this Agreement, Westport agrees
that it shall not purchase any additional shares of Bank Common
Stock. After the Termination Date, Westport may purchase such
amounts of Bank Common Stock to the extent permitted by the Bank's
Articles of Incorporation and applicable law.
5. Changes in Common Stock.
Until the Termination Date, any shares or other securities
that are issued on or in exchange for the shares of Bank Common
Stock (other than the shares or securities of any other corporation
issued to the stockholders of the Bank pursuant to a plan of
merger) by reason of any stock split, stock dividend, consolidation
of shares, reclassification or corporate reorganization (including
an exchange of shares pursuant to the formation of a bank holding
company), shall be deemed to be shares of Bank Common Stock for
purposes of this Agreement.
6. Representations, Warranties and Covenants.
(a) Westport hereby makes the following representations and
warranties to the Bank:
(i) Westport represents and warrants that, as of the
date of this Agreement, it is the shareholder of
record of all of the Westport Shares as set forth
on Exhibit A to this Agreement.
(ii) Westport represents and warrants that it does not
hold the shares of the Bank's stock with the
purpose of changing or influencing management
policies of the Bank.
(iii) Westport represents and warrants that it has full
power to enter into this Agreement.
(iv) Westport represents and warrants that, prior to the
date of this Agreement, it has not executed or
delivered any proxy or entered into any voting
agreement, voting trust, or any other agreement
that would adversely affect the Bank's ability to
enforce this Agreement.
(v) Westport represents and warrants that all consents
of the Beneficial Owners of shares of Bank Common
Stock required to enter into this Agreement, if
any, have been obtained and that Westport's
organizational documents and bylaws do not prevent
it from entering into this Agreement.
(vi) Westport covenants and warrants that it will not
take any action inconsistent with the purposes of
this Agreement.
(b) The Bank hereby makes the following representations and
warranties:
(i) The Bank represents and warrants that it has full
power to enter into this Agreement.
(ii) The Bank represents and warrants that all corporate
action required to enter into this Agreement has
been obtained and that the Bank's Articles of
Incorporation and bylaws do not prevent it from
entering into this Agreement.
(iii) The Bank covenants and warrants that it will not
take any action inconsistent with the purposes of
this Agreement.
7. Enforceability; Validity.
Westport and the Bank expressly agree that this Agreement
shall be specifically enforceable in any court of competent
jurisdiction in accordance with its terms against it and that all
of the covenants and agreements contained in this Agreement shall
be binding upon and enforceable against Westport and the Bank and
their successors, assigns, or other legal representatives. This
Agreement constitutes the entire agreement between the parties as
to the subject hereto, and shall take precedence over any actual or
alleged prior agreement, whether written or oral. This Agreement
may be modified only in writing executed by the parties hereto,
their successors, assigns or other legal representatives.
8. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
9. Severability.
If any provision of this Agreement shall be declared void or
unenforceable by a court or administrative board of competent
jurisdiction, such provision shall be deemed to have been severed
from the remainder of this Agreement and this Agreement shall
continue in all respects to be valid and enforceable.
10. Remedies for Breach.
In the event of a breach or repudiation of this Agreement by
Westport or the Bank, the nonbreaching party shall have all
remedies available at law or equity, including the right to the
specific performance of this Agreement.
11. Notices.
All notices, offers, acceptances, requests and other
communications hereunder shall be in writing and shall be deemed to
have been duly given if delivered or mailed postage prepaid, first
class, by certified or registered mail to the parties hereto at the
addresses set forth below or to such other address as any party
hereto shall designate to the other parties in writing:
If to the Bank:
Norwalk Savings Society.
45 Wall Street
Norwalk, Connecticut 0618-2554
Attention: Robert T. Judson, President
with a copy to:
William W. Bouton III, Esquire
Tyler Cooper & Alcorn
City Place, 35th Floor
185 Asylum Street
Hartford, Connecticut 06103
If to Westport:
Westport Asset Management, Inc.
253 Riverside Avenue
Westport, Connecticut 06511
Attention: Andrew J. Knuth, Chairman
with a copy to:
Robert M. Taylor, III, Esquire
Day Berry & Howard
CityPlace
Hartford, Connecticut 06103
12. Amendment.
This Agreement may not be amended, modified or altered in any
manner unless and until such change is reduced to writing making
specific reference to this Agreement and signed by the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of this first day of May, 1997.
NORWALK SAVINGS SOCIETY
/s/ Robert T. Judson
By: Robert T. Judson
Its President
WESTPORT ASSET MANAGEMENT
/s/ Andrew J. Knuth
By: Andrew J. Knuth
Its Chairman